Ashlee Vance at the Register tells the amazing story of SunnComm, the DRM company whose CD “protection” product was famously defeated by holding down a PC’s Shift key. It’s one of those true stories that would be hopelessly implausible if told as fiction. Here’s the opening paragraph:

You might expect one of the world’s leading digital rights management (DRM) technology makers to have a rich history in either the computing or music fields or both. This is not the case for SunnComm International Inc. Instead, the firm’s experience revolves around a troubled oil and gas business, an Elvis and Madonna impersonator operation and even a Christmas tree farm.

The story goes on with shell companies, phantom sales contracts, SEC investigations, shareholder lawsuits, and many, many excuses from the CEO. Oh yeah, at some point the company found time to develop a laughably weak CD copy “protection” product, to threaten legal armageddon against my student Alex Halderman when he wrote a paper analyzing the technology and detailing its weaknesses, and to somehow sell the technology to record companies despite its utter failure to keep even one song off the file-sharing networks.

Readers who are even moderately skeptical of CEO excuses will recognize this company for what it is. And remember, this company can plausibly claim to be the leader in music DRM. Gives you lots of confidence in the viability of DRM, doesn’t it?

In light of yesterday’s entry on DRM and competition, and the ensuing comment thread, it’s interesting to look at last week’s action by TiVo and ReplayTV to limit their customers’ use of pay-per-view content that the customers have recorded.

If customers buy access to pay-per-view content, and record that content on their TiVo or ReplayTV video recorders, the recorders will now limit playback of that content to a short time period after the recording is made. It’s not clear how the recorders will recognize affected programs, but it seems likely that some kind of signal will be embedded in the programs themselves. If so, this looks a lot like a kind of broadcast-flag technology, applied, ironically, only to programs that consumers have already paid a special fee to receive.

It seems unlikely that TiVo and ReplayTV made the decision to adopt this technology more or less simultaneously. Perhaps there was some kind of agreement between the two companies to take this action together. This kind of agreement, between two companies that together hold most of the personal-video-recorder market, to reduce product functionality in a way that either company, acting alone, would have a competitive disincentive to adopt, seems to raise antitrust issues.

Even so, these are not the only two entries in the market. MythTV, the open-source software replacement, is unlikely to make the same change; so this development will only make MythTV look better to consumers. Perhaps the market will push back, by giving more business to MythTV. True, MythTV is now too hard to for ordinary consumers to use. But if MythTV is as good as people say, it’s only a matter of time before somebody packages up a “MythTV system in a box” product that anybody can buy and use.

Braden Cox at Technology Liberation Front writes about a law school symposium on “The Economics of Self-Help and Self-Defense in Cyberspace”. Near the end of an interesting discussion, Cox says this:

The conference ended with Dan Burk at Univ of Minnesota Law School giving a lefty analysis for how DRM will be mostly bad for consumers unless the government steps in and sets limits that preserve fair use. I had to challenge him on this one, and asked where is the market failure here? Consumers will get what they demand, and if some DRM is overly restrictive there will be companies that will provide more to consumers. He said that the consumers of DRM technology are not the general public, but the recording companies, and because society-at-large is not properly represented in this debate the government needs to play a larger role.

I would answer Cox’s question a bit differently. I’m happy to agree with Cox that the market, left to itself, would find a reasonable balance between the desires of media publishers and consumers. But the market hasn’t been left to itself. Congress passed the DMCA, which bans some products that let consumers exercise their rights to make noninfringing use (including fair use) of works.

The best solution would be to repeal the DMCA, or at least to create a real exemption for technologies that enable fair use and other lawful uses. If that’s not possible, and Congress continues to insist on decreeing which media player technologies can exist, the second-best solution is to make those decrees more wisely.

Because of the DMCA, consumers have not gotten what they demand. For example, many consumers demand a DVD player that runs on Linux, but when somebody tried to build one it was deemed illegal.

Perhaps the Technology Liberation Front can help us liberate these technologies.

A group of large movie and technology companies is about to form yet another consortium to solve the digital copyright problem, according to a John Borland story at news.com. This looks like one more entry in the alphabet soup (SDMI, CPTWG, ARDG) of fruitless efforts to standardize on an effective anti-copying technology.

The new entity will fail just as badly as the old ones, and for the same reason: there is no effective anti-copying technology on which to standardize. You can get together as many company representatives as you like, and you can issue as many joint reports and declarations as you like, but you cannot change the fact that the group’s goal is infeasible. This just isn’t the sort of problem that can be solved by negotiation.

But perhaps the group’s real goal is to limit the use of digital media technology by law-abiding consumers. That’s certainly achievable. And, as Ernest Miller notes, they may also be able to erect barriers to entry in technology markets, by creating “security” requirements that lock out smaller companies.

In the end, my prediction is that the new group will fail to reach any meaningful agreement. They’ll hold some meetings and issue some vaguely optimistic press releases, but when it comes to the hard technical issues, they’ll fail to reach a consensus.

Despite this, the group will provide its members with a certain piece of mind. It will help the movie companies sustain their fantasy of the infringement-free, pay-per-view future. And it will help the tech giants sustain the fantasy that they, rather than their customers, will decide the future of media technology.