e-business basics - Digital rights management

Shapiro & Varian (1999)1 describe The Law of Digital Assets as a ‘double-edged sword’, in which the costs and ease of distribution are revolutionized, but it also becomes easier for other companies to duplicate digital propositions. In the old economy, technical know-how, physical means of production and well-developed legal processes for protection of rights enabled businesses, by and large, to secure their assets.

In eBusiness, there are fresh problems as intellectual property and assets can be more easily and cheaply duplicated or stolen and exploited. The courts have only begun to come to terms with such problems, and in many cases, offenders can operate electronically outside the jurisdiction of the major economies.

The costs of creating information are high, but when the costs of reproduction are low, others can copy it cheaply and this problem is addressed in an approach known as ‘Digital Rights Management’. This is very much an evolving discipline, which addresses the problems in different ways.

Firstly, there is the issue of electronically ‘watermarking’ one’s own property, which is a means of uniquely identification of the owner of the material so that there is a means of proving the source and its ownership. Some form of electronic identifier may be embedded in the code of the data or image that stays with it when it is duplicated. If the material appears on a website or publication, the identifier gives an audit trail that can be used to prove whether or not the user has the rights to do so.

Secondly, software is often supplied in a form that can only be fully activated by entering a unique code, often obtainable only after registration. As many software packages are updated frequently it is very much part of the service to receive updates, for which registration is of course required.

There are companies that specialize in forms of watermarking, encryption and security keys that address these generic problems. Of course, those looking to cheat the system are constantly catching up, and many well-known and expensive software packages are available for free from file sharing sites like www.kazaa.com complete with either a user code or a code cracking utility.

Another approach in database management is to ‘seed’ it with dummy data that gives away the source – for example, Dun and Bradstreet has for years included dummy company and director information in its database which is directed to its own directors, or ‘tame’ businesses, so that companies using the data for direct marketing purposes, but which have not purchased the rights, can be found out.

With digitalization of material such as literature, music and art, it is now easy to duplicate copyright material easily and to distribute it via the Internet. The on-line trader has to ensure that it does not fall foul of infringing another’s copyright, and to protect it’s own material if it is in that kind of a business.

As well as products that could themselves be subject to copyright, the web trader has to be careful when incorporating pictures, text, sounds and so on. The Copyright Designs and Patents Act 1988 provides the necessary definitions for the courts to handle complaints in respect of on-line trade.

1 Shapiro C, Varian H (1999): Information rules: A strategic guide to the network economy Harvard Business School Press

Author: Steve Whiteley, January 2007