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Digital Rights Management
NAB EXECUTIVE TECHNOLOGY BRIEFINGS SERIES
A series developed jointly between Focal Press and National Association of
Broadcasters

The NAB Executive Technology Briefing Series consist of titles addressing current
and future industry technologies, authored by experienced and well-known
professionals, often industry consultants, for managers and investors in the
industry. Readers should have an introductory to an intermediate level of knowl-
edge of the technology. The primary goals of each title in the series are as follows:

• Provide the reader with a working knowledge of the topic. Each title clearly
explains the technology discussed, the end-result providing the reader with a
general technical understanding to adequately converse with industry engi-
neers and other technology professionals.

• Discusses the impact (past, present and future) that the technology
had/has/will have on the industry. This includes-but not limited to: financial
implications, human resource implications, how the technology will change
the industry, competitive considerations, advertising/marketing considerations,
legal/legislative ramifications.

• Identify investment opportunities in the industry. Each title outlines not only
areas of opportunity but also the risks that may be involved.
NAB EXECUTIVE TECHNOLOGY BRIEFINGS

Digital Rights
Management
Joan Van Tassel

AMSTERDAM • BOSTON • HEIDELBERG • LONDON

NEW YORK • OXFORD • PARIS • SAN DIEGO
SAN FRANCISCO • SINGAPORE • SYDNEY • TOKYO
Focal Press Is an Imprint of Elsevier
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Project Manager: Paul Gottehrer
Marketing Manager Christine Degon Veroulis
Assistant Editor: Rachel Epstein
Cover Design: Frances Baca Design
Interior Design: Frances Baca Design
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Focal Press is an imprint of Elsevier

30 Corporate Drive, Suite 400, Burlington, MA 01803, USA
Linacre House, Jordan Hill, Oxford OX2 8DP, UK

Copyright © 2006, Elsevier Inc. All rights reserved.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted

in any form or by any means, electronic, mechanical, photocopying, recording, or other-
wise, without the prior written permission of the publisher.

Permissions may be sought directly from Elsevier’s Science & Technology Rights
Department in Oxford, UK: phone: (+44) 1865 843830, fax: (+44) 1865 853333,
E-mail: [email protected]. You may also complete your request on-line via the
Elsevier homepage (http://elsevier.com), by selecting “Support & Contact” then “Copyright
and Permission” and then “Obtaining Permissions.”

Recognizing the importance of preserving what has been written, Elsevier prints its books
on acid-free paper whenever possible.

Library of Congress Cataloging-in-Publication Data

Application submitted

British Library Cataloguing-in-Publication Data

A catalogue record for this book is available from the British Library.

ISBN 13: 978-0-240-80722-5

ISBN 10: 0-240-80722-7

For information on all Focal Press publications

visit our website at www.books.elsevier.com

Printed in the United States of America

06 07 08 09 10 10 9 8 7 6 5 4 3 2 1

Printed in the United States of America

Contents

Acknowledgments ix

Author Biography xi

1 Industry Overview 1

2 Intellectual Property and Copyright 19

3 The Content Revolution 45

4 Content Protection and Digital Rights Management Technologies 77

5 DRM Systems: Design and Implementation 127

6 DRM and Entertainment and Media Business Models 173

7 DRM Stakes and Stakeholders 207

8 Living with DRM 239

Index 259
This Page Intentionally Left Blank
 Dedicated to
my mentors, with thanks and love:

Lucille Newton-Van Tassel

James Bromley
Mary Murphy
and Clancy Imislund
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Acknowledgments

There are always many people to thank for the ideas and support that make it
possible to spend four years writing a book. I would like to begin with the people
at PricewaterhouseCoopers, who have always treated me so well. Peter Winkler
manages to be both gracious and demanding, always requiring the best possible
work. Laura School is an excellent editor and a pleasure to work with. Former
consultants Blake White and John Stubbs are both expert at content protection and
monetization business issues. There’s a reason they have advised clients at the
highest level – they are brilliant and focused.

Richard Doherty, founder and CEO of Envisioneering is a friend, colleague and

employer. We manage these multiple roles without too much difficulty, although
Carolyn Doherty’s calm is always a blessing. Rick is so well-connected and knowl-
edgeable that always rely on him to point me in the right direction to solve a partic-
ularly knotty problem. A gifted writer himself, he also imposes the highest
standards on the work I’ve done for him; but I always see him placing the same
demands on himself. He is, quite simply, a wonderful human being.

Harry Jessell has provided opportunities to delve into the guts of television
technology. I ask myself, how do I keep meeting these professionally demanding
men, but I am much the better for it. Harry is a journalist’s journalist – I never want
to have a conversation with him until I have gathered the facts and have a pretty
good grasp on the story. He has teamed up with Kathy Haley to launch
www.tvnewsday.com, which will cover the business of television. They’re a great
combination and I think this enterprise could become a powerhouse in the
industry.

Jane Kagon, Director of the UCLA Extension School Entertainment Studies and
Performing Arts program, has allowed me to teach classes that focus on some part
of work I am doing. By teaching, I learn myself, and Jane and UCLA Extension
School have provided a laboratory for everyone to explore the cutting edge of the
world of entertainment in the heart of its capitol. The school’s contributions to the
industry and students are nothing short of immense.

I met Mark Cuban before he was the Mark Cuban, and yes, he was always
charismatic, controversial, entertaining, handsome, and dazzlingly intelligent. But

ix
x ACKNOWLEDGMENTS

it’s his ideas that really count. I believe his influence on entertainment are and will
continue to be profound. I once said to him that I hoped someday he would head a
studio and I think he will. I hope so. He has a vision of the future and he expresses
it in a clear and direct manner that points the way to maximum benefit for the
entertainment industry and its customers. This book quotes him directly, but it also
reflects the influence he has had on my thinking about digital rights management.
Thank you, Mark.

I’ve also learned a great deal by attending industry conferences and events put
on by iHollywood Forums, headed by Michael and Zahava Stroud, and Victor
Harwood’s Digital Hollywood. The events they put together with Hollywood
insiders discussing such a rapidly-evolving industry have become important ways
for people at all levels in the industry to learn about the state of the art. The events
are well-thought out and well-attended, and I’m grateful to them for the opportuni-
ties I’ve had to hear from a range of high-level people in a short periods of time.

A particularly useful conference that was very helpful in the writing of this
book was the 2004 DRM Conference and Expo, put on by JupiterMedia. It was an
intense week for both presenters and attendees, and its specific focus brought out
industry people who do not normally attend such shows. I was able to learn about
the approaches, strategies, and experiments that the studios and labels were
considering for adoption, and it added a great deal to the book.

Many experts guided me through the complex technologies that make up DRM.
Raj Samtani, director of sales and marketing at ContentGuard, Carter Laren, senior
security architect at Cryptography Research, and Reed Stager, vice president of
corporate licensing, marketing, and public policy for Digimarc Corp. have all taken
the time to help me understand their parcel of the DRM landscape.

Finally, James Bromley and Steve Rose have always given me the benefit of
their expertise about industry technologies. They both taught me about the digital
revolution back when most people thought digital referred to fingers. I learned the
basics at the Annenberg School for Communication at the University of Southern
California from my dissertation chair, Peter Clark, and then-Assistant Dean, Susan
Evans. To all these people who gave me a peak over the horizon at a future that,
unbeknownst to me at the time, was rushing full-speed ahead aimed directly at all
of us, thank you.
Author Biography

Joan Van Tassel is a journalist, researcher, and author who specializes in the effects
of digital technologies on the business of entertainment and media. She has written
five books on these topics, and received the National Cable Center Book Award for
contributions to the cable telecommunications industry, and the Kraszna-Kraus
Award for excellence in the writing of a technical book. She was an award-winning
documentary filmmaker before completing her doctorate in new media at the
Annenberg School for Communication at the University of Southern California,
giving her an extensive background in both professional and academic arenas. Joan
continues to produce documentary works and to write about entertainment and
media technologies. She also teaches at the UCLA Extension School in the Enter-
tainment Studies and Performing Arts program.

xi
This Page Intentionally Left Blank
1 Industry Overview

In a sense, rights management has always been part of the entertainment business
landscape. After all, the first principle of the media and entertainment business is
that content owners have to get their wares into the hands, or ears, or in front of the
eyeballs of consumers to make money.

Paying to see or hear entertainment is a centuries-old practice that continues

into the electronic world. Until now. Today, millions of people are freeloading
copyrighted music and movies from Internet peer-to-peer networks without paying
the creators, producers, marketers, or distributors of them. This free-for-all is just
the most recent in a cascade of events that have steadily increased the risks of
distributing their high-value material for content owners.

Protecting the Mouse from the mouse

In late 2004, Peter Lee, vice president of business development for the Walt Disney
Company, delivered the keynote speech to a packed audience at the Digital Rights
Management Strategies conference in Los Angeles, hosted by Jupiter Research.
Disney is known to experiment with cutting edge digital rights management (DRM)
systems and to test a wide array of entertainment technologies. But, like most enter-
tainment giants, the company rarely discusses its strategies and tactics concerning
DRM publicly. So an eager Hollywood audience awaited Peter Lee.

1
2 C H A P T E R 1 Industry Overview

He did not disappoint. Laying out an unusually detailed presentation of a

studio’s approach to DRM, Lee articulated a vision of the near future that puts DRM
at the center of the company’s consumer strategy—and more. Lee described the range
of activities in which DRM potentially plays a role: studios in the U.S., Europe, and
Asia; theme parks and other destination parks; cruise lines; the ABC television and
radio networks; online properties; and, finally, physical goods properties, such as
home video products. The company is even using DRM in the enterprise as a way of
tracking and protecting sensitive corporate communications and documents.

“As we look at content protection and DRM, we see that it impacts us in

diverse units across a variety of global boundaries,” Lee noted. “Broadly, we
approach DRM as a way for us, for rights holders, to manage the terms and condi-
tions of digital content delivery.”

Disney is responding to the ways that digital delivery changes how consumers
do things. As consumers receive high value content over broadband connections,
they have started to alter their habits. Take the purchase of music: “When we look
at consumers today, we are seeing how they are embracing the new digital tech-
nologies,” said Lee. “Everyone knows how popular iPod is. But this business model
was enabled through rights management that allowed content producers and
distributors to make music available, not just as albums and collections, but as indi-
vidual songs. And it’s not just rental. There’s purchase by download to own, down-
load to burn, download to playback on a variety of devices. And there are creative
options centered on subscription as well.”

Lee’s point was that the ability to manage the terms and conditions gives rights
holders the confidence they need to distribute their content in a networked environ-
ment. And DRM is the primary mechanism they are using to manage those T’s and C’s.

The presence of DRM gave impetus to a Disney experiment called Moviebeam.

It’s a movie service that was initially launched in Salt Lake City; Spokane, Wash.; and
Jacksonville, Fla. Consumers pay $6.99 a month to get a set-top box (STB) with a hard
drive that is pre-loaded with 100 movies. In addition, the company attaches its signal
in an unused portion of a broadcast signal, sending ten new movies a week to the
STB. Customers use a remote to scan the library, watch trailers, and select films. At
launch, first run movies cost $3.99 and catalog features $2.49, with a 24-hour viewing
window. Billing information goes out over a phone line connected to the STB.

Disney is comfortable releasing its properties over Moviebeam because it is

DRM-protected, using proprietary technology. However, the company doesn’t just
rely on a single DRM technology. Disney embeds special identifiers in its motion
pictures, including digital watermarks and Digital Object Identifiers (DOI). Apart
from movies, the company marks its television programming with the broadcast
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