Consumer, Industry Groups Disagree on Need for DRM Regulation

The EC should encourage a market solution but avoid regulation, agreed industry respondents, including content owners, telecom associations, equipment manufacturers’ groups and broadcasters. Consumers and users, on the other hand, panned what they considered the industry tilt of the report, saying the Commission should regulate technologies that could harm privacy, fair use and other rights.

The Bureau Europeen des Unions des Consommateurs (BEUC), a federation of 38 national consumer groups that participates in the HLG, said it “could not and would not support” the panel’s position on migration to legitimate online services and on levies. (The report urged the EC and member states to adopt a no-tolerance approach to copyright abuse and unauthorized file-swapping and to consider case by case levies on sales of devices to cover private copying compensation). Both positions “reflected only an industry viewpoint; neither accorded any respect to the notion that consumers could have or should have any rights of ownership in relation to digital material,” BEUC said. The HLG failed to achieve its objective to address consumer acceptance and trust with respect to DRM, it said.

A balanced DRM regime needs several key elements, BEUC said: (1) A recognition that consumers have express rights with respect to digital material, such as fair use, the right to make private copies, the right not to have their use restricted by licenses, and the right to be informed when buying works whose use is restricted. (2) The regime must be fair, competitive and balanced. Govts. should secure competition with open standards and resist the urge to make DRM mandatory for any medium. (3) The right to privacy and data protection. DRM systems shouldn’t allow disclosure of consumer information to unauthorized people and should ensure private data is secure. (4) DRM must not be allowed to restrict fundamental free speech rights, as with attempts to stifle legitimate scientific research under the Digital Millennium Copyright Act. (5) DRM shouldn’t try to address all problems of the digital divide, but at a minimum shouldn’t widen the gap by barring access to works in the public domain. (6) DRM shouldn’t be allowed to alter consumers’ computers or other equipment in a way that affects their ability to control the devices.

“The proper role of the Commission is not to promote DRM, but to regulate it aggressively,” said the U.K. Foundation for Information Policy Research (FIPR). The EU copyright directive’s anticircumvention rule transfers regulatory power from govts. to the software writers it protects, FIPR said. The think tank recommended the problem be addressed in a further round of international treaty obligations. Meanwhile, FIPR said, the EC should legislate to restrict the “fruit of the poisoned tree” -- that is, to require that a rights-management mechanism or other technical protection measure (TPM) that abuses competition, consumer or other laws lose its anticircumvention protection under the copyright directive.

In the current legal environment, DRM gives entertainment platform developers control over complementary products, said the U.K. Campaign for Digital Rights (CDR). The EC shouldn’t promote either control of the market for complementary goods or territorial segmentation of markets (such as through “region coding” on DVDs), CDR said. Instead, it said, the copyright directive should be amended to allow circumvention of TPMs for lawful purposes.

DRM is a “non-starter,” said Berlin-based privakopie.net and Amsterdam’s Bits of Freedom. The HLG report discusses some of the difficulties involved in establishing a DRM infrastructure but it “never questions the ‘DRM proposition’ itself,” the groups said. That contrasts starkly with the “wide-spread conviction among technology experts” that DRM is “ineffective,” “stupid,” and “futile,” they said. The EC must put users at the center of the debate, they said, by: (1) Reconsidering its support for the “single-path solution of DRM of which there is strong evidence that it is a dead-end street.” (2) Convene an HLG with participants from civil society, science and business on the dangers of DRM and alternative systems that ensure rights holders’ compensation without control over users.

Industry Views

Several industry groups were less than enthusiastic about the HLG report. Eurochambres -- the Brussels-based association of European chambers of commerce and industry whose 17 million companies fall on all sides of the DRM debate -- said technological solutions to digital rights infringement “sound rather defensive while some proactive solutions might be profitable for the entire business community.” Eurochambres criticized the HLG report for assuming DRMs can be introduced without reference to the existing market: “The real problem of DRM is that it is introduced into a market that comes with a legacy, of which MP3 and file sharing systems are important parts.” The DRM discussion should be expanded to encompass the existing market actors, Eurochambres said, and the EC must ensure existing companies that have done nothing wrong but have developed new music devices are protected and included in DRM development.

Though the HLG was advised of broadcasters’ “absolute need” to keep free-to-air broadcast signals in the clear so “encryption can never be recognized as a protection mechanism to enforce” DRM solutions, “this important conclusion does not appear in the final report,” the European Bcstg. Union said. To be palatable to broadcasters, it said, DRM solutions must: (1) Be strictly limited to addressing unlawful redistribution via on-demand services over the Internet. (2) Include a safeguard to broadcasters against any direct or indirect requirement to scramble broadcast signals. (3) Be attractive for viewers and listeners of digital broadcasts by maintaining the existing possibilities for copying for private use. (4) Guarantee protection of viewers’ and listeners’ private date.

Other industry groups generally supported the HLG findings. The European Telecom Network Operators’ Assn. (ETNO) said the HLG’s conclusions were in line with its positions. It urged the EC to distinguish between TPMs and DRMs. The former now offer a level of protection adequate to make illegal copying an “insignificant risk,” ETNO said. TPMs associated with DRM systems need only offer protections sufficient to give average users an “incentive to honesty,” the group said, and the launch of legitimate digital distribution businesses shouldn’t be further delayed.

The Motion Picture Assn. (MPA) complained about being excluded from the HLG, but it backed the report’s conclusions. The EC has a key role to play in encouraging industries to come to an agreement, in particular on unauthorized retransmission of unencrypted digital signals and the analog hole, the MPA said. The Digital Interoperability Forum (DIF) warned that seeking a one- size-fits-all approach is “too ambitious,” and in the short to medium term, any industry-led solution should focus on developing interoperable DRM solutions rather than open, cross-platform multiple device DRMs.

The Digital Media Project (DMP), whose members include telcos, consumer electronics makers, academics and others, agreed with many of the report’s conclusions. However, it said interoperable DRM won’t happen if left to market forces, but will require a “system integration function” whose technical specifications the DMP is working on. The group urged the HLG to “move beyond reassuring words, define DRM interoperability and develop interoperable DRM requirements.”

The European Information Systems, Communications Technologies & Consumer Electronics Industry Assn. (EICTA) said levies were the most urgent problem in the DRM debate. EICTA doubted the HLG’s case-by-case approach to levies would reform the system. Without reform, it said, copyright levies will continue to be used to “maximise short-term revenue for collecting societies,” undermining consumer acceptance of TPM/DRM-enabled content delivery, online or packaged.

The EC consultation drew more than 40 responses. The Commission plans a Nov. workshop on obstacles to DRM’s rollout.