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Matthew Rojansky is a law student and a fellow at Stanford’s Center for International Security and Cooperation.

The “Napsterization” of Digital TV
Grokster is in the hands of SCOTUS...
[Matthew Rojansky] 6/15/05

Hollywood is up in arms over digital media these days. The Supreme Court will soon decide whether Grokster, a peer-to-peer music service similar to Napster, could be held liable for its customers' violations of copyright law. Last month, meanwhile, the D.C. Circuit Court of Appeals unanimously overturned the Federal Communications Commission’s decision to require manufacturers of any equipment capable of receiving a digital television signal to make their devices read and obey a flag embedded in the signal by broadcasters. This “broadcast flag” would have allowed content producers to block unauthorized copying and distribution of digital programming, which is why the Motion Picture Association of America (MPAA) spent millions of dollars to fight consumer advocates in the courts and to win the FCC’s endorsement in the first place. Having lost the case, the MPAA is now pressing Congress to circumvent the courts and grant the FCC power to control manufacturers of devices ranging from desktop computers to cell phones. The entertainment industry’s efforts to strangle digital media in its infancy are a thinly-veiled assault on consumer rights, and, more importantly, a waste of time, talent, and goodwill that the industry may never recover.

Lawsuits and lobbying campaigns represent billions of dollars in expenses that are simply passed on to consumers in the form of exorbitantly priced entertainment. Is it really appropriate for consumers to expect to pay more for television, movies and music each month than for transportation, groceries or health care? The disproportionate cost of entertainment is especially glaring when the limitless resource of the Internet makes so much information of all kinds so widely available at no charge.

It seems to me the solution is not more regulation. Nor is the answer a costly and drawn-out legal battle to decide whether and to what extent producers can control digital content, and whether viewing, listening and recording device manufacturers should bear the burden of incorporating copyright enforcement tools into their products. Perhaps instead the solution should be continuing investment by the producers of music, television, and film in technologies that improve the depth and quality of the digital signals themselves, while making those signals more challenging to illegally decode and duplicate. Investment in technology instead of lawsuits at least seems more in keeping with the creative image of the entertainment industry--a valuable image that the recording industry’s campaign against Napster and Grokster, and the MPAA’s lobbying shenanigans, are rapidly destroying.

Let’s face it. Some people make their living by ripping off the intellectual property of others. Other people are simply endowed with tremendous natural abilities, and enjoy the challenge of deciphering even the most hacker-proof encryption technologies. Even if police departments devoted more of their already inadequate resources to tracking down and arresting every unauthorized copier of commercial works, some people still would not be deterred. The tougher and costlier the enforcement mechanisms, the more genuine creativity in entertainment is stifled for lack of funding, and the more likely whole communities of artists and their fans will be to migrate to inherently unfettered media like the Internet.

The good news is that most people have absolutely no desire either to cheat their favorite stars out of fair prices for the entertainment they produce, or to invest the time, money and energy required to circumvent even simplistic, inexpensive copy-protection regimes. The solution is therefore obvious, although it will be hard for the MPAA to swallow. Content producers must abandon their OPEC-style approach to mass media distribution in the digital age, and begin to sell their content at a price consumers are willing to pay, or face the consequences of losing market share to black and gray market competitors. So far only Apple, a relative newcomer to the entertainment world, has tapped into this philosophy with its innovative iTunes online music store. At around a dollar per song, though, the system still seems far too pricey for most music fans, especially when nearly 90 cents of each dollar goes to middlemen like Apple and the record companies.

In the century that has elapsed since the first silent films produced in Hollywood thrilled audiences around the world, billions of entertainment dollars from thousands of cities and towns have been funneled into the coffers of a few dozen international industry giants. The beginning of this process heralded the end for local playhouses and folk musicians. Now, a century later, the entertainment giants find themselves threatened by the next big wave, digital media, which may ultimately engulf the entire industry and disperse billions of dollars back into consumers' pockets. If traditional bastions of the entertainment industry, like the MPAA, want to retain the interest and loyalty of the audiences who pay their bills, they need to start thinking less about regulation and enforcement and more about how to offer greater value and convenience for digital age consumers. tOR

The author is a law student and a fellow at Stanford’s Center for International Security and Cooperation.






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