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>Date: Mon, 29 Oct 2001 21:00:00 -0800
>From: TidBITS Editors <[email protected]>
>Subject: TidBITS#603/29-Oct-01
>To: [email protected] (TidBITS Distribution)
>Reply-To: "TidBITS Editors" <[email protected]>
>
>TidBITS#603/29-Oct-01
>=====================
>Steal This Essay 2: Why Encryption Doesn't Help
>-----------------------------------------------
> by Dan Kohn
>
> "Doveriai no proveriai." (Trust but verify.)
> - Russian proverb, as quoted by Ronald Reagan
>
> Even as content becomes a public good, content creators (or at
> least the publishing and recording industries that claim to
> represent them) have been led to believe that encryption can
> protect their revenue streams. As I noted in the first of these
> essays, they are lambs being led to the slaughter.
>
><http://db.tidbits.com/getbits.acgi?tbart=06604>
>
> Why is all content becoming a public good? It has realistically
> been nonrival for some time now, meaning that I can copy your CD
> of music or software for a few pennies or less, and you are in no
> way disadvantaged. (Of course, the author of that content may feel
> quite disadvantaged by this "theft," but as long as I don't
> scratch your CDs, there's no reason for you to care that I
> borrowed them for a few minutes.) In fact, the central concept
> of digitization - converting all content to streams of zeros and
> ones - entails making it infinitely copyable without any loss of
> quality, the very essence of nonrival goods.
>
> What has only become clear in the last couple years (although
> the Recording Industry Association of America - the RIAA -
> still has its head in the sand) is that digital content is also
> nonexcludable. Of course, tens of millions of dollars have been
> spent on a variety of means to make digital content uncopyable.
> Supposedly unremovable watermarks are embedded in images to detect
> copies (e.g., SDMI and Macrovision), content is encrypted so that
> it can only be viewed through an authorized player (e.g., DVD CSS
> and Microsoft's and Real Network's digital rights management
> systems being used in the music industry's Napster competitors,
> PressPlay and MusicNet), or some form of registration is required
> for activation (e.g., Office and Windows XP).
>
><http://www.riaa.org/>
><http://www.sdmi.org/>
><http://www.macrovision.com/>
><http://www.dvdcca.org/>
><http://www.pressplay.com/>
><http://www.musicnet.com/>
>
>
>**Encryption Is Ultimately Futile** -- The problem with the
> security of these approaches is that, as cryptographer Bruce
> Schneier points out, there are basically only two types of users:
> regular ones against whom _any_ form of copy protection will work,
> and experienced hackers, whom _no_ form of technology can stop.
> Your technophobe mother represents the first category, and your
> geeky nephew exemplifies the members of the second category. Why
> can't the hackers be stopped by encryption? If the challenge were
> just to transfer a file from one point to another without letting
> someone get to see its contents, encryption is up to the job. But,
> consumers don't listen to or watch encrypted versions of content.
> (I have, and it looks like static). They watch the regular,
> unencrypted version. So, somewhere close to the user, the content
> must be decrypted. And that decryption process typically runs on a
> PC, where experienced hackers can watch it work one instruction at
> a time, and change those instructions to enable the unencrypted
> content to be copied.
>
> Phrased differently, as long as the intention is ultimately to
> deliver the content to the customer (and hopefully even the RIAA
> is still trying to do that), then it's impossible to stop wily
> hackers from getting at the content in its unencrypted form and
> having their way with it. "Trying to secure [digital goods] is
> like trying to make water not wet," Schneier said recently. "Bits
> are copyable by definition."
>
> In early 2000, a 16-year-old in Norway named Jon Johansen was
> upset because he wanted to be able to play DVD movies in his Linux
> box's DVD drive, but the movie industry had not authorized any
> players for Linux. So, working with several anonymous contacts on
> the Internet, he cracked the copy protection scheme used by all
> DVDs, enabling them to be played on his machine and, incidentally,
> to be copied endlessly and perfectly. (The Norwegian police
> actually confiscated his computer at the request of the Motion
> Picture Association of America several days after he distributed
> the code on the Internet, providing a classic example of tardy
> barn door closing.) More to the point, one could ask what chance
> any copy protection scheme has, when random 16-year-olds with an
> Internet connection can succeed in breaking it in their spare
> time.
>
> But the news for authors such as myself, who might want to get
> paid for our work, gets worse. There are many in the music
> industry who believe that a 98 percent copy protection rate would
> be just fine, the same way that department stores calculate a
> presumed level of spoilage (i.e., stolen goods) in their
> inventories. That works for department stores because their goods
> are rival, so that even if a few shoplifters get their items for
> free, everyone else still has to pay. The problem for the RIAA is
> that nonrival content means crack once, run everywhere. That is,
> all it takes is one smart hacker to defeat the copy protection
> schemes for everyone. Then, your nephew can either distribute his
> hacks in an easy to use format that even your mother can install,
> or, more directly, he can just distribute the unencrypted content.
>
>
>**Advertising Support?** If content can't be made excludable (and
> thus easily charged for) via encryption, perhaps there are other
> ways to build business models around content. What about
> advertising? After all, broadcast television is essentially
> nonrival and nonexcludable, and it's financed by advertising.
> Unfortunately, no. First, as they have become ubiquitous, banner
> ads have dropped dramatically in effectiveness, as measured by
> click-through rates, which have fallen from 4 percent to 0.1
> percent. This is not too surprising, given that most people hate
> banner ads and do everything to try to ignore them. Ad rates for
> some large sites have fallen correspondingly from 40 cents per
> impression to less than 0.1 cents, one of the primary causes of
> the many new applications of former dot-com employees for
> Starbucks barista positions.
>
> And for content providers, the news grows still worse. The
> downturn in the economy has made it harder, particularly for
> publications without loyal readers, to attract advertisers, even
> at the lower ad rates. Then there's software such as WebWasher
> that automatically detects the banner ads on any given Web page
> and strips them out, which incidentally causes the page to load
> faster (just as a 30 minute television sitcom can be viewed in 22
> minutes without the ads). Ad blocking software replaces the ads
> that are supposed to be funding the content with blank space,
> which is what content providers' revenue models are starting to
> look like. The software is not perfect, but it's getting better
> and is already effective enough to strike fear into the hearts of
> content publishers and advertisers.
>
><http://www.webwasher.com/en/products/wwash/functions.htm>
>
> Even the soap companies that have funded so many years of daytime
> drama may start reconsidering their advertising budgets over the
> next decade, as digital video recorders such as TiVo become
> increasingly common. These enable viewers to have their favorite
> shows easily stored to a hard drive, where they can be
> conveniently replayed at the time of the viewer's (rather than the
> programmer's) convenience. Imagine setting your own viewing
> schedule rather than having it dictated by snotty network
> executives in LA and New York. Plus, these devices let you skip
> right past the commercials with a few clicks of the remote,
> thereby crumbling the foundations of 50 years of a profitable
> broadcast industry. New PC-based recorders such as SnapStream even
> support sharing recorded shows across the Internet, enabling video
> to take its place next to MP3s on the new peer-to-peer networks
> that are quickly replacing Napster. Why schedule your evening
> around a broadcast schedule and sit through brain-numbing
> commercials, when the show is available whenever you want it with
> the commercials already edited out? A world full of digital video
> recorders is one in which the couch potato is liberated from the
> slings and arrows of network programming (how dare they put that
> promising new show against Survivor!), and once again is empowered
> to make real choices about how, when, and what to watch. [For more
> on TiVo, see Andrew Laurence's two-part article series "TiVo:
> Freedom Through Time Shifting" and be sure to read the in-depth
> TidBITS Talk discussion on how personal video recorders are
> changing advertising. -Adam]
>
><http://www.snapstream.com/>
><http://db.tidbits.com/getbits.acgi?tbser=1204>
><http://db.tidbits.com/getbits.acgi?tlkthrd=1461>
>
> Are there any categories of content from which individuals can be
> excluded? Only two that I can see. The first is showing movies at
> movie theaters. With a significant investment in digital
> distribution, and an even bigger investment into physical security
> at the theater, studios should be able to distribute movies
> without them immediately being copied onto the Internet (but watch
> out for those 16-year-old projectionist/hackers). The other
> category would appear to be Web services, where software is split
> into components that are loosely coupled and distributed across
> the Internet. Since you're interacting with numerous other
> computers, your identity can be continually reaffirmed (what
> Microsoft is planning with Hailstorm), making it nearly impossible
> to avoid paying. But any software that supports a disconnected
> mode (such as an operating system), can be easily (by hacker
> standards) modified so that it no longer "calls home" to ensure
> authenticity. The registration system for Windows XP was cracked
> so that running a simple program will remove the requirement for
> online activation, six months before the software was even
> released.
>
> Content won't truly be a pure public good for another ten years or
> so until broadband home Internet connections are ubiquitous,
> making it trivial to transfer large files around. But, since the
> process is already accelerating (Napster began with college
> students who already have broadband connectivity, and some new
> peer-to-peer file sharing services are designed explicitly for
> downloading very large files in the background), it's worth asking
> why anyone will create content when the old models for getting
> paid don't work. The answer will have to wait for another essay.
>
> [Dan Kohn is a General Partner with Skymoon Ventures. His writings
> are announced through <[email protected]> and can
> be discussed through <[email protected]>.]
>
><http://www.dankohn.com/>
><http://www.skymoonventures.com/>
>
>
>
>$$
>
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