August 20, 2007

Are Digital Music Watermarks a Blessing or a Curse?

Unique watermarks would allow labels to hunt down and sue alleged copyright infringers with vastly increased efficiency, even if the file was copied from their computer without their knowledge. Hill calls the possibility a "privacy nightmare."

However, the alternate vision for watermarks is less bleak, and could reinvent the music industry as a DRM-free, privacy-respecting, P2P-friendly market. Rather than assigning a unique ID to users, the watermark could trigger targeted ads. Record labels could profit from what Hill calls the "velocity" of music (the speed at which it moves around the net), rather than waging an endless campaign to stop it.

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DRM was never the answer. But if the major labels adopt these watermarks and use them in the right way, it could bring Napster-style file sharing -- and music revenues -- back to life.

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