December 24, 2024

DRM and 'casual piracy'

Some background on a major transformation taking place in the music industry, even as most mainstream media organizations print not a word about it:

Reuters article, May 31: Sony BMG tests technology to limit CD burning.

As part of its mounting U.S. rollout of content-enhanced and copy-protected CDs, Sony BMG Music Entertainment is testing technology solutions that bar consumers from making additional copies of burned CD-R discs. …

“The casual piracy, the schoolyard piracy, is a huge issue for us,” says Thomas Hesse, president of global digital business for Sony BMG. “Two-thirds of all piracy comes from ripping and burning CDs, which is why making the CD a secure format is of the utmost importance.” …

Among the biggest headaches: Secure burning means that iPod users do not have any means of transferring tracks to their device, because Apple Computer has yet to license its FairPlay DRM for use on copy-protected discs. …

San Jose Mercury News, June 15: Music industry eyes `casual piracy.’ Major labels to copy-protect all CDs sold in the U.S. The story begins:

The record labels are in pursuit of a new class of music pirates – not the millions who download bootlegged songs over the Internet but those who copy music CDs for their friends. …

It’s surprising to me that the Mercury News has accepted the record labels’ terminology in this matter. Piracy refers to making unauthorized reproductions of digital media for financial gain – or, stretching the term, for indiscriminate distribution. It is not piracy – “casual” or otherwise – when you buy music and make a few copies for close friends.

As Jessica Litman, author of “Digital Copyright,” writes in her law review article “War Stories,” 20 Cardozo Arts & Entertainment Law
Journal 337 (2002):

Under the old way of thinking about things, copying your CD and carrying the copy around with you to play in your car, in your Walkman, or in your cassette deck at work is legal. Borrowing a music CD and making a copy on some other medium for your personal use is legal. Recording music from the radio; maxing different recorded tracks for a ‘party tape,’ and making a copy of one of your CDs for your next-door neighbor are, similarly, all lawful acts. The copyright law says so: section 1008 of the copyright statute provides that consumers may make non-commercial copies of recorded music without liability. Many people seem not to know this any more.

Now, this is not to say that individuals have a right to make an unlimited number of an unlimited number of CDs for their friends. But where is the debate on this issue? The Merc article goes on:

Sony BMG Music Entertainment, home to some of the music industry’s biggest acts, including Bruce Springsteen, System of a Down and Shakira, plans to copy-protect all music CDs sold in the United States by the end of the year. Another major label, EMI, whose artist roster includes Coldplay and Norah Jones, will introduce copy-protected CDs in its two largest markets – the United States and the United Kingdom – in the coming weeks.

For consumers, it signals an abrupt change to the rip, mix, burn mania embodied by the 2001 Apple Computer ad campaign promoting the first iMac computer with a CD burner and software for creating custom music CDs. These new copy-protected discs limit the number of times people can create copies of music CDs or add individual songs to music mixes. …

On the PC, a message appears that asks the buyer for permission to install a piece of software on the desktop. Answer no, and the disc is ejected. It won’t play. Once installed, the software regulates how often people can rip a full copy of the CD to the computer, burn individual tracks or make full copies of each album. EMI, for example, will permit the consumer to upload an album once per computer, burn individual tracks seven times and make up to three full copies of each CD.

Should we allow the record labels to define the extent of our fair use rights through the DRM they place on the CDs we buy? (Ernest Miller suggests that the labels are making a strategic mistake through this attack on copying/sharing among family members and friends.)

This latest bit of news comes on top of the restrictions placed on other uses of digital media:

– it’s a federal offense to back up a copy of your DVD;

– it’s illegal to copy a purchased computer game with DRM onto your laptop or desktop;

– the new generation of digital television may impose similar limits on how you can copy or burn Hollywood programming.

Will citizens balk at these kinds of restrictions, or come to accept them? My suspicion is that the Darknet will grow in direct proportion to actions that turn mainstream Americans into “casual pirates.”

Intellectual Property, Innovation, and Decision Architectures

Tim Wu has an interesting new draft paper on how public policy in areas like intellectual property affects which innovations are pursued. It’s often hard to tell in advance which innovations will succeed. Organizational economists distinguish centralized decision structures, in which one party decides whether to proceed with a proposed innovation, from decentralized structures, in which any one of several parties can decide to proceed.

This distinction gives us a new perspective on when intellectual property rights should be assigned, and what their optimal scope is. In general, economists favor decentralized decision structures in economic systems, based on the observation that free market economies perform better than planned centralized economies. This suggests – even accepting the useful incentives created by intellectual property – at least one reason to be cautious about the assignment of broad rights. The danger is that centralization of investment decision-making may block the best or most innovative ideas from coming to market. This concern must be weighed against the desirable ex ante incentives created by an intellectual property grant.

This is an interesting observation that opens up a whole series of questions, which Wu discusses briefly. I can’t do his discussion justice here, so I’ll just extract two issue he raises.

The first issue is whether the problems with centralized management can be overcome by licensing. Suppose Alice owns a patent that is needed to build useful widgets. Alice has centralized control over any widget innovation, and she might make bad decisions about which innovations to invest in. Suppose Bob believes that quabbling widgets will be a big hit, but Alice doesn’t like them and decides not to invest in them. If Bob can pay Alice for the right to build quabbling widgets, then perhaps Bob’s good sense (in this case) can overcome Alice’s doubts. Alice is happy to take Bob’s money in exchange for letting him sell a product that she thinks will fail; and quabbling widgets get built. If the story works out this way, then the centralization of decisionmaking by Alice isn’t much of a problem, because anyone who has a better idea (or thinks they do) can just cut a deal with Alice.

But exclusive rights won’t always be licensed efficiently. The economic literature considers the conditions under which efficient licensing will occur. Suffice it to say that this is a complicated question, and that one should not simply assume that efficient licensing is a given. Disruptive technologies are especially likely to go unlicensed.

Wu also discusses, based on his analysis, which kinds of industries are the best candidates for strong grants of exclusive rights.

An intellectual property regime is most clearly desirable for mature industries, by definition technologically stable, and with low or negative economic growth…. [I]f by definition profit margins are thin in a declining industry, it will be better to have only the very best projects come to market…. By the same logic, the case for strong intellectual property protections may be at its weakest in new industries, which can be described as industries that are expanding rapidly and where technologies are changing quickly…. A [decentralized] decision structure may be necessary to uncover the innovative ideas that are the most valuable, at the costs of multiple failures.

As they say in the blogosphere, read the whole thing.

Nobody Disputes This Post

Friday’s debate between Dean Garfield (MPAA’s head lawyer) and Wendy Seltzer (EFF lawyer) at Princeton was fairly interesting. I’m hoping video will be available sometime soon.

At one point, though, Dean Garfield said something that totally floored me. He was talking about technologies like Audible Magic that claim to be able to detect and block copyrighted music as it passes across a network. He asserted that that technology would be effective in stopping infringement. That’s a pretty iffy claim already. Then he went on to assert that “nobody disputes” the effectiveness of filtering.

That’s a pretty nervy statement to make in a debate. First, it’s obviously false. To give one well-known example, the computer science professors’ amicus brief in the Grokster case disputed that very claim. Two or three signers of the brief were in the room, and one of them (me) was moderating the debate.

Second, saying “nobody disputes X” is a questionable debating tactic, since it practically invites somebody in the room to falsify your statement by disputing X. Which is exactly what I felt compelled to do. Several members of the audience told me later that they would have raised their hands and disputed the effectiveness of filtering, had I not done so.

Third, if you’re going to make a statement that nobody disputes X, you ought to be able to back it up with strong evidence in support of X. When challenged to give even one example of an ordinary site where filtering was effectively preventing infringement, Mr. Garfield was unable to respond. He also dodged the question of whether the filtering software he advocates has undergone independent testing.

So why did he say that nobody disputes the effectiveness of filtering? I can only surmise that he felt compelled to say it because it is an MPAA/RIAA talking point at the moment. The old talking point used to be that filtering works. The new version, apparently, is that everybody agrees that filtering works. The change, if indeed there is one, shows that skepticism about filtering is spreading. It’s an old lawyer’s trick to assert that a claim is undisputed, in order to avoid addressing the contrary evidence.

Still, the debate was on the whole a success. Students who had studied the issue had the chance to cross-examine the speakers. Students who had not studied the issue heard the basic points made. The best possible debate, though, would have fewer talking points from both sides.

RIAA Suing i2hub Users

Yesterday the RIAA announced lawsuits against many college students for allegedly using a program called i2hub to swap copyrighted music files. RIAA is trying to paint this as an important step in their anti-infringement strategy, but it looks to me like a continuation of what they have already been doing: suing individuals for direct infringement, and trying to label filesharing technologies (as opposed to infringing uses of them) as per se illegal.

The new angle in this round of suits is that i2hub traffic uses the Internet2 network. The RIAA press release is careful to call Internet2 a “specialized” network, but many press stories have depicted it a private network, separate from the main Internet. In fact, Internet2 is not really a separate network. It’s more like a set of express lanes for the Internet, built so that network traffic between Internet2 member institutions can go faster.

(The Washington Post article gets this point seriously wrong, calling Internet2 “a faster version of the Web”, and saying that “more and more college students have moved off the Web to trade music on Internet2, a separate network …”.)

Internet2 has probably been carrying a nonzero amount of infringing traffic for a long time, just because it is part of the Internet. What’s different about i2hub is not that some of its traffic goes over Internet2, but that it was apparently structured so that its traffic would usually travel over Internet2 links. In theory, this could make transfer of any large file, whether infringing or not, faster.

The extra speed of Internet2 doesn’t seem like much of an issue for music files, though. Music files are quite small and can be downloaded pretty quickly on ordinary broadband connections. Any speedup from using i2hub would mainly affect movie downloads, since movie files are much larger than music files. And yet it was the music industry, not the movie industry, that brought these suits.

Given all of this, my guess is that the RIAA is pushing the Internet2 angle mostly for policial and public relations reasons. By painting Internet2 as a separate network, the RIAA can imply that the transfer of infringing files over Internet2 is a new kind of problem requiring new regulation. And by painting Internet2 as a centrally-managed entity, the RIAA can imply that it is more regulable than the rest of the Internet.

Another unique aspect of i2hub is that it could only be used, supposedly, by people at univerisities that belong to the Internet2 consortium, which includes more than 200 schools. The i2hub website pitches it as a service just “by students, for students”. Some have characterized i2hub as a private filesharing network. That may be true in a formal sense, as not everybody could get onto i2hub. But the potential membership was so large that i2hub was, for all intents and purposes, a public system. We don’t know exactly how the RIAA or its agents got access to i2hub to gather the information behind the suits, but it’s not at all surprising that they were able to do so. If students thought that they couldn’t get caught if they shared files on i2hub, they were sadly mistaken.

[Disclaimer: Although some Princeton students are reportedly being sued, nothing in this post is based on inside information from those students (whoever they are) or from Princeton. As usual, I am not speaking for Princeton.]

Godwin's Law, Updated

One of the most famous observations about online discussions is Godwin’s Law:

As an online discussion grows longer, the probability of a comparison involving Nazis or Hitler approaches one.

When it comes to copyright policy, a related law seems to hold:

As a copyright policy discussion grows longer, the probability of pornography being invoked approaches one.

What’s really interesting is the corollary:

When the topic of a copyright policy discussion switches to pornography, each side suddenly adopts the other side’s arguments.

For example, Hollywood argues that filesharing will lead to a shortage of movies, because nobody will make movies they can’t sell. But when the topic switches to pornographic movies, suddenly they start arguing that filesharing increases the creation and availability of content.

Similarly, some P2P vendors who say they can’t possibly filter or block copyrighted content, suddenly decide, when the topic switches to porn, that they can provide effective blocking. See, for example, a recent letter from the Distributed Computing Industry Association (a group of mostly P2P companies) to the Senate:

It is a fact that no industry – including the entertainment industry that cynically hatched the strategy of wrongly equating P2P with risks to children – has been more responsive than ours to concerns about the exposure of young people to inappropriate material. For example, by simply using the password-protected family filter included at no charge with leading P2P software programs, a parent can ensure that NO pornographic images or videos will be returned in response to any searches, including those of known child-pornography keywords.

The assertion that “NO pornographic images or videos will be returned in response to any searches”, can’t possibly be true. Content-based porn filtering will do just as poorly on content received via P2P as it does on content received via the web. These filters will be just as leaky as everybody else’s, and of course they’ll only operate for users who choose to turn them on.

I guess porn really does turn your brain to mush.