Witness Testimony
Mr. Robert Moore
Chief Executive Officer
321 Studios
3 Research Park Drive
Saint Charles, MO, 63304
H.R. 107, The Digital Media Consumers' Rights Act of 2003
Subcommittee on Commerce, Trade, and Consumer Protection
May 12, 2004
10:00 AM
Chairman Barton, Chairman Stearns, Representatives Dingell, Schakowsky, and
Members of the Subcommittee: My name is Robert Moore, and I am the Founder and
President of 321 Studios of St. Charles, Missouri - a company started in my
basement with 3 family members in 2001. 321 Studios is a software company. We
have provided more than 1 million DVD consumers with a convenient way to make
backup copies of their DVD collections. Our software is designed with many
anti-piracy features. It does not affect audio CDs.
In three years we created almost 400 jobs and achieved 100 million dollars in
sales. Today, I appear for my family and the fewer then 40 remaining employees
of a company on the brink of annihilation, caught with our customers in a
nightmarish "Catch-22" created by the courts' incomplete reading of
the 1998 Digital Millennium Copyright Act.
I am most grateful to be here, however, NOT to tell 321 Studios' story for its
own sake. Instead, I offer it today as a surreal example among many of why H.R.
107, the Digital Media Consumers' Rights Act, is such vital legislation.
I want to especially thank Reps. Boucher and Doolittle for their tireless
dedication to consumers' rights under copyright law, and Chairman Barton and
Chairman Stearns for this forum, and ask that my prepared statement and exhibits
be included in the Record. Today, I ask the Subcommittee and all Members of
Congress to consider three key points:
ONE: 321 Studios 1 million plus customers -- like American consumers in general
-- are people, not pirates, and we should strike a balance in copyright law for
them.
TWO: Our product is virtually impossible to use for real "piracy" --
high-speed volume bootlegging and internet distribution -- as distinct from
reasonable consumer use of copyrighted works.
THREE: H.R. 107 is needed if the protection for fair use and consumer rights
that Congress deliberately wrote into the DMCA is to have any practical meaning
in a digital age of content encryption. Let me take these points in order . . .
POINT ONE
Our customers are ordinary and honest Americans: moms and dads, artists and
educators, librarians and movie buffs. These customers just want to keep their
expensive collections safe so they can enjoy them for years to come and they
expect to be able to use DVDs like they use other legally obtained unencrypted
media. They collectively have paid Hollywood billions of dollars for DVDs that -
as CNN and the Associated Press reported just yesterday and last week -- we now
know to physically rot and degrade, and to be easily damaged by toddlers, teens
or harsh conditions of all kinds. A copy of those reports is attached for the
record, as well.
Our customers tell us that they also use our software to assure their ongoing
access to titles they've bought that later go out of distribution, and to
restore single disks included in expensive boxed sets that cannot be purchased
individually.
Please allow me to submit for the record a disk containing brief statements,
entirely in their own words, from just five of the literally thousands of
testimonials our customers have taken the time to provide to us. A transcript is
also attached.
I would also like to submit for the record a disk containing electronic copies
of the more than 160,000 communications made to Congress in support of 321
Studios advocacy on this issue since we launched our website in December of
2002.
POINT TWO
We at 321 Studios also are honest, hard-working, middle-American folks who love
movies and who respect copyright. To begin with, we didn't hide offshore from
Hollywood or wait to get sued.
Long before any action was filed against us, 321 Studios actually asked a
federal judge to issue a declaratory ruling that consumers had a fair use or
other right to make a backup copy of encrypted DVDs under the DMCA and,
therefore, that our product was legal.
Incredibly, the court didn't reach the question of what the DMCA's fair use
"savings clause" meant. It just mechanically ruled our software to be
an illegal "circumvention" tool and didn't address the question we had
asked. Sued later by Hollywood, we were enjoined from marketing 321 Studios'
software and consumers were cut off from our product: one they need in an
encrypted marketplace to make their fair use rights real.
Judge us also, please, by how we designed and marketed our software. Frankly,
anyone who tries to use it to mass produce bootleg DVDs would immediately become
a strong contender for "Dumbest Criminal of the Year." I say this
confidently for a host of reasons:
1. Our software can only make backup copies one at a time and it typically takes
an hour or two to copy a single DVD. Moreover, we block the user from making a
copy from a copy. Thus, high-speed mass production is literally impossible with
321 Studios' product.
2. The encryption placed on the original DVD by a movie studio is wholly
unaffected by 321 Studio's software;
3. Every copy of our software must be registered to be useable and every backup
DVD is invisibly "watermarked" throughout the copy so that -- if
improperly distributed or sold -- it can be traced back to the person misusing
the software to violate copyright law.
4. The software actively eliminates any digital copy of the original DVD from
the computer during the process of making the backup copy so there is literally
nothing on the computer to "upload" to the Internet. Make no mistake:
this issue is not about Napster or peer-to-peer file-sharing.
5. Finally in this regard, 321 Studios repeatedly has offered to work with
movie-makers so that the back-up copies made by our product also would be
encrypted. They consistently have refused, preferring to argue that we are
"pirates" because the backup DVDs that our software helps consumers
make are unencrypted!
POINT THREE
The issue raised by HR 107 and squarely before the Subcommittee today is not
whether piracy is bad or the industry deserves to be protected from it. The
answer to those questions is clearly "yes" on both counts.
The real, practical and very pressing question dramatically highlighted by the
experience of 321 Studios is simply this:
"If consumers can make a personal copy of an audio CD they've bought to put
on their iPod or play in their car …
"If consumers can use a VCR or TiVO to make a tape or digital copy of a
movie on broadcast or cable TV …
"If consumers can use conventional and digital photocopiers, and digital
scanners, to reproduce pages from a book …
"If consumers can make a backup copy of a computer program like Windows …
"Then, how can it be that consumers are criminals for making a backup copy
of a DVD they've bought and paid for and why is our company -- indeed any
technology company -- criminal for selling them the digital tools that they must
have to make their rights real?
CONCLUSION
We are at a watershed moment, Mr. Chairman. As 321 Studio's story makes all too
clear, H.R. 107 is critical to rescuing the public from this DMCA
"Catch-22" never intended by Congress.
For my family, for my company, for millions of consumers who simply want to make
a personal backup copy of a DVD without fear of persecution or prosecution . . .
I implore this Committee and all Members of Congress to cosponsor and pass H.R.
107.
Thank you, Mr. Chairman. I look forward to your questions.
CDs, DVDs not so immortal
(AP) -- Dan Koster was unpacking some of his more than 2,000 CDs after a move
when he noticed something strange. Some of the discs, which he always took good
care of, wouldn't play properly.
Koster, a Web and graphic designer for Queens University of Charlotte, North
Carolina, took one that was skipping pretty badly and held it up to the light.
"I was kind of shocked to see a constellation of pinpricks, little points
where the light was coming through the aluminum layer," he says.
His collection was suffering from "CD rot," a gradual deterioration of
the data-carrying layer. It's not known for sure how common the blight is, but
it's just one of a number of reasons that optical discs, including DVDs, may be
a lot less long-lived than first thought.
"We were all told that CDs were well-nigh indestructible when they were
introduced in the mid '80s," Koster says. "Companies used that in part
to justify the higher price of CDs as well."
He went through his collection and found that 15 percent to 20 percent of the
discs, most of which were produced in the '80s, were "rotted" to some
extent.
The rotting can be due to poor manufacturing, according to Jerry Hartke, who
runs Media Sciences Inc., a Marlborough, Massachusetts, laboratory that tests
CDs.
The aluminum layer that reflects the light of the player's laser is separated
from the CD label by a thin layer of lacquer. If the manufacturer applied the
lacquer improperly, air can penetrate to oxidize the aluminum, eating it up much
like iron rusts in air.
But in Hartke's view, it's more common that discs are rendered unreadable by
poor handling by the owner.
"If people treat these discs rather harshly, or stack them, or allow them
to rub against each other, this very fragile protective layer can be disturbed,
allowing the atmosphere to interact with that aluminum," he says.
Part of the problem is that most people believe that it's the clear underside of
the CD that is fragile, when in fact it's the side with the label. Scratches on
the underside have to be fairly deep to cause skipping, while scratches on the
top can easily penetrate to the aluminum layer. Even the pressure of a pen on
the label side can dent the aluminum, rendering the CD unreadable.
Koster has taken to copying his CDs on his computer to extend the life of the
recordings. Unfortunately, it's not easy to figure out how long those recordable
CDs will work.
Fred Byers, an information technology specialist at the National Institute of
Standards and Technology, has looked at writeable CDs on behalf of government
agencies, including the Library of Congress, that need to know how long their
discs will last.
Manufacturers cite lifespans up to 100 years, but without a standardized test,
it's very hard to evaluate their claims, Byers says. The worst part is that
manufacturers frequently change the materials and manufacturing methods without
notifying users.
"When you go to a store and buy a DVD-R, and this goes for CD-R as well,
you really don't know what you're getting," he says. "If you buy a
particular brand of disc, and then get the same disc and brand six months later,
it can be very different."
This renders the frequently heard advice to buy name-brand discs for maximum
longevity fairly moot, he says.
DVDs are a bit tougher than CDs in the sense that the data layer (or layers --
some discs have two) is sandwiched in the middle of the disc between two layers
of plastic. But this structure causes problems of its own, especially in early
DVDs. The glue that holds the layers together can lose its grip, making the disc
unreadable at least in parts.
Users that bend a DVD to remove it from a hard-gripping case are practically
begging for this problem, because flexing the disc puts strain on the glue.
Rewriteable CDs and DVDs, as opposed to write-once discs, should not be used for
long-term storage because they contain a heat-sensitive layer that decays much
faster than the metal layers of other discs.
For maximum longevity, discs should be stored vertically and only be handled by
the edges. Don't stick labels on them, and in the case of write-once CDs, don't
write on them with anything but soft water-based or alcohol-based markers.
Also, like wine, discs should be stored in a cool, dry place. Koster's friend
Mark Irons, of Corvallis, Ore., stored his CD collection in a cabin heated by a
wood-burning stove. The temperature would range between 40 degrees and 70
degrees in the space of a few hours. Now, the data layer of some of his CDs
looks as if it's being eaten from the outside.
Irons is still pretty happy with CD technology, since it beats vinyl LPs and
tape for longevity. Now that he's moved his discs to an apartment with a more
stable temperature, he's noticed that the decay has slowed.
"I'm hoping they'll hold out till that next medium gets popular, and
everyone gets to buy everything over again," he says.
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