The Irish Penguin

The ever confusing term ‘Intellectual Property’ gets another run out today as the EU attempts to shoot itself in the foot, yet again on crucial IT issues. This time the European Union wants to embark on a plan to encumber its multimedia sector in a cocoon of red tape through the introduction of DRM. And goes to the absurd length of stating that it is doing so in the interests of consumers. What the …???

The Irish Penguin is a die-hard market fanatic. The reason is not just because it’s the most efficient way to run an economy but rather that it is the best for the consumer (Note: The Penguin doesn’t think that its the best way to run some things like health care but that’s another story altogether). The bottom line is the customer truly is always right. Remember this for later. Which is way todays announcement is not just bad news for budding business entrepreneurs within Europe’s software economy but also a smack in the chops for European consumers. One of the frantic undertones of the EU is often one of desperation – an attempt to try and emulate America – in order to somehow shed the image of a union which is hamstrung fragmented markets and business unfriendly polices. Unfortunately, it sometimes goes about it the wrong way. Instead of the Japanese tradition of copying a process and improving it, the EU cumbersomely ambles towards the wrong target and periodically releases sound bites which it thinks will make it sound economically competent. Today was a comical case in point. Here is an excerpt from its press release.

“The European Commission has decided today to give a new boost to Europe’s online content sector. EU citizens should be able to enjoy easier and faster access to a rich variety of music, TV programmes, films or games via the Internet, mobile phones or other devices.”

Let’s read that first line again. The European Commission has decided what? This opening sentence sounds like the EU is trying to convince itself that this is a good idea. In reality, the European Commission has NOT decided today to give a boost to Europe’s online content sector. This is because included in its announcement the EU has decided that DRM (a completely misnamed and dangerous Digital Rights Management technology) should be forced on the European customer at every turn – in order to stifle the promising multimedia sector. It is highly useful to see that DRM has roundly been rejected by media consumers right across the globe. All of the major record company’s used to have DRM woven into their CDs and products at the turn of the year. DRM prevented users playing music on more than one music playback device. For example, it locked customers who had purchased an album online into playing it back on an iPod only; the user could not choose to play that same album on their home computer. And it also locked users who had bought CDs from playing them on their iPod. As sales plumetted and customers rebelled, EMI was the first to reject this notion and give back consumers the right to play their music on any device. That the left the remaining labels with an inferior product and they all quickly followed suit. Sony BMG, Warner Music Group and Vivendi’s Universal Music Group all now sell ‘clean’ products in United States which are not contaminated with DRM. This shows the power of the Free Market to correct problems like DRM. So if it makes sense for these major players to roundly reject DRM then how on earth can it make sense for the EU to move towards it? The answer – it doesn’t!

Ironically, the second sentence is also meaningless rhetoric. The EU Commission’s announcement today does NOT make it easier or faster to access rich multimedia. The only thing that can do that is solid broadband policies and Net Neutrality. Net Neutrality is crucial. It guarantees that the all services provided over the Internet are treated equal. This allows the separation of the bandwidth providers (such as European telecom companies and ISPs) from the content providers (movie distributors, news channels, websites, email services) in order to prevent the bundling of content with services. The big word there is ‘bundling’. If your telecom company is providing your movies via cable TV and an online company seeks to compete with them by providing movie downloads it is unwise to let the telecom company to control the bandwidth available to the online company – clearly it would be in the Telecom’s interest to restrict bandwidth for movies thus ruining the challengers business model and locks consumers into the telecom company’s cable movie offering. Thankfully, thus far Net Neutrality is not under serious threat in Europe. However, DRM certainly does nothing to make your Internet connection any faster. All is does is make digital media that you purchase over the Internet into an inferior product than it otherwise could have been.

One of the driving forces of the damaging policies is Viviane Reding, EU Commissioner for the Information Society and Media. She says “We have to make a choice in Europe: Do we want to have a strong music, film and games industry?” However the report issued goes on to call for the “establish(ing of) a framework for DRM transparency concerning, amongst others, the interoperability of different DRMs, and ensuring that consumers are properly informed of any usage restrictions placed on downloaded content…” The question remains, why create ‘usage restrictions’? Why not let the user just play their music how they want. It’s like selling someone a car and then letting them drive down only one street. It defies logic. Not to mention the that fact that every digital item you purchase will be more expensive as the cost of DRM will be included in each product. A more expensive and less functional product is not what the consumer wants. And the consumer is always right! They have rebelled against DRM before and they will rebel again. And the EU Commission wants to drag down European software houses and content providers with this sinking ship. With a ratification on the Lisbon treaty coming up in Ireland with guaranteed influx of the “No” vote protesters from neighbouring countries, we can only hope that Europe starts to give its citizens reasons to vote for Europe than against it.

For a more technical analysis of the announcement, as well as an open letter which you can sign that argues against the EU’s position, check out this link.