By Lisa Johnston
New products on display at the American International Toy Fair, held in N
The ever ongoing copyright battle, the one that pits the MPAA (movie studios) and the RIAA (record companies), a.k.a. Content Providers, against whatever is new in consumer electronics recording technology, is back in the news again.
As usual, the Consumer Electronics Association (CEA) and allied groups are standing up for the right to record. And the issue is always the same: The Content folks look at the new technology and wail that if it wins consumer acceptance, it will result in rampant piracy, cost them billions of dollars in lost sales, destroy their business model and lead to market chaos and bankruptcy.
The first time we really heard about this was in 1976 when Universal Studios took the lead in a lawsuit seeking to ban sales of Betamax VCRs on the grounds that consumers would use them to record televised movies and so infringe on their copyrights. The Betamax case went all the way to the Supreme Court which decided two key points — first, that as the VCR had non-infringing uses, sales could not be banned, and second, the Court was not in a position to order Sony to build in some kind of copy protection.
Around that same period the stereo cassette was pushing 8-track out of the market, and for good reasons. The cassette was smaller, easy to use and recording was relatively simple. But it also was easy to copy, and the RIAA rose up in arms. While it was true that professional pirates appeared, sales of pre-recorded cassettes soared, so the music merchants cried all the way to the bank while their lawyers cried for unneeded help from Congress.
Of course videocassette pirates also appeared. But despite the studio's wails over millions in lost pseudo-sales, the illegal copies represented a very small fraction of a soaring legitimate business. You can credit that to the rental market, created at the retail level over the objections of the movie makers as expressed in both threatened and filed (unsuccessful) lawsuits.
Both of the content groups prospered by changing their business models and lowering prices, and both made, and still make, gobs of money on pre-recorded material.
Hardware manufacturers have acknowledged the importance of copyright protection. When the movie makers added Macrovision to their tapes, JVC voluntarily modified its VHS standard to ensure the effectiveness of that anti-copy system. And when the digital age dawned, makers voluntarily agreed to build a Serial Copy Management System chip into digital audio recorders, again to restrict casual copying.
I'll grant you the expansion of digital technology makes for a new ballgame. The potential for copying movies and music increases as new methods of uncontrollable worldwide electronic distribution increases. CEA and the Content Providers agree the No. 1 issue is to stop the “bad guys.” It's in defining that term where the two sides split most widely.
The hardware guys contend casual copying has never really been an economic hardship for the content people. They say copying is too difficult and time-consuming for most consumers. While they agree some degree of copy protection may be needed, the real answer lies in a marketing solution that makes content easily available for full-quality copying at a reasonable price.
But the Content people still insist that each and every copy is a piracy and represents a lost sale. And they point out that every technological advance has the potential for creating new piracy. What they are after now is legislation that sets rigid standards for features and performance of recording devices, and strictly restricts how they are used by consumers. Before introducing a new product, like a TiVo or digital VCR, the maker would have to demonstrate how it complies with these new rules.
Is there an amiable solution? I think there has to be, and that eventually one will be worked out. And when it does come it will have been hammered out not by the lawyers, but by engineering and marketing executives on both sides who are willing to accept the compromises that will open the way to ever more amazing products and ever growing sales.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.