5/1/2002 | 3 MINUTE READ

Digital Piracy and the Automobile

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It's no secret that unauthorized music copying is costing the music industry billions of dollars in lost revenue.


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It's no secret that unauthorized music copying is costing the music industry billions of dollars in lost revenue. Within 10 years, the auto industry could find itself in a similar situation. This is because vehicles will be fitted with more "open" computer systems that will hold much more digital, downloadable, intellectual property. Bootlegging copyrighted material into the vehicle could become extremely popular.

Three trends have the auto industry on a collision course with rampant, costly piracy. One is more powerful and numerous computer systems going into the vehicle. Another trend is the behavior of the fastest adopters of new technologies, namely the under 25-year-old set. Many in this group began "stealing" copyrighted music and software as soon as their fingers could reach a keyboard and haven't stopped since (e.g., in a survey of U.S. teenagers, 58% of those planning a career in I.T. admitted they regularly burn CDs of copyrighted material, according to Ropernop Technology). Finally, some of the world's fastest growing auto markets are in those countries where illegal copying has become a national pastime among the computer literate (Illegal copying in these countries isn't limited to geeky teenagers. Thailand's Business Software Alliance (BSA) found that 71% of Thailand's businesses ran on illegally obtained software last year. After a crack down the BSA and enforcement agencies got that number down to "only" 69% this year). Together, these three factors conspire to make piracy perhaps the auto industry's number-one enemy of the future.

Much more computer-based material will likely be stolen in the future because there will simply be a lot more of it in the vehicle. Electronics-based systems now account for about 25% of the cost of a new vehicle. Delphi President J.T. Battenberg estimates this number will rise to 40% by 2006. Indeed, VW estimates that over 90% of the innovations going into the vehicle are computer related.

Piracy hasn't been a big factor to date because the bulk of today's automotive electronics, namely telematics, hasn't been accessible to the public but in hardware and embedded systems. But automotive information technology will likely follow the same hardware/software/content progression of personal computers. The PC industry began by peddling hardware. Within a few years, software took the lion's share of PC sales. Businesses, for instance, spent three times as much on software as they did for computer hardware in the 1990's. If the PC experience is any harbinger, tomorrow's vehicles will be loaded with thousands of dollars of software. Indeed, "standalone," automotive software could become a multi-billion-dollar aftermarket in its own right.

Also accelerating this development is enormous pressure on original equipment manufacturers (OEMs) to design vehicles that are more "upgradeable." This capability is worth billions of dollars because of the OEMs' great reliance on vehicle leasing. What the automakers are looking for is a means by which they will be able to upgrade the vehicles that are returned to them through software updates, not by replacing hardware.

Furthermore, imagine if telematics and software become the primary differentiators among vehicles. The temptation to piracy would become enormous, as the feel or performance of a $20,000 Chevy could be transformed into a $45,000 Cadillac, all at the push of button. This may not be as farfetched as it seems. Tomorrow's vehicles will be loaded with personalizable electronic dashboards, navigation systems, entertainment/communication systems and a slew of services. These could range from programmable, tunable muffler systems to pay-per-view movies beamed from satellites.

Tomorrow's car enthusiasts may modify "stock" software just like they modify the physical appearance of stock vehicles today. All this do-it-yourself activity could pose significant safety risks, however. The emerging Media Oriented Systems Transport (MOST) standard, for example, would simultaneously route audio, video, communications, and control signals all over the same fiber optic cable.

Unauthorized software modifications could unwittingly alter some of the control functions of a vehicle. This could lead to unexpected side effects like inadvertently triggering automatic door locks. Worse yet, hack modifications could interfere with hands-free steering in the more futuristic, intelligent transportation systems (ITS).

Certainly, the auto industry will take major steps to protect its intellectual assets. The same will be true for telematics service providers, software vendors, telecommunications operators, and music companies. Don't expect these groups, however, to be much more successful at stopping bootlegging than today's beleaguered protectors of digital, intellectual property. 


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