Microsoft, Apple snub consumer freedom coalition

DRM as a competitive advantage

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A new coalition of citizens groups and representatives from the computer and telecommunications industry was launched today, with two big names absent. This new alliance, the Personal Technology Freedom Coalition has fairly modest goals - seeking to restore some fair use provisions that will be lost if DRM is accepted, such as making a backup copy of your software, or burning a CD you've bought. It hasn't expressed any intention to address wider reform of the copyright framework, and wants the DMCA left largely intact. It includes Intel, Sun, SBC, Verizon, citizens' groups such as the United States Student Association and the Consumers Union. So it's safe for the children. And the PTFC has rallied behind Congressman Boucher's attempt to reform parts of the Digital Millennium Copyright Act, HR.107, or the Digital Millennium Reform Act first announced in October 2002.

But the modest goals of the DMRA and the PTFC are too much for two vendors to embrace: Microsoft and Apple. Microsoft is quietly pleased with the DMCA, arguing that it needs to protect its business software, which is widely pirated. But it has another agenda, which is getting Hollywood's big content producers hooked on its formats. It's working, too, as Microsoft has already snagged Disney.

Meanwhile, Apple once appeared to regard DRM as a necessary, and perhaps even a temporary evil. Steve Jobs last year told Rolling Stone that he didn't think that DRM would ever work, all the while patenting new DRM technologies and leading, with Sony and Warner Brothers, the movie industry's secretive Copy Protection Technology Working Group. And when Apple's head lawyer for its iTunes Music Store told EFF attorney Fred Von Lohmann last month that it would keep DRM even if it didn't have to, its true strategy became clear: DRM is a competitive weapon, and its customers are collateral damage.

DRM-free versions of songs from Apple's music store are available on the P2P networks within a few minutes. So, "FairPlay [DRM] is bad for everyone besides Apple," concluded Von Lohmann, "useless to copyright owners, irritating to legitimate customers." Instead, it's "a great barrier to entry that keeps the iPod as the exclusive device for the Music Store. Competitors who dare to reverse engineer the protocols or otherwise support interoperability find themselves staring down the barrel of the DMCA."

Although former Geffen CTO Jim Griffin characterized the computer industry's embrace of DRM as a necessary charade, it's hard to avoid the conclusion that both Microsoft and Apple see lock-in benefits from DRM, as long as the lock-ins are their own.

Why risk long-term disapproval with temporary popularity? Well, each has their own rationale. With the exception of ASCII, Bill Gates has never seen a file format he didn't create that he didn't want to own. It's the nature of The Beast. After an early encounter with the Internet, Gates complained that there weren't enough Microsoft file formats to be found, and then he really started worrying. This led to his 1995 'Pearl Harbor' speech, where he all of a sudden discovered the Internet.

But Apple, you'd think, is starting from higher moral ground. As the only music vendor that sees any net earnings from being in the business, it might have realized why. Apple accountants are smiling at the end of each month not because of the music store, but because the iPod has finally reached acceptance as a consumer gadget people want to have. At least amongst well-paid white middle class professionals (we don't see much acceptance of this expensuve gadget amongst what Hollywood calls "urban content creators", but we'll let that pass.)

In fact, iTMS might well be a hindrance for Apple, and when you count the massive promotional overhead and legal and R&D diversion, it is surely hurting the company's bottom line, which simply wants more zeros in the "iPod" column. (The Music Store has certainly tied up some of Apple's best brains, like Bud Tribble). So if Apple is to flourish outside its traditional computer business, it needs to grow the market for iPods, and there's no better way of ensuring its iPod business propsers than by making it easier, not harder, for people to share music. With just a tweak to the copyright framework, the iPod could be the Model T Ford of the new century.

While the rainbow coalition of ISPs, Baby Bells and computer giants (which even includes Intel, a DRM pioneer) argues for greater freedom, we're seeing the birth of a sort of "anti coalition" devoted to restricting consumer's rights. A sort of Axis of Two... although we're sure you can come up with a better name. ®

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