Tech Industry

Perspective: Get ready to be fleeced

CNET News.com's Washington watcher Declan McCullagh says a team of lobbyists and politicians is gearing up to enact new digital copyright laws that will cost you more money and result in more government regulations. Happy days.

WASHINGTON--Don't look now, but a team of lobbyists and politicians is gearing up to enact new digital copyright laws that will cost you more money and result in more government regulations.

Unhappy with the current reach of the law, the lobbyists and politicians believe that more restrictions levied on U.S. companies are necessary. Their target: The consumer electronics industry, which is already suffering through America's economic malaise and, conceivably, companies that sell music and video-playing software as well.

Who is behind this maneuvering? Don't blame Jack Valenti, or the folks over at the Recording Industry Association of America (they're too busy protecting their Web site from further defacements). You'll find the culprits among the "fair use" crowd, whose champions include none other than Rep. Rick Boucher, D-Va., and Sen. Ron Wyden, D-Ore., and whose allies include the Electronic Frontier Foundation, Public Knowledge and DigitalConsumer.org.

At the Intel-sponsored Digital Rights Summit in Silicon Valley last Wednesday, Wyden said he was about to introduce legislation requiring consumer electronics devices and media such as music CDs to be clearly labeled with explanations of any anticopying restrictions. Boucher has already introduced a bill to give federal bureaucrats the power to require "prominent and plainly legible" labels on copy-protected CDs.

Their intentions may be pure, but their methods are not. Whether CDs should be labeled as copy-protected should be up to the public, not the merry band of aging technophobes in Congress. Consumers are not dumb or naive. If rational people can't use CDs on all their electronics devices, word will get around, and they won't buy anymore. Record labels, too, have an incentive not to overly annoy consumers: CD shoppers are not price-inflexible, and if copy protection schemes become too onerous, they'll be rejected. Just look at the miserable failure of DivX.

As tempting as it may be, the solution is not to follow Hollings' lead and use the political process to demand the kind of regulations that "fair use" advocates think are appropriate.
I can understand the frustration felt by the "fair use" folks. Congress enacted three worrisome copyright laws in quick succession in the late 1990s: The Digital Millennium Copyright Act, the No Electronic Theft Act and the Copyright Term Extension Act. Only now are we seeing the ridiculous ways that they're being wielded--to block third-party toner cartridges for laser printers and possibly toss the average peer-to-peer user in prison for up to three years. Last month's rejection by the Supreme Court of a challenge to the copyright extension didn't help either.

Even worse, Congress could go further and impose additional regulations on computer hardware and software makers. That's what Sen. Fritz Hollings, D-S.C., hoped to do in his reviled Consumer Broadband and Digital Television Promotion Act, which would forcibly implant anti-copying technology in nearly anything with a microprocessor.

But as tempting as it may be, the solution is not to follow Hollings' lead and use the political process to demand the kind of regulations that "fair use" advocates think are appropriate. The right thing to do is try to repeal the worst sections of those three laws--hey, it could eventually happen--and then leave Congress out of it. To his credit, Boucher tries to do that in part through his Digital Media Consumers' Rights Act--but the other half of the bill is devoted to increasing regulations on the music industry.

Put another way, what's happening right now is lobbyists from the entertainment industry are seeking to regulate computer technology in hopes of limiting copying, and academics and left-leaning groups are seeking to regulate digital rights management technology in hopes of mandating "fair use." Both sides hope to enlist Congress--raising the very real possibility of interminable political battles that could shape the future of digital media more than the technology itself.

Both sides are wrong. It was a mistake for the movie studios and the record labels to start this political tussle in the mid-1990s, and it's a mistake to follow their lead. (And let's not forget the Business Software Alliance, whose members include Microsoft, Apple Computer and Adobe Systems, and which remains one of the biggest backers of the DMCA.)

Both sides hope to enlist Congress--raising the very real possibility of interminable political battles that could shape the future of digital media more than the technology itself.
Allowing the political process to make these kinds of decisions is what James Buchanan, who won the 1986 Nobel Prize in economics for his public choice theory, warned about decades ago. Legislators are supposed to pursue the "public interest," but they typically end up doing precisely the opposite, Buchanan said. While the free market is never a perfect judge of people's needs, politicians and bureaucrats in thrall to special interest groups can do far worse.

"No matter what Congress does, there's a better-than-even possibility it'll be the wrong thing," says James Gattuso, a free-market economist at the Heritage Foundation who once worked at the Federal Communications Commission. "Congress has so many competing pressures, it would be a stroke of blind luck if they got the answer right."

Adam Thierer, an analyst at the Cato Institute and veteran Washington hand, also believes it's not wise to trust Congress to do the right thing. "We should only resort to government solutions as a last resort, when we absolutely have to," Thierer says. "More importantly, that principle should cut in both directions. It means that we should reject calls for mandatory digital rights management on one hand, and reject calls for expanded 'fair use' rights and labeling requirements on the other. All sides seem to be favoring some sort of legislative quick fix and they all invite the government in."