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Tech Industry

Grokster and America's future

Tech entrepreneur Mark Cuban says the outcome of an upcoming copyright case will reverberate for decades throughout the U.S. economy.

I remember being very nervous back in college.

There was very real discussion about the United States losing its station as the world's most powerful nation. There were American hostages in Iran. There was an Olympics boycott. The Japanese stock market was booming, and many thought it wouldn't be long before our economy would be second to theirs. The U.S. auto industry was under attack by imports. Inflation was at record highs.

At Indiana University, our school newspaper carried headlines from around the state. I knew that Anderson, Ind., had an unemployment rate of more than 20 percent. Numbers that people were suggesting reflected Great Depression-era depths. Other cities were almost as bad.

Students weren't quite brimming with optimism. As I prepared to graduate, getting an interview was a battle. Fortunately, while our manufacturing economy was taking it on the chin, others were working late--including the labs at Xerox; the garages in Silicon Valley, Seattle and New Mexico; and the offices on Massachusetts' Route 128 and in Armonk, N.Y. The personal-computer business was getting ready to explode.

Studios get your hard-earned money, and they make it illegal for you to make a copy to keep just in case your DVD gets scratched. That's wrong.

The history of computing and, in particular, the microprocessor revolution, is well-documented. What may not have been nearly as well-understood is the role it played in revitalizing our economy and how we felt about ourselves.

In a scant five years, college kids went from worrying about jobs to being positioned at the lead of the new PC generation. When I graduated from college, I had taken one computer class that required me to punch in a Fortran program on cards and feed them to a huge computer I never saw. A number of jobs available in the computer field were limited to "computer scientists." That changed in what seemed a heartbeat.

If you knew how to use a spreadsheet, you could get a job. If you could write batch files in DOS, you could get a job. If you were advanced and could integrate local-area networks, grasp multitasking, program using relational databases--you could pick the job of your choice.

The PC revolutionized the job market for college graduates and more importantly, the business of business. But it didn't stop at PCs. Software was developed for every application imaginable. PCs were connected into local and worldwide networks. Printers went from modified typewriters to laser. Communications went from modems to broadband. Online services expanded from the thousands to the millions--and that was before the Internet and America Online. We went from Moore's Law to Metcalfe's Law.

This technology revolution has been amazing for two reasons. First, the technology has continued to evolve this long. We may be at a point where we aren't surprised to read about new technologies, but entrepreneurs continue to generate ideas that lead to new products and services. Technology continues to have a significant impact on the U.S. economy and to create jobs.

Second, the government managed to stay out of the way for as long as it did. Who knows why, but our elected officials managed to let the free markets stay free.

Until now.

Taking a wrong turn
Things started to get a little shaky back in 1998. In October of that year, the Digital Millennium Copyright Act was passed. The DMCA was basically a law that set a very unnerving precedent--that the government would do what it could to protect the interests of content owners at the expense of technological development.

Entertainment companies just feel that because P2P impacts their business in a way they can't control, it's better to make it illegal than adapt to the new technology.

By itself, the DMCA didn't kill technological innovation. At the time it passed, the DMCA was more a nuisance than anything else. Digital content wasn't all that prevalent, and there certainly wasn't much money in it. Not many people cared that our tax dollars were being spent to make sure that your Internet radio station never played more than three songs in a row from the same artist. Or that it became illegal to have a 24-hours-a-day station dedicated to the Beatles (or any other artist).

In 1998, few people were buying DVDs. It was easy to buy a VHS tape and make a second copy for your own use. The DMCA rarely touched home. In 2005, it's a whole different ball game.

You know those scratched DVDs you own? How nice it would have been to be able to make a copy first, knowing that the kids were going to ruin them at some point. But you can't. It's illegal to make software that allows you to make backup copies. You paid a lot of money for your DVDs. The movie industry has made billions upon billions of dollars from DVDs. Many movies make more from DVDs than from theatrical release. They get your hard-earned money, and they make it illegal for you to make a copy to keep just in case your DVD gets scratched. That's wrong.

It's the law of unintended consequences. Few people knew that DVDs would basically replace VHS in our homes. Few had any idea that DVDs would regularly get scratched and rendered useless. No one had any idea that trying to make a protective backup of that DVD would be illegal. It was perfectly legal to do it with VHS tapes.

The law of unintended consequences is never repealed. It goes on forever. Next month, a case entitled MGM v. Grokster will go before the U.S. Supreme Court. If this case goes the wrong way, that law of unintended consequences could put a hurt on us in the future.

The case is about whether peer-to-peer software that enables the peer-to-peer networks most of us read about--and few of us use--should be illegal or not. The big entertainment companies are pushing the argument that because some of their content gets stolen through the use of this software, all uses of the software should be illegal.

They are not, however, arguing that there aren't legitimate reasons to use the software. They acknowledge that businesses and individuals are using the software for purposes other than those that impact their music or movie businesses. They just feel that because it impacts their business (they still don't know if it's a positive or negative impact) in a way they can't control, it's better to make it illegal than adapt to the new technology.

In reality, this case isn't about whether music or movies are illegally downloaded using P2P software. This is purely about control.

In reality, this case isn't about whether music or movies are illegally downloaded using P2P software. This is purely about control. The entertainment industry wants control over technology that could impact its business.

Technology has advanced further than any of us could have imagined in the last 15 years. Even the best forecasters would have been shocked at the number of us who now use cell phones, e-mail and DVD players. They'd be equally stunned at the number of people who spend as much time online as they do watching TV, who own MP3 players or who are replacing film cameras with digital cameras--and more.

The next 15 years will have just as many new devices that we can't imagine today. But what if they all became illegal?

We are living in a world where information is becoming 100 percent digital. Of all the digital information across the world that is being created and exchanged, what percent is comprised of music and movies? What percentage of that is owned by Hollywood and the big music companies?

Think about all the home movies we are creating and saving on our computers. All the digital pictures of our families and friends. All the personal music created at home. All the corporate data and presentations. All the books, software, newsletters, newspapers, discussion forums, blogs, Web sites and e-mails that are created and saved digitally. How big a percentage of that could music and movies make up--one-tenth of 1 percent? At most?

Everything our imagination creates and touches that can be made digital is at risk if Grokster loses.

Every single one of these items can benefit from the distribution efficiencies created by peer-to-peer networks. Every person and company in this country that wants to exchange digital data can benefit from peer-to-peer technologies. Just because the uses aren't prevalent or obvious to some today doesn't mean they won't be two or five years down the road.

In the MGM v. Grokster case, the fewer than 50 companies who control less than 1 percent of all digital information are trying to take control of innovation in the technology industry and pry it away from the rest of us. Everything our imagination creates and touches that can be made digital is at risk if Grokster loses.

What innovations will be condemned by law before they have a chance to come to market, because they could have an impact on Hollywood and the music industry? We have no idea, and that is a very scary prospect.

Which brings me back to 1980.

The last 25 years have seen unimaginable increases in productivity, creativity, economic development and American pride because amazing people have been able to take amazing ideas and develop them without fear. That fearlessness ends if Grokster loses and the content industry is able is to take on the role of technology gatekeeper. There will be a time, as there was in 1980, when we need a spark, when we hope that something new helps us escape from something old. Let's not let the content industry steal that opportunity out from underneath us.

This is a call to action. Call your representative. Call your senator. Let them know that you respect the rights of the content industry, but that protecting innovation is more important. Our future could depend on it.