Story: The tech and CE industries get cozy with Hollywood

The attorneys, business people, and engineers from the three industries took their customary seats around the table in a cramped conference room at the Burbank Airport Hilton. Soon to be known as the DVD Copy Control Association, the cross-industry forum was made up of a handful of people who spoke on behalf of the Hollywood studios, the high-tech industry, and the consumer electronics industry.

Months before, at the dawn of the DVD era in 1996, the three groups had wrangled at length before finally agreeing to allow Hollywood movies to play on personal computers in addition to DVD players. Now the studios wanted to enforce their new system of “region coding” around the globe. Like Allied powers carving up Europe and the Middle East as spoils of war, Hollywood moguls had carved the world into six grand regions. To help preserve the system governing movie release dates in foreign markets, the studios believed it necessary to configure all DVD devices so that a DVD sold in the United States (Region 1) would not play in Great Britain (Region 2), Brazil (Region 4), or India (Region 5).

But Hollywood remained unhappy that region coding could be thwarted. In small numbers, movie lovers in Paris, London, and Rome had begun buying the newfangled DVD players and changing the settings to Region 1. In that way they could buy and watch an American DVD long before the foreign version of the same DVD hit their local markets. Desktop and laptop computers were problems, too. Film buffs could pick up a Hollywood DVD during a trip to New York and watch it—sometimes before the film even opened in their own countries—simply by changing the region setting.

What to do? How could these rule-breakers be stopped?

The representative from Universal Studios leaned forward. The idea he outlined was simple: place a Global Positioning System satellite chip in every DVD player and computer sold with a DVD drive. Hollywood could then track the location of every individual who uses a DVD player and enforce its rules from the sky.

James M. Burger, a Washington attorney who represents the tech industry, recounted the reaction of the computer and electronics people on the other side of the table to the audacious idea of planting such a James Bond–style tracking device in millions of users’ machines.

“We all looked at each other, a little dumbfounded.”

“Because of the privacy issues?” I asked.

“Oh, no. Because of the added expense. Do you know how much GPS chips cost back then?”

Eventually the proposal was scrapped and a less costly and intrusive system was agreed upon: a user could change the region code settings on her laptop only so many times before it was locked into one region permanently. (Members of the DVD Copy Control Association now chuckle at that early proposal, saying that lots of freewheeling ideas were floated during these sessions.)

Hollywood has long had a flair for the dramatic—and the imperial. Burger tells of a public hearing held in Washington that illustrates the culture gap between Hollywood and high tech. “One studio executive got up and said, ‘People pay for the privilege of watching movies.’ Could you imagine a computer executive saying, ‘People pay for the privilege of using one of our machines’? He’d be slaughtered. There’s sometimes a regal attitude in Hollywood.”

The most striking culture gap, however, may be the industries’ different attitudes toward change. “We love disruptive technologies,” says Intel vice president Donald S. Whiteside. “In Silicon Valley, the only constant is change,” adds Joe Kraus, who cofounded the former Excite search engine. “Hollywood has always had a tendency to see change as not desirable, and so they do everything they can to prevent it.”

In recent years, the press has framed the conflict between Hollywood and Silicon Valley as a battle about Internet piracy. But piracy is not really the core issue. The studios are chiefly interested in protecting their gleaming new DVD empire. Two technologies enforce Hollywood’s business model: encryption (or copy controls), which prevents copying; and region coding, which enables an orderly process for the worldwide release of movies. While copy controls arguably thwart piracy, region coding does nothing to prevent people from redistributing movies onto the Internet.

Instead, region coding enables Hollywood’s “windowing” process of marching movies from cinemas to home video, pay-per-view, video on demand, cable TV, and network TV in each country.

Many Europeans resent having to wait many months after a Hollywood movie is released on DVD in the United States before they can see the movie on DVD in their own countries.4 A thirty-year-old French programmer living in Ireland who goes by the techie name of >NIL: operates the Pioneer Region Free DVD Firmware site to help those who want to bypass region coding on their DVD players. (You’ll find hundreds of such sites on Google and hundreds of region-free DVD players for sale on eBay.) “Being French,” he tells me, “I wouldn’t mind seeing a revolution occur to shake down this whole monolithic business.”

The controversy over Internet piracy is a subplot to a much larger drama. This is a battle about how we may use, own, and share digital media. As more people create personal media and begin to participate in culture, we see backlash from major entertainment companies seeking to control all uses or reuses of their works, even at the expense of citizens’ traditional rights.

In this conflict, too often the press has failed to ask hard questions. Will the new wave of restrictions being imposed on law-abiding Americans (described in subsequent chapters) do anything at all to thwart determined pirates? Is the trade-off worth the price? Will home-brew culture be enabled, or will the locks placed on digital devices to prevent piracy also prevent us from adapting media for personal use?

The years-long battle over the proper balance between freedom and lockdown in the digital age shows no signs of abating. While Hollywood and high tech slug it out, the $100 billion consumer electronics industry has remained largely on the sidelines. Despite a few renegades, such as Philips Electronics (headquarters in the Netherlands), Archos (France), Pinnacle (Germany), or start-ups such as the former Diamond Multimedia or Sonicblue, electronics makers have a reputation for being beholden to Big Entertainment. And for good reason: nobody buys a DVD player or big-screen television unless there’s killer programming.

By contrast, the giants in the technology industry—which is about ten times bigger than Hollywood—have been less susceptible to the movie industry’s entreaties and cajoleries. As a result, high tech has been the public’s best friend at the private forums where blueprints for the digital home are drawn up. “We don’t just hand over the keys to Hollywood. We negotiate to preserve fair use and customer rights,” says Stephen Balogh, an Intel business manager who represented the computer industry at the meeting above.

But increasingly, high tech is becoming a less reliable advocate for the public. Three reasons for that. First, growing media consolidation has muddied the waters. For instance, when it was an electronics company, Sony only had to worry about making cool devices. Now that it owns a major motion picture studio as well as a record label, the company often gives greater priority to protecting copyrighted material rather than delivering a superior customer experience.

Second, Congress sent the message that it would consider imposing government mandates if the tech sector did not assuage the concerns of media companies over digital piracy. Spurred by congressional jawboning and fear of litigation, computer makers lined up behind a “trusted computing initiative” designed in part to lock down devices and prevent people from copying or manipulating entertainment media.

Third, computer companies, seeing slower growth, have begun to invade the home entertainment turf, becoming dependent on Big Entertainment’s wares. In 2003 Hewlett-Packard launched 158 consumer products, from cameras to a gadget that converts old VHS tapes into DVDs. Gateway has bet the farm on electronics by branching out into plasma TVs, DVD players, camcorders, and other gear for the digital home. Dell now makes big-screen digital TVs. Microsoft sells a PC-powered digital television and media hub for the living room. Apple sells the world’s most popular digital music player, the iPod, and its digital lifestyle software—iTunes, iMovie, iPhoto—have less to do with computing than with creating and managing entertainment. Even cellular giant Nokia has crossed boundaries by making mobile phones that also send e-mail, take photos, and play games.

There is an awkward name for this: convergence.

As media transform into series of 1s and 0s—TV shows recorded on digital boxes, ten thousand songs slipped neatly into a shirt pocket—the devices needed to play entertainment are coming to resemble personal computers, complete with chips, hard drives, and connections for networking.

What does this transformation herald? If you hear high tech tell it, convergence means letting all the entertainment gizmos in our homes talk with each other, perhaps commanded by a single all-powerful black box that the tech company places in your living room.

If you listen to big media, you’d think convergence refers to media corporations finding “synergies” and delivering “content” across many divisions. Customers, if considered at all, are looked on as “baby birds with our mouths open, happy to take anything the big media company gives us,” as Mary Hodder, who attended last year’s Digital Media Summit in New York, put it.

But convergence is about more than black boxes, new toys, or the marriage of technology and show biz. True convergence puts a blasting cap to the one-way architecture of top-down media. When media come together in new ways, consumers become producers who want greater ability to participate in media, to reuse it, to design their own experiences. New technologies are changing the balance of power between media companies and their customers so that, for example, computers become not just music and movie playback devices but also photography labs, mini-motion picture studios, and music recording studios.

Genuine convergence happens when people create personal media or capture mass media and personalize it. Meaningful convergence involves the user.

“When media intersect, the public begins to archive, annotate, appropriate, and recirculate media. Each of those steps is empowering to consumers,” MIT’s Henry Jenkins says. “We’re now seeing scorched earth–style warfare between consumers and corporations that continue to resist change. The corporations still control more cards than consumers do. But they control fewer cards concerning how consumers engage media content than they did before the VCR, the photocopier, the Internet, and TiVo.”

The media companies and their tech partners don’t see it that way.

At the 2004 Consumer Electronics Show in Las Vegas, Carly Fiorina, chief executive of Hewlett-Packard, took the stage and outlined her vision of the digital revolution, an era in which all of us become creators of digital photography, movies, and music. “We are all digital revolutionaries now,” she proclaimed. In this new era, she said, we rely on technology that is intimate and intuitive, that works when and where and how we want it to work.

But then she surprised many in the crowd by launching a blistering attack on digital piracy: “Just because we can steal music, doesn’t mean we should. Just because we can take someone’s intellectual property for free, doesn’t mean we should. Just because you can do it and not get caught, doesn’t mean it’s right. It’s illegal, it’s wrong, and there are things we can do as a technology company to help.”

Fiorina held aloft an ultrasleek iPod music player that HP would soon be selling and made a pitch to woo L.A. and New York media execs by announcing that the company would use its $57 billion in market muscle to come down squarely on the side of show biz. “Starting this year, HP will strive to build every one of our consumer devices to respect digital rights. In fact, we are already implementing this commitment in products such as our DVD Movie Writer, which protects digital rights today. If a consumer, for example, tries to copy protected VHS tapes, the DVD Movie Writer has HP-developed technology that won’t copy it—instead, it displays a message that states, ‘The source content is copyrighted material. Copying is not permitted.’ And soon that same kind of technology will be in every one of our products.”

It was clear whose “digital rights” HP would now protect: the lock-and-key gang at the major media companies. As for “putting more power in the hands” of “digital revolutionaries,” HP will permit you to copy, paste, borrow, remix, and recirculate only the cultural materials not under its digital lock and key. Disagree and you risk being branded a “pirate.”

(From Darknet: Hollywood's War Against the Digital Generation. You may copy excerpts from this entry to comment on or critique the work or to otherwise engage in fair use.)