The DRM Strategies 2004 Conference, organised by JupiterMedia, was held on October 25 and 26, in Los Angeles. The majority of the attendees were from the United States, with just a couple of guests and speakers coming from overseas. The main event was split into parallel tracks. In the “media track” over one hundred participants discussed about DRM for digital content, mainly entertainment like music and movies. In the much smaller “enterprise track”, probably with a few dozen participants, there was discussion on how valuable business and client information can be managed and protected with the help of new rights management technologies. I attended the media track which comprised among others a keynote debate about consumer friendly DRMs. By the way, this is the second time that INDICARE has reported about a Jupiter DRM conference (Helberger 2004).

General questions of DRM
P2P and limits of DRMs
Peer-to-peer file sharing networks were a general topic, and they were mentioned both as good, creating new opportunities if they are applied with the right business model, and also as the “dark side”, against which the content industry has to protect itself. Michael Einhorn, a consultant and economist argued that as long as peer-to-peer networks exist, no DRM would present a real alternative to consumers. He went as far as saying: “Peer-to-peer is a hydrogen bomb to every business model.” The two sided P2P topic has also been analysed in depth by Bill Rosenblatt, chair of the conference, in a recent INDICARE article (Rosenblatt 2004).

There was agreement that DRM cannot reach everywhere. If the content industry outlaws big networks then people will move to smaller networks, which cannot be monitored. As Khaja Ahmed from Microsoft said, “Bullet-proof protection of media is cost prohibitive. Keeping honest people honest is the level we can realistically achieve.” Another voice said “We do not have to block content leak to Kazaa, we have to compete with Kazaa’s offering.”

One creative use of new technology was called "viral marketing". John Beezer, president of Shared Media Licensing, recommended recognising what people using peer-to-peer file sharing networks were doing: they put a lot of effort into spreading content and providing information to others, effectively doing the marketing instead of the content owners. Viral marketing is based on a revenue system, where instead of punishing wrong behaviour, good behaviour should be rewarded. In this model a recommendation system is set up, where a user recommending a track to a friend would get 20 percent of the price of that track if the friend buys it, 10 percent if the friend recommends the track further, and 5 more for a third level endorsement.

For me, the essence of debate was that new business models are needed to exploit opportunities created by new technology rather than fighting against them.

Alternative compensation schemes
As expected there were discussions about levies and compulsory licensing as alternative compensation schemes. Compulsory licensing means a flat fee charged to ISP subscribers for unfettered content usage, while levies are like taxes on blank digital media, computers or other types of hardware. The former was strongly rejected by Electronic Frontier Foundation’s representative, Wendy Seltzer. Instead, she suggested to offer "darknet"-users the possibility to share music for a low subscription fee (e.g. $5 per month), collected by their internet service providers or college network. This idea of a “voluntary collective license” was strongly criticised by other participants. They said that there is no difference between voluntary and compulsory licensing from the industry’s point of view: content providers who do not agree with the terms of voluntary licensing, will get none of the collected money; so at the end of the day it is compulsory, too, if one wants to get revenue.

The ever returning question of interoperability was raised almost at every discussion panel. My conclusion on the discussion is that while everyone is talking about interoperability as a technological question, it is rather a business model issue: whenever the industry comes to the conclusion that they have to create interoperable services, the problem is solved. For example, Brian Lakamp, a representative of Sony Pictures, argued that in home networks a set of devices has to behave as one device. Therefore a consistent usage model (e.g. DVD) is an absolute necessity. From the consumer perspective, as someone from the audience pointed out, full interoperability is less important. Consumers just want point-to-point interoperability. In other words, if they can transfer content between their living room and their bedroom, the content format can be proprietary, it will satisfy them.

Fingerprinting and watermarking
The conference devoted two sections to fingerprinting and watermarking, focussing on the opportunities these complementary techniques can provide. As the participants learned, watermarking is not just another method to make piracy more difficult, it has a lot of different functions. The list below was presented by Reed Stager, vice president of Digimarc, and gives an idea of the multiple uses:

  • Copyright communication – identification data of the content owner and granted usage rights can be included in the content.
  • Copy protection – watermarks can control recording and playback.
  • Monitoring – to monitor broadcast and internet use.
  • Classification/filtering – content can be classified based on included metadata and filtered based on this.
  • Authentication/integrity – Genuineness of the content can be guaranteed.
  • Forensic tracking – identifies where content has left the authorized domain.
  • Asset/media management – links content to DRM system.
  • Remote triggering – automatic actions during distribution.
  • Linking/e-commerce – enables access to additional information and purchase of related content.

The importance of "information" was underlined by Michael Einhorn. He said that a considerable part of the money that consumers pay for legally obtained music does not go for the music itself, but the information about the music. This includes everything from making the tracks known by playing them in radio stations, to filling the correct tags (artist, title, genre, year of appearance, etc.) in digital music files. Such data can be embedded in the content as a watermark.

Fingerprinting, on the other hand, can not only be used for forensic identification or tracking the path of a specific digital file, Vance Ikezoye, president of Audible Magic, said. It can also be used for monitoring peer-to-peer networks blocking the spread of infringing content. “Peer-to-peer networks are a market of 60 million people”, John Beezer said, so it has to be regulated and business opportunities in such networks have to be exploited.

Gracenote’s idea of a media library could bring a revolution to peer-to-peer file sharing networks. This revolution is about filtering network traffic based on intelligent fingerprinting techniques, and if someone wants to download a piece of music from a fellow file sharer, traffic will be stopped by the Gracenote system and the downloader will be redirected to a legitimate music store where he can buy the content.

There are, however, two main problems with network filtering. On the one hand, applying filters everywhere would need a huge regulatory overhead, so it is almost impossible at the moment. On the other hand, client side encryption of network traffic renders fingerprint-based filtering useless, and anyway, with the spread of non-networked connections, where devices are “talking” directly to each other (e.g. over Bluetooth), there is nothing to filter. We have already discussed issues of filtering the network traffic in an INDICARE article (Kerényi 2004).

Consumer-friendly DRM systems
There was a panel which investigated whether consumer-friendly DRMs are an oxymoron or an inevitability. The discussion, moderated by Bill Rosenblatt, managing editor of DRM Watch and chair of the conference, unfortunately did not attract a large audience.

The first big issue was to find out what is the value consumers want? What is consumer-friendly? There was no definite answer to this question, because DRM was invented by the content industry, and it was not motivated by consumer needs. As someone from the audience noted, “DRM is not about end users’ experience, its starting point was the competition with the file sharing world”. However, everyone agreed that consumer acceptance is indeed a very important issue. DRMs should be invisible to the consumers, while the consumer should know exactly what they are allowed or not allowed to do. This was the criterion used to define user-friendly DRMs.

A big debate emerged on the topic of fair use. One party concluded that fair use was not really supported by the industry with technical means. It would rather incorporate narrow “fair use” rules into the present DRM platforms, so that new legal fair uses defined later cannot impede them in implementing their original intentions. Another group of people argued that ultimately the consumer would determine fair use, and not content owners, distributors, legislators or courts. Consumers vote with their wallets, and if they feel wronged they will look elsewhere for content. But this is not bad, because if the industry pays attention to lessons that can be learned from the “free world”, they can develop better business models. As Todd Chanko, an analyst from JupiterResearch noted, “piracy is another way of understanding consumer demand”.

One more important question was whether there will ever be a technologically enforced way to control fair use? Both answers from the panel concluded the same. One said that fair use is not the same everywhere in the world, thus it is quite fuzzy and cannot be enforced. The other answer was that fair use is basically about unauthorized uses of content, basically exceptions, which cannot really be built into systems. Personally, I think that symmetric rights expression languages could solve this latter problem.

The question arose why someone would want to buy a product with DRM. Ultimately – according to the querying person – DRM functionality decreases the value of the product, at least from the consumer’s perspective. The answer from the panel was that this was true, and “consumers hated DRM”, therefore providers would have to give them something in exchange. This could be any advantage over non-DRM capable devices, for example a selection of colours, better features or smaller files size. Therefore, as Mike Godwin from Public Knowledge stated, “competing with free, forcing industry to add value, is the healthiest idea”. The main problem, however, is that “while consumers are the market, consumers are also the threat to the market”.

Bottom line
All in all, the conference was a very interesting event. The most interesting point for INDICARE was the discussion about consumer friendliness of DRM. The conclusion is that while originally DRM was not motivated by consumers, to be accepted it has to become consumer friendly. This means that it has to be seamless, minimally intrusive, and at the same time it has to provide full transparency. Ultimately, consumers are the customers of content, and they will choose the best fitting solution, be it free of charge or for money and DRM protected. Digital rights management solutions need to provide advantages over free content. My conclusion on the conference is that decision makers in the United States have realised that just as in every service in the world in DRM the consumer is the one to satisfy. Therefore creating acceptable systems is the most important issue.


About the author: Kristóf Kerényi is a researcher at Budapest University of Technology and Economics in the SEARCH Laboratory. His interests include mobile and wireless IT security, as well as technological aspects of DRM. He received a MSc in computer science from BUTE. Contact:

Status: first posted 17/12/2004; included in INDICARE Monitor Vol. 1, No 6/7, 17 December 2004; licensed under Creative Commons