Everyone in our industry ultimately derives his or her income from the sale of copyrighted content. Revenues from theater box office receipts, DVD and cassette rentals, and broadcast license fees all depend on the ability of studios, networks and other distributors to control the use of that content. But while most people agree that copyrighted material must be protected in some way, there is much debate on how it should be done.

In the days of analog technology, large-scale copyright infringement was logistically difficult for would-be pirates, and the quality of copies fell off dramatically with each succeeding generation. But due to the advent of digital formats, which can be easily and cleanly duplicated, and broadband Internet connections such as DSL and cable, which allow the transmission of large amounts of information quickly, copyright now looms as a critical issue for the motion picture industry. Producers and distributors fear that as it becomes possible to send video around the Internet, people will use applications that facilitate the unauthorized exchange of digital files to swap copies of movies and television shows, just as they have traded music and software programs with applications such as the now defunct Napster.

Many companies and organizations are starting to offer solutions to the problem. Digital Rights Management (DRM) has become the generic term for any technology that controls access, copying and distribution of digital assets. Over time, it has come to mean many things, depending on the interests and perspective of the people and parties using it.

A Chaotic Landscape

Complicating the issue is the fact that the movie and television industry and the computer industry have different visions of the future. In Hollywood, the favored approach has been copy protection, which means that files cannot be copied under any circumstances. In this

As executive vice president of digital strategy for the Motion Picture Association of America and its international counterpart, the Motion Picture Association, Scott Dinsdale helps represent and guide the interests of the entertainment industry in the digital age. We interviewed him after he participated in a DRM panel at the iHollywood conference, where he presented his articulate vision for the future of the digital marketplace. Interview

scenario, protection is built into the devices that play the content, as it is when a DVD player is connected to a modern VCR. Computer and software manufacturers, on the other hand, prefer a situation in which files are handed around freely but cannot be opened or viewed without a software key (see "Encryption and Decryption With Keys" ).

The DRM landscape is further divided into a chaotic clutter of organizations and companies advocating one or another technique for exchanging copyrighted material in the digital age. Any such standard bearer could become the dominant company in a digital marketplace. (see "Digital Rights Management Organizations").

Finally, there is considerable debate over whether all digital assets should be treated as protected intellectual property. Because the Internet is used extensively in many segments of society, the concerns of entertainment distributors must vie with those of government, education, science and other groups that have an interest in keeping information public and accessible.

In one area, however, there is agreement: No perfectly secure system exists, and all interested parties agree that piracy cannot be totally eliminated.

Copyright and Digital Content

DRM grows out of United States copyright laws, which protect what has come to be known as intellectual property. According to Article I, Section 8, Clause 8 of the U.S. Constitution, "Congress shall have power ... to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." While the Copyright Act itself has evolved over the years, the creator or owner of intellectual property retains the right to reproduce the work, prepare derivative works, distribute copies to the public, perform the work publicly and display it.

Copyright law also places some limitations on those rights. According to the First Sale Doctrine, the person who purchases copyrighted content has rights that do not apply to other users. "Fair Use" permits the use of excerpts for catalogs, indexes and criticism and it allows consumers to do such things as photocopy portions of books they own or to make audiotapes from their CDs. Copyright is also limited in another way: It extends only to "expression." It does not protect ideas, processes, systems, methods of operation or facts.

Copyright law was extended into the digital realm by the Digital Millennium Copyright Act of 1998 (DMCA), which incorporates elements from two World Intellectual Property Organization (WIPO) treaties and amends the U.S. Copyright Act. The basic provisions deal with access-control technologies and copy-control technologies. In both areas, circumvention of copy protection is prohibited, as are devices that might be used to circumvent. While the DMCA includes some exemptions -- for encryption research, testing of computer security systems, and limited circumvention by nonprofits -- it lacks a general "fair use" exemption, meaning that the law does not provide for the type of quoting or excerpting that has been common for decades.

Partially for this reason, the constitutionality of the DMCA is being challenged, and there are multiple proposals to amend it (see "Digital Copyright Legislation" ).

Another anti-piracy bill, the 1997 No Electronic Theft Act, also amends the U.S. Copyright Act and the Justice Department says it will soon begin using it against file traders who share copyrighted products valued at over $1,000.

Competing Strategies

Motivated by their own interests, different parties advocate diverse approaches to DRM.

Entertainment distributors have focused on the creation and installation of copyright control circuitry, known as a "c-chip," on anything capable of duplicating content, including all CD and DVD recording devices, whether in computers or appliances. CSS, the copy-protection system adopted by the motion picture industry and consumer electronics manufacturers to provide security for copyrighted content of DVDs, is an example of this technique, and it was hacked almost before it was released. While propagation of the hack (DeCSS) was a crime under the DMCA, it spread worldwide in weeks. But despite its availability, most consumers

Digital Copyright Legislation Digital Rights Management Organizations Encryption and Decryption With Keys

find it difficult to make tapes from DVDs.

Another studio approach has been the formation of subsidiaries for the direct delivery of content they produce. But antitrust lawsuits have already been filed against these companies, alleging restraint of trade based on decades of precedents.

Satellite and cable television companies prefer "conditional-use systems," which typically allow access based on a service contract -- something at which these companies have already succeeded. But maintaining security across a mass population of viewers, all of whom use the same type of cable box, can be difficult. In practice, losses from theft in conditional-use systems are usually proportional to the size of the system.

Digital licensing schemes are being promoted by most Silicon Valley firms. They allow for free distribution but restrict how a file may be used. Users purchase specific viewing rights to the file, such as "play once," "play on these computers," "use this computer program for one hour" and so on. While license schemes vary, all are vulnerable to what are called "break-once-break-everywhere" (BOBE) thefts. This technology has a good track record -- licensing technologies have maintained secure content for long periods of time in some cases, but they typically protected content of minimal interest and might not be as effective for entertainment.

Network-based licensing is envisioned as a multi-step process that would use the Internet to deliver both content and keys, and enable transactions that charge users a fee and pay rights owners. The process, which requires at least three separate entities to provide content, administer requests for licenses, supply the keys, and verify those keys, is regarded as difficult logistically, but such large-scale systems have some precedent in electronic credit transactions.

Another approach uses software to identify a particular machine and then allow access only for that machine. Avid's dongle scheme is such an application. But these schemes are open to counterfeiting, virtualization (where the application or machine is duplicated) or hacks that patch the code that performs the identification check.

The strategy of "policing hosts" uses either of two technologies to protect content. One creates an invisible identification or "watermark," which is embedded into the file and permits the viewer to use it in a specific way, like "listen just once" or "watch this movie for one week." The main burden on watermarking is that any playback machine designed to restrict use based on watermarking is less marketable than one that has no such restrictions, making it unlikely to reach wide application unless mandated by an act of government. In addition, watermarks suffer from the same BOBE problems as other license schemes. Another strategy is called "fingerprinting." Like watermarking, it marks content, but unlike watermarking, in which all copies of a program have the same or similar marks, fingerprinting is designed to track a specific copy of the content after sale. The advantage is that the legitimate purchaser is free to use the content any way they wish, but copyright owners can track pirated copies back to their source. So far, there is uncertainty regarding the market acceptance of having one's personal identity tied to a product or piece of software. But the main concern is that there is no legal precedent for the use of fingerprinting technology to trace the blame for piracy, and by the time such precedents could be established, file-sharing might already be too commonplace to stop.

Limits

The concern of rights holders is that none of these schemes will prove effective or marketable. Microsoft recently published a whitepaper that stated, "In addition to severe commercial and social problems, [DRM watermarking] schemes suffer from several technical deficiencies, which, in the presence of an effective darknet, lead to their complete collapse. We conclude that such schemes are doomed to failure." Darknet is the authors' term for those who trade illegally in file sharing.

Microsoft itself has proposed "Palladium," an initiative more broadly called "Trusted Computing." This technology would create a generation of devices, including computers, that cede some control of the code in those devices to content owners, such as makers of entertainment or software programs. The content creators could then write and enforce rules that would determine whether a file could, for instance, be distributed or printed, or they could prohibit "untrusted" machines from accessing a trusted document. This would be a major break from the long-standing tenet that PC owners ultimately control their machines and the data on them, and it has profound privacy implications.

David P. Reed, formerly the chief scientist at Lotus Development Corp., called such initiatives "booby traps." "I'm personally angry and disgusted that companies that grew up because of the personal computer revolution, which empowered users, are now acting to harm the users," Reed said.

None of these ideas address what is called "the analog hole," which is the taping and recording of a program directly off of a screen using a camera and microphone. Strategies against this type of theft include rewards for people reporting cameras in theater audiences, as well as various technical schemes for exploiting the temporal differences between projection images and video scanning.

Conclusion

Because broadband connections capable of delivering digital video have not become popular as quickly as predicted, motion picture and television companies have a brief period of time in which to find an effective way to protect their digital assets and prevent them from being distributed without permission. But while that window does exist, the current uncertainty restricts investment in new digital markets. The focus on piracy has led the industry to adopt a defensive posture, but the creation of a truly enabled digital marketplace requires a coordinated active strategy to build the adoption of new and effective technical standards. Whatever the losses to piracy may be, the impediments to creating a secure and open digital marketplace are slowing the growth of our industry, and thus our opportunities to practice our professions.

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