Investor Relations


Part 2: Blue Spike's Digital Watermarking Emerges as the
Rational Choice for Fighting Piracy


The prerequisite of information security for electronic commerce has engendered the development of a number of useful technologies, each with its own strength and each with its own inherent focus.

The three technologies that are being proferred as copyright and information control mechanisms for e-commerce are:

  • Digital Rights Management (DRM) systems
    These are object-centric access control systems that primarily wrap content in protective layers of cryptographic shielding. DRM does not inherently provide for audit trails once the content has been rendered, seen or heard. Any DRM is comparatively weighted down by excessive computational resource use and can easily be replaced by "DRM-lite" type systems such as the "Trusted Transaction Server".

  • Public Key Infrastructure (PKI) schemes
    These are, broadly put, user-centric access mechanisms to authenticate the identity of networks users and ascribe each privileges appropriate to his user profile.

  • Digital Watermarking
    The systems pioneered by Blue Spike, Inc. invisibly bury the identity of the copyright holder into the intellectual property object, such as a song or an image. As well, watermarking systems are being used as copy control and playback control schemes being standarized by the consumer electronics and media industries originally through the Secure Digital Music Initiative (SDMI), but legislative action in the US Congress as well.
Of these three, only digital watermarking does not default toward restricting access as its core functionality.

In the context of delivering various kinds of information and content, DRM and PKI proffer keying systems to assure payment or end-user privileges are in place before releasing content or software for consumer use. Each of these systems have their own relative strengths in particular domains, though DRM and PKI, given the sophistication required to use and manage them, are most relevant in the commercial sector.

In consumer markets, however, digital watermarking's simplicity and technical elegance qualifies it as the most appropriate technology for the domain. Let's compare.

DRM schemes, if properly, deployed, can be powerful access control mechanisms for creators and distributors that require absolute certainty of information security and highly particularized control of their intellectual property (Bob can view document, but not before the embargo date, and he cannot e-mail it and cannot print it.) PKI can provide reliable delivery of information to individual users of a PKI and a highly secure transfer medium. Yet PKI systems were envisioned primarily as network access control systems. They can mediate the transfer of information by way of the cryptographic systems that are organized by the PKI. Content encrypted for an authorized network user with his public key acquired through the PKI can only be decrypted by his private key.

It is true that there are business rationales for secreting information being transfered from point to point. But in the context of creating and cultivating markets, opacity is by definition dysfunctional.

Containerizing content and forcing consumers to negotiate payment and usage rights before discovering it and enjoying it eliminates opportunities for spontaneous arousal and impulse provocation so necessary for marketing images, music and other entertainments. A system for trust, or a "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.

The logistics of key-based systems are daunting. Requiring the consumer to provide the right key to access its corresponding object - a song, for example - is itself an enormous complexity.

Making sure that the keys are accessible wherever a song is going to be played is yet another complication, one that becomes increasingly knarly as content is moved from CD to PC to handheld digital players like Diamond Rio and RCA Lyra. Cryptographically based access control schemes, in addition, are computationally demanding, placing them at odds with consumers' interests when there is limited computing power available - as in the case of portable players - resulting in degraded performance and a negative usability profile.

Last, and most importantly, these kinds of schemes do nothing to stop the capacity of ardent infringers from making and distributing unlicensed copies without further technologies to hamper them. Thus, they are exposed to copying, either by acoustic pick-up device or through direct recording of the music at the twisted pair. Put a jack on the end of it, put it into a sound card and a quality copy can be made for distribution on the Internet.


Part 2:
 Blue Spike's Digital Watermarking Emerges as the
 Rational Choice for Fighting Piracy


Part 3:
 Blue Spike Proffers a Technical Solution with a
Social Enforcement Mechanism


Part 4:
 Music: Just the Overture