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| Arms race in PC software
Although Napster-like technologies have been used largely to share entertainment files, they don't know the difference between music and any other kind of digital material.
That has led a troubled software industry to ask what it can do to stop these programs from being used to trade valuable computer products. The answer is still more disturbing: nothing.
Already, software companies say, the Napster revolution has quietly begun spreading into the desktop computer market. Particularly vulnerable are smaller firms that depend on a limited number of products--sometimes one--and have scant time or power to prevent piracy.
"It's beyond a mere threat. We've been out on file-sharing services ourselves, and it's already being employed not only for MP3 files but also software programs, including operating systems," said Bob Kruger, vice president of enforcement for the Business Software Alliance. "In office software, you can expect to see Microsoft, Corel, Lotus. In presentation programs, you're likely to see Adobe, CAD software like Autodesk--those are the products that are out there."
Yet at least some software executives, while fully acknowledging the gravity of the situation, are surprisingly sanguine. The reason: They've been down the piracy road before, and they believe they'll survive again.
True to their mathematical stereotype, many in the high-tech industry view the Napster issue with an almost clinical pragmatism. Large software companies are relatively unfazed by the prospect of another hacker insurgency, having spent years engaging the enemy in a digital arms race where encrypted protections are routinely written and broken.
Unlike Hollywood, Silicon Valley has learned to live with a relatively high rate of piracy--estimates usually fall around 30 percent, conservatively--and have built their businesses assuming those damages as a fact of life. Some even consider piracy a necessary evil that helps spread product awareness in this age of branding-saturated marketplaces.
|Sources: News.com, company sites|
Companies can take security measures such as strong encryption to fight piracy, but simple practicality comes into play here too: Such measures irritate consumers by making them jump through hoops before they can use the products, and even the highest levels of encryption are eventually cracked anyway.
"The software industry has been experiencing piracy for a while. Folks had to make a decision: whether to focus attention on usability or protection," one veteran of the business said. "You can make things easier to use or add more bells and whistles that are more able to protect."
That's why many believe that entertainment and other businesses will learn valuable lessons from the history of their software counterparts. Because of the unique pace and nature of their industry, software companies had grown accustomed to reinventing themselves in the face of rapidly evolving technologies long before the Web became the phenomenon that it is today.
Though Napster presents a serious threat to some companies, it could also provide the incentive to push many industry players to new business models that have long been planned but have yet to take off. Specifically, software companies could venture beyond the confines of desktop publishing and further onto the Web with services that essentially rent software applications as needed rather than sell them.
"There's lots of talk about 'apps on tap'--application services," a Silicon Valley source said. "There is room for creative people to charge for more services involving content that has already been available. Is it possible to invent a business model to license what has traditionally been sold through the back end with some kind of service? Sure."
Such a move could theoretically allow for more protection of copyrighted material because stronger encryption and other security measures could be used to protect a master copy of software that "can reside on some superserver," he said. "The issue of those who are able to load or abuse the permission to load ceases to be an issue. The distribution mechanism is really what we're talking about."
Any discussion about software must inevitably involve Microsoft, ruler of the land. The Redmond empire long ago made its peace with consumer piracy, viewing it as a relatively small price to pay while making the bulk of its money by licensing its products to businesses. Hardware companies, for example, pay enormous sums to sell their computers loaded with the Windows operating system and related products.
And that hegemony may have the interesting, if not unintended, effect of limiting the impact of the Napster revolution on PC software. Because so much of the landscape is shaped by the Microsoft business model, the thinking goes, software companies have come to expect a certain level of piracy as a normal part of business--as opposed to the zero-tolerance philosophy of the music and movie studios, where no single player has anything that approaches a Windows-like dominance.
"I think that Napster has a more direct impact on the music industry, more of a direct wake-up call," Microsoft attorney Tim Cranton said, though he stressed that piracy issues are a "prime concern" for his company and others.
In addition, from the consumer's perspective, the importance of quality and authenticity are very different issues when comparing software and entertainment.
"Copyright aside, you're not in danger of losing much by downloading a song from somebody halfway around the world. If the sound quality is lousy or the song stops halfway through, you just try another site," said Andy Oram of technology publisher O'Reilly & Associates, speaking as a member of Computer Professionals for Social Responsibility. "But would you trust software that you downloaded from some random site halfway around the world? Two years from now you may have a disk crash because of a flaw introduced maliciously or by mistake."
Nevertheless, few are confident enough to assume that Napster will be just a blip for PC software, especially after witnessing its geometric proliferation in music. Adding to the uncertainty is the specter of sweeping changes in business strategies if Microsoft is divided as proposed by the Justice Department.
Built solely for music files, Napster can tell the difference between songs and software--but only up to a point. The recently released Wrapster software allows would-be pirates to trick the Napster program and trade other types of files though the service.
In the near term, vast numbers of smaller software companies could be immediately vulnerable, especially if their products are sold directly to consumers and in files small enough to download with relative ease over standard Internet connections. In years ahead, far more companies may be at risk as high-speed connections allow larger and potentially more valuable products to be pirated in just a few minutes, as opposed to several hours.
"It scares the hell out of us," said Tim Starback, general manager of Emigre, a small font software company in Sacramento, Calif. "We're basically a five-person shop. To devote any time at all to fighting piracy takes up resources that people don't realize."
He and many others find irony in the fact that the very medium high-tech companies helped create is now threatening their livelihoods.
"It's ironic that information technology software programs have in general fueled the protection of intellectual property rights. We wouldn't be here today without these advancements," Cranton said. "This phenomenon has come about because the Internet is so new and has so many freedoms. We want to capture that and capture e-commerce without sacrificing long-term gains."
That, however, may not be so easy for many as it is for large companies with the options and resources, such as Microsoft.
"New models are popping up all the time. But it's too new to jump on the bandwagon--first you're a portal, then a service provider...We're different, much smaller," Starback said.
He and others say many of those responsible for copying and sharing their works are teenagers who stop their mischief once they're caught and learn the gravity of their actions. But it's a Sisyphian task.
"With them, there's a three-month window," Starback said. "Then a whole other group comes along and needs to be educated."
Go to: ISPs fight on both sides
CNET News.com: Could a court hold me liable if I copy one song off Napster? How about 100 or 1,000 songs? What is my potential exposure in each case?
Perkins & Coie: The Audio Home Recording Act (AHRA) allows for the use of digital audio recording devices for personal, noncommercial recording of copyrighted music--without liability. However, it is unclear if a computer would qualify for the exception, since at least one court has held that a computer is not a "digital audio recording device."
That same case found that the main purpose of the AHRA was to permit home recording and noted that copying a song from a computer to the Rio MP3 player was paradigmatic fair use. If a court found that the exception did not apply, you may have fair use defense for copying, but the ability to raise that defense would diminish with a larger number of copied songs. If you were ultimately found liable, the Copyright Act provides for significant monetary damages--up to $150,000 per work infringed, if the infringement is willful.
Beyond the letter of the law, is there a practical threshold of activity
that divides safe copying from actionable piracy?
Is it worse from a legal standpoint to make illegal copies for myself or to
help others get them?
Can I be held liable if people make illegal copies of files on my computer
through a program like Napster?
Next: Should I delete my MP3s?
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