[DMCA-Activists] FT: Music Industry: Is Fair Use Fair Play?

[Seth Johnson]

> http://news.ft.com/cms/s/2594a9f8-603a-11da-a3a6-0000779e2340.html


Music industry asks whether fair use is fair play


By Paul Taylor and Aline van Duyn

Published: November 28 2005 18:34 | Last updated: November 28
2005 18:34


Sony BMG Music Entertainment, the world’s second largest music
group, has become embroiled in a very public debacle after it put
copyright protection software on its compact discs. The discovery
that the software could expose the CD users’ personal computers
to hacker attacks has highlighted the controversial use of
digital rights management (DRM) technology as well as hitting the
operations of the joint venture between Japan’s Sony group and
Bertels­mann, the German media giant.

Sony BMG has been forced to suspend use of the software, recall
millions of music CDs – including some from its best-selling
artists such as Celine Dion and Natasha Bedingfield – and issue a
humiliating public apology. In addition, the company faces a slew
of lawsuits in the US, including one tabled by the Texas
attorney-general, which accuse Sony BMG of privacy and spyware
violations that could put further pressure on the company’s
embattled US management.

There are indications that sales of Sony BMG-branded CDs have
fallen, particularly of the 52 discs that the company finally
acknowledged contained the hidden ­software.

Now, as Sony embarks on a nearly unprecedented recall and
exchange programme for the 4.7m music CDs containing the
software, including an estimated 2m sold to consumers, industry
experts say the record label’s missteps highlight a broader
question for the computer and entertainment industries over the
use of DRM.

While implementing effective but fair DRM technology is
notoriously difficult, critics argue that Sony BMG’s music CDs,
which installed a "rootkit" program that buried its DRM software
deep on consumers’ hard drives when they were played on a PC,
went too far.

But they also acknowledge that in its haste to protect digital
content from piracy, Sony BMG is not the first company to fall
foul of privacy concerns.

Mark Russinovich, the software developer and blogger who first
discovered the rootkit on Sony BMG discs three weeks ago, points
out that many other spyware software programs also invade users’
PCs – often without their knowledge or full agreement.

"Consumers don’t have any kind of assurance that other companies
are not going to do the same kind of thing [as Sony]," he said in
a recent online article for Eweek.com, published by the media
group Ziff Davis. "Which actions are considered actions for which
users want really prominent disclosure? I think that’s a
complicated issue, but it needs to be addressed."

As the same article noted, the controversy over Sony BMG’s use of
copyright protection highlights the clash of two ideas of
property as the technology and entertainment worlds converge.

In the emerging digital age it has become easy for almost anyone
to make technically perfect and frequently illegal copies of
music, movies and video games using a PC. As a result, music
groups and movie studios have complained bitterly over the past
few years that their intellectual property rights are ­routinely
undermined by people burning copies of discs or DVDs, or trading
files online.

While the widely publicised crackdown over illegal file-sharing
services and users has had some impact, recent research suggests
that nearly 30 per cent of people in the US have obtained music
by burning a copy of a friend’s CD.

So record companies and other media content owners have responded
by developing technology or supporting initiatives that limit the
ability of a PC to make unlimited copies while permitting "fair
use".

These initiatives range from the rootkit software embedded in
Sony BMG’s discs to the "broadcast flag" technology that blocks
the retransmission of copyright material and that advocates say
would prevent digitally recorded television content being swapped
and traded online.

But some, including the powerful Consumer Electronics Association
in the US, fear the concept of fair use enshrined in the Sony
Betamax case 25 years ago could be curtailed.

"In the rush to crack down on pirates, we risk eliminating a
critical consumer right – the right to use copyrighted material,
without the permission of the copyright owner," Gary Shapiro, the
CEA president and chief executive, said in testimony before a
congressional committee investigating the issue earlier this
month (the CEA’s members include Sony).

Mr Shapiro argues that fair use is central to innovation because
it allows the development of new products such as digital music
players or DVD recorders that consumers can use to enjoy content
that they have purchased.

"Fair use is a safety valve which ensures that you don’t need to
ask the copyright holder to use copyrighted content. Fair use
protected the Betamax and without it, we would have no VCRs, no
tape recorders, no iPODs, no TiVos and no SlingBoxes.

"Our technological leadership – especially in the age of the
internet – has relied on the protection fair use gives to
innovators and venture capitalists. But this protection is
rapidly eroding," he warned.

"Until the [Supreme Court] ruling that said it’s illegal to
encourage people to break the law by copying protected content in
the Grokster decision this year, innovators were playing under
the Betamax decision’s bright-line rule: a product is legal if it
has substantial legal uses. The Grokster opinion added ambiguity
to this rule, leaving innovators on uncharted legal ground. This
shadow of litigation over the introduction of virtually any new
product that manipulates content especially harms smaller
entrepreneurs.

"Fair use is now all that protects inventors, investors and
consumers from an over-regulated world in which every use of
every product must be authorised in advance by every copyright
holder," Mr Shapiro said.

For the moment, the US television and film industries have
accepted that one of the best ways to thwart piracy is to make as
much of their content available on new distribution methods as
legitimately as possible.

One lesson from the music industry’s battle against containing
the spread of pirated music through digital file sharing was that
music labels for too long resisted customer calls to make songs
available digitally.

The music industry may not, however, be a complete blueprint for
other media sectors. Sony BMG’s recent difficulties are partly
the consequence of the "old technology" of CD players.

Tens of millions of CD players would not work if encrypted CDs
were used on them. Sony had to develop encryption technology
while trying to overcome that hurdle. "The encryption issues
facing the movie industry or the film industry are very different
because these sectors do not have to deal with such a large
technological barrier as the music sector does," says a senior
executive at a large media company. "We are starting with a
cleaner slate."

The Sony BMG debacle is also a reminder that customers must be
informed about what they are buying and what restrictions on
usage, if any, are included in their purchase. Music industry
blogs say consumer confidence in the sector has been damaged by
the Sony BMG CD recall, dealing a further blow to the battered
reputation of big music labels.

"There is no question all industries who face the encryption
challenge have to be very aware of customer reactions and
expectations, and presentation of information has to be very
forthright and very clear," says another senior industry
executive.

The other side of the digital distribution explosion is the need
for media companies to ensure they have the rights to distribute
content in new ways. It can take months or even years to go back
to artists and renegotiate rights.

Already, the film industry has been negotiating longer contracts
effectively to give production companies full rights over
distribution. The television industry in the US is catching up,
and digital distribution deals of top content are being announced
at breakneck speed.

This month, for example, NBC Universal announced a deal allowing
on-demand viewing of some of its most popular television shows
such as on the DirecTV satellite platform, the biggest satellite
operator in the US. CBS announced a similar deal with Comcast
Corp, the biggest cable operator.

"There is a lot of work going on behind the scenes to resolve
these issues," says Rick Cotton, general counsel at NBC
Universal. "You will start to see new distribution arrangements
entered into. Now the process has started it will only
accelerate."

TRACK RECORD: SONY BMG’S PRIVACY DILEMMA

? The discovery of Sony BMG’s "rootkit" software hidden on its
music CDs has brought accusations of privacy and spyware
violations

? The controversy over Sony BMG’s use of copyright protection
highlights the clash of two ideas of property as the technology
and entertainment worlds converge

? Record companies and other media content owners have responded
to illegal copies being made of CDs by trying to curb the ability
of PCs to make unlimited copies while permitting "fair use"

? Critics such as the Consumer Electronics Association fear that
any curtailment of the concept of fair use could stifle
innovation.




-- 

RIAA is the RISK!  Our NET is P2P!
http://www.nyfairuse.org/action/ftc

DRM is Theft!  We are the Stakeholders!

New Yorkers for Fair Use
http://www.nyfairuse.org

[CC] Counter-copyright: http://realmeasures.dyndns.org/cc

I reserve no rights restricting copying, modification or
distribution of this incidentally recorded communication. 
Original authorship should be attributed reasonably, but only so
far as such an expectation might hold for usual practice in
ordinary social discourse to which one holds no claim of
exclusive rights.