The CBO Challenge – An opportunity to affect Congress, sort of
[NOTE: Eventually, this wends towards an opportunity to make a case against DRM to the CBO. Click here to skip the context.]
The lunchtime speaker at the World Economic Forum meeting I was at yesterday was the affable Douglas Holtz-Eaken, Director of the Congressional Budget Office. I found what he said to be surprisingly sympathetic, and just one (big) step short of being all the way there. (Covering my ass: Yes, the CBO accepts that creative works are property, a fundamental error. Work within the system for just a few minutes, won’t you, people?)
The CBO advises Congress, trying to give a whiff of reality to their more hare-brained schemes. Douglas’ message to the WEF meeting of entertainment and media honchos and honchas was: Move slowly. “A great deal of caution should be taken about changes in copyright law.” Why? Because the laws of unintended consequences are particularly applicable. He said he urges Congress to ensure sufficient property rights only to provide incentives for creativity, and allowing the greatest possible use of creative works. (Good. This is what our Constitution charges him with saying.) The market should be left to decide as much as possible, he said
Then he talked about the concentration of control: The top 5 record labels have 75% of record sales; similarly for movie studios. He said that there’s been a lot of focus on the decline on music shipments, but “in our research, this is far from agreed upon.” And it’s getting easier for consumers to create their own music. The same will happen for video. “We’ve seen lots of responses” to the empowering of users, he said. “For example, the top 5 music companies have cut costs by $1.4B.” He did not sound hopeful that that would be enough, however. Prepare for being vitiated, he seemed (to me) to be telling the industry.
Of the 36 bills currently being considered by Congress that bear on copyright and digital distribution, he looked quickly at three that are typical. One funds educating consumers on copyright laws. (Sounded like a “Scared Straight” for file sharers.) Another “targets egregious unauthorized file sharing” and criminalizes the gross ignoring of the law. The third, the infamous Inducement act targets those who “induce” copyright. He also mentioned the Broadcast Flag, an FCC requirement. (In the Q&A, I and another person asked if any of the 36 protect fair use and the users’ rights. He said, yes, some do quite aggressively.)
Then he argued for a market approach: “There’s no reason to craft copyright laws to protect the status quo. Instead we should focus on copyright as a means of allocating creative works.” He ended by saying: “One of the most interesting things is the ability of DRM to enact a vast array of different contractual arrangements between producers and consumers. Congress should forebear to legislate which type of DRM. And we’re aware of the law of unintended consequences.”
I liked a lot of this, but not the ending. I expressed my fear that the media consolidation he referred to would tilt the market so that our choices are to either accept the terms offered by Big Content or become cultural hermits…that DRM will mean that Microsoft Windows, with 97% of the OS market, will be the de facto player and if you want to see the new blockbuster or listen to the popular song, you will have to agree to whatever terms the producers care to set.
Douglas replied: “We worry about this. We’re open to someone making the objective, quantifiable case that that would happen.”
(We’ll come back to that in a minute.)
Yossi Vardi, the estimable founder of ICQ, pointed out that the “pirates” are also the people buying the movies, CDs, etc. They have a sense of a lack of fairness, he said. For example, Yossi said, can someone explain to them why the outrageous copyright extensions will make Disney more creative? (I compared the social consequences of the great Net lockout with what happened during Prohibition. Yossi thinks I ought to float that as a meme…)
Afterward, I chatted with Douglas. I reminded him that this drive for DRM is solely at the behest of the entertainment industry; there is zero customer/market demand for it.
I started to say that asking us to bargain away our fair use rights is akin to asking us to bargain away free speech. I was about to expand on this theme when he said, “I know. We raise that very concern in the report in your binder”: Copyright Issues in Digital Media (Aug. 2004).
The report is disappointing. Although it’s open-minded, balanced and chockablock with information, it reads to me ultimately like an argument in favor of DRM as way of enabling more flexible licensing agreements. (I am reading into it. It does nothing but suggest options.)
So, here’s The CBO Challenge: Douglas is open to an analysis that shows that DRM will lead to an unfair, anti-consumer weighting of licensing agreements. I’m no good at numbers, analysis, or truth-based claims. But many of you are. This is an opportunity. Can any of you make the case? I do believe that Douglas will listen.
Categories: Uncategorized dw
David,
This all hinges on the what the definition of “is” is… Sorry, I meant “forebear”. What does this mean??
Congress should forebear to legislate which type of DRM.
I know your audience was Big Media — that’s the perceived enemy in this game, but the trend is that content production is democratizing. Some of the tools of Big Media such as DRM and copyright are extremely important to micro-producers, as is the environment in which we produce. Just because we aren’t Big Media doesn’t mean we’re Creative Commons or open source or information wants to be free. We want an environment where our works are generally respected. It’s really tough sometimes to decide which side to be on… Big Media has its problems and excesses, but the free culture crowd would find it a lot easier to enslave us than Big Media.
Back to DRM. It sounds like lately like the free culture people want it banned, limited, or tightly regulated. Talk about just the way to entrench Big Media… If the regulatory scheme becomes like the tax code, only big players will be able to afford to protect their content. The rest of us get to produce for the good of mankind presumably (because we won’t be able to sell what people don’t have to buy). Unlock codes on shareware/trialware — that’s DRM. Outlaw it or regulate it so you can sample Britney Spears and Snoop Dog with impunity. Lovely…
Oh, the pain … I still have not recovered from the last time I did something like that, the DMCA exemptions. And I won!
Now, in a nutshell, there’s always the trivial-Libertarian argument, in the abstract – business flexibility is good, so maximizing contract is good, so laws must be passed to enable maximum power of business. And the market will fix anything.
Many, many, people are employed to state this basic argument in a clever and appealing way.
The hell of it is, the committee people actually *will* listen. But there’s no “credit” for winning if you’re not a lobbyist-type. And if you’re not a lobbyist-type, it’s much harder to do the sort of effort required. Because nobody is paying for it, and it’s just too detailed to be of use in self-promotion. At least this is my unhappy experience.
BTW David, your assertion here is false:
Afterward, I chatted with Douglas. I reminded him that this drive for DRM is solely at the behest of the entertainment industry; there is zero customer/market demand for it.
Software-based DRM has been a mainstay in the software industry at all levels for 20 years. It is the key enabling technology that has allowed the software industry to make much of its commercial product available online, and take advantage of the low cost distribution provided by the Internet to give customers things they have high-demand for: try-before-you-buy, fast upgrade cycles, prompt security fixes, etc. At the same time, it provides developers reasonable protection against theft by reasonable people. It also compartmentalizes the theives, because they must then traffic in illicit serial numbers or cracks in order to steal. They can rationalize all they want, but the thieves have to act like thieves to be thieves.
Consumers want digital content. Producers of that content want an assurance that they can monetize the products of their investment and labor. DRM is a technology that fascilitates that compromise. If you (consumer) don’t want it because it is too expensive or too locked down, DON’T BUY IT. If producers are too overbearing in licensing, DRM, or otherwise, they will lose money. If you (producer) can’t make money, DON’T MAKE IT!! That is the epitome of a market!!
That’s the epitome of a fair and open market. But in a market so dominated by a few commercial interests, customers can lack the realistic flexibility.
Besides, we pay an unreasonable price for letting Big Content enforce its will through hardware changes. Silicon doesn’t allow us to make judgment calls about fair use exceptions.
In figure 1.1 of the paper you reference, “Big Content” that is using DRM can account for a maximum of less than 50% of the copyright industry. To get that figure, I combine music, movies, and even cable. Figures in the paper say, for example, that 75% of music is controlled by the Big 5 distributors. DRM’d content from Big Content that is actually limiting people’s perceived fair use rights that those same people actually desire to exercise is a very small portion of that. For example, the only people I hear complaining about Apple’s DRM for iTMS and iPod are the professional whiners. And frankly, those of us with outside Big Content with chips in the game would much rather do battle on the “who is a professional whiner” playing field of the blogosphere than have to get into politics and lobbying. The malcontents make it easier.
If you tempered your argument to support “forebearance” (which is not a derivative of the non-verb “forebear” and thus the source of my initial confusion above) rather than an outright Ernest-style attack on DRM, we’d be on exactly the same page. To paraphrase George H. W. Bush… “FCC mandated broadcast flag — Baaaaaaaaahhhhhhd. DRM arrived at by the market — not gonna regulate it, wait n’ see.” I do not perceive that as what you’re doing though.
I thought this was relelvant:
http://www.ecyrd.com/ButtUgly/Wiki.jsp?page=Main_blogentry_210904_1
quote:
Dear Content Producers and Owners:
We lied to you. In the golden 80s and 90s we told you micropayments and content protection would work; that you would be able to charge minuscule amounts of money whenever someone listened to your music or watched your movie. We told you untruths which we well knew would never work – after all, we would’ve never used them ourselves. Instead, we wrote things like Kazaa and Gnutella, and all other evil P2P applications to get the stuff free.
We told you these things so that you would finance the things we really wanted to build, not the things that you wanted to be built. We knew all along that DRM schemes do not work, and we knew that whatever we create can be broken by us. We don’t care anymore, because your money made us bigger than you
…
(there is more, too.)
Software-based DRM has been a mainstay in the software industry at all levels for 20 years. It is the key enabling technology that has allowed the software industry to make much of its commercial product available online, and take advantage of the low cost distribution provided by the Internet to give customers things they have high-demand for: try-before-you-buy, fast upgrade cycles, prompt security fixes, etc.
The mainstay of the software industry is the fact that software DRM makes sense for software products. Creative works (music, film, books, etc) are rarely software based and aren’t assumed to have the same “when, where, how” limitations of software-based products. When I buy software I expect to be limited in use to hardware that can drive software.
The use of creative content is far more varied and far less restricted.
I don’t see the DRM argument as all-or-none, but between good DRM and bad DRM.
Good DRM takes human nature into account. The chances of someone having a key that can open my Rav4 are fairly slim. And once I’ve paid thousands of dollars for that key I’m not so willing to make duplicates to hand out to my friends. Did I buy a Rav4? Yes. But really, its the key to that Rav4 that has the real value. Software keys are no different – they confer ownership. And once I have a sense of ownership I’m not so willing to part with the critical element that makes it mine. Which is why I don’t share my license keys.
(In fact, what copyright owner wouldn’t love the distribution to be handled by the consumers so long as the consumer still had to buy the key to use that content? That’s a DRM scheme Toyota would LOVE! You want it? Get from someone who already has it, but pay me to get the key that runs it… )
The problem with DRM in this context (the control and regulation of creative works) is that it’s overwhelmingly intrusive. It tries to force upon the end user the “where, when, and how” they use protected content rather than the ‘to whom’ they might give it.
For instance, I have no problem with software that checks on a local network that another license of that software is running. That’s fair, I bought one copy, only one copy should be running at a time. The problem is restricting me to the computer on which it was initially installed – or worse, keying it to my processor (as high-end software often does). Whether on my laptop, my tower, or my all-in-one – who cares about the “where, when, or how”? It’s the transferability and creating a distinct clone for the purpose of running it concurrently that is the real issue.
The success of iTunes is directly related to the laxness of its licensing. Yet it is keyed. To me. And that simple step keeps 99% of the user base honest. It doesn’t assume I’m a thief, but rather a human being who will use the content in diverse manners and circumstances all of which are reasonable and many are unknowable by the content creator (and thus impossible to cover with overly restrictive DRM).
The choice is simple: Overly restrictive DRM that treats us all as criminals? Or lax DRM that treats us all as human but makes it easy to prosecute the real criminals?
It’s not that DRM is evil – just that the current trend for the content creator to control all aspects of the “when, where, and how” is antithetical to the notions of “creative works” or “human freedom”.
DRM should simply be a sign: “This is a product of value. Treat it as such.” It should confer ownership (at least ownership of use, not necessarily the underlying work). Controlling the “how many” is appropriate so long as the how many is how many instances of simultaneous use – not how many rooms in my house; and even there, erring on the side of laxness is preferable.
The DRM being hawked to us by those in Congress and the music industry treats every consumer as a criminal who must be stopped before they begin.
Good DRM embraces the notions of Fair Use, flexability, and the willingness of most consumers to “play nice”. It confers ownership. It should be non-intrusive. IMO, it should be driven by the market.
The last time I checked, Apple didn’t need to introduce federal legislation to enact its scheme. It thought about it, talked about it, and finally offered it up to the public – who have the last word.
All this discussion of DRM and what it may or may not have done in the software industry misses two key facts:
1) the software industry never had legislation passed to enforce their DRM systems. They have allowed the market to determine the right mix of protection vs. leakage.
2) the MASS MEDIA software industry (i.e. games) has run away from DRM.
Draconian DRM to protect a $100,000 ERP system is understandable as is the cost of dealing with that system on the part of the end user, but early game publishers tried similarly draconian DRM schemes and found that the cost in customer support and returns took away all their profits.
PC games are DRM-free (with heavy support costs), while consoles are eaten up with DRM (and minimal support costs) and the game industry still manages to outsell hollywood.
Haven’t any of the Big Content people read “Crossing the Chasm” and understood it’s lessons of minimzing cost and mazimizing ease of acceptance in the mass market?
They’ll spend billions trying to protect their content from the trivial leakage of people willing to endlessly dick around with their PC to download a movie, while missing the boat on the mass market who just want to stick a disk into their player and turn on the friggin’ movie.
While it’s cool that I can bittorrent a copy of “Sky Captain”, connect my PC to the TV and watch it, it’s a lot more fun to take the wife and kid to the theatre instead.
Sigh. Observe the problem: As the political saying runs, “You can’t beat something with nothing”.
Anyone can spin a story. If it comes down to dueling stories, the side with the better lobbying organization will win (and that isn’t us).
We can then repeat our beautiful story to ourselves, lionize the best story-tellers, wonder why the other side just doesn’t see how we are so obviously correct – and prepare to do all over again the next round :-(.