Sony, Warner Agree on Standard Aimed at Protecting Digital Content

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July 17, 2001
Tech Center
Sony, Warner Agree on Standard
Aimed at Protecting Digital Content
By ANNA WILDE MATHEWS 
Staff Reporter of THE WALL STREET JOURNAL


Two big Hollywood studios reached agreements to back technology that protects 
digital content as it moves between home devices such as set-top boxes, 
computers and televisions.

The accords, expected to be announced Tuesday, represent an early step toward 
the future of digital home-entertainment networks, in which consumers could 
make digital copies of programs and view them on several different devices. 
The agreements involve Sony Corp.'s Sony Pictures Entertainment and AOL 
Time Warner Inc.'s Warner Bros. studio. They reached the licensing agreements 
with the Digital Transmission Licensing Administrator, an alliance of five 
big manufacturers that is widely referred to as the 5C group: Intel Corp.,
 Matsushita Electric Industrial Co., Toshiba Corp., Sony and Hitachi Ltd.

The new agreements will one day allow consumers to make digital recordings 
of some content produced by the Sony and Warner Bros. studios, using their 
computers or digital video recorders. But the agreements fall far short 
of an industry consensus, as major entertainment giants such as Walt Disney 
Co. and Vivendi Universal SA have yet to endorse the standard. The biggest 
stumbling block is the security of free broadcast programming that is received 
through TV antennas.

Negotiations over the issue have gone on for years. Consumer-products makers 
want to sell digital devices that will connect with each other in home networks,
 including digital video recorders. For their part, entertainment companies 
are worried about consumers making perfect, unauthorized digital copies 
of their most valuable programs, and zapping them around the world free 
of charge.

More than 50 companies have already licensed the security technology, including 
makers of set-top cable boxes and consumer-electronics products. But Sony 
and Warner are the first major Hollywood studios to sign on. Entertainment 
companies won't let their movies and shows be used in the new home digital 
networks until they are satisfied with how they will be protected.

Under the deals reached between the two studios and the electronics giants,
 certain instructions and restrictions could be embedded in digital content 
such as movies. The agreements essentially set up several classes of protection,
 according to people familiar with them.

The most protected class includes pay-per-view movies, which the entertainment 
companies would be able to prevent consumers from copying without permission. 
Consumers would be able to record portions of pay-per-view movies, however.

The second category includes pay-TV cable programming such as that available 
on ESPN and HBO. For that, consumers would be able to make a limited number 
of "first generation" digital copies. But entertainment companies could 
prevent consumers from duplicating those copies.

The question of how to protect content that comes from over-the-air broadcasters 
is tricky. If consumers receive such broadcasts via cable set-top boxes 
or satellite dishes, the security technology will allow them to make several 
digital copies of programs, though consumers could be blocked from retransmitting 
that content over the Internet.

But the new security technology is essentially powerless to stop consumers 
from copying and retransmitting such broadcasts if they receive them via 
antenna. In congressional testimony earlier this year, a Warner official 
told lawmakers that "today's technology can do little that is meaningful 
to actually prevent signals received over the air from appearing on the 
Internet. But we do not want to delay the rollout of other types of protectable 
digital TV until an as-yet-undeveloped solution comes into being." Nonetheless,
 Disney and other studios -- some of which own broadcast networks -- are 
holding out for something that would better protect programming that is 
broadcast over the air.

Write to Anna Wilde Mathews at anna.mathews at wsj.com1


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