SCN: LL

Fri May 3 08:44:06 PDT 2002

x-no-archive: yes

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(BusinessWeek)---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].

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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