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Record Companies Boxed In By Their Own Rhetoric

January 29, 2007 by

Reports are popping up all over that the major record companies are cautiously gearing up to sell music in MP3 format, without any DRM (anti-copying) technology. This was the buzz at the recent Midem conference, according to a New York Times story.

The record industry has worked for years to frame the DRM issue, with considerable success. Mainstream thinking about DRM is now so mired in the industry’s framing that the industry itself will have a hard time explaining and justifying its new course.

The Times story is a perfect example. The headline is “Record Labels Contemplate Unrestricted Music”, and the article begins like this:

As even digital music revenue growth falters because of rampant file-sharing by consumers, the major record labels are moving closer to releasing music on the Internet with no copying restrictions — a step they once vowed never to take.

Executives of several technology companies meeting here at Midem, the annual global trade fair for the music industry, said over the weekend that at least one of the four major record companies could move toward the sale of unrestricted digital files in the MP3 format within months.

But of course the industry won’t sell music “with no copying restrictions” or “unrestricted”. The mother of all copying restrictions – copyright law – will still apply and will still restrict what people can do with the music files. I can understand leaving out a qualifier in the headline, where space is short. But in a 500-word article, surely a few words could have been spared for this basic point.

Why did the Times (and many commentators) mistake MP3 for “unrestricted”? Because the industry has created a conventional wisdom that (1) MP3 = lawless copying, (2) copyright is a dead letter unless backed by DRM, and (3) DRM successfully reduces copying. If you believe these things, then the fact that copyright still applies to MP3s is not even worth mentioning.

The industry will find these views particularly inconvenient when it is ready to sell MP3s. Having long argued that customers can’t be trusted with MP3s, the industry will have to ask the same customers to use MP3s responsibly. Having argued that DRM is necessary to its business – to the point of asking Congress for DRM mandates – it will now have to ask artists and investors to accept DRM-free sales.

All of this will make the industry’s wrong turn toward DRM look even worse than it already does. Had the industry embraced the Internet early and added MP3 sales to its already DRM-free CDA (Compact Disc Audio format) sales, they would not have reached this sad point. Now, they have to overcome history, their own pride, and years of their own rhetoric.

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Duck Amuck and the Takedown Gun

November 28, 2006 by

I wrote last week (1, 2) about the CopyBot tool in Second Life, which can make an exact lookalike copy of any object, and the efforts of users to contain CopyBot’s social and economic effects. Attempts to stop CopyBot by technology will ultimately fail – in a virtual world, anything visible is copyable – so attention will turn, inevitably, to legal tactics.

One such tactic is the DMCA takedown notice. Second Life lets users keep the copyright in virtual objects they create, so the creator of a virtual object has a legal right to stop others from copying it (with standard exceptions such as fair use). The Digital Millennium Copyright Act (DMCA), among its other provisions, exempts service providers such as Second Life from liability for copyrighted stuff posted by users, provided that Second Life implements the DMCA’s notice and takedown procedure. Under this procedure, if you see an infringing copy of your material on Second Life, you can send a notice containing certain information to Second Life, and they have to respond by taking down the accused material. (For further details consult your neighborhood copyright lawyer.)

Let’s apply this to a specific example. Alice designs a spiffy new hot air balloon that everyone covets. Bob uses CopyBot to make his own replica of the balloon, which he starts riding around the skies. Alice discovers this and sends a takedown notice to Second Life. Bob’s balloon is then “taken down” – it disappears from the world, as in the classic cartoon Duck Amuck, where the animator’s eraser plays havoc with Daffy Duck’s world.

But surely Bob isn’t the only one riding in a copied balloon. Others may have CopyBotted their own balloons or bought a balloon copy from Bob. It’s tedious for Alice to write and send a takedown notice every time she sees a copied balloon.

What Alice needs is a takedown gun. When she sees an infringing balloon, she just points the takedown gun at it and pulls the trigger. The takedown gun does the rest, gathering the necessary information and sending a takedown notice, dooming the targeted balloon to eventual destruction. It’s perfectly feasible to create a takedown gun, thanks to Second Life’s rich tools for object creation. It’s a gun that shoots law rather than bullets.

For extra style points, Alice can program the gun so that it refuses to shoot at balloons that she herself built. To do this, she programs the gun, before it fires, to issue a cryptographic challenge to the balloon. Authorized balloons will know a secret key that allows them to respond correctly to the challenge. But unauthorized copies of the balloon won’t know the key, because the key is built into the object’s scripted behavior, which CopyBot can’t duplicate. (Exercise for computer security students: how exactly would this protocol work?)

But of course there is a small problem with abuse of takedown guns. To send a takedown notice, the law says you must be (or represent) the copyright owner and you must have a good faith belief that the targeted object is infringing. Alice might be careful to shoot the gun only at objects that appear to infringe her copyright; but others might not be so careful. Indiscriminate use of a takedown gun will get you in legal trouble for sending bogus takedown notices.

Initially, the management at Second Life pointed to takedown notices as a response to CopyBot-based infringement. More recently, they have shifted their position a bit, saying that infringement violates their Terms of Use and threatening to expel violators from Second Life. They still face the same problem, though. Presumably their enforcement actions will be driven by user complaints, which motivates Alice to make a complaint gun.

As the music industry has learned, when copying is easy, laws against copying are very hard to enforce.

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Will It Copy?

November 21, 2006 by

In the spirit of the cult “Will It Blend?” videos, today’s question on Freedom to Tinker is “Will It Copy?” As we saw with the CopyBot in Second Life, when something becomes easily copyable, the economics of its production change: users benefit more from already-existing objects, but the incentive to make new objects decreases.

This is exactly what happened to the music industry when computers and the Internet suddenly made small files, including digitized music, easily copyable. In the case of music, we know that the business is changing, but we don’t know yet what will be the net effect on the availability of good music.

Like the music business, the software business is challenged by cheap copying. If you make software that runs on users’ computers, your software will be copied by at least some users. By contrast, if you provide an interactive service, delivered across the net but implemented on your own servers – a search engine, perhaps – then your product can’t be trivially copied. You have an inherent advantage over the sellers of packaged software.

A similar story holds for the Second Life CopyBot. Objects in Second Life can be described by shape, coloration, and behavior. Shape and coloration are duplicated perfectly by the CopyBot, but behavior (the script code describing what the object does) is not. So if your business makes beautiful but passive objects – clothing, perhaps– your objects can be copied perfectly and you have a problem. But if you make functional objects – a magic wand that does tricks in response to voice commands, perhaps – then the CopyBot won’t affect you much.

Second Life users are reportedly fighting back by building anti-CopyBot technologies, but this is ultimately futile. As long as shape and coloration are visible, it will be possible to observe and copy them. It will be easier to build a three-dimensional scanner-copier in Second Life than in real life. Copying of beautiful, nonfunctional objects will remain possible.

Eventually, this will happen in real life too. Tools for analyzing and replicating real objects will get better and better; knockoffs will get closer and closer to the real thing; and the time window when only the original is available will get shorter and shorter. Today, fashion flourishes despite relatively free copying. Indeed, some argue that the high-fashion world is so dynamic because of copying – always moving, to stay ahead of the masses. So it’s not a given that the fashion world will dry up, in real life or Second Life, if copying gets faster and more accurate.

Part of the fun of “Will It Blend?” is that the answer is almost always “yes”. Increasingly, the answer to “Will It Copy?” will be the same.

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CopyBot Roils SecondLife Economy

November 17, 2006 by

Here’s one from the It-Was-Only-a-Matter-of-Time file. Somebody in SecondLife, a popular multiplayer virtual world, created a gadget called the CopyBot, which can make a perfect copy of any object in the SecondLife world. (Here’s a Reuters story.) This raises some interesting technical issues, but I want to focus today on how it effects SecondLife’s economy.

If you’re not familiar with virtual worlds, you might think the word “economy” is a stretch. But really it’s not. SecondLife has about 1.5 million residents. Residents are given a sophisticated toolset they can use to design complex objects, specifying the objects’ shape, appearance, and behavior. Objects can be sold for a currency called Linden Dollars. Linden Dollars are real money – they can be traded for U.S. dollars on currency exchange markets. Quite a few people make their living in SecondLife, running businesses that make Linden-Dollar profits, which are then cashed in for U.S. dollars. Most days, the SecondLife economy sees transactions worth a total of between $500,000 and $1,000,000 (real U.S. dollars). This is clearly a real economy.

To understand the possible impact of CopyBot, imagine such a thing existed in real life. Point this CopyGadget at any real-world object, push a button, and you get a perfect copy of that object. Want a new Lambourghini sportscar? Just find one in a parking lot and copy it. Like the lime sorbet at the local ice cream parlor? Buy a cup, take it home, and fill your freezer with copies. When you get down to the last cup in the freezer, just copy it again. You get the idea.

Needless to say, this would cause Big Trouble in the real-world economy. Lambourghini would have trouble selling cars. There would be no waiting at the ice cream parlor, even on the hottest summer night. Could these businesses survive? Could any business that provided goods survive?

A SecondLife business that designs and sells virtual objects faces the same challenge. If you design an object in SecondLife, the system lets you make copies of the object, but if you mark the object as uncopyable, the system won’t let other users copy it. So if you design a cool virtual widget, you can “manufacture” copies to sell to people, but your customers can’t re-copy the widgets they buy. Only you can make widgets, so people have to come to you to buy them. Like Lambourghinis and sorbet, manufactured virtual objects couldn’t easily be copied – until the CopyBot came along.

It’s too early to predict all of the impacts this will have. All we can say for sure is that it will be fascinating to watch. Already the story has several interesting facets, which I’ll write more about next week.

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New Congress, Same Old Issues

November 16, 2006 by

With control of the House and Senate about to switch parties, everybody is wondering how the new management will affect their pet policy issues. Cameron Wilson has a nice forecast for tech policy issues such as competitiveness, globalization, privacy, DRM, and e-voting.

Most of these don’t break down as partisan issues – differences are larger within each party than between the two parties. So the shift in control won’t necessarily lead to any big change. But there are two factors that may shake things up.

The first factor is the acceleration of change that happens in any organization when new leadership comes in. The new boss wants to show that he differs from the old boss, especially if the old boss was fired. And the new boss gets a short grace period in which to be bold. If a policy or practice was stale and needed to be changed but the institutional ice floes were just stuck, new management may loosen them.

The second factor has to do with the individuals who will run the various committees. If you’re not a government geek, you may not realize how much the agenda on particular issues is set by House and Senate committees, and particularly by the committee chairs. For example, any e-voting legislation must pass through the House Administration Committee, so the chair of that committee can effectively block such legislation. As long as Bob Ney was chair of the committee, e-voting reform was stymied – that’s why the Holt e-voting bill could have more than half of the House members as co-sponsors without even reaching a vote. But Mr. Ney’s Abramoff problem and the change in party control will put Juanita Millender-McDonald in charge of the committee. Suddenly Ms. Millender-McDonald’s opinion on e-voting has gotten much more important.

The bottom line is that on most tech issues we don’t know what will happen. On some issues, such as the broad telecom/media/Internet reform discussion, the situation is at least as cloudy as before. Let the battles begin.

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