CEA Washington Forum attendees got a good look at the ongoing battle between technology companies trying to provide digital content in a flexible and legal way, and what established media owners are doing to try and stop or slow down the practice.
The panel featured Jeff Blattner, XM Satellite Radio’s senior VP/public policy and special counsel; Bram Cohen, co-founder and CEO, BitTorrent; Blake Krikorian, co-founder, chairman/CEO of Sling Media; and Vijay Raghavan, senior associate, Qorvis Communications.
Moderator Michael Petrione, senior VP/government affairs of CEA, kicked off the discussion by illustrating the battle. Michael Malcolm, founder/CEO of Kaleidescape was also supposed to be on the panel but he was in court that day (see story at left) concerning a suit filed by the movie industry concerning his company’s DVD duplication technology.
Cohen of BitTorrent said that his company wants to work closely with content providers to give consumers the best possible media experience. In creating a new entertainment Web site, major studios pushed for the use of Microsoft Windows DRM “and some other flags” that have caused problems for users. Because of these issues, “We have no control over some [movies] that are downloaded but can’t be played by users from our Web site.”
In his opinion BitTorrent has been hurt and “content providers have been a victim too. DRM cripples the consumer experience and hurts everyone.” And he warned that for the foreseeable future traditional media companies will have to get used to digital because “there will never be a different way of transmitting media.”
XM has been and Blattner said his firm developed devices based on the “Audio Home Recording Act. You pay a fee for content. But we are being sued by the recording industry and they have also gone to Congress to complain.”
He points out the irony that “We are being sued by the recording industry for breaking the law, yet the recording industry has gone to Congress saying the law must change because XM didn’t break the law.”
And the stakes are high for XM, with a $3.5 million market cap and a merger pending with Sirius Satellite Radio, since it was pointed out that damages under the law are $150,000 per instance. “If there are two million instances,” as the recording industry alleges, Blattner said, “You do the math. The [potential] penalty is $300 billion.” He said he hopes that negotiations between XM and the industry will result in a settlement before the case ever reaches court.
Krikorian, of Sling Media, said the problem is “Consumers expect to get what they want, when they want it and where they want it. If they can’t get [movies or music] they will go to YouTube or video games and that is not good for anyone.”
He noted, “You should treat the consumer as king” to try and meet his needs “but that does not make the industry a failure if you do” since systems and procedures must be in place for consumers to pay for the media.
Raghavan of Qorvis Communications noted, “Consumers want to be king and they want to pay for content. That’s understood. But the studios have to understand that consumers want a real entertainment experience and something that is not limited.”
Krikorian said that there is hope that established media players are getting to understand the changing landscape, pointing to moves by CBS chairman Les Moonves appearing at International CES this year and cutting deals to have more of his network’s content available online. “If you were in their shoes you’d realize that change is tough, a big headache. Some always say, ‘What if?’ But slowly things will change for the better.”
Petricone asked the panel if to volunteer advice to Congress on this issue. Blattner of XM said, “Do no harm. Best if they create rules of certainty [for the market] and that it would be even-handed. Industry wants certainty and stability” to figure out “what the risks are” if a technology company wants to make specific types of investments.