- The Washington Times - Friday, January 24, 2003

The great schism in the entertainment industry between film and music makers may ultimately help to preserve consumer rights. Hollywood is employing its familiar strategy, by lobbying for a new law that would require technology makers to sell only products that prevent the copying of movies and other content. The recording industry, meanwhile, is breaking ranks with its traditional ally and taking a savvier approach. Record labels are countering technologically sophisticated piracy with a technological innovation of their own making CDs more bootleg-proof. The recording studios' departure from this alliance could prevent Hollywood from finding refuge in government intervention and benefit technology consumers.
Last week, major recording companies said they have asked Microsoft to find ways to make their CDs less susceptible to copying. Also, computer makers and software companies have agreed with music labels to prevent their technology from being used to copy music. The movie studios, meanwhile, are backing a bill, introduced by Sen. Ernest Hollings last year, which would require computer software and hardware makers to sell only products that have copy-restriction technology. The bill is far too draconian, and, if passed, could prevent consumers from engaging in legal activities, such as making a music mix from their own CDs. The studios just may have the deep-pocketed political sway to make the Hollings proposal a new law but maybe not. Their campaign has certainly been hurt by the recording labels' public announcement that they will not support the bill.
The music industry knows that trying to counter technological innovation through the courts can be a losing battle. Although the industry succeeded in getting the courts to shut down the music-sharing Napster Web site, music file-sharing Web sites have since proliferated. And it is next to impossible to shut down these sites, since, unlike Napster, they have no centralized server.
The movie industry should rethink its piracy woes, too, by seeking free-market solutions. The industry has plenty of time to readapt, since only 10 percent of the population are plugged into the broadband service that makes movie downloads pragmatic. But broadband's day will eventually come, and the film industry could reap benefits from it by charging a fee each time a clip or movie is downloaded. Internet surfers would have considerable incentive to download from a legitimate site, since they risk computer viruses every time they bootleg content on the Internet.
The movie industry has been short-sighted about the potential rewards of technological breakthroughs. "I say to you that the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone," Jack Valenti, president of the Motion Picture Association of America (MPAA), testified to Congress in 1982, while pushing to outlaw the VCR. The MPAA today sells about 70 million cassettes for rentals and 600 million cassettes for home viewing every year.
With the advent of the VCR, both industry and consumers clearly benefited. The film and music industries could revamp their distribution and pricing models to profit from the Internet. Policymakers should take their cue from music labels and give the free market and technological innovation a chance to evolve in protecting copyrights.

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