WASHINGTON, January 8, 2007–Both the high-tech and the mainstream press go ga-ga over the Consumer Electronics Show. Forty years old, it’s the country’s largest annual trade show, and it officially opens this morning in Las Vegas.
What’s not to like in more than 1.2 million square feet of electronic glitz and glimmer? On Sunday night, Microsoft’s Bill Gates previewed how your car will communicate with your electronic address book and your digital music player. Verizon Wireless demonstrated how you will soon get television from Comedy Central, Fox, and NBC directly on your cell phone. And NetGear announced a “media receiver” for watching TV, movies and Internet videos from the comfort of your leather couch. Think of it as video iPod with an HDTV connection.
The impresario of all these digital goodies is Gary Shapiro, the chief lobbyist for the Consumer Electronics Association. CEA is the tech trade association that sponsors the annual event, raking in more than $80 million. But for Shapiro, who looks and acts like the proverbial kid in the candy shop for four days every January, the show is about more than just money. It’s about scoring points for his group’s public policy agenda in Washington.
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The document I discussed in my previous post also provides concrete examples of a point I’ve made before: DRM is the technological equivalent of central planning. In their efforts to prevent piracy, the Windows A/V system is becoming more and more monolithic, with the operating system performing more and more functions that would traditionally be performed by third party software, and prohibiting third party software from overriding those functions. Monolithic software has many of the same flaws that centrally planned economies do: the thousands of third-party software developers out there have local knowledge about what their customers want that Microsoft does not possess. Hence, the more Microsoft centralizes decisions about what A/V features the OS will have, the more likely they’ll screw up and fail to provide needed functionality. That gives you lovely outcomes like this:
As well as overt disabling of functionality, there’s also covert disabling of functionality. For example PC voice communications rely on automatic echo cancellation (AEC) in order to work. AEC requires feeding back a sample of the audio mix into the echo cancellation subsystem, but with Vista’s content protection this isn’t permitted any more because this might allow access to premium content. What is permitted is a highly-degraded form of feedback that might possibly still sort-of be enough for some sort of minimal echo cancellation purposes.
The requirement to disable audio and video output plays havoc with standard system operations, because the security policy used is a so-called “system high” policy: The overall sensitivity level is that of the most sensitive data present in the system. So the instant any audio derived from premium content appears on your system, signal degradation and disabling of outputs will occur.
And, even more frightening, this:
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David Levine links to this fantastic summary of the new copy protection standards in Windows Vista, and the many problems those standards are likely to cause. Here’s the upshot:
In order to work, Vista’s content protection must be able to violate the laws of physics, something that’s unlikely to happen no matter how much the content industry wishes it were possible. This conundrum is displayed over and over again in the Windows content-protection requirements, with manufacturers being given no hard-and-fast guidelines but instead being instructed that they need to display as much dedication as possible to the party line. The documentation is peppered with sentences like:
“It is recommended that a graphics manufacturer go beyond the strict letter of the specification and provide additional content-protection features, because this demonstrates their strong intent to protect premium content”.
This is an exceedingly strange way to write technical specifications, but is dictated by the fact that what the spec is trying to achieve is fundamentally impossible. Readers should keep this requirement to display appropriate levels of dedication in mind when reading the following analysis.
What we see throughout the document, is the kind of thrashing that inevitably occurs when an industry’s management orders its engineers to do something that’s technically impossible. They’re forced to go to ever-more-heroic lengths to accomplish the impossible goal, leading to more and more bad design decisions. The result, in this case, is that the quality of all the A/V across the entire operating system is degraded any time there’s any “premium” content being displayed and a single “non-secure” device is installed on the computer. All this effort still isn’t going to stop copyright infringement, but it’s going to be a major pain in the ass for consumers.
Someone has figured out how to bypass the AACS copy protection scheme on the new HD-DVD format. HD-DVD players have been on the market since March, so this encryption scheme survived for approximately 8 months. The only thing that’s surprising about this is that it took so long.
I believe that in theory, the HD-DVD format allows the cartel that controls the format to blacklist compromised devices so that they won’t be able to play future releases. The story I linked to above doesn’t mention if this is likely to occur in this case.
Marketplace had a segment this evening in which Josh Bernoff of Forrester argues that iTunes DRM is hurting the music industry’s bottom line. If they’d called me, I could have told them that a year ago.
Bill Gates’s thoughts on DRM, courtesy of a rough summary by Michael Arrington:
Gates said that no one is satisfied with the current state of DRM, which “causes too much pain for legitmate buyers” while trying to distinguish between legal and illegal uses. He says no one has done it right, yet. There are “huge problems” with DRM, he says, and “we need more flexible models, such as the ability to “buy an artist out for life” (not sure what he means). He also criticized DRM schemes that try to install intelligence in each copy so that it is device specific.
His short term advice: “People should just buy a cd and rip it. You are legal then.”
Keep in mind that Gates heads a company that has an R&D budget in the billions, and they’ve been trying to do DRM right for close to a decade now. Yet he frankly admits that all the money has been for naught. A decade from now, people will look back at the DRM and e-voting fads of the ’00s and ask “what were we thinking?”
We can all agree how pernicious the DMCA is when it’s used by the MPAA to put out of business Load ‘N Go–a small company that sold iPods preloaded with movies along with the DVDs of those movies. Piracy was not an issue here because consumers had to buy the DVD of every movie loaded onto their iPod. The reason MPAA acted, of course, is because Hollywood wants us to pay twice for movies–once for a DVD and again for an iPod or PC version.
Sometimes, however, the content industry has a point. Today Todd Dominey posted on his excellent blog his experience getting rid of his 3000-CD collection and going completely digital. He ripped everything to his computer and then sold all the CDs on the Amazon Marketplace. Today’s post is a great howto for folks with big collections. The thing is that he kept the music, but every used CD he sold is arguably one new CD the recording industry didn’t sell. (There’s probably not a one-to-one correlation there, but probably pretty close.) As more folks move to digital, this practice will only grow.
As far as I can tell this is plain and simple copyright infringement. I don’t think DRM coupled with the DMCA is the solution. Given the new reality of the internet, the only choice the content industry has is to change its business model. But when you see something like this, you have to feel their pain. I believe ripping your CDs or DVDs for use on your portable devices is fair use, and I think the Copyright Office should have issued a DMCA exemption for the practice. That said, you can’t have your cake and eat it, too.
Nick Carr has joined the ranks of the DRM skeptics:
Digital music sales, after growing strongly for a couple of years, appear to be losing steam this year. That, more than the particular EMI experiment, is the big news here. As the Journal reports, “The MP3 releases are coming as digital-music sales have stalled for the first time since Apple launched its iTunes Store in 2003. Digital track sales held steady at 137 million songs in the second and third quarters of this year, according to Nielsen SoundScan. That’s a slight drop from the 144 million sold in the first quarter.”
…Won’t selling songs as unprotected MP3s lead to rampant illegal copying? No. Because there’s already rampant illegal copying. Most unauthorized copying is done either through online file-sharing networks or by burning CDs for friends. DRM schemes have little effect on either of those. All new songs are immediately available on file-sharing networks, DRM or not. In fact, the Journal quotes one source as saying that the “pirate market … command[s] better than 90% of the online marketplace.” People buy through iTunes because they either don’t want to engage in illegal trading or can’t be bothered with the geeky aspects of illegal trading. It’s not because iTunes has removed the option of illegal trading. As for burning CDs to share, that remains easy even with DRM-protected songs.
No, DRM is about controlling the business model for selling online music. And if it looks like there won’t be much additional sales growth through iTunes, then music companies are going to start selling unprotected MP3s. In an iPod world, they have little choice.
Quite so. An interesting question is what the political implications will be if the labels start abandoning DRM en masse. The principal argument for the DMCA is that DRM is necessary to prevent rampant piracy. If the music industry tacitly admit that this is nonsense, will Hollywood soldier on, hoping that they can succeed where the recording industry failed? And if the RIAA stops using its lobbying muscle to block reform, will that make it easier to get legislation passed?
Anybody know why eMusic’s traffic has tripled in the last month?
According to today’s WSJ, Blue Note records (a subsidiary of EMI) will begin selling music in MP3 format via Yahoo. Hopefully this is a sign of things to come, but for now the plan is just for a couple of songs, including a single from Norah Jones’ new album. What’s amazing is that this hasn’t been done already. I’ve always been skeptical that no one at the record companies gets it. But the article explains,
The MP3 announcements highlight a growing internal debate at EMI and other music companies over the correct approach to maximizing the impact of digital sales. Throughout the music industry, executives at record labels who suggested using MP3s for promotions spent years butting heads with their corporate superiors. … Mr. Hochkeppel confirms that he and other Blue Note executives had to overcome what he called “general resistance” on the part of senior EMI executives. He says they were ultimately persuaded there was a need to try fresh approaches to digital sales.
What I fear now is that if this experiment with just a few songs isn’t wildly successful, the suits still won’t get it. They should think about it this way: They have licensing negotiations coming up with Steve Jobs. What a better bargaining chip than the promise of a music store competitor to iTunes that sells MP3s, which play on iPods?
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