Congress is still struggling with the Digital Television Transition. They want to revoke all analog broadcasting licenses so that they can auction off the spectrum for new applications, which could (optimistically) produce a lot of revenue. However, that means that all analog TV tuners will fail, which means that a billion TV sets will fail. The political consequences are frightening.
Last week the Senate Commerce Committee approved a bill that delays the switchoff until 2009-04-07. They are hoping that by that time a significant number of sets will have been replaced. They also budgeted $3B in digital tuner subsidies for the remaining sets.
The House Energy and Commerce Committee is now considing the problem. The Republicans want the slightly earlier 2008-12-31 switchoff date, and only $0.99B in tuner subsidies.
Rep. Rick Boucher, a Virginia Democrat, called the House program "woefully inadequate," while Michigan Democrat Rep. John Dingell said the measure would unfairly punish low-income and minority households. Dingell said House Republicans "would force millions of Americans to reach into their wallets and pay a television tax of $20 to $60 per TV set."
"Why should ordinary people pay for a government decision that makes their television sets obsolete?" said Dingell, but Florida Republican Rep. Cliff Stearns said "I think to be prudent, less than $1 billion is more appropriate."
I think they are all wrong. Broadcasting is a failing medium. It is no longer the powerful mass medium that it once was. As its audience flees to better delivery systems, it will serve primarily the poor, the elderly, and the technologically incompetent. Using the Treasury to keep broadcasting alive will be a benefit to Jerry Springer, who appeals directly to the remaining broadcast demographic. Broadcasting will not help anyone to escape from poverty. I think that access to the net could.
So here is my proposal: Broadcasters must give up one of their two channels in one year. They can operate the remaining channel as digital or as analog, their choice. In some cases, they will have to accept a new channel number as we figure out the schedule of reallocation. The broadcasters have said "Let market forces decide." Let's take them at their word.
I think that the digital transition is going to fail, so there is no point in wasting more money on it. I think it would be much smarter to subsidize internet access for the poor. One of the new uses for the reclaimed TV channels should be to provide free WiMAX service in rural and urban areas.
CE (the Consumer Electronics Industry) and C (the Content Industry) need each other. Without delivery technology, C would be much smaller. Without content, CE products would have much less value. These industries from time to time have become combative. This occurs when CE introduces new products which disrupt C's business models. A CE company has a choice to produce disruptive products or not. C companies do not have such a choice, unless they choose to go to the government in an effort to protect their practices from change. Historically, C has always lost such battles, and they have always benefitted significantly from the loss. For the C businesses, fear and uncertainty overwhelm potential profitability.
This time, there is a chance that C will win the battle. C has done a brilliant job of changing the language. The way questions are asked gives them a huge advantage no matter how they are answered. C has done an effective job of lobbying the Congress. It appears that they can get from the Congress anything they can't get from the Courts. C has also done an effective job of intimidating CE, turning DRM (an ineffective nuisance) into a business necessity.
It is now CE that is feeling fear and uncertainty. If C gets the power to regulate change, then CE loses the ability to innovate and determine its own future.
C has carefully constructed the language of the debate. For example, they talk about Intellectual Property as though it has equivalence to Real Property. By doing so, they have increased their powers significantly beyond what is granted by copyright law. The criminal penalty for downloading a song can be significantly worse than for stealing a CD from a store. Shoplifting is a misdemeanor. Downloading is not necessarily a crime, but they have declared that it is theft, and that they suffer more greatly than they do from real theft.
Similarly, the term Piracy originally meant the hijacking of a shipment of real goods. It was then corrupted to mean unlicensed manufacturing. It now means to share music on the Internet.
The propaganda campaign has been so successful that many consumers now believe that some legal home recording activities are illegal.
The cost of HDTV production gear is falling almost as fast as the cost of TV sets. It is now possible to buy an HDTV camcorder and a computer which can do editing for much less than it used to cost to rent a camera. New equipment formats like Sony's HDV and JVC's DVCPRO HD produce great looking pictures and are small and easy to use.
The Music Industry is radically changing because cheap and good prosumer equipment allows musicians to easily produce their own stuff. This trend is going to move into HDTV. Individuals, schools, and theater groups will be able to shoot and edit their own productions and make them look really good on very small budgets.
I think this is a really exciting development. What we currently call Independent Film is about to get much bigger and much more independent.
People love the variety and control that they get with DVD. This is best seen in a category that was really big last year: TV on DVD.
In the lifecycle of a TV show, it is first shown on a network, and then rerun. Then it gets sold to syndication, where it will be shown over and over again. Every time a program is aired, its value decreases. Over the years syndicated programs will migrate to poorer and poorer stations, until finally the program is so worn out that no one would want to buy it.
But now those tired old shows are finding a new life on DVD. People are buying box sets containing an entire year of old shows. They like being able to watch them without commercial interruptions, and they like being able to watch them whenever they like. They also enjoy better image quality than they saw on broadcast.
The Studios are excited to be getting new revenue from these worthless properties. The biggest problem they have in producing the DVDs is getting the rights to the music. The laws in the US on music licensing are horribly, insanely complex.
The Studios recently negotiated new contracts with the actors, directors and writers unions. All of the unions wanted to increase the residual payments from DVDs. Historically, 80% of VHS and DVD revenues are exempt from residuals. Studios have insisted that soaring costs of filmmaking have made it impossible to increase DVD payouts because they need the revenue from the disc to remain financially viable. When the Content industry is seeking to change the Copyright Law, they claim to be defending the interests of the Artists. But clearly, the Studios are not the friends of the Artists.
One concern for the Networks is that if people are watching TV on DVD, they will be watching less regular TV. When people can watch what they want, they stop watching the Networks.
Sony/BMG, through a complicated sequences of bad decisions, has released several CD titles infected with a spyware agent. If you have purchased an infected CD, do not put it in your computer. Return it to the place of purchase for exchange. Infected products can be identified by a compatibility warning on the back label. Uninfected CDs are fully compatible with all types of CD players, so only infected product will carry the warning.
The spyware is a root-kit called XCP. Microsoft will include an XCP removal tool in the December update. "Root-kits have a clearly negative impact on not only the security, but also the reliability and performance of their systems," said Jason Garms of Microsoft. The following titles are believed to be infected:
The Content Industry enjoys some natural advantages which should allow it to prosper even in a file sharing world. However, it seems that the industry has committed itself to a campaign to eliminate as many of its advantages as possible.
Given the hopelessly inadequate state of computer security, it really isn't safe to download anything from the net. There is a persistant threat that an MP3 virus will emerge, which could put filesharers at significant risk. The safest alternative is to buy your music directly from the publisher, because only the source can guarantee that the content is free of digital contamination.
So Sony BMG puts malware in its CDs. Now it seems that it is risker to get music from store-bought CDs than from anonymous downloading.
When DVD was first announced, a group of engineers formed a technical working group to address issues around data representations so that DVD could be more versatile. At the same time, the Studios decided that they would boycott DVD unless it contained some form of copy protection. So MPAA hijacked the technical working group, and formed the Copy Protection Technical Working Group, composed of representatives of the Studios, Consumer Electronics companies, and Computer companies. DVD's CSS (Content Scramble System) came out of this group, as did the ill-fated Broadcast Flag.
In recent years, not much work happens at the CPTWG meetings. They are mainly a rendezvous point. If you need to meet with competitors in order to form some sort of technical alliance, CPTWG is the place to do it. The meetings are held every 6 weeks or so in hotels near LAX. They are open to the public, but there is a $120 fee, which includes continental breakfast and a lunch buffet. A meeting begins at 10:00 AM and is usually finished before noon. It begins with a reading of the ground rules, which declare that it is a public meeting, and that no confidential information be exchanged. Such exchanges and collusions begin immediately after the meeting.
The meetings usually include a legislative and regulatory update, and progress reports from various committees, subgroups, and organizations. Occasionally there will be a presentation by a startup with fantastic claims of a new DRM technology. This is usually greeted with suspicion and veiled ridicule. The members think they have seen it all. They know that the solutions they have selected are inadequate, but they are not expecting anything better to walk through the door. Even though the meetings are public, the press is not permitted.
The 93rd meeting is on 2005-12-07 at the Four Points Sheraton. Bring your laptop: wireless access is provided. You can watch the lawyers IMing wisecracks to each other during the presentations.
Taking the very long view of the history of human commerce, since the beginning the dominant forms of commerce have been personal, then local, then regional, and in the 20th century, national. We are now transitioning to the next phase, which is simultaneously global and personal.
The Content Industry complains about having to do global releases, but it works significantly in their favor. A global release requires a lot of organization and money, and so is a barrier to entry. Such barriers tend to protect the industry.
But the Content Industry is very bad at the personal. Its open contempt for the audience, which it sees as thieving sheep, is a severe handicap. This is why the industry is facing extinction, not piracy.
So what could replace it? I believe that there is an opportunity for a service industry which supports bands and troupes, helping them to go global and personal.
In analog recording, a wave form is captured in flux or vibrations. When that wave form is played back through a transducer, the sound or image is reproduced. This process does not exactly reproduce the original signal. A copy is less perfect than an original, and a copy of a copy is even less so. This is called generation loss.
Digital media is thought to be immune from generation loss. While it is true that bits can be copied without error, there are many operations that do introduce error which can accumulate over many generations. These operations include digitization, compression, scaling, mixing, and watermarking. In the signal path from the camera to the screen, an image might (and usually does) go through many of these operations, each introducing a small but irreversible amount of damage to the original signal.