Showdown at COMDEX 2002: The Latest Battle in the Intellectual Property War


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Call it a summit meeting between two superpowers. Call it a confrontation of equals in the Intellectual Property War. Call it what you will, it was one of the most stimulating arguments on content control presented by a mega content provider to the very people who have "advertently" or inadvertently made rampant content piracy possible—the Information Technology professionals that attend Comdex.

In what clearly was intended as a pivotal moment for the IT world and media, Fox Group CEO Peter Chernin appeared before the assembled techno-pros as the first media executive ever to deliver a keynote address at Comdex. For an hour, he challenged the audience to rethink piracy. He called for innovation that would allow both providers and purveyors of content to profit from the game as partners. And he supported his argument with a surprise guest, another media kingpin directly affected by the digital piracy war.

Chernin's keynote represents a major effort on the part of Big Media to reach out to the IT community. As the president and chief operating officer of News Corporation as well as the chairman and CEO of Fox, Chernin sits just under Rupert Murdoch in the Fox hierarchy. As such, he has few peers in the industry. So when he speaks about how he wants to release and control content, creators and deliverers sit up and listen.

Chernin woke the audience with his comment that piracy "has been systematically encouraged by a generous supply of Internet services, products, and tools." With a start like that, its no wonder Chernin said that he felt his appearance at Comdex was more like "the kind of death-defying stunt that's featured in Jackass: The Movie," than a typical keynote. He confessed, "I have not come to Comdex with any illusions about the eradication of all digital stealing, or about the absolute perfection of any method we might use to prevent it."

However, he also rallied the audience with strong, clear statements on intellectual property. He said, "we have no objection to anyone making copies of televised content…we have zero objection to anyone's ability to duplicate, to record, to playback and to save any copyable content whatsoever," and "we'd also be idiots to want to overturn fair use." Instead, he said that his goal is in "protecting content against theft and illegal redistribution—while protecting the thrilling digital advances and digital abilities to which we're accustomed." To do this, he called for "a partnership of content and technology providers in order to create explosive long-term businesses."

Chernin presented a digital content paradox: No one at Comdex would argue for software piracy, but entertainment content—music and video—seems to be fair game. Why? He outlined three prevalent arguments:

  1. Studios are luddites—the Dinosaur Theory. "We haven't developed a new business model to capitalize on the opportunities of the Internet because we are paralyzed with fear that modern technology might threaten our traditional profits."
  2. Studios are big bullies. "We are accused of seeking to scale back the fundamental freedoms of digital technology [time and space shifting]."
  3. Finally, Chernin's favorite—let's "screw the suits." These people are "corporate drones, after all, who only care about the money, have earned enough of it not to worry, and have less appreciation for the artistic value of their companies' own content than the pirates who are bravely ripping them off."

To counter, however, he cited:

  1. Fox's extensive use of cutting-edge technology at every turn, including CGI and Digital Video on the production side, streaming content on the news side, and DVD distribution to consumers.
  2. His desire to maintain consumer rights, with no objection to time and space shifting, while maintaining revenue through appropriate digital rights management.
  3. And, winning him some brownie points, Chernin said, "there have just got to be better ways to screw the suits. Digital copyright theft is less immediately harmful to executives at the highest levels than it is to the countless people at the creative level."

He spooled a video of testimonials from moviemakers—directors Steven Spielberg and Peter Jackson along with behind the scenes people—wardrobe, set design, and other technicians—who are impacted by lost profits due to piracy. Then, in a surprise announcement, Chernin introduced George Lucas, there to advocate digital protection.

Speaking extemporaneously, Lucas began by saying "I guess I am here to say there is no free lunch. No matter how free it seems, someone somewhere is paying for it. In the end, when someone gets ripped off or someone is getting something for free, someone else is getting screwed. I'm here to represent that group that's being screwed the most. We're trapped between the consumer and the corporation." He agreed with Chernin's argument that "the suits" won't be hurt by piracy. Instead, the many artists and technicians in the filmmaking process would lose far more than the studio executives. "The big corporations are like cockroaches, they will survive anything. It's the artists who suffer," said Lucas.

Unlike Chernin, Lucas didn't see piracy destroying the film industry; instead he said, "The real danger is that only ‘safe' movies will get made, movies with mass appeal that distributors feel are likely to make money." Smaller, art, experimental, or even films like Star Wars "would simply not get made, let alone distributed". That, he said, is how the little guys will get ripped off, as well as the consumers. "Beware of unintended consequences. The threat is at every level." He warned, "If the revenue drops, we're the ones that suffer the most. We're the ones that don't get to make the movies. I am pleading for the creative people in this industry."

Lucus surprised the audience by repeatedly asking for help. "I'm just begging for all of you to work together," said Lucas. He added, "Once you cut down the rainforest of entertainment, then the ecosystem of the entertainment business will be gone."

Chernin took the stage again and said, "I didn't come in a desperate appeal for your mercy." Instead, he seeks a partnership that would work to bolster DRM. He felt that Comdex 2002 was the place to start because, "both our industries seriously need to be reenergized and directed toward incredible growth and ongoing gains."

With this speech, Chernin didn't try tossing the gauntlet down to IT over piracy. Instead, he tried an approach that just might work: being constructive and appealing to hardware and software vendor profits as motive to prevent copying.