More tales from encrypt

High-definition DVDs made their long-awaited debut last year afterHollywood and electronics manufacturers settled on a complex array ofelectronic locks to guard against piracy. A few months later, hackers unearthedthe keys to at least three of those locks, enabling 42 high-definition flicksto be copied—for legal or illegal purposes.

If this story sounds familiar, it’s because it’s a remake of whathappened with conventional DVDs in 1999. Two years after the first moviesappeared on DVD, a trio of hackers found keys to unlock the scrambling systemused on those discs. Both then and now, the weak points were software programsused to play DVDs on a computer running Microsoft’s Windows operating system.

This time, however, Hollywood can do more than just wring itshands and complain about piracy. The basic protection system on high-definition discs (either HD DVD or Blu-ray) can be fixed, with new locks andkeys replacing the ones that were exposed. That means the hackers haven’t won apermanent victory; instead, they’ve simply won round one. In fact, studioexecutives seem to be shrugging off the setback and looking forward to roundtwo.

They may be right to be confident, but for the wrong reasons. And from the average viewer’s point of view, the cat-and-mouse game betweenstudios and hackers only delays the arrival of high-definition DVDs that are morevaluable and more resistent to piracy.

The dueling HD DVD and Blu-ray formats both use a technology called Advanced Access Content System to limitcopying. (Blu-ray adds another layer for extra protection.) The technologyinvolves a number of scrambling techniques, and a series of virtual keys arerequired to unlock a disc’s contents. Players—either hardware or software—can generate keys, but may use them only to play a disc, not tocopy it.

The first high-definition movies hit the shelves last year, alongwith a handful of expensive devices capable of playing them. These included afew HD DVD and Blu-ray drives for computers, and two software programs thatworked with those drives. By early January, hackers scrutinizing the flow ofdata on their PCs had found some of the keys used by the players to unlockdiscs, and soon unlocked copies of HD DVD movies were popping up online.Hackers have since posted tools to unlock more than 40 HD DVDs, enablingwould-be pirates to make permanent, high-definition copies of those films froma borrowed or rented disc.

Although the studios haven’t said much publicly about the hacks,behind the scenes they have been working with the tech industry on a response.Sources say the vulnerable software programs are being rewritten to make it more difficultto find the keys, and current users will be prodded to switch to the newversions. After those updates have been sent out, new HD DVDs will contain whatamounts to a kill switch—code that disables the earlier version of thevulnerable software. The changes won’t reel in the unlocked copies of moviesalready online, but the studios can always hope that the size of those fileswill deter downloading. The highest quality versions are so huge—they take upmore than 20 Gigabytes—upwards of 24 hours would be required to download onethrough an average broadband Internet connection.

The fact that the initial protection scheme failed so quickly(for HD DVD, at least; there have been no reports yet of the extra protection onBlu-ray discs being compromised) means that relatively few movies are likely tobe affected in this round. So in a sense, the events so far have been alow-cost trial run for the Advanced Access Content System. But it’s importantto note two things that have been obscured by the hubbub over the swift hack.

First, conventional DVDs became enormously successful forHollywood despite the fact that the copy-protection system was hacked.According to the Digital Entertainment Group, U.S. spending on DVDs rose fromabout $800 million in 1999 to more than $24 billion in 2006. Even thoughunauthorized copies of just about every film can be found online, the billions spent on packaged DVDs indicates that the averageconsumer would rather buy than download afree one. Granted, the lack of effective copy protection on those discs alsohelps commercial pirates crank out high-quality counterfeits. Still, most ofthe bootlegged movies sold on the streets come from copies of films intheaters, not from hacked DVDs.

Second, the thrust and parry over the exposed high-definition disckeys is distracting the studios and electronics manufacturers from enablinglegal copying of HD DVD and Blu-ray discs. The protection system on the discscan allow users to make a limited number of copies—say, for a back-up discand a home video jukebox. But the studios expect something in return forenabling this capability: they want to add a watermark-based system for deterringbootlegs. In particular, they want high-definition disc players to look forwatermarks indicating that the material came from a movie in a theater or anofficial home-video release. If the former were detected, the material couldn’tbe played or copied; if the latter were detected, it could be played only if itcame from an authorized retailer.

The advantage to this approach is that it focuses on bootleggers,rather than limiting every consumer on the assumption that they all would makeillegal copies if given the chance. But there are potential problems with thesystem—for example, if used the wrong way, watermarks would give an excessiveamount of control to content companies. There’s also some question about howeffective watermarks would be in combatting piracy, given that they can becircumvented. These problems have some high-tech and consumer electronicscompanies balking at watermarks, and until the dispute is resolved,high-definition discs won’t support copying for any purpose. Such a restrictive stance onlyinvites more hacking—and more rounds of cat and mouse.

Jon Healey is a Times editorial board member and author of the Bit Player blog.