Hollywood fears the Internet will crash the movie business unless computers come equipped with low-cost chips that foil the free distribution of movies by Internet pirates.
The Walt Disney Co. chairman Michael Eisner and News Corp. president Peter Chernin laid out such a scenario last Thursday, during a Senate Commerce Committee hearing on the long-simmering issue of digital copyright protection.
Lawmakers appeared to side with Eisner and Chernin, who expressed astonishment that after years of talks, they had received little cooperation from Silicon Valley leaders such as Intel Corp.
"Stealing is stealing. We've got to address it," said Sen. Barbara Boxer, a California Democrat who has to straddle the interests of two powerful constituencies in her state.
Intel vice president Leslie Vadasz said his company wanted to cooperate, but warned that caving into Hollywood by imposing technical standards on the computer world was just as dangerous as the problem they would seek to cure.
The hot issue is whether to embed copy protection technology in the coding to protect broadcast programming.
Vadasz promised to lay a proposal on the table by the end of March, a move Eisner and Chernin welcomed.
Copying movies is particularly lethal in the digital age, Eisner said. It is easy to do on a computer, the first copy is identical to the millionth copy and distribution can be global and instantaneous.
About 350,000 movies are downloaded on the Internet each day, he said, adding that an 80-cent chip could put most of that to a stop.
"I know this sounds alarming," Eisner said. "It is alarming. Make no mistake. This is not just about entertainment. This is about the economy."
Eisner and Chernin said if private talks falter, Congress should order the creation of a copy-protection standard for every media device.