DRM and Fair Use

Aron Schatz
April 18, 2006
This report will discuss the implications and ramifications of Digital Rights Management (DRM) and how it impedes on consumers right to fair use. Fair use is what gives consumers basic rights to content that they purchase. Copyright owners have been against fair use since the first piece of electronic recording equipment was released. Consumer rights are being violated by DRM.
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Consumers vs. content owners. This is the new digital war that is in many different headlines. The question must be asked; why are content owners against consumers? The answer to the question is very simple taken at face value. They are not against their primary source of income. Doing so would cause a collapse in their industry and this is not what any company wants. It is their actions and motives that are against consumers. Fully disclosing the intent and actions of content owners needs to be complemented by remembering some key cases and events in the past. The question still remains even though they are targeting their cash cow business processes. It is fair use that is part of the answer. Content owners and businesses that support them are adamant about letting consumers that purchase their works any rights at all. It was a few decades ago when the first major trial occurred that challenged fair use.

The VCR:

The VCR, or VTR as it was known back in 1976, was released by Sony and it was the first device that allowed consumers to record and playback what they witnessed on TV. Today this process is called time-shifting and is perfectly legal, but back when the VTR was introduced Universal Studios and Disney felt that the VTR infringed on their copyrights. The case was brought to the California district court in 1976. Two years later, the court ruled in favor of Sony. The opinion of the court was that the device was primarily used for non-commercial home use and is allowed under the First Amendment of free information for public use.

The trial went into the appeals process where it was decided in the Ninth Circuit Court that Sony was liable for damages and was contributing toward copyright infringement by creating this enabling technology. The court decided that Sony should have to pay fees and damages resulting from the creation of this device. The trial eventually landed in the Supreme Court and, in 1984, decided that Sony was within its legal rights to sell the device and consumers are allowed to purchase and use it. The opinion of the court to reverse the Ninth Circuit Court was slim, a 5-4 vote. The outcome of the trial was that time-shifting is fair and legal and the content owners have no right to disallow this process under the current copyright law. This was not the last time that the content owners attempted to quell consumer rights.

After the court battle, the content owners lobbied congress to pass laws protecting its copyright. Since the VCR was well entrenched in the homes of America after eight years of court, congress did not want to impede the use of the device. Congress mandated that a statutory fee be placed on blank VCR tapes. This ensured that anyone buying a VCR tape would be paying for its use to the content owners (which is a salvo against consumers). This type of fee should be illegal because the intended use of the tape may not be for recording a copyrighted show. It may possibly be a home movie or other noncopyrighted work. Unfortunately, the fee makes no regard to this use and is mandatory. It is interesting to know that blank audio CDs also have this type of fee attached to them.

Broadcast Flag:

Another angle that the content owners pursued was a feature that would be mandatory in all VCRs. A sensor would be installed that would detect a "no copy" signal and refuse to copy the content. If content owners were successful in placing this type of rights management into the VCR, the courts would have never had the chance to evaluate its use under copyright law and to legalize time-shifting as fair use.(1) Remember that content owners love to double dip on consumers. The more they purchase the same media, the more money that the content owners make in pure profit.

This "no copy" signal recently came into light in another issue. The FCC mandated that all TVs should be able to distinguish a broadcast flag that would prevent copying of the content over any medium (Antenna or Cable). "Responding to pressure from Hollywood, the FCC had adopted a rule requiring future digital television (DTV) tuners to include "content protection" (aka DRM) technologies. All makers of HDTV receivers would have been required build their devices to watch for a broadcast "flag" embedded in programs by copyright holders. When it comes to digital recording, it would be Hollywood's DRM way or the highway. Want to burn that recording digitally to a DVD to save hard drive space? Sorry, the DRM lock-box won't allow it. How about sending it over your home network to another TV? Not unless you rip out your existing network and replace it with DRMd routers. Kind of defeats the purpose of getting a high definition digital signal, doesn't it?"(2)
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Digital Content:

The history of the VCR has enabled consumers to record content and replay it in regards to fair use. Without the court decision, consumers may be paying for viewing each and every time. It is the concept of ownership that scares the content conglomerates. When a consumer goes and purchases a music CD and that CD is ripped to an MP3 player that the consumer owns, the content cartels see this as a loss of revenue. In their eyes, the consumer should have purchased the CD and should have purchased a licensed MP3 from a licensed source. Notice that the word legal is not used to describe the source of buying MP3s. What the consumer did is perfectly legal under fair use precedent but other technologies and laws are stripping this sort of basic right away from them.

The current generation of music players is all digital and the MP3 format spawned the entire movement of having a plastic disk to having a digital only file. There are enabling technologies such as the iTunes Music Store that allow consumers to purchase a single song off of an album for about $1. In the past, the content cartel known as the RIAA ensured that they make a hefty profit by bundling a few good songs and other random songs on a CD and charging $20 for it. Even as the media prices fell (CDs became cheaper to make), the price of the music did not change and people noticed. When Apple’s music store hit the market, people flocked to it and the new iPod. Little do most people know that when a consumer purchases something from the iTunes Music Store, the file that they paid for is riddled with Digital Rights Management or DRM for short.


DRM is an encompassing term that describes many different technologies. Many are very useful. Encrypting hardware is an example of DRM as is many security devices. Unfortunately, many uses of DRM are known to stifle consumer rights and to prevent the legal copying of copyrighted work. The perfect example of DRM that infringes on fair use today is region locks present in the DVD standard. If a consumer purchases a DVD from Asia, it will not work in an American DVD player. Also, the DVDs that consumers purchase today are encrypted with a technology known as CSS. Content owners have fought against the copying of DVDs, just as they did with the VCR. Remember that creating an archival copy of a work is fair and legal and not allowing consumers to do this basic right is illegal. No consumer group has presented this argument to a court yet and since the media cartels have near endless supplies of money, the American legal system is no place to decide this type of legality anymore.


The copyright law in America has changed since 1976. The law known as the Digital Millennium Copyright Act was enacted by the Clinton administration and gave content owners more rights over consumers than ever. Just on the cusp of the digital age, many works and creations have been stifled because of this new law. The DMCA makes it illegal to break encryption on a device. The DeCSS program that was used to allow archival backups of DVDs was again illegal. The process of copying the DVD was not illegal, though and there is the loophole. The content owners found a way to prevent fair use and still allow the fair use precedent to survive. The consumers of the world are now just feeling the problems with this type of systems.

There are many things that rely on fair use and common sense. Most people take fair use for granted, but if the content cartels had their way; we would be paying for everything we do today. If it were not for fair use documents many things would be infringement such as whistling a tune in public. This act would be a public performance. Cutting out newspaper articles and posting them on a door is infringement due to public display. Reverse engineering of computer code would be considered reproduction. Time-shifting media would also be considered reproduction. Fair use has entrenched itself in consumers very core attitude towards the media they purchase and if these rights are stripped, there will be problems.(3)

Copyright law has also deterred many other fields besides consumers of content media. The last example in the previous paragraph was deemed fair use because the reverse engineering of computer code leads to competition which is one of the founding principles of capitalism. If the copyright system was enforced to the extent that patents are, the world would be a different place. The fact that many pieces of code or algorithms can be copyrighted or are even patentable presents a problem that stifles competition. Innovation in the marketplace is spurred by competition. Just like Tivo was born out of time-shifting legislation, they saw an opportunity to create a time-shifting device that was better than the VCR and look where that has taken everyone. Most people now own a personal video recorder. This type of innovation would be moot if not for fair use. The computer industry has seen massive removable storage gains after the demise of the floppy drive. The slow large tape drives are being supplemented by faster optical drives. CDRW and DVDRW drives are commonplace in today’s world. This would not be the case if the content owners had their way. Being able to make copies of audio CDs and DVD movies are not what the media cartels want. It does not matter that there are more legitimate uses to using recordable drives (such as for file archival and backups), the mere fact that it has the possibility of copying a copyrighted work is enough of an issue for them to take action. This is why many blank media has extra fees attached to it to compensate the media companies. Most people would call this extortion but in the legal system, those with the most money usually win.
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Most of the negatives of DRM and copyright law exist to protect the copyright holder, but the purpose of the copyright laws are to protect the public and it is a problem that people must face this tragedy in this day. This does not answer the question of why DRM is good for companies and how they force it upon consumers. The answer is very clear, piracy. Even a few years ago, the term piracy meant a few people on the open seas raiding a ship for bounty. The term has lost its meaning thanks to clever PR. Its new meaning is anyone that copies a copyrighted work, for any reason. That is correct; most people are pirates and are committing piracy acts. This still does not answer the question about what the public gain from this type of restrictive technology. Most people do not care about piracy because it does not affect them. The media companies spin the issue to read like this: If piracy occurs, there will be no new content made. Taken further, the piracy issue would cause the collapse of all the different media companies. This has not happened to this day even after groups such as the RIAA and MPAA have been suing individuals over so called piracy. It is lucky for them that none of the cases have been brought to court, instead they make the defended, which is usually someone that cannot defend themselves, pay some amount of money less than the court fees would be. In essence, it allows them to say that they are fighting piracy and that they do get the people that are committing the acts. It is a problem with the legal system in America that allows this extortion to happen. Those with the most money win.

Media companies argue that DRM will help to bring more content to consumers with cheaper prices. As an example, a DVD that costs $20 may cost $5 with a DRM that allows for a single-viewing only. The problem with this argument is that it has been done before and has failed. The unpopular DIVX standard for DVDs that self-destructed after 48 hours was a great example of DRM failure in the marketplace. There are some successful examples of DRM in the marketplace such as the iTunes Music Store, but the iTunes FairPlay DRM is easily broken and easily copied. Even so, the DRM on its own is fairly open. Nonrestrictive DRM is the only DRM that will be accepted in the marketplace. Acceptable and proper is not the same thing, though. DRM should not be taken lightly.

The public stands to lose by changes brought about by DRM. The fact that there are laws such as the DMCA that supports DRM ensure the public loss in these areas.


An erosion of fair use in favor of DRM comes with the following potential costs:
  • a reduction in freedom of expression, to the extent DRM interferes with review, commentary, scholarship, and parody;
  • a reduction in innovation, to the extent that DRM eliminates the reservoir of incentives that spur companies to develop technologies that interact with copyrighted works;
  • a reduction in innovation, to the extent that DRM depends on legislative mandates (whether in the form of the DMCA, a mandate from the Broadcast Protection Discussion Group or the pending Hollings bill) that interfere with science and technology development;
  • an erosion of privacy, to the extent that DRM compromises user anonymity;
  • the "freezing" of fair use, to the extent that DRM systems will prevent courts from evolving fair use in response to new technologies;
  • undermining archives, libraries, and others who store and preserve our cultural heritage, to the extent DRM systems prevent free archiving of copyrighted content;
  • lessened competition, to the extent that DRM systems prevent companies from engaging in legitimate reverse engineering of competitors\\\' products.


What can be concluded from the approach the DRM and copyright law have on the public is that the public stands to lose much more than they would ever gain from this intrusive technology. DRM stifles fair use, ensures less competition in the marketplace, and disregards the fact that consumers are purchasing content. The best example of this issue is in computer games being made today. There are DRM copyright protection schemes that force the original CDs to be present to play the game and copies cannot be made. In the past, gamers would make a copy of the CD and use the copy to play the game and keep the original away as to not get damaged. This cannot be done with the current scheme. Most DRM in games also install system level drivers and rootkits which are detrimental for system stability. The other incident that occurred is when Sony BMG packaged rootkit-type DRM with their music CDs. Consumers that played the CDs in their computers opened themselves up for attack from viruses and spyware. Legally, Sony should be liable for damages and many district attorneys are still looking into the issue. The public has much to lose in this issue and hopefully we will stand up for our rights to fair use.

1 http://www.eff.org/IP/DRM/fair_use_and_drm.html "1. The Past: the VCR" Accessed April 15th, 2006
2 http://www.eff.org/broadcastflag/ Accessed April 15th, 2006
3 http://www.eff.org/IP/DRM/fair_use_and_drm.html "A. Activities that Rely on Fair Use" Accessed April 15th, 2006
4 http://www.eff.org/IP/DRM/fair_use_and_drm.html "C. What Does the Public Stand to Lose?" Accessed April 15th, 2006

All text in this article is © 2006 Aron Schatz »http://www.aselabs.com . Personal/Private consumption of this article is allowed under 'fair use' as long as the copyright notice remains (© 2006 Aron Schatz »http://www.aselabs.com). Any public reproduction (commercial use) must be authorized by Aron Schatz before being published. This goes for any businesses or major media outlets.

I may hate DRM and copyrights, but I also don't like people stealing my work without giving me credit.


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