Hollywood and whine: why are democrats helping the entertainment industry stamp out new technologies that fuel economic growth?

Washington Monthly, Jan-Feb, 2003 by Brendan I. Koerner

Payback has come in the form of several bills designed to clamp down on the free exchange of copyrighted music and movies, which entertainment companies deem the greatest threat to their future well-being. The most contentious of these measures is the Consumer Broadband and Digital Television Promotion Act (CBDTPA), sponsored by South Carolina's Sen. Ernest Hollings, which actually has zilch to do with promoting broadband. Along with placing new restrictions on the importation of foreign software, the Hollings bill would criminalize the sale of any digital hardware that doesn't come equipped with government-approved copy-protection controls. CD burners, DVD recorders, MP3 players, even Palm Pilots--all will be illegal unless their manufacturers are willing to render them incapable of making unauthorized duplicates. But Hollywood's definition of "unauthorized" is distressingly broad, encompassing actions usually regarded as integral to consumers' fair-use rights (such as recording a pay-per-view movie for private viewing).

Then there's Rep. Howard Berman's now-notorious H.R. 5211, a bill that would make it legal for entertainment companies to hack Napster-like music-swapping networks like Morpheus or Bear-Share. Or Sen. Joseph Biden's Anticounterfeiting Amendments of 2002, which would make it a felony, punishable by up to five years in prison and a $25,000 fine, to alter or forge digital watermarks, the electronic ID tags embedded in CDs and software. So if you should one day buy a new MP3 player that'll only play files with certain watermarks--say, those that denote approval of the Recording Industry Association of America--you'd have to break the law to make a non-watermarked recording of your garage band's "Freebird" rendition compatible with the device--even if that music was perfectly legal in the first place.

These bills are odious for many reasons, beginning with their blatant disregard for long-standing intellectual property rights. Copyright holders, for example, currently have no say over private performances of music or film--if I want .to play the new DJ Assault disc on my laptop during the day, and then again in my stereo at night, I'm perfectly within my legal rights. But if Biden's bill becomes law, music labels could imbue their products with watermarks that would limit playback to certain devices. Changing a watermark, even if only to play your own jug band's basement recording, could mean time in the federal slammer. Hollings' bill would similarly diminish consumer rights by making it virtually impossible for people to copy digital media, even for uses now considered legitimate, such as creating a hard-copy recording of a TV show, or transferring a movie from an analog source (that is, an old VHS tape) to a digital one.

The Clone Wars

These proposed laws are bad enough for consumers. But the greater evil is their long-term impact on economic growth. By yielding to Big Entertainment's every whim, Democrats are harming an industry that promises to be a much greater engine of growth--Silicon Valley. Consumers demand such high-tech hardware as computers and TiVos precisely because they want to be able to take advantage of new technology and record TV shows; burn CDs, and swap MP3s, regardless of whether Hollywood deems such activities predatory. To give an idea of the promise this holds for new businesses, MP3 vendor SONICBlue, for example, had sales of $300 million in 2001 (without spending a penny on advertising). What Democrats tout as "anti-piracy measures" would strip these devices of their most marketable qualities, or at least make it illegal for consumers to use them to their hearts' content. "Any attempt to inject a regulatory process into the design of our products will irreparably damage the high-tech industry," testified Intel vice president Leslie Vadasz before the Senate Commerce Committee last March. "It will substantially retard innovation, investment in new technologies, and will reduce the usefulness of our products."