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Ballmer protested in a letter to entertainment CEOs that was also signed by the CEOs of IBM and Dell Computer Corp.

Sen. Fritz Hollings, a Democrat, introduced a bill that would force government-approved anticopying mechanisms on technology companies if they couldn’t work out something amicable in the following eighteen months. The initial prospects for the bill and its ilk were poor, but the climate in Washington was clearly turning less hospitable for the technologists. The feud even slowed progress toward digital-television broadcasts, since the content side feared that copying would explode as broadband connections spread.

“Hollywood and Silicon Valley, it’s like Israelis and Palestinians,” said Napster director John Hummer. “The two groups will never see the world the same. It’s a fight between content and distribution, and in the end I think distribution always wins.” Now in a defensive posture, Silicon Valley tried to rally the public with such groups as DigitalConsumer.org, founded by Joe Kraus and Graham Spencer. The group’s website proposed a technology consumer’s Bill of Rights, which included the rights to fair use and to make copies for personal consumption on different machines. The site described Spencer and Kraus as cofounders of the Kleiner Perkins-backed Web portal Excite Inc. It didn’t mention that they had also invested a combined $200,000 in Napster.

As the political balance of power shifted, the tech community divided against itself. Some looked for ways to cut the best deal with the enemy in Hollywood. Microsoft moved to the front, announcing plans to develop a new type of operating system, dubbed Palladium, that would keep content in a sort of secure vault. Secure, that is, from the computer’s owner: “trusted third parties”—a movie studio, for instance—could agree to lend a video on condition that it get free rein to snoop inside and make sure everything there was paid for. (The industry already had a bot that searched for unauthorized movies, called Ranger.) The Berman bill would give entertainment companies virtual immunity for any legitimate content they damaged along the way. As hearings on the bill began, the music industry and its allies sponsored an ad campaign in which performers from Britney Spears to Luciano Pavarotti condemned file-sharing.

Digital-rights management efforts at Microsoft and elsewhere likewise devolved into a contest to give the most control to the entertainment

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