Alex and I are working on an academic paper, “Lessons from the Sony CD DRM Episode”, which will analyze several not-yet-discussed aspects of the XCP and MediaMax CD copy protection technologies, and will try to put the Sony CD episode in context and draw lessons for the future. We’ll post the complete paper here next week. Until then, we’ll post drafts of a few sections here. We have two reasons for this: we hope the postings will be interesting in themselves, and we hope your comments will help us improve the paper.

Please note that this is a draft and should not be formally quoted or cited. The final version of our entire paper will be posted here when it is ready.

Compatibility and Software Updates

Compared to other media on which software is distributed, compact discs have a very long life. Many compact discs will still be inserted into computers and other players twenty years or more after they are first bought. If a particular version of (say) active protection software is burned onto a new CD, that software version may well try to install and run itself decades after it was first developed.

The same is not true of conventional software, even when it ships on a CD-ROM. Very few if any of today’s Windows XP CDs will be inserted into computers in 2026; but CDs containing today’s CD DRM software will be. Accordingly, CD DRM software faces a much more serious issue of compatibility with future systems.

The future compatibility problem has two distinct aspects: safety, or how to avoid incompatibilities that cause crashes or malfunction of other software, and efficacy, or how to ensure that the desired anti-copying features remain effective.

Protecting Safety by Deactivating Old Software

Safety is the easier attribute to protect, and in most respects the more important. One way to protect safety is to design the DRM software so that it is likely to be inert and harmless on future systems. Both XCP and MediaMax do this by relying on the Windows Autorun feature, which is unlikely to be supported in future Windows versions for security reasons. If, say, the upcoming Windows Vista does not support Autorun (or supports it but disables it by default), then XCP and MediaMax will have no effect on Vista systems. Perhaps the use of Autorun by XCP and MediaMax was a deliberate design decision to ensure safety; but we suspect that it was a side-effect of a design choice that was expedient for other reasons.

Another way to protect safety is to build a sunset date into the software, and to program the software to be as inert as possible once the sunset date is reached. Building in a sunset after (say) three years would protect against many safety problems; and it would have little effect on the record label’s business model, as we would expect nearly all revenue from monetizing new uses of the music to have been extracted within the first three years after the disc is pressed. If a customer is ever going to pay for iPod downloading, she is likely to do so within the first three years after the CD is pressed.

Updating the Software

Like any software vendor, a DRM vendor can issue new verions of its products. A new version can be shipped on newly pressed CDs, but existing CDs cannot be modified retroactively.

Instead, the vendor can offer updates, which can be delivered either by download or on new CDs. Downloads can occur immediately, but only on machines that are connected to the Internet. CD delivery can potentially reach more machines, but is slower and less certain.

Either mode of distribution can be used straightforwardly if the user wants to cooperate. Users will generally cooperate with updates that only provide safety on new systems, or that otherwise increase the software’s value to the user. But updates that merely retain the efficacy of the software’s usage restriction mechanisms will not be welcomed by users.

Users have many ways to block the downloading or installation of updates. They can write-protect the software’s code, so that it cannot be updated. They can configure the system to block network connections to the vendor’s servers. They can use standard security tools, such as personal firewalls, to stop the downloads. System security tools are often well suited for such a task, being programmed to block unwanted network connections, downloads, and code installation. If a current security tool does not block updates of CD DRM software, the tool vendor has an incentive to make future versions do so.

A DRM vendor who wants to offer efficacy-related updates, recognizing that users will not want those updates, has two options. The vendor can offer updates and hope that many users will not bother to block them. From the record label’s standpoint, prolonging the system’s efficacy for some users is better than nothing. Alternatively, the vendor can try to force users to accept updates.

Forcing Updates

If a user can block updates of the DRM software on his machine, the vendor’s best strategy for forcing an update is somehow to convince the user that the update is in his best interest. This can be done by making a non-updated system painful to use.

If we rule out dangerous and almost certainly illegal approaches such as logic bombs that destroy a noncompliant user’s files or hold his computer hostage, the vendor’s best option is to make the DRM software block all access to protected CDs until the user updates the software. The software might check periodically with some server on the Internet, which would produce some kind of cryptographic assertion saying which versions are allowed to continue operating without an update, as of some date time. If the software on the user’s system noticed that no recent certificate existed that allowed its own version to keep operating, it would go into a locked down mode that blocked all
access to protected discs but allowed software updates. The user would then have to update to a new version in order to get access to his protected CDs.

This approach could force updates on some users and thereby prolong the efficacy of the DRM for those users. However, it also has several drawbacks. If the computer is not connected to the Internet, the software will eventually lock down the user’s music because it cannot see any certificates that allow it to continue. (The software could continue working if it can’t see the Internet, but that would allow users to block updates indefinitely by configuring their systems to stop the DRM software from making network connections.) A bug in the software could cause it to lock itself down irreversibly, perhaps by accident. The software could lock itself down if the vendor’s Internet site is shut down, for example if the vendor goes bankrupt.

Locking down the music, or forcing a restrictive software update, can also be counterproductive, by giving the user a reason to defeat or remove the DRM software. (Users could also defeat the timeout mechanism by misleading the DRM software about the date and time, but we expect that most users with the inclination to do that would choose instead to remove the DRM software altogether.) The software is more likely to remain on the user’s system if it does not behave annoyingly. Automatic update can reduce the DRM system’s efficacy if it just drives users to remove the DRM software. From the user’s standpoint, every software update is a security risk, because it might carry hostile or buggy code.

Given the difficulties associated with forced updates, and the user backlash it likely would have triggered, we are not surprised that neither XCP nor MediaMax chose to use forced updates.

Alex and I are working on an academic paper, “Lessons from the Sony CD DRM Episode”, which will analyze several not-yet-discussed aspects of the XCP and MediaMax CD copy protection technologies, and will try to put the Sony CD episode in context and draw lessons for the future. We’ll post the complete paper here next Friday. Until then, we’ll post drafts of a few sections here. We have two reasons for this: we hope the postings will be interesting in themselves, and we hope your comments will help us improve the paper.

Today’s excerpt is from a section early in the paper, where we are still setting the scene before the main technical discussion begins:

Threat Models and Business Models

Before analyzing the security of any system, we need to ask what the system is trying to accomplish: what its threat model is. In the case of CD DRM, the system’s goals are purely economic, and the technical goals of the system exist only to protect or enable the business models of the record label and the DRM vendor. Accordingly, any discussion of threat models must begin and end by talking about business models.

It is important to note that the record label and the DRM vendor are separate entities whose goals and incentives are not always aligned. Indeed, we will see that incentive differences between the label and the DRM vendor can be an important factor in understanding the design and deployment of CD DRM systems.

Record Label Goals

The record label would like to prevent music from the CD from becoming generally available on peer-to-peer file sharing networks, but this goal is clearly infeasible. If even one user succeeds in ripping an unprotected copy of the music and putting that copy onto P2P networks, then the music will be generally available. Clearly no CD DRM system can be nearly strong enough to stop this from happening; and as we will see below, real systems do not even try to achieve the kind of comprehensive coverage of all major computing platforms that we would needed as a prerequisite for stopping P2P sharing of protected music. We conclude that the goal of CD DRM systems cannot be to prevent P2P file sharing.

The record label’s goal must therefore be to stop many users from making disc-to-disc copies or from engaging in other forms of local copying or use of the music. By preventing local copying, the record company might be able to sell more copies of the music. For example, if Alice cannot make a copy of a CD to give to Bob, Bob might buy another copy from the record label.

By controlling other local uses, the record company might be able to charge extra fee for those uses. For example, if the record label can stop Alice from downloading music from a CD into her iPod, the label might be able to charge Alice an extra fee for iPod downloads. Charging extra for iPod downloads creates a new revenue stream for the label, but it also reduces the value to users of the original CD and therefore reduces the revenue that the label can extract from CD sales. Whether the new revenue stream outweighs the loss of CD revenue depends on detailed assumptions about customer preferences, which may not be easy for the label to determine in practice. For our purposes, it suffices to say that the label wants to establish control over the uses made by at least some users, because that control will tend generally to increase the label’s profit.

We note also that the record company’s profit-maximizing strategy in this regard is largely independent of the contours of copyright law. Whether the label would find it more profitable to control a use, as opposed to bundling it with the CD purchase, is a separate question from whether the law gives the label the right to file lawsuits relating to that use. Attempting to enforce copyright law exactly as written is almost certainly not the record label’s profit-maximizing strategy.

Monetizing the Platform

Even beyond its effect on controlling copying and use of content, CD DRM can generate revenue for the record label because it installs and runs software on users’ computers. The label can monetize this installed platform in various ways. For example, the DRM software comes with a special music-player application which is used to listen to the protected disc. This application can display advertisements or other promotional material that creates value for the label. Alternatively, the platform can gather information about the user’s music listening habits, and that information can be exploited for some business purpose. If these tactics are taken too far, the DRM software can become spyware. Even if these tactics are pursued more moderately, users may still object; but the record company may use these tactics anyway if it believes the benefits to it outweigh the costs.

DRM Vendor Goals

The DRM vendor’s primary goal, obviously, is to provide value to the record label, in order to maximize the price that the vendor can charge the label for using the DRM technology. If this were the only factor, then the incentives of the vendor and the label would be perfectly aligned and there would be no need to consider the vendor’s incentives separately.

However, there are at least two ways in which the DRM vendor’s incentives diverge from the record label’s. First, the vendor has a much larger tolerance for risk than the label does. The label is a large, established business with a valuable brand name. The vendor (at least in the cases at issue here) is a start-up company struggling to establish itself. The label has much more to lose than the vendor does if something goes horribly wrong. Accordingly, we can expect the vendor to be much more willing to accept security risks than the label is.

The second incentive difference is that the vendor can monetize the installed platform in ways that are not available to the record label. For example, once the vendor’s software is installed on a user’s system, the software can control copying and use of other labels’ CDs. Having a larger installed base makes the vendor’s product more
attractive to other labels. Because the vendor gets this extra benefit from installing the software, the vendor has an incentive to be more aggressive about pushing the software onto users’ computers than the label would be.

In short, the vendor’s incentives diverge from the label’s incentives in ways that make the vendor more likely to (a) cut corners and accept security and reliability risks, and (b) push its software onto more user’s computers, even in some cases where the label would prefer to do otherwise. If the label knew everything about how the vendor’s technology worked, then this would not be an issue – the label would simply insist that the vendor protect its interests. But if some aspects of the vendor’s design are withheld from the label as proprietary, or if the label is not extremely diligent in monitoring the vendor’s design choices – both of which are likely in practice – then the vendor will sometimes act against the label’s interests.