[Senate Hearing 109-539]
[From the U.S. Government Publishing Office]
S. Hrg. 109-539
THE ANALOG HOLE: CAN CONGRESS PROTECT COPYRIGHT AND PROMOTE INNOVATION?
=======================================================================
HEARING
before the
COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
JUNE 21, 2006
__________
Serial No. J-109-86
__________
Printed for the use of the Committee on the Judiciary
U.S. GOVERNMENT PRINTING OFFICE
29-573 PDF WASHINGTON : 2006
_________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government
Printing Office Internet: bookstore.gpo.gov Phone: toll free
(866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2250 Mail:
Stop SSOP, Washington, DC 20402-0001
COMMITTEE ON THE JUDICIARY
ARLEN SPECTER, Pennsylvania, Chairman
ORRIN G. HATCH, Utah PATRICK J. LEAHY, Vermont
CHARLES E. GRASSLEY, Iowa EDWARD M. KENNEDY, Massachusetts
JON KYL, Arizona JOSEPH R. BIDEN, Jr., Delaware
MIKE DeWINE, Ohio HERBERT KOHL, Wisconsin
JEFF SESSIONS, Alabama DIANNE FEINSTEIN, California
LINDSEY O. GRAHAM, South Carolina RUSSELL D. FEINGOLD, Wisconsin
JOHN CORNYN, Texas CHARLES E. SCHUMER, New York
SAM BROWNBACK, Kansas RICHARD J. DURBIN, Illinois
TOM COBURN, Oklahoma
Michael O'Neill, Chief Counsel and Staff Director
Bruce A. Cohen, Democratic Chief Counsel and Staff Director
C O N T E N T S
----------
STATEMENTS OF COMMITTEE MEMBERS
Page
Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah...... 2
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont. 4
prepared statement........................................... 96
Specter, Hon. Arlen, a U.S. Senator from the State of
Pennsylvania................................................... 1
prepared statement........................................... 129
WITNESSES
Burton, LeVar, National Board Member, Directors Guild of America,
Los Angeles, California........................................ 2
Cookson, Chris, President of Technical Operations and Chief
Technology Officer, Warner Brothers Entertainment Inc.,
Burbank, California............................................ 10
Glickman, Dan, Chairman and Chief Executive Officer, Motion
Picture Association of America, Washington, D.C................ 6
Shapiro, Gary J., President and Chief Executive Officer, Consumer
Electronics Association, Washington, D.C....................... 8
Sohn, Gigi B., President, Public Knowledge, Washington, D.C...... 14
Zinn, Matthew, Vice President, General Counsel and Chief Privacy
Officer, TiVo Inc., Alviso, California......................... 12
QUESTIONS AND ANSWERS
Responses of LeVar Burton to questions submitted by Senator
Specter........................................................ 26
Responses of Charis Cookson to questions submitted by Senator
Specter........................................................ 35
Responses of Dan Glickman to questions submitted by Senator
Specter........................................................ 39
Responses of Gary Shapiro to questions submitted by Senator
Specter........................................................ 46
Responses of Gigi Sohn to questions submitted by Senator Specter. 54
Responses of Matt Zinn to questions submitted by Senator Specter. 61
SUBMISSIONS FOR THE RECORD
Burton, LeVar, National Board Member, Directors Guild of America,
Los Angeles, California, prepared statement.................... 74
Cookson, Chris, President of Technical Operations and Chief
Technology Officer, Warner Brothers Entertainment Inc.,
Burbank, California, prepared statement........................ 80
Glickman, Dan, Chairman and Chief Executive Officer, Motion
Picture Association of America, Washington, D.C., prepared
statement...................................................... 90
Miller, Scott P., Executive Vice President, Veil Interactive
Technologies, St. Louis, Missouri, prepared statement.......... 97
Shapiro, Gary J., President and Chief Executive Officer, Consumer
Electronics Association, Washington, D.C., prepared statement.. 105
Sohn, Gigi B., President, Public Knowledge, Washington, D.C.,
prepared statement............................................. 114
Zinn, Matthew, Vice President, General Counsel and Chief Privacy
Officer, TiVo Inc., Alviso, California, prepared statement..... 131
THE ANALOG HOLE: CAN CONGRESS PROTECT COPYRIGHT AND PROMOTE INNOVATION?
----------
WEDNESDAY, JUNE 21, 2006
U.S. Senate,
Committee on the Judiciary,
Washington, DC.
The Committee met, pursuant to notice, at 9:34 a.m., in
room SD-226, Dirksen Senate Office Building, Hon. Arlen
Specter, Chairman of the Committee, presiding.
Present: Senators Specter, Hatch, and Leahy.
OPENING STATEMENT OF HON. ARLEN SPECTER, A U.S. SENATOR FROM
THE STATE OF PENNSYLVANIA
Chairman Specter. Good morning, ladies and gentlemen. Now
that our witnesses are all here, we will proceed. We had heard
there was a traffic problem in Washington. Shocking development
that that would occur to delay witnesses, but we are all here
now so we will proceed with this hearing on the inherent
tension between protecting copyrights and stimulating
technology.
This is the third hearing conducted by the Committee on
this issue. Last April, we had a hearing on the digital radio
issue, in September on Grokster, and today's is the third
hearing. We will take up the question of the so-called analog
hole, which is the technological loophole that could allow
intellectual property thieves to illegally duplicate digitally
protected movies, video programming, and other visual creations
that are viewed in the home.
Content owners have incorporated anti-copying features, but
they are not foolproof. So the object is to see to it that we
can protect property rights and we can also do without
curtailing innovative ideas in a very fast-moving field.
I hosted a roundtable earlier this month on June 6th with
the interested parties to see if we could find some area of
compromise. When you deal in an issue of this sort with giants
on both sides, my experience has been that it is preferable to
see if the parties cannot find a solution among themselves as
opposed to relying on Congress. Legislation is full of
unintended consequences. It does not have too many intended
consequences. So that if it can be worked out to the
satisfaction of the people who are interested and know the most
about it, that is the preferable course.
Without objection, my full statement will be made a part of
the record.
[The prepared statement of Chairman Specter appears as a
submission for the record.]
Chairman Specter. Let me yield now to my distinguished
colleague, Senator Hatch, for an opening statement.
STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM THE STATE
OF UTAH
Senator Hatch. Well, we are just happy to have all of you
here. I am more interested in listening to you and seeing what
you feel about these matters. Of course, we want to do what is
right, and I appreciate the Chairman holding this hearing. I
appreciate his leadership in this matter, and I appreciate all
of you for being here.
That is all I have to say. I am going to listen as
carefully as I can. Thanks, Mr. Chairman.
Chairman Specter. Thank you very much, Senator Hatch.
Our first witness is Mr. LeVar Burton, a National Board
Member of the Directors Guild of America; well-known for his
performance in the role of Lieutenant Commander Geordi La Forge
in the television series ``Star Trek;'' also a director on such
television programs as ``Charmed,'' ``JAG,'' ``Star Trek;'' a
graduate of the University of California School of Theater.
Thank you very much for joining us, Mr. Burton, and we look
forward to your testimony.
As you note from the time clock, we have a 5-minute rule,
and we will start the clock back at 5.
STATEMENT OF LEVAR BURTON, NATIONAL BOARD MEMBER, DIRECTORS
GUILD OF AMERICA, LOS ANGELES, CALIFORNIA
Mr. Burton. I will get right to it then.
Chairman Specter. Thank you.
Mr. Burton. Thank you, Mr. Chairman, Senator Hatch, very
much for the invitation to discuss this problem posed by the
technology gap that you referred to earlier as the ``analog
hole.''
As you stated, I am here today on behalf of the Directors
Guild of America, and I am a National Board Member, and the
Directors Guild today represents over 13,500 directors and
members of the directorial team who work in feature film,
television, commercials, documentaries, and news. The DGA's
mission is to protect the economic and creative rights of
directors and the directorial team, and we are working to
advance our artistic freedom and to ensure fair compensation
for our work.
Now, during the making of a film, directors are actually
running a multi-million-dollar business--a business involving
hundreds of people and a myriad of details and decisions that
have to be made each day to keep the production on schedule and
on budget. Whether it is the crafting of a single scene or the
visual creation of a character from the written page, the
director is always working to tell the story. That is what we
do. This is not an effort we take lightly, and it is not
uncommon for a director to put years of work into a single
production.
We want you to know that the DGA places the highest
priority on the prevention of widespread pirating of movies,
television programs, and other creative works. And, indeed, the
entire film production industry--from studios to independent
production companies, directors, writers, actors, and the tens
of thousands of below-the-line workers, both skilled and
unskilled--has a tremendous stake in the ever-growing problem
of piracy.
Now, when the film industry is mentioned, what first and
foremost comes to people's minds is generally the popular image
of glitz and glamour and the wealth of Hollywood. But like that
proverbial iceberg, that is just a small part of the picture.
Yes, our industry is concentrated in Los Angeles and New
York, but, in fact, the film industry exists in every State in
the country. And, yes, there are some luminaries known the
world over who are fabulously wealthy. But, in fact, most
directors and others who work in our industry are very much
unknown to the public. We work behind the camera, and the
overwhelming majority of jobs in our industry are held by what
we call ``below-the-line workers''--the people whose names
scroll by at the conclusion of a film. These are the set
designers, the carpenters, sound technicians, painters,
drivers, lighting technicians, make-up artists, seamstresses,
and so many other jobs, often amounting to hundreds of hours of
work on a film. And they are no different than workers in other
industries whose jobs are understandably important to you
Members of Congress.
And those are just the employees of the production company.
The filming of a movie and a TV program also generates
substantial employment for scores of small businesses that
provide supporting services and equipment for the filming of a
movie, from highly skilled computer technicians and artists at
special effects companies, to caterers, dry cleaners, security
personnel, and others who work for the companies that support
film production.
For directors, writers, actors, and the many craftspeople
we work with, film and television production involves years of
creative effort and hard work to put a vision on the screen.
For the studios and the investors, it involves tens, if not
hundreds, of millions of dollars to make that vision a reality.
Today, the average studio film costs, believe or not, nearly
$100 million to make and market.
Obviously, this involves a high risk for almost everyone
involved, and it means that it is never easy to get a film
financed--a reality faced by every one of us who is in this
business. I want you to consider that many films do not
actually retrieve their investment from theatrical
distribution.
Most films made for theatrical release require large
capital investments, and these are highly risky investments
since their return cannot be known at the outset. Yet today,
theatrical receipts account for less than 30 percent of the
income received from studio films, and that means that sales in
ancillary markets--from DVDs to pay and free television, which
are most at risk from unauthorized copying--are critical if
films are to recoup their investments. Quite simply, without
the revenue from these ancillary sales, pictures would just not
get made today.
Clearly, the willingness and capacity of producers to
invest in film and digital television is undermined when our
creative works are illegally copied, whether in analog or
digital form, by casual users or mass-produced production
facilities, over the Internet, or by hard disk. When a greater
share of potential income is siphoned off--stolen as a result
of piracy--risk rises, financing becomes more difficult, we are
not able to make our films, and American jobs are lost. That is
the bottom line.
For directors and for the DGA, this is the fundamental
concern with piracy: that the siphoning off of revenue from
ancillary markets will result in fewer films being made, which
means less opportunity for us, as creators, to make the films
and television shows for the American public.
I see that my time is ticking away. There is more I would
love to say.
Chairman Specter. It is not ticking away. It is up.
Mr. Burton. It is up.
[Laughter.]
Chairman Specter. But if you have another thought to
express, go ahead, Mr. Burton, and summarize.
Mr. Burton. Well, just to summarize, Senator, obviously
there are people in Hollywood who make a lot of money doing
this, and there are many concerns that are expressed by both
sides of this equation. We at the DGA want this Committee to
know that we represent hundreds and thousands of working people
who are doing their jobs every day, raising their families, and
that the issue of piracy is one that is of great concern to us.
And whatever help you can give on this issue, we are most
appreciative, and thank you for your leadership on this
problem. And good morning, Senator Leahy.
Senator Leahy. Good morning.
[The prepared statement of Mr. Burton appears as a
submission for the record.]
Chairman Specter. Thank you very much, Mr. Burton, and I
now yield to our distinguished Ranking Member, Senator Leahy.
STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM THE
STATE OF VERMONT
Senator Leahy. Thank you, Mr. Chairman, and, Mr. Burton,
thank you. I have read your testimony, I am glad I got in for
this hearing, and it is good to see you again.
Mr. Burton. It is good to see you, too, Senator.
Senator Leahy. I was actually at a breakfast, Mr. Chairman,
where this was the major discussion, and it went on a lot
longer than I thought it was going to. That is why I am
delayed.
I am also glad to see Mr. Zinn, who is in the same class as
my eldest son at UVM. We treat everybody fairly by mentioning
he was with my eldest son at the University of Vermont.
The so-called analog hole is a major issue, and content
owners are concerned over this gap in copy protection of their
digital works. The analog hole, as others will describe, opens
up when digital input is converted into an unprotected analog
form so it can be viewed clearly on the millions of analog TV
sets in households across the country. It is something that
people our age may not well understand, but our 12-year-old
neighbors could very easily understand. That analog content, as
Mr. Glickman knows, could then be reconverted into unprotected
digital form and put on the Internet. And, of course, once it
falls into that hole, it has lost all digital protection.
The possibility that this digital-to-analog-back-to-digital
transformation could facilitate indiscriminate redistribution
of copyrighted video content is real. As we have learned from
past experiences--the unfettered illegal sharing of content
over peer-to-peer networks that cost the copyright industries
millions of dollars--there are many reasons to work hard to end
the infringement of copyrighted goods. The theft of goods--Mr.
Burton mentioned the number of people employed who lose jobs,
but also Congress just has an overall obligation to help ensure
that copyrighted materials are protected.
But the balance I have always had trouble with is this: I
do not yield to anybody in my concern about copyright matters.
Senator Hatch and I have worked over the years many, many times
on this issue, as have Senator Specter and I. If somebody has
got a copyrighted material and they have worked hard and they
have done it, they ought to be able to profit by it. If nobody
likes it, if nobody wants to buy it, that is fine. Then they do
not make anything. On the other hand, if somebody really likes
it, they ought to get compensated for that. Your business
models may have to change in how you do things. None of you are
going to be investing huge amounts of money into brick-and-
mortar stores to sell your product. But you are going to be
investing a lot in trying to sell them in other ways.
I worry that technology invariably moves faster than
legislation, and many times you are far better equipped to know
what is going to work and what consumers will buy. The inexpert
hand of Government is not as effective as the relevant markets
in moving assets and interests to their best uses.
So we are trying to find the best thing. I think it is
clear that we have to make sure that a copyright is a
copyright. But we also have to make sure that we do not put a
heavy Government brake on technology. We were asked to do that
once years ago, I remember, on this Committee when the first
VCRs were coming out, and we were afraid people might copy a
movie off television. And we were told that a lot of the movie
companies wanted to be able to sell their movies at $125 a
copy. I said, ``Well, why don't you sell them at $10 a copy or
$15?'' Now everybody knows, Mr. Glickman and others know that
with every movie made, you have to think of what is the after-
sale on DVD.
So let's find the best way, but also let's find the best
way if somebody has a copyrighted material, it ought to mean
that not only here, but my last point would be for those who
may be listening, whoever is in the administration has got to
do a tougher and better job around the world in getting other
countries to respect this. You cannot have China just do a
photo op when they are trying to get the Olympics in Beijing, a
photo op of crushing pirated material, when out back of the
same building they are selling five times more than they just
destroyed.
So, Mr. Chairman, this is very timely and I applaud you for
having the hearing, and seeing my friend Senator Hatch here, he
and I have sat through an awful lot of these hearings in the
past.
Chairman Specter. Thank you very much, Senator Leahy.
We turn now to our second witness, Mr. Dan Glickman,
Chairman and CEO of the Motion Picture Association of America;
had been President Clinton's Secretary of Agriculture; 18 years
in the House of Representatives; bachelor's degree from
Michigan and a law degree from George Washington University. On
his official resume, I do not see his most important attribute.
He was born in Wichita, Kansas.
Mr. Glickman, we are delighted to have you here. I might
add by way of an addendum, at least in my view the most
important attribute, I was also born in Wichita.
Mr. Glickman. I heard that before I came to this hearing
today.
Chairman Specter. I left in 1942 to make room for Dan
Glickman, who arrived in 1944.
[Laughter.]
Senator Leahy. And, Mr. Chairman, if I might--
Chairman Specter. But I left on Highway 96, and he arrived
at the Wesley Hospital.
Senator Leahy. You do do backgrounds on these guys.
[Laughter.]
Senator Leahy. I might also mention that my youngest son is
this week in Wichita in flight training. I mean, we get this--
anyway.
Chairman Specter. Senator Hatch, what do you have to say
about Wichita?
[Laughter.]
Senator Hatch. I look at this bunch of characters and they
leave me dumbfounded, I tell you.
STATEMENT OF DAN GLICKMAN, CHAIRMAN AND CHIEF EXECUTIVE
OFFICER, MOTION PICTURE ASSOCIATION OF AMERICA, WASHINGTON,
D.C.
Mr. Glickman. Well, we citizens of Wichita appreciate it,
Senator, and thank you all for having this hearing. And I want
to thank you for the opportunity to talk about the analog hole,
which is a fairly obscure term, but, frankly, an avenue for
massive infringement of copyrighted material protected under
the law. We have a hole here that has the potential of massive
leakage of copyrighted material. So the question is how we deal
with this particular problem.
My friend LeVar has talked a little bit about the impact on
the copyrighted industries. The film industry has a positive
balance of trade with virtually every country in the world. It
is an enormous job creator. However, the viability of this
creative output is reliant upon our ability to protect it from
being devalued by theft, and this is where the problem occurs.
We are in the digital future, as Senator Leahy talked about.
That will allow viewers to watch virtually any movie at any
time, at any place, at prices dictated by a competitive and
thriving marketplace.
In my statement, I talk about our studios and our companies
are expanding their distribution channels to harness new
technologies to deliver content in a variety of ways. I have
listed Disney, Warner Brothers, NBC Universal, MTV Networks,
Fox, and every one of our companies and others are taking
advantage of this digital marketplace right now by offering all
sorts of options.
However, while the industry embraces the many opportunities
of the future, it must deal with the ever present threat of
theft.
The pilfering of our films costs our industry approximately
$6.1 billion a year. Noncommercial copying of movies for family
and friends, which is a large part of what we are talking about
here today, costs our members an estimated $1 to $1.5 billion
each year. On the Internet front, it has been estimated that as
much as two-thirds of Internet bandwidth in this country is
consumed by peer-to-peer traffic, much of which is attributable
to movie theft.
We are embracing digital rights management technologies so
that we can offer consumers more choices at greater varieties
of price points. People may want to purchase a permanent copy
of a movie. Others may want to only watch it once and do it at
a lower price. However, to maintain that distinction, we need
to provide technical safeguards to ensure that the consumer who
opts to take advantage of a time-limited viewing option at one
price is not, in fact, getting the benefit of the sale option.
Otherwise, the price of the time-limited model will naturally
migrate toward the sale model, all of which is to the detriment
of the honest consumer.
In the DVD area, we have done this, and we have developed
copy control mechanisms to ensure that, in fact, that content
is protected. But there are some areas where private sector
solutions have not worked. The analog hole is an example of an
area where assistance is needed.
When digital content protected by digital rights management
technology is converted to analog form for viewing on legacy
analog television equipment--that is, existing TVs, for the
most part--the content is stripped of all its digital
protections. This analog content then can be redigitized ``in
the clear,'' without any protections whatsoever. The
redigitized and completely unprotected content can then be
efficiently compressed, copies, and redistributed without
degradation. It can also readily be uploaded to the Internet
for unauthorized copying and redistribution. Like a black hole,
the analog hole sucks in all content protections, leading to
various problems--leading to the opportunity for massive
copyright infringement of protected items.
This is not an idle concern. Some manufacturers voluntarily
design analog-to-digital conversion devices to respond to
analog copy protection information, such as one called CGMS-A,
other markets devices specifically designed to exploit the
analog hole. I have one here. We will leave it with the
Committee so you can take a look at it. This stripper is one
example of a device specifically designed and marketed to take
advantage of the analog hole. These bad actors are reaping a
windfall at the expense of motion picture companies and
ultimately consumers, and good actors are placed at a
competitive disadvantage.
Closing the analog hole would place analog-to-digital
conversion devices on an equal footing with all digital devices
by maintaining the integrity of digital rights management
measures. My testimony talks about the bipartisan solution in
the House sponsored by Congressmen Sensenbrenner and Conyers
known as ``CGMS-A plus VEIL.'' It provides a practical degree
of protection. It has been the subject of intense scrutiny by
technology and content communities, as well as other interested
parties, and there is a broad consensus on the nature of the
selections that should be considered. Indeed, three major
technology companies, I think all members, if I am not
mistaken, of Mr. Shapiro's organization--IBM, Thomson, and
Toshiba--have publicly endorsed the CGMS-A plus VEIL technical
solution.
So I appreciate the fact of coming here. I want to restate
the problem again. Because of this hole, we have an avenue for
massive copyright infringement which will negate the economic
value and basis of the production of movies and other video
content which will hurt not only Mr. Burton's clients and
people he represents, but everybody in this industry.
We look forward to working with you, as well as our
colleagues here at this table, to find an appropriate solution,
but we think that the legislative solution is warranted. And
thank you very much, Mr. Chairman.
[The prepared statement of Mr. Glickman appears as a
submission for the record.]
Chairman Specter. Thank you very much, Mr. Glickman.
Our next witness is Mr. Gary Shapiro, President and CEO of
the Consumer Electronics Association, also Chairman of the Home
Recording Rights Coalition; was an assistant to Congressman
Mickey Edwards; Phi Beta Kappa graduate from State University
of New York, a double major--economics and psychology; and a
law degree from Georgetown.
We welcome you here, Mr. Shapiro, and the floor is yours.
STATEMENT OF GARY J. SHAPIRO, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, CONSUMER ELECTRONICS ASSOCIATION, WASHINGTON, D.C.
Mr. Shapiro. Thank you for this opportunity to testify on
the so-called analog hole. We understand the movie industry is
concerned about what consumers may do with content that they
have absolutely lawfully acquired. This concern has led to yet
one more request to Congress to expand copyright law and even
to dictate how products can be designed and used. We believe
that this most recent request is a bad solution in search of a
problem, and we ask you to consider that every time that
Congress accedes to the content community request, someone else
is paying the price, whether in terms of higher prices,
unavailable products and features, or even higher litigation
costs. Indeed, the historic vast expansion of copyright law
these last few years was supposed to end with the inducement
language of the Supreme Court, but that case appears to be just
the beginning. The content community is aggressively pushing
new legislation that would impose new design mandates on our
products, and the analog hole mandate is just one of those
proposals.
Mr. Chairman, in your opening statement, you referred to
intellectual property thieves, and I just heard my two
colleagues talk about piracy and thieves and theft. But yet, as
Mr. Cookson points out in his written statement, the analog
hole mandate does not even address piracy. This is what he
says: ``These technologies are not intended to resist
determined commercial pirates. They are designed to provide
normal consumers with a way to determine that they are crossing
the line.''
This is determined to frustrate consumers doing what they
are supposed to be able to be doing in their home, which is
shifting content around. Yet these technologies that they are
advocating are complex, untested, and would cripple millions of
consumer products and would have huge implications on many non-
consumer technologies.
Let me tell you how the Hollywood community views this
proposal. The industry magazine called Variety recently ran a
story headlined, ``Biz Balks as MPAA Digs Hole for Itself.''
The sub-head says, ``Analog problem requires complex copyright
protection scheme.'' The story describes how a motion picture
industry audience responded with ``dubious groans'' when the
MPAA's own top engineer described this so-called solution and
that he expected it would be retailers who would be the ones
who would have to explain it to disenfranchised consumers. The
article states, ``The final question summed up the problem.
This is a roomful of people whose living depends on this
working. You are getting pushback to the point of hostility. If
you can't sell it to us, how are you going to sell it to the
target 16 to 45 demographic?''
Yet the MPAA is pushing this complex, Rube Goldberg
proposal which will distort devices to get at some theoretical
harm. Where is the proof of harm? Where is the need for
legislation? Indeed, there is no evidence at all that the
analog hole is contributing to any motion picture industry
problems. Don't believe me. Look at the evidence. MPAA's own
website states that 90 percent of pirated copies come from
handheld camcorders. And an independent AT&T study found that
77 percent of movies on P2P networks were leaked by movie
industry insiders. Which ever of these studies is correct, it
does not have to do with the analog hole.
And even if there were some real harm, the only proposal we
have seen on this, H.R. 4569, is so broad and so unfocused that
it would eliminate real products that served needs and hurt no
one, like the great Slingbox, which I could talk more about
later.
In fact, this bill, the legislation, starts with the
premise that the thing to be protected is something called ``a
covered format.'' MPAA, in its inter-industry discussions, has
had 10 years to figure out what the video resolution of such a
format would be and to define it and how many semiconductor
components and pieces of software would be covered. They have
not. They want under this legislation to leave it to the Patent
and Trademark Office after Congress has decided that a mandate
should be put in place.
This fundamental drafting hole suggests one of two things:
either they are afraid to admit the breadth of the hardware and
software to be covered, or the technology is changing so
rapidly that they are afraid to put a definition in the bill.
One key concern is there are two required copyright
protection technologies. One is VEIL. Its cost and operation
are unknown. You cannot even assess the VEIL technology unless
you pay a $10,000 fee and promise not to talk about it. So how
can Congress mandate a technology which is incapable of being
discussed and reviewed? How can we even comment on it? But I do
trust our member, Texas Instruments. They oppose this proposal
and point out in documents attached to my written testimony
that the VEIL own documents indicate the VRAM watermark does
not work 42 percent of the time, and it actually caused a
noticeable difference in 29 percent of the test clips. Asking
Congress to mandate a secret technology which may affect visual
performance and illegitimize many products is really quite an
ask.
Another unanswered question is VEIL's licensing status. I
would like to conclude with this: Other countries are busy
developing their technology industries to compete with ours,
but we are here facing and fighting proposals and a massive
amount of litigation which is bankrupting some of my own
members under existing laws which suppress new technologies
simply to preserve old business models. We have prospered
recently as a country because of these same technologies. We
are a nation of individual creators, and our creativity cannot
and should not be solely defined by a handful of large
companies. There are all sorts of things from the Internet--
mixing technology, blogging, mashing, and home video editing--
which have made millions of Americans creators and fostered
websites like iTunes, YouTube, and others. If you want to block
the hole, the analog hole, we are also blocking Americans from
exercising their fair use rights and sampling--
Chairman Specter. Mr. Shapiro, how much more time will you
need?
Mr. Shapiro. One minute. There is a new breed of Americans
which are your constituents, and they are our consumers. They
like to TiVo, timeshift, playshift, and manage their content,
and I can't imagine they want the law changed to deny this
right.
Thank you for this opportunity. We want to work with you to
continue this historic digital revolution and our Nation's
leadership in content creation, entrepreneurship, and
creativity.
Thank you.
[The prepared statement of Mr. Shapiro appears as a
submission for the record.]
Chairman Specter. Thank you, Mr. Shapiro.
Our next witness is Mr. Chris Cookson, Chief Technology
Officer and President of the Technical Operations at Warner
Brothers; previously had been Vice President and General
Manager of the Operations and Engineering Division of CBS, 10
years at ABC; undergraduate degree and an MBA from Arizona
State University.
Thank you for coming in today, Mr. Cookson, and we look
forward to your testimony.
STATEMENT OF CHRIS COOKSON, PRESIDENT OF TECHNICAL OPERATIONS
AND CHIEF TECHNOLOGY OFFICER, WARNER BROTHERS ENTERTAINMENT
INC., BURBANK, CALIFORNIA
Mr. Cookson. Thank you, sir. Chairman Specter, Ranking
Member Leahy, thank you for inviting me to testify today. In
2002, Richard Parsons, our Chairman at Time Warner, testified
before this Committee and identified that the analog hole was
one of the challenges facing the audiovisual industry in its
transition from the analog world to the digital world that
could not be addressed purely in the marketplace but would
require, in fact, some kind of Government intervention. Today,
I would like to focus on three aspects of this issue: enabling
consumer choice, respect for copyright, and the fact that this
is a transitional issue that gets us from where we have been to
where we are going.
We are in transition from an analog world where we used to
live to a digital world which faces us in the future. The
analog world had order and structure that delineated the
choices we had. For instance you could go and rent a VHS or you
could buy a VHS. If you did not take it back, you knew you were
going to pay more than if you just rented it.
Unauthorized copies in that world degraded badly, and none
of us really had the capability of transmitting content to
other people.
A fully digital world will also allow for this distinction
between consumer choices. Technologies like encryption can be
used to authorize access based on how a consumer wants to use
content and the terms under which it is offered. For example,
in the digital world you can choose to watch once. You can
choose to have a copy to watch for a week. You could choose to
keep a copy in a library and so on. The choices actually in the
digital world can be unlimited. But the key thing is the
consumer can decide which uses they want to make.
The digital world also allows for unsecured content to be
copied and transmitted quickly, inexpensively, easily, and
endlessly, and with no loss of quality.
Today, we are in the middle of that transition where
content is delivered predominantly to our homes in digital
form, and the problem is we mostly still have old analog TVs.
And so the digital content that comes to us in digital form
with rights management associated with it has to be descrambled
and put into an analog form to get the last 3 feet from the top
of the set to the back of the set. When that happens, all the
protections are lost and the content can be easily redigitized,
resulting in nearly perfect files, which can then be copied
endlessly and retransmitted.
Consumers need and deserve a clear understanding of the
terms of an offer that they can accept and the bounds of the
functionalities that they will receive. We expect that most
consumers will respect copyrights when the offer is perceived
as fair, when the offer is understandable and easy to use, when
the quality of service meets their needs, and the outlines of
what the agreed uses are are clear. A clear understanding when
the attempted use crosses the lines then helps to make a better
definition of the offer, and the consumer then understanding
what they got.
Our job is to figure out how to make appealing, fair,
understandable choices available to consumers, and we are
trying hard. Today, the products which analog inputs, such as
some we have brought today, make it more difficult for
consumers actually to understand what the deal is. If I can put
a copy in my library when I take the offer that said view once
and it is easy and it is done with things I bought in a regular
on an open market, am I foolish if I pay the price to buy it to
put into my library? And if the price for Pay-Per-View includes
the ability to put it in my library, can I really get a cheaper
price if I really say I really want to watch it only once? Or
do we all have to pay the same price no matter what use we want
to make?
The misapprehensions of this approach that Mr. Shapiro
mentioned actually come from, I think, a lot of
misunderstanding and some bad information about what is
included. I would be glad to go into more detail about what is
included, but there is no implication here for F-16s, as I have
seen said, or for toasters or for other devices. We are
focusing narrowly and only on those devices which a consumer
would buy that have the ability to digitize analog. And those
devices and only those devices are involved.
It will not eliminate my TiVo. I have several TiVos. I like
my TiVos. They are fed directly from digital satellite. Most
personal recorders in the TiVo class are fed directly by
digital satellite or cable, and they are already subject to the
kinds of controls we are suggesting that the analog hole
measures would induce.
The advantage of this approach is that it is very narrowly
focused. It deals only with those devices which have the
capability to digitize analog. Other people have suggested the
answer is just banish analog outputs. We think that that is a
flawed approach because it ends up hurting those who can least
afford it. The people who have analog TV sets should be able to
expect to receive a service life of those TV sets which they
were designed to give when they were new.
Thank you very much.
[The prepared statement of Mr. Cookson appears as a
submission for the record.]
Chairman Specter. Thank you, Mr. Cookson.
Our next witness is Mr. Matt Zinn, Vice President, General
Counsel, and Chief Privacy Officer of TiVo Incorporated;
previously had been a senior attorney of broadband law and
policy for Media One; also had been corporate counsel for
Continental Cablevision; bachelor's degree from the University
of Vermont and a law degree from George Washington University.
A thumbs up from Senator Leahy, Mr. Zinn, and we look
forward to your testimony.
Senator Leahy. And classmate of my son.
[Laughter.]
STATEMENT OF MATTHEW ZINN, VICE PRESIDENT, GENERAL COUNSEL, AND
CHIEF PRIVACY OFFICER, TIVO INC., ALVISO, CALIFORNIA
Mr. Zinn. Chairman Specter, Ranking Member Leahy, and
Senator Hatch, thank you very much for the opportunity to
present TiVo's concerns about this proposed legislation that we
believe would inhibit innovation and have profound consequences
for consumers' expectations as to how they can use lawfully
acquired content. TiVo is a 400-person Silicon Valley company
that makes products that allow consumers to have flexible use
of lawfully acquired content such that they can watch what they
want to watch, when they want to watch it, and where they want
to watch it.
We are very concerned about piracy. We think that is a
laudable goal, and we take a lot of steps to make sure that
content does not get pirated by using strong encryption.
However, we are also very sensitive to the needs of consumers
who want to have flexibility to make use of content for their
own personal noncommercial uses, such as in the home.
I am not sure what the problem is here because nobody has
talked about an analog hole problem. Mr. Burton has talked
about piracy, but there is no linkage between his testimony and
the analog hole. Mr. Glickman has talked about the potential
for massive infringement through the analog hole, yet nobody
has demonstrated a dime of lost revenue due to the analog hole.
So, you know, we need to identify what we are talking about
here. Is it piracy? Is it indiscriminate redistribution of
content over the Internet? We need to identify what the problem
is.
If it is piracy, analog to digital conversion is not what
pirates use to copy DVDs and pirate content. They use digital-
to-digital conversion tools, such as the types of things that
are discussed in Maximum PC magazine for this month. And if
pirates were to even use the analog hole, then the combination
of CGMS-A and VEIL would not stop a pirate. They are very easy
to defeat by people who are determined to defeat those tools.
So the only people who are affected by this legislation are
ordinary, honest, law-abiding consumers who will have their
rights stripped away so that Mr. Cookson can make more money by
charging every time you play a show. Basically, Mr. Cookson is
trying to remove the ``L'' from the ``Play'' button and make it
a ``Pay'' button. Every time you watch something, you have got
to pay.
Now, the legislation mandates that we use a technology
called VEIL, which is an untested technology, as Mr. Shapiro
has said, and it is a technology that has been hand-picked by
the studios. It seems crazy to me that Congress would mandate
that consumer electronics companies have to use a technology
that has not been vetted by the companies that would have to
use it. And VEIL presents us from a patent perspective with a
massive problem. I have to use a certain technology mandated in
a certain way, and I have got no protection if I get sued for
patent infringement. You only have to look at the BlackBerry
settlement of a couple of months ago for $612 million to
understand the kind of damages I am talking about here for
using technology that I did not even ask to use. So that kind
of exposure should be reason enough to question this kind of
legislation, but that is not all. We have criminal and
statutory penalties of $2,500 per device just to comply with
the robustness rules, and the robustness rules require us to
protect against hackers using ordinary tools.
Now, I do not think consumer electronics companies can make
a device that could withstand hackers. Hackers can pretty much
hack any device today, and so this legislation would put me in
jeopardy of Draconian penalties from day one because I cannot
build a device that can withstand hackers.
So at the end, I feel that this legislation is really not
about piracy. It is about exerting control over consumers' uses
of lawfully acquired content, and the types of things that
would be prevented by this legislation would be I could not
move a show from the living room to the bedroom if I get tired
and I want to watch a show in the bedroom. Pat Reilly could not
make a DVD of Dwyane Wade's latest moves in the last game so
that he can watch the next game when he is on a plane. And I
could not, you know, transfer a copy of ``The Crocodile
Hunter'' from the Discovery Channel to my laptop so I can watch
it at a place more convenient.
I am not a pirate, and these are not piracy. The MPAA may
think they are piracy, but these are fair uses. And I see no
reason to change the balance of copyright law to prohibit these
uses just so that the content industry can make more money for
people watching content that they have already paid to watch.
So, in summary, the analog hole is not the problem. We
believe in protecting content from piracy, but this is not the
problem. This is a solution in search of a problem. Copy
controls on legitimate consumer use are different than piracy
prevention. These are two different things we are talking
about, and manufacturers should not have to bear the burdens
and the liabilities, and consumers should not have their
freedoms restricted for a problem that has not even been really
vetted. So we urge the Congress and this Committee to take a
hands-off approach to the analog hole and to let the affected
industries deal with this problem.
[The prepared statement of Mr. Zinn appears as a submission
for the record.]
Chairman Specter. Thank you very much, Mr. Zinn.
Our final witness is Ms. Gigi Sohn, President and co-
founder of Public Knowledge, an intellectual property and
technology public interest group; previously served as project
analyst at the Ford Foundation's Media, Art, and Culture Unit;
also was Executive Director of Media Access Project; summa cum
laude graduate from Boston University with a degree in
broadcasting and film, and a law degree from the University of
Pennsylvania.
Thank you very much for joining us today, Ms. Sohn, and the
floor is yours.
STATEMENT OF GIGI B. SOHN, PRESIDENT, PUBLIC KNOWLEDGE,
WASHINGTON, D.C.
Ms. Sohn. Thank you, Mr. Chairman, Ranking Member Leahy,
and Senator Hatch. Thank you for inviting me to testify today.
I want to focus on the impact of efforts to close the
analog hole on consumers, so I bought a couple of props to
help. Here is a video iPod. It is one of the most advanced
personal digital devices available, but it has an analog
connector right here on the underside. With a $20 analog cable,
you could connect this to your television and watch your
legally downloaded videos on your analog TV.
Here is a DVD player, also equipped with analog connectors
on the back. These multicolored video and audio outputs allow
you to watch your legally purchased DVDs on your television.
You have probably seen similar outputs on the back of your VCR,
TV, digital video camera, TiVo, or video game consoles. These
analog outputs are the analog holes that the content industry
wants you to close.
What would closing the analog hole mean for consumers? For
one, it would restrict lawful uses of technology, like
recording television shows onto a computer or moving recorded
content from one device to another over a home network. These
uses may not be authorized by the content industry, but they
are 100 percent legal.
Second, closing the analog hole could make obsolete
hundreds of millions of consumer devices. Devices that are
purchased before an analog hole mandate goes into effect may
not work with devices purchased after. There is no transition
period and no backward compatibility.
Third, to the extent that such a mandate results in costs
to device manufacturers, they will inevitably be passed on to
the consumer.
Fourth, closing the analog hole will restrict, if not
eliminate, the making of fair-use excerpts of DVDs or other
digital media for blogs, videos, or classroom use. This is
because the DMCA makes it illegal to circumvent digital access
controls for any reason, even if that use would be lawful under
fair use.
The analog hole is an important legal and technical
solution to this problem. Indeed, both the Copyright Office and
the MPAA have said that the analog hole should be the only way
for consumers to be able to engage in fair use of protected
digital media. By now asking Congress to close the analog hole,
the content industry is playing a shell game that consumers
will lose.
Now, let me just say, for Mr. Cookson, I think consumers
are smarter and they know what the limits of copyright are.
But, in any event, those are limits that the law should set,
not that Time Warner or Fox or Disney should set. The
legislation introduced in the House would codify these consumer
harms. I get into detail in my written testimony, but let me
just say for those of you who have been involved in patent
reform, this would impose duties on an inexperienced and
overworked Patent and Trademark Office in an area where they
have really no expertise and put them in charge of oversight of
a vast number of consumer electronics and computer devices.
I note that Hollywood has offered no real evidence that
analog-to-digital conversion is being used for indiscriminate
redistribution of copyrighted works. Indeed, much of the
testimony submitted to you today focused on hard goods piracy
and infringement resulting from the use of computers and
digital networks. The way to fight these problems is not by
removing an important means for consumers to lawfully use the
digital media and technology they purchase. Instead, the
content industry should use the many legal, technical, and
marketplace tools at their disposal, including the Supreme
Court's Grokster decision, which allows content owners to sue
manufacturers and distributors of content who actively
encourage illegal activity. This directly addresses Mr.
Cookson's concern that some analog to digital device
manufacturers encourage infringement.
The Family Entertainment and Copyright Act, which makes it
illegal to bring a camcorder into a theater or leak pre-release
movies; lawsuits against individuals who engage in wholesale
infringement over peer-to-peer networks; agreements between
content companies and Internet service providers to crack down
on piracy while protecting individual privacy; and digital
rights management tools that are marketplace driven, not
Government mandated.
Of course, the best deterrent to widespread infringement
are business models for online content delivery that are
reasonably priced, easy to use, and flexible. To Hollywood's
credit, it is starting to experiment with different business
models. We believe that Congress should allow the market to
work before it adopts a technology mandate that, on balance,
will hurt consumers far more than it would help the industry.
I would like to close with this thought. When Congress was
considering the DMCA 8 years ago, the content industry assured
legislators that this would be the last law that they would
seek to limit consumers' lawful uses of digital media. But in
that time, we have seen proposed law after proposed law
intended to further limit consumer rights and which impose a
variety of innovation taxes on the technology sector. In this
Congress alone, no fewer than five bills in both Houses would
tip the copyright balance even further toward the content
industry. This is nothing more than a carefully planned, long-
term assault on honest consumers to make them pay multiple
times for uses that the law still considers fair.
Members of this Committee, legislation to close the analog
hole would be profoundly anti-consumer and have no effect on
piracy. I urge you to reject technology mandates and thereby
preserve the careful balance inherent in our copyright laws.
Thank you.
[The prepared statement of Ms. Sohn appears as a submission
for the record.]
Chairman Specter. Ms. Sohn, do you think the Congress
should take seriously any representation by anyone saying this
is the last legislative fix we will ever ask you for?
[Laughter.]
Ms. Sohn. I think you answered your own question. We could
go through the history. In fact, I don't know if you saw the ad
that the CEA put in The Hill about the many times the content
industry has come hat in hand to this body asking them
essentially to preserve their old business models. Or they have
gone to court.
Chairman Specter. We have noticed they are coming, but not
hat in hand.
[Laughter.]
Chairman Specter. Mr. Glickman, lots of information about
piracy from you and from the Department of Justice, but can you
quantify any direct connection between piracy and the analog
hole?
Mr. Glickman. We have just completed a major study called
the LE case study which estimates that our companies lose about
$6.1 billion a year in piracy, and as part of that--
Chairman Specter. OK. I mean from analog--I have only got 5
minutes.
Mr. Glickman. OK, $1 to $1.5 billion in what we call
noncommercial copying of movies for family and friends. We
believe a big part of that is due to the analog hole.
Chairman Specter. How do you arrive at the figure of $1.5
billion?
Mr. Glickman. The firm did worldwide and national piracy
study focus groups. The methodology we considered to be quite
good.
Chairman Specter. Well, let me ask you to supplement your
answer with the specifics as to how you come to that
conclusion.
Mr. Glickman. Sure, be glad to.
Chairman Specter. We would like to see the methodology
because before we really tackle the problem, we want to know--
before we really look for a solution, we would like to have a
specification of the problem.
Mr. Glickman. We will get you that, Senator.
Chairman Specter. Mr. Shapiro, you have marvelous
technology, phenomenal. With all of the technological advances
and the ingenious devices, why not an answer to prevent
duplication? Is as much time spent on trying to avoid
duplication as is spent on these new devices, to sell these
devices to the consumers? I enjoy them as much as anybody, but
why not a real technological effort to find a way to prevent
duplication?
Mr. Shapiro. We believe that Americans believe and have the
right under the Sony Betamax case to shift the content they
have lawfully acquired in time and in place and to manage it.
And that is a fundamental disagreement. This is not about
piracy. This is about taking content that you have lawfully
acquired and being able to use it elsewhere. What you heard
from Mr. Cookson is they want to charge more every time you
play a product. This is all about price discrimination.
We have embraced CGMS-A. We have tested it out. It is even
in a CEA standard. Actually, most of our manufacturers are
using CGMS-A. They have tested it and are comfortable with it.
This other thing called VEIL that no one has ever really
seen or tested because you cannot talk about it and you have to
pay a license fee is what concerns us most. But our products
respond to Macrovision; our products respond to CGMS-A. We have
worked very closely--we have developed a DVD standard with the
motion picture industry that everyone is comfortable with.
Chairman Specter. Well, you talk about products legally
acquired. That is really sort of a rabbit in the hat. Mr.
Cookson has sent up an SOS, and before recognizing his hand
signals, I would like to pose a question to him. How do you
respond to this point that Mr. Zinn is making and Mr. Shapiro
just made again that it is legally acquired? And Mr. Shapiro
pointedly said to you, Mr. Cookson, you want to charge more
money every time they play one of those Warner Brothers films.
Mr. Cookson. Well, one of the things that I wanted to
address is that all three of the people surrounding me here
have spoken about your ability to timeshift, to watch something
later, to watch it in another room of your house, the ability
to take a clip of a basketball game and--
Chairman Specter. Come to grips with the issue on legally
acquired. Has it been legally acquired and--
Mr. Cookson. It is legally acquired, yes, sir, and the--
Chairman Specter. And should there be a limit--it is
legally acquired. Should there be a limit then as to its use?
Mr. Cookson. There is no limit proposed to the use of those
things they spoke about. What I wanted to say and the reason I
gave the SOS is that there is a misunderstanding. There is no
proposal to limit the ability to timeshift, the ability to take
content from your living room to your bedroom, the ability to
take something off of a basketball game and record it onto a
disk and watch it on an airplane. Those are all preserved in
the bill as proposed, because most content, in fact, is marked
for copying one generation and marked for the use in
timeshifting. Only in very special cases things like video on
demand, Pay-Per-View, or recorded media where you can control
when the watching takes place is there a copy-never provision.
So it was not proposed by any of these that the things that
they have mentioned would not be used in the way that they say
it ought to be used.
Chairman Specter. Mr. Zinn, you had an SOS. I cannot ask
you a question because my red light is on, and I do not permit
anybody to do it, including me. But if you want to followup on
your hand signal, go ahead.
Mr. Zinn. If copies are marked one generation and I copy it
to my DVR, then I cannot make a DVD of it. I cannot transfer it
from one DVR to another DVR, and I cannot transfer it from one
DVR to a laptop to make flexible use of what is admittedly
lawfully acquired content.
Mr. Cookson. Here, again, this is a misunderstanding, sir.
The technologies in the marketplace already that Mr. Shapiro's
company has created and there are in place such as the 5C
technology permit the copying to a DVR and then the moving to a
DVD. So I think a lot of the opposition that you are seeing
here today is really based on a lack of understanding of the
technologies that have already come to market and the way that
it is proposed that they be used.
Chairman Specter. Have you fellows finished your private
debate now without intervention by the Chair?
Senator Leahy?
Senator Leahy. I love the debate.
Again, I go back to what I said. I do not want to step on
technology. I want the people who produce these things to be
able to get paid for it and the people who have a legitimate
interest, a normal interest, whether it is a performer, a
writer, a producer, whomever, whoever is involved in the
copyright, whatever the entity doing the copyright negotiates
with the people who are involved in there but must share the
profits they get, and that is fine. Nobody here is going to
dictate that. I just want to make sure you get it.
Also, though, I think back to the days of the VCRs where if
Congress had stepped in and basically put the brakes on
technology, we could have been in a very serious area. So we
have to have that balance. And there is nobody--you are
probably the most knowledgeable people we could possibly have
here, but none of you are going to be willing to tell me what
the technology is going to be 10 years from now. You are
working on what it is going to be a year from now or 2 years
from now.
I want to get back to the money part. Secretary Glickman,
who is an old friend of all of ours, you talked in your answer
maybe it is around $1.5 billion from your study. And, Mr.
Burton, what do you think it is?
Mr. Burton. You are asking me, Senator, what I think the
annual loss of--
Senator Leahy. The analog hole problem, what are the actual
losses in your mind?
Mr. Burton. Well, I do not pretend to have all of the
statistics, but I do know that as Senator Specter mentioned in
my introduction, one of the things I am most known for is
``Star Trek.'' I have been in this business for a long time,
almost 30 years.
Senator Leahy. You had a pretty impressive role before
``Star Trek,'' too, sir.
Mr. Burton. Well, I do not mean to make any of us feel old,
but next year we will celebrate the 30th anniversary of
``Roots'' airing for the first time in this country, and there
has been a lot of water under that bridge between then and now.
But ``Star Trek,'' I think it is safe to say, is pretty
popular worldwide, and its popularity is what makes it
vulnerable to this kind of piracy. It was determined that in
2005 that were over 57,000 worldwide auctionsites of DVDs of
movies and television that were available for sale, but those
DVDs had not been released to the public as yet.
Senator Leahy. I understand that, and also with the time
limitations here. Does anybody--I mean, can we put an actual
handle on this? What I am worried about, if you have, for
example, $6 billion in worldwide piracy, and if this is around
$1 billion worth, do we have bigger areas that we should be
looking at, for example, our treaties by other countries, the
enforcement of those treaties?
You are always going to have some form of piracy, just as
you are going to have somebody come into a bookstore and
shoplift a book. And we can create all kinds of penalties for
piracy, but creating penalties or defining technology are two
different things.
Mr. Glickman. If I might--and we are going to get the
Committee the information Senator Specter has requested. First
of all, you are right, we are never going to be able to stop
piracy. We have to stay ahead of it and control it through a
myriad of ways, from enforcement and education and
international treaties.
There is no question you have leakage with the analog hole;
that is, you have digitized content that goes through the whole
and--
Senator Leahy. But, Mr. Glickman, you also have leakage
when some of your movie theaters do not keep strong enough
controls. You are going to have leakage when you go into more
digital projection in your movie theaters.
Mr. Glickman. That is true. The question here is: Is the
leakages going to be like the levees around New Orleans after
Hurricane Katrina? That is, do we believe that this hole is so
vulnerable that the leakage will become a flood or an
avalanche? In our judgment, that is, in fact, the case.
Senator Leahy. Now, I will go back. You and I will have
more chance to discuss this, but my time is running out.
Ms. Sohn, you say that there are other uses of the analog
hole that have no adverse effect on the movie industry, like
transferring old home movies to DVDs, something that, with the
movies of my kids when they were little, now I am able to do,
classroom use, and so on. If we bring up this legislation, how
do we not stop that sort of thing?
Ms. Sohn. Well, one of the things that I recommended in my
testimony, which will sound familiar to all of you, I think, is
some sort of environmental impact statement. I really think you
have to take the balance of what the impact would be on honest
consumers, and I really do think that conflating honest
consumers who want to transfer their home movies or who want
to, you know, do video blogs using an excerpt of a DVD using
the analog hole, you have to consider that, I mean,
particularly--and balance that against the harm, the alleged
harm to the industry.
I think we have made it pretty clear here that the things
that the industry is complaining about are not going to be
resolved by the analog hole. But it really, really needs to be
balanced against what the consumers' harm is here. In my
environmental impact statement, the harm to consumers would far
outweigh the benefits to the industry here.
Senator Leahy. Mr. Cookson had his arm up. He is the boss.
Chairman Specter. You go ahead.
Mr. Cookson. I just wanted to clear up one thing. The
proposal that is on the table would have no impact at all on
your ability to digitize and record and transmit or do anything
you want to with your own personal content because you would
not have marked the content with any of the marks that would
suggest it would be controlled. So that is something that I
think is one of those misunderstandings that was mentioned.
Chairman Specter. Mr. Shapiro, you wanted to comment. Go
ahead.
Mr. Shapiro. I have a number of comments.
First of all, there is an article, ``The Problem with the
MPAA's Shocking Piracy Numbers.'' It points out that the
methodology has not been released and, indeed, that they are
inflated, and, in fact, it is inside the U.S. The U.S. is
already the tightest country in the world in terms of fighting
piracy. It is one of the few countries to make the
circumvention of DVD access controls illegal. It is working out
very well, and this would carry us into the extreme of the
extreme in terms of getting every last drop, and it would hurt
consumers.
Second of all, again, the MPAA website says 90 percent of
the piracy is people in camcorders in movie theaters, which
Congress just made illegal. Now, Mr. Cookson keeps on saying
that this would not affect any legitimate behavior of
consumers. What it clearly would affect is their ability to use
their own content in a way that they would wish, and at some
point he is going to say exactly what it covers, what the
legislation would cover, because the way we read the
legislation, it covers absolutely every product with an analog
output unless the Patent and Trademark Office says it does not,
which includes literally thousands and thousands of products.
And as Ms. Sohn said, you are talking about if this goes into
effect, the products in people's homes downstream from that
product would be rendered unusable. So if you just bought a new
Yamaha Surround Sound processor, you spent $3,000 on it.
Congress legislates, there is a mandate, you have a box which
all of a sudden you cannot get your product in your TV set. And
that is why the reaction of consumers to this proposal, if it
is enacted, afterwards is going to--the retailers and the
manufacturers are going to have to bear the burden of that,
explaining why the products they sell just do not work.
Chairman Specter. Mr. Cookson, if you have another
rejoinder, would you please make it brief?
Mr. Cookson. It is another misunderstanding, sir, and so I
think that we need to clear up that there are no controls over
analog outputs at all. Those are all handled through private
contracts. It is only the devices that do the digitizing with
the analog input that we are talking about. The numbers in the
MPAA website refer to the early window theatrical piracy, which
is 90 percent, from theatrical screens. That is before the DVD
has come out to copy. The DVD then becomes the source of piracy
as soon as people can replace the camcorder from the screen.
And so the data is being misconstrued a bit, sir.
Chairman Specter. Senator Hatch?
Senator Hatch. Well, I want to thank all of you for being
here. This has been an interesting hearing to me. But one
frequent criticism I hear about the analog content protection
legislation that was introduced in the House is that it covers
virtually all devices that contain an analog-to-digital
converter, including airplanes, cars, MRI machines, measurement
equipment, and even some high-end toaster ovens.
Mr. Cookson and Mr. Glickman, how do you respond to that
type of criticism? And, additionally, should we consider having
some sort of a primary purpose test to ensure that devices are
not typically used to handle the conversion of commercial video
content, that they are not covered by legislation in this area?
And anybody else who would care to answer after Mr. Cookson and
Mr. Glickman, I would be happy to--
Mr. Cookson. Yes, sir, if I could. The necessity that we
see is to focus as tightly as possible on the fewest possible
devices, and there are analog-to-digital converters in F-16s
and, you know, in toaster ovens and in automobiles, and those
are not sold to consumers with the purpose of taking analog
television and turning it into data.
Products such as this, though, this product is a cute
little thing that I think has a very legitimate use, as we
mentioned, if you want to take your home movies and digitize
them. This plugs into the front of your computer in the USB
port. This product, though, we have no basis for dealing with
in the contractual way that we deal with the manufacturers who
do things like make DVD players and so on.
So the products that are sold for the purpose of taking
analog input video and turning it into data are the only
products that we would seek to regulate.
Mr. Glickman. I just would add to that. Three major
consumer electronics manufacturers--Thomson, Toshiba, and IBM--
have basically endorsed the legislation, and I just would read
to you from the Thomson letter: ``The hole allows for digital
entertainment to be played in analog form and then redigitized.
Thomson acknowledges that the analog hole is a problem that has
not been readily solved by voluntary efforts.''
So this is not an issue that pits the manufacturers and
consumers and the content owners against each other. It is an
issue that we ought to be able to embrace a legislative
solution together.
Mr. Shapiro. Oh, come on. Thomson is virtually out of the
consumer electronics business. They own Technicolor, and this
is their biggest customer sitting next to me. That is like
saying someone from the motion picture industry has endorsed
this legislation, congratulations.
[Laughter.]
Senator Hatch. I take it you smell something wrong here.
Mr. Glickman. Would you say the same thing about Toshiba
and IBM?
Mr. Shapiro. First of all, IBM is not even in the
electronics business for the most part anymore. I don't know
what Toshiba is doing, but they did not endorse the
legislation. What they said is they used CGMS-A as virtually
every manufacturer does. There is not a manufacturer that you
could show me that will embrace the VEIL technology because
they have not seen it. And if they do see it, they are not
allowed to talk about it. They have to pay, and they sign a
nondisclosure agreement. So to have Congress come when this has
not even been vetted with the industry and to say make this a
law that has to be, you know, literally hundreds of millions of
products, it is just--it is the biggest reach in copyright
history.
Senator Hatch. Mr. Zinn, I hope you can be short. I have
one other question.
Mr. Zinn. Just to pop up a little bit, we are getting a
little in the weeds, but I think there is kind of a white
elephant in the room here, and that is, we have not identified
what the problem is. Is the problem piracy, stopping piracy? Or
is the problem stopping indiscriminate redistribution of
content over the Internet? Or is the problem that consumers
have too much flexibility in the home and Mr. Cookson cannot
make as much money as he wants from monetizing that concept?
Senator Hatch. One of the problems is being able to
digitize and then put it online, and that is what I think the
movie industry is more concerned about. I don't think this is
as big a problem as some think it is.
Mr. Zinn. I would agree with you.
Senator Hatch. Ms. Sohn, in your written testimony you
assert that adopting legislation similar to what the movie
industry has advocated would immediately ``make millions of
consumer devices obsolete.'' Now, if the legislation merely
contained--let's say we pass legislation that merely contains a
prospective requirement that new devices recognize and respect
the copy protection information, how does that make millions of
legacy device obsolete? And won't digital converters and
digital recorders simply continue to work as they do now?
Ms. Sohn. Could you repeat the question one time?
Senator Hatch. Sure. You are asserting that adopting this
legislation, similar to what the movie industry has advocated,
would make millions of devices obsolete. Now, if the
legislation merely contains a prospective requirement that new
devices recognize and respect the copy protection information,
how does it make millions of legacy devices obsolete?
Ms. Sohn. Well, I actually have some charts that I would
like to submit for the record--
Senator Hatch. Sure.
Ms. Sohn.--with your indulgence that show exactly that. So
here we have an example of--let's say we have analog hole-
compliant television set and a legacy Slingbox, OK? So what
will happen is when the signal gets to the Slingbox, it will
strip out the CGMS-A. That is what is indicated here by the
lock. It will go to the Slingbox and out will come the VEIL
signal, all right?
Now, the default on the VEIL signal is copy never, so if
you want to then see it on your mobile phone or on your
computer, you cannot because VEIL tells you essentially that
you can copy never. So this Slingbox, therefore, becomes
completely and totally obsolete.
Senator Hatch. OK. Mr. Cookson?
Mr. Cookson. The misunderstanding in this case is that the
VEIL presence always permits viewing. There is never a
restriction on viewing anything. All content can always be
displayed. The only question is whether or not it can be
copied.
Ms. Sohn. It is not viewing. It cannot record, so it says
you cannot--the VEIL does not allow you to record it.
Mr. Shapiro. If there are so many misunderstandings among
the experts from the technology industry on this panel, I just
cannot figure out how consumers are ever going to be able to
deal with this and understand what occurs when they are
frustrated. And who are they going to go to? Who is going to
explain it? And that was the objection of the motion picture
industry audience saying who is going to explain to consumers
that they cannot do what they have always been doing and why
they are not able to do that.
Chairman Specter. Do you want to break tradition, Mr.
Cookson, and seek recognition?
[Laughter.]
Mr. Cookson. I apologize, sir.
Chairman Specter. No, no. It is the other way around. But
you go ahead.
Mr. Cookson. In terms of what consumers can do, as Mr.
Shapiro pointed out--and I think it is worthy of appreciation
on our part--many of his manufacturers do look for CGMS-A. In
fact, there are many manufacturers who make DVD recorders that,
if you plug into the analog input--you take the output of your
analog, output of your DVD player, and plug it to your DVD
recorder. The recorder will tell you it cannot copy this
material because it is copyrighted.
The issue we have is that that is a laudable thing for them
to be doing, but there is no obligation to do so. Many of his
members do that because they do recognize and respect
copyright, and we appreciate it. There is no reason, though,
that their competitors have to do the same thing, and we have
seen some products come to market touting the ability to make
back-up copies of your DVD. This product here is a product that
does not do this.
So a product made by one of his manufacturers that does
look for the CGMS-A and does respond exactly as we are
proposing today in the legislation is something consumers
already have in the market. We are asking to level the playing
field so that those who do not respect copyright and who do not
look for the code would do the same as his many members today
do do.
Chairman Specter. Well, now we have two people seeking
recognition. Like in the Senate, whoever sought it first. Go
ahead, Mr. Shapiro.
Mr. Shapiro. A brief response.
Chairman Specter. Make it brief. We are running over time,
but go ahead.
Mr. Shapiro. The vast majority of companies--in fact,
probably all of our members do have CGMS-A, and privately
agreeing with the motion picture industry, this makes sense. If
companies choose not to do that, and if those products are
indeed being used in ways which violate the copyright law, then
under the Supreme Court decision, the well-funded content
industry can bring a lawsuit and put that company under even
before it is determined, saying you are inducing a copyright
violation.
The point here is these are not copyright violations. These
are activities that consumers are accustomed to doing. They
want to manage. They want to TiVo. They want to shift their
content in time and place. And that is what is being denied
here.
Chairman Specter. A rejoinder, Mr. Zinn, briefly.
Mr. Zinn. Well, we keep coming back to the copying of DVDs,
and DVDs are not copied under the analog hole. Sure, they can
be, but that is not how you would do it. You would do it using
DVD copying technology that is readily available on the
Internet, and it is cheaper, and you do not need--
Chairman Specter. And your hand is up again, Mr. Cookson?
[Laughter.]
Chairman Specter. Go ahead, but make it brief.
Mr. Cookson. We are introducing new DVDs and Blu-ray disks,
which are high definition. They have analog outputs on them.
There is no hack. There is no way to record those things
digitally.
We are very concerned that we have seen new products that
have come to market today costing as much as $1,500, but very
soon in this price range, that digitize the high-definition
outputs of the DVD or Blu-ray players. And there is no means
that we can see to prevent that other than making strictly
digital outputs for high-def and saying that the people who
have analog outputs cannot see high-def, and I think that that
is something we would like to avoid. And we think that if there
is a means of getting reasonable protection from the
digitization of the output of those high-definition signals
other than denying high-definition to people with analog TV
sets, that would be a better alternative.
Chairman Specter. Well, thank you all very much. This has
been an unusual hearing. I think that we might promote the
quality of this hearing by having the Senators leave the room.
[Laughter.]
Chairman Specter. And after the Senators leave the room,
you can continue the hearing.
But on a very serious note, the idea of having you get
together and try to hash it out is one which I think you ought
to pursue. And we had a session in my office on June 6th, and I
am prepared to do it again. But I think it would be useful if
you met in the interim. And it may be that you ought to make a
limitation. Senator Hatch points out the scope of the proposed
legislation on so many lines. If you limit it to video or
audio-video, something more narrowly focused, it might not be
quite so complicated. Or if you are talking about patent
infringements on mandated approaches, perhaps the legislation
ought to provide immunity if you are doing something which the
Government orders you to do. I am not saying that is
necessarily going to be the result, but those are ideas you can
come up with. You do not really need for us to do that. And if
you find an answer jointly, you will be a lot happier with it
than what is imposed by the Congress.
Senator Hatch. Or the courts.
Chairman Specter. Or the courts, right. And Senator Leahy
notices the high-powered nature of the audience today. He was
doing--well, you speak. He was doing a multiplication factor of
the cost of this hearing to the principals of all those in
attendance. It is high than when he practiced law, or I did, or
Orrin did, on our hourly rates.
Senator Leahy. It is about equal to the gross domestic
product of the State of Vermont.
[Laughter.]
Chairman Specter. Well, thank you all very much for coming.
This is a matter of great importance, and we want to know more
precision about the losses. And we would like to see if
somebody can come up with an idea as to technologically how to
solve it. I think the great effort of technology is directed to
finding a product that will sell on the market, and that is the
American system, but there ought to be some efforts made to
find a way to close the opportunities for property right
infringements as you go along because of the serious concerns
and the serious interests which are involved.
Thank you all, and that concludes our hearing.
[Whereupon, at 10:49 a.m., the Committee was adjourned.]
[Questions and answers and submissions for the record
follow.]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]