On Sept. 21, 2004, California’s Governor Schwarzenegger signed Cal. Penal Code § 653aa [PDF format]. That new law criminalizes the unauthorized electronic distribution of a sound recording or audiovisual work by a sender who fails to disclose his or her valid email address and the title of the work. If laws were meals, this one would rank with Thanksgiving Dinner at the Salvation Army: A largely symbolic gesture, well-intended but poorly executed, to temporarily satiate the beggars at the door. In other words, California lawmakers have given a big fat turkey to the Hollywood lobby.
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FYI, Heritage last week released a new report by Norbert Michel on the effects of file-sharing on music sales. His conclusion:
Despite both sides’ positions, the research thus far does not show a clear effect on record sales from file sharing. Does this mean that P2P is harmless? Not necessarily. There are many reasons why P2P’s impact may not have appeared in empirical data, and there are valid reasons why P2P remains a threat to the music industry.
Michel goes on to discuss the shortcomings of the existing data on the issue. He, by the way, is a research analyst with Heritage’s Center for Data Analysis, and wrote his PHD dissertation on the file-sharing issue.
Yesterday, the U.S. Court of Appeals for the Federal Circuit denied a DMCA anti-circumvention claim made by garage door opener manufacturer Chamberlain against rival SkyLink. SkyLink developed a universal remote control that could operate Chamberlain’s garage door openers and Chamberlain didn’t like that so they filed a lawsuit. Luckily, they lost.
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Many in industry are already making a big stink about the potential copying of digital music played on either over-the-air or satellite radio stations. They fear the unrestricted play will result in unrestricted copying, and then massive redistribution of that music via P2P systems. As this AP story notes, there are already devices on the market to faciliate this.
The story also notes that the RIAA has told the FCC that “Digital audio broadcasting without content protection is the perfect storm facing the music industry,” and asked for new regulatory mandates to help them address this concern. Specifically, the RIAA would like the FCC to build on the “broadcast flag” regulatory model they imposed recently at the request of the television and movie industries. Thus, the RIAA wants “an audio protection flag” mandate that would require all consumer electronic devices to read a special string of code embedded in every digital audio transmission that signalled to the device that the music was copyrighted and could not be copied.
As I wrote in a newsletter last fall, I’m concenred about all this mandatory “flag” nonsense:
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Why again do we need the Inducing Infringement of Copyrights Act (Induce Act)? Apple’s iTunes service sells about 2.5 million songs a week, while Wal-mart sells around 200,000 and Sony 100,000 songs per week. And soon, enter Yahoo – it’s the second most visited site on the net. And enter Microsoft. Its MSN music service and soon to be released Windows Media Player 10 will add serious competition to this developing market. Microsoft will differentiate itself from the more proprietary downloading services of Apple and Sony by touting its interoperability, using the slogan “Plays for Sure.” And college kids are going back to school and finding that they get access to music downloads (compliments of their tuition of course). Music is for sale! Buy it!
Like my TFL colleague Tim Lee, I’ve been spending some time lately thinking about digital rights management (DRM), trusted computing (TC) and copyright skirmishes. Just so you know right up front, I consider myself to be right smack in the mushy middle of most copyright battles going on out there these days. I’m hopelessly undecided on many of the more controversial issues out there, but I’d like to think I still might have a little something to contribute to the debate.
In particular, I’d like to comment on this very interesting battle over the role DRM should play in the future of copyright. The current debate pits those who generally claim that “DRM is the devil” against those who claim “DRM is our savior.” Just by way of background, DRM is generally defined as a system of content protection that employs various technological tools and capabilities to shield against undesirable use or distribution of digitized works or products. Trusted computing is essentially an extension of DRM, or a new, more robust flavor of it, which focuses on how to make computing platforms and technologies even more tamper-resistant.
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The Ninth Circuit Court of Appeals handed down a decision today in the Grokster case. It’s a significant victory for developers of decentralized peer-to-peer file-sharing systems, whom cannot now be held liable for the copyright infringing activities of users.
The last paragraph of the ruling, however, will undoubtedly prompt today’s losers to direct even more resources toward the INDUCE Act:
Indeed, the Supreme Court has admonished us to leave such matters to Congress. In Sony-Betamax, the Court spoke quite clearly about the role of Congress in applying copyright law to new technologies. As the Supreme Court stated in that case, “The direction of Art. I is that Congress shall have the power to promote the progress of science and the useful arts. When, as here, the Constitution is permissive, the sign of how far Congress has chosen to go can come only from Congress.” 464 U.S. at 456 (quoting Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 530 (1972)).
In an attempt to woo customers from Apple’s iTunes Music Store, RealNetworks halved per-song prices today for its music download service. The company will also be initiating an ad campaign espousing “Freedom of Choice.”
I have some serious difficulty mustering sypathy for RealNetworks in their current spat with Apple over Real’s new Harmony technology (which allows users to play files downloaded from Real’s service on an Apple iPod). Remember that Real is the same company that invoked the DMCA to crush Streambox several years ago.
If you do buy Harmony-enabled songs from Real, don’t expect them to always work with your iPod. Apple has already warned that future firmware upgrades may eliminate compatibility.
There has been a string of stories about hackers cracking the copy-protection features of Apple’s proprietary suite of music hardware and software. The most momentous was the news that Real had figured out how to place its own copy-protected songs on iPods, without any cooperation from Apple.
I think Apple’s response was incredibly short-sighted. Steve Jobs, Apple’s CEO, appears to be of the attitude that he can single-handedly conquer the digital music market. Aside from one-sided rebranding agreements, Apple has refused to let anyone under the iTunes tent.
Apple, clearly, has not learned from its own history. This has clear parallels to the biggest platform battle of Apple’s corporate lifetime– the battle with Microsoft for dominance of desktop computing. There, as here, Apple pursued a strategy of trying to build everything itself. Microsoft, in contrast, licensed its technology freely to all comers. In the process, Microsoft built a thriving and competitive ecosystem of PC hardware manufacturers, each of which had to pay Microsoft tribute in order to run Windows. Apple, meanwhile, spent most of the last two decades trying to invent everything in-house, and Steve Jobs strangled Apple’s one tentative attempt at platform openness in its cradle when he returned to Apple’s helm in 1997. As a result, Macs today have a dismal 3% market share and have been relegated to being the niche favorite of creative professionals and yuppies.
Apple looks determined to do the same thing with its current commanding lead in the music market. Microsoft and Sony are veterans of brusing platform battles, and they’re coming with war chests of billions of dollars to take Apple’s cozy music monopoly. Apple needs all the allies it can get in that battle. It should be locking in favorable terms now with anyone willing to take its side, not snubbing potential allies at every opportunity.
Steve Jobs has never shown himself to be a great strategic thinker. He’s a smart guy who thinks it’s cool to run a computer company and a movie studio. But he lacks Bill Gates’ appetite for world domination. and paradoxically, that makes him more–not less–of a control freak. The problem is that peaceful co-existence is rarely an option in the technology business. Either your platform comes out on top, or someone else’s does so and you get relegated to obscurity.
Fortunately, Real appears to be doing to Apple what Microsoft did to IBM in the 80’s– pry their platform open against their will. If Real wins the coming legal battles, the iPod and iTunes will be open whether Apple likes itor not. That just might be a blessing in disguise.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.