“Those who count on quote ‘Hollywood’ for support need to understand that this industry is watching very carefully who’s going to stand up for them when their job is at stake. Don’t ask me to write a check for you when you think your job is at risk and then don’t pay any attention to me when my job is at stake”

– Chris Dodd, Fox News, Jan 20, 2012 (originally found on Techdirt)

So, I’ve struggled with how to react to everything that’s happened over the last week, and really all the things that have led up to it over the past few years. The SOPA/PIPA protest and blackouts, the abrupt shutdown of Megaupload, the rise of Anonymous and their reaction to all of it. I have seen my government and my fellow citizens attack their own for being intelligent, for being hard working, and for trying to better the world. I let it slide when Congress was discussing breaking the Internet – the greatest engine for social, economic, and technological growth since the development of agriculture and the written word – to protect a small but powerful group. I shrugged it off when Congress referred to consulting the experts who built the Internet as “asking the nerds” if it would be problematic to change how DNS works. I joined in the protests of SOPA and PIPA, and did my best to spread awareness about the complete removal of due process, the risk to our free speech, and the cost of turning over the roles of judge, jury, and executioner to a private industry with everything to gain by holding back progress.

I buy my media. It’s probably been almost a decade since I downloaded media I didn’t pay for. I have an HD premium cable package, two Tivos, two Xbox360s, Netflix, Last.fm and for a while a Hulu Plus account. I spend more on media in a given month than some people spend on food. TVs, computers, a house-wide audio system – all of it fueling the creative people in this country and around the world to do what they love and to share in their creations. But all of it enabled, and given value, by technology.

When you create a disruptive technology, there’s always someone who goes from comfortable to on the defensive. That’s why you disrupt. The blatant admission by Hollywood that they had bought politicians and expect to have their laws passed, no matter the public outcry and no matter the damage done to our rights makes them an industry worth disrupting. I believe the “at any cost” approach to protecting creative works is harmful to our economy, our rights, our culture, and our world. We have laws in place that protect this content, and despite claims to the contrary, they work quite well. More people are making more money in movies and music today than at any point in human history.

I don’t think I agree with the actions taken by Anonymous in their reaction to the Megaupload shutdown, but I can understand the anger and frustration behind them. I don’t think using technology to attack groups or individuals gains any real support for your cause. No, I don’t want to make them the victim. I don’t want to in any way encourage empathy or lend legitimacy to the actions of the MPAA. I don’t want to continue the arms race of DRM vs. hackers. I want us, the technologists, to completely take them out by building services and products so unfathomably better that they cannot hope to compete, until they dwindle to nothing.

And I encourage every creative person out there to join us. Your work is valuable. You should be paid for it, no one argues that. Help us dismantle an industry that has systematically devalued your creative labors, stripped you of your own rights (as authors, and owners of your own work), and sold the fruit of your creative efforts for their own profits.

When you can’t win because the game is rigged, you change the rules. Rather than use technology to help groups like the MPAA and their members reach new customers and adapt to a changing market, we must use technology to accelerate their end. Every day, I work to expand the capabilities of technology. Join me. This year – build something amazing, disruptive, and wonderful. When Hollywood dies, and it will, it won’t be because we bought the most politicians, it won’t be because we hired the best lawyers. It’ll be because we served their customers better than they ever could.

I strongly support the sentiment in Y Combinator’s RFS9. At no point in my life have I seen an industry so aggressively bite the hand that feeds. At no point have I seen an industry so deserving of being wiped from our economy by the tides of advancing technology. Since I started you with a quote, I figured I’ll leave you with this:

“Hollywood appears to have peaked. If it were an ordinary industry (film cameras, say, or typewriters), it could look forward to a couple decades of peaceful decline. But this is not an ordinary industry. The people who run it are so mean and so politically connected that they could do a lot of damage to civil liberties and the world economy on the way down. It would therefore be a good thing if competitors hastened their demise.”

– Y Combinator RFS9: Kill Hollywood

I was the lone hand in the “don’t” category…my CEO included. When pressed for an answer (in front of a few hundred new co-workers, mind you), I managed to muster the courage to answer, “UBB puts service providers at an adversarial relationship with the providers that actually drive acceptance of their product” or something of that nature.

Think about it though – if we’d had usage-based billing in 2001, there’d be no Youtube. No Netflix. No Hulu. Hell, we’d probably not even have an iTunes store. More importantly, would you pay for a 50mbps connection if you couldn’t use it for anything?

Let’s be honest with ourselves. Everyone talks about having everyone pay “their fair share”, how “heavy users” are just free-loading on the poor grandparents who only use the internet once a week to check email. They bring up examples of “I don’t get all the water I want for free. Or all the electricity” True. I don’t get to just go to a library and check out all the books I want. Or watch all the TV I want, or read all the articles in the newspaper I want.

Oh wait.

That’s not what UBB is about at all. It’s about stopping competitive services. It’s about slowing down innovation in the internet space (especially over-the-top video) and extending their outdated business model just a little bit further. It’s about protecting video revenue at the cost of consumer choice.

And c’mon, if you’re designing your network for the retirees who barely understand what a computer is? You’re doing it wrong. And you certainly shouldn’t be asking for legal protection to continue being that bad at your job.

My CEO (on another topic, actually) said it best: “Do you really think you’re going to win by standing still?” UBB is all about standing still. Services providers have seen their business model change, and most of them, rather than change along with it, are trying to find a way to return to the era of $100/mo services. All these companies have seen their core business declining – first with home phone lines, then just as they started making the shift to video, down goes video. Why do I need an $80/mo video package on top of my $40/mo internet, if I can spend $50/mo on their super-high-speed connection (introduced to compete with the Cable company) and get the rest from Netflix and Hulu?

Your local service provider is terrified of becoming just a dumb pipe to the internet. They’ll fight tooth-and-nail against any real competition, because then they have no edge, no way to lock you in. It makes sense from a business perspective, but it is profoundly anti-consumer.

But all this isn’t why I don’t think it’ll happen. To get back to my point – who’s really driving faster internet and broader fiber deployments in this country? You can bet it isn’t the tiny little rural phone companies. It’s Google, Microsoft, Apple, Netflix, Amazon – companies that have made their fortunes in software and computing, and know digital delivery of services is the next great frontier. These companies wield tremendous economic power, and know that their ability to innovate in the space will be significantly reduced. They can even make the argument (rightly so) that it will harm the competitiveness of American innovation, and start to leave us behind against countries like South Korea, Switzerland, and France – places where high speed internet is not only faster and cheaper, but more widely available. Who in their right mind would argue it is “necessary” to slow down innovation, because we’re going too fast and a few legacy companies can’t keep up? I mean, who besides the recording industry?

Sure, there will be some places where UBB might take hold. You can point to cellphones, Canada, etc. Each of these is a bad example. In the case of cellphones, voice and text messaging has become cheaper to the point where many carriers offer truly unlimited minutes and text messages (in some cases, for as little as $59/mo). Data caps? They’re lowest on the network that refused to update its infrastructure, and non-existent on Sprint’s 4G network. And Canada? Well, the government quickly realized it was extremely harmful to their national interest, because it was limiting Canadian’s access to the broader market. They are amid a plan to reverse the laws requiring UBB. What changed? Netflix came to town.

The only place UBB will actually work is where there’s no competition. Sure, you can act as an abusive monopoly, avoiding competition by stacking the laws in your favor. But you’re also inviting some local lawmaker who wants to stand out in an election to come down hard on you. First time someone shows up in town with unlimited internet? You shed customers, en masse. Heck, it’s not long before cellphones become a competitor for UBB-structured telcos. Only one bill, more convenient…sound like the shift away from landlines to anyone else?

In simplest terms though, Usage Based Billing is an admission that a provider can’t actually deliver the service they sold. It’s like selling me a package of 300 channels and then getting upset (and charging me more) if I watch more than 10 shows a week. And that’s just stupid.

*Usage-based billing (UBB) is a general term for the idea that home internet use should be billed (in whole or in part) based on the amount of data you consume, rather than the speed it is delivered. Options include per-gigabyte, per-month usage (like $1/gb), tiered access with overages (like your phone minutes used to be/still are), or a number of other possibilities.

I am writing to express my concern about Selectable Output Control. SOC represents a struggling industry’s attempt to block consumer choice and limit the usefulness of products already purchased. Disabling the ability to use analog outputs is an absurd leap, for the sake of “protecting content”.

And let’s be honest: this will do next to nothing to stop piracy. One copy is all it takes, typically leaked from within the studios themselves, or by one of the many content partners. A federal involvement will only devalue the hardware and software already purchased and in use by consumers, harming innovation and damaging consumer confidence at a time when our country needs it most.

Imagine a parallel: what if the highway billboard industry claimed that in order to offer full video billboards (with sound!), highway speeds must be limited to 20mph or less, so that users could receive the full benefit of the new ads. In such a situation, the governing body would be severely harming a large number of consumers to protect the interests of a private industry.

I strongly urge the FCC not to agree to the MPAA’s request for SOC. SOC would represent an industry artificially limiting customer choice, and negatively impacting a much larger industry (consumer electronics) for their own favor. It does absolutely nothing to benefit the consumer in any way, increase the value of new and existing technologies, or grow the industry in a meaningful way.

And now, a little backstory, if anyone’s curious:

Selectable Output Control is a technology that the movie industry developed to cripple your TV. Basically, the idea was that while watching Pay Per View (or anything else) on your TV, the MPAA should be allowed to, at their discression, disable any and all of the analog outputs from your television (audio and video). The idea was that this would “limit piracy”, by making it harder to record something and later distribute it. Since digital connections (DVI, HDMI, DisplayLink) all conform to a High-bandwidth Digital Content Protection (HDCP) standard, the recording device can’t actually record “protected” content. That means that if you plug your HD cable box into your BluRay burner, it won’t let you record anything. Sounds just fine right?

But what happens when I have a legitimate reason for wanting to do this? Suppose I buy a PPV event and want to record it onto my computer so I can watch it on my laptop on my next flight. With HDCP, this is impossible (and even trying is a felony). I used to be able to use the component outputs and plug it into one of these or these. These products could happily collect data, record it, and let me do with it what I please (you know, the exact reason people BUY products like this).

SOC is bad for consumers and bad for the electronics industry. Pretty much the only people it benefits is the MPAA, who wants to do everything in its power to stop users from recording TV, since it means you can skip commercials, share with friends, etc. Trouble is, all it’ll do is push more and more users to the illegitimate services, since they won’t have any of these restrictions.

I think that’s something the MPAA forgets: they’re not fighting piracy, they’re competing with it. Right now, pirated movies offer a better experience to the user: they’re cheaper, I can do whatever I want with them, I can re-format them to put on a mobile device (iPod, phone, etc), and they never expire. I’d be perfectly happy to buy such things if I could, because I’d be guaranteed quality and a virus-free file. Since the MPAA insists on trying to fight piracy, it ends up exhibiting all manner of destructive behavior, and SOC is just the latest.

Limiting consumer choice has never been good for the consumer, and in a world where there are more and more options, locking down my TV’s outputs will probably never directly affect me. I’ll just hop to a technology that isn’t restricted, and one that the MPAA gets no money at all from. What it will do is create a headache for legitimate users (like those that still get HD cable over component video), an expense for the FCC, and a burden on consumer electronics companies, especially their support departments.

It sure as hell won’t stop piracy though!

Certainly, a portion of this country receives broadcasts over the air, and probably will for quite some time. This will limit us to the time-locked, one-show-per-channel But an ever-growing number of us have a feed from our local cable or phone company for internet. What that means is that the same person providing me the access to some arbitrary multicast feed of channels that I pay an exorbitant amount for is also letting me stream from the myriad of services online – Netflix, Hulu, Youtube, and a myriad of network-specific sites, like NBC.com and ABC.com. I feed all the “channels” into my Tivo DVR and then watch them when I want. The whole thing seems silly though, and there has to be a better way for everyone involved.

And here it is:

Currently, networks like NBC see themselves as content providers, effectively they are both publishers and distribution houses for a very narrow stream of content. They have a limit on the content they can carry, both from a financial resource standpoint, but more importantly they only own a few channels, which can only put a single show at a time on. This is a choking point which doesn’t NEED to exist in a modern system, but is vestigial backwash from when radio waves carried a signal out from one tower to your house.

I envision a day when networks like NBC act almost exclusively as content aggregation. They pay for shows to be made, insert their commercials and so forth directly into them, and then send dozens (or hundreds) of shows directly to my local cable / internet provider each week. Then, my provider can set up a “portal” – possibly even give me a little Set Top Box to stream it directly from their servers. Even manage subscriptions through the box – letting me automatically download a show (effectively subscribe), letting me pick my shows and pay for groups, seasons, genres, or just single episodes. Or an “all I can eat” pass to watch whatever I want when I want it.

Everything is On Demand. The amount of traffic I pull down from the Internet is dwarfed by the amount I pull down over a high-speed, local connection to a server sitting halfway across town. Why stream from NBC’s servers over an expensive, “real” internet connection when I can pull down from my local ISP?

What this will do is basically abolish the concept of a TV “network”. They’ll be feed services, and can focus on what they’re actually supposed to do – provide content. They’re publishers, not distributors, and they should stick to that. The value of a themed “schedule” pales in comparison to the value of watching what I want, when I want it, with not limit to storage, capacity, or the number of channels I can record at once. And I shouldn’t need a $1000+ piece of hardware or something I pay an extra $15/mo for. I should just do it.

Microsoft is working on something called “Media Room” – it is effectively a DVR for an entire cable provider. Record everything, turn your entire network into an “on demand”. It is incredibly promising, but the current content providers are crying “Foul!” at the concept of delivering content to users whenever they want it, rather than based on an arbitrary schedule. They’re fighting with lawyers and lawmakers, and it’ll be a while before technology and consumer benefit win out. The old, lumbering media giants don’t want to give up a piece of their estate, even though they’d be better off in the long run. Also, they don’t want to make it really easy for new competitors to enter the business of media distribution. There isn’t a way to easily monetize Youtube (yet), but if I could put content on my local ISP’s network and let people pay a quarter per show? I wouldn’t need NBC at all, except to make the expensive shows. The value of their distribution network would no longer be a hurdle, just the amount they can front for famous actors / sets / equipment.

Leveling the playing filed scares them, so they’ll fight it as long as they can.

What’s most fascinating to me is the breadth of extra content available. They’re not just showing episodes online, there’s a tremendous amount of additional content. The inbox of one of the characters on the show, interviews with the cast.

But what does NBC get out of it? Well, they get the exclusive advertising rights. No longer are mid-show commercials shared (or overwritten) by local broadcasters. They show me ads, and install four cookies on my computer to track (presumably) which shows I visit, which ads I click on, which shows I learn more about. It looks like they’re getting ready to build a passive profile of “me” on their site, with page ads and commercials all targeted at me, rather than hoping I fit the largest demographic for whatever time period the show is on. As it happens, I saw commercials for tampons. Go figure.

The other big advantage? The adoption cost is incredibly low. Suppose a friend told me that Coastal Dreams was her favorite new show. The season started in October, so the chances that I’d be seeing all the old episodes in the right order are virtually zero. I can’t exactly join in midway through, or else I wouldn’t know if April overreacted by firing Christian. Well, now NBC doesn’t have to waste airtime with reruns to attract new viewers. If I want to watch the story from the beginning to catch up, I can simply log on and view all the past episodes. No waiting for the Season 1 DVD, no reading episode synopsis on Wikipedia or Torrenting the first half of the season. It’s all right there, and that way NBC still gets their advertising buck for me watching.

I think this is a very interesting experiment. The cost of launching a show this way is dramatically lower, the fans feel more “invested” because they get more than a passive interaction with the storyline, and best of all, all the Ad revenue is pointing right back at NBC. No middlemen, no cable company taking their cut, nothing.

I haven’t had the time or desire to actually watch an episode of Coastal Dreams yet, but I’d bet you can’t fast forward through the commercials, either. Take that, Tivo!

I’ll be watching this one closely. Not the show, the experiment. The show seems aimed at pre-teen girls.