DIGITAL RIGHTS MANAGEMENT – AN OPEN DISCUSSION – Part 2

DIGITAL RIGHTS MANAGEMENT – AN OPEN DISCUSSION – Part 2

The Genie is out of the bottle, and try as they might, neither the Genie nor the cork is going to easily go back in. I say the issue has been going on for decades, but it was not until recently that the media companies could do anything about it using Digital Rights Management (DRM) on digital distribution.

First off, my name is Owen Rubin, and I am a media addict! I am a junkie for saving media, in all forms, and I cannot seem to stop. How did this happen?

I, like John, owned a reel-to-reel tape recorder when young. My cousin imports Asian electronics, and I obtained my first, small, 3” reel-to-reel tape recorder when I was only nine years old! It sounded awful, but yet I recorded music from the radio by simply putting the small device in front of my parents FM radio and letting it run. I had dozens of tapes of music, each holding maybe 20 songs, which I collected like crazy. I also recorded some TV sound tracks too, and loved that I could listen, even though the quality stunk, any time I wanted. I was hooked! How cool was this that I could play back this music when I wanted to?

On my 13th birthday I bought a top of the line Sony stereo reel-to-reel deck, with lots of bells and whistles, and connected to a very nice stereo system my parents bought me. And just like John, I owned box after box of 7” reels of tapes containing music mostly recorded off the FM radio. In those days, a local radio station would play whole albums, uninterrupted, both sided non-stop. To “own” that album on tape, one simply had to hit the record button on the deck, and it was yours. I did not feel as if I were breaking any law, after all, it was broadcast over free airwaves, so why not capture it? And I did not stop at just radio. I found myself recording the entire audio of my favorite TV shows as well. It was an addiction, and I collected hundreds of boxes of 7” tapes with more music and TV audio than would easily fit on today’s largest iPod.

But it did not stop there. The top drawer of my media cabinet is full of hundreds of cassette tapes, also mostly of music off the radio or converted reel tapes which I recorded when I switched mainly from my reel-to-reel to a new, smaller cassette. I hate to admit it, but I even owned an 8-track recorder so I could transfer this music onto tapes and listen to them in the car in those days.

But I should point out, that although I recorded hundreds of hours of music on tape, between ages 9 and 21 I also bought over 250 LPs, or long play record albums, dozens of pre-recorded tapes, as well as hundreds of 45s (these are single play 45 RPM records, for readers too young to know what a 45 is.) And often, when I would record something off the radio I really liked, I would quickly run to the local record store and buy the 45, for 99 cents, or the LP for $5 to $7. Most of these LPs and singles still sit in my garage today, and I listen to them on occasion. I spent a lot of money on media, and never ever considered myself a thief for recording off the radio. But I also immediately recorded onto tape any music I purchased, so I could enjoy it without wearing out the record. By today’s RIAA standards, I would have been skirting the edge of being a criminal for doing all this, and it never felt wrong, and I cannot recall ever being told I could not do this.

Then, in 1976, at the age of 22, with too much money in my pocket from my first job at Atari, I discovered the Betamax videocassette recorder. Cool, a new form of recording with the ability to save television programs. As an avid Sci-Fi fan, I had to have this $2600 device! You can imagine my collection now. And it hurt to collect TV then, because blank, ONE HOUR video tapes (L-500’s) in those days cost $18 an hour! But I wanted to control my listening and watching, and this let me do it. And to get the most out of my $18 tape, I paused when commercials came on as well. Again, I did not feel as if I was breaking any law.

And I will not bore you with all the new technologies that continued to come along for the next 25 years to feed my copying needs, such as VHS, S-VHS video tapes, and CD recorders, only making this habit that much worse. With commercial-free music feeds and amazing quality TV from satellite, the recording quality of my archive improved with every technology.

I hate to admit that I also owned a ten-foot satellite dish in 1983, and that is when I met my first DRM! Seems that over six million satellite viewers were getting HBO (and the like) for “free” (regardless of the fact that they paid $2500 to $5000 for their systems) while cable TV viewers had to pay $6 to $9 a month. In an attempt to stop this “stealing,” which HBO claimed was costing them over $50 million a year in losses, and which, for a great many years was broadcast in the clear on satellite anyway, HBO assured the United States Congress that “Videocypher II,” a scrambling and DRM solution built by MA-COM, a government funded company, would lock their signal up, “stop the bleeding”, and allow them to sell it legally to the same satellite viewers, not leaving them in the dark.

Sounded like a good idea at the time. Except, HBO wanted a satellite viewer to pay the SAME cost per channel that any cable subscriber paid. Strangely enough, as a satellite viewer, I owned all my equipment, whereas a cable customer “rents” the use of the cable company’s equipment in their monthly fees. You would expect that a cable customer’s price for HBO would be higher than mine as they are also paying for all the cost of all the cable company’s equipment, while I paid for my own equipment up front. Also, it cost HBO nothing to add a satellite viewer, as the signal was already being broadcast anyway, and all the viewer had to do was tune in and “take a copy” of the signal.

But no, the beginning of the greedy grab by media companies with DRM started way back in 1976 when HBO “locked” their signals from the public, and then wanted all those consumers who already invested thousands in equipment to pay the same price per channel as someone who watched on cable. In addition, cable companies started to threaten to drop other channels from their service if they too did not scramble out satellite viewers using Videocypher II and make satellite viewers pay to view them as well. Even channels like PTL (Praise the Lord), a religious channel who you would think would want all the viewers they could get, all of a sudden scrambled.

Why would they do that? Because cable companies paid channels like PTL and HSN (Home Shopping Network) on the order of ten cents per subscriber on their system, and if the cable company dropped them, these channels would loose millions of dollars in revenue. So HSN and PTL scrambled, and were tossed into a very expensive package of channels for satellite viewers to buy, averaging about $1 per channel per month for what cable companies paid 10 cents per channel, and viewers got included in basic cable. And it was a take all or none.

In 1976, DRM had started, and six million satellite customers were all of a sudden called thieves, and asked to pay VERY HIGH prices to continue receiving programming that only days before was available for free. Even the “free” broadcast networks (NBC, ABC, and CBS) encrypted! It should also be noted that 60% of those households with large backyard dishes in those days lived in areas where cable was not available, because the cost to provide cable was just too high. And now these people were now forced to pay high cable prices for using their own equipment, and also had to buy new equipment to support the new DRM. DRM just screwed the consumer here.

But I digress. Now, almost 30 years later, and with literally many hundreds of Beta, VHS, and S-VHS tapes of almost every Sci-Fi show I liked in my media cabinet, along comes the PVR (personal video recorder, or the ability to record to a computer hard disk) now with a recordable DVD built right in. As you can imagine, the media companies were in a panic, because people could now digitally record TV onto a hard disk. They panicked so much that they tried to pay companies like TiVo and Replay to remove the “commercial skipping” feature. TiVo took the money, and the button that skipped 30 seconds forward was reprogrammed to not work any more! Replay, who had a FireWire connector for external additional storage, turned off the connector just before releasing their unit.

But my addiction had a new pusher: the ability to store, in MPEG encoded files, up to six one hour episodes (of 42 minutes each) of my favorite shows, recoded digitally on nearly indestructible DVD media, which takes up 1/10 the space of a video tape, as a godsend. As you can imagine, I bought one (and own two other PVRs) and I am converting all my tapes to DVDs, as well as recording and saving new shows I like at an alarming rate, and I already have well over 175 DVD’s worth of “stuff.” There is no help for me!

Note that the big problem here was that the media was now digital. Never mind that the MPEG-2 satellite stream looks awful compared to a good copy of its analog cousin, or that digital delivery now means that unlimited quantity of copies can be made with no additional loss of quality. In the analog days, it appears that media companies did not mind if you made lousy copies of their analog stuff, because in the end it looked worse and worse with each copy.

And now, with peer to peer networks like Bit Torrents, LimeWire, and BearShare, plus web sites hosting links to these files, if people are so inclined, they can find just about every TV show, movie, program, or song digitally encoded and waiting for download on one or more of these networks. And THERE lies the problem and need for DRM.

Up until a few years ago, most of the recording people did was for their own personal enjoyment, and what black-market or pirate use did occur was limited to people who did it on a very large scale, basically making thousands of copies and selling them as legit at flea markets or overseas, and that was a different problem from the individual. But we could record what we wanted for personal use, and if we wanted to share it with friends, we had to hand them a physical tape to make that happen, much like lending a book. And since copies of copies did not look or sound so good, no one cared it you copied it, because over time, it was useless. The media companies tried their best to stop individuals from recording anything they wanted for their own use in 1976 out of fear of lost revenue. Lucky for most of us, “fair use” won over, and the case ‘Universal City Studios, Inc. et al. v. Sony Corporation of America Inc. et al.’ set a standard that said the right to record for personal, non-commercial use was okay. (See:  http://www.museum.tv/archives/etv/B/htmlB/betamaxcase/betamaxcase.htm)

But did you know as a result of this and several following suits, every blank audio CD-R (not the data ones), minidisk, video tape, and audio tape you buy actually has a “fee” tacked onto its price that goes to companies like the RIAA and MPAA to pay a “license” for the right to copy copyrighted material? The RIAA claims this money goes to the artists, but artists say they never see it. BUT, we DO pay for the right to copy every day with this fee, so how can we be breaking the law? But then the ability to store digitally in a computer format came along, and guess what, we are no longer paying because we no longer buy tapes.

So what happens today when you record for your own use, be it music, programs, movies, or video, and then “share” that recorded material with anyone who wants it, digitally, and still retain your “original?” What happens is the media companies start believing they will loose millions and millions in revenues to “illegal copying” and tighten their grip on EVERYTHING! It’s the same story: if you copy it, they lost a sale, even if you never intended to buy it. And in today’s digital world, the ability to add digital rights management to digital content in an attempt to stop this “sharing” means that everyone will suffer from tighter and tighter controls over all media, the companies will “bleed” more as people stop buying, and they will continue to blame the problem on people who copy.

Right now, the RIAA and MPAA are lobbying to add a $3 per disc fee to DVD-R and CD-R to “pay” for all this illegal copying. This means that you are assessed a fee to copy regardless of what you use the disc for. That is not right. Nor is assuming I’m guilty and charging me just in case I MIGHT put copyrighted material on one of these discs. And what if I own the material and paid my fee, how do I get a refund? If I buy an Apple iTunes song, and put it on a CD-R audio, I am paying twice now. That is not right!

We all know, it is simple to copy, rip, and burn all types of copyrighted things, and we have also seen that the more the media companies tighten their grip, the harder people will work to steal that media, constantly coming up with new ways to share it. I do not believe it will ever be stopped, but the battle will become more and more ugly. And if the industry continues to sue and arrest the same people who buy their media, even if not sharing it, more and more people will simply stop buying it, and they WILL loose more money again. Why would anyone sued by a record company ever buy anything from them again?

You can fight back. For those who want RIAA-free music, there is a website at http://www.magnetbox.com/riaa/ where you can put in the name of CD or artists, and they will tell you if the CD is released by an artists that is a member of the RIAA or not, and then you can buy RIAA free music if you choose.

But lets look at this from another angle. Something I call “What the hell are you thinking, RIAA?”

The media companies make millions and millions of dollars EVEN with all this theft going on, so they are not hurting for revenue, and obviously make a great deal of money from all the honest people out there, so it is hard to take them seriously when the complain. This does not give you a license to steal, and I would not ever suggest that, but I am tired of hearing how badly these companies are bleeding revenue over Internet “theft.”

These ads showing that you’re hurting someone make me sick. I saw one at the movie theatre the other day that showed a set builder who said recording the movie with a camera on the sly was like taking money out of his pocket. BLECH! Give me a break. Recently, “The Incredibles” from Disney/Pixar took in $72 million in just the first week. Most of that money will be going right into Disney’s bank account too. If stealing that movie is costing that set designer money, then I think Disney needs to rethink how they decide to screw the little working guy paying eight bucks or more per ticket, while still keeping the corporate profits.

These same companies claim losses of hundreds of millions of dollars on “stolen” media, just as HBO did in 1976. But I claim that this is a bogus loss number, and not truly representative of what they are really losing. Yet they claim these big losses so the government will get involved. (John, a political animal, is chuckling, because the mantra of “less government,” touted by many bigshots in government and business, crumbles when individual interests are at risk.)

In HBO’s case in 1976, six million viewers got free service for years. When HBO finally decided it was enough (and satellite system use was growing fast), they calculated 6,000,000 viewers times $9/month in lost revenue, claiming $54 million dollars each month per channel. But when they turned on the DRM, what really happened is they lost 4 to 5 million viewers who would not pay the ridiculously high price they wanted to charge IN ADDITION to having to buy another $300 piece of equipment to see the channel. Seems their loss should have been stated as maybe $5 million dollars, except about two to three million satellite viewers had offered to pay a $5/month subscription fee to watch HBO even BEFORE it was scrambled, and HBO said no!

So I would calculate that DRM cost HBO dearly. In addition to all the equipment they had to add to scramble and do DRM, which costs hundreds of millions of dollars, they lost an additional $10 million a year clear profit from the people who were willing to pay anyway. The company just pissed off the rest of the potential viewers. HBO priced themselves too high, and forced viewers to buy more equipment, but DRM failed and cost them MUCH more than simply asking people to pay a fee. How ironic!

And according to surveys I have read on Internet downloads, somewhere near 90% of those who steal or download media, be it music or a movie, would not buy the same thing IF they had to buy it. They would simply do without. Recent studies of downloader behavior shows that of 100 people downloading for free some media or software, fewer than 10 in that 100 would actually go buy that same thing if they could no longer download it and had to pay retail prices. Yet, these media companies call every one of the 100 downloads a loss, even though it is not a sale they would have ever realized in the first place, meaning that the total loss stated is 90% too high! So take these media company “loss” numbers with a grain of salt; that is not how much they actually lose in sales due to downloading.

Also, loss is an interesting concept here, because the actual loss is different than a loss of a physical item. If one steals a physical item, like a CD, the store is out the item, so a real loss is realized and the store can no longer sell that item. But if one makes a digital copy of something, there is no physical loss, and the digital item is still available for sale. I argue this is what makes this crime seem so unserious to so many; nothing physical is lost, and consumers have a hard time getting their head around what was actually lost by the media companies. This is a difficult perception to change in many people.

Lastly, I believe that highly inflated prices are the real reasons people steal in the first place. Look again at HBO in 1976. They wanted satellite viewers to pay the same as cable viewers even though there was no cost whatsoever to HBO to turn these viewers legit. Satellite viewers owned their own equipment and thus did not have to pay cable overhead in the price, yet HBO inflated the price out of greed by HBO and pressure from the cable companies, who did not want viewers moving to satellite. Instead of competition lowering the price for all, an unfair business practice using DRM caused hackers to break the Videocypher II system, and the result was hundreds of millions of dollars being spent by HBO to go after the thieves who stole their signal, and improve their DRM (sound familiar?)

I believe if these same companies took most of the money they spend on trying to prosecute and stop the pirate, and used that same money to simply lower their price, they would realize a great deal more sales, convert many a thief into a paying customer, and isn’t that their goal in the first place? Of course some people will continue to steal, as they never have any intention of buying, and perhaps just writing that genuine loss off to overhead in return for many more new customers is a better answer. Prosecuting these people is stupid in the long run because they would never spend money anyway. All this legal activity not only angers the legit customer who has to jump through more DRM hoops and sees more restrictions, but also ends up raising the cost of the item to cover the costs, pushing away more potential customers.

Personally, I find it easy to understand why people want to steal music, videos and software; it is too damn expensive! I went to Tower Records the other day, and the average CD was $18 to $22. This is a ridiculous price for a CD, and to me easily explains why sales are down. We know how cheap CDs are, because AOL gives away millions of them for free every month! I believe cost is the number one reason music sales are down, NOT stealing as John suggests above. Look at the number of songs Apple has sold at a reasonable price, converting a thief to legit paying customer, all over price alone!

The other problem is with content on a CD or DVD. I cannot recall the last time I bought a CD where I liked the entire thing. Until recently, I had no way of knowing the complete content of a CD before buying. And I believe this too is a reason that music sales are down overall, again not related to theft of music, as John would imply above.

Today, one can sample all the songs online before they buy, be it an illegal download or a system like iTunes’ ability to play 30 seconds worth of the music. What many music fans discover is that a lot of CDs today are not worth buying, with only a few good songs. Why buy the entire CD when companies like Apple sell so many singles on their sites? Why buy a lousy CD for $20 when you can buy only the few good songs for $1 each? Sounds like $18 lost revenue to the media companies, but I see it as $2 gain they would normally not get.

And I can not help but wonder what happened to those promises from these same record companies who said, when CDs were new, that CDs would be cheaper to make than vinyl records, and that consumers would reap the cost savings in lower costs for music? It NEVER happened, and all those savings went right into the pockets of the media companies.

The same is true for DVDs and software. Why does Microsoft Office for the Mac cost almost $400 for the “standard” edition, and almost $500 for the “professional” edition? Is it no wonder people copy them? Sure this is a great piece of software, but for most, it is way too expensive. I believe if it were cheaper, more people would buy rather than steal.

And let us not forget DVDs of movies and TV shows. A season of “Star Trek The Next Generation” has a retail price of $120! WHY? This for a show that already paid for itself hundreds of times over in syndication, and yet the greedy *^&@% at Paramount charge $120 a season for six DVDs. Huge profit! And these are the same companies who scream when someone copies their stuff, even though they have it in their power to reduce theft by simply lowering the cost. ( John argues that media giants claim they need cash cows and mega-hits to subsidize all the flops and humdrum releases, which supports his point about diminishing quality within the entire entertainment industry. I am not sure this is true, but why should we consumers pay for the mistakes of their executives? Take it out of their million dollar salaries! )

Which takes me to fair use. If I buy a CD, do I have the right to rip it to an MP3 and listen to it on my iPod or MP3 player? The record companies say no, this is not fair use, and they want it to stop. If I own the LP, tape, or CD, which means I bought a license to listen to that music already, am I breaking the law if I download an MP3 version of the same song off the Internet? To me, it would seem like a fair thing to do since I could rip the music myself, but again, the record companies say no. Maybe this is because someone else is illegally sharing it, but I still claim that I bought a license. But media companies actually say no to ripping the song yourself as well, and want that stopped too.

In fact, these media corporations do not want you to copy anything; they want to be paid over and over for copies of the same music in each format you use. If they had their way, you would never own any content, and in fact, they claim you merely purchase a license to listen now. But they would rather you buy a limited, short-term license to listen, or maybe even pay-per-play license and never own the right to unlimited play. And this takes us directly into the need for DRM. Without DRM, the media companies cannot move us all to a pay-per-play model for media, their ultimate goal. And digital media has now made this DRM possible!

If these media companies had their way, VCRs and PVRs would also be illegal immediately, and they have spent hundreds of millions of dollars to try and make that happen. Recording a show off a broadcast channel would be illegal, or require you to pay a fee for the right to do so. And, in fact, High Definition content providers are working right now to restrict PVR recording of their shows, EVEN if they are broadcast over free airways. Why, because a few people might distribute the show on the Internet? But what is wrong with that anyway? I believe if a show was broadcast for “free” over public airways, it should be fair game to view and share, but the people who make and distribute it say no. WHY? Greed and larger profits for them, in spite of how we consumers pay directly for “free” content through corporate advertising revenue and low-cost federal broadcast licenses!

Ok, to the flip side now. If I believe all this, why do I not simply copy tons of media?

In reality, someone paid to produce, record, play, create, etc. the music, video, movie, or software you plan to steal, and whether you like it or not, they own the rights to it, not you. Yes, it may be too expensive, and yes, it sucks that you cannot just share it with all your friends when you do buy it. But the people who made it or paid to make it, own it, and if you copy or distribute to others, it IS stealing. If you download any kind of media or software for which you do not have the right to own, or have not paid a legitimate seller to purchase, you are stealing. Physical item or not, there is a value associated with the media, and if you believe it is too expensive, then do without it.

There is no rule in this world that says you have the right to have whatever piece of content you wish, and if you cannot afford to buy it, steal it. Perhaps for most of you who feel otherwise, you will have to wait until you actually help create something of value to understand the anger as you watch so many just make copies without paying for it. Maybe that is what it takes! I designed video games as my first job out of college, and I did not want people ripping me off, so I do not rip them off.

Obviously, you cannot fix this problem by continuing to steal music, software and movies. Continuing to do so will just make the problem worse as media companies make protection better and better, and start suing more and more. Just this month, Congress is working on a bill to give people jail time for stealing music and movies. At some point, the cost of stealing in time will be higher than simply buying the item. Unfortunately, when the media companies know that, the price will go up too, probably to pay for the cost of the DRM! In fact, I work for a company called Arxan Technology, and we protect DRM and copy protection software from tampering and reverse engineering, making it harder to get around the protection, and I feel quite good about it actually. I am not a fan of DRM actually, but the problem is so bad now, it is the only real solution.

But what can you do about it? I say, vote with your wallet. First, support those artists who support file sharing as a way to hear their music, and buy their stuff when it is for sale. Many artists give away much of their music because they believe it is a good idea to let you hear what they do. Have a look at this month’s WIRED magazine (November, 2004) for an article on Digital Rights Management. Inside the magazine is a CD of free music from artists like David Byrne, Chuck D, The Rapture, Beastie Boys, and many more, 16 songs in all. And all these songs encourage commercial sharing. Support these artists!

Secondly, support companies that let you try or listen before you buy, allowing you to make an informed buying decision up front. I use to hate it when I would buy a CD where I heard one song on the radio, only to find out that the rest of the CD was nothing like that song, and I could not return it. Now, if you like what you hear, buy it. If not, there are still legal ways to obtain the individual songs, and for a few dollars, don’t become a thief, but refuse to buy crap to get just one song.

And if you still do download music, and you like what you hear and want to keep it, that is the time to go buy it. Either get the single from a place like Apple’s music store, or go buy the CD. But also write letters when you feel you did not get your money’s worth. Push to make companies let you return software or media that is not good. Let these people know that you feel ripped off, and if they do not want you to rip them off, they should not be doing it to you either. Letter writing works people. Same for movies or software: if you download it and use it, go buy it. Obviously if it is important enough for you to keep, it is worth buying. Perhaps if more people buy only what they use, the price will come down!

But the bottom line is very simple. If you keep stealing media, the DRM that controls and protects it is going to get harder and harder to break, and soon there will be no Genie or bottle to break. What this means is that the annoyances a legit user is going to have to go through will get bigger and bigger, and fairly soon every one will loose, legit people and downloaders. Or maybe even worse, companies simply stop making this stuff, or go back to analog means of distribution, and that would really suck.

That’s my 2 cents on DRM!