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CONTACT: Amy Smorodin
May 11 , 2006
(202) 289-8928

DMCA Permits Trust in Digital Market
Despite Flaws, Content Providers Use of Barriers Preserves Viability of Market

WASHINGTON D.C. – The Digital Millennium Copyright Act (DMCA) has helped the digital content marketplace by allowing business models to place more trust in technical barriers that serve the same purpose as walls and doors in the offline world, explains Solveig Singleton in "The DMCA Dialectic: Toward Constructive Criticism," a Progress on Point released today by The Progress & Freedom Foundation. Singleton argues that recent critiques of the DMCA remain marginal because they do not serious address this need, and challenges critics to produce workable alternatives. The paper is based on Singleton’s remarks at a recent conference at the Cato Institute.

In the paper, Singleton, Senior Adjunct Fellow at The Progress & Freedom Foundation, explains that the DMCA helps to resolve a fundamental problem for all business models. To attract investors, businesses must be able to exclude free riders by erecting boundaries, usually either physical or legal barriers. Singleton states that legal boundaries are inadequate in the digital environment because the court system is "far too slow and far too expensive" to resolve small-value infringement disputes. Therefore, physical boundaries such as digital rights management (DRM), bolstered by the DMCA, are needed for growth in the market.

Singleton disputes the argument that the DMCA seriously impedes interoperability and competition, specifically reverse engineering. She notes the Act contains an exemption for reverse engineering and points to other restrictions The author explains that the mains obstacles to interoperable and open DRM are business problems such as the slowness of developing interoperable systems. Proprietary DRM so far has an advantage in the digital market because it offers added assurance for rights holders that their content will be protected. Singleton also addresses the issue of fair use, explaining that consumer demand will guide how DRM tools evolve to meet demand for access to works.

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation