'DRM' Protects Downloads, But Does It Stifle Innovation?

Of course it does, it also puts the boot on the throat of the consumer and stifles choice, innovation, and creativity. The following is a conversation between Fritz Attaway and Wendy Seltzer.

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Consumers now have the ability to buy digital versions of music and movies from a vast (and growing) online catalog. But that convenience has come at a price: Most of the digital content is packaged with technology called digital rights management, or DRM, a sort of copy protection that limits what users can do with the material.

The music and movie industries defend DRM as a means of protecting artists and publishers -- without it, they say, it would be too easy for users to abuse copyrights by illegally swapping files over the Internet. They also argue that without DRM technologies, publishers wouldn't have been willing to distribute their content in online music and video stores, such as Apple's iTunes.

But some consumer advocates argue that DRM often goes too far, treating customers as would-be criminals and putting burdensome restrictions on what they can do with music and movies that were legally purchased. (ITunes, for instance, allows users to burn music to an unlimited number of CDs, but limits the number of computers on which users can play purchased music.)

The Online Journal asked Fritz Attaway, a senior executive with the Motion Picture Association of America, to debate the issue over email with Wendy Seltzer, a law professor who specializes in intellectual property and First Amendment issues. Their exchange is below.

http://online.wsj.com/public/article/SB115047057428882434-1V_FEK_CJelMfytdST8APRW7cZw_20060720.html

Mr. Attaway begins: Hello, Wendy. It is a pleasure to meet you in cyberspace.  I am looking forward to a lively and informative discussion.

The answer to the question, "Is digital rights management being implemented in a positive way?" is a resounding yes. Positive, but not perfect. Let me explain.

Digital rights management is the key to consumer choice. The better the DRM, the more choices consumers will have in what they view, when they view it and how much they pay for it. The only valid criticism of DRM is that some of the DRM technology currently in use is not sophisticated enough. But it is getting better. Users of next-generation DVD technology will have more choices than they do today because the DRM technology will be more sophisticated.

Why is DRM the key to consumer choice? Because it allows content owners to tailor their offerings to what consumers want. Unless you believe in the tooth fairy, you understand that in order to make movies, which today average around $100 million in production and promotion costs for major studio releases, there must be a return. In other words, you must be able to get people to pay for the privilege of watching them. Many consumers want to own a permanent copy of movies. Others are only interested in having an opportunity to watch a movie once. DRM technology allows studios to offer copies of movies that consumers want to own, and a viewing only opportunity, usually at a much lower cost, to those who don't want a permanent copy. It is a win/win proposition for both the owner of the movie and the consumer.

I think I have used my allotted space, so Wendy, I will turn it over to you.

Ms. Seltzer responds: Thank you Fritz, it's a pleasure to have the chance to talk with you here.

Core to the question of DRM implementation today is the legal backdrop, the Digital Millennium Copyright Act's anticircumvention provisions. The DMCA stops us from innovating in technology around DRM-restricted media, by declaring those innovations to be "circumventions" if not pre-approved by the copyright holders. The DMCA thus stifles technology innovation and scientific investigation, as well as interfering with end-user activities that don't infringe copyright. Our culture and our technology opportunities are poorer for the DRM-DMCA combination.

You raise the example of DVD as a success story, but DVD players have hardly changed in the last decade. True they've gotten cheaper, but I still can't buy one (lawfully) that lets me take clips to create my own movie reviews or "Daily Show"-style send-ups of my favorite films. I still can't play movies on my GNU/Linux computer. When Kaleidescape tried to build a DVD jukebox to allow people to burn movies to an enclosed hard drive rather than shuffle jewel cases and discs, the company earned high reviews -- and a pricey lawsuit.

DRM plus DMCA protects existing business models, such as that of the blockbuster movie, but at the expense of new developments that could create more value for both creators and users of content. In the era of podcasts and YouTube, I'm quite interested in seeing what those users can do as they become creators.

Mr. Attaway writes: Wendy -- I have been hearing that the DMCA will stifle technology innovation since the day it was enacted in 1998. But there is absolutely no evidence to support that assertion. In fact, the record supports the very opposite conclusion -- the DMCA has been an incredible stimulus to both technology and marketing innovation. Just look at some of the new viewing opportunities that have become available to consumers in the past few months:

• Warner Brothers partners with Free Record Shop using P2P distribution

• Disney offers feature length film on iTunes

• CBS delivers college basketball "March Madness" online

• ABC offers free downloads at ABC.com

• Google Video beta launched -- essentially going with a wholesale reseller model -- creating an iTunes-like store.

The DMCA may protect old business models, but it also stimulates new business models, and movie studios are at the forefront in the creation of new business models based on innovative technology.

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What do you think about the copy protection used on digital downloads? Join a discussion.

DRM does not interfere with end-user activities any more than the electronic tags on the dresses you buy at the mall. DRM prevents you from breaking the deal you make, taking something you haven't paid for. If you pay for one copy of a DVD movie, the DRM prevents you from making 50 copies. What is wrong with that?

What about "fair use" -- a legal term meaning a use of a copyrighted work that is not specifically authorized by the owner? The ability to exercise fair use is greater today that it has ever been. The copyright office has conducted two proceedings since enactment of the DMCA and found that the DMCA has had no significant impact on the ability to exercise fair use. Every time the DMCA has been challenged in court on grounds that it interferes with fair use, the court has found that claim to be unfounded.

Bottom line: While you can assert that DRM and the DMCA have stifled innovation and fair use, the facts demonstrate the very opposite.

Ms. Seltzer says: Fritz, I think we're talking about different parts of the media experience here. You talk about new viewing opportunities, while I'm talking about technologies that allow "viewers" to become creators building on shared cultural reference. Each of the models you mention is a new way to package viewing, but none of them recognizes the wishes of users who want to do more than view, or those who want to view in novel ways that haven't been licensed yet.

Fair use protects the public's rights in copyright. It gives the right to make "transformative" uses of copyrighted works, such as parodic remixes and home-made music videos. The same tech law that prevents making 50 copies of a purchased DVD often prevents doing creative things with one.

Along with the broader doctrine of noninfringing use, fair use also leaves room for unanticipated uses -- the "time-shifting" of the VCR, the "pause" button on a TiVo video recorder, the "time-stretch" function of my home-built MythTV. None of those innovators needed to ask permission before offering their products. Under DMCA and proposed legislation, they would need to ask before working with DVDs, digital television, or digital radio broadcasts.

Further and unfortunately, it's hard to point to media technology that was never invented because its developers were too afraid of the legal climate to leave their garages.

If DRM is a dress tag, it has "enabled" the sale of dresses that, Cinderella-like, expire at midnight, and that prevents me from taking them to the tailor when styles change. I don't want that in my media any more than in my dresses.

Mr. Attaway responds: Wendy -- I think we are getting to the philosophical heart of the issue. You want to be able to take for free the intellectual property others invested their time, talent and money to create. I think those creators ought to be able to control, within reasonable bounds, how their property is used, and certainly to be able to extract the economic value of their investment.

"Transformative" uses are fine, but they cannot be given priority over the incentive to create new works. A central tenet of our fair use doctrine is that fair uses do not interfere with the ability of the creator to exploit the economic value of her work. You would strip the ability of content owners to prevent the making of unlimited copies for friends and family and even sale on the street corner, so that a few people might be able to make "transformative" uses of the works. I say the interest of society in the creation of new works should be the priority.

The good news is that as DRM technology becomes more sophisticated and discerning, content owners will be able to protect the economic value of their works AND provide consumers the flexibility to make transformative and other fair uses. Our goal should be to improve DRM, not kill it.

At the risk of over working the dress analogy, you suggest that your dress should not disappear at midnight. But if you only paid to use the dress until midnight, what is wrong with that? As I said, DRM only requires you to abide by the deal you have made. If you make a deal to rent a movie, you should not expect to be able to make a permanent copy.

Ms. Seltzer responds: Fritz, I have not been asking for media free of charge. I have been asking for it free of usage and interoperability restrictions that go beyond copyright. The difference is critical -- I fully support a market in which creators are compensated for their works, but not one in which a creative industry can monopolize cultural reference and the technology around its works.

The copyright balance is that both creators and the public get the returns on investment, neither to the exclusion of the other. None of us creates from scratch, rather one creative work is input to the next.

I'd gladly pay more for fully usable media. The problem is that I don't just want to see my own creative output, but the works of the public around me. DRM hides the choices from us until we have a whole ecosystem of limited-use devices: iPods that need their songs re-purchased after one too many computer crashes; first-generation HDTVs that won't work with the next generation of HD-DVD players; and movies you don't realize you can't re-mix until you have a flash of inspiration after Jon Stewart's Oscar show.

I would ask you how you justify DRM that does not stop the commercial pirates -- we all know they use even more sophisticated copying than the still-available DeCSS -- but does interfere with noncommercial transformation.

Mr. Attaway responds: Wendy, you have brought up what should be the key word in this discussion: balance. You are absolutely right -- copyright is a balance. And DRM is essential to achieving that balance.

Consumers should have a choice to either own a copy of a movie for multiple viewing, or to just view it one time for a much lower price. And movie companies want to provide that choice, and many more. But without DRM, every transaction would have to be priced as a sale, not just of one copy but of many copies, in order to account for unrestrained copying. Why would anyone purchase a higher-priced sale copy of a movie if he could simply rent, rip and return -- that is, rent, make a copy and return the original?

To repeat my refrain, if there is a problem, it is that DRM technology is not sophisticated enough to provide the optimum balance. The content industry is working hard with the technology industry to improve DRM and the options available to consumers. Good public policy will encourage that process by promoting the development and implementation of DRM.

With regard to your comment that many DRM technologies can be circumvented by commercial pirates, you are correct, but DRM is not intended to prevent commercial piracy. It is intended to insure that most consumers will keep the deal they make with movie distributors. Like the lock on your door, they are not a guarantee against theft, but they "keep honest people honest."

My plane is about to leave, so I must sign off. This has been great fun. I hope we will have an opportunity to continue this important discussion at a future time.

Ms. Seltzer concludes: Thanks Fritz. We're both talking about balance, but our equilibrium points are very different. You seem content if we can pay in lots of different ways to see the same movies on a constrained set of devices. I see balance in an ecosystem of big and small media and independent innovation of technologies around them. I want to see what iPod for movies and TiVo for radio look like, and not just from companies who can strike deals with the major movie studios and record labels before they start.

DMCA-backed DRM lets the majors dictate the terms, well beyond price, on which we can use and interact with media. It makes copyright's limited monopoly into a technology regulation, a gate on hardware and software development through which only "approved" devices can pass. More sophisticated DRM will not improve that problem, just make the approvals more onerous and the range of consumer electronics smaller.

Nobody wants a door lock that locks its homeowner out too often. The law can support DRM in the short term, but as more and more honest people trip against its restrictions on their noninfringing activities, I predict they'll press Congress to change the law to allow for creativity in media and technology again.

Have a good flight.  I too enjoyed the conversation and look forward to continuing it.