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Organizations that invest millions of dollars in movie content are very concerned about protecting their investments. That concern is perfectly reasonable. Technology companies have been happy to provide copy protection as part of their digital rights management (DRM) offerings, and movie owners hope to use these offerings to fight unauthorized use of digital content. Technical copy protection, however, will not stop piracy. The notion that copy protection can prevent digital theft is fatally flawed because it ignores two critical differences between the physical and digital worlds.

Digital World Difference #1: You Can Pick Locks By Using Software

In the physical world, a good lock can keep out most thieves. In other words, a physical lock that is 99% effective will stop 99% of break-ins and thus prevent 99% of potential losses due to theft. In the digital world, however, once a copy protection scheme is broken, someone can write a software program to make breaking the copy protection easy for anyone. After that, any thief that can download the software will be able to circumvent the copy protection and then steal digital content just as effectively and as fast as the original genius that broke the copy protection scheme.

Digital World Difference #2: Bits Can Be Copied

The second difference between the physical and digital worlds has to do with the concept of quantities. In the physical world, there is a one-to-one relationship between the quantity of an item that is stolen and the loss incurred by the rightful owner. In the digital world, however, a thief can make an unlimited number of duplicate copies from one stolen original. Unlike analog content (e.g. VHS tapes), which degrades every time it is duplicated, the 1s and 0s that make up digital content allow anyone to make perfect copies. So, for example, if one TV “falls off a truck” (a euphemism for theft), then the rightful owner incurs a loss of one TV set. But if one copy of a digital movie is obtained by the wrong person, it can result in millions of bootleg DVDs being sold in places like the markets of Shanghai or the subways of New York. That one stolen copy of a movie could also end up on a Bittorrent network where millions of people anywhere in the world can download it illegally for free.

Understandably, the fact that anyone can make unlimited perfect duplicates from one digital copy scares the daylights out of media executives. In an attempt to counter that aspect of digital content, many of these executives have hung their hopes on technical copy protection schemes. The problem with this approach is that it imposes a physical world concept on the digital world. In other words, instead of addressing the fact that a digital movie can be copied, it simply imagines that aspect of digital content away. Returning to the previous example, in the physical world, a lock that stops 99% of thieves will protect the owner from 99% of potential losses. In the digital world, a movie owner would need to stop 100% of piracy losses because if only one copy is lost, an unlimited number of duplicates can result.

When faced with the realities of the digital world, proponents of technical copy protection often argue that such technologies are still worthwhile because they are effective at deterring most unsophisticated would-be pirates. This concept, which some call the “speed bump” theory, ignores the fact that, because there is an Internet, unsophisticated pirates don't have to break a copy protection scheme; they can simply download a perfect duplicate made from the one original that escaped in-the-clear (i.e. unencrypted).

The speed bump theory also ignores the first difference between the physical and digital worlds (i.e. software makes everyone is an expert). Although it is both illegal and wrong, anyone capable of using a Web browser can download software that can circumvent copy protection. For example, it is trivial to copy retail DVDs since the standard copy protection used, which is called CSS (Content Scrambling System), was broken by a child in Norway in 1999, after which the first deCSS programs appeared. Since many versions of deCSS are freely available on the Internet, unsophisticated pirates do not need to know anything about encryption keys or the physical structure of a DVD in order to copy a disc that is encrypted with CSS. All they need to do is run software that was created by someone that did know.

In one very important sense, the digital world is exactly the same as the physical word. The simple axiom that “the customer is king” is no less true when it comes to selling movie downloads than when selling a physical object. Removing copy protection from digital downloads makes it possible for paying customers to more easily enjoy their purchases where they want to and when they want to. Without futile copy protection, on-line service providers would also be able to more quickly add features that create value for paying customers. The ability to burn personal use backup copies or export movies to a video iPod are just two examples of features that would be difficult or impossible for almost any DRM-based system to provide.

There is another movement afoot that is gaining traction even with some large players. A growing minority of organizations have adopted the philosophy that if you provide digital content to people in a usable form and at a reasonable price, then many consumers would rather pay for it than steal it. The success of companies like eMusic, a service that sells DRM-free music downloads, should serve as an example to executives in the movie industry. The Internet giant Yahoo! has also been making waves by following eMusic's lead and selling music downloads that are not copy protected. There is still time for the movie industry to learn from these examples. In order to succeed in a digital world, they should use the Internet to add value for paying customers, not take value away by using copy protection that inconveniences honest people while doing nothing to prevent large scale piracy.

About the Author: Jim Flynn is the CEO of EZTakes, Inc. (www.eztakes.com), a Web service that sells movie downloads that consumers can burn directly to DVD. EZTakes discourages piracy by personalizing DVDs with the identity of the purchasing consumer. By enabling consumers to burn DVDs that will play on virtually any DVD player, EZTakes has bridged the gap between the Internet and the living room.