February 1, 2001 11:40 AM PST

Microsoft plays OS card to cement anti-piracy role

Without much fanfare, Microsoft has captured a leading spot in the content-protection business, a role that is fostering closer relationships between the software giant and music labels and movie studios.

The last several months have seen most of the major music labels release songs in Microsoft's Windows Media format, which has built-in copy protection, or DRM (digital rights management) technology. Most of the labels are quick to say they are technology agnostics, but in a few cases their commercial download services are using exclusively Microsoft technology.

"What Microsoft has done is as close to my mission statement as anything I've seen," said Jay Samit, a senior vice president at EMI Group. "They're making it as easy to buy music as it is to steal it."

That quest for secure downloads is still a long way from completion, however. The labels' services, which cost up to $3.99 per song, are far from competing with the still snowballing popularity of file-swapping service Napster. And that's the fundamental flaw in any DRM technology, many analysts say: Millions of copies of songs are already on the Net without any protection.

The idea of protecting songs, movies or other content from being copied and distributed has been a controversial one among technologists and consumers. But it's becoming clear that Microsoft is betting on the technology to extend its reach deep into the digital entertainment world, with hopes of becoming the standard infrastructure for delivering music, video, games and other digital files.

Several other content-protection plans from companies such as InterTrust and IBM have gained ground in the young industry. Microsoft, however, is betting on the advantage that has served it so well many times before: Its product is in the operating system.

"Clearly, the fact that they write the Windows operating system gives them an ability and credibility when it comes to securing music within the bowels of the computer," said Aram Sinnreich, an analyst with Jupiter Research. "Microsoft has been slowly building up strength as a dark horse in this business."

A hard sell
DRM companies have taken something of a beating in popular opinion over the last year. The emergence of Napster and other file-swapping services has conditioned a large number of people online to the idea of free music. Putting a technological lock on the songs is seen as an insult by many Net music lovers.

Nor has DRM technology have a solid track record. Several online instances of content protection--notably Stephen King's first attempt at Net publishing--have been quickly cracked. Most backers of DRM systems concede that anything can be hacked given enough time and energy but say content protection is geared toward keeping mainstream surfers from stealing.

The features of Microsoft's offering aren't unique. Like others in the business, they give the content owner--the record label, movie studio or publisher--the ability to distribute works with rules for use. For example, a song might be able to be played by anyone, played a single time, or played only if the listener goes to a Web site and plugs in an e-mail address.

The P2P myth What's novel is that it's built directly into an audio and video technology that is quickly gaining ground on its own, and that the two technologies are inextricably linked. The technologies, in turn, are being set deeply into the Windows operating system. Other technologies being built into Windows further boost content-protection features, such as the so-called Secure Audio Path, which scrambles output from a computer sound card so that music streams can't be tapped and copied at that point.

"We see Windows Media and digital rights management as a core service in the operating system," said Michael Aldridge, lead product manager for Microsoft's Digital Media Division. "This is going to be a core technology for anything that's distributed across the Web."

Walking a dangerous line?
That argument has been heard before. In the browser wars, Microsoft contended that its Internet Explorer was an operating system component, and that it was using no unfair advantage in its fight against Netscape Communications. The Justice Department disagreed, as did the judge that ordered that Microsoft be split into separate operating system and application development divisions.

Antitrust lawyers say Microsoft must have a dominant market share in the audio and video market with its Windows Media technology before triggering any legal scrutiny. But it's not outside the realm of possibility, some say.

"What you have Special coverage: Breakup seen is that one of the things the government worried about is that Microsoft would continue to add more and more features to its operating system for which there was independent consumer demand," said Emmett Stanton, a partner at law firm Fenwick & West. "This could bear some scrutiny."

Microsoft counters that adding the content protection deeply into computers' and other devices' infrastructures is the only way to be confident of security.

"We've had a core multimedia system like this as part of the operating system since 1991," Aldridge said. "There are very low-level things that have to happen for this to work."

A few executives at major music labels have privately expressed some concern that Microsoft has tied its content protection technology so closely to its music and audio technology. Most labels are still experimenting with multiple formats and protection plans from several companies. Some even have created their own content-protection systems.

Microsoft and the record companies hope that by offering a legal version of Napster or other subscription services that have new songs, concert tickets or other tie-ins, they can persuade people to pay for what many file swappers are getting now for free. It will be a hard sell, many analysts say.

"Napster is not an evil thing for content owners," Microsoft's Aldridge said optimistically. "It's just that it doesn't have any DRM in it."

 

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