[Paleopsych] WP Outlook: The Battle Between Tinseltown and Techville

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The Battle Between Tinseltown and Techville

    By Drew Clark
    Sunday, April 10, 2005; Page B04

    Creativity and innovation aren't qualities you'd ordinarily expect to
    be at war with one another. Both involve a type of inventiveness, a
    vision of something new, a stepping outside of mental boundaries. Yet
    in America's courts, the companies that rely most on creativity and
    innovation are at each other's throats.

    It's a battle of culture as much as law. It's Tinseltown vs.
    Techville, the glamour people vs. the geeks, those who admire their
    finished products and those who never finish tinkering. And for each
    one, an important principle is at stake.

    The latest round of this fight features two small software firms,
    Grokster and Streamcast, vs. the entertainment giants, led by MGM and
    other studios, recording labels and artists' groups. In a case just
    argued before the Supreme Court, the entertainment firms say that
    Grokster and Streamcast, which help individuals copy movie as well as
    music files, must be shut down. The future of creativity is in
    jeopardy, they say. How will artists live if they don't receive
    copyright royalties?

    The technology industry, some of which holds its nose at Grokster and
    Streamcast's failure to obtain licenses for copying recorded
    materials, has united to defend their principal arguments in court.
    The high-tech industry says the future of innovation is at stake. How
    can engineers prosper if they're constantly looking over their
    shoulders for approval from Hollywood?

    Both sides in this clash have legitimate concerns. As with the
    original Napster, the music file-sharing service that taught the world
    to love free downloads, Grokster and its ilk don't pay licensing fees
    on the vast majority of songs and movies traded by their users. The
    musicians and recording labels are essentially being ripped off. But
    by whom? That's the essence of the question currently before the
    Supreme Court. And the overarching issue is: How far can the scope for
    digital copyright expand without threatening innovation?

    This isn't the first time that Hollywood and tech titans have duked it
    out. Napster awakened the motion picture studios to the danger posed
    by piracy on the Internet. The recording industry then vanquished
    Napster in court -- and Napster now sells music under license
    agreements with major recording labels. But Walt Disney and Fox
    Entertainment strong-armed their fellow motion picture studios into
    taking on even bigger adversaries: Apple, Microsoft, Intel, Dell and

    These computer and software companies were just as guilty as Napster
    because they refused to cooperate in the studios' efforts to lock down
    personal computers, according to the argument made at the time by
    motion picture lobbyist Jack Valenti. He and Disney CEO Michael Eisner
    enlisted the support of the then-chairman of the Senate Commerce
    Committee, Ernest "Fritz" Hollings (D-S.C.), who introduced
    legislation in March 2002 to force Silicon Valley to cooperate.

    If high-tech didn't come up with some anti-copying "policeware" within
    one year, the draft bill said, federal government would require that
    every digital device include technology to stop the copying of digital
    movies and music. Such a mandate would be absurd and impractical, the
    high-tech companies countered. They lined up congressional supporters
    of their own, and the Hollings bill died without even a committee

    The entertainment executives are no longer fingering Apple or
    Microsoft. Instead, entertainment companies are suing Grokster for
    releasing "peer-to-peer" software that enables someone on the Internet
    to search millions of other computers for the digital songs and movies
    "shared" by other users.

    Grokster doesn't copy anything itself, but the entertainment lawyers
    say it is guilty because its users abuse copyrights. By contrast,
    legitimate online services, like Apple's iTunes and Real Network's
    Rhapsody, negotiate royalties and licensing fees so that artists get
    their cuts. Hollywood and the recording industry are essentially
    saying to Grokster: It's our creative property and you need to shut
    down your brand of thievery.

    Not so fast, reply Grokster and the electronics industry. The original
    Napster was nabbed for contributing to copyright infringement because
    it listed the names and whereabouts of unlicensed digital music files.

    Grokster doesn't do that. It just releases software for individuals to
    use at their discretion. Echoing the "guns don't kill people" argument
    of those who oppose gun control, Grokster is effectively saying
    "peer-to-peer software doesn't steal music, people do." Hollywood
    calls that willful blindness.

    To the average teenage music fan, Napster and Grokster may be a legal
    distinction without a practical difference. The recording studios
    estimate that about 90 percent of the files shared using Grokster are
    being shared illegally. Searching for a handle in the case after
    losing the first two rounds in lower courts, both the Recording
    Industry Association of America and the Motion Picture Association of
    America have resorted to filing lawsuits against the individual
    computer users, too.

    The tech titans aren't worried about the teenagers and grandmothers
    being hauled into court. But with studios suing Grokster, the tech
    firms want to protect the Supreme Court's 1984 decision in Sony Corp.
    v. Universal City Studios.

    That decision legalized Sony's analog videocassette recorder, the
    Betamax. At the time, the motion picture studios said that 91 percent
    of all the videotapes made by consumers were copied without
    permission. The 5-4 decision was unusual because Justice Sandra Day
    O'Connor switched sides late in the session, forcing the case to be
    reargued the following term. She eventually joined the opinion of
    Justice John Paul Stevens, who took vendors off the hook as long as
    their technology was "merely capable of substantial non-infringing

    It was a pro-innovation decision, and one very much on the mind of the
    current Supreme Court. Justice Stephen Breyer asked whether the Xerox
    machine, the VCR, the iPod or even the printing press could have moved
    forward with a more restrictive standard. He suggested "the monks had
    a fit when Gutenberg" invented his printing press.

    "A very important part of the Sony analysis is that new information
    technology that benefits consumers is a presumptively good thing,"
    says American University copyright law professor Peter Jaszi.

    That's one reason the chief of the Consumer Electronics Association
    calls the decision "the Magna Carta for everyone who enjoys their
    iPods, TiVos, personal computers and electronic products." These
    companies see themselves as agents of capitalism's "creative
    destruction," vs. the status quo of Hollywood's existing means of

    Back in the 1970s, Hollywood feared that the Japanese videocassette
    invasion would destroy theater and broadcast syndication revenues. But
    Valenti's rhetoric -- he said the VCR "is to the American film
    producer and the American public as the Boston Strangler is to the
    woman home alone" -- proved hyperbolic. Instead, studios adapted by
    creating new revenue streams like cable television and VCR rentals.
    Home video rentals now provide the studios with more money than box
    office sales.

    A similar pattern happened earlier in the 20th century. The player
    piano, the phonograph, radio and television each forced changes in
    distribution. Often, Congress revised copyright laws to protect
    artists' royalties, but copyright holders also adapted successfully to

    Digital technology, however, poses a unique challenge to copyright.
    The law gives creators exclusive rights to exploit their works'
    economic value. Authors sell manuscript rights to book publishers, for
    example, and publishers use copyright law to stop pirate editions that
    pay no royalties to publishers or authors. Before the computer
    revolution, copyright worked because it was relatively easy to find
    pirate printing presses or factories forging bootleg records or films.
    The inconvenience of making photocopies, or audio or video cassettes,
    kept copyright violations in check.

    But the explosion of digital technology and the Internet has changed
    that equation. Digital copies are frequently higher quality than
    analog, and they don't degrade with each reproduction. And the
    Internet in all of its forms -- e-mail, the Web, peer-to-peer -- has
    slashed the cost of distribution. That erases one of the biggest
    advantages of the entertainment companies.

    Can innovation be used to protect creativity? The recording industry
    made an attempt to control copying by designing a "serial copy
    management system" in conjunction with Digital Audio Tape. Under a
    1992 law, audio recorders using DAT had to include this
    copy-protection system. These technological controls blocked
    individuals from using a taped copy of a song to make another copy.
    That angered consumers, however, and the medium never took off.
    Computers were exempted from the 1992 law, later enabling millions of
    people to "rip" compact discs into compressed digital MP3 music files
    on their hard drives. They loved that convenience, and they loved
    sharing those unprotected MP3 files.

    This brings us back to the current conflict between creativity and
    innovation. Single-purpose devices can be retrofitted to stop copying
    relatively easily. Audio compact disc recorders, VCRs and cable
    television set-top boxes are all built with anti-copying controls
    designed to limit users to none or one copy of a song, movie or
    television program. But when Hollings proposed the same thing for
    general purpose computers, techies decried the constraint on their
    ability to program and build digital devices. It went against the tide
    of innovation, which was merging technologies not separating and
    limiting them.

    This freedom to tinker is exactly what the techies fear they could
    lose if the Supreme Court sides with Hollywood and against Grokster.
    Why? Because every engineering decision and product design would be
    subject to legal review by entertainment industry lawyers.

    Technology companies from Microsoft to Apple to Grokster say they have
    a better way to protect copyrighted content. It involves digitally
    scrambling songs, movies and video games with encryption software,
    like the technology used to create digital versatile discs. DVD
    encryption leaves much to be desired, however; it has been cracked by
    a Norwegian teenager who spent three years defending himself against
    Hollywood's lawyers.

    Nonetheless, the approach has promise because it uses innovation to
    protect creativity, rather than using the courts to suppress

    It doesn't hurt that user-friendly software like Apple's iTunes and
    Microsoft's Media Player stand to profit if they, too, can keep
    adapting to innovations and become intermediaries in a more orderly
    digital media marketplace.

    Meanwhile, however, the entertainment industry will press forward,
    striving to extend the scope of copyright further into the digital
    world. No matter how the Supreme Court rules, we can expect the
    dispute to be back before Congress. When it is, Congress shouldn't
    forget that acting in the name of creativity could have dire
    consequences for innovation.

    Author's e-mail: [3]drew at drewclark.com

    Drew Clark is the senior writer for the National Journal's Technology
    Daily, an online Web site, and covers the politics of
    telecommunications, media and technology at www.drewclark.com.

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