Last Fall I was asked to make a presentation on the use of watermarks in the use of watermarks ‘to prevent piracy”. Anyone who follows this thread knows that isn’t what watermarks do. Instead I presented “Using Invisible Watermarks to Detect, Deter and Disrupt Piracy”.
It was videotaped and you can watch the presentation here.
The key points- piracy is an old problem; watermarks are an old solution; neither is what they were; market forces point to the use of watermarks; cultural issues in the motion picture industry make when an unknown.
There is a lot more in there than this, so if you want to be more informed about piracy and watermarking, it is full of a bunch of things you might not know.
It’s a free sample of a series about technical and financial aspects of the motion picture industry, courtesy of The Business of Entertainment -n educational courseware production company

A couple of bits to update you on current entertainment piracy activity.
Today the vast majority of piracy activity falls under the Millennium Digital Copyright Act, the most recent attempt to have the laws of the land align with the actual technology and capabilities, much less proclivities, of the people of the land.

One aspect of this was playing out recently in Federal Court where a Southern California man was being prosecuted for ‘modding’ an Xbox to defeat its internal mechanisms for playing unauthorized games or media, with ‘unauthorized’ meaning pirated. This is an important detail, as it speaks to the question of who owns a product, and the distinctions between hard and soft property.

While Microsoft builds and sells the Xbox, the software within it is licensed to the buyer, rather than sold outright. And the machine itself combines both hard ans soft technologies to prevent it being used with counterfeit content. The question of whether or not Microsoft can tell an owner what to do with that hardware has yet to be tested in court. So the case had great potential to be a stake in the ground for all interests.

Unfortunately, a screw up by prosecution resulted in the dismissal of charges, and over two years of effort only served to prove that lawyers are human too. When, on Monday, the prosecution’s first witness reported something that had not been disclosed to the defense. Without getting too much inside trial law, or the tongue lashing the judge gave the prosecution for having made the error, suffice to say that it was a loss to all who had hoped to see the definitions of piracy, property and the law get more resolved.

Meanwhile, game publisher Ubisoft, currently readying a Micheal Jackson themed release, has a novel way of handling piracy. Merry Christmas!

As the equinox recedes, and your days shorten up to Haloween, you may have been too busy meeting your obligations to note that the way movies are delivered has turned a significant corner.
Beyond the all too clear event of Blockbuster reorganizing, or the fact that the new brick and mortar model is either a kiosk, or your mailbox, the relaunch of Apple TV, along with similar offerings from others, signals the battle is on to capture your movie patronage, especially at home, assuming you still have one.
Expect every vendor, from the phone company to your personal computer geek fixit guy, to be promoting their own brand of how to get your movies.
The results are predictable. Consumers are confused.
Thieves are not. The world of download piracy has this figured out. One might think that the way to accomplish anything is ask someone who already has, but for all the bright lights of Silicon Valley and Hollywood, learning from others prior experience hasn’t happened.
For the proponents of watermarking, it is all good. However each of these new channels succeed or fail, at some point a secure way to protect the copyright that also facilitates transactions will become paramount. USVO is ready, and ahead of the curve. It is great to see the marketplace moving more toward the conditions required for our products to be in demand, to be part of the ongoing evolution of media distribution.

As the equinox marks the turning of the seasons, more reports from the world of media signal the slow grinding of the old models and businesses as technology continues to make it easier for you to see the content you want, where you want and when you want.
Unfortunately, as evidenced by the Blockbuster bankruptcy, the existing players aren’t taking advantage of this, still seeing making you watch content on their terms, still wringing out every last drop of the old models. As noted in the Christian Science Monitor, some are making the old model thrive- just not at any scale. Online legal provider Netflix shares boomed on the news.
As pointed out in this article earlier this week in the LA Times, even the latest technologies that the studios are using, are in turn being used by pirates, making theft even easier. Also pointed out in the article, tools exist to both reduce illegal provision, and penalize the companies doing it.
As noted previously here, the government is starting to be more active. But as in many transitions, the pace of change is much more rapid than the redeployment of either jurisdictions or established companies to control, or exploit.
It is the development of these new ways to consume content where profit lies, and it is inevitable that watermarking and enforcement will play a significant role in enabling both the legal transactions and the eventual corralling of the illegal. USVO continues to provide breakthrough technologies for this reality.

Yesterday marked the official release of the “2010 JOINT STRATEGIC PLAN ON INTELLECTUALPROPERTY ENFORCEMENT” , a 65 page document from this administration’s Office of the U.S. Intellectual Property Enforcement Coordinator, one Ms. Victoria Espinel. Ms. Espinel delivered the document to the Senate Judiciary Committee this week. And the top law enforcement officer in the nations top law enforcement officer joined in. “The Department worked closely with administration officials to develop key aspects of this strategic plan to better protect our nation’s ability to remain at the forefront of technological advancement, business development and job creation,�? said Attorney General Holder. “
Additional facts revealed- So far this year the department has launched more than 150 new investigations that involve all areas of piracy. Espinel warned pirates: “We’re committed to putting you out of business.”
Top of the executive summary ‘letter to the President”? Making sure that the government isn’t using pirated products itself.
Key for those who have followed the USVO story- frequent and prominent use of the term ‘enforcement”. USVO advocates and calls for more resources to be focused upon enforcement of copyright. Watermarks are the primary forensic tools used in enforcement efforts for motion pictures.
The plan was declared “Not Nearly As Bad As Expected; But Not Great Either” by TechDirt, a customary critic of ‘the Hollywood’ business model.

As the summer movie season starts to unfold, it should come as no surprise that pirates are as busy as the bees, taking the marketing nectar from the Hollywood releases and converting that desire to see the major movies events ( known as “tent poles” in the trade) into the honey of derivative income.
Unlike the bees, who perform an essential function for their ecosystem, pirates are parasites with no apparent contributory value to their hosts. While recent studies have cast doubt upon the actual damage to industry of all sorts of piracy,
Yet there is something that piracy accomplishes. It proves there is an audience out there for entertainment delivered over the internet- people who just can’t wait for the title to be in their neighborhood theater. Now how many of those would be willing to pay for that privilege isn’t known, but the opportunity is there to discover how many of the estimated 50 million people who pirate content.
Today brings us just one example of the activity and attitudes of people who are in this sector. “Piracy is still a major issue for the content industry which hinders the distribution and access to content,�? said Wim Bus, SVP Product Management at Civolution.”
Civolution, for those of you new to this sector, embodies two significant corporate investments in digital watermarking of content. A competitor of USAVideoInternactive, it’s story also illuminates what makes USAVideointeractive such an interesting and compelling opportunity. Born from the Phillips and Thomson efforts to build and sell digital watermarking, Civolution represents over $50 million of investment in a field who time is just now arriving. Due to these legacy investments, it’s product offerings are built upon yesterday’s assumptions about how content companies want to protect and function.
Today, USVO is an engaged partner with a major multi-national content corporation, which is telling us exactly what it wants to both exploit the digitally networked world and fight piracy. Our powerful and adaptable technology is not built on an idea that both business and technology have past, but is prepared for an evolving marketplace that is challenged by both what is known- today’s circumstances- and what is yet to be discovered.
Tent poles will keep going up, but those in the tent will be those contributing to the returns to the tent builders- the content companies. Watermarking is a key factor in making sure that those coming in the door pay their way. We invite you to explore this sector, both here on the USVO blog, and website, but throughout the investment media space and see why appropriate investment today will yield a powerful result in the future.

Just in case you haven’t noticed, today USVO was able to announce its extension and expansion of ties to one of the major distribution companies. It the one whose name rhymes with ‘box’. Turns out, and it is totally understandable if you haven’t noticed this either, that this company rarely makes what are called ‘vendor’ announcements. The last one in the IT sector was two and a half years ago when they allowed USVO to announce the initial contract. In an extraordinarily generous moment, they even let us put their logo on the release. A Google search of business news services turns up a great number of press releases from this company-so you know that their in house PR organs are functioning.

But the vast majority of its communications and outreach function only serves to promote its own products. There was, as this contract was finalized and negotiated, push back about how this announcement might divert attention from the upcoming blockbuster holiday release of the Jim Cameron film “Avatar”. Given the multi-million dollar advertising in all media and striking imagery there in, it isn’t clear how many of you small stock press release aficionados would now not be going to the theaters in the next month to see the film that some consider the make or break test of 3D theatrical exhibition as the salvation of the film industry. Really. The film, probably the most expensive production ever mounted, even allowing for inflation, is so important that it wouldn’t surprise if Rupert Murdoch himself asked the White House to go to China some other week.

So thanks to those inside the organization that see the value of telling the world that their organization has been and will be protecting their products and asserting the rights of content distributors with sophisticated state of the art technology integrated with proactive enforcement strategy. We here at USVO appreciate their courage in the face of all manner of opposition and resistance. Thanks for being willing to shine just a little of the light from the mountaintop on our humble enterprise.

As a measure of that appreciation, there will be no direct mention of the company here. See the announcement on our news page. Please go search for any such news from any other watermarking company for a direct relationship with a major content company.

Last night 60 minutes had a segment on movie piracy. Watermarking was represented, in its most primitive forms, and used crudely. The focus was on camcorders feeding organized crime. A highlight was a pirated DVD with a Mexican narco trafficker organization logo on the package.
An MPAA investigator gave a blow by blow of an arrest in a theater. Best feature was the graphic representation of Peer to Peer file sharing. Bit torrent, which has dominated file delivery for years, was presented as a ‘’perfectly legal’ technology used by 50 million people worldwide to get films for free.
Humor was provided by Stephan Soderburg with the A list director speaking for the film workers whos jobs are being impacted by reduced risk taking and production in the studio system, since the stars ‘aren’t being hurt’.
French law was highlighted for its current proposal to restrict internet access for downloaders and send thieves to prison.
So the good news is that P2P technology is prime time news. The failures of preventative strategies were well discussed. Many more minds are now prepped for the USVO approach of enforcement and active engagement of the new digitally enabled markets.

Recently published at arstechnica.com, Nate Anderson has neatly quoted over a hundred years of objections to new technologies by those whose business models were perceived to be threatened by those new technologies. Starting with John Phillip Sousa having concerns for ‘the national throat’ that player pianos would cause to atrophy through the recent transition to digital television, Anderson illustrates that copyright holders have never made a significant contribution to either creation or distribution of content. The basic argument is that copyright limits innovation.
Much like the current national debates on healthcare or climate, those who benefit by the current situation are vigorously defending the status quo while stirring up as many worst case scenarios for the proposed changes as they can. While it can’t be said that the advent of mechanical reproduction of music that Sousa expressed concerns about destroyed music or even the music industry, it is true that many businesses changed or were lost and that while some benefited, others did not.

This is true of every change in our world. When the Clean Air act was passed, many predicted that our economy would be choked. And while polluters did have to spend money to adapt, they spent that money with innovators who invented and produced solutions to cleaning the outputs that had been defined as polluting. New businesses were generated, and others were reduced- in particular areas of health care that were in less demand as people suffering from asthma and other related conditions suffered less.
In the area of copyrighted content, the malaise of the music industry has not meant the end of it, much less the creation of music. New music is being produced and distributed through an explosion of new channels. While there may never again be the focused attention that the combined forces of music and television combined to make Michael Jackson the world wide phenomena of the 80s, thousands of artists are finding audiences and sustaining their existence.
The motion picture industry is continuing this pattern. Today within the industry are people who have experience with both winning and losing in the cycle of innovation and disruption. The losers include all the vendors of various analogue services that are dwindling. Kodak for instance, already dealing with the consumer shift to digital photography, is busy seeking new business supporting the new digital capture and release in the industry. On the winning side are those companies supplying new digital cameras, digital projectors and screens as well as those who are installing and servicing them.
New models of revenue at every level are being tried out, with both successful and failing results. For every iPod there are several struggling MP3 player brands, and for each Steve Jobs – now holding the single largest position and a board seat at Disney, there are VPs and vendors struggling to find a product or service that will succeed and replace the revenues lost. Not every producer of blank VHS tapes has successfully become a DVD manufacturer.
In the not too distant past, there was a ride at Disneyland, sponsored by General Electric, as it was still known, called “the Carousel of Progress�?. Animatronic families demonstrated the lifestyles of the 20th century. The emergence of leisure time and how to use it is revealed as the circular building rotated the audience from one stage to the next. As each movement occurred the robot cast would sing “there’s a great big beautiful tomorrow, waiting at the end of everyday’.
This lyric remains both the promise and the problem society, organizations, and individuals face continually; how to make it through the night without going bankrupt.
What does succeed historically, as Anderson points out, is giving buyers more choice and more power. Rights holders that exploit this will always succeed. USVO sees itself as a partner with the copyright holder companies, is to make that transition profitably.
For extra insight into the issue- read the comments on Nick’s article.

Yesterday savvy heavies and websurfers were focused on the latest FCC hearing on broadband- the 24th since embarking on establishing a national broadband policy. As reported upon in Broadcasting & Cable, John Horrigan, consumer research director for the initiative, “the underlying goal was to figure out what drives adoption, specifically what users wants�?.
Judging by those testifying, the main interest was in how to put high value content on the internet- something users have shown they want- and make sure content creators, owners, and broadband providers are compensated- something users are at best ambivalent about.
With high profile representatives like Dan Glickman of the MPAA (“It must be a safe and secure environment�?) and Patrick Ross, ED of the Copyright Alliance (“there needs to be a clear distinction between legal and illegal content�?) it was clear that the challenge of providing users with quality content and content owners with compensation looms large not just for the content companies, but for providers, and government as evidenced by Patent & Trademark Office rep Michael Shapiro pointing out his office’s “keen interest�? in the plan and the “great peril�? that the plan might increase piracy.
While it isn’t clear that the hearing produced any paths toward answering the challenge, last week’s release of “The Beatles – Rock Band�? along with remastered versions of the Beatles catalog made very clear that the users have no problem paying for both the music and the game. With Abbey Road the top selling album again, and the game expected to have its unique instruments sold out by November, the Beatles once again are proving that content is king.
What hasn’t been reported is any piracy. Extraordinary security and secrecy marked the long project and its many products. Next week we’ll examine how this set of releases may point at new models of content business, where relationship and service are emphasized over products.
Also in the news recently, the Digital Watermarking Alliance announced at IBC in Amsterday last week that “2009 has been a banner year in commercialization and adoption of digital watermarking solutions.�?
Noteworthy for USA Videointeractive shareholders is that none of the items on the inventory of the banner year includes contracts with major studios, such as their company has. Since USVO is not a DWA member, it follows that our accomplishments aren’t featured. The list does put USVO’s accomplishments into a context that evidences what has often been stated here- USVO has accomplished more with less ( much much less) than other players in the watermarking space.