Thursday, October 06, 2005

Why you should care about CPCM

The EFF critique of the proposed standards for copy protection in European digital TV systems exemplifies the conflict that arises when the husk of stuff is sloughed off information goods.

EFF position

The EFF rejects the downstream control of content that these standards would give entertainment companies. For example, the proposed technology would determine which shows can be copied, which devices can be used for copying, and who would be able to share copies with whom.

The EFF motivates its objections in various ways:
  1. The user "owns" the content once it has been delivered and should be able to decide how to dispose of it

  2. Customary rights on fair use of content will be infringed, harming society in a variety of ways

  3. Restricted outputs would limit innovation in the equipment market

  4. A veto on allowed devices would crimp the Open Source movement
I'll focus on the first one, since it's at the heart of the transition to digital media.

I imagine content producers have always believed that they continue own the content even after it’s sold (or licensed, rather, as they'd insist). However, there was no need to press the issue in the analog era, since lossy copying meant that quality degraded so rapidly that massive illegal appropriation of their property wasn't a significant business risk.

The difference with Digital

Digital media is reproducible perfectly and infinitely, at minimal cost. Producers worry that if they don’t control its downstream distribution, content will show up as a perfect but free copy, and they will no longer be able to make money from it. The product in question is now much closer to the ideal knowledge good; it's no longer packaged in a carrier that degrades over time. (In economic terms: Content as a knowledge good is, in principle, a non-rival good, but when packaged in an analog distribution medium it becomes effectively rivalrous, and thus much easier to fit into existing economic structures.)

The content companies are betting – hoping! – that technology will save them. However, for the solution to succeed the controlling technology has to be everywhere content is played, and has to be the only way content can be played.

Such centralized control is anathema to the advocates of a new digital content regime. The paradigm of their daily lives is the mash-up, open Internet: building new services by combining existing ones in new ways (eg, which combines Craig’s List with Google Maps), and getting under the hood to tweak code if they want to add their own features (eg Linux).

The crux

It’s more than just a clash of cultures, though. The argument matters because it resonates with a shift in technology that has flecked open this question: How should intellectual property be managed when it is no longer wrapped in “stuff” which obscures its fundamental difference from conventional physical goods? As more and more knowledge is represented in digital form (examples below), and as the ratio of knowledge to stuff in our products increases, it will affect every business, and every citizen.

Forthcoming attractions

Phones are much smarter than they used to be (more knowledge), not to mention smaller (less stuff). Phone companies didn’t used to worry much about what I did with a phone once I bought it, because I couldn’t do much. Now that one can (in theory) make calls over a Wi-Fi network that the phone company can’t monetize, they care a lot more, and are asserting control over the software that’s allowed on their phones.

Cars are much smarter, too. It comes as no surprise that people are increasingly unable to choose who maintains their vehicles, since manufacturers only give their dealerships the requisite electronic diagnostic equipment. Say goodbye to your friendly independent mechanic… Changing the bits has become more important than changing the oil, and the manufacturers care about the bits.

Consultants and professionals are also “knowledge wrapped in stuff”. The Stuff is human flesh, and the Knowledge is what they learnt in Law School or Med School or B-school, and the School of Hard Knocks. While the knowledge is non-rivalrous, acquiring and distributing it via human carriers (the ultimate analog distribution medium :-) makes it effectively rivalrous: if I’m using the consultant, you can’t have her. (A Washington DC ploy much-used by incumbent industries: put all the top law firms on retainer so that they can’t lobby for insurgent industries.) As such knowledge is increasing – though of course still imperfectly – represented in software, similar fights will arise over the control that digital consultants have over the downstream use of their expertise algorithms.

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