What's wrong with the DMCA?

DRM as a policy is a ticking time bomb for the recording industry. One trigger that has not been discussed much is the service life of the computers where people park their "rights". Right now we're all talking about piracy and fair use, but plain folks will understand the impact of the DMCA when they realize in 2006 that they can't give their old computer away to Grandma without losing access to all the music, movies, ebooks and other intellectual property they bought over the years. They can't back up their "rights" in case of a hard drive crash, either. They'll find that they've irrevocably tied thousands of dollars worth of licenses to a $500 computer with a three year service life. It's as if the music industry confiscated and crushed all your CDs, tapes, DVDs and LPs every time you bought a new stereo. That'll breed customer goodwill, alright.

The sad part of it is how eminently solvable the problem would be, if everyone approached it from a business perspective and not as a crusade. Most consumers of the media industry's product are generally law-abiding and will not resort to piracy if given reasonable options - in fact, they'll willingly pay more money if they perceive that they're getting more value. The high-quality audiocassette did not kill the vinyl record - that was accomplished twenty years later by the far more expensive CD. The VCR did not spawn rampant copying and kill the movie business, even though pre-recorded movies were relatively expensive.

Media companies didn't need the DMCA to legislate the problem away, either. They just gave consumers a reason to prefer the real thing, or the new technology. In the case of the failure of cassettes to supplant LPs, the hooks were cover art and liner notes. (Better sound was a red herring - most mainstream consumers listened to music on equipment that rendered the difference negligible, and continued to buy LPs even after car stereos became mainstream products.) The high cost of pre-recorded movies on video gave birth to a whole new industry of video rental shops, where people who wouldn't pay $80 to buy a movie cassette were more than happy to pay $2 a night to buy what we would today call a "time-limited right to use" the movie. And the mainstream buyers of audio recordings couldn't wait to switch from vinyl to CDs, even though the typical cost per unit increased between 50 and 100 percent. Remember, $8.99 was considered expensive for a vinyl album in the late 80s. Once CDs fell below $20, vinyl disappeared from the market within two years. And record companies didn't stop pressing records to force people to pay more for CDs. They stopped because nobody was buying them.

Technology moved ahead, and content producers found ways to leverage the new technologies to make their customers happier and themselves richer. Back then, technology and media complemented each other, and everyone benefited. Now, with technology and media at each other's throats, everyone loses. And the central cause of the problem is the DMCA, which causes everyone to dig in behind extreme, adversarial, and ultimately self-destructive positions.

The trouble with the DMCA is that it causes everybody to make irrational choices against their own long-term self-interest. The media companies can avoid changing their business model, and they can milk a few extra dollars out of the old one. The tech industry and the distribution channel can expend their energies fighting the Act instead of inventing the products and services that will, in the long run, enrich everyone in the chain. Consumers can grumble about their loss of rights, even though the ultimate weapon in this war resides in their wallets, and even reasonable people can dabble with piracy for much the same reason that the 55 mile per hour limit turned most drivers into speeding scofflaws on the superhighways.

With the DMCA providing the ammunition to both sides, this war can go on for a long time. But the concept of an industry treating its entire customer base and some of its creative allies as potential enemies seems questionable, and is probably unprecedented outside of the arms trade (where it is probably practiced far less often than it should be). In the short term, the advantage is with the companies who have the clout to get the laws written, but legal strategies cannot possibly win in the long run. Ordinary people will lose their audio and video collections - not a few people, but everybody, sooner or later. Some people will go to jail for "crimes" that almost everybody will have at least considered, and probably committed, themselves. And when buying and using media content becomes an ordeal, some clever person will invent a new kind of entertainment or a new distribution method that sidesteps the DMCA, and consumers will beat a path to his or her door. And that will be the end of the story.

But it doesn't have to be that way. (The previous sentence (c)1972 Jim Croce, but I don't think I've yet lost my fair use right to quote it). A few reasonable, creative people in key positions could invent new products, services and distribution channels through technology. If consumers responded positively, other companies would follow suit, or risk losing market share and artists. Within a few years, the DMCA could be largely irrelevant even if it's still on the books.

I don't presume to know what will work in this new world, but I imagine that as a first step the media world could learn something from tech companies, who went through their own anti-consumer experiment with copy protection at the dawn of the PC era. When too many buyers were unable to back up their $400 software packages, or were down for days waiting for new distribution diskettes to arrive, vendors responded by removing copy protection and implementing software registration. Registration allowed manufacturers to offer added services like telephone support to legitimate customers, and provided a channel for selling add-on products and upgrades.

Record labels and movie companies might take a similar approach, selling the equivalent of a basic CD or DVD for a set price - with fair use rights included - and offering supplementary content through the Internet using a copy-protected data area of the disc as a key. Even better, as long as most people have low-speed Internet connections, a registration code might be provided to enable hidden content that's already on the disc much as Microsoft's product activation is used to open up XP-class software. The code doesn't even have to be locked to a single computer - it can be portable, but usable on only one computer at a time. That way, a buyer can carry a disc from home to work and have access to all its features. Basic content could be copied to a portable MP3 player or (horrors!) shared with others, which might promote additional sales of the product (I know that one's controversial.) Since codes would be unique, a pirate who shares one would effectively be permanently giving away his or her rights to the added content. And the registration information could be used for more effective, targeted marketing of future releases.

What should the added content be? Figuring that out is where the creative people get to shine.

Through this simple method, honest people get fair use. Dishonest people lose much of the value of their purchase via a mechanism that's self-enforcing and final. Someone might make a copy of a CD to share, but without a code of their own the recipient gets just the basic content - which might drive them to the store to buy the original to get the extra goodies. Once the "product" is defined by the whole package and not just the basic content, the mainstream perception of "a CD" or "a DVD" will be redefined, and the transition's complete. Rights are protected, consumers are happy, and everyone's making money.

So there's one short-term solution that seems to satisfy honest people on all sides of the argument. It took me about five minutes to come up with it. Maybe it's a good idea, maybe not. But the technology and media people who know how things really work can come with better ones, I'm sure. They can create ways of using new technology to improve content and distribute it in a form that protects intellectual property, that preserves fair use rights, and that people can't get enough of. With that kind of products filling real and virtual shelves, the labels won't need a law to get people to do the right thing. They just will.

By the way, if you want to see how far we all have to go, read the transcript of Fox Corporation CEO Peter Chernin's keynote address to Comdex at http://www.comdex.com/news/fall2002/common/keynote_chernin.pdf . Marvel at the fact that, given the opportunity to address several thousand talented and influential technologists for 90 minutes, he chose to focus on piracy instead of innovation.

We have a long way to go.

©2002 Rich Stillman