Watermarking & the SDMI

Mastering engineer Denny Purcell let out a long sigh. "Does anyone in this room believe that any of this is going to do any good?" he asked. Of the eight or nine people—each with decades of experience in the music and/or audio industries—hanging out at Georgetown Masters Studios for SDMI's Phase II listening tests this past October, not one said "Yes." The consensus: the watermarking issue will probably be dead and forgotten within a year.

Even those who believe that the music industry has legitimate justification for trying to protect its products have questioned the enormous amounts of time, money, and human resources the Secure Digital Music Initiative (SDMI) has spent on watermarking. Entertainment-industry lawyers keep fanning the flames of executive hysteria; executives, fearful of losing sales to piracy, then demand solutions from engineers, who dutifully offer every remedy they can concoct. Cure du jour: watermarking.

It's but the latest wave in the entertainment industry's long tradition of opposition to new technologies, which it always sees as threats, never opportunities. Remember the Tape Tax? Macrovision? Serial Copy Management System? Yet each supposed threat to the industry's revenue streams has become a revenue stream in itself: prerecorded cassette tapes were immensely more profitable for the music business than vinyl records; videotape rentals made winners out of hundreds—thousands—of loser films. These new formats were greeted with hysteria by an industry eager to keep on doing business the same old way.

Fact of life: People make copies of movies and music. They make photocopies of newspaper and magazine articles; they cut and paste copyrighted pieces into their e-mails and send them to friends. Most do so within so-called "fair use" provisions of copyright law that allow quoting and copying for non-commercial purposes. People are going to continue making copies, whether watermarking is eventually made workable or not. An enlightened industry would encourage new technology rather than try to hinder it, and find new and more efficient ways to let people to share information and entertainment—and more efficient ways to extract profit from the process.

I don't think the watermarking effort is part of some vast, malevolent conspiracy to deprive us music-lovers of our rights. I believe that artists and writers deserve to be compensated for their work. I also believe that the publishers and distributors of such work deserve to be compensated. So I'm not opposed to the entertainment industry's attempt to control the distribution of its products—unlike those who profess that "the music should be free," which to some extent has always been free. In the scramble to gain exposure for new releases, the music industry showers promotional discs and many other perks on radio stations, independent disc jockeys, and reviewers for publications like this one. The music is given away and played for free; it's a cost of sales.

Accountants can calculate such costs very accurately, but no one has ever presented a solid scientific case attributing specific "lost sales" to services like Napster or CD burners in computers—or, in an earlier era, to cassette copies made from borrowed LPs. Such losses are extremely hypothetical. The most likely and reasonable scenario is that most people, especially near-destitute college students, would not be willing to pay for copied recordings. They would simply live without them. Freely copied music is of marginal and transitory interest—for background listening only. As far as I know, no one is building a reference library of MP3s.

Applied to the new generation of high-resolution recordings, the watermarking effort is misguided. Audiophiles—the upper end of the market—won't stand for it. Whether they can hear it or not, they will object on principle (as John Atkinson did in last September's "As We See It"), even though, as recording engineer Chuck Ainley pointed out in an e-mail, watermarking probably does less damage to the music than many commonly applied forms of signal processing.

Typical music fans—the vast bulk of the market—won't care if their music is watermarked or not, but they will object to players that require authorization from some central authority (via watermarking) in order to play it. At the insistence of the music industry, such a feature could be included in the next generation of players, as mentioned in remarks made by International Federation of Phonograph Industries president Paul Jessop at a watermarking panel discussion during last autumn's Audio Engineering Society convention. Remember the Divx debacle?

Furthermore, how will watermarking do for the music industry what its proponents claim it will do? How will it prevent copies? This has never been explained. All the digital-encryption-and-copy-prevention expertise in the world can be defeated with one digital/analog converter and one analog tape recorder. Beyond the marketing problems lies the obvious engineering truth: any copy-control technique that reasonably might be applied to consumer audio will be hacked and defeated. If a watermark can be detected, as it must be in order to work, it can be removed—as was apparently proven by researchers at Princeton and Rice Universities and elsewhere in response to a "Hack SDMI" challenge the SDMI issued in September.

Disturbingly, the watermarking effort seems intended to inhibit lawful activities by ordinary music-lovers without really addressing wholesale piracy—a major industry in parts of the globe where copyrights are even less of a concern than audio quality. Watermarking will have no effect on the world's millions of street-corner entrepreneurs.

As a method of containing piracy, watermarking simply won't work. The music industry might be better off canceling the contracts of the legal eagles who keep pushing for it as a guarantee of job security (think of all the copyright-infringement litigation it could generate!) and instead apply the funds to developing business plans that would reduce the incentive for piracy. In other words, make the music more affordable.

But that may be too simple a solution. I suspect that watermarking tests and the "Hack SDMI" challenge are not really about DVD-Audio or SACD or any high-resolution audio format that involves the movement of physical products. I think they are part of a larger research-and-development program for a future only beginning to dawn: one in which Universal or BMG or Sony Music Entertainment will pump a wide-bandwidth audio datastream directly to consumers for a monthly subscription fee. They want to sell you the music, and they want to make sure you don't sell it to anyone else. "Big Brother" conspiracy or simple, solid business? That will depend on where you stand in the transaction.