Ed Felton at Freedom to Tinker has a good post on the problem of digital watermarking, How Watermarks Fail (via BoingBoing), in which he concludes that watermarking schemes (such as Koplar's VEIL technology, discussed in my post VEIL Technology: Four Patents & an Application the other day) are not well suited for Digital Rights Management (preventing unauthorized copying of copyrighted material).
The discussion in the comment section is particularly interesting. Consider this comment, for example:
Let’s imagine a case where Microsoft’s post-Vista OS, codenamed Blacksheep, will only work with video cards that require a watermark in order to play Super-HD video (2048-4096 lines of resolution). Then such videos could be distributed in encrypted form with the watermark embedded. The decryption and watermark detection algorithm could be public; however the encoding/embedding algorithm would be secret.
Users could use the public decryption algorithm to create raw MPEG files with the watermark stripped, but would not be able to play them on commercially available video cards (similar to how video cards are now requiring monitors with HDCP support in order to play HD video). Users would not be able to create new videos with altered watermarks because the algorithm to do that is secret.
If digital watermarking schemes for DRM are put into practice, they may have little effect on the problem of bootleg versions of mega-corporate products. However, as discussed in the comment section, they may be quite effective about keeping digital artistic productions by individuals out of the distribution system: in the end, what DRM may accomplish is forcing individuals to give big corporations a cut for distribution just to get the authorized watermarking.
My experience in the early-mid 90s teaches me that part of the purpose of setting the production standards of early CD-ROMs absurdly high was to promote corporate authorship over individual authorship with the idea that digital products could be authored like film and TV, not like books, thus empowering the executive level and disempowering the actual creators, or rather reconfiguring relations such that executives become part of the creative "team."
Now computers are being sold that allow individuals, and small groups of individuals, to produce works to very high production standards on very low budgets. This also threatens the rise of corporate authorship. So watermark-style DRM may do very little to prevent the "piracy" about which the big media corporations are up in arms, it may be the killer app of corporate authorship.
It needs to be said over and over that in the early '90s, corporations did not own or control most of these digital rights they now claim the right to defend. In large part, these rights were taken, without additional compensation, from the artistic creators. (I know who the real pirates are!)
Transitioning from a world where art is created by individuals to a world where it is "created" by corporate "creative teams" is the second part of an overall stratgey to consolidate corporate control over the revenue that can be extracted from the popular arts; for creating a future in which consumers remain consumers and don't try to horn in on the revenue due to producers of artistic commodities.
(See also Dr. K.)