In most people's minds, digital rights management (DRM) serves one primary purpose: prevention of digital piracy. That's an important function, to be sure. Each year, music and video companies lose millions of dollars to file traders who produce and distribute unauthorized copies of commercial products, and the problem is growing. Just ask the Recording Industry Association of America and the Motion Picture Association of America. Last year, the two organizations began suing hundreds of file swappers, many of them young teenagers, whom the organizations accuse of robbing their members and violating the Digital Millennium Copyright Act by copying and sharing audio and video files through vast peer-to-peer networks like KaZaA, Gnutella, Grokster, Morpheus, and others. RIAA and MPAA also have petitioned the courts to shut down numerous P2P networks and to declare illegal some of the more than 4 million software products available for decrypting and copying audio and video files. They're having some success, but even the organizations themselves admit they're swimming upstream.
"It's a technological Cold War," says Ted Fitzgerald, chief technical officer for Music Public Broadcasting, a California DRM company that is working with music and movie industry groups to craft more effective, proactive solutions to their industries' nightmare. For every step forward RIAA and MPAA make by shutting down individual file traders, they take two steps backward in public image. For every file-trading service they shut down, two more spring up to take its place. It's so much easier - and more economically beneficial - to solve the problem before it becomes one than it is to clean up the mess afterwards, Fitzgerald says. DRM, while not necessarily inexpensive up-front, makes sense in cost-benefit analysis.
MPB founder and chief executive Hank Risan agrees. "Piracy is rampant," he says. "Sales go way up when a company employs DRM." Technology exists now, he says, to make protecting content quicker, easier, and more effective in more ways than ever before.
Titan Media, one of the largest producers of gay content for the Web, can attest to that. According to corporate vice president Keith Webb, the company has experienced more than an 80 percent reduction in pirated video files since instituting a DRM policy more than two years ago. Still, "between April and December 2003, we sent out 375,000 cease-and-desist letters for P2P file trading - all of it video content," Webb says. "It's a huge, huge problem."
What's more significant, say Risan, Webb, and some others in the field, is that DRM may have some side benefits, especially for the adult industry, that outweigh its traditional function.
What It Is
Succinctly defined, DRM is "a system for protecting the copyrights of data circulated via the Internet or other digital media by enabling secure distribution and/or disabling illegal distribution of the data," according to online dictionary Webopedia. "Typically, a DRM system protects intellectual property by either encrypting the data so that it can only be accessed by authorized users, or marking the content with a digital watermark or similar method so that the content cannot be freely distributed."
In other words, it's a proactive method of protecting intellectual property; a sort of "digital lock." According to Bill Rosenblatt, president of Giant Steps/Media Technology Strategies and managing editor of the Jupitermedia Corporation newsletter "DRM Watch", DRM systems incorporate at least three key components: user and product identification, rights and policies, and encryption keys. Those three components are managed within a closed system comprising a content packager (the encrypting source), a DRM controller (within each encrypted package), and a license server ("key tender"). The process works something like this:
•A content owner encrypts his or her property using the content packager. The resulting package is then made available to end-users.
•When an end-user obtains a package and attempts to open or copy it, the DRM controller within the package is invoked automatically.
•The DRM controller communicates seamlessly with the license server, which attempts to authenticate the user. If it recognizes the user, access is granted to the contents of the package. If not, the user is asked for indentification, usually a pre-set code (or "key"), payment for the right to view the content, or some other means established by the content owner.
DRM is a way for content owners to manage "users' rights to do things to or with digital content," says Rosenblatt. "It's persistent protection that travels with the content and provides technological enforcement of policies for information access, as opposed to legal enforcement."
Although DRM has become something of a popular buzzword in recent years, the concept is far from new, Rosenblatt says. In the 1960s and '70s, computer gurus began to seek ways to protect the physical integrity of digital media. DRM as its own independent field of endeavor began to emerge in the early 1990s, and the first patents for core processes were filed in 1994 by companies including InterTrust and IBM. The first commercial solutions were released in 1995, and by 2002 "niche" applications had begun to appear for digital content like music and e-books.
Today a variety of DRM solutions exist, focused primarily on streaming media: audio and video files. Adobe includes a sort of rudimentary DRM method - for watermarking images - in its popular Photoshop program. Although proprietary solutions have been developed and marketed by big companies like Apple Computer Inc., RealNeworks Inc., Macrovision Corp., and Sony - as well as a handful of smaller entities - the most widely used DRM technology currently is Microsoft's Digital Rights Management (part of the company's Media suite), partly because it's freely available, customizable, and extensible. Newer, more powerful applications are on the near horizon. For example, Thomson and Fraunhofer, the German companies that own the core patents to the MP3 music format, are in the midst of creating a new DRM add-on to the specification. Based in large part on open standards being adopted by the Moving Picture Experts Group (MPEG) and the Open Mobile Alliance, the new specification will do away with some of the cross-platform compatibility issues now faced by those who wish to protect their digital rights, the companies hope.
Protecting More Than Copyright
MPB's Risan, a theoretical mathematician and neurobiologist who won a National Science Foundation award as a teen, made a fortune in the financial markets in the '70s, and found himself facing the RIAA's ire in 2002 as an unfortunate and unintended side effect of a musical instrument museum Website he owns. He leads a team of developers in Santa Cruz, Calif., that says it has created the next wave in anti-piracy solutions. MPB's suite of products is software-based and can be added to whatever solution copyright owners currently employ, Risan says. It's robust, dynamically updateable, and protects across platforms (DVD, computer, etc.). Even copies of the DRM-ed content can't be copied, Risan says. The really nice thing about it, according to Risan, is that it's completely transparent to the end user; "it doesn't do anything until [a user tries] to circumvent it." At that point, depending upon the copyright owner's strategy, several things can happen: An FBI warning like those seen at the beginning of DVDs and videotapes might pop onto the screen; the machine might eject the physical medium on which the material resides (a DVD, for example); the user might be offered an opportunity to behave more appropriately; or s/he might be temporarily "locked out" of any reproduction or decryption programs on the computer. Risan says it's a very secure system, and so far all attempts to hack it have failed.
"Circumventing existing DRM technology is just about the easiest thing in the world to do these days," he says. "We've designed this technology to prevent that from happening." The technology can be seen in action at a music service set up to showcase it, BlueBeat.com.
More important, he says, is that DRM solutions like his may offer adult content producers a glimmer of hope against accusations that they distribute pornography to children: "DRM not only prevents unauthorized copying and distribution of [sexually explicit] files, but also can protect minors from accessing them."
That's one of the primary reasons Titan Media wraps its pay-per-view content in electronic locks, according to Webb. Titan's DRM scheme requires users to be verified as adults through VerifyME - an online service that checks identification against government-issued ID databases - before they gain access to the content.
"We lose two-thirds of our traffic at that junction," Webb says, "but I'd rather turn away 100 adults than let in one kid." The procedure is expensive, he admits, but the company remains profitable. What's more important to Titan is that it feels it's "going the extra mile" to prove to law enforcement that it really doesn't market its wares to minors. The lesson to be learned is simple: "You can protect, and you can profit, and you can profit quite well by doing the right thing. We're proving it," Webb says.
While Titan's extra step in the process may pass judicial muster, adult industry attorneys aren't so sure most DRM solutions will. "I'm not sure the simple issuance of an electronic key is sufficient, because there are confirmation-of-key-receipt issues," says Lawrence G. Walters, a partner in the bi-coastal firm Weston, Garrou & DeWitt, implying that the person who receives the key may not be who s/he says s/he is. Walters favors the inclusion of a digital affidavit confirming age in any DRM scheme.
Joe Obenberger, of the Chicago firm J.D. Obenberger and Associates, takes an even dimmer view. "It's not going to stop a damn thing," he says. "Anybody who can access the computer can access the content [once it's been unlocked]." Although he admits there are First Amendment and privacy concerns surrounding any sort of hardware-based content management system, he says that may be the only truly secure way of preventing minors from accessing adult materials: "There ought to be a chip setting that would allow kids to access only material appropriate for kids." (Microsoft has proposed a hardware-based copyright-protection system, but most computer industry analysts think the expense of replacing equipment would make it anathema to consumers.)
Marketing Magic?
Jason Tucker, managing partner of DRM solution provider and marketing consulting firm Playa Solutions, sees another benefit of DRM for the adult industry - or any industry, for that matter. DRM is the "killer app" for viral marketing, he says. By wrapping content in a digital lock and then encouraging it to stray, copyright owners not only can increase their bottom lines as it drifts into the hands of people willing to pay for it, but also can spread their message to untapped markets. "The future for DRM is not on the P2P networks," Tucker says. "It's wherever end users are. Doing what? Marketing." The reason there hasn't been a more widespread adoption of the technology, he says, is that most people still "just don't get it," particularly in the mainstream.
"The music and film industries want Net distribution to just go away," Tucker says. "They want everyone to stop all this nonsense and go back to the music or video store and buy a record or a movie. That's why they're so focused on content security. So they pick up this buzzword, 'DRM,' and they hang on it and they hope to make a lot of money. What they've got - and it's their own fault - is a runaway train."
What content producers fail to realize, Tucker says, is that "when traditional commercial models fail to provide what users want, the user base makes its own world." That accounts for the popularity of the P2P networks, he says, and until the real world experiences a massive paradigm shift, it's going to suffer at the hands of the virtual world. "People get hung up on these locked-in business models," he says. "Make the technology work for you, not the other way around."
Instead of thinking of DRM as a way to lock content up so it can't be played at all except under very restricted circumstances, Tucker says a better idea would be to offer end users an affordable option to unlock the content. "When you think about it, even 99 cents a song is too high," he says.
The technology also has to be affordable for content producers in order for it to really take off, Tucker says. Playa utilizes a micro-transaction pay-per-unlock model to demonstrate DRM's validity as a marketing tool to its clients. "In the past eight months, we've done more than 30 million transactions," Tucker said. "Even Microsoft was floored [by the volume]."
There are other ways to commoditize DRM, as well. Some suggest including trailers or other advertising messages in DRM-ed packages. "The real value of these services, in our view, is that they drive Website traffic and often stimulate use or purchase of associated offerings," Scott Kessler of Standard & Poor's wrote in an article published at TechNewsWorld in March ("The Mighty Lure of Online Music;" www.technewsworld.com/perl/story/33026.html).
Future Outlook
Despite its promise, DRM has yet to take off to any great extent, possibly because business models using it are still proving themselves. New ones are on the horizon, and Tucker and Risan both see DRM as a future imperative for anyone who produces digital content.
"I don't think anybody's figured the Holy Grail out yet for DRM," Tucker says, "but I'm the happiest I've ever been with the way the technology and business models are going. The next 12 months are going to be very interesting. We're going to see some clever business models and more widespread use [of the technology] for things like securing members areas and marketing."
Titan Media already is investigating ways to secure its Websites' members area content with DRM, according to Webb. The sticking point has been in making a smooth, transparent transition from the traditional unlimited-content-for-a-monthly-fee model to one that allows members to access locked content without requiring them to jump through additional hoops. The company also is embarking upon a "wholesale DRM" project that will provide DRM-wrapped content to online retailers who can then sell it to their users in any way they please. There is no up-front cost to the retailers. Instead, at the end of each month retailers will receive a bill for all unlocked content at an agreed-upon wholesale price. Titan sees it as a financial win-win for all involved.
Regardless what business models develop, DRM is not going to go away. Risan says he sees it becoming more important for copyright owners as the technology expands. "We're all moving toward online distribution," he says matter-of-factly. "That's going to be the wave of the future."
