Perspective: Grokster and America's future

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of dollars from DVDs. Many movies make more from DVDs than from theatrical release. They get your hard-earned money, and they make it illegal for you to make a copy to keep just in case your DVD gets scratched. That's wrong.

It's the law of unintended consequences. Few people knew that DVDs would basically replace VHS in our homes. Few had any idea that DVDs would regularly get scratched and rendered useless. No one had any idea that trying to make a protective backup of that DVD would be illegal. It was perfectly legal to do it with VHS tapes.

The law of unintended consequences is never repealed. It goes on forever. Next month, a case entitled MGM v. Grokster will go before the U.S. Supreme Court. If this case goes the wrong way, that law of unintended consequences could put a hurt on us in the future.

The case is about whether peer-to-peer software that enables the peer-to-peer networks most of us read about--and few of us use--should be illegal or not. The big entertainment companies are pushing the argument that because some of their content gets stolen through the use of this software, all uses of the software should be illegal.

They are not, however, arguing that there aren't legitimate reasons to use the software. They acknowledge that businesses and individuals are using the software for purposes other than those that impact their music or movie businesses. They just feel that because it impacts their business (they still don't know if it's a positive or negative impact) in a way they can't control, it's better to make it illegal than adapt to the new technology.

In reality, this case isn't about whether music or movies are illegally downloaded using P2P software. This is purely about control.

In reality, this case isn't about whether music or movies are illegally downloaded using P2P software. This is purely about control. The entertainment industry wants control over technology that could impact its business.

Technology has advanced further than any of us could have imagined in the last 15 years. Even the best forecasters would have been shocked at the number of us who now use cell phones, e-mail and DVD players. They'd be equally stunned at the number of people who spend as much time online as they do watching TV, who own MP3 players or who are replacing film cameras with digital cameras--and more.

The next 15 years will have just as many new devices that we can't imagine today. But what if they all became illegal?

We are living in a world where information is becoming 100 percent digital. Of all the digital information across the world that is being created and exchanged, what percent is comprised of music and movies? What percentage of that is owned by Hollywood and the big music companies?

Think about all the home movies we are creating and saving on our computers. All the digital pictures of our families and friends. All the personal music created at home. All the corporate data and presentations. All the books, software, newsletters, newspapers, discussion forums, blogs, Web sites and e-mails that are created and saved digitally. How big a percentage of that could music and movies make up--one-tenth of 1 percent? At most?

Everything our imagination creates and touches that can be made digital is at risk if Grokster loses.

Every single one of these items can benefit from the distribution efficiencies created by peer-to-peer networks. Every person and company in this country that wants to exchange digital data can benefit from peer-to-peer technologies. Just because the uses aren't prevalent or obvious to some today doesn't mean they won't be two or five years down the road.

In the MGM v. Grokster case, the fewer than 50 companies who control less than 1 percent of all digital information are trying to take control of innovation in the technology industry and pry it away from the rest of us. Everything our imagination creates and touches that can be made digital is at risk if Grokster loses.

What innovations will be condemned by law before they have a chance to come to market, because they could have an impact on Hollywood and the music industry? We have no idea, and that is a very scary prospect.

Which brings me back to 1980.

The last 25 years have seen unimaginable increases in productivity, creativity, economic development and American pride because amazing people have been able to take amazing ideas and develop them without fear. That fearlessness ends if Grokster loses and the content industry is able is to take on the role of technology gatekeeper. There will be a time, as there was in 1980, when we need a spark, when we hope that something new helps us escape from something old. Let's not let the content industry steal that opportunity out from underneath us.

This is a call to action. Call your representative. Call your senator. Let them know that you respect the rights of the content industry, but that protecting innovation is more important. Our future could depend on it.

Biography
Mark Cuban is the owner of the Dallas Mavericks and is co-founder of HDNet. He also maintains a blog.

More Perspectives

Sony Beta max

Sony was sued by the movie industry for introducing the Betamax, and thus introducing the home movie/rental business. Luckily for us and the movie industry Sony prevailed. As you point out in your article movies often make more from the VHS/DVD/rentals then from theatrical release. Are the movie moguls so short sighted they do not see the potential to make even more money online? They need to embrace the new technology, not outlaw it.

Nice, but flawed

I agree about 80% with the article.
First, movie and music industry is a big hardcore business masked as entertainment. You spent lot of somebody money to earn even more money. Same as any other such entertainment for example casinos in Vegas. All is bright, shiny, free drinks and friendly stuff while you pay.
So there is no wonder the movie/music industry would fight anything that somehow affect their business. Why everybody are still surprised about this?
Then, if copying copyrighted DVD is outlawed, ok, so be it. But we must make sure it would became a law that a company must replace any scratched DVD at no cost and they must openly advertise it. Since we are not paying for product (medium), but licensing a home use of its contens, we should be able to carry our end of license, even if the medium is damaged. It would cost very little to companies if every major DVD store will be allowed to simply replace any scratched DVD at no cost. The medium is sure less than 25 cents. But unless we demand it to become a law, the companies would not do it, because even 25 censts are still money. So far we let the media company dictate and change their end of license for their benefit without giving any benefits to us.

The P2P is another story. There is very little doubt that P2P is currently primary used to illegaly share copyrighted materials including music, movies, e-books and software. Just connect to any P2P network or torrent and look what people share - these are not their own pictures or music. These are ripped movies, mp3s and cracked software (that often carry also some virus or spyware as a bonus). Of course outlawing technology is just not going to work, people will find other means to do this. But there is less than 1% of legitimate use of P2P right now.
It is also amazing how some people think of P2P wide networks as a holly grail. It is most insecure way of distributing a data - you never know what you are really getting and from whom. That may be fine for mp3 or divx, but hardly for sofware.

I agree that we should not allow to outlaw a technology, it is clearly a step back. But we can't honestly hide behind scratched DVD's story neither. The people who exchange movies on P2P are not doing this because their dog chewed the DVD. They do it mainly because they don't want to spend 3 bucks in blockbuster.
If we make free replacing of damaged DVD a requirement, then the scratched DVD story will be gone. Studios wont take the first step by temselves because it cost them some money, but ultimatelly they will agree. However it seems a movie swappers not really want it neither, because the "kids scratched my DVD" cover story will be blown. I haven't really seen any movement in this regard.

P2P not predominantly use for piracy...

While the MPAA and RIAA contend this is true, the
majority of content distributed by P2P networks
(on a per-byte basis) are legally distributed
software and documents.

Sure, there are DVD rips and illegal software out
there, but they don't represent the majority of
content. Even then, most of the "copyrighted
content" (entertainment industry newspeak; in the
US, all content is copyright the moment it is
created -- including this post) like movies are
not complete products. They are typically
transcoded down, truncated, or excerpted.

[tharcod]

No, it's not about P2P being legal/illegal

It's not about P2P being legal or illegal. I can own a printing press, I can use a printing press, but I can't use a printing press to run copies of PCWorld to distribute for free (unless I'm the original publisher, which last I checked, I'm not). Notice they aren't suing Google -- if they find infringing content on google, they click a couple times, enter in an explanation, google investigates, then google removes from the index if its appropriate to do so. Same with Yahoo, Alta Vista and others. If Grokster and Kazaa were legitimate, they'd have this same facility. And they don't.

RE: No, it's not about P2P being legal/illegal

That almost makes sense except that Google, Yahoo, Altavista et. al. are not peer-to-peer networks. They essentially provide links to content via a search engine. When you own the search engine you get to define what it will and will not list in the results. P2P is what we call distributed networking, ie. it's more like everyone on the network controlling their own search engine and linking to content on their own network. Though that leads me to this: I could use Google's search engine to list files that I have available for download. Does it seem logical to sue Google for copyright infringement because I use their technology to make available content to which I don't own the copyright? No, and it doesn't make sense to sue P2P networks either. If the entertainment industry treated P2P in the same respect as with Google, then they would contact each user on a network who has illegal content and ask for the removal of the content in question. The problem is, they would essentially have to contact millions of users so they choose to sue a few hundred or a few thousand people for more money than all those people together could possibly make in 10 lifetimes. The point is, there will always be pirates making a buck off of illegal content, but to group everyone on the internet in the same category as all the pirates is a mistake. It's also a mistake to sue the P2P networks. They might as well sue Vint Serf and everyone else involved in created TCP/IP which makes it possible to do everything we do online. This is about taking the wrong approach to solve a perceived problem that may not even be a problem at all. Now that I think about it, it's about much more than technology. It's about a way of life that the entertainment industry has been able to easily take advantage of and control for about a hundred years and the thought of it ending has got them running scared. I mean seriously, why in the heck does it cost $10 at the theater to see a new movie any way? It's about time for a change, don't you think!

[kzetmeir]

Can't Sugar Coat Theft ...

Regardless how many ways its twisted ... right is right ... wrong is wrong ... and theft is theft.

Whether it's music, movies or other proprietary material. You know it ... and the people who are willfully downloading and/or distributing to friends and others the intellectual property belonging to others know it too.

Scratched DVDs? LOL ... Does Detroit fix my car because I got it dinged?

It still comes down to basics ... just because you can technologically copy something ... doesn't make it legal.

Before Sony BetaMax ... there was Xerox. And again the courts found that simply because you can slap a document on a copier and burn 1000 copies ... doesn't make it legal. Out of that, I think came the Personal Use rule ... which seems to still be valid today.

If we don't protect innovation ... and give innovators the ability to be rewarded ... then innovation will cease to exist in any meaningful way.

RE: Can't Sugar Coat Theft ...

Yes, but at least if something goes wrong with my car, Detroit won't sue me if I fix it myself! Your analogy here is a bit off any way. A scratch on a car doesn't prevent the car from working properly. A scratch on a DVD is completely different. You better believe I'm hauling my car back to the dealer when the engine falls out a few months after I buy it.

Not theft.

The misnomer "intellectual property" not
withstanding, we are not talking about theft.
Theft is a property crime. The "content" is not
subject to property law, but rather copyright
law. There is a vast legal difference between
copyright infringement and theft.

Making a copy is not stealing. One might argue
that it devalues an asset - that is the ability
to leverage a monopoly on a work to create a
profit by licensing copies - but the
entertainment industry doesn't typically make
that argument in court because there's no real
proof of that; particularly in the case of
personal use copies. Further, copyright, until
recently, only covered distribution of a work or
derivatives, and then only those "in a fixed
medium" (which a digital copy hadn't been
considered to be, but now is).

Keep in mind the intent of copyright was to
provide a short-term monopoly on a creative work
to the author to allow him to negotiate
publication of the work without fear that a
publisher will do so without their consent and
without attributing the actual author. It wasn't
until much later that a profit motive for having
a copyright existed. This was at a time when the
printing press was high-tech and belonged solely
to guilds a and nobles. It was a compromise, with
the notion that in return for this grace period
the author's works would pass into the public
domain.

In practice, modern copyrights do not expire.
Congress extends the term of copyrights every
time there's a threat of any commercially owned
content passing into the public domain. The
constitution sets the limit to 14 years with an
optional 14 year extension and required
registriation. Today, all works are automatically
copyrighted, terms now regularly exceed a
century, and there's no longer a systematic way
to identify and contact a copyright holder to
negotiate a license. The majority of the 20th
century's music and literature is now still under
copyright, but no longer published. Not
available, and illegal to duplicate -- many times
the author or performer being long since dead.
Yet media companies sue those that share copies
of these works too.

The DMCA did something very interesting to
copyright law, however. First, it made a
redundant law for copyright violation (i.e., if
the work is "digital", you get charged with
infringement and a DMCA violation); it made
infringement a criminal offense rather than a
civil one (FBI enforces rather than copyright
holder filing civil suit); it introduces, for the
first time, legal prior restraint at the
discretion of a copyright holder (they can force
a carrier to discontinue access to the work); it
made "access" to a work a violation -- with the
implication, for the first time, that the
copyright holder can not only prevent
distribution, but can ex post facto declare the
terms and manner in which a licensed work can be
used.

What's really interesting here is that the DMCA
also outlaws technology that circumvents an
access control, and it really doesn't state that
the technology be limited to controlling access
to a copyrighted work, nor does it require that
it be good at it. Since copyrights now enjoy
permanency, you can now patent a technology that
can be used to protect a work, and US law will
prevent use of that technology indefinitely
(without proper licensing, of course) - perpetual
patent protection for the creative programmer.
That's a big stretch, of course. The practical
end of it for you and me is that it effectively
eliminates the doctrine of fair-use by enabling
the copyright holder to restrict use, a priori,
to a single specific use-case and preventing the
licensee from obtaining the means to use it in
any other way.

This is why these technologies are sometimes
referred to as Fair-Use Circumvention Kits (and
for which there's an approriate, if not very
clever acronym).

Sweet if you're Sony, sucks if you are a
consumer.

[edgeben]

Theft is theft, so go after the thieves

>Regardless how many ways its twisted ... right is right ... wrong is wrong ... and theft is theft.

Whether it's music, movies or other proprietary material. You know it ... and the people who are willfully downloading and/or distributing to friends and others the intellectual property belonging to others know it too.<

So go after the thieves, the downloaders and servers. Just because the software makers are easy targets does not make what the RIAA is doing right.

>Before Sony BetaMax ... there was Xerox. And again the courts found that simply because you can slap a document on a copier and burn 1000 copies ... doesn't make it legal. Out of that, I think came the Personal Use rule ... which seems to still be valid today.<

But the Personal (Fair) Use rule is being effectively repealed by the RIAA's efforts.

And the government didn't ban Xerox, did it? Where would we be today if Betamax, VHS, and copiers were outlawed? For that matter, where would the studios be today? A lot less wealthy, that's where.

>If we don't protect innovation ... and give innovators the ability to be rewarded ... then innovation will cease to exist in any meaningful way. <

Who's innovation are you talking about here? There is innovation in digital media and digital protection, innovation in copying and sharing software and equipment, and innovation in distribution. The only place I see a failure to innovate is on the part of the studios in dealing with the new world of digital media on the Internet.

We already pay a tax on every blank cassette, CD and DVD we buy, with the sole purpose to recoup losses from copying. Have the studios proposed to give up that tax when they get their way and ban copying and distribution software? If Grokkster loses in court, we should demand that that fee be repealed.

I don't download music or movies, and I believe that music and movie downloaders are stealing, but two wrongs do not make right. The RIAA is using the courts and Congress' misunderstanding of digital media to railroad laws and rulings through to deprive everyone of P2P software, whether the users are thieves or not. So who is stifling innovation in this scenario?

Dinged is not broken?

"Scratched DVDs? LOL ... Does Detroit fix my car because I got it dinged?"

Just because your car is 'dinged' does not stop you from driving it. A scratched DVD which is then unable to be played because of that scratch(s) is a different matter. If you make a back up copy for your own use, what's the problem with that? Black market DVD's, now's there's a problem. If someone is selling and therefore making money from their illegal activity, of course they should be prosecuted if caught.

[Rainero]

What do mean that I cannot copy my DVD Movie for Backup Purposes?

If MGM don't want to Copy their DVD Movie, It's about time that they don't use also DVD standard. DVD standard had been made to be compatible and universal to all not for greedy individuals.

MGM make your own standard don't use standard made for consumers. So much so that you will be go on bankruptcy in no time.

[ivand67]

It IS illegal

321 Studios, a company known as the makers of the rather popular DVDXCopy software, were shut down because their software allowed "illegal" copying of DVD movies.

It was one of the most unfair decisions of all time.

You can check out the statement on their site (www.321studios.com).

[P_S_J]

DVD

What the entertainment industry charges for content is outrageous. As prices come down on DVDs/CDs, the price stays high on the shelves. The reason people go to P2P networks for illegal content is because they feel ripped off. Why am I paying $15 for a CD that I buy because I like one song and after I am done listening to the CD, I still only like one song. I can see paying something to see a movie, since something has to cover cost of employees for the theatres. DVD costs are crazy. Keep all that additional content crap off the DVD. Keep costs down. How many of us watch the commentary or making of the movie? Or the blooper/deleted scenes that are less entertaining that the label on the movie? In my opinion MP3s are legal content. It's comparable to taking a cassette tape and recording your favorite song from the radio. It is not a "perfect" digital copy. That is why it is smaller. 75% of the time there is a noticable loss in quality with MP3s, especially if it was downloaded. People who do not understand technology should not comment on it. The only thing the entertainment industry only cares about the bottom line. I love Napster (sarcasm). You get to buy 5 poor quality MP3s for $5. It's illegal for you to back up your DVD, but not a violation for them to try in every way to prevent you from backing up a DVD. I thought that was covered under fair use in the DMCA.

[Royce]

Government Steps In

Your analysis of the movie/media world may be correct, but why do you say government steps in? The DMCA was passed, not because there was a clamor for it from "the people," but because this same interest group pushed and won support for their ideas? Where were the Tech people then, where was Bill Gates, where were you? Its not government that does anything, its various interest that get together to get some stupid piece of legislation passed that serves their interest. Don't tell me that the Tech firms were not behind making it easier for foreign computer workers to get jobs--that benefitted the Tech firms, not "the people," not US computer workers. So if you object to the DMCA, get in the game and get your cronies in the game and get it repealed.

[skibrian]

We can move to Europe

I am the CEO of 312, Inc., and we already have a UK branch
office. We are a tiny startup firm just closing our first serious
funding. We depend on P2P technology. If this blows the wrong
way...312 doesn't have to quit, it just has to move to Europe (or
maybe India? that's where are investors hail from).

More unintended consequences.

They aren't just squashing P2P

What worries me is the industry will not just stop at P2P. They want to control digital content in all forms. One of my biggest worries is that I will no longer be able to record and time shift my favorite TV show to watch it at a later time because the entertainment industry can tack a broadcast flag on it and make it unrecordable. That is also on their docket. The lockdown they hope to achieve will be broad and it will be stifling. This goes way beyond trying to stop a 15 year old from downloading a bootleg copy of "The Incredibles". Look into their full agenda, I think you may be startled.

[zaide]

grokster

why can't you get right to the meat of the subject?. /who really cares about your scolastic history, etc.