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There’s a war looming in cyberspace over copyright. The war will not be about whether to combat the spread of unauthorized copies of computer programs, music or movies. On that point, the combatants agree. This will be a war about tactics and solutions. The content industry — especially Hollywood and the record labels — wants the solution built into computers and other digital devices, such as Palm Pilots and MP3 players. The industry also wants it built into software, operating systems, Web browsers, and routers — the devices that guide Internet traffic. It’s a solution designed around the assumption that nearly all computer and Internet users are potential large-scale infringers. In short: The content industry wants to place a copyright cop in your computer. It also wants to station one anyplace else on the Internet where an unauthorized copy might be made. And if the industry has its way, we all may feel the consequences. Digital videos you shot in 1999 may be unplayable on your computer in 2009. You may no longer be able to move music or video files around easily from one computer to another (from, say, a home desktop to a laptop or to a personal digital assistant). The content companies, on the other hand, see something different at stake. In a speech before Congress in 2000, Michael Eisner, chief executive of The Walt Disney Co., voiced the worries of the content industry when he said that “the future of the American entertainment industry [and] the future of American consumer” is at stake over the issue. The content companies, with Eisner in the lead, argue that failure to build copy protection into the very digital environment itself will lead to their industry’s destruction. In previous battles over copyright, Hollywood and the large record labels have received the full support of their powerful friends in the software and computer industry. But this time, many of the high-tech companies are on the other side. They’re satisfied that current law — rather than future Rube Goldberg design mandates — can do the trick. “We think mandating these protections is an abysmally stupid idea,” says Emery Simon, special counsel to the Business Software Alliance (BSA), an antipiracy trade group whose members include the Adobe, Microsoft, Intel and IBM corporations. A recent legislative proposal floated by Fritz Hollings, D-S.C., chairman of the Senate commerce committee, is the most public manifestation of the content industry’s struggle. The Hollings bill, called the Security System Standards and Certification Act (SSSCA), makes it a civil offense to make or sell digital technologies that do not contain what it calls “certified security technologies,” built-in systems that prevent the copying of content. Draft versions of the legislation, which hasn’t yet been formally introduced, also would impose criminal penalties — up to five years in prison — upon anyone who alters existing security technologies or disables copy protection mechanisms. There’s more than one way to prevent copying of copyrighted content. Various approaches, sometimes referred to as digital-rights management schemes, exist. One general method, called encryption, involves scrambling content in a “digital envelope.” Encryption is what protects DVD movie and video game software from piracy.But the content industry wants to do more than just protect content. If encryption is broken — and hackers are often able to break it — content is free to be copied. To prevent this, the industry wants content to be labeled or digitally “watermarked,” and it wants computers and other devices to be redesigned to look for the watermark, and to limit copying accordingly. Supporters of the Hollings proposal don’t couch the legislation in terms of protecting embattled copyright interests. They frame it as a measure designed to promote digital content and the use of broadband, high-speed Internet services. If Hollywood could be assured that its content would be protected on the broadband Internet, the argument goes, it would develop more compelling programs for the Web and spur greater consumer demand for broadband. An aide to the Senate commerce committee says there are likely to be hearings on the bill as early as February 2002; hearings that had been set for fall of 2001 were postponed because of the Senate anthrax scare. Back in 1998, Hollywood, record labels and software and technology companies came together to support the Digital Millennium Copyright Act. That act — now law — prohibited the creation, dissemination, and use of tools that circumvent digital-rights management technologies. There won’t be a similar broad-based coalition behind anything like the Hollings bill. Software and technology companies simply aren’t ready for a state-ordered restructuring of their entire industrial sector. In remarks made in December at a business technology conference in Washington, D.C., Intel Corp. chief executive Craig Barrett spoke out against legislation like the Hollings bill. Let the private sector work out its own systems for protecting copyright, Barrett said. A few companies are so big and so diverse that they don’t fall easily into the content or technology camp. AOL Time Warner, for example, is conflicted. The movie companies and other content producers under the AOL Time Warner umbrella tend to favor efforts that lock down cyberspace, but AOL itself and some of the company’s cable subsidiaries oppose compulsory designs. “We like the DMCA,” says Jill Lesser, AOL Time Warner’s senior vice president for domestic public policy. “There isn’t from our perspective a need for additional remedies of copyright violations.” Broad as it is, the Hollings proposal is only one small part of a global effort to make the digital world safe for copyrighted materials. Standards groups, industry gatherings and global business policy forums are all working to create industrywide standards that don’t require the approval of lawmakers. A group called 4C Entity is promoting a standard for building digital rights management into digital storage devices, such as hard drives and possibly writable CD-ROM drives (the devices that copy CD-ROMs). The 5C Consortium is developing a copy protection standard for digital television, and interindustry forums like the Content Protection Technology Working Group are also working on digital TV. But the content industry complains that the standard-setting process is proceeding at a tortoise’s pace. The Hollings bill is meant to speed up the process, acting as a lever to compel the technology companies to negotiate more and faster. The movie and TV studios are trying to ward off a possible Napster-like scenario. Though the free music-sharing service is now gone, other file-sharing systems, more decentralized and less easy to sue, remain. And Napster’s legacy still casts a shadow over the music industry — and on the content owners as a whole. A technology expert at News Corporation says that Napster signals the music industry’s downfall. Music fans are now accustomed to copying CDs with CD burners, and downloading music from the Internet as MP3 files. “Within five years,” the expert says, “music will be a cottage industry.” Rubbish, responds Matthew Gerson, the vice president for public policy at Vivendi Universal S.A., which produces and sells both music (Universal Music Group) and movies (Universal Studios Inc.). “We know that if we build a safe, consumer-friendly site that has all the bells and whistles and features that music fans want, it will flourish,” Gerson says. “Fans will have no trouble paying for the music that they love, and compensating the artists who bring it to them — established stars as well as the new voices the labels introduce year after year.” But maintaining that model — with the record label serving as the conduit between creation and consumption — depends both on large streams of revenue and on control of copyrighted works. The Internet and digital technology could cut off the revenue stream by moving music consumers to a world in which trading music online for free is the norm. The record labels and the movie and TV studios see watermarks — undetectable yet traceable digital imprints — as their way to prevent a future world of widespread trading in free music, movies, and other types of content. How would those watermarks work? For an example, let’s use digital television, a nascent technology that transmits high-quality television broadcasts using a digital, rather than an analog, signal. A digital broadcast would include a watermark that identifies the content as copyrighted and might contain certain instructions. Devices and software designed according to the content-industry’s mandate would look for the watermark. Those devices, in turn, would have strict limitations built in as to whether, and how often, a copy of that broadcast could be made. The reverse might also be true: Those components might be designed not to play un-watermarked content. Otherwise, it would only encourage pirates to learn how to strip out the watermarks. In a world in which all consumer digital technology looks for watermarks, our legacy digital videos and MP3 collections might no longer be playable. Digital television is the most pressing worry. Unlike DVD movies, which are encrypted on disc and decrypted every time they’re played, digital broadcast television must be delivered unscrambled. The Federal Communications Commission requires that broadcast television be sent in the clear as a matter of public policy. The prospect of high-quality, unencrypted content, delivered digitally, scares Hollywood. Without watermarking, consumers could simply record their favorite shows, trade them with friends, or — worst of all — make them available on the Internet, � la Napster. Content owners are also worried about the computer as it becomes not just a stand-alone device but also a component within the overall home entertainment system. Says the BSA’s Simon: “That’s the multipurpose device that has them terrified.” The fear is that computers will leak copyrighted content all over the world, he says. And that, says Simon, is why the Hollings legislation is so broadly drafted. It’s designed to close up all the leaks that digital technology might pose. In the drafts made available in the fall of 2001, the Hollings bill would make it a civil offense to develop a new computer or related technology that does not include a federally approved security standard preventing the unlicensed copying of copyrighted works. In at least one version, the law would make it a felony to remove a watermark or flag from copyrighted content. It would also outlaw logging onto the Internet with any computer that removes or sidesteps the copy protection technology. Before the draft legislation was circulated, “we didn’t know how broad this was,” says one lawyer for cable company interests. Many cable companies are worried that the measure will interfere with their customers’ viewing experience. Although the Hollings legislation is controversial, its supporters are working to garner support. Preston Padden, the executive vice president for government relations for Disney, traces the origins of the bill to the Global Business Dialog on e-Commerce, a public policy group whose members come from a wide range of businesses. The group’s IP subcommittee is chaired by Eisner, who, after much give and take with software and computer companies, shepherded through language favoring government “facilitation” of copyright protection standards. With the group’s recommendations in hand, Eisner could go to Congress and say there was a general business consensus favoring the passage of new laws to protect content on the Internet. But there is a big difference between what that group generally recommended and what the Hollings bill specifically proposes. The devil will be in the details. IBM, Microsoft and other technology companies are all developing their own ways of protecting copyright. Their digital rights management schemes are generally based on encryption, not watermarks. These companies don’t want design mandates, which would effectively kill a market they are poised to exploit. Moreover, technology companies have a “philosophical problem” with being told how to build their technologies, says Disney’s Padden. With the exception of export controls on encryption, the computer and software industry does not have much experience with government mandates. Not surprisingly, Rick Lane, News Corp.’s vice president for governmental affairs, and the other content industry lawyers think that the computer companies need to get over it. After all, mandates have been a fact of life for the consumer electronics industry — particularly radio and television equipment — for decades. Forty years ago, for example, the government told television makers to build UHF-reception capability into all new TVs. The real problem runs deeper than mere resistance to government control. There’s a philosophical difference that separates the content industry from the technology companies. You can see that difference in the way each industry refers to its customers. The content companies refer to “consumers,” while the tech industry refers to “users.”If you see a world of “consumers,” your major concern is setting prices at the right level, so that buyers will purchase your products — while you still make money. You control access to your merchandise, and do everything you can to prevent theft. For the same reason that supermarkets have cameras by the door and bookstores have electronic theft detectors, content companies want copy protection to prevent theft of their wares. Allowing people to take stuff for free is inconsistent with their business model. But if you see a world of “users,” you want to give that market more features and powers for less money. The impulse to empower users was at the heart of the microcomputer revolution. Steve Jobs and Steve Wozniak, for example, founded Apple Computer Inc. partly because they wanted to put computing power into ordinary people’s hands. Redesigning the world of digital tools so that every device, application and operating system is on the lookout for copyrighted works is at odds with that view. What gets lost in the debate is the voice of consumers — whatever they are called. Maybe they are willing to trade away open, robust, relatively simple digital tools for a more constrained digital world in which they have more content choices. But maybe they aren’t. The Hollings bill is unlikely to attract them to the debate, pitched as a “security standard” rather than as a new copyright law. Like the larger philosophical war that is raging around the world in the aftermath of the terrorist attacks, the looming war between these two sides has the potential to be a long, difficult fight without a foreseeable conclusion. And if and when peace talks begin between the two sides, there’s no guarantee that the rest of us will have a seat at the table.

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