How DRM would kill the next Netflix (and how the W3C could save it)

The World Wide Web Consortium's decision to make DRM part of HTML5 doesn't just endanger security researchers, it also endangers the next version of all the video products and services we rely on today: from cable TV to iTunes to Netflix.

The W3C's Encrypted Media Extensions system is designed to allow companies to prevent their competitors from making products that work with theirs, even in legal ways. For example, when Netflix started, it put DVDs in envelopes and redistributed them, charging money to let hundreds of people watch a movie that had only been paid for once, even though the studios objected.

Now Netflix and its allies from the entertainment industry and the DRM industry are working with the W3C to prevent exactly this kind of disruptive innovation. They advocate using DRM to technologically prevent the kind of lawful innovation that they relied on to get started, and to use the laws that protect DRM to give them the right to sue companies that defeat the technology. Under this system, companies get to turn everything they dislike about their competitors into an illegal act, just by putting a DRM between the competition and their system.

At the Electronic Frontier Foundation, we've proposed a legally binding covenant to help with this problem: if the W3C adopts it, then members who work on DRM will have to promise not to use DRM to attack interoperable technologies or security researchers.

I've written a post detailing the kind of interoperability -- from free/open source software to code that helps disabled people access videos to tools for national archives to new browsers -- that the W3C will put at risk unless they adopt a covenant to undo the legal mischief of the world's DRM laws.

Imagine a new, disruptive company figured out a way to let hundreds of people watch a single purchased copy of a movie, even though the rightsholders who made that movie objected. The new company charged money for this service, and gave none of it back to the movie's creators. That's exactly the business model that a controversial project at the Web's premier open standards organization seeks to prevent.

Of course, it's also the business model of Netflix, circa 1997, not to mention every prior video rental service relying on the traditional principle that a copyright owner's control ended when they sold a copy of the work.

If the studios had been able to to lock out disruptive new companies by adding a bit of technology that was against the law to break, Netflix would have been stopped in its tracks. It never would have grown into the powerhouse it is today, a valued partner to the movie studios and independents alike, a production house in its own right -- and one of the principal advocates for standardizing digital restrictions on media use.

We get it: companies often become less revolutionary once they achieve success. But people love Netflix, and they will love the next Netflix even more.

Interoperability and the W3C: Defending the Future from the Present