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Wednesday, April 6, 2005

Interoperability and the iPod
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The verdict was unanimous, Lamar Smith had to acknowledge -- let the markets sort out interoperability among digital music formats and players.

Congressman Smith of Texas and his IP subcommittee colleague, Congressman Howard Berman of California, held a hearing on music interoperability this morning, and not surprisingly, our own Ray Gifford brought a free-market argument to the witness table. More surprising was that the same argument was brought by CFA's Mark Cooper, although that position got him into trouble later in the hearing (more on that below), proving it's always easier to argue on principle than circumstance.

Despite the fact that the newly elected Ukranian President, fresh from a defeat of totalitarianism, was about to speak across Independence Avenue before a joint session of Congress, turnout was good, with eight committee members in attendance. Both Smith and Berman seemed open to Ray's call for allowing consumers to choose the level of interoperability they prefer. One highlight: Ray argued that Congress should "protect the Schumpeterian incentives to innovate and compete for, not just in, the market," a line that caused Smith's face to light up. He began his questions by telling Ray, "Schumpeter should be the patron saint of Congress."

Why was this hearing held? It's a legitimate question, and the answer isn't quite clear to me. Perhaps it was a preemptive strike against some in the Free Culture Movement who argue that an iTunes song should be playable on devices other than an iPod, and an iPod should be able to play music formats other than iTunes or the poor-man's format, MP3. Berman also suggested another hook -- the lack of interoperability causes confusion in the nascent digital download market, and that could make it more difficult to wean music fans from free sites.

Berman may be misguided enough to want to mandate interoperability, but it was enjoyable to watch his vivisection of Cooper. Cooper began his testimony by insisting on interoperability mandates on the core layer (see multiple PFF publications for why this is a ridiculous notion), but said of the application layer ("widgets," he called it) that market forces should reign, and consumers would push Apple into the same marginality in music players that they have in computers.

Cooper may be right on the latter point, and Ray conceded that during his testimony. But Berman was struck by the fact that Cooper (a) tolerated DRM in this marketplace and (b) wasn't calling for a mandate that Apple disclose through labeling that its songs and devices weren't incompatible. HR-1201 by Rick Boucher of Virginia, which CFA heartily supports, would permit circumvention of DRM and calls for mandated labeling for copy-protected CDs.

I can't replicate the exchange here, but it was a brilliant Socratic road Berman led Cooper down, confirming Cooper agreed with this point and that point until it became obvious that Cooper's testimony was in complete contradiction with his support of HR-1201.

The difference is fair use, Cooper said. Circumvention of DRM should be allowed for fair use, he said, arguing that consumers find themselves unable to do certain things with content they once might have expected to be able to do. The answer didn't help Cooper's case, because Berman had already had Cooper confirm that DRM is a contract between a consumer and a content provider regarding a package of rights; Berman had had Cooper confirm that consumers should feel free to choose from various tiers of those rights; Berman had had Cooper confirm that it wasn't the government's role to mandate labeling of those rights; and Berman had had Cooper confirm that CFA believes consumers will on their own push the market to more open offerings and away from restrictive ones, thus negating the need for government intervention or hacking of DRM.

Cooper was as contradictory as Ray was consistent. Standard-setting is hard. Policymakers should exercise extreme caution. Public choice theory tells us that groups will seek to use government to promote their standards and harm others. These are the same principles he laid out during our Digital Europe events in Milan and Brussels, during discussions largely focused on patents and software. They applied today to music codecs and playback devices. They will apply to other interoperability debates in the future. PFF has a luxury CFA doesn't; sound principles don't have to be adjusted to fit a given situation.

posted by Patrick Ross @ 12:56 PM | Interoperability

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