A Copyfighter’s Musings

Building off what I said yesterday about Real’s press release, I presented two questions to a Real executive on pho regarding a message he had posted supporting Harmony and interoperability.

“1. Why did Real sue, under the DMCA, creators of interoperable software
products?  Streambox created Harmony-esque software for Real’s streaming
files.  If interoperability is permitted by the DMCA and is something that
you’re in favor of, it seems totally at odds with your actions against
Streambox.

2.  Why did you implement your own proprietary DRM standard, Helix?  Why didn’t
you act in concert with other music services and tech providers to use a more
open standard?
(Although, no DRM can be truly open, see: Freedom-to-tinker)”

I haven’t heard back yet, but I’m interested in their answers. I have argued that they adopted Helix for the same reasons Apple uses FairPlay – to control the other markets and generate licensing revenue. But perhaps there’s some other strategy I don’t know about.

As for the former question regarding Streambox, let me attempt to provide answers Real could provide.  Though these arguments may provide Real with some wiggle room in court, they still don’t map particularly well to the principles stated in their press release yesterday. (Note that I am assuming that the possible violation was in circumventing to analyze the FairPlay DRM.  As discussed previously, it doesn’t seem like Harmony itself would be a circumvention device, and thus there is no 1201(a)(2) or 1201(b) issue.)

1.  Real never circumvented Harmony; they simply built a product based on Hymn and other public information. Thus, there is no conflict with 1201(a)(1).  This may be true, but it still doesn’t explain why they would support interoperability here but not in the case of Streambox.

2.  Real’s intentions in creating Harmony were pure. They simply wanted interoperability.  Streambox allowed people to record streams that they otherwise could not and thus you could infer wrong intentions. Similarly, DecSS could be used for any purpose associated with decryption, not just interop. On its own, this doesn’t matter in the eyes of the DMCA.  Circumvention under (a)(1) is circumvention regardless of the intentions.  321 Studios seemed to have fine intentions, building copy protection into their DVDs, but that didn’t save them.

3. Harmony fits the definition of 1201(f) because it is for the “sole” purpose of interoperability.  Again, unlike Streambox and DeCSS, the circumvention needed for Harmony was solely intended to make certain files work with other devices.  Harmony even puts an analogous layer of DRM restrictions on the songs it converts.

Despite this, Harmony still does not seem to fit the terms of 1201(f). As noted in Remeirdes, 1201(f) only exempts computer program to computer program interoperability. The definition of computer program in Title 17 is rather narrow.  It applies to executables, but not data.  Remeirdes stated plainly that it does not apply to interop with movies. Thus, it would not seem to apply to interop with music files. (See 82 F. Supp. 2d 211, 218: “Finally, and most important, the legislative history makes it abundantly clear that Section 1201(f) permits reverse engineering of copyrighted computer programs only and does not authorize circumvention of technological systems that control access to other copyrighted works, such as movies.”) (see also ChillingEffects discussion)

If Real can make this argument successfully in court, more power to them.  However, it appears to me as a fairly restricted view of the “well-established tradition” of interop. 

Take music editing software.  Because of DRM, this software can’t open music files to edit them.  One could add in a feature that decrypted the files so that the editing software could interoperate – that is, read the files and edit them.  But, unlike Harmony and like Streambox, this editing could now also create copies of the songs.  Moreover, these copies would be unencrypted.  If you take Harmony as your benchmark of legality, perhaps this editing software could be legal if it layered DRM on top of any song produced using parts of the decrypted song. 

As you can see, the scope of this interop exemption seems rather narrow.  To me, this view creates an odd dividing line.

Filed by Derek Slater at 3:38 pm under General news
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What a riot.  First, Real implements a proprietary DRM scheme, and then tells Apple that they should license FairPlay.  Now, having sued the makers of software that interoperates with Real’s software, Real tells Apple that the DMCA allows creation of interoperable software and Apple has no grounds to sue over Harmony.

Here’s Real’s press release: (emphasis added)

“RealNetworks, Inc. is delighted by initial consumer and music industry support for Harmony. Compatibility, choice and quality are critically important to consumers and Harmony provides all of these to users of the iPod and over 70 other music devices including those from Creative, Rio, iRiver, and others. RealPlayer Music Store provides the highest sound quality of any download music service. That’s why so many consumers have welcomed news of Harmony. Consumers, and not Apple, should be the ones choosing what music goes on their iPod.

Harmony follows in a well-established tradition of fully legal, independently developed paths to achieve compatibility. There is ample and clear precedent for this activity, for instance the first IBM compatible PCs from Compaq. Harmony creates a way to lock content from Real’s music store in a way that is compatible with the iPod, Windows Media DRM devices, and Helix DRM devices. Harmony technology does not remove or disable any digital rights management system. Apple has suggested that new laws such as the DMCA are relevant to this dispute. In fact, the DMCA is not designed to prevent the creation of new methods of locking content and explicitly allows the creation of interoperable software.

We remain fully committed to Harmony and to giving millions of consumers who own portable music devices, including the Apple iPod, choice and compatibility.”

See also this article in Forbes.  I see the distinction Real’s trying to make; Streambox actually removed the DRM such that you could record the stream.  But the distinction is irrelevant in the eyes of the DMCA.  You’re either circumventing or you’re not. It doesn’t matter that you circumvent and then put the file in another DRM format.  update: See above and the comments section for this post for what I mean by this.

Filed by Derek Slater at 4:04 pm under General news
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Apple has released a statement in response to Harmony:

“We are stunned that RealNetworks has adopted the tactics and ethics of a hacker to break into the iPod(R), and we are investigating the implications of their actions under the DMCA and other laws. We strongly caution Real and their customers that when we update our iPod software from time to time it is highly likely that Real’s Harmony technology will cease to work with current and future iPods.”

Along with piracy rhetoric, we now get evil hacker rhetoric.  Since when is reverse engineering unethical?  Oh right – since the DMCA, which Apple is predictably waving around.  Let me remind you that Real was one of the first companies to sue the creator of an interoperating product under the DMCA, so it’s not as if they’re the innocent defenders of innovation here.  This could make for a fine DMCA battle royale, with copyright holders caught in between.  Or it could fade away – we’ll see.  (For more on the legal, business, and social welfare perspective on these issues, see also an earlier Harmony specific post, earlier posts on the iPod-iTunes tie and the Berkman Center’s iTunes Music Store Case Study.)

I certainly believe Apple’s threat to alter FairPlay/iPod/et. al. so that Harmony-made songs can’t play.  We’re bound to see some back-and-forth on the tech side.  There was some discussion yesterday about the mechanics of the DRM and whether altering iTMS songs would affect Harmony-made songs.  Hymn co-creator Jon Johansen chimed in saying that Harmony “generates a new user key which is added to the key store on the iPod.”  On his blog, he cited a posting by a supposed Real codec engineer.  If this is the case, can Apple simply update the iPod software to cut out Harmony?

Also, see News.com‘s coverage of Apple’s statement.  Forrester Research also has an analysis up with some predictions of what’s to come.  Forrester predicts that Microsoft will try to create something similar to Harmony, but I doubt it.  They’ve been doing just fine licensing WMA out to everyone; they don’t need to get WMA songs onto the iPod.  Only if Microsoft’s DRM/media side ended up in the desperate state that Real’s in would they make such a move.  However, I do agree that this is going to be a tricky situation for Apple to deal with. Short run, the iPod is probably running too strong for this to matter. But, long term, as cheaper, alternative players come out, Apple will probably have to make some adjustments.  Finally, Forrester notes that Real created Harmony with the record label’s consent and thus the question of copyright holders suing Real under the DMCA is probably moot, as I had assumed.

BusinessWeek has an editorial (via PaidContent.org) with some useful nuggets surrounded by some plainly silly arguments (the author argues that an open standards approach to digital music never worked and Apple saved the industry, when the music industry never even tried such an approach).  From a business perspective, the author may be right that it’s in Apple’s best interests to end Harmony.  In any case, PaidContent is right that the hidden gem in this article is this quote from Napster’s Chris Gorog: “We’re going to look at [licensing Harmony from Real] very carefully,” he says. “If Apple doesn’t fight it, and the technology works, we’d be seriously interested. But Apple will most likely fight it.”

Remember, though, Harmony does not convert WMA (which Napster uses) to FairPlay-AAC.  It only moves from Helix-AAC to WMA and FairPlay.  Gorog would need to talk to Microsoft about a WMA to FairPlay converter, I’d assume.  I don’t think he has the power to create a Harmony-like converter for Napster.

More coverage of the business questions for Apple from CNN Money (via PaidContent.org).

Filed by Derek Slater at 1:47 pm under General news
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 (Pending RSVP confirmation) I’ll be at the Creative Commons book party for Dan Gillmor’s We the Media on Friday – see Lessig’s blog for the details.  If you’re in the area, I hope to see you there.

Filed by Derek Slater at 11:01 pm under General news
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Interesting new feature from a Music Store: MusicMatch now allows people to share songs with friends for up to three playbacks.  Features like this certainly add value and help differentiate the Stores.  But, with these limited sharing features, I wonder why the industry does not more aggressively pursue models like Wippit and Weed.  I know that, with Altnet, there’s plenty of legitimate bad business blood.  But Wippit and Weed are intriguing ways of linking the selling copies biz model with P2P.

People are always talking about how P2P is used for sampling.  People hear a song for free there, then go buy the artists songs.  Well, if they like the sample, why not allow them to buy it right there in the P2P environment? With Weed, you can do that. Plus, people get bonuses for sharing with their friends – it works with the mechanics of the environment.  You take the biz model to the consumers, not the other way around.

With Wippit, you do have to transplant consumers a bit more.  But you get to replicate the environment along with a feels free subscription service.  Plus, if done right, you get some cost savings by using your customers as servers.

Filed by Derek Slater at 10:59 pm under General news
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Speaking of lock-in issues, I want to get back to an argument made by a few blog-commentators (Brad Hutchings among them) that, even if you accept that the DRM lock-in’s theoretical impact from business and social welfare perspectives, there is no practical impact because people can easily get around the DRM.  If they can do so, then they are by definition not locked-in.

The point most often made is that the iTunes Music Store songs can be burned to CD, ripped, and re-encoded in MP3.  You can do so without violating the DMCA and it’s trivially easy.  That’s true, but note that the same argument would not apply to Janus-wrapped songs that do not allow burning.  In any case, you can output to the soundcard and record.  There are also methods that, though illegal, are available and thus would seem to diminish lock-in effects in practive. Circumvention devices are still available, so people can go that route as well.  Moreover, there are other environmental factors that seem to limit its effects further.  The availability of MP3s over P2P does so.  To some limited extent, so does the limited competition in music services and formats.

As noted in the iTMS case study, the extent to which all this is true does indeed limit the effect of lock-in.  Whether it entirely eliminates the effects in practice is far more questionable. In fact, it appears that the empirical evidence is to the contrary.  If people were so easily getting around the DRM, why would eLabs find that consumers are frustrated by this limitation? (See Paul Gluckman, “Building Business on Legal Downloads Isn’t Easy, Panelists Say” Washington Internet Daily (Feb. 10, 2004)).  Why would SunnComm be getting similar complaints?  If the limitations of DRM were bothering no one, why would anyone complain?

Some people then take this argument and turn it into a criticism of the DRM-does-not-impede-piracy argument.  The argument goes: if people are not actually creating unencrypted copies, then DRM does limit what can get on P2P.  But this misses a critical point.  If many, or just a few, or maybe even just one user gets around the DRM and uploads a copy to P2P, the DRM is basically irrelevant in stopping piracy (save for the narrow, presently theoretical exceptions discussed elsewhere).  However, for the consumers who are buying legit and don’t evade the DRM, the DRM lock-in effect remains. 

Filed by Derek Slater at 10:57 pm under General news
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Ernest covers the most important points  about Real’s Harmony and I chipped in a few in the comments. As we discussed, it isn’t clear that there’s a DMCA violation here – if anything, it’s an (a)(1) access control violation.  But, it seems they might have simply created a conversion tool based on Hymn without doing any circumvention or reverse engineering themselves.  If that’s the case, there no a contract issue either.  So, a widely-available circumvention device helped create a DRM evasion device that doesn’t circumvent.

Which is not to say that those are actually the facts or that Apple won’t sue.  From a more general standpoint, Apple could argue, in a twisted but perhaps intellectually consistent way, that it’s not fair for them to be able to make FairPlay files but for him to not be able to make Helix files. And then Rob Glaser could say, but you never asked. 

But how could Glaser say that with a straight face to Apple? In that dynamic, Apple has all the leverage. They have the market share in the Music store and portable player markets.  Why would Jobs care about Real’s format?  Real’s nothing to Apple.

As long as the services operate in an environment in which they must use some form of DRM, there is little incentive for them to share one DRM. The only way is if everyone decided, collectively and simultaneously, to drop their own formats and share one format. But I doubt either Apple or Microsoft would want to do that.  They have all the leverage here – it’s not in their interest to have one format here.

That’s why, in my view, ending the format conflicts won’t happen in the foreseeable future unless the music industry, not the services, choose to drop the DRM.  Even in the long term, if DRM sticks around, the format conflict will only end temporarily when enough consumers settle on a particular format, possibly creating some quite terrible lock-in; the conflict will then erupt again when a new service comes out that consumers cannot take advantage of because of the lock-in.

Regardless, will this move benefit Real in any way?  I suppose.  It’s basically a last ditch effort by them. The only reason for them to have used the Helix format in the first place is if they wanted some control over formats. Otherwise, why not just give in in the first place and license WMA?  Now, they see that they don’t have the market share to push Helix on their customers, so they have to make do.  Consumers benefit a little, but, as Ernest makes clear, Harmony is mostly hype.

Filed by Derek Slater at 10:48 pm under General news
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I wish I had more time to talk about the INDUCE Act. Luckily, everyone on the blogroll has been full of good info, so check it out. In particular and as usual, Ernest has been on a roll.  Make sure to check out former Intel exec Les Vadasz’s op-ed, out from behind the WSJ subscription wall, over at The Importance Of.

Filed by Derek Slater at 10:45 pm under Big Ideas
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In reading a couple of the links below about eBay’s new music store, I noticed a little confusion (which Techdirt duly noted) about first sale.  I dropped a line to Rafat Ali at PaidContent, and he noted that a short explanation might be helpful.  So here goes.

Copyright owners hold an exclusive right to distribute copies of their work.  The first sale doctrine is an exception to this right.  As codified in 17 USC 109, as long as the particular copy was lawfully made, whoever owns it can distribute it however he chooses without infringing.  Thus, after a copyright holder distributes a particular copy of a copyrighted work, their right to control distribution of that particular copy is over.  Note that the copyright holder retains the right to distribute their copyrighted work in general, but loses rights to the particular distributed copy.

Examples of this doctrine in action are numerous.  Video rental stores depend on the doctrine; once they purchase a copy of a video or DVD, they can distribute it to customers on whatever terms they choose, without consulting the copyright owner.  Used book and CD stores depend on the doctrine; people can buy a CD, sell it to the store, which can then resell the CD, all without the authorization of the copyright owner.  You can lend a book to a friend because of first sale.  (Certain restrictions on rental do apply to music and computer programs, with exceptions for libraries and non-profit institutions.)

Having said this, it might seem that eBay could quite easily create a resale market in digital music. After all, given the underlying logic of first sale, it would seem people could download a song from iTunes, then go to eBay, and resell it.

The problem is, the first sale doctrine only provides an exception to the right to distribute.  It does not implicate copyright holders’ exclusive right to make copies of their works.  If you were to resell your iTunes song, you would necessarily have to makie copies – a copy in RAM, in intermediate computers in transit, and a copy on the buyer’s computer.  At least the latter and perhaps all would likely infringe the right to make copies, even though you might not infringe the distribution right.  The only way you might be able to resell that song in a clearly legal way is to send the physical hard drive on which the song is stored to the other person.

The Register of Copyrights argued that first sale does not apply to the digital world.  People have since suggested an exception for “forward-and-delete” technologies, which would immediately delete the copy on the distributor’s computer if it is being resold.  But until such an exception exists, forward-and-delete still involves making copies and thus still could be infringing.

That’s probably a primary reason why eBay will only allow digital songs to be sold with the authorization of the copyright holder.  A few other reasons may also apply.  First, the first sale doctrine only applies to lawfully made copies.  eBay may worry about people trying to resell pirated copies, claiming that they were licensed, and that eBay would somehow be held liable for secondary copyright infringement.  Second, both contract and DRM can limit consumer’s rights to resell.  While these restrictions apply to the consumers who own the file and not to eBay directly, eBay might worry about people trying to sell songs limited by contract and DRM and then being caught in between the buyer and seller.

For more on first sale as it applies to digital music in particular with a broader look to other jurisdictions, see the Berkman Center’s iTunes Case Study.   Regarding first sale in the digital world in general, see this paper by R. Anthony Reese.

Filed by Derek Slater at 4:09 am under General news
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See these articles, via PaidContent.  Notably, eBay is not allowing people to resell items they have downloaded and thus may have the right to resell under section 109 (emphasis on the word may).  Only copyright owners or those who are explicitly permitted by copyright owners to sell are allowed to use the service.

Filed by Derek Slater at 11:07 pm under General news
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Via John Palfrey: The Harvard Law Bulletin has a nice issue with several articles about copyright and IP.  Read it all, but check this from the main article about the Digital Media Project scenarios:

“We know [the content industries] are skeptical [of a Voluntary Co-op or ACS model],” Fisher says. But “if their situation gets worse, they may have no choice.” The Berkman Center, in collaboration with others, is developing a pilot project of this model, which they hope to implement on a voluntary, subscription basis. “If we can get the demonstration project up and running, it may reduce the resistance, if we can show it actually works,” he says.

Filed by Derek Slater at 10:14 pm under General news
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Apparently, the lawsuit against Hummer Winblad and BMG for funding Napster has been given the go ahead.  Frank links to the decision. 

Hey, maybe they’ll end up buying BMG and then suing their lawyers for even bothering to defend the company, because a record company has never done that before – oh wait.  Wonder if we’d see more of these suits if the Induce Act were law? (Cue Ernest post on the interaction between the Induce Act and tertiary liability.)

Remember: this case involves record companies suing another record company for supporting an innovative business model.  And we hope these people will come together on a VCL.  Sheesh.

Filed by Derek Slater at 9:55 pm under General news
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I’m a little swamped this week, so I can’t do these pieces justice yet. That shouldn’t stop you from doing so.

1.  I hope you remember John T. Mitchell, strong consumer advocate and formerly of Public Knowledge.  From what I know of him (website articles, pho postings, and an interview I did awhile back), he often points out the free uses, like private performance and first sale, that have fallen by the wayside in the DRM era.  He also discusses DRM’s restrictions in light of copyright misuse and antitrust.  DRM: The Good, The Bad, and The Ugly seems to bring many of these ideas together in a very thorough manner.  I haven’t read it critically yet, but from my brief skim, it is well worth your time.

2.  You probably remember Lee Hollaar’s incredibly informative Legal Protection of Digital Information treatise.  According to Professor Lessig, Hollaar’s article Sony Revisited “is in part responsible for Congress’ current infatuation with the Induce Act.”    Be sure to read not only the article, but also Lessig’s response, Ernest’s (pre-)follow-up, and the comments at Lessig’s blog, one of which is a lengthy response from an author cited in the article.

Update: Here’s Hollaar confirming that the Induce Act came in part as a result of his article.  Also, see this nice clarification to Lessig’s separation of powers argument – it’s a key point.

Filed by Derek Slater at 10:28 pm under General news
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Having seen this around the office and in Siva’s new book, I wanted to link to this piece from Harper’s Magazine.  A German customer writes to EMI, complaining that his newly purchased Toto CD can’t play because of copy-protection. EMI responds by insulting him, accusing him of supporting piracy, and by saying, “Should you legitimately have a playback problem with the CD that you complained about, we would ask that you specify the exact CD player model for us. The scenario you put forth–multiple players failing to play the CD–can only be the stuff of fairy tales, given our experiences.”  EMI’s letter concludes by telling him that they are going to force copy-protection onto consumers no matter what.  Read all of “Toto Recall.”

Filed by Derek Slater at 10:53 pm under General news
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Seems like a pretty interesting choice.  Don’t know much about him, but he’s not an insider, or a lobbyist, and he doesn’t seem to have much of a Hollywood connection.

Filed by Derek Slater at 10:49 pm under General news
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