Contracts, DRM Style

by on September 21, 2006 · 28 comments

I think the hysterical tone of this article about the new restrictions in the latest version of the Windows Media Player DRM is unnecessary, but it makes some good points:

One of the problems with WiMP11 is licensing and backing it up. If you buy media with DRM infections, you can’t move the files from PC to PC, or at least you can’t and have them play on the new box. If you want the grand privilege of moving that content, you need to get the approval of the content mafia, sign your life away, and use the tools they give you. If you want to do it in other ways, you are either a lawbreaker or following the advice of J Allard. Wait, same thing.

So, in WiMP10, you just backed up your licenses, and stored them in a safe place. Buying DRM infections gets you a bunch of bits and a promise not to sue, but really nothing more. The content mafia will do anything in its power, from buying government to rootkitting you in order to protect those bits, and backing them up leaves a minor loophole while affording the user a whole lot of protection.

Guess which one wins, minor loophole or major consumer rights? Yes, WiMP11 will no longer allow you the privilege of backing up your licenses, they are tied to a single device, and if you lose it, you are really SOL.

We hear a lot about how DRM is a contract. But what kind of contract allows one party to unilaterally and retroactively change its terms?

Moreover, this is really a pretty severe restriction on the use of digital files. Backups are a fundamental part of good computer use. I back up my data at least once a month. I use my laptop pretty heavily, and a little bit abusively, and I rely on the fact that if my hard drive dies (or is lost or stolen) I’ll be able to get my data from backups.

In some cases, if you ask really nicely, the store that sold you the files will permit you to access the files again. But it’s clear that they do this out of the goodness of their hearts: “Some stores do not permit you to restore media usage rights at all.”

Is it any wonder that Windows Media-based music stores are going down in flames?

  • http://enigmafoundry.wordpress.com/ enigma_foundry

    I’ve made the point here before about consumer protection laws, such as ‘lemon laws’ that do not allow consumers to ‘contract away’ certain rights.

    The theory behind this is the unequal bargaining power of Joe Sixpack, who is unlikely to have a lawyer, (let alone a legal department as Microsoft does) as well as the fact that, as a monopoly (or near monopoly, depending on the Industry) consumers are in an inferior bargaining position.

    This has just shown that MS is aware of how much of an inferior bargaining position consumers are in. If and when the public becomes aware of these inequitable provisions, (especially if MS were stupid enough to actually try to enforce them) we will see legislation to protect consumer rights. It is the first duty of the media, IMHO, to make the public aware.

    Keep up the good work.

  • http://enigmafoundry.wordpress.com eee_eff

    I’ve made the point here before about consumer protection laws, such as ‘lemon laws’ that do not allow consumers to ‘contract away’ certain rights.

    The theory behind this is the unequal bargaining power of Joe Sixpack, who is unlikely to have a lawyer, (let alone a legal department as Microsoft does) as well as the fact that, as a monopoly (or near monopoly, depending on the Industry) consumers are in an inferior bargaining position.

    This has just shown that MS is aware of how much of an inferior bargaining position consumers are in. If and when the public becomes aware of these inequitable provisions, (especially if MS were stupid enough to actually try to enforce them) we will see legislation to protect consumer rights. It is the first duty of the media, IMHO, to make the public aware.

    Keep up the good work.

  • http://weblog.ipcentral.info/ Noel Le

    Yeah, that article’s hysterical tone doesn’t lend it any favors.

    Read your EULA, and find out what restrictions come with your purchase of a license or a product (those are distinct by the way).

    ***But what kind of contract allows one party to unilaterally and retroactively change its terms? Moreover, this is really a pretty severe restriction on the use of digital files. Backups are a fundamental part of good computer use.***

    Actually, many EULAs and purchase contracts contain unilateral provisions (not just in digital music or software). Knowing that would keep you from being so surprised and claiming that your “fundemental” rights are at stake.

    I agree with the point of making backups, but if you didn’t realize that until too late shop around more next time.

  • Steve R.

    Since I am not a lawyer, I cannot make any legal statements. However, as a layperson, EULAs CANNOT be considered valid contracts. For a contract to be valid, in my opinion, they have to be negotiated and where both parties agree to abide by certain obligations. EULAs are contracts of “adhesion” where no negiotian takes place and where the vendor strips you of your rights and the vendor denies liabily for nonperformance.

    Logically EULAs make no sense. First, at the time you buy the product at the checkout stand, hand the cahier your own EULA. If a vendor can give you one, then you can give them your own. Fair is fair.

    Second, a “contract” that is written by one party, who can change the conditions at will, leaves the purchaser who is expecting a certain value out of that product with no recourse. For example you are promised free support for 90 days and the vendor decides to discontinue support the day after you buy the product. Society, if it is to function effectively, requires that both sides to be ethical.

  • http://weblog.ipcentral.info/ Noel Le

    Yeah, that article’s hysterical tone doesn’t lend it any favors.

    Read your EULA, and find out what restrictions come with your purchase of a license or a product (those are distinct by the way).

    ***But what kind of contract allows one party to unilaterally and retroactively change its terms? Moreover, this is really a pretty severe restriction on the use of digital files. Backups are a fundamental part of good computer use.***

    Actually, many EULAs and purchase contracts contain unilateral provisions (not just in digital music or software). Knowing that would keep you from being so surprised and claiming that your “fundemental” rights are at stake.

    I agree with the point of making backups, but if you didn’t realize that until too late shop around more next time.

  • Shahn Hogan

    Isn’t the link backing up these claims just a ReadMe.txt file that says these are Known Issues (ie: they are going to fix these things, but they are broke in Beta 2)? I would expect Microsoft to resolve these issues before Media Player 11 is final. A lot of things can happen between Beta 2 and RTM.

  • Steve R.

    Since I am not a lawyer, I cannot make any legal statements. However, as a layperson, EULAs CANNOT be considered valid contracts. For a contract to be valid, in my opinion, they have to be negotiated and where both parties agree to abide by certain obligations. EULAs are contracts of “adhesion” where no negiotian takes place and where the vendor strips you of your rights and the vendor denies liabily for nonperformance.

    Logically EULAs make no sense. First, at the time you buy the product at the checkout stand, hand the cahier your own EULA. If a vendor can give you one, then you can give them your own. Fair is fair.

    Second, a “contract” that is written by one party, who can change the conditions at will, leaves the purchaser who is expecting a certain value out of that product with no recourse. For example you are promised free support for 90 days and the vendor decides to discontinue support the day after you buy the product. Society, if it is to function effectively, requires that both sides to be ethical.

  • James Gattuso

    Steve R. — Though I usually hate to admit it, I am a lawyer, and you are incorrect about contracts. Yes, there is such a thing as contracts of adhesion, but they are very narrowly defined. A contract need not be negotiated to be valid. Otherwise, millions of transactions made every day would have to be haggled. (Think of the gourd scene from Monty Python). The economy as we know it, as well as checkout lines around the nation, would come to astop.

    You are right about each side having to abide by certain obligations. But that’s not lacking in most EULA cases — you give the seller money, they give you software. I don’t see the problem.

    Of course, neither party can unilaterally and retroactively change a contract. But is that what was done in the case described? It looks like its a new set of rules for new software. I could be wrong. But if I am, I’m sure there are plenty of lawyers who will be willing to take the class-action case.

  • Steve R.

    James: From my layman viewpoint, I still continue to believe what I posted. Obviously my viewpoint is derived from personal experience and websites such as this one. So my knowledge and viewpoint may skewed.

    I would like to direct you to Ed Fosters post “A Contract Only Microsoft Can Break” at http://www.gripe2ed.com/scoop/story/2006/9/4/235357/7375

    Also the “EULA Library” at http://www.gripewiki.com/index.php/EULA_Library

    And “Battle of the Forms” at http://cexx.org/battle.htm

    By way of a personal experience, I subscribed to Sprint several years ago and after two years I was supposed to get a $100 rebate towards a new phone. When it came time, to make a long story short, Sprint refused to honor the rebate.

  • Shahn Hogan

    Isn’t the link backing up these claims just a ReadMe.txt file that says these are Known Issues (ie: they are going to fix these things, but they are broke in Beta 2)? I would expect Microsoft to resolve these issues before Media Player 11 is final. A lot of things can happen between Beta 2 and RTM.

  • James Gattuso

    Steve R. — Though I usually hate to admit it, I am a lawyer, and you are incorrect about contracts. Yes, there is such a thing as contracts of adhesion, but they are very narrowly defined. A contract need not be negotiated to be valid. Otherwise, millions of transactions made every day would have to be haggled. (Think of the gourd scene from Monty Python). The economy as we know it, as well as checkout lines around the nation, would come to astop.

    You are right about each side having to abide by certain obligations. But that’s not lacking in most EULA cases — you give the seller money, they give you software. I don’t see the problem.

    Of course, neither party can unilaterally and retroactively change a contract. But is that what was done in the case described? It looks like its a new set of rules for new software. I could be wrong. But if I am, I’m sure there are plenty of lawyers who will be willing to take the class-action case.

  • Steve R.

    James: From my layman viewpoint, I still continue to believe what I posted. Obviously my viewpoint is derived from personal experience and websites such as this one. So my knowledge and viewpoint may skewed.

    I would like to direct you to Ed Fosters post “A Contract Only Microsoft Can Break” at http://www.gripe2ed.com/scoop/story/2006/9/4/23…>

    Also the “EULA Library” at http://www.gripewiki.com/index.php/EULA_Library…>

    And “Battle of the Forms” at http://cexx.org/battle.htm
    <br>

    By way of a personal experience, I subscribed to Sprint several years ago and after two years I was supposed to get a $100 rebate towards a new phone. When it came time, to make a long story short, Sprint refused to honor the rebate.

  • http://www.techliberation.com/ Tim

    Jim, I agree with you that there’s nothing wrong, in principle, with contracts of adhesion. Or, for that matter, with EULAs that allow one party to change particular terms unilaterally.

    Rather, my point was that people often use contracts as a metaphor for DRM, and it seems to me that it’s a bad metaphor. Although some contracts do allow some of their terms to be changed uniltarerally, that’s not the kind of contract the people who equate DRM to contracts are appealing to. Contracts generally place obligations on both parties, but the DRM “contract” only puts obligations on the customer.

    And yes, you could view this as just being a new contract for a new version of Microsoft’s sofware. The problem is that ordinarily, if a company offers you a contract you don’t like, (say, a bank informs you of changes in its privacy policy) you have the option of going to a competitor. But thanks to the DMCA, it’s illegal to take your content with you when you switch software vendors. Either you accept Microsoft’s terms or you have to give up your content. This is akin to having the freedom to switch banks, but your old bank gets to keep your money. As long as the DMCA is on the books, I’m going to complain about Microsoft using the leverage it provides to foist unreasonable terms on unsuspecting customers.

  • http://www.techliberation.com/ Tim

    Jim, I agree with you that there’s nothing wrong, in principle, with contracts of adhesion. Or, for that matter, with EULAs that allow one party to change particular terms unilaterally.

    Rather, my point was that people often use contracts as a metaphor for DRM, and it seems to me that it’s a bad metaphor. Although some contracts do allow some of their terms to be changed uniltarerally, that’s not the kind of contract the people who equate DRM to contracts are appealing to. Contracts generally place obligations on both parties, but the DRM “contract” only puts obligations on the customer.

    And yes, you could view this as just being a new contract for a new version of Microsoft’s sofware. The problem is that ordinarily, if a company offers you a contract you don’t like, (say, a bank informs you of changes in its privacy policy) you have the option of going to a competitor. But thanks to the DMCA, it’s illegal to take your content with you when you switch software vendors. Either you accept Microsoft’s terms or you have to give up your content. This is akin to having the freedom to switch banks, but your old bank gets to keep your money. As long as the DMCA is on the books, I’m going to complain about Microsoft using the leverage it provides to foist unreasonable terms on unsuspecting customers.

  • http://weblog.ipcentral.info/ Noel Le

    Tim, if you’re that unhappy with current services, and feel like your fundemental rights are deprived, and that you’re being bullied by big companies, then start your own production label. You’ve written enough to justify decentralized music productions with nether DRM nor the big labels, and with little capital investment that you can just Google TLF, print out the hits under “Tim Le – music – DRM”, go to a VC and woala…

    So Tim, what prevents you from going to a competitor. The DMCA does not prevent that. No, you won’t be able to bring your content with you, but here you’re merging two distinct issues: what is possible (switching to a competitor) and what is optimal (switching to a competitor with your content). By arguing the second, you want to prove the first (basically you’re saying that because you can’t swtich with your songs you can’t switch at all).

    Well, the switching costs won’t be that substantial. Are you hurting. I’ll float you DRM-free songs that I have.

  • http://weblog.ipcentral.info/ Noel Le

    Tim, if you’re that unhappy with current services, and feel like your fundemental rights are deprived, and that you’re being bullied by big companies, then start your own production label. You’ve written enough to justify decentralized music productions with nether DRM nor the big labels, and with little capital investment that you can just Google TLF, print out the hits under “Tim Le – music – DRM”, go to a VC and woala…

    So Tim, what prevents you from going to a competitor. The DMCA does not prevent that. No, you won’t be able to bring your content with you, but here you’re merging two distinct issues: what is possible (switching to a competitor) and what is optimal (switching to a competitor with your content). By arguing the second, you want to prove the first (basically you’re saying that because you can’t swtich with your songs you can’t switch at all).

    Well, the switching costs won’t be that substantial. Are you hurting. I’ll float you DRM-free songs that I have.

  • http://enigmafoundry.wordpress.com/ enigma_foundry

    Steve R. — Though I usually hate to admit it, I am a lawyer, and you are incorrect about contracts…

    Well, as I have noted above, it is exactly because of such abusive behavior of monopolies (or near monopolies) that Consumer Protection Laws are put into place.

    Lawmakers should enact protections from these ‘contracts’

  • http://enigmafoundry.wordpress.com/ enigma_foundry

    Tim, if you’re that unhappy with current services, and feel like your fundemental rights are deprived, and that you’re being bullied by big companies, then start your own production label.

    NO! Much better Idea—> Lobby for protection from such outrageous, bullying, immoral, behavior. Just make these contracts illegal.

  • http://enigmafoundry.wordpress.com eee_eff

    Steve R. — Though I usually hate to admit it, I am a lawyer, and you are incorrect about contracts…

    Well, as I have noted above, it is exactly because of such abusive behavior of monopolies (or near monopolies) that Consumer Protection Laws are put into place.

    Lawmakers should enact protections from these ‘contracts’

  • http://enigmafoundry.wordpress.com eee_eff

    Tim, if you’re that unhappy with current services, and feel like your fundemental rights are deprived, and that you’re being bullied by big companies, then start your own production label.

    NO! Much better Idea—> Lobby for protection from such outrageous, bullying, immoral, behavior. Just make these contracts illegal.

  • Steve R.

    Enigma: We may have a bit of confusion here. What you quoted is from James Gattuso who was responding to what I had written. What I wrote, in part was, “Since I am not a lawyer, I cannot make any legal statements. However, as a layperson, EULAs CANNOT be considered valid contracts. I do NOT consider EULAs valid contracts.

    Also it is logically absurd for one party to be able to unilaterally change, at will, the terms of a contract. If that where the case, every EULA change with generate a massive and endless amount of counter, counter counter, etc revisions as each party sends the other an update.

  • http://www.codemonkeyramblings.com MikeT

    There is a social cost to liberty in these cases. My mom is the perfect example of a customer who finds out what these precious contracts and EULAs do to her rights as a buyer. “It’s my f$%^ing copy of Windows, and if they want to tell me otherwise, they can give me my money back!”

    The concept of the rights of the seller ending at first sale is a natural, human instinct before it is a legal concept. Most people aren’t lawyers and are horrified to find out that they have literally no fundamental rights over the IP they buy except over the physical media. The legal profession is largely aloof and out of touch with human nature on this subject, but that doesn’t matter because these things work great on paper!

  • Steve R.

    Enigma: We may have a bit of confusion here. What you quoted is from James Gattuso who was responding to what I had written. What I wrote, in part was, “Since I am not a lawyer, I cannot make any legal statements. However, as a layperson, EULAs CANNOT be considered valid contracts. I do NOT consider EULAs valid contracts.

    Also it is logically absurd for one party to be able to unilaterally change, at will, the terms of a contract. If that where the case, every EULA change with generate a massive and endless amount of counter, counter counter, etc revisions as each party sends the other an update.

  • http://www.codemonkeyramblings.com MikeT

    There is a social cost to liberty in these cases. My mom is the perfect example of a customer who finds out what these precious contracts and EULAs do to her rights as a buyer. “It’s my f$%^ing copy of Windows, and if they want to tell me otherwise, they can give me my money back!”

    The concept of the rights of the seller ending at first sale is a natural, human instinct before it is a legal concept. Most people aren’t lawyers and are horrified to find out that they have literally no fundamental rights over the IP they buy except over the physical media. The legal profession is largely aloof and out of touch with human nature on this subject, but that doesn’t matter because these things work great on paper!

  • http://enigmafoundry.wordpress.com/ enigma_foundry

    SteveR: Yes I unserstood youre point, I was really responding to James, who seems to support these ‘contracts’ or takes the view that they shhould be eliminated through non-coercive measures. I disagree with his conclusions, primarily because i believe that the rights of a natural person should be greater than that of an inanimate corporation. (Yes, I realize the case laaw that exists as of 2006 is against me on this)

  • http://enigmafoundry.wordpress.com eee_eff

    SteveR: Yes I unserstood youre point, I was really responding to James, who seems to support these ‘contracts’ or takes the view that they shhould be eliminated through non-coercive measures. I disagree with his conclusions, primarily because i believe that the rights of a natural person should be greater than that of an inanimate corporation. (Yes, I realize the case laaw that exists as of 2006 is against me on this)

  • http://weblog.ipcentral.info/ Noel Le

    Tim ***people often use contracts as a metaphor for DRM, and it seems to me that it’s a bad metaphor. Although some contracts do allow some of their terms to be changed uniltarerally, that’s not the kind of contract the people who equate DRM to contracts are appealing to. Contracts generally place obligations on both parties, but the DRM “contract” only puts obligations on the customer.***

    Hmmm, it still seems, Tim, like you’re criticizing a particular contract rather than the metaphor between contracts and DRM. There’s no use criticizing a metaphor too closely, afterall it is a metaphor.

    We still call DRM “DRM” rather than electronic contracts right.

    The contract analogy is still good despite your criticism. By continued use of a product, a customer accepts unilateral changes made by a vendor. There need not be mutual obligation, only mutual assent.

  • http://weblog.ipcentral.info/ Noel Le

    Tim ***people often use contracts as a metaphor for DRM, and it seems to me that it’s a bad metaphor. Although some contracts do allow some of their terms to be changed uniltarerally, that’s not the kind of contract the people who equate DRM to contracts are appealing to. Contracts generally place obligations on both parties, but the DRM “contract” only puts obligations on the customer.***

    Hmmm, it still seems, Tim, like you’re criticizing a particular contract rather than the metaphor between contracts and DRM. There’s no use criticizing a metaphor too closely, afterall it is a metaphor.

    We still call DRM “DRM” rather than electronic contracts right.

    The contract analogy is still good despite your criticism. By continued use of a product, a customer accepts unilateral changes made by a vendor. There need not be mutual obligation, only mutual assent.

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