Importance

July 14, 2004

New DRM Coalition to Raise Barriers to Entry for Competitors

Oh, wait, that isn't the spin they're putting on their organization.

C|Net News brings us news of this new DRM coalition (Tech, Hollywood heavyweights create content coalition). Note that it is the big companies that are pushing this, not the small, innovative companies. Coincidence? I don't think so.

Several high-profile technology companies and movie studios are expected to announce Wednesday that they have formed a coalition to ensure that high-definition video and other content cannot be pirated in home networks.
The article talks about protecting "content" and movies. However, there is no mention of protecting audio. Hmmm ... why might that be? Whatever happened to SDMI?

Same old story. Piracy will continue. Large corporations will be protected from innovative upstarts. Isn't that how capitalism in the 21st century is supposed to work?

Posted by Ernest at 7:39 AM
  Comments and Trackbacks (http://www.corante.com/cgi-bin/mt/mt-tb.cgi/3542)
Industries to Form Yet Another DRM Consortium

Excerpt: A group of large movie and technology companies is about to form yet another consortium to solve the digital copyright problem, according to a John Borland story at news.com. This looks like one more entry in the alphabet soup (SDMI, CPTWG, ARDG) of fr...

Read the rest...

Trackback from Freedom to Tinker, Jul 14, 2004 6:29 PM

Hopefully to the consumer, the end result will still look like this: Hmmm, my choice is between totally mediocre content with some level of drm whose limits I'm not exactly sure of, or innovative new piece of content based on different business model w/o the drm confusion.

Posted by Hollywood Liberation Army on July 14, 2004 10:21 PM | Permalink to Comment

We can hope, but we will have to wait and see. With technological mandates such as the broadcast flag, the consumer may not have any choice whatsoever.

Posted by Ernest Miller on July 15, 2004 12:49 AM | Permalink to Comment

Ernest, I'm beginning to suspect you're the fourth member of the Lone Gunmen.

Broadcasters do not have to use the broadcast flag. If a market niche opens up for flag-less content, you can be sure that (at least) the lower-ranked broadcasters will attempt to exploit it. If consumers really prefer such unprotected content, the strategy will be successful (although deep down I think your fear is that they WON'T prefer such content, and you and your fellow bloggers will be left tilting at windmills). If your argument is (as I suspect, given your penchant for conspiracy theories) that there is an unreasonable restraint of trade in place over the broadcast television industry, then your complaint is not with content protection, but antitrust law. Perhaps you should start blogging about the USDOJ Antitrust Division instead of the FCC.

Posted by Rolo Timassie on July 15, 2004 02:34 PM | Permalink to Comment

Rolo, I'm beginning to suspect your the first monkey in the "see no evil, hear no evil, speak no evil" triptych. Can we stop with the name-calling, please?

Why is yours an argument against the fact that government mandated DRM serves to increase barriers to entry and preserve incumbent advantages against innovators?

Yes, all other things being equal, consumer prefer non-DRM'd content. However, it does not necessarily follow that it makes business sense for broadcasters to offer it. If the benefits from preserving market power through DRM outweigh consumer's preferences (which are diluted through coordination problems, among other things), then broadcasters won't offer it.

Your argument is orthogonal to mine.

In any case, when it is government that has mandated enforcement of DRM, whether through the broadcast flag or the DMCA, the DOJ doesn't get involved. There is no "misuse of DMCA" doctrine that would give the DOJ a foothold to challenge government-granted monopoly power.

In any case, a significant increase in market power alone is not sufficient basis for an anti-trust action. The question is why we should pass laws and regulations that increase the market power of incumbents with very little or no other benefits?

Posted by Ernest Miller on July 15, 2004 03:28 PM | Permalink to Comment
Industries to Form Yet Another DRM Consortium

Excerpt: A group of large movie and technology companies is about to form yet another consortium to solve the digital copyright problem, according to a John Borland story at news.com.

Read the rest...

Trackback from Robert DeLaurentis: The Weblog, Jul 15, 2004 6:48 PM

I was responding to this statement: "With technological mandates such as the broadcast flag, the consumer may not have any choice whatsoever." If consumer demand for flag-less content is strong enough, there will be someone who attempts to fill that niche. The only thing that could prevent that is if the market is not sufficiently competitive. I'm not sure why this is so difficult to grasp. (BTW, there are no consumer coordination problems. They don't need to coordinate. They just need to turn the channel.)

I also don't understand your "government mandated DRM increases barriers to entry" argument. First of all, barriers to entering what? You haven't even hinted at what market you're talking about. No content owners are mandated to use content protection. Whatever barriers to entry exist to producing content, content protection is not one of them. If the argument is that government regulations increase the cost of producing televisions or VCRs, there's no way that the minimal cost of Macrovision or broadcast flag technologies is the one thing that will prevent more manufacturers from entering the market -- which is pretty crowded as it is. If that's your argument, it's pretty weak. I think the truth is you just don't like content protection, and therefore an announcement about more content protection around the corner must be a bad thing, for reasons beyond articulation.

Posted by Rolo Timassie on July 16, 2004 04:41 AM | Permalink to Comment

Let me get this straight. The broadcasters petition government to mandate broadcast flag technology. Then they don't use it? That makes sense. As I've said before, the broadcaster want broadcast flag technology independent of consumer desires. Indeed, the very fact that they turn to the government to mandate the broadcast flag shows that the market would not naturally move towards the broadcast flag. I'm not sure why this point is so difficult to grasp.

Btw, there is a consumer coordination problem when it comes to petitioning government. The broadcast flag was not determined by the market (which would have rejected it), but by petitioning government. Public choice theory is quite clear that consumers have a coordination problem when it comes to petitioning government.

Barriers to entry in both the technology and content markets.

You keep reiterating that no content owners are mandated to use content protection. My argument is that the big companies want to raise barriers to entry to keep out new and innovative smaller companies. The content owners are big companies who want to keep out new and innovative companies. Yes, they don't have to use content protection, but then they don't get the benefits of increased barriers to entry. The only reason they would forgo the barriers to entry is if the barriers provided less benefit than consumer preference. They don't.

The idea that content protection does not raise barriers to entry is absurd. Content protection often makes it illegal (or much more costly through legal meand) to manipulate, edit, transform, etc., existing content in new and innovative ways. For example, innnovative playlist technology (which threatens label control over how music is packaged and consumed) is hindered by the many different incompatible DRM formats out there. I could provide many more examples.

The cost of production of technological goods is only one very limited aspect of barriers to entry. It is the rules that DRM enforces that prevents innovative developers from competing with new technology, not necessarily cheaper technology. Most small companies on the cutting edge can't compete on price alone anyway, they can only compete through innovative capabilities. If DRM (and similar) strictly controls what capabilities are permitted and/or requires them to be vetted before they may be implemented, that is a barrier to entry, a significant and substatial one.

I think the truth is that you are wedded to the idea that DRM will save the content world, and arguments to the contrary must be a bad thing, for reasons beyond logic.

Posted by Ernest Miller on July 16, 2004 05:15 AM | Permalink to Comment

  Post a Comment
 
Name:   
Email:   
URL:   
Comments:
  Remember personal info?
   
   
 
 
  Email this entry to a friend
Email this entry to:   
Your email address:   
Message (optional):   
 

  Related Entries