MOVIE MAKERS SHUN NET PACT MUSIC, PC FIRMS COME TO TERMS.

Byline: From staff and wire reports

Hollywood spurned a high-stakes agreement disclosed Tuesday between leading music and technology companies aiming to protect copyrights on digital movies and music without new government involvement.

The unusual compromise, brokered among some of the largest computer companies and the music industry, lists seven guiding principles that Silicon Valley executives hope lawmakers will take into account as Congress develops future technology policies.

With the agreement attempts to head off government intervention in the rising debate between Hollywood and Silicon Valley over what consumers can do with commercial music or movies they purchase.

Under the agreement, technology lobbyists will argue that record companies should be permitted to use hacker-style tactics to disrupt Internet downloads of pirated music and movies. They will caution that such tactics must not be destructive to networks or to a user's computer data and that they must not violate a person's privacy.

The technology lobbyists also will argue against efforts in Congress to amend U.S. laws to broaden the rights of consumers, such as explicitly permitting viewers to make backup copies of DVDs for personal use or to copy downloaded songs onto handheld listening devices.

In exchange, the Recording Industry Association of America agreed to argue against government requirements to build locking controls into future generations of entertainment devices to make it more difficult for consumers to share music and movies. Technology companies have complained that such controls are too expensive and complex.

``What we're saying is we don't need our heads banged together,'' said Hilary Rosen, chief executive for the music group. She said the agreement will help stem ``needless legislative battles, silly rhetoric about what divides us and continuing disharmony in the public policy arena.''

The powerful movie, television and home video industry, represented by the Motion Picture Association of America, spurned the agreement. The MPAA has aggressively sought government requirements for built-in locking controls on new devices, such as DVD recorders.

Jack Valenti, president of the Motion Picture Association of America and Hollywood's top Washington lobbyist, denied any rift with the rest of the entertainment industry and said discussions on solutions to piracy are ongoing with both computer and recording industry leaders.

While expressing support for many aspects of the Recording Industry Association of America's new agreement, Valenti said, ``we are not prepared to abandon the option of seeking technical protection measures via the Congress or appropriate regulatory agency, when necessary.

``We believe that no alternative course of action should be eliminated from consideration,'' added Valenti, who noted that the recording industry is already in a crisis mode due to the ease with which computer users can download and copy songs.

Valenti's organization and its member major studios have as yet been spared the worst impact of Internet piracy because downloading of films is cumbersome and time-consuming for most computer users. However, the industry is racing to have its new protections in place before broadband technology comes into wide use.

Broadband service, which allows pirates to download movie files in minutes instead of hours, is gaining an estimated 100,000 new subscribers nationwide each month.

Valenti noted that the major movie studios continue to pursue other legal piracy remedies, including the broadcast flag. The flag proposal, now before the Federal Communications Commission, would allow movie producers and television broadcasters to digitally encrypt programs and prevent them from being downloaded.

Technology executives responded that they had sought a six-month cease-fire on any lobbying activity during a meeting with Hollywood executives in Chicago in September.

``We thought it would be more productive without the motion-picture industry holding a legislative gun to our head,'' said Ken Kay of the Computer Systems Policy Project, which represents chief executives at IBM, Dell Computer Corp. and Hewlett-Packard Co., among others.

Both sides said Tuesday they were willing to continue negotiations.

Hollywood lobbyists also are battling several attempts in Congress to weaken provisions of the Digital Millennium Copyright Act of 1988, which can levy penalties up to $500,000 and five years in prison on persons who use and access protected materials without the permission of the copyright holder. Rep. Howard Berman, D-Van Nuys, was a leading architect of the act.

Reps. John Doolittle, R-Roseville, Zoe Lofgren, D-San Jose, and other lawmakers are seeking to exempt public libraries from the law. They would also exempt individuals who swap or trade protected materials with others but do not profit from the activity.

Berman last year attempted to address music and movie piracy with his Peer to Peer Protection Act. The proposal, which will be reintroduced in the new Congress, would exempt movie and recording companies from federal anti-hacking laws. The companies would then be free to use programs to invade the computers of identified Internet pirates and to disable stolen files so that they could not be copied or distributed.