For Your Eyes Only

Media companies are tired of feeling ripped off. New software could stop
Napster-like piracy in its tracks and make it profitable to sell
entertainment online.

By David Orenstein, May 2001 Issue


The first response of the movie and music industries to peer-to-peer piracy
was to go to court-to make a technology phenomenon into an issue for the
lawyers. Round two is shaping up to be exactly the opposite: a legal issue
is becoming an issue for the technologists. How so? Digital rights
management (DRM) software puts a virtual lawyer into every song, book, and
movie. 

Content owners are betting that a new technology will make it possible to
distribute their titles over the Internet without risking widespread
piracy. DRM software allows publishers to embed rules in files that
precisely define how those files can be used. If a consumer fails to obtain
a license for a DRM-protected movie, the movie won't play. If a consumer
attempts to watch a movie more than the agreed-upon number of times or for
longer than they paid for, the DRM virtual lawyer will put a stop to the
show. 

Media publishers and retailers are encouraged and have begun to launch
major trials. In late January, BMG Entertainment made 2,900 songs available
for digital downloads through a network of more than 50 Web retailers.
Meanwhile, two trials of video on demand were conducted late last year in
Cincinnati and in three Western cities. And barnesandnoble.com has been
carrying thousands of downloadable e-book titles for more than a year (see
"Book Learning," November 14, 2000 issue). The explosion of
digital publishing and the much-publicized Napster imbroglio have created a
significant market for DRM software, and Microsoft, IBM, and Intertrust are
each using their presence during the trial phase to position themselves as
the technology of choice. 

But the market isn't ready to choose. Given that consumer interest in media
files exploded when files were free, no one really knows how people will
react when they have to pay. The music industry will get a good indication
of how well the model-and the software-works when the "Big Five"
recording giants put their full catalogs online next year, says
GartnerGroup senior analyst P.J. McNealy. 


How it works

In DRM, rules are embedded into files, which the software then encrypts.
Wrapped up in an encrypted "container" with its rules, a movie is
then released on the Internet. Consumers who pay for a license receive
decoder "keys" from clearinghouses or publishers. But even those
armed with decoder keys must follow the rules. If a consumer pays for five
movie viewings, for example, embedded rules simply will prevent the movie
from playing any more than five times-that is, until the license is
renewed. 

Managing the rights for streaming media is a bit different. In
video-on-demand trial runs in Seattle, Portland, Ore., and American Fork,
Utah, Blockbuster used InterTrust Technologies' software to ensure that
rented movie files would stream to customer set-top boxes for no more than
24 hours. To prevent videotape recording, the companies used copy
protection software from Macrovision, which inserts signals into the file
that confuse VCRs but that go unnoticed by televisions. In the Cincinnati
trial, Broadwing and Intertainment are using Microsoft's DRM software. 


In either case, DRM software provides publishers and retailers with a wide
variety of options to set rules. If a retailer runs a subscription service,
as Napster plans to do, it could require subscribers to renew their song
licenses every month. A site or music label could also allow consumers to
burn a song to a CD, but only for an extra charge. And an e-publisher could
allow you to share a book with a friend by making available a single copy
that can be passed along but not copied. 

Significant problems could arise, however. One of the biggest: Not all DRM
software runs on all players. After all, the companies that write the
software are competitors. And for now, they'd rather fight for market share
than make life less confusing for consumers. If, for example, you buy a
song protected by IBM's software, it won't run in Microsoft's Windows Media
Player, which only plays Microsoft-protected files. To listen to the
IBM-protected music, you'd have to obtain another player. Ultimately, some
player makers such as RealNetworks, Liquid Audio, or MusicMatch might run
all DRM software on virtually any music-playing device, but such
universality would require scores of business deals and an enormous amount
of technical work. Beyond that, consumers may be forced to upgrade their
portable players to accommodate DRM, something they may be unwilling to do.


And no one really knows if DRM software can actually secure files. Few
DRM-encrypted digital downloads have been available for long, so hackers
haven't had much of a chance to find weak spots. 



Why bother?

 
On the other hand, hackers may not even bother to crack DRM encryption
because it's so easy to pirate songs and movies from DVDs, CDs, and VHS
tapes, says Forrester Research analyst Eric Scheirer. Twelve-year-olds can
easily "rip" songs from music CDs to distribute far and wide. And
better compression and cheaper bandwidth will make movies an increasingly
attractive target. Scheirer argues that such end runs by consumers will
eventually kill the retail prospects of DRM. Instead, publishers may use it
to syndicate content or to retain control over retail pricing. In the end,
DRM may prove more useful for protecting certain medical records, legal
documents, and sensitive corporate memos. 

Nevertheless, publishers seem confident that DRM will solve the piracy
problem. Blockbuster and Enron's video-on-demand trial program would never
have drawn participation from studios such as Metro-Goldwyn-Mayer without
DRM technology, says Blockbuster spokesperson Liz Greene. "DRM is
vital," says David Bishop, president and COO of Home Entertainment at
MGM. "We can make [piracy] difficult enough that someone won't spend
150 hours of their life breaking into something that they could have
purchased for $3.99 or $4.99." 

The industry's confidence in DRM, of course, makes perfect sense. No
sizable company would do business without an army of lawyers, so why not
enlist an army of virtual ones, too? 

==========================
Sensitive Secrets  
 
Doctors, lawyers, and drm. Digital rights management technology can do more
than just control who listens to a Radiohead track; it can also control who
sees and edits sensitive business documents such as budgets, medical
records, and even trade secrets. 

For example, McGuireWoods, a national law firm based in Richmond, Va., uses
DRM software to ensure that opposing lawyers do not misuse the documents
they obtain during litigation, says Rodney Satterwhite, the firm's general
counsel for knowledge management. "We get paid to worry,"
Satterwhite says. 

Rather than rely on blind faith that its opponents will act in good faith,
the firm protects trade secrets with Authentica's PageRecall software,
which converts documents into specially encrypted Adobe Acrobat files.
Using PageRecall, McGuireWoods can ensure that only the opposing lawyer
herself can open the file. Meanwhile, the firm can block her from copying
or printing it, say, for her client's product development team. The firm
can make the documents totally unreadable after the litigation ends,
Satterwhite says. 

Protecting business information with encryption is not new, of course, but
DRM presents a more versatile set of options than encryption's simple,
"Joe can open this budget plan but Phil cannot." DRM also enables
more precise use and distribution of information. 

Certain parts of a protected medical record, for example, would be visible
to everyone who has access to it, but sensitive sections could be read only
by the patient and his doctor. 

Versatile as it is, DRM may never be a really big hit in business, says
Forrester Research analyst Eric Scheirer. It may be more trouble than it's
worth unless privacy and security are absolutely paramount.  
  
 

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