Remarks delivered by Bruce P. Mehlman, Assistant Secretary for Technology Policy, United States Department of Commerce, delivered October 23, 2002 at the Heritage Foundation in Washington, DC:

Thanks for inviting me today.September 17, 2002, was a very important day for my family. On that Tuesday, Pixar's Monsters' Inc. first became available for home sale. I had known this day was coming for months, having visited the Monsters' Inc. web site multiple times since the first of four theater visits my family attended. And like 80,000 others, I had pre-purchased my DVD from Amazon.com months earlier.

According to the Pixar, Monsters Inc. sold 11 million DVDs and video cassettes in its first 7 days on the market. Two weeks prior, I hesitate to admit, my wife and I were watching the finals of American Idol on Fox. Although we did not vote for our favorite performer over the phone or via Internet, Fox reports that over 100 million viewers did. Kelly Clarkson's single, "A Moment Like This," sold 236,000 copies in its first week, jumping farther in the charts - from #52 to #1 in one week - than any other single in history, with millions of visitors clicking on the American Idol web site and fueling the hype.

What these two stories illustrate, in my opinion, is that reports of the death of the movie and music businesses at the hands of the Internet are greatly exaggerated. They also touch upon one of the most intense and emotional policy battles out there right now, the one that brings us here today. The fight over digital content and rights management has it all - critical industries battling over billions, lobbyists and lawmakers maneuvering for position, disruptive technologies in a dynamic market, and self-professed consumer advocates gearing up for a great crusade. Moral absolutism abounds - you are either on the side of "freedom and innovation" or the "Eighth Commandment and the rule
of law." And on an almost weekly basis, experts gather to assess the status
and issues relating to the questions at hand.

So is all of this sound and fury justified? I believe the attention is warranted, although the intensity is not always constructive. The issue of digital content and rights management is of great importance for several reasons. First, the industries implicated by the issue represent significant jobs and revenue with major league implications for our economy. The movie industry employs over 590,000 people. Software and computer service employment exceeds 2 million, while the IT industry employs over 5.5 million. Motion picture GDP was $34.9B in 2000, software and computer service $245.7B, with IT revenue at $796.7B, according to the Commerce Department's Bureau of Economic Analysis. All three of these industries have been built on a foundation of intellectual property
assets.

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