Journalism Issues

ORIGINAL POST:
http://www.businessweek.com/magazine/content/02_19/b3782610.htm

MAY 13, 2002

SPECIAL REPORT -- THE FUTURE OF E-BUSINESS

Lawrence Lessig: The "Dinosaurs" Are Taking Over

Interviewed by Jane_Black@businessweek.com

If the media giants have their way, the Net freedom fighter says, content
will be rigidly controlled and innovation stifled

Who should control the Internet? If Stanford University law professor
Lawrence Lessig is right, the Internet will soon belong to Hollywood
studios, record labels, and cable operators -- corporate giants that he
says are trying to cordon off chunks of the once-open data network.
Lessig's mission is to stop them. At age 40, he's already the Net's most
famous freedom fighter. Since 1995, he has been a seminal thinker on many
of the Digital Age's most important battles -- the AOL-Time Warner merger,
Napster, and the Microsoft antitrust case.

In his latest book, The Future of Ideas: The Fate of the Commons in a
Connected World, Lessig argues that imminent changes to Internet
architecture plus court decisions that restrict the use of intellectual
property will co-opt the Net on behalf of Establishment players -- and
stifle innovation. On Apr. 29, Lessig spoke with BusinessWeek Online
Technology reporter Jane Black about what he sees as some disturbing
trends. Here are edited excerpts of that conversation:

Q: You argue that the Internet's popularity as a new medium is a result of
its open architecture. How do you see this changing? And are the changes a
threat to e-business?
A: There are two places where it's changing. One is at the physical level
of the network. As we move from narrowband to broadband [access to the
Net], broadband operators are developing technology that gives them
control over applications and content on the network.

Cable companies, for example, have a view of what the network should be
used for. And they're beginning to pick and choose what kinds of content
will flow quickly as a way of favoring -- or not favoring -- content
providers. For instance, perhaps cable companies can make it more
difficult [for Web sites] to use streaming video if that interferes with
their video business. It's your father's AT&T all over again: They, not
the user, decide what the network should be.

Q: What's the result of a controlled network?
A: The cost of innovation goes up significantly. Before, you just had to
worry about complying with basic network protocol. Now you have to worry
about making your program run on the full range of proprietary systems and
devices connected to the network. Before, the network would serve whoever
and whatever people wanted it to. Soon, you will need the permission of
network owners.

Think about other platforms in our lives, like the highway system. Imagine
if General Motors could build the highway system such that GM trucks ran
better on it than Ford trucks. Or think about the electrical grid. Imagine
if a Sony TV worked better on it than a Panasonic TV. The highway and
electricity grids are all neutral platforms -- a common standard that
everyone builds on top of. That's an extraordinarily important feature for
networks to have.

Q: And the second change that threatens e-business?
A: Dominant media is a huge threat. [Record labels and Hollywood studios]
make their money because of the control they assert over the production
and distribution of artists' work. In the music business, a handful of
companies control more than 80% of the music in the world. These companies
control not just distribution but a market where artists have to sell
their souls to a record label just to have a right to develop music that
can be distributed.

That's the model for the last century. The economic reasons that might
have justified that tightly controlled structure have disappeared. The
Internet can support much greater competition in production and
distribution than [is possible with] the dominant five companies. The
record labels have launched lawsuits against every company that has a
model for distributing [music and entertainment] content they can't
control. That has sent a clear message to venture capitalists: Don't
deploy a technology that we don't approve of, or we will sue you into the
Dark Ages.

The result is that the field has been left to dinosaurs. There would have
been more chips, computers, and devices to deliver content if Congress had
been more keen to allow innovation to occur. We've given control over the
future to exactly the wrong people. And before we know it, the possibility
for innovation will have disappeared.

Q: Why is it so difficult to head off these moves?
A: One reason is that Washington surrounds itself with the same people all
the time -- [Motion Picture Association of America President] Jack Valenti
and [Recording Industry Association of America President] Hillary Rosen.
They've succeeded in making Washington believe this is a binary choice --
between perfect protection or no protection. No one is seriously arguing
for no protection. They are arguing for a balance that avoids the
phenomenon we are seeing now -- one where the last generation of
technology controls the next generation of industry.

In fact, there are lots of solutions that would promote innovation. For
example, Congress could do what it has always done -- establish a flat
compulsory licensing fee [such as the one radio stations pay to music
publishers for playing their songs] so that any company can compete in the
marketplace. That's what Napster [the free-music sharing Web site the
recording industry sued out of existence] asked Washington for all along
-- a compulsory license. That could deal with 80% of the problem of
existing content.

But these solutions are never recognized because, while the future under
perfect competition would produce an industry with much greater income to
artists and greater opportunities to consumers, the fact is that the
concentrated players are going to lose.

The problem is, we've given control of the future to the people who will
lose even under best possible plan. It's like giving the communists
control over the future of the new Russia. Congress continues to have them
come down and testify. And they step forward and say they want communism
to be protected for the next 100 years.

Q: The current debate over Web radio is a good example. New fees that the
U.S. copyright office has mandated threaten to put small Webcasters out of
business.

A: Web radio is a perfect example. In the course of its testimony before
the CARP hearings [the Copyright Arbitration Royalty Panel, the government
group responsible for setting compulsory license fee for Webcasters] the
RIAA argued that higher rates would reduce the number of competitors to
four or five big players. That's their model: To wipe out diversity and
get back to a place where only a few people control delivery.

I understand why they want that. But I don't understand why Congress is
giving it to them. And it's not just the fees that are ridiculously high
-- it's the data collection that has been mandated [by CARP and is
awaiting approval]. If the RIAA has its way, Webcasters would have to
report every song that every listener heard. In essence, it asks to create
a national police state of music listening by forcing Webcasters to
collect data and turn it over to copyright holders. My question is: Why?
It kills competition and the development of niche markets. This is a
classic example where the legal process is being used to destroy
creativity and innovation.

Q: What should Washington do?

A: First in context of copyright, Congress should pass low fixed
compulsory license fees for distribution of [music and entertainment]
content on the Web. Those fees should not be tied to reporting every usage
on the Web. They should be determined the same way they are now for radio
-- according to a sampling that gives some idea of what music is being
played.

Second, Congress should repeal the 1998 DMCA [Digital Millennium Copyright
Act, which, among other things makes it a crime to circumvent
copyright-protection technology]. We have no reason to believe that the
market won't work well enough to prevent abuse. We don't need the federal
government threatening prosecution.

Finally, Congress needs to not pass new legislation, like the [recently
introduced] Hollings' bill that would mandate a police state in every
computer [by requiring that copyright-protection mechanisms be embedded in
PCs, CD players, and anything else that can play, record, or manipulate
data]. (See BW Online, 3/27/02, "Guard Copyright, Don't Jail Innovation.")

Q: Do we need a new definition or vision of copyright and intellectual
property in order for e-business to move forward?

A: We don't need a new vision. We just need to recognize what the
traditional vision has been. The traditional vision protects copyright
owners from unfair competition. It has never been a way to give copyright
holders perfect control over how consumers use content. We need to make
sure that pirates don't set up CD pressing plants or competing entities
that sell identical products. We need to stop worrying about whether you
or I use a song on your PC and then transfer it your MP3 player.

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// posted by newshare @ 11:34 PM