DRM Actions Could Prompt Fresh Look At Protecting Copyrighted Content

By Dugie Standeford for Intellectual Property Watch
Two recent developments – the decision by music industry giant EMI to sell downloads free of digital rights management (DRM) and the launch of France’s new DRM agency – could change the nature of the debate on copyright reform. While it remains to be seen whether EMI and other companies offering unprotected content are successful, or the Regulatory Authority for Technical Measures (ARMT) effectively resolves interoperability disputes, it is likely that content providers and policymakers around the world will be watching closely, experts said.

EMI announced earlier this month that starting in May it will make DRM-free tracks available, with “vastly improved sound quality,” through iTunes, Apple’s popular music download service. The new offerings – priced at $1.29, €1.29 and 99 pence – will be playable on any device, including mobile phones. Consumers who prefer cheaper music can continue to purchase DRM-protected songs for the current price, and can upgrade them for an additional 30 cents apiece.

French DRM agency ARMT opened for business on 6 April. The first of its kind in the world, ARMT was created by France’s new law on the rights of authors and related rights in the information society (known as DADVSI). The ARMT is the “cornerstone of the law’s attempt to solve problems generated by DRMs,” such as lack of interoperability of platforms and the making of copies for private use, said Nicolas Jondet, a research assistant at the University of Edinburgh arts and humanities research centre for studies in intellectual property and technology law.

The DRM watchdog is an independent administrative authority tasked with implementing the law’s interoperability requirements and ensuring that DRMs do not keep users from benefiting from copyright exceptions such as private copying, Jondet wrote on French-Law.net. Under DADVSI, DRMs must not prevent effective interoperability. The ARMT has the authority to order technology companies to disclose “essential” interoperability information to rivals in order to promote interoperability, and it can impose “huge fines” amounting to 5 percent of a company’s worldwide turnover after tax if it refuses to do so, he said.

Only software publishers, makers of technical systems and service providers can seek access to interoperability code, according to Jondet. However, anyone can refer a case based on copyright exceptions.

The Apple/EMI agreement is “the more positive development,” said Ren Bucholz, Electronic Frontier Foundation policy coordinator for the Americas. With the agreement, two large players have recognised that DRM is “bad for the market” and banned it of their own volition, he said.

The ARMT, meanwhile, is the “worst of both worlds” because it allows firms to continue to use DRM but injects another layer of bureaucracy into the system, Bucholz said. It is an “arbitration arrangement for large companies to duke it out,” and does not get to the core issue of consumer unhappiness over DRM, he said. He pointed to a March report by Deutsche Telekom’s Musicload finding that three out of four customer service calls involve consumers frustrated by DRM.

Is There a Trend?

EMI’s decision is “part of a larger trend,” said University of Ottawa law professor Michael Geist. Many of the larger independent labels have already done away with DRM, and EMI’s move “may foreshadow similar developments with other major labels,” he said.

But Jondet predicted that DRM is not likely to go away for a long time. First, the three other main music labels are “far from convinced that it is in their interest to drop DRMs,” because Apple and EMI have yet to show that their business plan works. More importantly, he said, even if all music were DRM-free, problems relating to content protection still abound in the movie arena.

EMI’s decision will signal a trend only if other content producers, first in the music industry and then in the film sector, follow suit, Jondet said. “This is not likely to happen in the near future” because content producers remain unsure about DRM-free business models, he said.

Policy Implications

In the last 10 years the United States has pushed other nations to adopt legal protections for technical protection measures, including DRM, Bucholz said. Provisions barring the circumvention of such measures are now part of the World Intellectual Property Organization “Internet treaties” on copyrights and performers’/producers’ rights, and national implementing legislation, as well as bilateral free trade agreements.

The thinking behind those policies was based on giving content creators greater control over their material in order to ensure greater monetary returns, Bucholz said. Now, however, “we’re seeing the gospel of DRM is on hard times.” As other countries consider bilateral accords and implementing the WIPO treaties – as Canada is doing now – Bucholz said he hoped they will look at them with “fresh eyes.”

EMI’s decision “sends a message that copyright reforms premised on stronger protection for DRM may well be unnecessary,” said Geist. In fact, “for many countries anti-circumvention legislation may be harmful as it sends a counter-productive message to the market that DRM should be actively supported at a time when the market is rejecting it.” The International Federation of the Phonographic Industry (IFPI) declined to comment.

Could the ARMT be a regulatory model for the rest of the world? DRM is here to stay, at least for the time being, so the authority might “offer a good compromise guaranteeing the interests of content producers and distributors and of consumers,” Jondet wrote. The European Union is certain to scrutinise it when it reviews the implementation of the Copyright Directive, he said, but whether it changes European copyright law “will largely depend on its efficiency.”

The more market-oriented United States is unlikely to favour the French solution, Jondet said, but it could be used as a “regulatory bogeyman” to spur content producers and technology companies to better accommodate consumers’ needs.

Net importers of copyright-protected goods might find the ARMT model attractive, Jondet said. Developing nations and those lacking a powerful local media industry “might choose to adopt a system that, without conflicting with international trade and copyright agreements, could better cater for the needs of consumers, educational institutions, museums, researchers” and others, he told Intellectual Property Watch.

If you’re a developing country, said Bucholz, you have to wonder “if there is any upside to DRM” because it hampers innovation, availability of technology, and access to information.

Dugie Standeford may be reached at info@ip-watch.ch.