Public sector pries into digital music hardware

TAMPA BAY, FLA. — When Michael Greene appeared on stage at the Grammy Awards two weeks ago, he didn’t come to honour outstanding musicians; he was there to present a new problem to system builders.

The CEO of the National Association of Recorded Arts and Sciences (NARAS) called MP3 file

sharing a virus running rampant and a criminal activity. He also said the recording industry is lobbying the U.S. government and has sent a proposal to Congress, which could force system builders to install government-approved copy protection hardware devices.

At the semi-annual System Builder Summit this week, Intel Corp. vice-president of reseller channel operations Tom Kilroy did not want to field questions about government-approved copy protection. But system builders say they were caught off guard by Greene’s comments and want more details on recording industry’s lobby.

Michael T. Simmons, production manager for Qsystem Computers, a system builder from Carencro, La., is concerned about what the government-approved copy protection devices might do to the growth of legal downloading.

“”This (recording industry lobby) is going kill the Internet,”” Simmons said. “”What about new live software updates and virus protection utilities that you download freely from the Internet? The only reason companies do that is because they don’t want to send you a CD.””

Changes may be afoot on our side of the border as well. The Copyright Board of Canada is contemplating a levy that would increase the price of recordable CDs by $0.59 per disc, memory cards by eight cents per megabyte, $2.27 per writable DVD disc, and $21 per gigabyte on MP3 players. If approved, the levy, which is being pushed by the Canadian Private copying Collective on behalf of recording artists, would come into effect next year and run through 2004.

The president of McKinnon Micro Distributing Ltd. in Richmond, B.C says the levy won’t have much of an impact on his business, but bemoans the possibility of an increase. If it is implemented, he predicts writable media sales won’t be noticeably harmed and MP3 player sales will be dip early on, but should recover.

“”Everybody wants their rightful due, and not everybody has the kind of money Microsoft does where they can fund this anti-piracy group that’s worldwide,”” says Tim McKinnon. “”I certainly don’t begrudge them that, but, man, it’s just another tax.””

Charlton Lam, general manager at Markham, Ont.-based Supercom, agrees with McKinnon. He says the impact will be minimal (even on the MP3 player front) and disagrees with the reasons for the levy.

“”People are looking for them (MP3 players) specifically, so it doesn’t matter if it’s $100 more of less,”” he says. “”I don’t like taxes geared towards one industry, or one person, or one segment.””

Rick Morgan, president of Ace Computer Warehouse, a system builder from Peoria, Ill., said he believes people using computers to download MP3s from popular file sharing programs is a form of piracy. “”I do think (government-approved copy protection) is a necessary step as far getting the things in the right hands,”” he said. “”In my eyes it is stealing, so you might as well get it under control.””

Doug Daniel, CEO of NASBA, the Association of System Builders and Integrators based in Atlanta, Ga., said it was too early to say how government-approved copy protection would affect system builders’ business.

“”I do not know what the system builder reaction would be at this point. But whenever someone tries to force you to do something, the immediate reaction is to resist,”” Daniel said.

However Daniel added that NASBA, which has 8,300-member s in the U.S. and another 1,200 in Canada, would probably give in to public sector decisions.

“”Piracy is a big issue in our industry and we are adamantly opposed to anything that encourages piracy. We would have to leave it in the good hands of the Justice Department for the time being. Whatever they decide to do we as an organization would support,”” he said.

The problem, as Daniel sees it, would be around enforcing any legislation. “”It is tough to take on policing it yourself. Everyone wants someone else to police it. And you have to start in your own back yard,”” he said.

However, the question most asked about government-approved copy protection at the System Builder Summit is who was going to pay for this.

“”Ultimately, the person who pays for this is the consumer. The consumer or end user always picks up the tab for everything,”” Daniel said.

With files from Geoffrey Downey


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