IT LEADERS OFFER NAB DIFFERING DRM SOLUTIONS

Content can be protected and HDTV can expand more rapidly with simple technology step, Microsoft Vp Mike Toutonghi said Tues. To surprise of no one in audience, his solution involved Microsoft software and Windows XP. He said at end of 2002 there would be only 1.24 million U.S. homes with HD-capable digital TVs, and even with projected increase over 3 years that still would lead to only 6.96 million homes with HD in 2005. However, 21% of U.S. homes already have analog tuner in their PCs, he said. Toutonghi heads Microsoft’s newest division, Windows E-Home, and he said company was working to make PC less anchored to home desk and more mobile, with remote-control operation for multimedia use. Including HD-capable DTV tuners would dramatically increase DTV market, he said.

Reception of HD movies into PCs with large hard drives and Internet connections naturally raises copyright concerns, Toutonghi acknowledged. But he said “some of the early attempts at copyright protection that were not consumer- friendly met with significant resistance among consumers.” He said Microsoft software could “provide not just copyright protection but digital rights management” that would protect fair use rights, with consumers encountering “barrier” only if they attempted something that exceeded reasonable use. Toutonghi issued “an open invitation” to broadcasters and content creators present “to work together and make this happen for consumers.”

“It’s very ironic that software companies come and say ‘We have a software solution that can solve this’ when they couldn’t do it [for] themselves,” Netscape founder Marc Andreessen said Mon. He created first successful Web browser, Mosaic, went on to found Netscape, now runs media company LoudCloud. In New Media keynote address here, he said software companies finally realized in 1980s that way to target piracy was not through software or hardware solutions: “PC makers were never able to implement that. The reason is because it’s just bits.” He said industry spent great deal of money on ad campaigns: “Most people, once they're educated and sensitized, they don’t want to go through life as criminals.” Andreessen said success of that campaign helped lower cost of software dramatically, which in turn decreased temptation to copy software illegally.

“It would be a big, big mistake if laws were passed now” to mandate DRM solutions, he said, adding that many of companies that were pushing that approach “would have to spend more money in 2 to 3 years to get that reversed” once they saw downsides of mandated technology. Andreessen did acknowledge that piracy was wrong -- although he confessed to illegal download few days earlier to obtain episode of Seinfeld that had been taken out of syndication -- and said “enforcement is a big part” of Washington’s role. Bottom line, he said, is that consumers already have demonstrated strong demand for digital content, demand that wasn’t obvious when Andreessen was developing browsers, and businesses should be able to figure out way to capitalize on that demand, make profit and keep piracy levels low: “It’s an incredible stroke of luck for the media industry.”

If Hollings’ bill became law, IT, CE and content industries would have one year to reach DRM consensus or FCC would begin rulemaking on hardware and software solution. In early drafts of bill, Commerce Dept.’s National Institutes of Standards & Technology (NIST) would have been agency of choice. Asked about change, Hollings counsel Al Mottur said FCC had worked on DTV, so its staff had been involved in meetings that touched on DRM. But Chmn. Powell has told Congress that because of limitations on compensation, FCC is severely short-staffed on engineers, and many of those came aboard when radio waves were cutting-edge. At FCC panel, Commission Chief of Staff Marsha MacBride agreed with Powell’s comments and admitted “other agencies have some expertise” in DRM. However, she said, “if Congress says we should do it, we will adapt.” Lobbyist for studio supporting Hollings bill told us his company had no preference as to which agency would be appropriate and insisted choice of FCC was Hollings’ alone.