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Consumer Rights

The FTC on DRM: Fighting for Consumers or Making Toothless Threats?

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The moment digital media consumers have long waited for finally came this week as the FTC held a Town Hall meeting to discuss issues surrounding the use of DRM technologies.

From the beginning it was clear the FTC has heard consumer complaints about DRM related issues and takes the matter seriously. What wasn’t clear is what, exactly, the FTC is prepared to do to ensure that consumers get what they pay for when they purchase digital media products.

Mary K. Engle, Acting Deputy Directory for the Bureau of Consumer Protections, opened the workshop with some tough words for companies selling DRM protected media products, warning, “If your advertising giveth and your EULA taketh away, don’t be surprised if the FTC comes calling.” Further, Engle noted that consumer distrust over DRM makes for an unhealthy marketplace. [Read more…] about The FTC on DRM: Fighting for Consumers or Making Toothless Threats?

Open Letter to the FTC — My DRM Town Hall Comments

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At long last the Federal Trade Commission is taking a serious look at DRM and the impact the technology is having on consumers. The Commission has scheduled a Town Hall meeting in Seattle on March 25th.

The FTC is soliciting public comments until the end of the month. I’ve already submitted my comments, and I encourage all Medialoper readers to do the same. You can submit your comments online until January 30, 2009.

While no one can doubt the importance of protecting the intellectual property rights of copyright holders, it is equally important to protect the rights of consumers. Unfortunately, where DRM is concerned, consumers have no rights.

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Digital Content in an Ownership Society

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I’ve been collecting media in one form or another since I was old enough to recognize Beatles ’65 at the White Front department store in Fresno, California. That was around 1966. I was three, and it was a very bad day for my mother.

In the years since, I watched my LP and 45 collection explode, only to be replaced by CDs, and finally to be morphed into a vast field of bits on a relatively small network storage device. Bits that I dutifully back up, maintain, and curate.

I spend more time fixing faulty ID3 tags than I care to admit. And I’m constantly annoyed when album art mysteriously goes missing (am I the only person having this problem with iTunes?).

There’s a point where it might just be easier to chuck it all and consider subscribing to one of those all-you-can-eat music services. That’s certainly what the RIAA would like me to do.

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Customer Service Through Litigation: The RIAA Institutionalizes Its Business Model

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I admit to being a bit old-fashioned, but in my mind, good customer service rarely involves suing your customers. But, for the past several years, that’s just what the RIAA has done. Nothing creates a warm and fuzzy feeling about an industry faster than threats. Makes you feel wanted.

Illegal downloads are a problem. I maintain — because frankly, the RIAA has offered nothing in the way of hard evidence — that the amount of money being lost is quite a bit less than what the press releases suggest. I believe this simply because every download does not represent a lost sale. In many cases, the songs would have gone unsold, unheard, unnoticed.
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Teaching Consumers About DRM

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Some day in the near future you will purchase a digital audio or video recording and find that it doesn’t work exactly as you expect it to. Maybe it will simply stop playing after a few days, or perhaps you won’t be able to convert it for use on your portable media player, or maybe you won’t be able to skip past the annoying promos at the start of the program. When this happens you can blame Digital Rights Management (DRM) for your dissatisfaction.

While we talk a lot about DRM here on Medialoper, it’s not at all clear that everyone understands what we’re talking about. In fact, a 2005 survey of European digital music consumers (PDF file) revealed that 63% had never even heard of DRM, while 23% had heard of DRM but weren’t sure what it was. There’s no reason to believe that American consumers are any more well informed on the issue.

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The DRM Virus Is Spreading – A Pandemic May Be Near

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Last week we were startled to learn about Zune’s viral DRM system. As it turns out, the whole thing may have been a miscommunication on the part of Microsoft’s Zune Insider. But that doesn’t mean that Zune isn’t responsible for spreading the DRM virus. On the contrary, there’s mounting evidence that Zune is directly responsible for a mutation of the virus.

With the release of Zune, Microsoft has intentionally turned its back on its previous DRM standard – the PlaysForSure system. As a result, PlaysForSure partners are starting to drop support for Microsoft’s old DRM system in favor of their own proprietary DRM systems.

On Monday Real Networks and SanDisk announced that the Rhapsody music service will be switching from PlaysForSure to Real’s own Rhapsody DNA system. In an attempt to emulate Apple’s iTunes/iPod experience, SanDisk will release a new player that will be tightly integrated with the Rhapsody music service. The move is designed to position both companies against the upcoming Zune Marketplace as well as iTunes.

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Why Google Music Won’t Matter

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Wall Street is buzzing again with rumors that Google will soon launch a digital music service to rival iTunes. While a showdown between Apple and Google would be the Wall Street equivalent of Godzilla vs. MechaGodzilla, analysts seem to be so caught up in their visions of “enhanced revenue streams” and $500 share prices, that they’ve missed one essential point. Google Music just won’t matter much. Here’s why:

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Consumer Rights Fading In The Digital Age

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Back in the good old days of analog media (I can’t believe I actually just typed those words), consumers who purchased an LP or video tape could pretty much do whatever the hell they wanted with the physical product once they paid for it.

Say, for example, that shortly after buying Journey’s Departure LP you realized that you had made a horrible mistake. Half-way through the first listen it was clear that your head would explode if you heard just one more second of Steve Perry’s screeching voice. Not a problem. Thanks to the doctrine of first-sale (an established part of US Copyright law) you had every right to take that Journey album to the nearest used record store and sell it for whatever you could get for it.

The same rule applied to any media that contained copyrighted material. Amazingly, this rule lasted well into the digital age and was applied to CD’s and DVD’s as well (we’ll overlook the major record labels challenge to used CD sales in the late 80’s).

Consumers of copyrighted material have historically had certain legal rights that have been very well defined. Suddenly, however, everything seems to be changing.

eBay has begun cracking down on auctions featuring new iPods loaded with thousands of songs. On the surface these auctions may seem fishy, but until we know otherwise we have to assume that the songs contained on those iPods are not in violation of copyright law (that’s the “innocent until proven guilty” thing you’ve probably heard about).

There are plenty of possible scenarios in which these auctions could be entirely legal. Here are a few:

  • All of the music may be under a creative commons license that allows such distribution
  • All of the music may be public domain
  • All of the music may have been legally purchased through sources such as iTunes or eMusic

Of these three scenarios, it’s the last that scares the music industry the most — although it really should scare consumers the most since they’re the ones who will ultimately lose out when the entertainment industry finally kills the doctrine of first sale.

For some reason, we’re being asked to believe that digital content is is something entirely new and different. We’re being told that the principles of copyright that have applied for hundreds of years no longer apply in the digital realm, even though the content is essentially unchanged — only the method of delivery has changed.

It’s not just the doctrine of first sale that’s being compromised in the digital era. Thanks to Digital Rights Management (DRM) and the Digital Millennium Copyright Act (DMCA) fair use is being curtailed as well.

As a result of the DMCA consumers have lost their right to shift certain types of digital content from one format to another. While it’s still legal to convert your CD’s to mp3 files and load them onto your iPod, you’re breaking the law if you try to do the same with a DVD and a video iPod. It doesn’t matter that you purchased the DVD legally and are just trying to transfer the video to a more convenient format. The DMCA clearly bans any software capable of breaking DVD encryption. The law is blind to the fact that you own the medium and the fact that historically you would have the right to shift content from one medium to another.

It’s only a matter of time before the major media companies follow the lead of software companies and ask consumers to consent to an end user license that is even more restrictive. Once that happens you can forget about fair use and the doctrine of first sale. Both concepts will be effectively dead by that point.