Grokster and the financial future of America (from: Mark Cuban)
http://www.blogmaverick.com/entry/1234000237029704/
I remember being very nervous back when I was in college.
There was very real discussion about the US losing its station in the world as the worlds most powerfulnation. There were hostages in Iran. The Olympic boycott. The Japanese Stock Market was booming and manythought it wouldnt be long before our economy would be second to theirs. The US auto industry was under attack byimports. Inflation was at record highs.
At Indiana University, our school newspaper had headlines from around the state. I knew that Anderson Indiana had anunemployment rate of more than 20 percent. Numbers that people were suggesting reflected depression era depths. Othercities were almost as bad.
My fellow students werent quite brimming with optimism. As I got ready to graduate, getting an interview was abattle.
Fortunately for me and many others, while our manufacturing economy was taking it on the chin, the labs at Xerox andthe garages in Silicon Valley, Seattle, New Mexico and the offices on Rte 128 in Mass and in Armonk NY , among manyothers, were working late. The personal computer business was getting ready to explode.
The history of computing and in the particular the microprocessor revolution is well documented. What may not havebeen nearly as well understood , and this is purely my opinion, is the role it played in revitalizing not onlyour economy here in the US, but how we felt about ourselves.
In a scant 5 years, college kids went from worrying whether they could get jobs, to being positioned at thelead of the new personal computer generation. When i graduated from college, I had taken 1 computer class thatrequired me to punch in a Fortran Program on cards and feed them to a huge computer I never saw. The number ofjobs available in the computer field were limited to “computer scientists” It changed in what seemed like aheartbeat.
The class of ‘85 was having a blast with each successive release of a new computer, new software andapplications their older brothers and sisters didnt have a clue about. If you knew how to use a spreadsheet, you couldget a job. If you could write batch files in DOS, you could get a job. If you were advanced and could integrate LocalArea Networks, grasp multitasking, program using relational databases, you could pick the job of your choice.
The PC revolutionized the job market for college graduates and more importantly, the business of business .Personal Computing introduced a new era of productivity and the USA was the leader in personal computer technology. Wewere back on top again.
It didnt stop at PCs . Software was developed for every application imaginable. PCs were connected into localand worldwide networks. Printers went from modified typewriters to laser. Communications went from modems to broadband.Online services expanded from the thousands to the millions and that was before the internet and America Online. Wewent from Moores Law to Metcalf’s Law.
This technology revolution was and has been amazing for two reasons.
First , is that the technology has continued to evolve this long. We may be at a point where we arent suprisedto read about new technologies, but entrepreneurs continue to generate new ideas that lead to new products andservices. Technology continues to have a significant impact on the US economy and to create jobs.
Second, is that the government managed to stay out of the way for as long as it did. Who knows why, but our electedofficials managed to let the free markets stay free. Until now.
Things started to get a little shakey back in 1998.
In October of 1998 the Digital Millenium Copyright Act was passed. The DMCA was basically a law that set a veryun-nerving precedent. That the government would do what it could to protect the interests of content owners at theexpense of technological development.
The DMCA in and of itself didnt kill technological innovation. At the time it was passed it was morenuisance than anything else. Digital content wasnt all that prevelant and there certainly wasnt much money in it, sonot many people cared that our tax dollars were being spent to make sure that your internet radio station never playedmore than 3 songs in a row from the same artist. Or that it became illegal to have a 24 hours a day Beatles (orany other artist) station.
In 1998 few people were buying DVDs. It was easy to buy a VHS tape and make a 2nd copy of it for your own use. The DMCA rarely touched home for many of us.
In 2005, its a whole different ballgame.
You know those DVDs you have that are scratched ? How nice it would have been to be able to make a copy of them first, knowing that the kids are going to get their hands on them and ruin them at some point ? You cant. Itsillegal. Its illegal to make software that allows you to make backup copies. You paid a lot of money for yourDVDs. The movie industry has made billions upon billions from DVDs. Many movies make more from DVDs than fromtheatrical release. They get your hard earned money, and they make it illegal for you to make a copy to keep just incase your DVD gets scratched. Thats wrong.
The law of unintended consequences. Few people knew that DVDs would basically replace VHS in our homes. Fewpeople had any idea that DVDs would get scratched and be useless with regularity. No one had any idea that trying tomake a protective backup of that DVD would be illegal
Next month there is a case that will go before the Supreme Court of the United States. MGM vs Grokster.
The case is about whether Peer to Peer software that enables the P2P networks should be illegal or not. Thebig entertainment companies are pushing the argument that because some of their content gets stolen through the use ofthis software, that all uses of the software should be illegal.
The are NOT arguing that there arent legitimate reasons to use the software . They acknowledge that businesses andindividuals are using the software for purposes other than those that impact their business. They just feel thatbecause it impacts their business (they still dont know if its a postiive or negative impact), in a way they cantcontrol, its better to make it illegal rather than adapt to the new technology.
In reality this case isnt about whether music or movies are illegally downloaded using Peer to Peer sotware. This is purely about control. The entertainment industry wants control over technology that could have an impact ontheir business.
Technology has advanced and gone further than any of us could have imagined over the last 20 years. Go backjust 10 years and even the best forecasters would be shocked at the number of us who have cell phones, useemail, have DVD players, spend as much time online as we do watching TV, have MP3 players, replaced our filmcameras with digital cameras and more.
The next 10 years will have just as many new devices that we cant imagine today.
What if they all became illegal ?
We are living in a world where information is becoming 100 pct digital. Of all the digital information across theworld that is being created and exchanged, what percent is music and movies ? What percentage of that is owned byHollywood and the big music companies ?
With all the home movies we are creating and saving on our computers. All the digital pictures of our families andfriends. All the personal music created at home. All the corporate data and presentations. All the books,software, newsletters, newspapers,discussion forums, blogs, websites and emails that are created and saveddigitally. How big a percentage could music and movies be ? 1/10 of 1 percent ? At most ?
Every single one of these items can benefit from the distribution efficiencies created by Peer to Peernetworks. Every person and company in this country that wants to exchange digital data can benefitfrom peer to peer technologies. Just because the uses arent prevelant or obvious to some today, doesnt mean theywont be in 1, 2, 5 or more years from now.
In the MGM vs Grokster case, the fewer than 50 companies who control less than 1 pct of all digital information aretrying to take control of innovation in the technology industry and pry it away from the rest of us.
Everything our imagination creates and touches that can be made digital is at risk if Grokster loses.
What innovations will be condemned by law before they have a chance to come to market because they could have animpact on Hollywood and the music industry ? We have no idea and that is a very scary prospect
Which brings me back to 1980.
The last 25 years have seen unimaginable increases in productivity, creativity, economic development and Americanpride because amazing people have been able to take amazing ideas and develop them without fear.That fearlessness ends if Grokster loses and the content industry is able is to take on the role oftechnology gatekeeper.
There will be a time , as there was in 1980, when we need a spark. When we hope that something new helps us escapefrom something old. Lets not let the content industry steal that opportunity out from underneath us.
One last line that I cant resist to use as it relates to the MGM vs Grokster case
Software doesnt steal content…. people do .