August 6, 2002

Is DRM “Inevitable?” — DRAFT [9:57 am]

(entry last updated: 2002-08-06 18:09:16)

(I’m off to a meeting, so I need to add some links to this - but I wanted to get the draft up before I head out. Comments welcomed - today’s links are in the next entry)

(Sorry - that was rude to the RSS feed collectors - see more below)

The latest round of discussions at the Internet Law H2O/Rotisserie has revolved around Palladium as a topic, focusing on its implications for the Internet. As good listeners to what we learned at ILaw, the comments so far have centered on two themes: (1) Palladium/DRM represent a change in the architecture of the Internet in ways that may adversely effect creative work and (2) Palladium/DRM is inevitable.

I am not in disagreement with the first of these themes, but the assertion of the inevitability of Palladium/DRM bespeaks a set of assumptions that I believe should be exposed to some reconsideration.

As I understand the argument that is presented to defend the inevitability of Internet/computer DRM, the major providers of music and movie/video content will never make their content available over the Internet without the protections that a digital rights management regime provides. Valenti of the MPAA and Rosen of the RIAA have repeatedly asserted that, in the face of expected and rampant piracy, respectively, the Internet will not be embraced by the movie and music industry without the imposition of hardware and software restrictions that will guarantee their “property” rights.

OK- I can understand that position. Essentially, what they are saying is that, if they use the Internet to distribute content digitally, then they will lose control over that content, and it will be hard for them to make money. I can see how that would be the case. Litigation is expensive and time consuming, and the uncertainties will make it hard for them to raise the capital necessary to run an Internet distribution network.

But here’s the key question: So what? Last time I looked, there wasn’t anyone forcing the MPAA and the RIAA to use the Internet for distribution of their product. If they don’t want to participate, they certainly don’t have to. If they don’t want to put their content on the Internet, they can continue to run their businesses using their traditional distribution channels.

But that’s not what they want either! Like everyone else, they recognize that digital distribution is the key to reduced operating costs. The CD and the DVD show that they “get” digital distribution. The problem they face is that, on one hand, if they use the Internet to save on distribution costs, they run the risk of reduced profitability through the loss of control. On the other hand, if they eschew the Internet, then they run the risk of losing profits because of higher distribution costs — and, they also face the long-term risk that someone else will figure out how to profitably exploit the reduced distribution costs of the Internet, driving them out of business altogether.

A nasty quandry for them. So, the solution is to get us to pay to make the Internet safe for their business model by purchasing new hardware that limits our ability to use digital data. And, since there’s no value proposition for this, they elect to go outside the market and get these restrictions legislated.

Here’s a proposed analogy. Suppose there’s a standing lunchtime basketball game at the local gym. People show up, teams are picked, and games are played on a regular basis. The games get bigger, and start to attract some of the local talent. The level of play improves, players learn new skills and get more competitive. A cooperative community develops where everyone gets something - skills, exercise, outlets. Then, one day, a retired NBA player shows up and wants to play - he needs the exercise and his knees won’t let him play one-on-one anymore - he needs a team game. Everyone is thrilled - by playing with him, they will learn more, and he will get the standard benefits - exercise, team play, etc. But, after the first game, the retired pro argues that a lot of fouls went unpunished because the current system is based on players calling fouls on each other. He says that he won’t play any more games until a referee is brought in — at the expense of the other players. What happens?

Right - the retired pro goes home. The games go on as before.

And, as long as the RIAA and the MPAA want us to pay these egregious prices, in both dollars and freedom, for the referee, they can go play elsewhere as far as I’m concerned.

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