[FYI] (Fwd) FC: Sonia Arrison on Berman's P2P bill: "Hollywood hacks consumers"

["Axel H Horns" <horns@ipjur.com>]

------- Forwarded message follows -------
Date sent:      	Fri, 02 Aug 2002 01:28:20 -0400
To:             	politech@politechbot.com
From:           	Declan McCullagh <declan@well.com>
Subject:        	FC: Sonia Arrison on Berman's P2P bill: "Hollywood hacks consumers"
Send reply to:  	declan@well.com

Previous Politech message:

"Peer-to-peer hacking bill officially introduced in House"
http://www.politechbot.com/p-03795.html

---

Subject: hollywood hacks consumers
Date: Thu, 1 Aug 2002 21:43:56 -0700
From: "Sonia Arrison" <SArrison@pacificresearch.org>
To: <declan@well.com>

Declan,

This would seem to fit with many of your recent politech posts.  It's
one outline of how to deal with copyright issues.

-Sonia
----------------------------------------------------

http://www.techcentralstation.com/1051/techwrapper.jsp?PID=1051-250&CI
D=1051-080102C

Hollywood Hacks Consumers
By Sonia Arrison
August 1, 2002

Hollywood wants Congress to pass laws protecting intellectual property
against theft on the Internet. But Hollywood lobbying has gone too far
with the introduction of a new bill that authorizes copyright holders
to hack into peer-to-peer networks.

The Peer to Peer Piracy Prevention Act 
<http://www.house.gov/berman/p2p.pdf> , sponsored by Hollywood-area
Representative Howard Berman
<http://www.opensecrets.org/politicians/contrib.asp?CID=N00008094&cycl
e=2002> (D-Calif.) and House subcommittee
<http://www.house.gov/judiciary/submembers.htm>  on intellectual
property chair Rep. Howard Coble
<http://www.opensecrets.org/politicians/contrib.asp?CID=N00002247&cycl
e=2002> (R-N.C.), would allow copyright owners, such as the film and
recording industries, to secretly hack into users' computers and
unleash new technologies to thwart unauthorized trading of movies or
music on peer-to-peer (P2P) networks.

Security experts worry 
<http://www.wired.com/news/politics/0,1283,54153,00.html>  about how
authorized hacking could spread viruses, destroy data, and invade
privacy. Providers of P2P technologies, like Steve Griffin, CEO of
StreamCast Networks, say
<http://www.streamcastnetworks.com/FullPress.html>  the bill is
tantamount to "cyber warfare" against consumers. Indeed, Rep. Berman
indicated that the entertainment industry wants to target consumers
because litigation against providers of P2P networks has become
futile.

"While the 9th Circuit could shut Napster down because it utilized a
central directory and centralized servers, the new P2P networks have
increasingly engineered around that decision by incorporating varying
levels of decentralization," Rep. Berman said
<http://www.house.gov/berman/floor072502.htm> .

Since it is next to impossible to shut down decentralized networks,
Rep. Berman and Hollywood hope to intercept and catch the actual
people who illegally download music and films. This strategy is flawed
not least because there are numerous people to catch and many hackers
will probably see this as a reason to counter-attack
<http://news.com.com/2100-1023-947072.html>  Hollywood. But there's a
larger problem.

Many of Hollywood's Internet pirates are also paying customers in real
space, putting Hollywood in the strange position of wanting to attack
its own customers. Intellectual property is, of course, important both
in principle and to the U.S. economy. But new technologies force
intellectual property holders to re-examine their beliefs and business
models -- something that the entertainment industry tried and failed
to avoid in the past with the introduction of audio and video
cassettes. A similar situation is occurring now.

Downloads of pirated music have not visibly impacted purchases of
compact disks (CDs), notes University of Texas economist Stan
Liebowitz <http://www.utdallas.edu/~liebowit/> , author of a
forthcoming book <http://wwwpub.utdallas.edu/~liebowit/netpage.html> 
about the digital economy. Liebowitz points out
<http://www.salon.com/tech/feature/2002/06/13/liebowitz/index.html> 
that downloads of music files are close to five times greater than the
total number of CDs sold in the U.S. in a year (and one-and-a-half
times the worldwide sales), but CD sales have only declined by five
percent, which is what might be expected in a recession.

Liebowitz speculates whether consumers are simply downloading music
that they used to copy on audiotape. It could also be that many
consumers download songs that they wouldn't buy at the price of a CD
anyway, especially if they don't value the other nine songs they are
forced to buy on a single album. If this is the case, music companies
could actually make more money by recognizing the opportunity to offer
their products in different forms.

Consumers will still buy CDs when they are interested in all the
songs, but for those songs in which consumers are less interested,
music companies might be able to increase sales by lowering prices and
offering online singles sales using a micropayment system
<http://www.ipin.com/> . The film industry could change its model too.

Videos could be embedded with digital rights management technology
(DRM) created by Hollywood, not legislated
<http://www.techcentralstation.com/1051/techwrapper.jsp?PID=1051-250&C
ID=1051-041102A> . This would make unauthorized copying difficult, if
not impossible. If consumers could easily order films online at a
market price, which may mean greater price differentials than we see
now, it's not a stretch to think that the market would expand and
everyone will win.

Instead of making consumers the enemy, as Hollywood is doing with
support of the P2P Piracy Prevention Act, it would be smarter and more
profitable to respond to new technologies with a change in thinking.
Consumers will always be willing to pay market prices to be
entertained. The challenge is for entertainers to meet the demand with
a better model.

Sonia Arrison is director of the Center for Technology Studies 
<http://www.pacificresearch.org/centers/cts/index.html>  at the 
California-based Pacific Research Institute
<http://www.pacificresearch.org> .

Copyright © 2002 Tech Central Station - www.techcentralstation.com




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