IP: TRISTRAM: Silicon Valley Grows Up (and Recesses)

[Dave Farber <dave () farber net>]

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From: "John F. McMullen" <observer () westnet com>
Date: Fri, 24 May 2002 06:02:41 -0400 (EDT)

Op-Ed Piece in the New York Times --
http://www.nytimes.com/2002/05/24/opinion/24TRIS.html?todaysheadlines

Silicon Valley Grows Up
By CLAIRE TRISTRAM

SAN JOSE, Calif.  On some stretches of Highway 880, curling around the
east side of San Francisco Bay, you can drive by row after row of pristine
office buildings, constructed just before the bust, never occupied by a
single tenant. These days, Silicon Valley's traffic, like the valley's
ambitions, isn't as ferocious as it used to be. Sometimes it's even
possible to get from San Francisco to San Jose in less than 90 minutes.

Maybe because I have lived in this part of the world since the Macintosh
was new, I tend to remember Silicon Valley more for its excitement than
for its excesses. I can still feel the jaw-dropping amazement that struck
me the first time I saw the World Wide Web, in a computer lab at Silicon
Graphics in 1994. Sock puppets and Super Bowl ads I tend to forget about.

So in the midst of the biggest bust the valley has seen since the early
1990's, I console myself with the knowledge that the excitement will
return, as it always does. Right now the most important story for Silicon
Valley just may be in Washington, where the valley and Hollywood are
fighting over the future of digital entertainment. Congress is currently
considering legislation that would require the computer industry to
develop "security system standards" to protect the transmission and
duplication of digital content.

This is not just an intrastate feud between Northern and Southern
California. It is a fight with global implications, and the valley's
peculiarly technophilic culture, usually part of its charm, may not serve
it so well.

Of course, what some find charming others see as condescending. Back when
Napster was still in the early stages of being sued for copyright
infringement, its executives would publicly express their belief, with all
sincerity, that Napster would one day be embraced by the music industry:
the industry just didn't understand the technology yet.

Alas, understanding never came. Despite credible studies suggesting that
sharing music files online actually leads consumers to buy more CD's
rather than fewer, the association pressed forward with its suit and
Napster was shuttered, its remains subject to a fire sale just last week.
Some 80 million Napster users were scattered to the wind. And digital
music distribution has become a dead zone where investors fear to tread.

The same broken dialogue is now repeating itself between Silicon Valley
and Hollywood. Hollywood went to Congress to block any sale of DVD's
without legislatively mandated copy protection. It sued to block the sale
of MP3 players and digital VCR's because these devices make it easy to
make fast, durable, portable copies of music or movies.

Silicon Valley responds  in that rational, superior way technologists
sometimes have  that of course digital technology makes possible better
reproductions that last longer than their analog counterparts. Hollywood,
valley executives say, doesn't understand the upside potential and is
stifling innovation. Besides, these guys said the same thing about the
VCR, and in 2001 consumers spent more than twice as much on videos as they
did at the box office.

In other words: Hollywood, you just don't understand.

It may not be the most politic approach. But it represents a fundamental
difference in viewpoint: Silicon Valley doesn't see digital theft as a
problem that can be solved  there, done. It's more like an arms race, of
an incredibly positive sort, with each innovation demanding new strategies
and providing new opportunities. The computer industry has sold an
all-digital product  software  for decades. It can be copied and
distributed every bit as easily as digital movies can. And yet the valley
has largely succeeded, through a relentless publicity campaign as well as
litigation, in preventing the widespread piracy of its intellectual
property.

Hollywood's latest bid for protection from digital theft is called the
Consumer Broadband and Digital Television Promotion Act, sponsored by
Ernest Hollings of South Carolina, chairman of the Senate Commerce
Committee. At its heart, the legislation aims to force Silicon Valley and
Hollywood to work together to come up with a way to protect copyrighted
digital material; if they don't, the government will step in.
Technologists see any "solution" as impossible, or at least fleeting,
since no software has yet been written that can completely prevent piracy.

But simply stating "you just don't understand, Senator"  even if it is a
perfectly reasonable response  isn't going to work in this latest battle,
as Silicon Valley is learning. Hollywood does a far better job than the
valley of speaking in one voice on Capitol Hill. Painfully, if not
surprisingly, Sen. Dianne Feinstein, former mayor of San Francisco, is a
co-sponsor of the Hollings bill; Hollywood has contributed roughly twice
as much money to her as Silicon Valley has.

So the discourse is changing. Andy Grove, the chairman of Intel, will
speak to anyone who will listen about the importance of the free market,
which is the standard technolibertarian argument. But he now also
acknowledges the valley as a powerful part of the mainstream economy and
speaks of the fight as one mature industry against another. Why should the
government, he asks, have to protect the movie industry from new
technology?

Silicon Valley, a famously fractious place, is also becoming more unified.
Mr. Grove and Steve Jobs, chief executive of Apple, have been vocal
opponents of the Hollywood proposal. The Business Software Alliance, an
industry group known for its vigorous pursuit of digital pirates, which
includes Microsoft and I.B.M. as members, is also opposed to the
legislation.

Still, old habits die hard, and one of the valley's oldest is its tendency
to thumb its nose at authority (even as it exercises a fair amount
itself). Gateway, the large computer maker, runs television ads that urge
its customers to download music (with permission from the artists) from
its Web site. Regardless of the effectiveness of these tactics, they have
succeeded in angering Hollywood.

In some ways, this populist activism is curious for an industry that has
increasingly served the needs of business rather than those of consumers.
But maybe that's the best thing about this fight. It has galvanized this
place as nothing has for at least a couple of years. It reminds the
industry of its relevance. And maybe, just maybe, by exposing its
immaturity  after all, the technology industry can no longer act like a
brilliant but misunderstood child  this debate will help Silicon Valley
grow up.


Claire Tristram writes frequently about technology and business in Silicon
Valley.


   "When you come to the fork in the road, take it" - L.P. Berra
   "Always make new mistakes" -- Esther Dyson
   "Be precise in the use of words and expect precision from others" -
    Pierre Abelard
                          John F. McMullen
   johnmac () acm org ICQ: 4368412 Fax: (603) 288-8440 johnmac () cyberspace org
                  http://www.westnet.com/~observer


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