Against Intellectual Monopoly

development of technological protection measures to be
implemented and enforced by Federal regulations to protect digital content
and promote broadband as well as the transition to digital television, and for
other purposes."" Talk about the tail wagging the dog: the entire computer
industry is apparently to be threatened for the important purpose of promoting broadband television. At least the BILL makes no bones about what
it is about: as consumers are unwilling to pay for the devices needed to play
media content in a form in which the content providers wish to supply it,
the BILL will simply force them to do so. The key point is that these devices
may not work as advertised - or worse yet, may malfunction and cause
computers to lose data. The loss from such a malfunction bears no sensible
relationship to the value of copyrighted content that is being "protected."
    There are many foolish details in the various bills proposed so far, which
will no doubt be replicated in yet further efforts at legislation. Although
we do not believe that current copyright legislation, especially the length of
term, makes sense, even if we did, would it make sense to mandate by law
content protection on general-purpose computing devices?
    Tape recorders and DVD players are single-purpose devices designed to
play media content. Any harm done through content protection is largely
limited to the value of the material that is supposed to be protected. That is,
the harm of DVD players that do not work is limited to the economic value
of DVDs. By way of contrast, if general-purpose computing devices fail to
operate properly on account of content protection, the harm is potentially
equal at least to the economic value of computers and the data they store -
a value that greatly exceeds the value of the material that is supposed to be
protected.

    To get some idea of the importance of the "intellectual property" versus
the computer industry, here are some numbers. According to the RIAA,
the value of all CDs, live presentations, music videos, and DVDs in 1998
in the United States was $13.72 billion.22 According to the Statistics of
Income (SOI), in 1998, the business receipts of the computer and electronic
product manufacturing industries, including both hardware and software,
was $560.27 billion. In other words, the computer industry has an economic
value more than 40 times as large as that of the "copyright" industry. Indeed,
IBM's (worldwide) sales in 2000 alone were $88 billion - more than six times
the size of the entire U.S. "copyright" market.
    Notice, however, that although music market revenues are a reasonable
indication of the value of music players, the potential loss of data from
malfunctioning computers can greatly exceed the revenues of the industry.
A recorded CD containing some music can hardly contain other materials,
and its economic value is therefore equal to the value of the music it contains.
A PC, not to speak of a business mainframe, stores the product of hundreds,
or even tens of thousands, of valuable hours of work - personal records,
programs, business accounts, personal software, and on and on. If a PC stops
functioning, say, because its hard disk is wiped out by some malfunctioning
content-protection device, the value of those thousands of hours of work
is gone. Think of a mainframe for some large business company becoming
dysfunctional even for a few hours or days. Millions of dollars of valuable
services would be lost. It is this kind of comparison that should be kept
in mind. Forcing the installation of content-protection devices on all our
computers would force each of us, consumers and businesses alike, to live
with the continuous threat of such gigantic loss. The music and movie
industries, whose monopolistic interests the proposed piece of legislation
aims to protect, are most certainly not willing or able to compensate us in
case of such a disaster.
    Let us examine the idea of content protection, also known as "digital
rights management" (DRM) in more detail. There are two distinct types of
content-protection schemes. One type of scheme is advisory in the sense
that media is simply labeled as protected, and authorized players refuse to
copy material that is protected. The Serial Copy Management (SCM) system
mandated by law for digital audiotapes is an example of such a scheme, as is
the more recent "broadcast flag" for television. Advisory schemes are