The Human Factors
Hacking, Cracking and Re-recording
Statistically speaking, there will always be people who will look for a
"good deal" - so there will always be a market for pirated copies
of copyright works.
Again, statistically speaking, there will always be someone who will try to
break DRM or copy the content, even just because of the challenge. This is the
"hacker" mentality and it disregards all manner of law and difficulty.
I don't condone it, I just recognize that it exists.
It doesn't matter whether it is brute force, elegance, brilliance or social
engineering - the chance of an original digital recording of a desired product
remaining securely managed is somewhere between slim and none, no matter what
the method or technology. The chance of any recording, original or
re-recorded, of a hot commodity being available to anyone who wants it is
100%.
Social Engineering
Somewhere, every DRM system must have a repository where the master key or
keys are stored. History has already shown that the weakest factor in even the
most technologically security system is the human factor. Secretaries and CEOs
leave their passwords taped to their desk or in plain sight, or choose trivial
or easily guessed passwords for their workstations. Even companies such as
VeriSign, whose
product is supposedly high security, have been fooled into issuing digital
certificates for legitimate companies (in this case Microsoft) but to bogus
people.
The Government Factors
The problem of detailing the government factors around DRM is where to
begin and when to stop.
Do I rant that the legislators are a bunch of technological morons, and
should not be allowed to deal with anything more complex than the handle on a
toilet?
Do I complain about the possibilities (and the proven existence) of
back-doors that allow the government to spy on what I do, read and watch?
Do I get worked up over the sell-out of the government to big business over
the rights and expectations of the public they are supposed to represent?
Eventually, I expect to comment on all of these things.
The Market Factors
Now we come to the crux of the matter - the fact that the market that
supported the distribution of text, audio and video materials prior to the
digital/Internet/macro-storage age involved a completely different market from
the one that exists now that the digital age is upon us. The old market turned
on scarcity and high cost of production and
distribution. The new market must deal with easy, cheap
copying and low distribution costs.
The Old Market
There are all sorts of things that can be said about the old market. In the
case of print media in North America for example, the market was controlled
mostly by a small number of national or international companies in each of the
major categories: newspaper, magazines, catalogues, etc. plus smaller players
either regionally or in each vertical market.
In the case of radio and TV there tended to be major players nationally and
minor ones locally. The spread across verticals was much less pronounced since
the cost of entry tended to be higher than for print.
In the case of music, and later video, the number of large companies has
been very small. Many small companies have come on the scene and either
continued as small, "independent labels" with tight, vertical markets or been
"one-hit wonders".
Although there is every indication that all of the various big-business
media has had its detractors, the current debate mostly brings up the
practices of the music recording industry. The movie/video industry may turn
out to be somewhat similar, given current indications.
While the digital age is what we are beginning to deal with currently, the
fact is that the music industry seems to have a long history of controversy
with respect to its dealings with the original artists. This seems to have
come somewhat to a head now that there are distribution channels that are no
longer big-business controlled as they have been in the pre-digital age.
The picture being portrayed by some of the artists (for example, see
Janis Ian's web site) is one of
monopoly powers (the publishers) manipulating the markets and the
compensations to the detriment of the original artists and the public in
general. Artists such as Janis make the point that the marketing might of the
record labels, coupled with their stranglehold on the distribution channels
effectively denied the independents any access to market in the major
categories. Payola (paying radio stations to play select songs to increase
ratings which drove sales) was a scandal in the 60s and 70s but is just a way
of doing business today - same as hard goods distributors and manufacturers
paying for shelf placement in your super market.
This warped and managed (for the benefit of the publishers, not necessarily
the artists, and certainly not the consumer) marketing strategy has come up
against the open and consumer-driven reality of the free-information era
brought on by wide-spread communications infrastructure and culminating with
the Internet; a completely new market which is only just being shaped and
discovered.
The Transition Market
Today we are in the transition between the old, complicated, expensive,
might-makes-right marketing strategies and the open, simple, inexpensive,
underdog capable marketing field.
Text publishing is starting to be done by individuals, with their
popularity depending largely on their abilities and content, not on their
purchased placement on the magazine racks or the coattails they ride upon such
as the newspaper empire they write for. What you are reading is an example.
The traditional press seems to understand that the added value of the Internet
"printing press" is valuable, and has adapted fairly well to the new medium
and what it can bring to their empires.
In the music industry, the impact of the Digital/Internet/Portable-storage
market has both been more and less than with other media. Due to the fact that
the industry's creators seem to be better organized than other media creators,
there is a widespread movement for compensation for non-retail copying of
their works enshrined in law in a growing number of countries. Here in Canada
this is what the Blank Audio Media Levy
is all about. This makes it look like the impact of digital copying might be
less than if there was no media levy. The fact is that the reliance of the
industry on the levy might have blinded it to the possibilities of a
completely new market opportunity which might in fact have been of more
benefit.
Some of the musicians on the edge of the traditional music industry are
finding that the digital revolution is making their advance to market share
and profitability far less onerous than it might have been in the traditional
market place. In general, it appears that those with talent and who are
providing good value for the consumer dollar are finding buyers while those
whose product might have found its way to the market
place for reasons other than real talent are having a significant
negative market impact.
As for video, the fact that the Internet is only just starting to
transition into bandwidths that can deal with full motion and full resolution
video copies leaves the movie/video industry to expect the worst but possibly
be able to learn from the experiences of the print and music industries.
The New Market
During my testimony at the Blank Audio
Media Levy hearings I noted that, while CPCC has pegged the compensation
for any copy of a musical work at the same rate as that paid to artists for
the retail sale of a work, the actual compensation should be 2 orders of
magnitude less at least (1/100th) due to the fact that the market was no
longer the same market the compensation was originally negotiated in. The
limited, physical distribution of content through a controlled and controlling
channel is being replaced by the unlimited content distribution Internet and
digital copy paradigm.
I expect a real backlash from the purchasing public
similar to that suffered by software publishers back in the days of
distribution on floppy disk. Back then (not all that long ago, but many have
obviously forgotten) the publishers started doing all sorts of things to stop
people from being able to copy the floppy that software came on. Laser drilled
holes, special software, special disk formats, and all sorts of things meant
that Joe Average couldn't make a backup copy of the software he'd purchased
and had to beg if the original got destroyed.
The bottom line then was that publishers who used these
means started losing customers, fast!
Publishers who recognized that copies of their software
were in fact one of the best means of gaining market share (and increasing the
number of people who actually bought the program despite the fact that many
didn't) started to gain on those who tried to punish their customers in search
of the perfect method of denying the ability to copy.
Today, I expect the purchasing public will simply not
buy anything that disallows them from using the purchased item the way they
want, when and where they want, as easily as they do today. They've already
shown that they won't purchase over-priced product when they know how
inexpensive it is to produce. The public will simply vote with their dollars
and those who recognize this will win.
The band that publishes their own music, sells it online
and at concerts, in the quantity their fans want, in a timely and fairly
priced manner, will win. They'll publish everything they can - and
their fans will buy it all. Nobody will care if people not yet fans somehow
get a copy since that may infect them with "fandom" and get them to purchase
in the future. This is marketing at its basest.
So, to reiterate, I expect the successful multi-media
sellers will:
