Fans: Music Should Rock, Not Lock
By Brad King
2:00 a.m. June 6, 2002 PDT
Matthew Davidian loves music.
He's got 550 albums that he's bought over the years and has since ripped into digital files. He doesn't use file-sharing applications like Kazaa unless he's checking out some new music. Admittedly, Davidian, 32, doesn't buy many CDs, but it's not because he's not willing to part with the cash. It's just that nothing much on the radio interests him.
No, Davidian feeds his new love for dance music with regular visits to MP3.com, one of the plethora of sites where independent and unknown artists post their music for anyone to download legally for free.
In short, he's the type of guy the recording industry should be salivating over. He's into exploring new music, he's into legal sites, he's had a history of purchasing albums and says he has no problem with the concept of paying for music.
There's just one problem: He hates digital rights management (DRM), the security systems being used to control how consumers can listen to music they legally purchase.
Dividian's story is not unique, and his distaste for DRM is a big problem for record companies and movie studios. Without that security on CDs and DVDs, the industry thinking goes, no online business can survive. But no consumer wants to buy protected content.
The federal government is listening -- at least to the entertainment industry. The House Judiciary Committee continues its hearings to determine if there should be a mandated security system that comes with all digital content and consumer electronics products.
"There is one way to deal with information pirated and sold without DRM protection, and in concept it could be a tech mandate," said Rep. Howard Berman (D-California) before postulating that technology applied from the production stage through distribution could solve the file-sharing problem.
This is the latest in the debate over Senate Commerce Chairman Fritz Holling's (D-South Carolina) Security Systems Standards and Certification Act legislation that would force electronic devices to come with copy protections built directly into the systems.
While the digital rights management companies understandably believe security is paramount to the success of online business, none want the government mandating a standard.
"Imposing broad technical measures simply to address a specific issue would stifle innovation and certainly result in higher consumer costs with few, if any, corresponding benefits," said Will Poole, Microsoft's vice president of new media platforms.
There's the rub. Entertainment companies, terrified about digital piracy, must partner with technology companies to create an open security standard that Dividian doesn't want on his product in the first place.
But piracy concerns aren't going away. Billions of music files a month are swapped using Kazaa, Morpheus and Gnutella, three of the most popular file-trading networks, while up to 500,000 films a day are shared using those same networks according to a recent report by Viant Media, which predicted movie piracy will steadily rise in the coming years.
"Spurred by this summer's blockbuster movies, we believe it may currently be undergoing a period of rapid expansion," Viant analysts conclude in The Copyright Crusade II report. "If the current capacity and interest levels remain intact, we would estimate that this represents roughly a 20 percent increase over traffic levels observed a year ago."
Despite the doomsday predictions, the entertainment industry is doing just fine. The movie industry, after a stellar summer, is on pace to shatter last year's box office record by 16 percent, reaching $9 billion in revenues despite the rise in piracy.
The music industry presents a much more murky picture. Worldwide sales dipped this year, prompting a rash of finger-pointing among executives. Some claim online piracy has killed sales, others look to sagging sales from its major stars, while others blame the economic downturn. Some point to all three.
The piracy bit took a hit when rapper Eminem's latest release, The Eminem Show, was rushed up a week after tracks began appearing on file-trading services. The album climbed to the top of the chart in four days.
"I absolutely believe that the bootlegs and downloads have a huge negative effect on sales," said Steve Berman, head of sales at Interscope, a division of the Universal Music Group.
Berman's attitude, which is prevalent within Hollywood and the music industries, has forced the entertainment industry to begin looking for ways to attract Dividian and other consumers to buy products that are so secure they offer little incentive to use them.
Centerspan Communications, which runs the multimedia-sharing network Scour, distributes a limited number of songs and movies from Vivendi Universal. The catch is that the content comes with DRM, a stark difference from the mega-popular services that allow people to exchange files without restrictions.
Even Kazaa, the single largest sharing community, has decided to get into the security business. While Davidian can still download any song he wants on that network, soon he will receive a different type of file. Kazaa will be distributing Altnet, a new service that allows entertainment companies to deliver secure content to users ahead of the free files.
"Altnet ... allows us to deliver files from content creators and owners and enables them to establish direct relationships with their end users," said Kevin Bermeister, CEO of Altnet.
The question Centerspan and Altnet -- and the entertainment industry -- is about to have answered is how willing consumers will be to use DRM. If Dividian is any gauge, the answer won't be pleasant for Hollywood.
On recent visits to the House of Blues and Liquid Audio, two sites that offer music in encrypted formats, he found much more frustration than fascination.
"Score minus one for HOB.com (for) not making it clear to downloaders that they may render music downloaded from their site unplayable at any time," Davidian wrote in an e-mail. "Score minus one for not even giving listeners an option to purchase said music to continue listening to it."
News 
Market Data 
Discover 
