02.02.09

How Music DRM Was Conceived at Microsoft Over a Decade Ago

Posted in Antitrust, Bill Gates, DRM, Microsoft at 2:03 pm by Dr. Roy Schestowitz

Blame Microsoft, don’t just blame Hollywood

3 CD ROMs

AS we pointed out last month, Microsoft is actively fighting for music DRM while the rest of the world seems to be abolishing it. Thanks to Comes vs Microsoft court exhibits, we are able to go back in time and put together the pieces, then show how DRM came about and what role Microsoft played in it.

In 1998, Bill Gates wrote and circulated a long memo [PDF] with thoughts on a variety of issues. It was titled “The Era Ahead” and it was sent to “Executive Staff and Direct Reports; Platforms Group; Interactive Media group; Office of the Chief Technology Officer; MS Research Full Time Employees”. In page 4, writes Gates:

We’re not only seeing digital photography becoming standard on the consumer PC, but we’re also seeing digital music. MP3 is a format that is being used for a lot of music out on the Web. There’s a lot of piracy, with people trading songs illegally. We can help solve this problem by putting intellectual-property protection right into Windows, so that we protect the fights of people who develop and distribute content such as books and music.

The significance of this is that it shows that the idea came from Microsoft, not necessarily pressure or extortion by media companies.

“The significance of this is that it shows that the idea came from Microsoft, not necessarily pressure or extortion by media companies.”Also, one year later (in 1999), Craig Eisler from the Exchange group had met with Bill Gates and shared with colleagues in the media groups this presentation [PDF].

It talks about competition like Apple, even Real (“RM”, which was abused by Microsoft) and in slide 17 it also contains a reference to “Digital Rights Management v3″. This goes under “Q2 00′ WMT [Windows Media Technologies] 5.0.”

This takes us back over a decade ago, but let’s travel a few more years into the future. The next exhibit is Exhibit px06986 (2001) [PDF], which we have as full text (not just PDF scan) at the bottom. “They are busy trying to screw Sony out of the technology used to screw customers. It’s just gross,” says one reader. “They completely missed was how badly all of it would perform. Vista was a DRM-loaded [operating system] that produced embarrassments such as this [one]. This is not good stuff to read with a head cold.”

There was good supporting stuff in the previous document and presentation as well. Further says the reader: “The end to end Microsoft-only DRM goals and the shove “upgrades” down their throats tie in nicely. [...] I don’t understand how they think they will remain the “center of computing” while they are so busy wrecking everyone that tries to play and screwing customers.”

This last correspondence starts with Bill Gates, who mails Windows executives like Will Poole Jim Allchin with copies to Bob Muglia, Craig Mundie, Eric Rudder, Steve Ballmer, and Robbie Bach. So basically the entire top tier of the company is involved in this. He inquires about DRM at Sony, among other things.

Will Poole (now involved in NComputing [1, 2, 3] and the Vista collusion) responds to this mail where they organise things for Bill Gates to talk about with Sony.

Microsoft’s Kevin Egan also weighs in, noting that:

We also have an unconfirmed suspicion that the Vaio Desktop Division has a Linux-based home server project underway.

Brad Brunell and Keith Laepple then point out other issues. They bring up DRM and also:

Sony continues with their own proprietary interfaces for Memory stick; we would like the media exposed as standard storage to Windows OSes

Brad Brunell, who is manager in “Digital Rights Management and Core A/V Technologies” at Microsoft then explains Microsoft’s DRM plans:

I do not think that DRM is direct correlation to DTCP. We need to accelerate our efforts on Secure Video Path. We stalemate of beat DTCP over time via Secure Audio Path, Secure Video Path and DRM combined. The challenge with the Studios is that they prefer to exercise monolithic control mechanism an partner with the CE industry who will do monolithic efforts and take the contractual restraints (threat of lawsuit) that the Studios like. MS is too much a gorilla in the Studios mind and they do not want to empower us any further. We will have to execute to win.
[Dennis Flanagan] We only stalemat of beat DTCP if we get interesting content delivered in our format to PCs. We only get that to happen if our DRM extends to secure the video rendering path. We have to interoperate with DTCP if that is the way all televisions connect in the future and if our platforms must connect digitally to televisions. I think there is some time before digital connections to televisions and DTCP is a market imperative. According to WebTV and others, for STBs that time is now because TV manufacturers are compelling this. Even if it becomes a market imperative, this does not necessarily mean that Microsoft has to provide the DTCP implementations or sign the license. Further, a model we appear to like better than 1394 connection to the monitor/TV. I think SVP with DVI/HDCP support is a much higher priority for us right now. I also think we should continue to push the Digital Media Receiver (DMR) concept in which the PC is the server, the DMR is co-located with the TV, the DMR pulls content off the PC server via an IP connection, and the DMR renders the content on the TV. In this case the DMR can support 1394 and 5c if it likes or analog if it doesn’t.

I think eHome will have to consider supporting DTCP in order to get access to the content (probably by passing burden to OEMs like we are doing with MPEG2), probably side by side with Secure Video Path. The problem is that if DTCP gets to broad of an installed base on PCs, then we may have the technology jam occur and have another per-unit royalty dilemma (similar to MPEG2).
[Dennis Flanagan] It’s unclear that DTCP will gain broad platform adoption on PCs. It is clear that link chp companies want to build DTCP into 1394 links, but it’s also clear that companies who build systems that include such chips will have to take the appropriate licenses and comply with the appropriate robustness rules. It is unlikely that the PC Industry is going to accept those liabilities. Even moreso, without SVP it is unlikely that content owners would grant such licenses to PCs. Further, if there is going to be mass integration of 1394 in PCs that support will likely end up in system-integrated controllers and not have DTCP support.

Here is a presentation that explains why all of this is very harmful [PDF].

Sacha Droz from Microsoft mentions Sony’s situation with regards to DRM:

DRM and SVP are definitely our TOP Priority if we want to be successful in any Digital Media scenario where copyrighted content is being used, regardless of its format and usage. eHome is the most interesting customer case as they need DRM, CA (CA to DRM Trranscription – to get access to current premium content) and “Local” (Same Box) and “Distributed” Secure Video Path (I see DMR as a part of this).

The need for a single implementation is noted there, so there was foresight regarding the lack of interoperability that makes the DRM nightmare we all have today.


Appendix: Comes vs. Microsoft – exhibit px06986, as text


From: Sacha Droz
Sent: Thursday, July 12, 2001 8:19 AM
To:Dennis Flanagan
CC: Harish Naidu; Peter Biddle; Stephen Heil; Marcus Peinado; Scott Fierstein, Brad Brunell; Keith Laepple
Subject: RE: eHome-SONY points for BillG meeting with Mr Idei

DRM and SVP are definitely our TOP Priority if we want to be successful in any Digital Media scenario where copyrighted content is being used, regardless of its format and usage. eHome is the most interesting customer case as they need DRM, CA (CA to DRM Trranscription – to get access to current premium content) and “Local” (Same Box) and “Distributed” Secure Video Path (I see DMR as a part of this). DTCP, 5C etc are technologies we may and/or have to consider from a copy protection standpoint. I do believe that DTCP will play a major role, may be sooner than expected because of the STB, but I also agree on the fact that we may not necessarily have to sign a license. If you ask me, I can see a more general adoption of 1394 in the next generation PC. I also believe in the industry to come out with a real alternative, free of license.

We will NOT achieve a broad acceptance of our solution if one of these 3 coponents (DRM, CA, SVP) is missing or broken. Content Providers will not release their content, Conditional Access Vendors will not be interested in enabling any of our platforms to really collaborate with their solution and finally, Network Operators will not agree to spend Millions of Dollars to Extend/Upgrade their broadcasting infrastructure. Also, understanding the business models of each of these players is very important. CA Vendors have to fully understand and trust out implentation and believe in the fact we are not competitn with them but enabling them to sell more lecenses and more smart cards to the NetOps community. On the other hand, NetOps will ask for to get the same level on stbility and redundancy support accross multiple sites etc. And of course Content Provider must tell the other guys they are OK with our solution and start deliver content.

We have a great challenge here and we have to clearly identify all of the scenarios, finalize the overall archetecture and more precisely define each component’s ownership between the different Groups/Divisions involved. We also urgently need to align our BizDev and Techinical speech across these teams. I understand that we all have different requirements but, I do believe in having ONE and only ONE implentation working for everybody.

Sacha R.

— Original Message —
From: Dennis Flanagan
Sent: Wednesday, July 11, 2001 7:34 AM
To: Brad Brunell; Keith Laepple
CC: Harish Naidu; Peter Biddle; Stephen Heil; Marcus Peinado; Scott Gierstein; Sacha Droz
Subject: RE: eHome – SONY points for BillG meeting with Mr Idei

— Original Message —
From: Brad Brunell
Sent: Wednesday, July 11, 2001 12:08 AM
To: Keither Laepple
CC: Harish Naidu; Dennis Flanagan; Peter Biddle; Stephen Heil; Marcus Peinado; Scott Fierstein; Sacha Droz (sachad at microsoft.com)
Subject: RE: eHome – SONY points for BillG meeting with Mr Idei

I do not think that DRM is direct correlation to DTCP. We need to accelerate our efforts on Secure Video Path. We stalemate of beat DTCP over time via Secure Audio Path, Secure Video Path and DRM combined. The challenge with the Studios is that they prefer to exercise monolithic control mechanism an partner with the CE industry who will do monolithic efforts and take the contractual restraints (threat of lawsuit) that the Studios like. MS is too much a gorilla in the Studios mind and they do not want to empower us any further. We will have to execute to win.
[Dennis Flanagan] We only stalemat of beat DTCP if we get interesting content delivered in our format to PCs. We only get that to happen if our DRM extends to secure the video rendering path. We have to interoperate with DTCP if that is the way all televisions connect in the future and if our platforms must connect digitally to televisions. I think there is some time before digital connections to televisions and DTCP is a market imperative. According to WebTV and others, for STBs that time is now because TV manufacturers are compelling this. Even if it becomes a market imperative, this does not necessarily mean that Microsoft has to provide the DTCP implementations or sign the license. Further, a model we appear to like better than 1394 connection to the monitor/TV. I think SVP with DVI/HDCP support is a much higher priority for us right now. I also think we should continue to push the Digital Media Receiver (DMR) concept in which the PC is the server, the DMR is co-located with the TV, the DMR pulls content off the PC server via an IP connection, and the DMR renders the content on the TV. In this case the DMR can support 1394 and 5c if it likes or analog if it doesn’t.

I think eHome will have to consider supporting DTCP in order to get access to the content (probably by passing burden to OEMs like we are doing with MPEG2), probably side by side with Secure Video Path. The problem is that if DTCP gets to broad of an installed base on PCs, then we may have the technology jam occur and have another per-unit royalty dilemma (similar to MPEG2).
[Dennis Flanagan] It’s unclear that DTCP will gain broad platform adoption on PCs. It is clear that link chp companies want to build DTCP into 1394 links, but it’s also clear that companies who build systems that include such chips will have to take the appropriate licenses and comply with the appropriate robustness rules. It is unlikely that the PC Industry is going to accept those liabilities. Even moreso, without SVP it is unlikely that content owners would grant such licenses to PCs. Further, if there is going to be mass integration of 1394 in PCs that support will likely end up in system-integrated controllers and not have DTCP support.

I have a 1394 call with Scott Fierstein to give input to this meeting scheduled on Thursday.

I’ve added a resonoable representation of the 5c thinking “brain-trust” on athe cc: line. I will ask TaneCeded to set up a strategy/consideration meeting. Please feel free to forward that invite to other stakeholders.

Brad Brunell
Director – Business Development
Digital Rights Management and Core A/V Technologies
Microsoft Corporation
(425) 703-3750

— Original Message —
From: Keith Laepple
Sent: Tuesday, July 10, 2001 2:06 PM
To: Brad Brunell
Subject: RE: eHome – SONY points for BillG meeting with Mr Idei

Brad, this is interesting stuff. I’ve been trying to figure out what eHome needs to do re: 5C, as we intend to support 1394 devices, incl. protected video content. Does DMD thing that eHOme can/should rely on DRM as an alternative to 5C on 1394? A concern I have is that CE mfgs won’t adopt DRM as a 5C alternative if it requires Windows in one of the 1394 devices, and requires an Internet connection. Do we want to have BillG suggest to Idei that we will promote DRM on 1394 if we cannot resolve technical and business problems we have identified with 5C?

Note, there is a 7/23 JimAll review on 1394 strategy where this is likely to be discussed.

— Original Message —
From: Brad Brunell
Sent: Tuesday, July 10, 2001 1:44 PM
To: Will Poole
Cc: Hank Vigil; Jeff Camp; Kurt Buecheler; John Manferdelli; Fran Dorgerty; Keithe Laepple; Hank Vigil; Jeremy Hinman; Dick Brass; Kevin Eagan
Subject: RE: eHome – SONY points for BillG meeting with Mr Idei

Sony is a DRM (security) competitor
- All Sony devices supporting Memory Stick with OpenMG decrypt capability, they view security and physical media as a stratigic control point
o Trying to license to other CE mfg with little success
o Sony still selling Memory Stick media at a loss
- Ships their own software Jukebox to manage content (including transcript from v1.3 Media DRM into OpenMG)
- With 5C (Hitachi, Intel, MEI, Sony and Toshiba) Digital Transmission Content Protection (DTCP) specification on the transfer (1394) and display of video, attempting to legislate and mandate (through media company distribution contacts) the DTCP conde on top of Windows and into CE devices (DVD, digital TV) for a per unit yoalty (similar to MPEG2 strategy); several studios are on board to support (AOLTW, Paramount)

Microsoft goals:
- 2 way transcription
o So far Sony is insisting on 1 way transcription from Microsoft DRM into OpenMG
o Interoperabilty of consumers is necessary for digital media to work
- We want them into ContentGuard with the promise of 2 say transcription (interoperabilty)
- Memory Stick as “standard” media vs. proprietary implementation
o Sony continues with their own proprietary interfaces for Memory stick; we would like the media exposed as standard storage to Windows OSes
- If Sony exposes as standard storage, then their security bundling is weakened and they would likel
- Optical media wins on cost vrs flash media
o Sony has embraced 3″ CD fromat (156MB) in some of their digital camcorders and cameras; what is their strategy with optical media, is there a new small form factor, multi-GB of storage optical media (that exposes itslef as standard storage) that we can collaborate on?

Brad Brunell
Director – Business Development
Digital Rights Management and Core A/V Technologies
Microsoft Corporation
(425) 703-3750

— Original Message —
From: Kevin Egan
Sent: Tuesday, July 10, 2001 1:27 PM
To: Will Poole
Cc: Hank Vigil; Jeff Camp; Kurt Buecheler; John Manfrerdelli; Fran Dogherty; Keither Laepple; Hank Vigil; Brad Brunell; Jeremy Hinman; Dick Brass
Subject: eHome – SONY points for BillG meeting with Mr Idei

Will Here are the top eHome discussion points for BillG’s upcoming meeting with Mr. Idei.

- eHome wants to close Sony’s Vaio Desktop Division as a teir one OEM partner for Windows XP Home Server. We’re early stage discussions of Home Server PC with Sony.
o On June 19th Mike Toutonghi, Kevin Eagan and Fran Dougherty, met at Sony HQ in Tokyo with Yoshihisa (Bob) Ishida, President of VAIO Desktop Computer Company. This was the first Sony-eHome meeting. Sony seemed very receptive to eHome’s Home Sever direction. We agreed to do technical and business follow-up meeting in the next 30 days. Sony Desktop Vaio Division is one of eHome’s top prospective OEM partners. Sony just released their Digital Studio PC line in the US with their own “Giga Pocket” PC-based PVR features. eHomes home server version of Windows XP will provide MS and Sony a great opportunity to create innovative Home Server PC products for next Christmas with a much improved customer experience over their first generation Digital PC line.
o Issues Sony has several competitn media technologies and software apps bundled with their Digital PC line. Notably their own Media Player software with their own DRM technology. We also have an unconfirmed suspicion that the Vaio Desktop Division has a Linux-based home server project underway.
- eHome is also in separate discussions with Sony’s Display Networking Company regarding home server product and networked display opportunities.
o On the evening of June 19th Mike Toutonghi, Kevin Eagan and Fran Dougherty had dinner meeting with Makoto (Mark) Kogure, President Projector & Display Systems Company.
o DNC is interested in MIRA as a tool to sell more displays. They can see a home server PC as a mdia hub for their LCD and plasma display products.
o Most concerned fearture of Home Server is Windows Terminal Services and performance.
o Their focus up to time has been office environment. They plan to start penetration to home enviornment in 2003.
o Interest in XML Control of devices, DRM, Identifying a list of things to work on together, persue a LOI and get alignment in technology areas.
-kevin

— Original Message —
From: Will Poole
Sent: Monday, July 09, 2001 11:25 AM
To: Brad Brunell; Jeremy Hinman; Dick Brass; Kevin Eagan
Cc: Hank Vigil; Jeff Camp; Kurt Buecheler; John Manferdello
Subject: FW: SONY
Importance: High

Brad and Jeremy, could you each pls give me 3-5 bullets to brief billg on point #1 below.

Kevin, can you provide 3-5 bullets on discussion w/Sony re eHOme PC server as it relates to #2.

Dick, we should brief Bill ong the CG discussions separately – assume you can drive that?

Send by EOD tomorrow please.

—Original Message—
From: Bill Gates
Sent: Sunday, July 08, 2001 12:27 PM
To: Shinichi Ata; Sam Furakawa; Richard Fade; Will Poole; Jim Allchin; Michael Rawding; Pieter Knook; Ben Waldman; Jon DeVaan; Alan Yates; Alex Loeb
Cc: Hank Vigil; Eric Rudder; Steve Ballmer; Robert (Robbie) Bach; Christine Turner; Bob Muglia; Craig Mundie
Subject: SONY

I am meeting with Mr. Idei of SONY in Sun Valley on Sunday. There is no particular agenda.

Anything people want me to bring up with SONY let me know.

Possible topics:

1. Music/DRM/Media formats. I assume this topic will come up and that Will will make sure I am fully briefed. I don’t know where we stand with SONY and DRM. Do we want them in the Xerox deal? Is SONY treating us reasonably in this area? Does SONY have a plan to make HDTV popular by getting 480p transmitted on cable systems?
2. PCs We want SONY to continue to make innovative PCs. They have done a lot of design leadership. Are we working with them on XP the right way? Do we wnet them do something different relative to the tablet? Richard should make sure the right OEM person tells me anything I need to know. Jim should make sure I know what the Windows groups thinks and what we are pushing. Alex should remind me any tabliet thing I need to know. Is there a message relative to 1394 or Upnp where we should work more with SONY?
3. Pocket PC. Sony make Palm devices and is in a JV with Erisson. Ben/Juha is there any message relative t this that I shoudl be giving to SONY? Do we want SONY to do PocketPCs just in the phone space or more broadly?
4. SONY and Cablevision. What is the latest on this Jon/Alan? Is there any message I should taking ot SONY? SONY has always wanted their sttop box people to work with us. Is there any UltimateTV message I should be taking to SONY?
5. Platform stuff. Is there any plan/hope to get SONY excited about our URT stuff versus Java byte codes?

I am open to other topics people think would make sense.

I doubt gaming will come up since we are primarily competitors there. I doutb SONY as a customer will come up unless someone tells me it needs to.

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