When consumer choice is not enough: Dishonest Relationship Misinformation (DRM)

(First published on IT World Canada blog)

When I discuss non-owner locks on technology and anti-competitive locks on content, the two highly controversial forms of so-called “Digital Rights Management”, a common question comes up: If I don't like these things, why don't I just not buy them and be done with it?

While I have historically been a firm supporter of consumer boycotts, I do not believe they can be effective in this case for a number of important reasons. I am also a strong supporter of free markets, but in this case I also do not believe that markets alone can solve the problems — partly because I don't believe we have a free market scenario.

Non-owner digital locks

Lets start with non-owner locks on technology. I have called this Dishonest Relationship Misinformation (DRM) because we have a scenario where people are buying something, but where they are not expected to retain ownership-like rights. To me it is obvious that if I own something that it is me, and not someone else, that maintains the keys for any locks applied to what I own. I may offer a spare key to other people, and in some cases this may be a property manager that manages the property on my behalf, but it is still the owner that controls who has these keys.

Non-owner locks on technology are based on the idea that the manufacturer of the device, not the owner, should control who has keys to the locks they have applied. One interpretation of anti-circumvention legislation promoted by some special interest groups is to suggest that it should be illegal for the owner of the device to remove this non-owner lock and apply their own.

This is clearly backwards: what should be illegal is for someone other than the owner to apply a lock and then not pass the keys to the owner when the property is sold. To do otherwise is to ignore hundreds of years of precedent in how property works not only in the legal community, but also how the general public understands the concept of property rights.

The general public understands the concept of rental, where someone other than the owner makes use of the property while the owner retains ownership rights. Along with property law we have a whole body of law that sets out the rights and responsibilities of both the owner and the renter, and this model is generally understood by the general public at large.

It is unreasonable for DRM proponents and apologists to expect the general public or people in the legal profession to understand this brand new type of relationship that is neither ownership nor rental. While I avoid the ”purchase” of products that have non-owner locks on them, I think it is obvious that this has little to no impact on the market as a whole. It would also have little to no impact on the radical changes being proposed to our legal system when it comes to property law.

This departure from property law is unnecessary as the long established rental arrangement provides all the flexibility needed for the legitimate business model options being contemplated by the content and technology industries. What we should be doing is strengthening the legal protection for owner applied digital locks, including in rental situations where it should clearly be illegal for a renter to circumvent a lock on technology which they do not own.

The term DRM is also used to refer to activities which do not involve non-owner locks, but various types of locks on things which people do own. A membership-required site uses a variety of technological measures to ensure that only members are able to access their site. I believe that our laws should make clear that breaking into such sites is illegal. This is a combination of property and electronic commerce laws, two areas of provincial jurisdiction that could use some modernization.

This protection of property rights, itself provincial law, should be seen as parallel to federal copyright law. While legal protection of owner-locks can be used to protect the interests of copyright holders, they should be protected regardless of whether there was a copyright infringement involved in the circumvention of these owner locks. This is an entirely different conversation than discussions around 1996 WIPO treaty ratification where the anti-circumvention rules added to copyright law should only apply to circumvention which directly relates to copyright infringement.

To be clear, while I believe that non-owner locks should be illegal, and owner locks should be clearly legally protected, that this protection should happen outside of federal Copyright law. It is areas of provincial jurisdiction where the appropriate legislation should be modernized.

Anti-competitivelocks on content

I consider disallowing non-owner locks on technology to be a pretty simple protection of property rights, justified for all the same reasons our society recognizes other property rights.

I understand why a wide variety of groups have different opinions on anti-competitive locks on content. The question here is whether copyright holders should have a brand new right to dictate what brands of technology their works can be accessed with, and whether this is helpful or harmful at protecting the rights of these same copyright holders. I think that an answer to the second part of that question is an answer to the first.

I have seen no evidence to suggest that dictating brands of technology has or can help the financial interests of copyright holders. While there is alot of hand waiving, all the evidence I've seen suggests that these locks are taking money out of the pockets of creators. These locks make the content less valuable to audiences, and thus fewer are willing to pay. These locks also threaten artistic control as well as business model control. I believe that in order to protect ther ights and interests of copyright holders that this new right should not be added to Canadian Copyright, even if in the short term some copyright holders appear to be asking for it.

I can use myself as an example to illustrate part of the answer. For reasons which should be clear from my views on non-owner locks, I will avoid the ownership or use of technology that has non-owner locks applied to them. A copyright holder that locks their content such that their content can only be opened with non-owner locked devices has excluded me as a potential customer.

Telling me that it is my choice to not consume content only provided on brands of devices I do not own is backwards. This is like telling someone that they are free to vote for anyone they want, but that the only legal options are from the Communist party. That is not achoice, but the removal of choice.

For other audiences the evaluation may be different. They may own a variety of brands of technology, some non-owner locked and some not. For them it is clear that content that is interoperable with all their devices is more valuable than content that only works on one. They will expect a discount on content that only works on a subset of their devices. This discount is unlikely, especially considering it costs the copyright holders more money to lock their content (fees to license DRM technology) than to leave it unlocked and interoperable with all devices.

We have a problem with the statistical models being used by creative industries to indicate the health of the industry. If you look at the statistical methodology there is no differentiation made between copyright infringement, consumer boycotts, or market failures where people aren't buying for other reasons (inadequate value for money, not available on owned devices, etc). All the statistics show is that people aren't buying, and there is no way for copyright holders who blindly believe that infringement is the only problem to realize that it is things under their own control that may be the primary cause of declining revenue.

This reduction in the value and marketability of content is one way that these anti-interoperability locks take money out of the pockets of copyright holders. While I believe this costs copyright holders more than infringement does, I don't consider it the greatest threat.

Few television viewers think about the traditional business model of commercial television. The model is to sell eyeballs (viewers) to advertisers. The product isn't copyrighted works being sold to viewers, but viewers being sold to advertisers. The supplier of the most relevant service is the television network, cable and satellite companies. Copyrighted works are a business expense to these suppliers, used to grow the size of their product (viewers) to their customers (advertisers).

Anti-competitive locks on content threaten to cause a transformation of traditional retail content distribution from where the product is the content and the customer is the audience, to one where the product is the audience and the customer is the copyright holder. If a small number of locked platform providers are able to dominate the distribution networks for copyrighted works it will then be these platform providers, not copyright holders, that are in control of the business models. Copyright holders will have to give in to the demands of the platform providers if they wish to receive any remuneration at all.

This transformation is already happening with companies like Apple who are able to dictate terms to an ever increasing number of copyright holders. In the past it was only software authors, and then with iTunes they were able to convince large parts of the music industry to sign on. With new content types being added to Apple's platform, we now see examples where cartoonist Mark Fiore nearly had his works censored by Apple. Apple backed down when this became widely publicized, but if we allow this type of platform control to dominate we will have effectively eradicated artist freedom.

Beyond issues of censorship, it should also be obvious that it is the platform providers that determine pricing and other aspects of the economic interests of copyright holders, not the copyright holder.

At this relatively early stage, artists still have the freedom to move elsewhere. We still at this moment have communications technology in the hands of citizens which do not have non-owner locks applied to them, and artists who aren't already being dictated to by publishers/labels/etc can opt to sell to these people and not those locked in by a platform monopolist.

I don't think this will last, if current trends continue. I don't think that individual artists or individual consumers will have any weight in protecting their rights and interests if a large proportion of fellow artists and/or consumers remain unaware of the threats.

Canada has a federal Competition Act and a Competition Bureau set up with a recognition that sometimes the government needs to step in to protect free markets when traditional market forces are insufficient. In addition to not adding a new brand dictating restriction to Copyright, I believe that we should modernize our competition law to protect the creative industries from these practices. The Competition bureau has thus far focused far too much on price as an indicator of market failure, and needs to look at additional indicators that would take other anti-competitive threats into consideration.

It should be obvious that consumer choice is not adequate here, considering that many creators have been convinced that “more copyright” is good for them, and that a new brand-dictating right will help them. I believe that by the time they realize the threat, if ever, the damage to creative industries will be massive.

I consider the wiping out much of the creative industries to be bad for anyone, so is not something I believe we should allow to happen. Relying on consumer choice alone is a do-nothing approach that should be dismissed.

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Russell McOrmond is a self employed consultant, policy coordinator for CLUE:Canada's Association for Free/Libre and Open Source Software,co-coordinator for Getting Open Source Logic INto Governments (GOSLING),and host for Digital Copyright Canada.