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Movie Makers, Tech Firms Ink DVD Copying Pact

By John P. Mello Jr.
www.TechNewsWorld.com,
Part of the ECT News Network
07/15/04 9:02 AM PT

In an announcement late Tuesday, Microsoft, IBM, Intel, Matsushita (Panasonic), Warner Brothers and the Walt Disney Company said they would develop a DVD copy-protection scheme that will allow consumers to make backup copies of movies as well as share DVD content on portable devices.


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In an apparent move to avoid the mistakes made by the recording industry in managing digital forms of its intellectual property, two movie studios have cut a deal with several major technology companies -- including Microsoft (Nasdaq: MSFT) and IBM (NYSE: IBM) -- to develop a scheme that will allow limited copying of next-generation DVDs.
"They're trying to be wiser than the recording industry," Vamsi M. Sistla, director of broadband and residential entertainment technologies for ABI Research in Oyster Bay, New York, told TechNewsWorld.

Sistla explained that "In the present marketplace, consumers prefer to use their content on multiple outlets. If consumers aren't given that choice, it will backfire on the content providers' business."

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In an announcement late Tuesday, Microsoft, IBM, Intel (Nasdaq: INTC) , Matsushita (Panasonic), Warner Brothers and the Walt Disney Company said they would develop a DVD copy-protection scheme that will allow consumers to make backup copies of movies as well as share DVD content on portable devices.
That scheme, dubbed AACS for Advanced Access Content System, isn't expected to be developed until the end of this year at the earliest.

While the brief announcement by the AACS alliance of companies raised questions in the minds of many industry observers, analysts, by and large, praised the move.

Critical Development

"This is the first significant multi-industry effort in this area," Ted Schadler, a principle analyst with Forrester Research in Boston, told TechNewsWorld. "Thumbs up on the effort," he said.
"This development is critical to the growth of the industry," Rob Enderle, president and principal analyst with the Enderle Group in San Jose, California, noted.

"It's critical for the growth of the merged PC-consumer electronics industry, which is going through a painful birthing process right now," he told TechNewsWorld, "and it's also critical to the movie industry as well because otherwise they're going to lose a substantial amount of revenue to piracy."

Different Notions of Portability

Finally, some of the content creators and copyright holders are reaching across the table to the technology providers, Mike McGuire, a research director for the Gartner Group based in Stamford, Connecticut, observed.
"That's a great first step," he told TechNewsWorld from his office in San Jose, California. "However, both parties have to be cognizant of what consumers are going to expect," he advised.

"We're going to see very different notions of portability between a movie and a song," he predicted. "But we have to give these studios some credit for being a little more forward looking than the music industry," he said.

Positive Development

"If the technology companies and the movie studios can reach a common ground that allows consumers to do what they want to do, that's a positive development," Jeff Joseph, vice president for communications for the Consumer Electronics Association in Arlington, Virginia told TechNewsWorld.
However, not everyone saw the announcement in a positive light.

Fred von Lohmann, a staff attorney with the Electronic Frontier Foundation in San Francisco, labeled the AACS Alliance a new Digital Right Management (DRM) "cartel."

Bad Cartel

"A new DRM cartel is going to be bad for innovation, bad for competition and in the long run, bad for consumers," he told TechNewsWorld. He maintained that the ultimate aim of the alliance was to restrict what types of products consumers can have and the features those products can offer.
Although the movie industry argues that copy-protection schemes are needed to combat digital piracy, von Lohmann scoffed at that contention.

No Stopping Pirates
"The reality is that none of these content protection systems has had any success in stopping digital piracy," he said. "There's no reason to assume that this will be any different," he asserted.

"If this system is quickly defeated by pirates, then the only people that are going to be paying the price are legitimate consumers and innovative companies shut out by the cartel," he said.