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Technology Stocks : InterTrust Technologies (ITRU) -- Digital Rights

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To: lindend who wrote (2)10/5/1999 9:37:00 PM
From: Walter Morton   of 201
 
Recording Industry Escalates Crackdown on Digital Piracy

By SARA ROBINSON October 4, 1999

For years, frustrated record companies have watched helplessly as millions of illegally copied songs circulated on the Internet, but a crackdown on digital piracy that will have a wide-ranging impact on consumers is about to begin.




In fact, the first elements are already in place. Few consumers are aware that Philips CD burners, the devices that record data or music on compact disks, have been adding a digital serial number to every CD the machines make to enable copyright owners to trace any recording to the machine that made it.

"We don't encourage illegal behavior," said Marijke van Hooren, a spokeswoman for Royal Philips Electronics. "If there is illegal use, there's a way to find out more or less what's happening." She added, though, that Philips does not keep a registry associating serial numbers with owners.

Whatever privacy questions the serial number may raise, it may ultimately prove to be the most benign of the music-protection systems about to land on store shelves.

While record companies have given up on the millions of unprotected songs currently estimated to be circulating on the Internet, they plan to make the most desirable music available only in protected form. By Christmas, the major labels hope to make some of the most popular recordings available online in formats protected by rights-management technologies from companies like Microsoft Corp., Liquid Audio and Intertrust Corp.

Unfortunately for consumers, it appears that some of these technologies are going to be cumbersome.

A key issue is how to protect music on CDs from being ripped -- converted into computer files -- and illegally distributed on the Internet. While a final specification is yet to be determined, the Secure Digital Music Initiative, the recording industry's anti-piracy effort backed by the consumer electronics and technology industries, has made some progress toward a standard for protecting newly issued CDs.

Hardware that will support the future Secure Digital specifications is just now making its way into portable music players. Software will follow in the next 12 to 18 months when the rest of the specifications are determined. At that time, the major labels will quietly start issuing commercial CDs containing an electronic fingerprint that, in theory, will prevent the music from being illegally distributed.

But it is not clear whether the Secure Digital technology will provide enough security to thwart the millions of teen-age and college-age pirates who routinely rip CDs and distribute the music to friends.

What is more, the technology will probably embed in each song data that allow only one device to play it. Analysts say that fact is likely to make protection technologies so cumbersome that consumers will have a strong incentive to get around them.

"Never before has such a burden of complexity been put on the consumer," said Richard Doherty, president of Envisioneering, a market research and technology firm that tracks the consumer electronics and computer industries. "This will be a real test of mettle."

The key component of the Secure Digital technology is digital watermarking, embedding an electronic identification in music files. While the consortium has not agreed on the final specification for protecting commercial CDs, the most promising approach involves using two types of digital watermarks -- fragile and robust -- on each CD.

The robust watermark, supposedly tough to remove, will identify that the CD is new, protected music that can be played only on devices that are compliant with the Secure Digital Music Initiative. The purpose of the fragile watermark is to prevent music from being compressed by software that does not conform to the Secure Digital standard.

If a CD is ripped and then illegally compressed for storage on a computer or portable player, the fragile watermark will be destroyed. Music that has the robust watermark but not the fragile watermark will not be playable on a Secure Digital-compliant player.

In August, the consortium selected a watermarking technology developed by Aris Technologies for the robust watermark. This selection will likely provide a licensing fee bonanza for Aris, a privately held company based in Cambridge, Mass. The standard for the fragile watermark -- and thus the recipient of those licensing fees -- has not yet been announced.

But watermarking technology has potential problems. No one has yet developed a way to insert a watermark that cannot be easily removed. Some Internet sites already offer software capable of removing watermarks. Moreover, by design, the watermark must affect audible components of the digital signal, so that clumsy attempts to remove it will degrade the sound. Some critics say that for discerning listeners, the watermark itself might adversely affect the quality of the music.

Joseph M. Winograd, chief technology officer of Aris, acknowledged that watermarks could be removed. "I would say that no security is absolute," he said. "Our goal is to set the bar for circumvention as high as is practical and possible."

As for fears about loss of sound quality, however, he said, "We can demonstrate that to the most adept and acute listeners of the recording industry, content with the watermark cannot be distinguished from content without it."

The next generation of portable players of music recorded as MP3 files, the format most widely used on the Internet, are now just now hitting the market. Diamond Multimedia Systems' Rio 500 is among the first capable of detecting the robust watermark.

When watermarked music starts to appear, these devices will prompt the user to upgrade to software that will play and copy the new music. This software, still in development, will not play music that contains the robust watermark but lacks the fragile one. Moreover, the software will only allow the user to make four copies of each song, including songs in MP3 format. And each copy will contain information that only allows it to be played on a single device or machine. Additional copies will require reripping a CD or re-downloading music. That means that music downloaded with software that comes with a portable player will not play on a digital car stereo or PC.

"This is something SDMI would like to consider," said Leonardo Chiariglione, the consortium's executive director.

Another issue is that since the music is limited to a single player, if that device fails an entire music collection can be destroyed.

Doherty says that when he asked recording industry executives about this issue they "just looked at the ceiling."

Susan Lewis, a spokeswoman for the Recording Industry Association of America, said participants in the Secure Digital Music Initiative "recognize that this is an important consumer issue, and everyone is looking at it."
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