Copyright and Digital Markets

Canadian Press is reporting this evening that the introduction of a copyright reform bill is imminent, with the article stating that "sources say the new legislation is ready, but Heritage Minister Bev Oda and [Industry Minister Maxime] Bernier are struggling on final wording that gives each the maximum political brownie points."  The article, which features comments from myself, CRIA's Graham Henderson, and Howard Knopf, does a good job of highlighting at least two of the key issues – fair use and digital markets – that will be front and centre once the legislation is introduced.

As is the case in many other countries (Australia, UK, New Zealand), there is a growing awareness of the limits of fair dealing/fair use, particularly with respect to time/place/device shifting.  Consumers rightly take for granted that they have the right to record a television show or a copy a CD for their iPod.  Under current Canadian copyright law, such activities are at best in a legal grey zone.  Unless the government addresses the fair use issue, expect Canadians (and the media) to be very vocal about the failure to address a fundamental issue in need of reform.

Another issue that will garner considerable attention is the question of digital markets.  Graham Henderson hints at the issue in his comments, when he suggests that anti-circumvention legislation is needed to facilitate the development of new digital services, comparing the popularity of services in the U.S. with those in Canada. This argument represents a clever sleight of hand that confuses the facilitation of new services with the popularity and market acceptance of those services. 
It starts with the notion that content owners will be reluctant to offer digital services without the combination of DRM and legal protection for DRM.  Experience shows that simply is not the case – Canada has music and movie download services without additional legal protections. 

Moreover, even if anti-circumvention legislation were needed to bring services to market (which they are not), the popularity of digital services in Canada is a consumer and market issue, not a legal concern.  Indeed, there are a multitude of factors for why the Canadian services may not be faring as well as their U.S. counterparts.  These include:

  • the services arrived later in Canada due to licensing negotiations. The experience in virtually every market (including the U.S.) is that it takes time to gain market acceptance
  • there are unsurprisingly fewer services (Canada being a much smaller market), leaving Canadians with less choice
  • the most popular music service – iTunes – excludes a significant chunk of the Canadian market with its lack of French content
  • Canadians may be more concerned with the effects of DRM, including interoperability restrictions, privacy consequences, etc.  This points to the fact that policies that promote DRM may actually have negative marketplace effect with reduced consumer acceptance
  • Canadians may recognize that they already pay millions every year for the private copying levy and thus feel comfortable with payment to artists via that alternative compensation system
  • Canadians may generally be slower to embrace e-commerce, whether clothes, toys, jewelery, or music
  • Canadians may have shifted their spending patterns away from music toward other entertainment options including video games, DVDs, etc.

Not only is there no evidence for equating consumer acceptance of digital services with anti-circumvention legislation, but policy makers should also reject CRIA's narrow characterization of digital services as solely or primarily those that use DRM (in fact, online music services are themselves shifting away from DRM).  Beyond music and movies, there are an enormous number of new digital services that have nothing at all to do with DRM.  Rather than seeking greater control, these services are far more reliant on a copyright law framework that facilitates access and use.  They include online PVRs (which Telus is promoting), search services, ad-supported open business models, and the plethora of Web 2.0 services that depend upon openness and access.  The digital marketplace is far larger than just DRM-backed online music services, which despite its growth is actually a shrinking part of the expanding digital landscape due to marketplace (not legal) considerations. 

Ultimately, if government wants to address both the device shifting concern and the desire to facilitate digital markets, it could achieve both without any reference to anti-circumvention legislation.  Fair use would do the trick.


  1. Dwight Williams says:

    Same Article, Different Interpretations?
    I found this edition of the article on the front page of Metro News Ottawa today. I did not know you were interviewed for the same article until just now.

    Still, a fair set of concerns regarding our rights as end users of the equipment and software and products under discussion…with the possible exception of the CRIA\’s representative.

  2. moolcool
    Im in canada. This means that if i want to watch a tv show on my computer i have to buy it on itunes or something dosent it? Why should people pay for things twice? What can i do to stop this as a citizen of Canada.

  3. I’ve written my MP, he failed to respond to me last spring when I wrote him about the same subject, even after several e-mails. I guess a flyer in the neighbourhood to let his constituents know might get his attention. The CRIA has already had tons of artists jump ship to form their own coalition, I’m wondering what their opinion is on this?

  4. Russell McOrmond says:

    Openly publish letters to MPs
    Comment to ‘crossmr’: When you send a letter to your MP, please consider publishing an electronic version of it on the site so that other constituents know you did so. This is then available and archived during the next election, and might just push the MP to realize that this is an issue that is important to constituents.

  5. Bill Ahrens says:

    In spit of all the claims from Harper that his government abides by the rule, again we see the typical Conservative political pork barrel machinery in action. It is apparent that the Harper’s government interest only lay with their patronage friends and lining their political and friend pocket books.

    In a time when there are numerous major issues and environmental problems to address and solve that have and will have drastic and devastating effect on the social fabric of all Canadians. Such pressing issues of our time are education, health care, and global warming. Yet again, we find our government wasting time on insignificant issues such as the Canadian copyright act instead of real issues, the only reason it benefits them and their friends.

  6. Bottom line: If Bev makes it illegal for me to format or time shift my legally purchased media I will trounce her butt of the Hill in the next election. I just sent her a letter expressing how I will not be voting for her if she carries this law through and I will collect my share of the copying levy DIRECTLY FROM HER. How dare her, Maxime and the Conservative party do this! I AM SO ASHAMED I VOTED FOR BEV ODA!

  7. I am also in agreement with Bill Ahrens comments that our politicians are not addressing the proper issues. Does anyone else see the similarities between this legislation and the Nazi Germany of May 10, 1933? Hitler was advocating the burning of books to stem creative thought. Is this our countries first step at becoming a totalitarian state? Why does our government always choose to treat its population like children with a “do as I say, not as I do” attitude. If they want to make this into a law, then we (the people) of Canada should be able to look into their personal lives. We should be able to go into their (the politicians) homes and see if they have a PVR, VCR, Ipod, PSP, or Computer. If they (families included) do have any of these devices, we should have the right to look into them and see if they are adhering to the law as well.

  8. Keith Risler says:

    A few days ago I faxed Prime Minister Harper, Bev Oda (Heritage Minister) and Maxime Bernier (Industry Minister) on the issue of DRM. I am posting that text here because it summarizes my view on the issue of DRM and any law that might cracking copy locks illegal. (An additional comment follows after the text that was not in my faxes). I believe it is important to understand the needs of rightsholders in terms of what a copyright license actually has meant in practice over centuries. What it has meant is that for as long as copyright has existed, there has always been a gap between the letter of the license and the practical use of the licensed material. DRM could change that circumstance and in effect magnify the force of copyright licenses significantly. Sheltering DRM with laws that disallow cracks thus amounts to a far greater tightening of the usage regime than is initially evident:

    Having been involved in copyright-related issues for the past decade, I’d like to express two concerns related to the opportunity costs associated with proposed copyright law changes. A solution to both concerns would be to skip outlawing the cracking of digital locks on software and content and any software that can do the same, and let the marketplace decide whether Digital Rights Management (DRM) is a good technology or not.

    I believe that if we enshrine digital locking, we may 1) alter fundamentally the traditional role of the legal system to enforce contractual agreements in the area of intellectual property, denying citizens the right to due process as afforded by the legal system. And we would 2) artificially widen the practical scope of typical copyright licenses by making some of the more extreme license terms that have historically not been generally enforceable fully binding on users.

    My concerns thus relate to the dramatic elevation of rightsholder power which the ongoing technical evolution of DRM—aided artificially by bad law—could too easily impose. As it’s already illegal in both civil and criminal terms to infringe copyright, on no account should a technical mechanism be permitted to get in between a citizen’s right to due process in terms of defending against the accusation, on any other basis than general acceptance by the marketplace.

    DRM is a software process that as presently evolved imposes a lock or allows a use of digital content such as text, audio, or video based on a digitally assigned permission (or lack thereof) which may even be tracked in real-time via active “call-home” routines built into the DRM-locked software or content.

    DRM may fairly be said to encompass locked audio, video, and text, but also active locks on software that is “activated” or tracked at each system bootup by such mechanisms as the Microsoft Windows Genuine Advantage system.

    In Canada there has been for some time an anticipated change to our copyright law that would make it illegal to crack such digital copy locks or to acquire or use software that can do so. This provision should not be enacted, because it would deny citizens due process should they be in effect accused of copyright infringement via a DRM-enacted consequence. The problem with DRM is that it tends to enforce penalties such as an evolving “revocation” function in the absence of any court-determined guilt.

    DRM allows rightsholders to lock down content in previously unimagined remotely-enforceable ways, while it imparts no equal ability on the part of the individual citizen to control his or her own content in the same way, or to challenge the digitally-imposed denial of access. In effect, an elite communications control right is created for those with the technical leverage to access costly systems that can create and manage DRMed content.

    It is critical to note that the mechanical ability to pirate content in dramatic ways pre-distribution is not something that software makers and Hollywood first experienced. Rather, publishers ran into these kinds of issues considerably before the time of Samuel Clemens (Mark Twain). It was not uncommon for books that were to be published first in England to be pirate-published in the U.S. even before being published in England. This was because, even a relatively long time ago, the mechanical nature of publishing post-Gutenberg meant that if you could steal the technology, you could pirate the content in a relatively quick time.

    Those many decades ago, no special perks in law were considered necessary; and today there is no greater need for special protection in terms of making cracking software illegal.

    In the U.S. the origins of copyright are often traced to the U.S. founders who, Ben Franklin the printer being among them, had an interest in establishing the idea of copyright. This ancestry in fact is not the true origin of copyright law, which traces back to something called the Statute of Anne around 1709 or 1710. But there was a previous legal process for protecting works as early as the late 1660s. The Statute of Anne’s goal was to control the copying of books, which even by that time had become a relatively quick and easy steal, a point that lawmakers are often not apprized of by well-intended copyright lobbyists.

    Significantly, copyright law does not have its roots in regulating end users, but in regulating the publishers of bootlegged content.

    And yet even now Windows Vista PC buyers are feeling the effects of relatively recent U.S. copyright reforms as well as the reality that previously hard-to-enforce license terms will soon be fully enforceable by DRM, in terms of significantly heavier hardware requirements to run that OS, dictated by the pervasive processor-heavy Vista DRM.

    In the mid-1990s here in Canada I was heavily involved with a national arts group that advocated with considerable success for tighter copyright laws in Canada. Our group realized some time after 1986 or so that technically the copyright law in Canada makes even the copying of magazine articles, and newspapers using a photocopier illegal. With the help of the publishing industry, we eventually created a licensing regime for this, so that almost everyone in Canada pays a license fee for every photocopy they make. This is done via blanket licensing to schools and governments, as well as per-copy individual licensing.

    DRM will eventually allow text content to be metered, and as I understand it remains a Holy Grail of the licensing agency that does “reprographic” copyright licensing in Canada, for example. When every content item is metered and regulated by DRM, which may happen eventually, the cost to licensees—and we are all content licensees in some capacity—will rise correspondingly.

    My second major concern with DRM is that historically many contracts that are penned between parties (a copyright license works in the same way) tend to be loaded up on onerous terms on the premise that, despite the tough language, the terms aren’t that tough in reality because they are costly to enforce—a point made to me during my training toward qualification as a mediator. So a typical contract such as a loan agreement may be over-written to allow for the weak enforceability. DRM stands to make this over-written component of a software license binding in full without the judgment of the law courts that would normally enforce an alleged copyright infringement, absent DRM.

    The Canadian government in my view should consider the effect DRM-enabled systems may have in denying due process to the end user, as well as DRM’s effect in artificially enhancing contractual bindings on content licensees, in terms of any copyright law changes.

    I don’t in principle object to DRM, but feel that if DRM does have legs, it should be in a free marketplace. Such evolution will be more properly balanced in terms of end users if DRM is not protected by an artificially legislated advantage.
    Please allow the marketplace to decide the issue of DRM appropriateness.

    Apart from my faxed comments above, I believe It may also be wise to consider legislating limits on DRM, since DRM has the potential to take intellectual property rights out of the sphere of fair trade in the marketplace, and to in effect lock down end users outside of any practical legal recourse, in terms of DRM-enacted cutoffs that occur on an automated basis.

    Keith E. Risler