Thomas Jefferson, Needles and Haystacks

With an Information Economy, manufacturing, labor and distribution costs are now commoditized, so that establishing, maintaining and fostering "trust" becomes the most valuable asset.

"Trusted transactions" are the best means to identify and authenticate market participants, value-added information and value adding components in real time. The emergence of a large anonymous marketplace for goods and services demands greater transparency and more realistic security applications. Security in trusted transactions can be easily demonstrated to foster trust by any market participant. In fact, Blue Spike has been shipping a server product that is able to handle all of the complex copyright issues in a manner consistent with market realities and legal remedies. The comparison with other security technologies reveals that only digital watermarking can enable title to be created for individual instances of digital signal copies.

Public Key Infrastructure (PKI) applies strictly to transmission security.

Meaning ensuring that information sent from point A to point B can be said to have integrity, confidence and trust. Non-repudiation of the information sent, a form of guarantee to the recipient of the information, is also accomplished, but only for the information as it is transmitted. Once the information has reached its destination, no further security is enabled. Persistence of identity and authenticity of information, including music, is not possible.

Cryptography, including public key cryptosystems and digital signature applications, have never been designed to establish responsibility over digitized media content such as music. Digital signatures are related to digital watermarks only to the extent that changes are made to target data that can be detected later a means of tamperproofing. The underlying technology of digital signatures simply proves that there is space to hide additional information in practically any set of data.

Digital watermarking technology, however, enables the imperceptible concatenation, literally "permanent binding," essential to the persistent modification of the music or content signal, of a digital signature to media content.

Simply, encrypted music can be decrypted and subsequently copied and redistributed in an uninhibited manner thus, the "digital copy problem" known commonly as "piracy." Digital watermarking leverages the security of cryptographic transmission and combines said security with tamperproofing of a signal such as music. Encryption and PKI cannot solve the "digital copy problem" because the media signal being copied is not considered in the generation of a digital signature or digital certificate.

Only a secure digital watermark which combines cryptographic techniques with data hiding, or steganography, are apt to successfully enable audit trails for media content.

Digital watermarking for images is not the same for audio, since the information hiding exploits psychovisual effects for visual information and psychoacoustic effects for audio information. An interesting argument for consideration is that any scheme to replicate a signal, so-called digital signal processing or communication schemes, such as compact disc or MP3, are logically related to any ciphering or encryption scheme. Could it be that value resides in the ability to share a secret? We know encryption is able to randomize a signal in such a manner that the key used for randomization is a shared secret between the sender and receiver.

When we evaluate the merits of an audio signal, we must observe the signal in "coded" not "ciphered" form. Copyright is not secret sharing, it is value sharing.

Attempts to limit observations of the value of the audio signal can never yield economic benefits to those seeking to increase the value of their work. Value is enhanced in authorized exchange.

Digital Rights Management (DRM) relies on associations between media content and predetermined rules to be governed in the exchange of such content. Rules exist in a particular domain in order to have applicability. Should a containerized or DRM-associated song be compared with a freely available but identical version of that song in an unsecured CD (for instance the industry standard, Red Book audio compact disc)? Any and all rules, including use parameters and restriction, can be simply removed or defeated. What is also problematic is that music must be played to be recognized. Once played, the music signal itself is in freely accessible format. Capturing the signal in the ether is a trivial pursuit.

Any unsecured format can easily be compared with a secure version of the same media content and the difference between the signals is the supposed security.
Essentially the notion that secure formats can succeed if unsecured and less expensive versions are concurrently available makes the assumption that consumers will give up something, their fair use and first sale doctrine rights, for nothing.

The problem with DRM, cryptographic containers, "cryptolopes" and related technologies is the over reliance on predetermined rules, not on the market reality that content achieves value when freely accessible. Not free, just freely accessible.

A system for trust, or "trusted system," is inherently command-based and increases the likelihood for systemic failure since media content requires open and accessible means for recognition in order for markets to work correctly. Denying legacy media and legacy file formats (for instance currently available unsecured CD and related file formats such as WAV and AIFF) which are not "containerized," is likely to diminish the returns for any given media work.

Recognition is highly valuable and the time in which to maximize returns shrinks.

Traditionally record companies had 6-8 weeks to sell 80% of a given released title. The time in which sales are similarly reached presently is between 2-3 weeks. This excludes long sellers. Thus the "paparazzi effect" is when media content owners must maximize recognition in order to enable maximized sales. Value cannot be created secretly. Secrets are not maintained in promoting music, thus assumptions that a trusted system or DRM solution can assure security and payment for media content, are poorly constructed arguments. Moreover, each crack in the system requires that all outstanding players be replaced. Systemic risk is higher than the cost for supporting any supposed illusory security over the packaged digital signals.

Comparing performance: a trusted system will likely require ten times as much computation to offer no more security than can be offered by secure watermarking at a cost of ten times the overhead to the system.

Furthermore, models for "superdistribution" simply ignore traditional and well-founded market effects that when value is established for a particular asset, control over that asset is rarely successfully shared with downstream parties. The argument that a digital rights management system can guarantee payment ignores the importance of understanding the ways and means for maintaining the value of a recognized asset, including music. Labels do not share control over copyrights, why will they in the future?

Trust is misplaced in a system which cannot provide concurrent support for existing unsecured media formats (CD, DVD-Video, etc.) or transmission channels (radio, wireless, satellite, etc.) and new formats (electronic distribution).

The issue will continue to be whether DRM or other trusted system technologies can add value to the music to be transacted. There is no security by obscurity and obscurity should not impact the ability to realize value in media content. Consumers should not be bothered by any copyright security or audit trail and should be given the ability to maintain privacy.