Hollywood found another business model, as the broadcasters had, as the Vaudeville artists had, as the music publishers had, and they made more art that paid more artists and reached a wider audience.
There's one thing that every new art business-model had in common: it embraced the medium it lived in.
This is the overweening characteristic of every single successful new medium: it is true to itself. The Luther Bible didn't succeed on the axes that made a hand-copied monk Bible valuable: they were ugly, they weren't in Church Latin, they weren't read aloud by someone who could interpret it for his lay audience, they didn't represent years of devoted-with-a-capital-D labor by someone who had given his life over to God. The thing that made the Luther Bible a success was its scalability: it was more popular because it was more proliferate: all success factors for a new medium pale beside its profligacy. The most successful organisms on earth are those that reproduce the most: bugs and bacteria, nematodes and virii. Reproduction is the best of all survival strategies.
Piano rolls didn't sound as good as the music of a skilled pianist: but they scaled better. Radio lacked the social elements of live performance, but more people could build a crystal set and get it aimed correctly than could pack into even the largest Vaudeville house. MP3s don't come with liner notes, they aren't sold to you by a hipper-than-thou record store clerk who can help you make your choice, bad rips and truncated files abound: I once downloaded a twelve-second copy of "Hey Jude" from the original Napster. Yet MP3 is outcompeting the CD. I don't know what to do with CDs anymore: I get them, and they're like the especially nice garment bag they give you at the fancy suit shop: it's nice and you feel like a goof for throwing it out, but Christ, how many of these things can you usefully own? I can put ten thousand songs on my laptop, but a comparable pile of discs, with liner notes and so forth -- that's a liability: it's a piece of my monthly storage-locker costs.
Here are the two most important things to know about computers and the Internet:
1. A computer is a machine for rearranging bits
2. The Internet is a machine for moving bits from one place to another very cheaply and quickly
Any new medium that takes hold on the Internet and with computers will embrace these two facts, not regret them. A newspaper press is a machine for spitting out cheap and smeary newsprint at speed: if you try to make it output fine art lithos, you'll get junk. If you try to make it output newspapers, you'll get the basis for a free society.
And so it is with the Internet. At the heyday of Napster, record execs used to show up at conferences and tell everyone that Napster was doomed because no one wanted lossily compressed MP3s with no liner notes and truncated files and misspelled metadata.
Today we hear ebook publishers tell each other and anyone who'll listen that the barrier to ebooks is screen resolution. It's bollocks, and so is the whole sermonette about how nice a book looks on your bookcase and how nice it smells and how easy it is to slip into the tub. These are obvious and untrue things, like the idea that radio will catch on once they figure out how to sell you hotdogs during the intermission, or that movies will really hit their stride when we can figure out how to bring the actors out for an encore when the film's run out. Or that what the Protestant Reformation really needs is Luther Bibles with facsimile illumination in the margin and a rent-a-priest to read aloud from your personal Word of God.
New media don't succeed because they're like the old media, only better: they succeed because they're worse than the old media at the stuff the old media is good at, and better at the stuff the old media are bad at. Books are good at being paperwhite, high-resolution, low-infrastructure, cheap and disposable. Ebooks are good at being everywhere in the world at the same time for free in a form that is so malleable that you can just pastebomb it into your IM session or turn it into a page-a-day mailing list.
The only really successful epublishing -- I mean, hundreds of thousands, millions of copies distributed and read -- is the bookwarez scene, where scanned-and-OCR'd books are distributed on the darknet. The only legit publishers with any success at epublishing are the ones whose books cross the Internet without technological fetter: publishers like Baen Books and my own, Tor, who are making some or all of their catalogs available in ASCII and HTML and PDF.
The hardware-dependent ebooks, the DRM use-and-copy-restricted ebooks, they're cratering. Sales measured in the tens, sometimes the hundreds. Science fiction is a niche business, but when you're selling copies by the ten, that's not even a business, it's a hobby.
Every one of you has been riding a curve where you read more and more words off of more and more screens every day through most of your professional careers. It's zero-sum: you've also been reading fewer words off of fewer pages as time went by: the dinosauric executive who prints his email and dictates a reply to his secretary is info-roadkill.
Today, at this very second, people read words off of screens for every hour that they can find. Your kids stare at their Game Boys until their eyes fall out. Euroteens ring doorbells with their hypertrophied, SMS-twitching thumbs instead of their index fingers.
Paper books are the packaging that books come in. Cheap printer-binderies like the Internet Bookmobile that can produce a full bleed, four color, glossy cover, printed spine, perfect-bound book in ten minutes for a dollar are the future of paper books: when you need an instance of a paper book, you generate one, or part of one, and pitch it out when you're done. I landed at SEA-TAC on Monday and burned a couple CDs from my music collection to listen to in the rental car. When I drop the car off, I'll leave them behind. Who needs 'em?
Whenever a new technology has disrupted copyright, we've changed copyright. Copyright isn't an ethical proposition, it's a utilitarian one. There's nothing moral about paying a composer tuppence for the piano-roll rights, there's nothing immoral about not paying Hollywood for the right to videotape a movie off your TV. They're just the best way of balancing out so that people's physical property rights in their VCRs and phonographs are respected and so that creators get enough of a dangling carrot to go on making shows and music and books and paintings.
Technology that disrupts copyright does so because it simplifies and cheapens creation, reproduction and distribution. The existing copyright businesses exploit inefficiencies in the old production, reproduction and distribution system, and they'll be weakened by the new technology. But new technology always gives us more art with a wider reach: that's what tech is for.
Tech gives us bigger pies that more artists can get a bite out of. That's been tacitly acknowledged at every stage of the copyfight since the piano roll. When copyright and technology collide, it's copyright that changes.
Which means that today's copyright -- the thing that DRM nominally props up -- didn't come down off the mountain on two stone tablets. It was created in living memory to accommodate the technical reality created by the inventors of the previous generation. To abandon invention now robs tomorrow's artists of the new businesses and new reach and new audiences that the Internet and the PC can give them.
5. DRM is a bad business-move for MSFT
When Sony brought out the VCR, it made a record player that could play Hollywood's records, even if Hollywood didn't like the idea. The industries that grew up on the back of the VCR -- movie rentals, home taping, camcorders, even Bar Mitzvah videographers -- made billions for Sony and its cohort.
That was good business -- even if Sony lost the Betamax-VHS format wars, the money on the world-with-VCRs table was enough to make up for it.
But then Sony acquired a relatively tiny entertainment company and it started to massively screw up. When MP3 rolled around and Sony's walkman customers were clamoring for a solid-state MP3 player, Sony let its music business-unit run its show: instead of making a high-capacity MP3 walkman, Sony shipped its Music Clips, low-capacity devices that played brain-damaged DRM formats like Real and OpenMG. They spent good money engineering "features" into these devices that kept their customers from freely moving their music back and forth between their devices. Customers stayed away in droves.
Today, Sony is dead in the water when it comes to walkmen. The market leaders are poky Singaporean outfits like Creative Labs -- the kind of company that Sony used to crush like a bug, back before it got borged by its entertainment unit -- and PC companies like Apple.
That's because Sony shipped a product that there was no market demand for. No Sony customer woke up one morning and said, "Damn, I wish Sony would devote some expensive engineering effort in order that I may do less with my music." Presented with an alternative, Sony's customers enthusiastically jumped ship.
The same thing happened to a lot of people I know who used to rip their CDs to WMA. You guys sold them software that produced smaller, better-sounding rips than the MP3 rippers, but you also fixed it so that the songs you ripped were device-locked to their PCs. What that meant is that when they backed up their music to another hard-drive and reinstalled their OS (something that the spyware and malware wars has made more common than ever), they discovered that after they restored their music that they could no longer play it. The player saw the new OS as a different machine, and locked them out of their own music.
There is no market demand for this "feature." None of your customers want you to make expensive modifications to your products that make backing up and restoring even harder. And there is no moment when your customers will be less forgiving than the moment that they are recovering from catastrophic technology failures.
I speak from experience. Because I buy a new Powerbook every ten months, and because I always order the new models the day they're announced, I get a lot of lemons from Apple. That means that I hit Apple's three-iTunes-authorized-computers limit pretty early on and found myself unable to play the hundreds of dollars' worth of iTunes songs I'd bought because one of my authorized machines was a lemon that Apple had broken up for parts, one was in the shop getting fixed by Apple, and one was my mom's computer, 3,000 miles away in Toronto.
If I had been a less good customer for Apple's hardware, I would have been fine. If I had been a less enthusiastic evangelist for Apple's products -- if I hadn't shown my mom how iTunes Music Store worked -- I would have been fine. If I hadn't bought so much iTunes music that burning it to CD and re-ripping it and re-keying all my metadata was too daunting a task to consider, I would have been fine.
As it was Apple rewarded my trust, evangelism and out-of-control spending by treating me like a crook and locking me out of my own music, at a time when my Powerbook was in the shop -- i.e., at a time when I was hardly disposed to feel charitable to Apple.
I'm an edge case here, but I'm a leading edge case. If Apple succeeds in its business plans, it will only be a matter of time until even average customers have upgraded enough hardware and bought enough music to end up where I am.
You know what I would totally buy? A record player that let me play everybody's records. Right now, the closest I can come to that is an open source app called VLC, but it's clunky and buggy and it didn't come pre-installed on my computer.
Sony didn't make a Betamax that only played the movies that Hollywood was willing to permit -- Hollywood asked them to do it, they proposed an early, analog broadcast flag that VCRs could hunt for and respond to by disabling recording. Sony ignored them and made the product they thought their customers wanted.
I'm a Microsoft customer. Like millions of other Microsoft customers, I want a player that plays anything I throw at it, and I think that you are just the company to give it to me.
Yes, this would violate copyright law as it stands, but Microsoft has been making tools of piracy that change copyright law for decades now. Outlook, Exchange and MSN are tools that abet widescale digital infringement.
More significantly, IIS and your caching proxies all make and serve copies of documents without their authors' consent, something that, if it is legal today, is only legal because companies like Microsoft went ahead and did it and dared lawmakers to prosecute.
Microsoft stood up for its customers and for progress, and won so decisively that most people never even realized that there was a fight.
Do it again! This is a company that looks the world's roughest, toughest anti-trust regulators in the eye and laughs. Compared to anti-trust people, copyright lawmakers are pantywaists. You can take them with your arm behind your back.
In Siva Vaidhyanathan's book The Anarchist in the Library, he talks about why the studios are so blind to their customers' desires. It's because people like you and me spent the 80s and the 90s telling them bad science fiction stories about impossible DRM technology that would let them charge a small sum of money every time someone looked at a movie -- want to fast-forward? That feature costs another penny. Pausing is two cents an hour. The mute button will cost you a quarter.
When Mako Analysis issued their report last month advising phone companies to stop supporting Symbian phones, they were just writing the latest installment in this story. Mako says that phones like my P900, which can play MP3s as ringtones, are bad for the cellphone economy, because it'll put the extortionate ringtone sellers out of business. What Mako is saying is that just because you bought the CD doesn't mean that you should expect to have the ability to listen to it on your MP3 player, and just because it plays on your MP3 player is no reason to expect it to run as a ringtone. I wonder how they feel about alarm clocks that will play a CD to wake you up in the morning? Is that strangling the nascent "alarm tone" market?
The phone companies' customers want Symbian phones and for now, at least, the phone companies understand that if they don't sell them, someone else will.
The market opportunity for a truly capable devices is enormous. There's a company out there charging $27,000 for a DVD jukebox -- go and eat their lunch! Steve Jobs isn't going to do it: he's off at the D conference telling studio execs not to release hi-def movies until they're sure no one will make a hi-def DVD burner that works with a PC.
Maybe they won't buy into his BS, but they're also not much interested in what you have to sell. At the Broadcast Protection Discussion Group meetings where the Broadcast Flag was hammered out, the studios' position was, "We'll take anyone's DRM except Microsoft's and Philips'." When I met with UK broadcast wonks about the European version of the Broadcast Flag underway at the Digital Video Broadcasters' forum, they told me, "Well, it's different in Europe: mostly they're worried that some American company like Microsoft will get their claws into European television."
American film studios didn't want the Japanese electronics companies to get a piece of the movie pie, so they fought the VCR. Today, everyone who makes movies agrees that they don't want to let you guys get between them and their customers.
Sony didn't get permission. Neither should you. Go build the record player that can play everyone's records.
Because if you don't do it, someone else will.
The DRM Sausage Factory
(Originally published as "A Behind-The-Scenes Look At How DRM Becomes Law," InformationWeek, July 11, 2007)
Otto von Bismarck quipped, "Laws are like sausages, it is better not to see them being made." I've seen sausages made. I've seen laws made. Both pale in comparison to the process by which anti-copying technology agreements are made.
This technology, usually called "Digital Rights Management" (DRM) proposes to make your computer worse at copying some of the files on its hard-drive or on other media. Since all computer operations involve copying, this is a daunting task -- as security expert Bruce Schneier has said, "Making bits harder to copy is like making water that's less wet."
At root, DRMs are technologies that treat the owner of a computer or other device as an attacker, someone against whom the system must be armored. Like the electrical meter on the side of your house, a DRM is a technology that you possess, but that you are never supposed to be able to manipulate or modify. Unlike the your meter, though, a DRM that is defeated in one place is defeated in all places, nearly simultaneously. That is to say, once someone takes the DRM off a song or movie or ebook, that freed collection of bits can be sent to anyone else, anywhere the network reaches, in an eyeblink. DRM crackers need cunning: those who receive the fruits of their labor need only know how to download files from the Internet.
Why manufacture a device that attacks its owner? A priori, one would assume that such a device would cost more to make than a friendlier one, and that customers would prefer not to buy devices that treat them as presumptive criminals. DRM technologies limit more than copying: they limit ranges of uses, such as viewing a movie in a different country, copying a song to a different manufacturer's player, or even pausing a movie for too long. Surely, this stuff hurts sales: who goes into a store and asks, "Do you have any music that's locked to just one company's player? I'm in the market for some lock-in."
So why do manufacturers do it? As with many strange behaviors, there's a carrot at play here, and a stick.
The carrot is the entertainment industries' promise of access to their copyrighted works. Add DRM to your iPhone and we'll supply music for it. Add DRM to your TiVo and we'll let you plug it into our satellite receivers. Add DRM to your Zune and we'll let you retail our music in your Zune store.
The stick is the entertainment industries' threat of lawsuits for companies that don't comply. In the last century, entertainment companies fought over the creation of records, radios, jukeboxes, cable TV, VCRs, MP3 players and other technologies that made it possible to experience a copyrighted work in a new way without permission. There's one battle that serves as the archetype for the rest: the fight over the VCR.
The film studios were outraged by Sony's creation of the VCR. They had found a DRM supplier they preferred, a company called Discovision that made non-recordable optical discs. Discovision was the only company authorized to play back movies in your living room. The only way to get a copyrighted work onto a VCR cassette was to record it off the TV, without permission. The studios argued that Sony -- whose Betamax was the canary in this legal coalmine -- was breaking the law by unjustly endangering their revenue from Discovision royalties. Sure, they could just sell pre-recorded Betamax tapes, but Betamax was a read-write medium: they could be copied. Moreover, your personal library of Betamax recordings of the Sunday night movie would eat into the market for Discovision discs: why would anyone buy a pre-recorded video cassette when they could amass all the video they needed with a home recorder and a set of rabbit-ears?
The Supreme Court threw out these arguments in a 1984 5-4 decision, the "Betamax Decision." This decision held that the VCR was legal because it was "capable of sustaining a substantially non-infringing use." That means that if you make a technology that your customers can use legally, you're not on the hook for the illegal stuff they do.
This principle guided the creation of virtually every piece of IT invented since: the Web, search engines, YouTube, Blogger, Skype, ICQ, AOL, MySpace... You name it, if it's possible to violate copyright with it, the thing that made it possible is the Betamax principle.
Unfortunately, the Supremes shot the Betamax principle in the gut two years ago, with the Grokster decision. This decision says that a company can be found liable for its customers' bad acts if they can be shown to have "induced" copyright infringement. So, if your company advertises your product for an infringing use, or if it can be shown that you had infringement in mind at the design stage, you can be found liable for your customers' copying. The studios and record labels and broadcasters love this ruling, and they like to think that it's even broader than what the courts set out. For example, Viacom is suing Google for inducing copyright infringement by allowing YouTube users to flag some of their videos as private. Private videos can't be found by Viacom's copyright-enforcement bots, so Viacom says that privacy should be illegal, and that companies that give you the option of privacy should be sued for anything you do behind closed doors.
The gutshot Betamax doctrine will bleed out all over the industry for decades (or until the courts or Congress restore it to health), providing a grisly reminder of what happens to companies that try to pour the entertainment companies' old wine into new digital bottles without permission. The tape-recorder was legal, but the digital tape-recorder is an inducement to infringement, and must be stopped.
The promise of access to content and the threat of legal execution for non-compliance is enough to lure technology's biggest players to the DRM table.
I started attending DRM meetings in March, 2002, on behalf of my former employers, the Electronic Frontier Foundation. My first meeting was the one where Broadcast Flag was born. The Broadcast Flag was weird even by DRM standards. Broadcasters are required, by law, to deliver TV and radio without DRM, so that any standards-compliant receiver can receive them. The airwaves belong to the public, and are loaned to broadcasters who have to promise to serve the public interest in exchange. But the MPAA and the broadcasters wanted to add DRM to digital TV, and so they proposed that a law should be passed that would make all manufacturers promise to pretend that there was DRM on broadcast signals, receiving them and immediately squirreling them away in encrypted form.
The Broadcast Flag was hammered out in a group called the Broadcast Protection Discussion Group (BPDG) a sub-group from the MPAA's "Content Protection Technology Working Group," which also included reps from all the big IT companies (Microsoft, Apple, Intel, and so on), consumer electronics companies (Panasonic, Philips, Zenith), cable companies, satellite companies, and anyone else who wanted to pay $100 to attend the "public" meetings, held every six weeks or so (you can attend these meetings yourself if you find yourself near LAX on one of the upcoming dates).
CPTWG (pronounced Cee-Pee-Twig) is a venerable presence in the DRM world. It was at CPTWG that the DRM for DVDs was hammered out. CPTWG meetings open with a "benediction," delivered by a lawyer, who reminds everyone there that what they say might be quoted "on the front page of the New York Times," (though journalists are barred from attending CPTWG meetings and no minutes are published by the organization) and reminding all present not to do anything that would raise eyebrows at the FTC's anti-trust division (I could swear I've seen the Microsoft people giggling during this part, though that may have been my imagination).
The first part of the meeting is usually taken up with administrative business and presentations from DRM vendors, who come out to promise that this time they've really, really figured out how to make computers worse at copying. The real meat comes after the lunch, when the group splits into a series of smaller meetings, many of them closed-door and private (the representatives of the organizations responsible for managing DRM on DVDs splinter off at this point).