The DMCA and SunnComm's Shift By George Ziemann (Oct. 11, 2003) One of the first four recipients of RIAA file-sharing lawsuits was a college student at Princeton. The student settled for about $12,000. College is an investment in the future. The RIAA made a withdrawal. Payback began this week, when Alex Halderman, a Princeton graduate student, revealed how to bypass the woefully inept copy-protection method just introduced by BMG. Simple logic says that this is the beginning of a trend. Enter SunnComm, the Phoenix-based designer of the copy protection software, which threatened a $10 million suit against Halderman for spilling the beans. The threat came on Thursday (Oct. 9) alleging Halderman violated criminal provisions of the Digital Millennium Copyright Act in disclosing that holding down the Shift key bypassed the copy protection -- if it even worked at all. Although SunnComm ultimately changed its mind about the litigation, it highlights one of the DMCA's many flaws. The DMCA does, in fact, make it a criminal offense to bypass copy protection and/or "access controls" (which are one and the same). Even if it's bad. Even if it's dangerously bad, in the case of real-life security. What really made SunnComm mad seems to be the damage Halderman's revelation did to its stock, which lost about $20 million in market value after the news came out. One has to wonder how many investors sold their stock because the flaw was revealed, how many sold based on the revelation that SunnComm was associated with the RIAA, and how many sold based on the knowledge that SunnComm was wasting its time trying to develop copy protection, which we all know never works. Even if Halderman had never said anything, someone else would have, almost as quickly. This one didn't even require a Sharpie marker. To me the most surprising thing about the entire story was that SunnComm and BMG both appear to have believed it would work. GE and Vivendi Merger The Washington Post reported that the GE/Vivendi merger did not include Universal Music. Just passing that on in case you heard the news about the sale and missed that little detail. Ford's Better Idea Bill S., an Alert Reader, pointed me at a paper by legal studies professor G. Richard Shell from the Wharton School at the University of Pennsylvania. Seems that if you go back 100 years, there's an even better history lesson than Edison's to indicate what's on the horizon for the music business. While we can be pretty certain that the RIAA won't heed this advice any more than any of the other suggestions I've offered, perhaps it will provide someone with a little inspiration. First of all, RTFA (Read the, uh, forementioned article). Knowing that half of you won't bother, and for the entertainment value to the rest, here's my synopsis. The recording industry has a pricing problem. Innovation always drives the prices of yesterday's technology into the dirt. Suing your customers is not a winning business strategy. The way to respond to the demise of the commercial CD is to figure out new ways to make money on music. In 1903, the Association of Licensed Automobile Manufacturers tried to put down the threat of cheap, mass-produced cars by suing consumers who bought Henry Ford's automobiles, having refused to license Ford the right to sell "self-propelled vehicles powered by internal combustion engines," for which the ALAM held the exclusive patent, called the Selden Patent. Henry Ford fought back, in court, from 1903 until 1911. In that time, the association launched hundreds of lawsuits against Ford's customers to scare them away from his showrooms for buying "unlicensed vehicles." People rallied to Ford's side against the bullies. Editorials weighed in against the industry's heavy-handed lawsuits, and Ford helped his own case by purchasing litigation insurance for his customers. By the time the patent litigation was over ­ Ford won on appeal in 1911 when the court ruled that the Selden Patent covered only cars made with a special type of engine nobody was using anymore ­ Ford was a hero, and the largest car manufacturer in America. No legal rule is strong enough to overcome a radical technical innovation. Courts can delay progress but they cannot stop it. Henry Ford once classified lawsuits against new technologies as "opportunities for little minds ... to usurp the gains of genuine inventors ... and under the smug protest of righteousness, work a hold-up game in the most approved fashion." I hear that some of the peer-to-peer networks have already begun taking out litigation insurance for their customers. Maybe some of you already knew this story.