Washington – Congress is toying with the idea of mandating one standard for all online music platforms.
Thanks but no thanks – the industry can figure it out, said music industry and consumer groups at a congressional hearing about the plan Wednesday.
During a hearing to discuss mandating interoperability standards between competing music platforms such as Apple’s iTunes and RealNetworks’ Rhapsody, lawmakers sounded off on the lament of some hipsters frustrated by playback snafus when they try to transfer music files from other platforms to their iPods.
Although Real and Apple support Advanced Audio Coding (AAC), a compression format defined by the MPEG-2 standard, RealNetworks has hinted strongly in the past that it might consider using Microsoft’s Windows Media (WMA) format because of the playback snafus with iPod devices.
The two companies have also sparred over Real’s own DRM (define) translation technology that lets consumers securely transfer purchased music to every popular secure music device on the market, including ones from Creative, iRiver, RCA, Rio, Samsung, palmOne and all four generations of Apple’s red-hot iPod. Apple later accused RealNetworks of hacking its DRM system.
“This interoperability issue is of concern to me since consumers who bought legal copies of music from Real could not play them on an iPod,” Rep. Lamar Smith (R-Tex.) said at a hearing of a House subcommittee on intellectual property.
The ideas floated by Smith and Rep. Howard Berman (D-Calif.), who once sponsored an infamous bill that would have allowed music companies to jam the personal computers of illegal downloaders, included a national interoperability standard and warning labels on portable devices about what formats can play on the machines.
Government intervention in the burgeoning online music business, though, brought a unanimous no vote from industry officials who showed up to weigh in.
William E. Pence, chief technology officer of Napster, noted that the government has “historically not been a participant in competition between early-stage consumer technologies” such as between the VHS and Betamax, the cassette and the eight-track tape or USB and Firewire.
“Similarly, it does not seem prudent for government to pick a winner in the continuing marketplace battle between Apple’s Fairplay DRM and its competitors,” Pence told the panel.
Pence said government intervention “can lead to politicizing and inhibiting” innovation and urged the panel to allow the marketplace to select winners based on actual demand.
“Marketplace forces will continue to drive innovation in the DRM arena with attendant consumer benefits – new ways to enjoy digital music at a variety of different price points – while gradually solving the interoperability problem,” Pence said.
Dr. Mark Cooper, the CFA’s director of research, noted that Apple’s early dominance of the download market does not guarantee its long-term success.
“A quarter of century ago a closed platform dominated the computer desktop market,” Cooper said in a reference to the Apple II and MacIntosh computers.
“A more open platform quickly replaced it, forcing all platforms to improve compatibility. Given a choice that is not distorted by anticompetitive practices and good information, consumers will prefer and migrate to the interoperable platforms.”
Ray Gifford, president of the Progress and Freedom Foundation, a Washington think tank focused on digital issues and public policy, urged Congress not to give in to “platform envy and mandate some sort of interoperability.”
Gifford said antitrust and intellectual property laws are well suited to handle the situation.
“For public policy makers, we can never forget the lessons of public choice theory, which predicts that firms and interest groups will seek government favor in promoting their standards solution and handicapping their rivals,” Gifford said.
“Any call for the government to prefer one standard or model over another must be subject to most exacting skepticism.”
“Apple was invited to testify today, but they chose not to appear,” Smith said. “Generally speaking, companies with 75 percent market share of any business, in this case the digital download market, need to step up to the plate when it comes to testifying on policy issues that impact their industry. Failure to do so is a mistake.”
A spokeswoman for Apple declined comment.
