Fighting Digital Piracy: Industry Disputes

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SANTA MONICA, Calif. -- Entertainment industry conferences have an unfortunate tendency to devolve into gripe sessions about ungrateful, immoral consumers who merrily pirate the work of others and/or object to any attempts by owners to control their content.

And there was plenty of that sort of griping going on at this year's Digital Hollywood conference, held last week in Santa Monica, Calif. But one panel discussion, "Digital Choice and Access to Digital Content - Balancing Consumer Rights with Technology, Regulation and Legal Principles" stood out from the fray. Participants actually discussed ways that DRM and copyright have imposed unfair restrictions on content use, and discussed ideas that they hoped would allow both businesses and consumers to be happy.

The panel started off with a copyright attorney blasting copyright laws.

"We're setting up a friction that doesn't exist between consumer rights and copyright, so how do we encourage dissemination and access to all of these works that are being created? We need to rewrite the copyright laws," said panelist Ann Chaitovitz, former executive director at the Future of Music Coalition and a copyright attorney-advisor to the U.S. Patent and Trademark Office.

Exclusive rights may be fine in the abstract, but they don't work in the real world, said Chaitovitz. "Technology took away all of the controls," she said. "Copyright law was intended to encourage innovation. Maybe it's time to scrap the exclusive rights concept and ask ourselves again how to incentivize creation."

Chaitovitz raised the idea that music companies, driven by fear that their business model was collapsing, initially used Digital Rights Management (DRM) technology in what she described as a "stupid" way. Consumers voiced their objections, the market worked and the labels stopped using intrusive DRM.

A warning for Amazon's Kindle

She said she believes the same thing will happen with Amazon's Kindle, which has been criticized for using draconian DRM, including the requirement that publishers must supply DRM-protected digital copies of books for the Kindle bookstore no matter what the publisher may think about DRM.

But that change may not happen until the public makes its wishes known in a concrete way, she said. Publishers can't afford to make a stand and risk having their books locked out of the Kindle store.

Also under discussion was the idea that DRM can, when used correctly, help everyone do the right thing.

Panelists agreed that just because they have the legal right to control their content, the public doesn't necessarily see DRM as legitimate. They discussed that one of the ways business can change that perception is to demonstrate that part of the cost of content is actually being paid to the creators of that content, not just the companies that package and distribute it.

That said, panelists agreed that technology and tech companies have wreaked havoc on the entertainment and news business, killing any controls that businesses might have once had over who accesses their content and how they use and redistribute it.

Next page: The five stages of grief

The five stages of grief

"The Internet is the equivalent of cancer for big media," said Laurin H. Mills, managing partner at Nixon Peabody LLP. "They are going through the five stages of grief. Right now they are largely in the denial stage. Occasionally they move into anger and sue somebody."

Mills talked about how he had represented newspaper clients for 20 years and said that his clients "had a chance to get this right during the first dotcom boom" but instead ignored the problems presented by the Internet. And "now most news companies are worth less than the real estate they're sitting on. Unbelievable," said Mills.

Technology companies are dragging traditional content providers kicking and screaming into the future, several panelists said.

Google (NASDAQ: GOOG) was cited by Mills as a company that is "ignoring the (copyright) law" and rather than negotiating with copyright owners up front they instead "dare owners to stop them if they can."

She also said Apple's iTunes store has ripped the music industry's ability to control pricing.

Another factor in the distribution of content that's being changed in response to technology, specifically file sharing, is the window of time that movie companies used to have between releasing a film to select theaters, releasing it to all theaters around the world and then making it available on DVD, pay-per-view and whatever other venues they chose for distribution.

Now, once a film hits one theatre, it's being bootlegged, Chaitovitz said. So companies might as well release it through as many venues as possible, as soon as possible, because the film will be widely available hours after a limited release anyway.

"We are aware of the piracy, and we are adapting to it. But there are a lot of factors that go into a release timeframe. The window of time is shrinking, but it can only shrink so far," said Arnaud Robert, corporate vice president of emerging technology strategy at The Walt Disney Company.

And why does piracy exist? Participants at this panel discussion didn't point their trembling fingers at evil consumers; instead they said piracy is caused by bad law, bad technology and bad business models.

Changing the digital ecosystem

Disney's Arnaud placed most of the blame on bad technology.

"We have this ecosystem created by tech companies," he said. "They didn't have consumers in mind or studios, but created platforms that benefited them and really doesn't benefit content owners or consumers. There's a shift that needs to happen away from the (digital distribution) platform silos."

Mills shared a recent experience with trying to do things the right way.

"My law firm has their annual meeting tomorrow. My partner wanted to hand out an article from Fortune at the meeting, and we wanted to do it the right way. We spent three hours figuring out how to do it, and it turns out you have to pay $3 per article to distribute the article. We just said forget it."

He added, "It's a lousy business model. Why doesn't Fortune have a means where you can go on the site and pay 20 cents or 15 cents to get an article? That's why piracy exists. The business models don't make sense."

Article courtesy of InternetNews.com.

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