Speech by Gary Shapiro, President and CEO of the Consumer Electronics Association.
Title: The Campaign to Have Copyright Interests Trump Technology and Consumer Rights.
Date: September 17, 2002.
Location: Optical Storage Symposium, San Francisco, California.

Editor's Notes:
Source: CEA. TLJ converted a MS Word file into HTML.
TLJ added hyperlinks.

The Campaign to Have Copyright Interests Trump Technology and Consumer Rights

We are at a critical juncture in history when the inevitable growth of technology is conflicting with the rising power and strength of copyright owners.  How we resolve this tension between copyright and technology will define our future ability to communicate, create and share information, education and entertainment.

Today I would like to share with you my views on this situation and the questions we must confront as we wind through this confusing, but historic maze.

There is no doubt that this era’s rapid shift to digital and other technology is changing the rules of the game. Reproduction, transmission and storage technology all are progressing exponentially, resulting in an unprecedented power to copy, send and save all forms of media. Reproduction technology has become incredibly cheap and reliable. Transmission technology, including satellite, cable, broadcast, wired or wireless, and often connecting through the Internet, has linked everyone at ever increasing speeds and competitive pricing. Storage technologies also quickly have expanded in capacity as total storage media costs have plummeted.

With each new technology, the fears of the music and motion picture industries have grown. With television and the VCR, it was going to be the end of movies. With CDs and cassettes, it was the supposed harm from real-time transfers and one-at-a-time copies. Today’s technologies make these perceived threats seem naïve and harmless. With high-speed connectivity and the Internet, it’s not buying a CD and making a copy for a friend; it’s downloading from a stranger or making available thousands of copies with the touch of a keystroke.

The growth of reproduction, storage and transmission technology has terrified copyright owners. The RIAA claims that 3.6 billion songs are downloaded each month. The RIAA also estimates that $4.5 billion has been lost by the music industry due to pirating. And the motion picture industry also sees the writing on the wall. Fox Group CEO and News Corp. President Peter Chernin in an August 21 keynote speech at an Aspen conference claimed that Spiderman and the latest Star Wars movie were downloaded four million times following the weekend after their release.

Based on these and similar threats the content community has gone on a scorched earth campaign – attacking and burning several new recording and peer-to-peer technologies. They have used the Congress, media and courts to challenge the legality of technology and morality and legality of recording. In the same Aspen speech, Chernin attacked computers as untrustworthy and the Internet as primarily used for pornography and downloading.

I believe that hardware and software companies have a mutual interest in working together, so that they can sell more products. For years, consumer electronics companies have been working with both the recording and motion picture industries on developing technological measures that meet the needs of both industries. For instance, the DVD standard includes anti-copying protection. It also includes an anti-fast forward technology designed to ensure copyright warnings are shown, but instead is being used to require consumers to sit through movie previews. CE companies also have provided digital interfaces that allow consumers to share content among their own devices while restricting unauthorized redistribution to the Internet. By protecting content at the source, content providers can be assured their intellectual property rights are respected, while consumers can enjoy unimpeded personal use. However, source protection should not be used to mislead consumers to purchase CDs that can only be played on certain CD players.

Indeed, despite the cooperative efforts, the copyright community has declared war on technology and is using lawsuits, legislatures and clever public relations to restrict the ability to sell and use new technologies. Lawsuits have shut down file-sharing services like Napster and Aimster, and threaten peer-to-peer networks like KaZaa and Morpheus. They unsuccessfully challenged the legality of MPs recorders in the Diamond Multimedia case. They have challenged as illegal ReplayTV, a TIVO-like device, which allows television programming to be sorted and stored on a hard disc and which allows a consumer to skip commercials. In fact, one TV executive equated the skipping of commercials as “stealing” free broadcast television. The RIAA has announced that it will start suing individuals who engage in file sharing and has subpoenaed Internet access provider Verizon to identify a downloading subscriber.

At the urging of the content community, Congress has stepped into the act.  Legislation has been introduced which requires all technologies to be shaped by a government-mandated copy protection system. Other legislation allows any copyright owner to seek and destroy the posting of copyrighted products on P2P networks via personal computers connected to the Internet. Still other legislation would allow a content owner to insert an embedded watermark into the work to determine if there was infringement and, at the content owner’s discretion, disable the device, even if, upon subsequent determination, the use was lawful.

The most recent and scary development is that the United States Department of Justice is threatening to jail millions of Americans who use file-sharing services. In a presentation at the Progress and Freedom Foundation’s Aspen Summit on August 21, Deputy Assistant Attorney General John Malcolm said that peer-to-peer sharing is piracy and a criminal offense.

With this pronouncement, along with similar euphemisms by the media, it is clear that the copyright community has reshaped the debate. All of a sudden, the downloading of a song to sample an artist’s wares, behavior most Americans between 13 and 25 engage in regularly, has been likened to a criminal act.

Consider the clever public relations campaign of the content community. They’ve changed the simple language that describes the acts at issue. It used to be called “taping”, “reproducing” or “downloading”, and advocates on both sides would call it “unauthorized reproduction” or “unauthorized taping”. Then somehow this use of technology shifted to the more pejorative and sinister “copying”. The word “copying” sounds bad. It got you in big trouble in high school on a test. “Copying” is a sister to “plagiarism” which is especially bad.

But in the past few months, Hollywood and the music industry have shifted to different words.  They now only talk about downloading as “piracy”. They call it “stealing” and always use analogies to shoplifting products out of a store. The Justice Department has adopted this approach. “Stealing is stealing is stealing,” said Malcolm in Aspen.

At the same conference, Chernin echoed these themes and used the words “piracy”, “shoplifting” and “stealing” repeatedly to describe downloading. He even declared that those who disagree with his views on copyright are either “amoral or self-interested”.

Another way copyright owners have distorted the debate is to tie in downloading with our national goal of broadband deployment.  They argue that broadband demand will not grow until this issue is resolved.  Indeed, Senators Holling’s legislation is called “The Consumer Broadband and Digital Television and Promotion Act”. Yet broadband deployment has little to do with songs and movies, and more to do with fast Internet speed, always-on convenience, exchanging home videos, interactivity on the web and a range of potential uses for education, medicine, business, shopping and gaming. Yet, some legislators have become confused and convinced by Hollywood that there is a connection between broadband and copyright.

A third way that the copyright community has reshaped and redefined the debate is almost biblical in its reach. The entire theme of the copyright community is that downloading off the Web is both illegal and immoral.

But is it either? I submit it is neither.

Despite the assertions of the Justice Department, downloading is not illegal.

First, fair use rights are guaranteed to consumers by statute, and applied judicially on a case-by-case basis. This means that, while some consumer practices ultimately could be adjudicated as either fair use or infringement, there is scant basis for challenging them as criminal.

The music and film industries claim that there is no such thing as fair use "rights" in an attempt to disparage the term. They say that fair use is only an affirmative defense to copyright infringement and therefore not a right. But various recognized "rights" only may be asserted as affirmative defenses in a lawsuit. For example, in a slander suit, one may assert the First Amendment right but only as an affirmative defense; this does not diminish the fact that the right exists.

Second, time after time, practices of individuals that were initially equated with "piracy" or "theft" have been shown to be neutral or beneficial to copyright owners, and have either been tolerated or accepted as fair use. Think of the VCR and the Supreme Court decision holding that its use to tape full movies is fully legal.

Third, the 1997 NET Act's requirement of a total retail value of $1,000 per infringement should be taken seriously as a barrier to bringing cases against ordinary consumers. This law should not be re-interpreted, after the fact, as a criminal enforcement vehicle against consumer-to-consumer recording and "swapping" practices.

Downloading is not immoral either.  To make downloading immoral, you have to accept that copyrighted products are governed by the same moral and legal principles as real property, thus the recent and continuous reference by the copyright community to label downloading as stealing.  But the fact is that real and intellectual property are different and are governed by different principles. Downloading a copyrighted product does not diminish the product, as would be the case of taking and using tangible property such as a dress. At worst, it is depriving the copyright owner of a potential sale.  Indeed, it may be causing a sale (through familiarity) or even more likely, have no impact on the sale. My son often will become familiar with artists through downloading their music on the Internet and then go out and buy the CD.

The comparison to real property fails for several other reasons. Real property is subject to ownership taxes. Real property lasts forever and can be owned forever. A copyright can be owned only for a limited period of time. Indeed, the United States Constitution declares this. More, copyright law must bow to the First Amendment that expressly allows people to use a copyrighted product without the permission of the copyright owner. This concern contributes to the statutory and judicial concept of “fair use”. The First Amendment includes, not only the right to send, but also the right to receive. Indeed, in 1984, the U.S. Supreme Court in declaring the VCR a legal product, said that it could be okay to copy an entire copyrighted product. So if the Supreme Court expressly held that VCR copying in the home for non-commercial purposes is a legal activity, how is it suddenly labeled as “piracy” because the device is a computer?

The major record labels concede that they totally have failed to transform their business models in response to the Internet.  But then they whine that they “cannot compete with free”, referring to the free downloading the Internet allows.  While I am sympathetic to the radical shift of selling a CD with a one good song for $20 to a marketplace where consumers pick and choose which songs they want, I am not sure this is the correct approach. For one thing, you can compete with free. Purveyors of bottled water do it. America Online does it. Book retailers do it with libraries. Independent online music services say they can do it, if they can clear the rights.

The Beatles 1 album, which contained 30-year-old songs that could have been downloaded for free from Napster-like services from day one, but nevertheless sold some 26 million copies. Why? Because people were willing to pay for the quality of a CD over the often barely acceptable sound quality of a download using P2P services.

Of course, recording artists must make a living and should be paid.  Most consumers likely would pay a reasonable amount for quality downloads, access to full catalogs and maybe some promotional items such as concert tickets or hidden tracks on a CD. Artists even can get new revenue from the Internet by identifying their fans and promoting their concerts, new releases and other products. But the music industry has made little effort to look at new business models or provide a viable and attractive alternative to the downloading services.

The recording industry and motion picture industry should stop complaining so much and look for technological solutions to its own problems.  Doesn’t it make more sense to protect content at the source, using technologies that maintain consumer expectations for personal use? Content providers would be served better by working with technology companies to deploy these solutions rather than suing everyone and lobbying Congress to legislate unreasonable and consumer-unfriendly mandates.

Despite a lack of hits and a recession, music and movie sales are holding their own. Compare this to real downfalls in other sectors from telecommunications to IT to broadcasting, and you must ask yourself if the Internet is actually a good thing for the copyright community.

So where does this lead us? I submit that policymakers should follow some basic principles:

First, do no harm. If we had previously heeded the concerns of the creative community, we would have no radio, no TV, no VCR, no computer, no e-mail and no Internet. Yet each of these technologies has enhanced the revenue stream for copyright owners.

Second, advances in technology should not be restricted. We cannot even imagine today what future advances we will choke off if we artificially restrict technology. If we can envision technology connecting the poorest in the world to medical information, to education and to a better quality of life, we should be careful about stifling its growth. Advances in technology also can supply tools to content providers to help them manage digital rights in a manner that takes into account consumers’ expectations.

Third, claims of harm should be greeted with great skepticism. Not every recording is a lost sale.  It actually may represent a stream of future sales. Artists from Chuck D to Janis Ian  to Courtney Love support home recording rights for practical business reasons.

Fourth, copyright owners have a high burden of proof before any technology should be restricted. Broadcasters and the motion picture industry have come close to making the case that redistribution of free, over-the-air broadcast television over the Internet is harmful to the concept of free over-the-air broadcasting. This is an area where careful legislation or regular legal review, respectful of consumer rights and expectations, may be appropriate.

Fifth, copyright owners should continue developing ways to protect their content at the source, rather than insisting that the burden should be on the device that plays it. Perhaps they should consider a more flexible business model that focuses on keeping honest people honest. But, the corollary here is don’t sell CDs that don’t work on many CD players.

Finally, any restrictions on technology should be narrowly crafted, define limitations on abuse by copyright owners and define legitimate consumer recording rights and expectations. For example, CEA supports the distance education bill presented by Congressman Darrell Issa of California and Rick Boucher of Virginia that addresses a specific IP concern rather than attempting to legislate through a one-size-fits-all approach. The Boucher-Issa bill reaffirms fair use rights and would amend the Copyright Act to ensure educators can use PCs and new technology to foster distance learning.