You Paid For It, But Don’t Own It

Those of us old enough to remember when most of our music came on vinyl “records” probably have fond memories of squeezing a bunch of songs onto a cassette tape for a road trip. Or making mixtapes for friends and lovers. Or, when that first tape became too warbly for the cheap cassette player in your ’69 Corvair, you simply recorded another from your record. Smart audiophiles used cassettes as a backup, to prevent wearing out their records.

We took this for granted, even though the music industry tried to stop it. Fears of piracy drove that position, but ultimately copyright law was on the consumers’ side under the “Fair Use” provisions. You bought it, you owned it.

That changed with software, which so far has operated under a licensing system. Whenever you install a new program, you click on the “accept” button on the license agreement (hands up, anyone who’s read one start to finish. Anyone? Bueller?) That agreement presumably gives you the right to use the software subject to certain conditions imposed by its maker. But you don’t own it. And you can violate it by making a backup copy of the software, reselling it, modifying it, or any number of things you might do that for whatever reason that the publisher doesn’t want you to do.

The court case, in the Ninth Circuit Court of Appeals, is MDY v Blizzard. The skinny is MDY Industries, a software company, has created a program that will allow users to essentially play Blizzard Entertainment‘s immensely popular online game, World of Warcraft, on automatic pilot. (Since WoW is a real-time game with thousands of players, the software does convey a certain advantage if you have to break away from the game to… you know, have a real life). Blizzard considers MDY’s program a “bot” used to cheat, and thus is a violation of the license agreement. The court will presumably use this case to decide whether the license agreement is legal.

The Electronic Frontier Foundation has a summing up of the case here (they’re on MDY’s side in the case). But outside of the relatively few WoW players who are using bots to cheat, the court ruling has widespread ramifications for the software industry as a whole, especially with Microsoft.

Managing a digital product in the wild is a difficult task, because the whole reason we encode lots of data digitally rather than in an analog format is because of the ability to make perfect copies. This ability is why the software business is such an immensely profitable undertaking: Once you have developed a product, it costs very little to produce it at scale. Unlike the auto industry, whose costs for raw materials are always a significant part of the total cost of each car made, with software, at most you’re buying a DVD and packaging, and sometimes you’re just paying for the electricity and bandwidth to download the file from a remote server.

Coupled with the near-ubiquity of the Internet, this makes it very easy to ship (there’s an archaic word for you) bug fixes, updates, new features and versions (whether critical, useful, or not) and so on, helping to continue the revenue stream. Right now, software companies, including Microsoft, have methods and techniques to detect unauthorized copies or uses of software, and disable them. Someone running a pirated version of Windows may find their computer no longer boots up, to say nothing about an inability to upgrade the system. Engineers who modified the first iPhones to run on a network other than AT&T’s (with whom Apple had an exclusive partnership agreement) soon found themselves in possession of a $300 brick. When it comes to fighting piracy, remote disabling is just the latest tool in an arsenal that has at various times included digital rights management software, entering a code on the packaging to unlock the software package, even shipping the program on a floppy disk with an extra notch in it that disabled the floppy drive’s “write” head. (We covered it with a piece of tape).

The industry in general argues that the licensing agreement is part of its quality control process, which is true, in a sense. Publishers have long known that consumers are unlikely to go back to the retail store to buy an upgraded version of their software. Having a window pop up on your desktop allowing you to upgrade on the fly is not just easier, it’s necessary in an age of rampant computer viruses and trojan horses. The makers of antivirus software, in particular, are dependent on the existing system to give them even a hope of combatting the growing tide of malware.

The EFF, and other advocates, argue that license agreements are first and foremost a violation of the copyright act and inconsistent with other parts of the law, and that the same convenience that online upgrading allows can be exploited or misused, such as the case when some legal and legitimate users of Windows had their operating systems disabled due to a bug that mistakenly identified the software as a pirated copy. And there’s a few in the tech community could make their systems run better if they could just tweak the code a little (no small wonder that many hardcore developers outside of Microsoft prefer working in open-source environments, where they can customize their operating systems to their heart’s content for whichever purpose they have in mind).

So there’s a lot riding on this case. It’s determining whether software is going to be treated the same as books, music, video and other media (a lot of which we now read, listen to or watch on our computers), or whether the software companies will continue to impose whatever terms they wish on the consumer. I would expect Blizzard to appeal this to the Supreme Court if they lose this round, but if the courts ultimately upend the established practice of the industry, there’s going to be a mad scramble to find a workaround, and while it’s probably unknown how much real money will be lost, the markets will surely be a bit more jittery.