Disingenuous Comments from Michael Eisner

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Tim O'Reilly
Mar. 15, 2002 05:49 AM
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Amy Harmon's New York Times story, Piracy, or Innovation? It's Hollywood vs. High Tech was one of the more balanced pieces I've seen. After years of fear-mongering and legal action by the entertainment industry, it's good to see high-tech leaders like Andy Grove of Intel and Steve Jobs of Apple stepping up to the plate to give legislators and the public a more balanced view.

I wanted to weigh in from two perspectives. First, as the CEO of one of the country's largest and most successful computer book publishers, I am in a unique position to see both sides of this issue. My business is content and copyright, just like Disney's, but my subject matter is technology. And I want to go on record as saying unequivocally that the Silicon Valley perspective on this issue has far more substance to it than the Hollywood/Nashville/New York version. The legislation currently being explored in the Senate Judiciary Committee, to require computer makers to build copy-protection into its products, is extremely ill-conceived.

Steve Jobs was right when he said "most people want to be honest, and if offered reasonable choices, most people will choose to buy their content." We publish many of our books in unencrypted electronic form as part of our CD Bookshelf product line as well as part of our Safari Electronic Books Online service. Pirated versions of these products have been uploaded to countless web sites, many of them in Eastern Europe but accessible to US consumers. The net result: We have a constant stream of emails from customers telling us about infringing sites and offering their support for the legitimate product. Many (though not all) of the sites respond to a simple letter asking them to desist from offering the pirated version over the web. And our sales of all our products continue to be robust and profitable. We've seen absolutely NO difference in the sales of books that are available only in print from those that are available in freely downloadable online form.

According to the NY Times story, Michael Eisner of Disney says that he doubts that "any new business model could compete with digital copies that were free, flawless, and accessible from the comfort of his prospective customers' living rooms." And Peter Chernin, president of the News Corporation reportedly suggested that matters might be different if the tables were turned. "Let's say I decide to broadcast on my network the code for how to make Intel chips or Microsoft software," he said. "I think they'd find a way to stop it."

These entertainment and publishing industry executives are either being disingenuous or are ignorant of both technology and history. The software industry faces exactly the same conditions that the entertainment industry fears will destroy its markets. Software is digital, easily and perfectly copyable, and pirated copies are in fact available through a variety of illicit channels, but that hasn't kept companies like Microsoft from going on to become among the largest and most successful in the world. What's more, copy protection was widely explored by software companies in the 1980's, and what they learned was that consumers avoided copy-protected products. Consumer behavior gave marketplace advantage to companies that didn't use copy protection, and after a relatively short time, the industry got over its fears and got back to offering products that people were glad to pay for.

This is not to say that companies shouldn't use modest deterrents to piracy, such as watermarking or other methods of associating a digital copy with the purchaser of a product. It is relatively easy for the creator of those products to incorporate such schemes without requiring any action of computer or software vendors. Entertainment and publishing companies need to embrace the future and offer digital products at a reasonable price, using business models that will grow the market for everyone. If Congress bows to their short-sighted fears and mandates strong copy protection and technological barriers that punish legitimate users along with pirates, we will all be poorer as a result.

Tim O'Reilly is the founder and CEO of O'Reilly Media, Inc., thought by many to be the best computer book publisher in the world. In addition to Foo Camps ("Friends of O'Reilly" Camps, which gave rise to the "un-conference" movement), O'Reilly Media also hosts conferences on technology topics, including the Web 2.0 Summit, the Web 2.0 Expo, the O'Reilly Open Source Convention, the Gov 2.0 Summit, and the Gov 2.0 Expo. Tim's blog, the O'Reilly Radar, "watches the alpha geeks" to determine emerging technology trends, and serves as a platform for advocacy about issues of importance to the technical community. Tim's long-term vision for his company is to change the world by spreading the knowledge of innovators. In addition to O'Reilly Media, Tim is a founder of Safari Books Online, a pioneering subscription service for accessing books online, and O'Reilly AlphaTech Ventures, an early-stage venture firm.