Mix the thundering clash of two huge U.S. industries with the threat of government intervention and the potential for consumer rights violations, and what do you get? The debate over digital copy protection that is playing out in Hollywood, Silicon Valley and, most recently, Washington, D.C.
Following numerous congressional hearings on the issue over the past few months, public policy group the Cato Institute hosted a panel discussion here Wednesday morning on whether technological controls should be put in place to protect copyright digital content, such as music and movies, from illegal copying and distribution. As expected, representatives of the technology industry disagreed with content company executives over who is responsible for safeguarding digital works. Content companies claimed the responsibility lies with PC and consumer electronics companies, which make the devices that can duplicate their digital music and video products. Members of this industry have taken their complaints to Congress, resulting in a proposed bill by South Carolina Democrat Senator Fritz Hollings that would force the inclusion of government-mandated digital rights management (DRM) technology in PCs and devices.
The technology industry has bristled at the idea of going through the trouble and expense of equipping products with such government-issued safeguards. Moreover, they claim DRM is no cure-all to Internet piracy, because many digital works are pirated before they even leave the studios and no technology can prevent that.
Creating the most controversy are Internet peer-to-peer file-sharing services, which critics say facilitate the unauthorized distribution of copyright materials freely across the Web. "For us the future is the Internet ... but we cannot afford to give (our content) away for free," said Rick Lane, vice president of government affairs with news and entertainment company News Corp. "We need protections in place."
Members of the technology industry agreed that Internet piracy is serious problem but argued that getting the government to set technology standards is not the solution. "We at Verizon don't think the answer is a mandatory DRM scheme," said Sarah Deutsch, vice president and associate general counsel for Verizon Communications Inc., which operates an Internet service provider (ISP) division.
The Digital Millennium Copyright Act, passed in 1998 to update U.S. copyright law to protect digital works, makes provisions for the use of DRM but doesn't mandate it, Deutsch said. Still, content companies have not approached Verizon to discuss implementing the technology, opting instead to take the issue to Congress. "Why hadn't voluntary talks begun?" she asked.
Hollings' proposed bill, which Deutsch referred to as a digital Pearl Harbor, would shift the responsibility and cost of implementing DRM to technology companies, including ISPs, she said.
One alternative to mandatory technology controls would be compulsory licensing of content, which the government has imposed in the past when there has been a "market failure" caused by a clash between new technology and the interests of content providers, Deutsch said. She gave the examples of music for player pianos and jukeboxes, as well as network programming for cable and satellite television services -- all of which had compulsory licenses placed on them by the government.
"A lack of content has led to the illegal file sharing we see today," Deutsch said. "A possible solution (would be) compulsory licenses to get the content out there."
Another content company executive said that although his industry has worked with technology companies on a number of digital piracy issues, peer-to-peer file sharing is one problem to which the technology industry has not responded adequately. A number of content companies sent letters to technology executives asking for their help with Internet piracy, but they didn't get a response until the eve of a hearing Hollings held on his proposed bill in February, said Stewart Verdery, an official in Vivendi Universal SA's government affairs office.
Movie companies need to stem the trend of having their feature films distributed on the Internet before they even open in theatres, Verdery said. "Everything can't be free," he added.
But DRM isn't necessarily the solution to this movie pirating problem, said Jonathan Potter, executive director of the Digital Media Association, a technology industry group in Washington, D.C. In many cases, illegal copies are made or obtained by employees of the studio while a film is still in production, and then distributed on the Web. "A whole lot of (pirated movies) are coming from (the movie companies') employees, and they know it," Potter said.
Films are also being pirated by viewers who sneak recording devices into theatres and then make a copy of the film available on the Web -- another example of a scenario where DRM couldn't prevent illegal duplication. "The guy with a camcorder in a movie theatre ... doesn't have anything to do with DRM technology," said Jonathan Zuck, president of industry group the Association for Competitive Technology.
Therefore, placing mandatory DRM requirements on the technology industry wouldn't necessarily solve the problem, Zuck continued. "If the content industry is so concerned, why aren't they helping pay for DRM implementation?" he added.
News Corp. isn't going to "fork over US$100 million" to implement DRM, Lane said, "but we're willing to work with (the technology industry) to come up with a new solution."
Vivendi's Verdery agreed that DRM won't help solve all of the content industry's piracy problems, but said it offers one solution.