Web pirates pillage Hollywood

"Thomas Jefferson realized that the foundation of innovation and progress in a democracy is a strong flourishing set of ideas," the consumer activist says. "No ideas are conceived in a vacuum."

Early patents were a solution devised to create an incentive for invention. But they created a monopoly for only a limited amount of time, Kraus says. "In exchange, the person has to give it back to the common. They don't get exclusive rights forever. "The reason copyright exists is not to protect artists but to benefit the citizenry."

Kraus adds: The danger here "is that in an effort to find a new business model, what the entertainment industry wants to do is eliminate the notion of personal-rights use and use technology to control content completely."

But the MPAA doesn't see the issue this way.

"This is the first I've ever heard that there's an inalienable right to fast-forward a film," says the MPAA's Attaway. "But this is a marketplace issue. Consumers will make their interests known, and studios will respond to those interests."

The technology companies that may be asked to create the new hardware and software solutions to piracy also would like to see the marketplace, not government, handle the problem. Technological invention is impossible to foresee, they argue, and specific legislation would impede the innovation that is the industry's lifeblood. This week computermaker Gateway Inc. came out against the Hollings legislation and in support of consumers' rights to download digital content. The company's website now offers free music for downloading, and all 277 Gateway stores will hold clinics this weekend on how to download digital files and "burn" CDs.

In Senate hearings last month, Intel Corp. vice president Leslie Vadasz went so far as to say "government intervention would create irreparable damage."

Beyond that, point out industry observers, Hollywood has a history of fighting new technologies (videotape, the VCR, the cassette tape, among others) that later have become lucrative sources of new revenues for it.

Some suggest that this institutional conservatism blinds Hollywood to solutions that are already available. The head of IBM's business development for digital-rights management in Europe reminded the Senate commission that the military has solved the problem of how to protect sensitive digital data.

This week, IBM introduced encryption software it says will solve the problem of illegal copying. Many observers say secure encryption software and hardware are available, but an inability to agree on standards has kept Hollywood from using them.

The culture of the entertainment industry must change from one of total control to adaptability, says Dave Cavena, who led IBM's digital-cinema division for 10 years and now is an independent consultant on digital-piracy issues.

"At some point, studios will have to find an economic model that will drive them toward same-day release [of movies] on all media: the Internet, cable [TV], theater" to reduce the incentive for pirates to steal the material before the studio can make it widely available.

A closer look at Sherie Tree, that Los Angeles teen, may provide an object lesson to the industry, Kraus says. Yes, she downloaded "Moulin Rouge" onto her computer. But she also put down $19 of her allowance money to buy the DVD when it finally became available. And she dragged friends and family to the multiplex on repeated trips to watch the film at $9 a sitting. Her original "free" download resulted in a considerable number of purchases.

"The fundamental question," Kraus says, "is do you treat all consumers like potential thieves, or treat them with dignity and give them their rights...?"

DigitalConsumer.org has proposed a "consumer technology bill of rights." The firm's co-founder, Joe Kraus, says the rights of consumers have been left out of the debate between Hollywood and Washington over music- and video-piracy issues. Consumer rights, the group says, should include:

• The right to "time shift" media (i.e., record a show to watch at a later date).

• The right to "space shift" media (i.e., copy a CD to a portable MP3 player).

• The right to make backup copies of media (i.e., music or video files) that have been purchased.

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