March 2004
The Center for Democracy & Technology is a non-profit, non-partisan public interest organization dedicated to developing and implementing public policies to protect and advance civil liberties and democratic values on the Internet.
This report was researched, written, and produced with the generous support of the John D. and Catherine T. MacArthur Foundation, the Glushko-Samuelson Foundation, and other CDTsupporters.
Copyright © 2004 Center for Democracy & Technology
Adobe Acrobat version of the report
Introduction
I. Stakeholder Overview
Content Producers
Information Technology Sector
Consumer Electronics Manufacturers
Consumers/Public Interest
II. Issue Breakdown
Digital Television
Analog Reconversion
Peer-to-Peer File Sharing
Law Enforcement
Digital Distribution Business Models
Conclusion
Acknowledgements
The increasing distribution and use of video, music, and other content on digital media have given rise to a major policy debate over how to protect copyright holders while meeting consumer expectations for the digital transformation. The debate is complex and polarized. New copy protection laws and regulations, new business models for digital distribution, and new and sophisticated copy protection technologies have been put forward as parts of the solution. Stakeholders include movie studios, record companies, book publishers, video game producers, computer software companies, hardware and chip manufacturers, consumer electronics companies, libraries, universities, consumers, and the public at large. Policy makers, business leaders, and technologists are all involved. The outcome of the debate will define for decades to come how Americans watch TV, listen to music, and use their computers.
While the digital copyright debate encompasses a wide variety of issues, including music file-sharing, software piracy, and protection of e-books and video games, we focus in this report on the issues surrounding protection of video content and growing concerns about online trading of movies and television programs. Although copying of music may be the most well-publicized problem faced by a content industry today, copying of video is the storm on the horizon. The movie and television industries' proactive attempts to preempt indiscriminate redistribution of their content over the Internet now dominate much of the policy discussion about digital copyright and may set far-reaching precedents.
The Center for Democracy and Technology is a public interest organization dedicated to promoting democratic values on the Internet, supporting both the rights of content creators and the free flow of information. We are seeking balanced solutions that protect both the interests of copyright holders and the interests of consumers in an open Internet that fosters new forms of communication and expression. To aid in understanding the digital content protection landscape, CDT has conducted extensive research into the positions of key stakeholders, including one-on-one interviews and group consultations on major policy proposals. This document represents CDT's attempt to fairly describe the viewpoints of key participants in the digital copyright debate, as a prelude to exploring consensus solutions.
The report is divided into two sections. In Section I, we catalog in a general way the perspectives of major stakeholders in the video content protection issue. While the major stakeholder groups rarely speak with one voice, and many stakeholders arguably fit in more than one group, we have attempted to provide a detailed look at the interests of four main groups:[1]
In Section II, we focus on five main issue areas in the content protection debate. In each area, we provide some background and then attempt to describe the perspectives of the four main stakeholder groups on that issue. The five areas we focus on--digital broadcast television, the "analog hole" problem, peer-to-peer file sharing, copyright law enforcement, and new digital distribution mechanisms--are not the only areas of active policy debate, but they represent a cross-section of the issues that policy makers will be asked to consider in the next few years as efforts are made to protect video content online.
In an effort to visually map the stakeholder interests, we have also compiled a chart summarizing the positions of the four major groups on six specific issues related to the policy areas described above. These issues are:
This "matrix" appears at http://www.cdt.org/publications/copyright-matrix2.shtml.
At this time, there is no consensus approach to preventing massive or indiscriminate redistribution of content online. As this report shows, a variety of solutions are being considered. The emergence of the broadband Internet, with all the potential it holds, heightens the importance of ensuring digital copyright protection while also allowing users to take full advantage of the constantly changing, democratic medium of the Internet.
The digital copyright debate is rapidly evolving, and this document is simply a snapshot of one manifestation of the debate. We look forward to ongoing discussions with all stakeholders to contribute to the development of balanced solutions.
The "content industry" includes a diversity of stakeholders, including movie and television studios; music production companies; publishers of books and other written works; broadcasters; computer software companies; and video game makers. Large media companies span many of these categories. These groups differ greatly in their business models and approaches to content protection. For example, software companies have historically been vocal proponents of strong protections for digital content, but they disagree with many of the policy proposals put forth by the studios.[2]
For purposes of this paper, we use the term "content producers" primarily to refer to movie and television producers, the recording industry, and closely associated groups. The perspectives of some other content companies, in particular software or video game makers, are included in our discussion of the Information Technology (IT) industry.[3]
The content industry is the driving force in the digital content protection debate. Much of the current discussion on digital copyright and the use of DRM technology is focused on proposals from this industry, which faces the greatest potential threat from widespread copyright infringement.
The studios we spoke with see great promise in digital technologies. They have made millions in sales of DVDs, and are pursuing technologies like digital distribution of movies to theaters and consumer movie delivery methods like MovieLink. Benefits of digital technology for studios include:
At the same time, content producers are deeply concerned about the threat that digital technologies pose to their ability to control the distribution of their works. Millions of people regularly use peer-to-peer programs to download copyrighted songs without paying for them, and the music industry attributes major revenue losses to file sharing. The movie industry fears becoming victim to the same kind of widespread piracy over file-sharing networks. Arguing that "one can't compete with free," both the music and movie industries believe that file-sharing and other digital copying will destroy their businesses and their artistic control unless stopped. While many feel it is too late to digitally protect music against redistribution, movie and TV studios strongly believe it is both possible and essential to act now to protect their business. Studios are very concerned that if file sharing of high-quality video files becomes common, users will begin to "expect" free movie content, and the studios are anxious to preempt any such video file-sharing "culture."
The threat of digital redistribution over the Internet is particularly acute for movie studios and other video content producers because their business models are highly dependent on "repurposing" programming. The studios' revenue depends on the ability to resell movies and shows repeatedly in different media and locations. A new movie might be distributed sequentially to theaters, on airplanes, on pay-per-view, on premium cable, by rental, by sale, on basic cable, and on broadcast television, and might be released abroad at different stages. Television programs may follow similar paths. Revenue is extracted at each step, with the later distribution streams--especially television syndication--as profitable as the first.[5] If these secondary markets are compromised by piracy, studios will be unable to gain the full value of the works they create.
Content producers are looking to DRM technologies and digital distribution channels as ways to enable even more focused distribution models. They envision a future in which consumers have many choices in the ways they receive their entertainment, from short-term rental downloads to long-term sales. Without effective protections from digital piracy, these new offerings will not be possible--the studios will not risk exposing their high-value content to widespread unauthorized redistribution.
The IT industry is diverse and rapidly changing. For purposes of this analysis, the "IT industry" broadly includes:
In contrast with the relative unity of the content industry, IT does not speak with one voice on many copyright issues--as is apparent from the list above. Companies have a range of opinions on fair use, the DMCA, and the broadcast flag. On some issues, however, particularly concerns about technology mandates, the industry has been increasingly unified. In general, IT companies tend to be sympathetic to copyright concerns but highly skeptical of proposals that might hamper innovation or new uses.
Many IT companies are themselves copyright holders and enforce their intellectual property rights vigorously. IT companies rely on good content to drive use of their products. The growing digital use of multimedia--from home movies to industry offerings--drives sales of new computers, broadband Internet access, and CD and DVD players and burners.
At the same time, IT companies are also part of a computing and communications revolution. They are developing new ways to use and send content, deploying faster networks, and experimenting with new business models. Their businesses are based on a tradition of innovation and rapid change, and their experiences give them a greater comfort level with technology. IT companies are supportive of allowing consumers wide uses of content. They also support experimenting with new business models.
IT companies are particularly wary of government technology mandates. Many companies in the IT sector view government control over technology design as anathema to innovation and rapid change in IT. Historically such mandates have been widely opposed in copyright, as in other areas like encryption, wiretapping, and content control. Allowing the government to pick technology "winners" is viewed as a threat to new, unanticipated technologies and innovation.
With experience in the digital environment, many IT companies have a greater comfort level with tradeoffs in copy protection. Software and game makers, for example, have learned to live with piracy even as they vigorously combat it; the software industry faces piracy rates as high as 40%. In contrast to the "zero tolerance" approach of some content companies, many IT companies believe that not every download is a lost sale and that stopping all infringement is either impossible or prohibitively burdensome.
Many IT companies are particularly interested in protecting the flexibility and openness of the general purpose computer and the Internet. These companies believe that such flexibility and openness have led to the explosive growth of the computer and the Internet and their contributions to productivity. By treating all bits equally and not prejudicing particular applications, the general purpose computer has an adaptability that has driven innovation and created new markets and business opportunities in a variety of fields.[6] There is concern in the IT sector that some copy protection proposals threaten this approach.
Overall, the touchstone for IT companies is creating copy protection solutions that are consistent with technical realities and do not jeopardize innovation and experimentation with new business models. That view is manifested in IT companies' concern that many content protection solutions proposed by content producers may do little to prevent copying threats while imposing significant costs on technology manufacturers and on innovation. For this reason, before new regulation, IT companies tend to support enforcement of current laws and experimentation with new distribution methods that might help reduce the digital piracy problem by satisfying unmet consumer demand.
We include in the category of "consumer electronics" the manufacturers of the wide range of dedicated consumer products for accessing and manipulating content--televisions, VCRs, and DVD players, as well as portable music players, digital cameras, etc. As such dedicated devices begin to converge with general purpose computers, the line between CE and IT companies has begun to blur.
The consumer electronics (CE) companies have a symbiotic relationship with the content industry. But while CE companies want to support the content industry's efforts at protecting content, they also wish to protect their users' ability to make wide use of the content they acquire. This tension has led to some divergence of opinion among CE companies about how best to approach the digital copyright issue.
Much of CE companies' business is based on selling consumers devices to play and manipulate high-quality entertainment. In order to ensure a steady stream of content for these devices, CE companies have pursued good relationships with the content industry. As studios have become increasingly concerned about protection of their content, they have asked the CE industry to incorporate stronger protections for copyrighted material into the devices they sell.[7] As a result, CE companies are making content security a high priority--especially for broadcast DTV, where consumer uptake has been slow.[8] The CE companies hope that, by demonstrating that studio content can be secure over DTV, they can achieve a stable commitment from the studios to continue broadcasting DTV programming.
At the same time, consumers constantly desire new features in CE products, such as the ability to play MP3 music files on their DVD players, or the ability to share TV shows between DTV sets in their houses. Each new feature has the potential to become a "must-have" for thousands or millions of consumers, creating whole new markets for the industry. Some CE companies are worried that aggressive steps to protect digital copyright--such as the use of inflexible DRM systems, or the application of license terms that tie a company's hands in crucial areas--could constrain their ability to offer such new features. They strongly want to find a solution that will preserve their competitive ability while adequately protecting content to satisfy the studios. Although the companies do not wish to jeopardize their relations with the content industry by appearing to sell products that exacerbate the digital piracy problem, they want to provide consumers with innovative new devices.
The innovation concerns of CE companies are greatly heightened when government technology mandates are considered. While CE companies are not opposed to certain limited regulations on technology to achieve content protection goals, they emphasize that such regulations should not be passed over the objections of their industry and that voluntary agreements, when possible, are greatly preferable to government action.[9] While they have supported narrow regulation in some areas related to content protection--namely DTV and digital cable--they have forcefully opposed it in other areas. The CE companies are particularly wary of limits on consumers' uses within the home of lawfully acquired content beyond what the CE industry has already agreed to.
Traditional consumer advocacy groups, Internet user organizations, libraries, schools, special needs and disabilities groups, and academics all have spoken out in the digital content protection debate.[10] Ideally, we would have liked to include in this section the views of the public at large in addition to the perspective of the various groups that aim to speak for the public. But by necessity we have limited our focus in this section to the views of advocacy groups and individuals speaking out in the name of the public interest. The deployment of large-scale surveys to gauge actual public opinion was well beyond the scope of this project. Moreover, widespread public interest in and education about digital copyright issues has unfortunately been limited thus far.
While public interest groups typically share the same high-level goals, they often disagree considerably about the relative importance of specific issues. Thus, while public interest organizations usually took similar stances on the problems we presented, how they framed the issues and what aspects they chose to emphasize sometimes differed substantially.
Like all of the groups we interviewed, public interest advocates shared a commitment to the importance of content protection in promoting creation of artistic and other content. User advocacy groups recognize that the public has a strong vested interest in the continued expansion of high-quality content. They recognize that incentivizing the creation of content through copyright protection is one of the most important ways of pursuing that end and they respect the needs and rights of creators.
However, some user advocates question the content producers' description of the extent of the threat posed by digital copying. For example, they argue that the music industry's recent downturn can be better attributed to broader economic woes and the industry's creative choices than to piracy.
Among the things that set public interest groups apart from the other groups we interviewed was their emphasis on empowering users. Public interest advocates argue that advances in digital technology have not only created new ways of accessing content, they have also helped to democratize its production by putting the creation and wide distribution of creative works within the reach of private individuals. They argue that if copy protections prevent users from copying works and expanding on them in historically protected ways, much of the advantage of the digital transition will be lost. Traditionally protected uses include time-shifting (recording a show or movie to watch later) and archiving (creating a library of favorite shows or movies), as well as excerpting, parodying and otherwise reproducing material as part of protected "fair use." Advocates of this position argue that preserving these rights fuels core values of civil society by promoting balanced, high-quality public discourse. Some public advocates caution that over-protection of content--as well as under-protection--can have a centralizing or chilling effect on the creation of content.
Public interest groups also want to see innovation continue free from unnecessary restrictions. They argue that public choice is best safeguarded when communications networks and devices are designed for openness and flexibility. They emphasize the importance of open standards and healthy competition in securing this end and are skeptical of regulatory approaches that might "lock-in" particular technologies or insert government unnecessarily.
Public interest groups are also concerned that privacy and free speech rights not be threatened by new copy protection initiatives. While they recognize the difficulties confronted by the content producers as they seek to protect their rights against widespread and flagrant violation, user groups insist that due process be protected as these efforts are pursued. At the same time, some public advocates are concerned that the expanding use of technology measures to protect content could have negative effects on people's rights and on public discourse.
Public advocates raise concerns regarding the impact of content protection initiatives on the consumer experience. Consumers' investment in television and home entertainment equipment spans over fifty years and well over a billion dollars. While digital television holds the prospect of great benefit for consumers, an abrupt transition from analog to digital could render a great deal of existing equipment useless. Advocates point out that in order to avoid this legacy problem, consumers will want their new, digital devices to interoperate as smoothly as possible with the older, analog devices already in their homes. These groups stress that people will not want to see usability and interoperability sacrificed as part of the digital transition.
Another major set of questions of concern to some consumer groups relates to the Internet and its role as an open, decentralized, user-controlled medium supporting democratic engagement and ever-expanding means of communication and expression. These groups want to ensure that DRM does not "leave out the Internet," that is, that users continue to have the ability to engage in legal sharing of information in creative ways over the Internet.
Until recently, user interests were often not directly represented in discussions of digital content protection, including the proceedings of the Broadcast Protection Discussion Group (BPDG) and the legislative negotiations surrounding the Digital Millennium Copyright Act (DMCA). Public interest groups are now asserting a role in digital copyright discussions.
In 1996, the Federal Communications Commission (FCC) approved a standard for digital broadcast television (DTV). Digital TV offers a significant improvement in picture quality. Moreover, because digital broadcast makes more efficient use of spectrum, the transition will give consumers access to more channels while freeing a substantial portion of the spectrum for other uses. The DTV transition is well under way--already, more than 80% of commercial TV stations are on the air with digital broadcasts. Consumers have been slow to purchase digital television receivers, however, and the vast majority of televisions in use still use old analog technology. The FCC faces tremendous pressure to speed the adoption of digital technology so that it can reclaim the valuable spectrum that is now used for analog TV broadcast. The goal is to accomplish this transition by 2006.
The piracy concerns of content owners represent a potential hurdle to the digital transition. Content owners argue that content broadcast in digital form is more easily captured than analog broadcasts and can be copied with perfect fidelity. Some content companies have said that they will be reluctant to release "premier" content for digital broadcast until this problem is solved. If offerings on digital broadcast are limited or low quality, consumers are unlikely to make the switch from analog.
In an attempt to address the concerns regarding piracy of digital broadcast content, the FCC adopted a set of regulations in November 2003 that will require all equipment capable of receiving DTV broadcasts to include federally approved content protection technologies, starting in 2005. Under the system created by the FCC, devices will have to monitor all digital broadcasts for a mark--or "flag"--that indicates the broadcast should be protected. Using encryption or another method, approved content protection technology will keep users from copying "flagged" content onto online peer-to-peer networks or otherwise engaging in "indiscriminate redistribution" online.
The implementation of the Commission's regulations, including the method by which content protection technologies can become "approved," is still being worked out in ongoing FCC proceedings. In addition, the flag regulations face potential court challenges, alleging that the FCC does not have the authority to mandate the broadcast flag regime. If legal challenges succeed in stopping or slowing the flag, Congress will be urged to give the broadcast flag effect. If Congress takes up the flag issue, a wholesale reconsideration of digital broadcast content protection, including a variety of issues already decided by the FCC, is possible.
Broadcast Encryption: The broadcast flag is not the only proposal for protecting DTV content. DTV movies and shows could be protected from piracy by encrypting the digital broadcast. Broadcast encryption would "scramble" the DTV signal broadcast over the air so that any person without an authorized "descrambling" (or decrypting) device could not receive it. "End-to-end" encryption of this kind is already used for Digital Broadcast Satellite systems such as DirecTV, for digital cable, and for the studios' Internet movie delivery service, MovieLink. Properly implemented, such encryption can be very difficult to circumvent. Broadcast encryption was rejected by the FCC because it would render existing DTV receivers incapable of receiving broadcasts without a converter box or other upgrade. However, some groups continue to point to broadcast encryption as preferable to the flag scheme, and the approach may receive another hearing if the issue of broadcast television content protection comes before Congress.
Content producers view the proposed broadcast flag regulation as the best solution for protecting DTV broadcasts against piracy. Movie studios proposed an early version of the current flag regulations to the FCC and have been among the flag's strongest supporters.
The studios emphasize that neither the flag nor the DRM it signals will prevent users from making copies of broadcast content within their home on compliant devices, but that the flag will prevent massive unauthorized redistribution on the global Internet.
While studios concede that the protection afforded by the flag system is imperfect, they believe that the flag will keep unauthorized redistribution at an acceptable level. The studios maintain that the flag regulation will allow for a wide variety of authorized content protection technologies and that it will have a minimal impact on innovation and competition in DTV products.
Finally, the studios dismiss concerns that the broadcast flag will be expensive to implement. They argue that the regulation reaches just one DTV component, the demodulator, and that implementing the required protection will be inexpensive at scale.
Broadcast Encryption: Although the studios acknowledge that an encryption-based system would be effective, they do not prefer the use of broadcast encryption for DTV. The studios point to the problem of legacy DTV sets--and point out that retrofitting these sets with decryption hardware opens vulnerabilities, since such decrypters could create an easy channel of unprotected digital content for DTV pirates.
The studios also point out that a broadcast encryption system could be less innovation-friendly than a broadcast flag system. Some process for providing access to decryption keys would need to be created, just as the broadcast flag rule requires a process for "authorizing" DRM systems to receive flagged content. In the case of encryption, however, unauthorized devices would be unable to receive DTV broadcasts at all, potentially hindering innovation in ways that might be unpalatable to device makers, lawmakers, or consumers.
Above all, the studios believe that lawmakers and regulators will not accept any DTV proposal that departs from the historic availability of free over-the-air television in America--and so they have supported a solution they believe is more politically viable.
The IT sector has remained deeply divided in its view of the broadcast flag. While sympathetic to the content protection concerns that motivate the flag, many IT companies are wary of rules that they believe may chill innovation or unduly restrict consumers' uses of content, and they question the cost of a system they believe may be of limited benefit. However, a notable few have more readily embraced the flag as a reasonable measure and an opportunity to build content protection technology. A third group of IT companies has refrained from taking any public position.
The broadcast flag regulations directly implicate the IT industry, since computers and digital networks are expected to play a major role in the distribution and use of video programs. IT companies expect that computer users will increasingly expect to move, copy, and send video content within their homes and online. The potential impact of the flag regulations on "downstream devices" authorized to use DTV video will directly affect hardware and software makers and network administrators. For this reason many IT companies were deeply involved in the development of the flag as part of the Broadcast Protection Discussion Group (BPDG).
The core issue for IT companies concerned about the flag is creation of a "gatekeeper" that must approve new video copy protection technologies before they may be sold to consumers. Under one proposed technology approval process, the primary method for selecting technologies would be based on the determination of a subset of studios.[11] Such an authorization process is anathema to the innovation-oriented IT industry. IT companies argue that allowing the content industry to veto new technologies could limit new uses of content--like sending programs in a wireless home network or securely transmitting excerpts of video over the Internet.[12]
Many IT companies have questioned the costs and benefits of the flag. Their hardware and software will have to incorporate mandated protections, and the substantial costs of building those technologies will be borne by them, not those whose content is protected. At the same time, some believe that the benefits of flag protection are limited. They point out that because DTV would still be broadcast "in the clear," it will be trivial (though illegal) to build or import devices that do not comply with the flag and allow unlimited copying.[13]
More broadly, some IT companies are concerned about the impact of the flag on the general purpose computer and the open Internet. Computers and networks generally handle all data equally; the flag would create a federal mandate to design computers with capabilities to handle certain data differently. Some companies are concerned that such regulation creates a dangerous precedent for broader regulation of computing, for content protection and other purposes. It also involves a new level of regulation of computing by the FCC.
Broadcast Encryption: Some IT companies have been among the leading supporters of protecting content by encrypting the DTV broadcast signal. The proposal offers a greater level of copy protection and also places primary responsibility (and cost) on the producers and broadcasters of content. Such a system is also perceived as requiring less direct regulation of computing by the FCC and is viewed as posing less of a threat to innovation than the flag scheme.
Supporters of broadcast encryption among the IT industry acknowledge the legacy DTV problem. But they argue that the additional hardware needed to allow existing TVs to receive the encrypted broadcasts would be inexpensive (although they have not addressed concerns that such hardware could be used to circumvent protections). They are aware of lawmakers' historic reluctance to endorse proposals that could be interpreted as restricting public access to broadcast television, but at least some companies believe that this reluctance could be overcome were the case for broadcast encryption made well.
CE companies have been advocates of the DTV transition. They believe that digital technology offers a higher-quality experience and increased functionality that customers will find desirable. CE companies want to work to address the piracy concerns of content holders to get the DTV transition moving. The companies accept that, for DTV, regulation seems unavoidable--some legal mandate is needed to ensure that device manufacturers respect the flag. The companies' support for the flag is rooted in this belief. They emphasize that any approved rule should be narrowly constructed and minimally intrusive. Most of the CE makers believe the broadcast flag, if implemented properly, can substantially meet these criteria.
But while they are willing to assist the content industry by adding robust content protection to CE products, CE companies do not wish to see this project dominate the direction of their industry. Maintaining their freedom to innovate and produce competitive products is extremely important to CE makers, and they are only willing to go so far in their efforts to protect studio content. The CE companies emphasize the importance of protecting users' ability to make reasonable uses of content they acquire. They emphasize that technologies approved under the flag regulations to protect content[14] should be flexible, and that the process for authorizing such technologies should promote innovation. In addition, they strongly want to avoid any actions that would make obsolete, or impair, products already in consumers' homes.[15]
Some CE companies also emphasize that authorized protection technologies should be made available under minimally restrictive terms. These companies do not want to see the licensing agreements for protection technologies become a way to control the direction of the CE industry.
Broadcast Encryption: CE manufacturers share the concerns of the content industry that a broadcast encryption scheme is not politically viable. CE makers' more immediate complaint about broadcast encryption is the legacy device problem. Most CE companies strongly oppose broadcast encryption for this reason.
Consumer groups are distressed by the broadcast flag regulations. They believe that the broadcast flag is both under- and over-restrictive, i.e., that it could prevent legitimate consumer uses of content and stifle technological innovation, while failing to substantially inhibit illegal redistribution of content. They also worry that the broadcast flag regulations have the potential to hinder innovation and block reasonable, legal uses of broadcast content.
In arguing that the broadcast flag is overly restrictive, public interest advocates point to the inability of technological protection measures to differentiate between illegal copying and protected "fair use." Advocates also argue that the broadcast flag regulations could require users to upgrade their entire home entertainment systems simultaneously if they want devices to interoperate. This would greatly increase both the overall cost of the DTV transition and the direct costs assumed by users.
An even greater public interest concern is that transmission of content over the Internet has not been adequately addressed in the broadcast flag regulations. While consumer advocates are sympathetic to the substantial concerns that the content industry has about allowing its content online, they point out that there are substantial and legitimate reasons why users would want to be able to receive Internet content on their televisions and television on their computers, actions that may be precluded by the regulations. They maintain that many of the most exciting benefits of the digital transition are lost if consumers are unable to use the Internet to transmit protected content. These consumer advocates emphasize that encryption mechanisms can make online transmission largely secure.
Alongside these concerns about the negative impacts of the broadcast flag, many advocates harbor serious reservations about its effectiveness. Like the IT sector, these groups point out that, under the flag system, broadcast content is still transmitted "in the clear." And these critics argue that until solutions are found to the "first clean copy problem" arising from peer-to-peer file sharing and the "analog hole" (discussed below), the broadcast flag will not substantially curb illegal copying of protected content.
Finally, many public interest groups worry that the broadcast flag could become a precedent for even more sweeping regulations of consumer devices that could raise yet greater consumer concerns.
The consumer and public interest groups we talked to drew different conclusions from these concerns. Many groups do not believe that protecting broadcast content through DRM is critical to the success of DTV, and support abandoning the broadcast flag altogether. These groups point out that content makers have thrived despite the fact that current analog broadcast is unprotected. Some consumer advocates further suggest that DRM protection of DTV content may be viewed by consumers as handicapping their devices' functionality, and that it might actually hinder the growth of digital broadcast. They believe that many consumers will be unwilling to upgrade an older, unrestricted analog set to a newer, restrictive digital set if the newer one may not let them do the things they want to do. Given the reservations about the flag scheme's effectiveness, these groups ask whether it is worth risking the negative consequences of the flag for minimal and uncertain benefits.
Other groups are willing to consider the broadcast flag, albeit with substantial amendments. In our conversations, they offered several specific proposals. They argued that the broadcast flag regulations must be expanded to specifically address the issue of transmission of content over the Internet. Additionally, many consumer advocacy groups suggest that the regulations should include a way for new copy protection technologies to be self-certified, that the initial list of approved technologies should include a variety of options to avoid first-mover "lock-in," and that the FCC should forbid companies from licensing approved technologies under terms that prohibit interoperability.
Broadcast Encryption: Some public interest groups have argued that an encryption-based solution is preferable because it would require less direct regulation of computing by the FCC. However, these groups are still wary that studios could use the licensing terms for access to the encrypted content to control what products IT and CE manufacturers are allowed to deploy or restrict what uses users can make of content. The encryption solution is therefore viewed by many as better than the flag regulations, but still problematic in important regards.
All digital copy protection technologies share a limitation known as the "analog hole." Even content that is tightly protected when it is in digital form can be captured as soon as it is passed through an analog output. This happens, for example, when a movie is played on a DVD player. Although the digital content is stored on the DVD itself in encrypted form, the output from the DVD player to the TV set is usually analog and unprotected. The content rendered into analog form can be captured and redigitized.[16] While there may be some loss of quality in the initial digital-analog-digital conversion, all subsequent copying can be fully digital and therefore free of further degradation.
There are two general approaches to "plugging" the analog hole. The first is to phase out analog outputs from consumer devices, replacing them with more easily securable digital ports.[17] However, this approach would render useless large amounts of equipment already owned by consumers that have only analog inputs. Therefore, in this section we have focused on the second approach--finding a way to technologically protect analog output using some kind of "analog rights management" technology in a way parallel to that in which DRM is used to protect content output through digital ports.
A cross-industry group convened to discuss the "analog hole" problem, the Analog Reconversion Discussion Group (ARDG), recently issued a report on technological protection options for analog. Content in analog form cannot readily be encrypted in the same way as digital content, so analog protection generally relies on some form of marking--content is marked as protected when it is output, and receiving devices are expected to watch for and respect this mark.
This mark can be carried in one of two ways--"in-band" or "out-of-band." In band marking is usually based on some form of "watermarking." Watermarking imperceptibly embeds information in an image or sound. Since the data is actually a part of the image or sound itself, the watermark persists through analog conversion and redigitization.
There are technological hurdles facing watermarking. Different parties disagree about how substantial these problems actually are. One serious hurdle stems from the fact that files traded over the Internet are almost always highly compressed in order to shrink them down to a manageable size. Much of this compression is achieved by eliminating those parts of the data that are imperceptible or nearly imperceptible. For example, MP3 encoding attempts to eliminate frequencies that are inaudible when the music file is played. Watermarking works by encoding information in parts of a content stream that are imperceptible or nearly imperceptible. The problem is that if a watermark is added to a part of the stream that is imperceptible, a good compression technology will remove it. Watermarking technology that has proven to be sufficiently robust to survive compression has, so far, faired poorly on tests of its imperceptibility.
"Out-of-band" marking of analog content is technologically much easier. Certain analog devices already on the market make use of a content marking system known as Copy Generation Management System- Analog (CGMS-A). Like a watermark, CGMS-A inserts information about whether and how a movie or show can be copied into a part of the video signal that is not displayed. But unlike in a watermark where the information is embedded in the signal, this information is carried alongside it. When a device receives the analog signal, this information is easily read, and the show or movie can be appropriately protected.
While not regulated, detection of CGMS-A (or similar marks) is inexpensive and has already been voluntarily implemented in some consumer electronics products. One of the biggest drawbacks of CGMS-A and other similar "out-of-band" marking schemes, however, is the separation of the protection mark from the content itself makes it technically easy to strip CGMS-A from a video signal, leaving the material unprotected. Out-of-band schemes are, in general, technically much easier to circumvent than watermarking schemes.
There is a third approach to protecting analog content that is different altogether--so-called "forensic watermarking." In the case of forensic watermarking, no attempt is made to prevent copying technologically. Instead, images are watermarked as a way of uniquely identifying them. Then, when illegal copies are found--copies of a movie released online before its opening date, for example--they can be traced back to their original source, which can help in identifying who first made them available. While forensic watermarking would not impede copying directly, supporters of the technology hope that the presence of forensic watermarks would act as a deterrent against illegal distribution of protected content by making discovery and prosecution more likely. At least one arrest for online video piracy has already been made based on evidence from forensic watermarking.[18]
The studios believe the greatest promise for addressing analog reconversion is through watermarking. Watermarking offers the strongest protection for content, and studios believe that the technical hurdles can be (or already have been) overcome. The movie studios acknowledge that if a watermarking scheme is to be effective, new regulations will almost certainly be needed to ensure that devices that convert content from analog to digital forms will look for and respect the watermarks in analog content and obey copy protection rules when they are found. They support laws or agency regulations to enforce this approach. The studios believe that economies of scale will make watermark detection (and subsequent content protection) cheap and non-burdensome to device makers.
The IT industry has been deeply wary of proposals to deal broadly with the analog hole. Watermarking proposals are viewed as costly and burdensome on computer processors. IT companies also have concerns that watermarking technologies will be easy to circumvent, even for unsophisticated pirates. Additionally, the legislative mandates that might be needed to enforce such approaches threaten to impose government technical standards on a very broad range of devices. Such approaches are anathema to IT companies, which have battled in many contexts to limit government design mandates for computers and the Internet.[19]
"Forensic watermarking" enjoys broader support among IT companies. Because forensic watermark detection is done by investigators using dedicated hardware once pirated copies are found, rather than by every device doing analog-to-digital conversion along the way, forensic watermarks do not impose the same burdens on IT manufacturers as do copy-control watermarks.
Despite its misgivings, the IT industry has recognized that the loss of DRM information when a movie or show is converted into analog form and then back to digital is a serious concern for content producers. Over the last year, IT companies have engaged in active discussions with other stakeholders on how to deal with analog redistribution. Several IT companies were involved in the Analog Reconversion Discussion Group.
Since analog ports connect nearly every television product currently in consumers' homes (including TV sets, VCRs, digital video recorders, DVD players, game consoles, and other devices), and since consumers have a long history of using these ports and well-established expectations about their operation, CE makers are extremely skeptical of limiting these outputs' functionality in any way.
Many CE products--including camcorders, personal video recorders (PVRs), and video-capture devices for computers on the market--already provide consumers with the ability to do high quality digital-to-analog and analog-to-digital conversions, but relatively few consumers currently use these tools to pirate TV shows or DVDs. Since CE makers believe that the analog problem is limited, they believe steps taken to address the problem should also be limited. CE makers do not wish to assume significant new costs, or to surrender design control over future innovations, to solve what they view as a relatively small-scale problem.
In particular, many CE manufacturers are wary of proposals to close the analog hole through the use of watermarking because watermark detection is a highly sophisticated process, and building such a process into millions of consumer devices could significantly raise the price of thousands of common devices (such as camcorders, personal video recorders, and DVD burners). Moreover, CE manufacturers believe that a requirement that their products include watermark detection could constrain their ability to explore new approaches in product design.
However, some CE manufacturers are enthusiastic about watermarking in one specific respect--properly implemented, watermarking will not interfere with the operation of devices already in consumers' homes. There have been some proposals to use watermarking to protect not only analog content, but digital content as well, for this reason. Most CE manufacturers believe that "forensic watermarking" could have significant value for content makers who wish to identify the source of infringement.
Many CE manufacturers support "out-of-band" approaches to protecting analog content--and a number point to CGMS-A as a proven, functioning, and inexpensive way of implementing such protection. Many CE makers feel that the risk of circumvention of CGMS-A or other similar out-of-band marking schemes is acceptable given their low cost and ease of deployment. They point out that no system can ever be 100% effective. CGMS-A currently has limited deployment, but many CE companies believe that a regulation requiring the use of CGMS-A would be far less burdensome than a regulation requiring watermark detection.
User advocates worry that proposals that would restrict users' ability to perform analog to digital conversions would be a step backwards. These groups argue that adding analog protection technologies into these devices would raise costs and stymie innovation.
Like the IT and CE industries, user advocates worry that adding watermark detection capabilities to consumer electronics would involve substantial expense--and they are concerned that these costs would be passed down to consumers. Moreover, they point out that a comprehensive watermarking solution would affect a huge range of devices, and they argue that watermarking would be likely to limit those devices' functionality. These groups point to many of the same concerns raised in the broadcast flag debate, but point out that the impact of analog protection regulations would be much broader than the impact of the flag regulations.
Public interest groups also note that analog ports have frequently been held up by the content industry as a "safety valve" for users who want to use content in ways that are lawful but that are not supported by a DRM system. These consumer advocates argue that adding restrictions to analog could close this safety valve.
On top of these concerns, some public interest advocates point to significant reservations in the technology community about whether analog protection measures can ever be effective. These groups reiterate that out of band marking schemes are easy to circumvent, and argue that no watermarking scheme has yet been publicly demonstrated that is both transparent to users and robust to even relatively simple attacks.
In June of 1999, Napster launched what became the first large-scale peer-to-peer file sharing network, starting a revolution in content distribution. Napster was shut down after an extensive legal battle, but subsequent implementations of the peer-to-peer concept have become more sophisticated both legally and technically, making it possible for them to survive, at least so far.
The peer-to-peer concept is fundamentally simple. One computer in a network sends out a search request to other connected computers, which respond with any matches from their lists of shared files and pass the search request along to other computers with which they are connected. The client issuing the initial search request can then ask any of the responding peers to transmit one of the matching files. With millions of users on the resulting networks, peer-to-peer software allows users to search and download a tremendous volume of content.
In Napster, searches were streamlined through the use of centralized indexes. But since the original Napster was shut down, the peer-to-peer networks used for file sharing have not relied on centralized servers that maintain comprehensive indexes of content. In the modern "true" peer-to-peer networks, there is no administrative hub for content owners to go after, as there was in the Napster case.
File-sharing software is content-neutral--it does not distinguish among the kinds of files that users may want to share, and in particular, does not try to determine whether or not the content of those files is protected by copyright. Therefore, the software companies maintain that the software itself is not at fault if users use it illegally, and they point out that the ability to distribute content over peer-to-peer networks has a wide array of legal and valuable uses.
Copyright holders have complained that the nature of peer-to-peer networks means that as soon as even one digital copy of a piece of protected content becomes available, it will quickly be downloaded and redistributed by other peers, spreading exponentially across the network. This means that even a single "clean" copy of a Hollywood movie or show, released on a peer-to-peer network, could spawn thousands or hundreds of thousands of unauthorized downloads. Starting with a single copy, a movie or song can spread "virally" across the network until nearly any user has easy, free access to it.
From a direct enforcement perspective, the sheer volume of violation and the inability to go after any central administrative entity make true peer-to-peer networks a daunting target. Nonetheless, music companies have begun a steady campaign of lawsuits against peer-to-peer users that are "egregiously" pirating copyrighted songs, and movie studios are considering a similar approach. These enforcement actions are one part of a standard combination of measures being used by the content companies to fight peer-to-peer--consumer education, providing consumers with "honest alternatives," and law enforcement. We discuss two of the measures in greater detail in the sections that follow.
In addition to these "traditional" enforcement methods, some have suggested that copyright holders should take direct action against those who redistribute copyrighted content illegally. Such "self-help" measures fall into two categories. "Passive self-help" includes actions like uploading false copies of copyrighted works in order to disrupt access to infringing copies.[20] "Active self-help" includes more invasive measures such as uploading targeted viruses or "worms" onto peer-to-peer networks that would obstruct the operation of computers belonging to users suspected of downloading copyrighted content. In July of 2002, Representative Howard Berman introduced legislation in Congress to provide safe harbors for copyright owners employing some kinds of self-help measures.[21]
The content industry views as one of its biggest threats unauthorized redistribution of copyrighted works over peer-to-peer. If video content becomes readily available online, users will be able to archive their favorite episodes (reducing their interest in both reruns and syndication), make copies of movies (eliminating the need to buy DVDs), or even archive whole seasons of TV shows (making purchasing a "Friends" box set redundant). In all these cases, the studios stand to lose a tremendous amount of revenue.
The studios' approach to these problems is still emerging, and perspectives vary from company to company. Some studios already engage in "passive self-help." There is anecdotal evidence that these efforts have met with some success, but their long-term effectiveness remains to be seen.
When Rep. Berman proposed his legislation to allow "active self help," it received a lukewarm reception from policymakers and was not strongly supported by content providers themselves, who were unsure of the consumer response to mechanisms that might damage computers. Since that legislation's introduction in the 107th Congress, the studios have not pushed for changes to the law that would facilitate active efforts at self-help. Press reports, however, indicate that some studios continue developing technological tools in this area, perhaps for future deployment.[22]
While in early 2003 we detected a great deal of skepticism about the ability to stop peer-to-peer sharing, the combination of aggressive enforcement (see below), public education about security risks, and attractive alternatives has some content producers cautiously optimistic about the long-term prospects for limiting extensive sharing via peer-to-peer networks.
The IT industry has strongly sympathized with the content industry's desire to curb widespread infringement taking place on popular peer-to-peer file sharing networks (such as Kazaa and Gnutella).
Many companies are supportive of "passive self-help" efforts to obstruct illicit file sharing. They support the practice of "spoofing" or uploading false copies of copyrighted songs or other content in order to make true, infringing copies more difficult to find. However, IT companies are wary of permitting content owners to engage in more active forms of self-help. Hacking into the computers of alleged copyright infringers or uploading viruses or worms onto file-sharing networks that could disable users' computers or otherwise make the network unusable are illegal under current law, and IT companies do not want to see that change.
While they support the enforcement of copyright over file-sharing networks, most IT companies believe that no copyright holder can totally prevent copies of its work from ever finding their way onto file-sharing networks. And while future DRM systems might reduce the rate at which new content appears on peer-to-peer networks, a tremendous amount of content makers' older ("legacy") content is already online and unprotected. The IT industry believes vigorous enforcement of existing law will be critical if the studios are to keep infringement over peer-to-peer networks from growing beyond manageable bounds.
The CE industry is less directly impacted by the debates surrounding peer-to-peer than the other stakeholder groups. Like the IT industry, the CE industry generally feels that the problem of online file sharing is best addressed by enforcement of existing law. CE makers are generally skeptical of regulation in this area, and point to the significant consumer appetite for Internet-based content playback devices such as MP3 players as evidence of significant unmet demand for legitimate content offerings online.
While they are sympathetic with the need to protect studio content from rampant piracy, public interest groups are concerned that attempts to stop copyright infringement over peer-to-peer file sharing networks could undermine a technology that has great value to millions of users. Advocates argue that peer-to-peer file sharing networks are used for a wide variety of non-infringing activities, including both sharing of non-copyrighted material (such as public domain material) and the authorized sharing of copyrighted material (such as sample works from up-and-coming bands or filmmakers).
Many public interest groups have supported or at least accepted the content industry's prerogative to engage in "passive" self-help on peer-to-peer networks. However, these groups have been very vocal in opposing "active" self-help. Consumer and public interest groups view such approaches as legitimizing unacceptable activities that could impinge users' privacy, chill speech, or deny due process.
In addition to technological solutions, copyright holders have a range of legal remedies at their disposal for use against people who are copying content illegally. These remedies were substantially expanded by the Digital Millennium Copyright Act of 1998 (DMCA)[23] and the No Electronic Theft Act of 1999 (NET Act).[24] The DMCA includes a ban on "circumvention devices" and provides copyright holders the ability to use a fast track subpoena process in some cases to identify Internet users who may be engaged in copyright infringement. The NET Act provides criminal penalties for individuals engaged in online copyright infringement, regardless of whether those individuals profited from their actions. Some groups argue that copyright holders should pursue legal remedies under these statutes before seeking new regulations.
As noted above, the central problem facing copyright holders is that peer-to-peer technology has made it impossible to prosecute a single "hub" for content redistribution. Instead, copyright holders are forced to go after individual users. Since the number of users committing significant copyright violations may be in the millions, the cost of bringing enforcement actions against even a significant minority of those cases is astronomical. However, a relatively small number of high profile cases may be enough to deter the remaining infringers.
Studios vigorously enforce their copyrights in both online and offline contexts. While they view enforcement actions as necessary and important, the studios (and other copyright holders) believe the size of the digital copyright problem to be so great that they cannot rely solely on the enforcement of existing law to address it. Enforcement is both costly and creates a risk of backlash from consumers. Enforcement actions are also hard to bring against those abroad.
IT companies were among the strongest proponents of recent statutes enhancing copyright owners' enforcement authority, including both the DMCA and the NET Act. Many believe, however, that the full force of these laws has not yet been brought to bear on the online piracy problem. While it is true that enforcement of current law is unlikely to completely eliminate online piracy, the IT companies believe that the right kind of enforcement actions could reduce the problem to a manageable level.
Some IT companies have emphasized that users' privacy, security, and due process rights must be protected in copyright enforcement actions.[25] They have also expressed concern that the damages sought by copyright holders in litigation are excessive, and may not accurately reflect the size of the offense. While they hope these concerns can be addressed, IT companies continue to believe strongly in the value of enforcement in dealing with online piracy.
The CE industry is not as directly impacted by the debates surrounding new enforcement actions as other stakeholder groups. Like the IT industry, the CE industry believes that enforcement actions could help reduce the problem of online piracy, and many view this solution as preferable to new design mandates that could impact their products.
Public interest groups encourage copyright holders to avail themselves of the powerful tools given to them by the DMCA and the NET Act before seeking other approaches that could gravely affect users' rights and reasonable uses of content. At the same time, these groups harbor substantial reservations about the DMCA and the NET Act, and many are pursuing reforms to address the problems they see.
Consumer/public interest groups have focused on two sections of the DMCA as requiring reform--the anticircumvention provisions, which are viewed by many as too restrictive and incompatible with fair and reasonable uses of content; and the subpoena provision, which is viewed as a threat to users' privacy and due process rights. The substantial penalties associated with copyright infringement have also been a source of controversy for some groups.
Despite these concerns, some public interest groups believe that vigorous enforcement of existing law is likely to yield results, both in terms of substantial prosecutions and deterrent effect. Others question whether enforcement will be effective unless there are also attractive, legal alternative sources of content.
Most parties in the digital copyright debate agree that the Internet creates great opportunities for content industries by opening up possibilities for direct digital distribution of content. Eliminating the need for physical media and retail intermediaries, the Internet gives content producers the ability to sell music or video directly to consumers. However, it is unclear whether easy to use for-fee services will attract users away from free but illegal services.
Many for-profit, legal digital distribution services exist. The most successful thus far has been the Apple iTunes Music Store, which has sold millions of downloads of major-label songs and albums. Similar services for video have been introduced as well, although so far they have been less successful. The offerings and business models of these services are evolving rapidly as vendors learn what features are most important to consumers.
In recent years, studios' digital distribution of content in physical media has increased significantly. The DVD has been tremendously successful, outpacing even the compact disc in consumer acceptance and enthusiasm. At the same time, digital cable and DBS systems are found in an increasing number of consumers' homes. In 2002, the studios unveiled MovieLink, an entry into the world of online distribution--and six of Hollywood's seven major studios are providing films to MovieLink.
The studios are committed to further innovation in digital distribution models, but emphasize that those systems will take time to develop. They are concerned that pirates will make their content freely available on the Internet sooner than they can develop legitimate distribution systems, and that the viability of future offerings will be undercut even before they are launched. It is this concern that is driving the studios' call for better protection of their content in all areas, including DTV and other digital distribution systems.
Many IT companies strongly argue that providing consumers with desirable alternatives that can effectively meet their needs is the best method of discouraging the illicit redistribution of copyrighted material. Many IT companies believe that the studios' movement in this direction has been slow. Some are concerned that the studios' pursuit of regulation may be a distraction from the more fruitful approach of designing new digital offerings to draw consumers away from piracy.
The CE industry is somewhat less immediately affected by the debates surrounding new digital distribution than are other stakeholder groups. However, as digital convergence progresses and CE devices become increasingly networkable, digital distribution may play a larger role in the businesses of CE companies. CE companies point to the significant consumer appetite for Internet-based content playback devices like MP3 players as evidence of unmet demand for legitimate content offerings online.
Many consumer and public interest groups have argued, like the IT industry, that the piracy problem content producers face is in large part a problem of unmet demand. They contend that the unauthorized file sharing seen online could be significantly reduced were content providers to make high-quality content available to consumers at a reasonable price and in a manner that supports consumers' desire to make reasonable uses of that content. In particular, early evidence seems to indicate that consumers would much rather "own" content--with the freedoms that entails--than feel like they are merely "licensing" it under restrictive terms.
User and public interest groups believe that the studios have much to offer as well as much to gain in such an environment. They argue that, faced with the choice of purchasing a legitimate copy of a valuable piece of entertainment using a high-quality service and at a reasonable price, or illicitly downloading the same entertainment over an error-prone, user-unfriendly connection with a legally questionable file-sharer, the majority of consumers will gravitate towards the higher quality, legally sound offerings of the major content producers.
The digital content protection debate is complex. Policy positions vary even within stakeholder groups. The debate is rapidly changing in the face of experimentation with new business models, rapid marketplace change, evolving consumer expectations, and intense negotiations and discussions among stakeholders.
At the same time, some common themes have emerged. At least three goals are shared by all of the stakeholder groups we investigated:
Without exception, every group that we interviewed agreed that these three themes were reasonable goals to pursue. The profound disagreements that we have seen were about how to appropriately balance these three goals in technology and policy. In particular, there is little consensus about how to incorporate the potential new uses and distribution schemes offered by the Internet and other new digital networks while both protecting copyright and allowing a wide range of uses and choices by consumers.
There is near universal agreement that copyright holders must pursue enforcement of existing laws and the development of new business models. But enforcement and new business models may not be enough. There is also widespread recognition that digital rights management (DRM) technologies offer important potential benefits for society, depending on how they are designed and implemented. Major concerns arise over the role of government in mandating any particular means of copy protection and the impact of DRM on the openness of the Internet as a medium uniquely suited to free expression and democratic participation.
We call for further dialogue among stakeholders. This dialogue must proceed on the basis of mutual respect if it is to be successful. In the end, consumer perceptions may have the greatest impact on this difficult debate, and we should be mindful that these perceptions are not well represented in Washington policy circles.
We are grateful to the participants who so graciously offered their time and expertise to our dialog project. While the description offered in this paper is solely the responsibility of the authors, we wish to acknowledge those we interviewed, including:
Brian Adkins
Allan Adler
Prue Adler
Fritz Attaway
Mary Alice Baish
Alan Bell
Rich Beutel
Cheryl Bruner
Jim Burger
Rick Chessen
Doug Comer
Chris Cookson
Robert Cresanti
Ed Desmond
Sarah Deutsch
Scott Dinsdale
Alan Dinsmore
Michael Epstein
Elizabeth Frazee
Matt Gerson
Mike Godwin
Becca Gould
Seth Greenstein
Bruce Heiman
Link Hoewing
David Isaacs
Ken Kay
Joe Keeley
Larry Kenswil
Gary Klein
Rick Lane
Don Laike
Jill Lesser
Doug Lowenstein
Susan Mann
Andy Moss
Chris Murray
Amy Nathan
Miriam Nesbit
Tom Patton
Mike Petricone
Lowell Sachs
Janina Sajka
Paul Schneck
Seth Schoen
Andy Setos
Tim Sheehy
Emery Simon
Gigi Sohn
Frank Torres
Stewart Verdery
Fred Von Lohmann
[1] For example, software makers and video game companies are "content" companies but are also technology firms that have taken some positions in the copyright debate more closely linked to the "information technology" sector.
[2] See, e.g., Drew Clark and Bara Vaida, "Digital Divide," National Journal (Sept. 6, 2003), available at http://nationaljournal.com/about/njweekly/stories/2002/0906nj1.htm. Similarly, video game producers, while they also have been strong supporters of copyright protection, have shied away from endorsing mandates of copy protection technologies, and have taken some positions more akin to those of the IT sector.
[3] The views of book publishers and publishers of other written materials are distinct from those of either of these groups. While many book and journal publishers are beginning to use DRM technology to protect their offerings, their efforts are not directly implicated by the digital television and music proposals that are the focus of this paper. Books, journals, and other written works are still primarily distributed in non-digital form to the general public (i.e., consumers). While digital technology is increasingly used at the institutional level (providing schools and libraries with electronic journal or book databases), publishers' pursuit of DRM in those environments is the subject of bilateral discussion with those institutions. Book publishers have not endorsed many of the strongest copy protection proposals, and have a nuanced position not easily categorized in any of our four groups.
[4] High definition content can include both very-high-quality video (several times better than standard broadcast television) and sounds that surpasses CD-quality.
[5] The ability to find profitability in secondary markets also reduces the element of risk for each film. Relatively few of the high-budget films produced today turn a profit in their theatrical release, but many become profitable over time.
[6] One of the most prominent new uses for general purpose computers has been to become the "digital hub" for digital entertainment content.
[7] The content industry has asked for assistance in protecting its content in the past, and the CE industry has responded. The primary example of this has been the development of the extremely successful Digital Video Disc (DVD)--CE and IT makers contributed to its development by creating its CSS encryption system.
[8] Many industry players expected significant consumer demand for DTV. They believed that DTV's ability to offer high-resolution picture and sound, along with other features, would be attractive enough to consumers to overcome the high prices of current DTV sets. While some "early adopters" have purchased DTV equipment, the numbers are lower than expected--just 450,000 sets have been sold in a market projected to include over 100 million sets.
[9] For example, for several years, major CE manufacturers have built "Macrovision" copy protection into their VCRs and other consumer devices. Macrovision prevents users from duplicating copy-protected videotapes (such as rental copies of Hollywood movies) by hooking two VCRs together. Recent legislation actually requires Macrovision in all VCRs solid in America, but in the eyes of the CE makers the law merely reflected what had already happened in the market--CE makers' voluntary protection of studio content.
[10] We note that bunching all these diverse groups in this way does a particular disservice to the positions of educators and librarians. Library and education professionals have been dealing with copyright issues for a long time and have sophisticated, highly developed positions in this area. However, because our focus is primarily on video and digital copy protection technologies, we gave them less attention here than their long history of involvement in the copyright arena might otherwise merit.
[11] See Joint Reply Comments of the Motion Picture Association of America, et al., to the Federal Communications Commission, in the matter of Digital Broadcast Copy Protection, (February 2003).
[12] IT would prefer that new technologies self-certify to a set of objective criteria that allow for secure new uses. For example, a DRM system could self-certify that it frustrates mass redistribution of protected movies and shows on the Internet, allowing new uses while protecting copyright.
[13] IT companies also point out that the flag does not prevent users from redigitizing content received from an analog output (the "analog hole"), stop theft of digital content directly from studios (as has happened with recent movie releases), or block recording of a movie with a camcorder.
[14] These are the "authorized technologies" referred to by the proposed broadcast flag regulation, along with each technology's associated "encoding rules."
[15] Most of the DTVs sold so far have been sold to "early adopters;" technophiles with enough interest (and income) to purchase new technology even at high prices. Early adopters are a key market for CE companies; alienating them could have long-term consequences.
[16] The analog hole problem does not only affect encryption-based protection solutions like DVD. Digital markings like the broadcast flag can also be lost when content is converted to analog (though they can be replaced with analog marking schemes like CGMS-A, as described below).
[17] An extreme proposal for "plugging" the analog hole was presented in draft legislation circulated but never introduced in September of 2002. It called "for the termination of the manufacture of equipment that has analog outputs by July 1, 2005." (See Staff Draft, "Regarding the Transition to Digital Television," the subject of a September 25, 2002 hearing by the House Committee on Energy and Commerce, Subcommittee on Telecommunications and the Internet, available at http://energycommerce.house.gov/107/drafts%5Cdtvstaff.htm.) Two somewhat more limited approaches have been suggested by content producers in the context of ongoing proceedings at the FCC regarding protection of digital cable and satellite TV--"selectable output control" and "down-resolutioning." Selectable output control is the "ability to remotely shut off a particular output or connector on a program-by-program basis," thereby directing content away from unprotected high-resolution analog outputs. This would not eliminate analog outputs altogether, but would allow them to be inactivated for certain programs. Down-resolutioning, which could be implemented instead of or alongside selectable output control, would cause content sent through analog outputs to be intentionally degraded in quality. This would require consumers to use protected, digital outputs to access high definition content. At the time of publishing of this document, the FCC has prohibited use of selectable output controls in cable and satellite television, but is still considering whether to allow down-resolutioning.
[18] See Lorenza Munoz and Patrick Day, "Suspected Movie Pirate Arrested," Los Angeles Times, January 23, 2004, C.1.
[19] As noted earlier, IT companies have fought successfully to prevent government mandates over encryption key recovery and security standards; ISP and network design requirements to allow Internet wiretapping; and network design mandates to permit content filtering. In each case, it has been argued that government is not well suited to developing complex technical standards, which could interfere with rapid technical development and experimentation.
[20] See, e.g., "Madonna swears at music pirates," BBC News, April 22, 2003, available at http://news.bbc.co.uk/1/hi/technology/2962475.stm.
[21] See H.R. 5211, sponsored by Rep. Berman in the 107th Congress, available at http://thomas.loc.gov/cgi-bin/query/z?c107:h.r.5211:.
[22]See Andrew Ross Sorkin, "Software Bullet Is Sought to Kill Musical Piracy," New York Times, May 4, 2003.
[23] Public Law 105-304. Available at http://thomas.loc.gov/cgi-bin/bdquery/z?d105:hr02281:.
[24] Public Law 105-147. Available at http://thomas.loc.gov/cgi-bin/bdquery/z?d105:hr02265:.
[25] Recent litigation between the RIAA (Recording Industry Association of America) and Verizon highlights many of these concerns. The litigation focused on privacy and due process questions in the DMCA's subpoena process.
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