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JANUARY 3, 2003

By Jane Black

Will Your TV Become a Spy?
Hollywood wants every new digital set to include technology that would stop people from putting its shows on the Net. Bad idea

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While the economy and stock markets struggled, 2002 was a golden year for the silver screen. Thanks to blockbuster hits such as Spider-Man, Harry Potter, and Lord of the Rings, ticket sales hit $9.3 billion worldwide, a remarkable 13% rise over 2001's then-record receipts. So much for claims that piracy threatens Hollywood's livelihood.

Yet studio execs remain on the warpath. As movies are increasingly broadcast and sold in digital format, Tinseltown execs are panicked that consumers will make infinite numbers of perfect digital copies and share them over the Internet.

That's why the entertainment industry's honchos will once again journey to Capitol Hill when Congress convenes a new session later this month to ask lawmakers and the Federal Communications Commission for more protection. However, if Hollywood has its way, consumer privacy -- not piracy -- will pay a heavy price.

...OR ELSE.  Case in point: Hollywood wants a digital broadcast "flag" built into every new digital-TV receiver. This would allow content owners to track and/or designate which movies -- or any programming, for that matter -- could be copied, how often, and by whom.

In July, a consortium of Hollywood studios, high-tech companies, and a consumer-electronics trade group called the Broadcast Protection Discussion Group issued a report asking the FCC to mandate that "robust" and "flexible" copy protection be integrated into every digital-TV set. Without it, the studios say they'll refuse to license their movies and other programming to broadcasters, slowing the already-glacial transition to digital TV.

"Making digital TV a reality is a top priority in Washington. The FCC is under intense political pressure to act," says Jim Burger, an attorney at Washington (D.C.) firm Dow, Lohnes & Albertson. Burger is representing the computer industry -- which backed the proposal but is generally opposed to mandated technology fixes -- in the negotiations. The FCC is accepting comments on the proposal until Jan. 17.

MULTIPLE PAYMENTS?  Simply put, the digital flag is a bad idea and a serious threat to consumer privacy. Only Hollywood's interests would be protected. The consortium's report doesn't mandate protection of consumer information, only that the technology chosen should be flexible and robust. History has shown that the most powerful and adaptable copy-protection technology is also privacy-invasive.

Take Thomson Multimedia's SmartRight technology, a copy-protection scheme that's gaining momentum in Europe and Asia. Every time you watch a movie or transfer a video from a digital TV to a PC, it reports back to the copyright owner.

Spying on customers wouldn't only infringe on individuals' privacy but it could also lead to new revenue streams for Hollywood. Today, studios get paid only once when you buy the DVD of When Harry Met Sally -- no matter how many times you watch it or how many friends borrow it from you. New technology would conceivably allow the studios to charge you every time you view the film, since a record is created from a technology monitoring your viewing habits from inside your home.

A PROTECTED RIGHT.  A database of who watches what also would allow studios and broadcasters to better target advertising and promotional campaigns. Do you watch the Star Trek TV series every day? How about buying the collection of Star Trek shows on DVD? It's a marketer's dream come true.

I think it raises questions about violating every person's right to anonymity. Monitoring what you watch and when is akin to tracking what books you buy and read, something the courts have already ruled is a violation of the free expression of ideas protected by the First Amendment. Marketers have plenty of ways to obtain information about consumer preferences. This shouldn't be one of them.

If your right to read whatever you want is constitutionally protected, why should anyone -- especially Hollywood studios -- be permitted to invisibly track and record what you watch on TV? The broadcast flag would bestow the entertainment industry with just that power. "New copy-protection technologies put the right to watch anonymously at great risk," says Seth Schoen, staff technologist for the Electronic Frontier Foundation, a digital-rights advocacy group.

NO SPYING INTENTIONS?  The Motion Picture Association of America (MPAA) disagrees. Rich Taylor, MPAA's vice-president of public affairs, says the technology is designed only to stop consumers from creating a massive database of TV shows on the Internet -- not to spy on the average couch potato. "All the broadcast flag does is drops the garage door down if someone tries to send a file over the Internet," he says. "It doesn't run back and tell the copyright holder who does what. It just stops piracy from happening."

But if that's all Hollywood is after, the broadcast flag proposal should also mandate that whatever technology is chosen doesn't violate consumer rights. After all, it would be anything but a happy ending if the entertainment industry's quest to quash piracy came at the expense of privacy.

Black covers technology for BusinessWeek Online in New York
Edited by Beth Belton

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