MESSAGE
| DATE | 2006-03-21 |
| FROM | Ruben Safir
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| SUBJECT | Subject: [NYLXS - HANGOUT] Study and the consequences of the DMCA
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« The 6 Myths Driving the Push for Video Game Regulation | Main | Net
Neutrality, France and iTunes »
March 21, 2006
The DMCA, IBM Clones, and Intra-platform competition
I’m pleased to announce that my new Cato Policy Analysis, “Circumventing
Competition: The Perverse Consequences of the Digital Millennium
Copyright Act,” is now available for download.
A lot of DMCA critics have focused on how DRM undermines fair use by
narrowing the ways in which users can consume the content they have
legally acquired. That’s certainly a valid argument, but I tried to
focus on the implications of another type of fair use: the fair use
right to use reverse engineering to build a competing product. Prior to
the enactment of the DMCA, the courts had consistently turned back
efforts by incumbents to use copyright law as a way to exclude
competitors from their technology platforms. Most famously, IBM was not
able to prevent the creation of IBM clones, because a company called
Phoenix used “clean room” reverse engineering techniques to develop a
compatible BIOS without directly copying any of IBM’s copyrighted
software.
The DMCA throws that principle out the window, because it makes it a
crime to “circumvent” a DRM scheme—that is, access the content without
first getting the permission of the DRM creator. As a result, it’s
effectively illegal to build third-party software that interoperates
with software like iTunes or Real’s video streaming software.
What’s most troubling about this is that it locks out small startups and
individual hobbyists from building software or hardware that works with
a dominant media platform. Inter-platform competition is good and
important, but intra-platform competition tends to be a much more
important driver of technological progress. Again, the PC platform is
the poster child: it has worked so well because new entrants (Phoenix,
AMD) have been able to offer products that serve as drop-in replacements
for existing PC components. They didn’t have to develop a whole new PC
platform in order to sell their BIOS or CPU—and they didn’t need IBM or
Intel’s permission to do so.
In contrast, if someone wants to enter the digital music market, they
can’t make their products compatible with the dominant technologies
without the permission of the incumbents. And, not surprisingly, Apple
has chosen not to give anyone permission. As a result, there’s not
possibility for some scrappy startup to do to Apple what Phoenix did to
IBM.
As I document in the paper, the same problem exists with virtually all
post-DMCA video technologies. The next generation of digital video
platforms—including Blu-Ray and HD-DVD, Internet streaming formats, and
the CableCard—are all wrapped in DRM controlled either by an individual
company or an industry cartel. They have strict rules about how approved
devices are designed that typically dictate in great detail what
features compatible devices may or may not have. If you’ve got an idea
for a digital media product that doesn’t meet their checklist, they’re
likely to tell you to take a hike.
I expound on this and other points at much greater length in the full
paper, which is available from Cato’s web site.
Posted by Tim Lee at March 21, 2006 08:58 AM
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