Video Content Owners Not Doomed To Repeat MP3 History, Divx Maker Says
by Curtis Lee Fulton (G2 News)
April 15, 2002
Divx, a video compression format made by DivxNetworks, has been labeled the MP3 of video and in some ways the moniker fits. Despite Microsoft's bundling advantage with its Windows Media format, most movies available for free on Napster-like P2P file swapping services like StreamCast Networks are encoded in Divx. Many of the flicks are illegal copies of copyrighted movies, but some are legitimate freebies or promos. And Divx' portal site, www.divx.com, has a bunch of free, legal content as well.
Now, much like MP3 did in 1998, Divx is going portable. Consumer electronics maker eDigital and Divx are collaborating on a line of portable video players. The first batch of devices should be out by Christmas and will cost from $200-$500, depending on storage size and the kind of video display it has. All players will use the Divx 5 video compression format.
But Divx and MP3 have their differences. CDs can be easily and legally encoded into MP3s for personal use, but due to legal and technological measures, DVDs can't. eDigital sales and marketing VP Steve Ferguson is quick to point out Divx' copy-protection technology, something MP3s never had. Divx gives content owners a way to securely distribute movies online, he says. The situation creates an unusual legal landscape for device makers and a secure distribution option for content owners. If the content owners bite, then Divx could rule the roost.
Despite Divx' copy protection, its piracy roots run deeper than MP3s. Divx began in September 1999 after a hacker named Jérôme Rota lashed together some Microsoft multimedia software that let MPEG-4 movies be multiplexed with MP3 audio tracks. He dubbed his creation "DivX ;-)," out of spite for Circuit City's failed self-destructing DVD format DIVX. Rota's format was the first technology that let consumers compress full-length movies to a size that could feasibly be transmitted over the Internet at near-DVD quality.
But the future of Divx is heading in an entirely non-hacker direction. Divx Networks was founded during the summer of 2000 and its first task was to replace all the Microsoft technology with original code. Since then, the company has improved the codec's performance and developed DRM (digital rights management) for the format that content owners can use to protect their content.
Although Divx has DRM and MP3 doesn't, it's much easier for consumers to convert CDs to MP3s than it is for them to convert DVDs to Divx files. Consumers can legally encode their CD collection into MP3s using CD "ripping " software, but DVD owners cannot. DVDs are encrypted with a technology called the Content Scrambling System (CSS), which uses encryption to prevent the disks from being decoded outside a DVD player. Free software exists called DeCSS that can crack CSS, but it's illegal because of the Digital Millennium Copyright Act (DMCA), which prohibits the manufacture or distribution of tools that circumvent copy-protection technology.
So eDigital is facing an odd situation. One of the most obvious marketing angles for selling the players is that they're a great way to take movies on the road. But thanks to the DMCA, the company can't legally bundle DVD-ripping software with its product. It can only hype the free content on divx.com and hope that consumers can figure out for themselves where on the Internet to find DVD-ripping software and how to use it.
Of course, the number of free Divx movies available on any P2P service will probably drive demand for eDigital's video players too, the same way Napster drove portable MP3 player sales. Ironically, the DMCA and DVD copy protection could drive demand for P2P services even higher, because many consumers may find it easier to download a Divx version of a DVD they own rather than bother with cracking the DVD encryption.
The first Divx players to market could meet with legal challenges, as the first portable MP3 player did. When the Diamond Rio portable MP3 player (Diamond is now owned by Sonicblue) hit the shelves in 1998, the Recording Industry Association of America (RIAA) promptly sued for violating the Audio Home Recording Act (AHRA), which imposes technology restrictions on consumer devices that make piracy easy.
The court ruled that the Rio didn't violate the AHRA, because it couldn't create MP3s on its own.
If Divx players remain legal and the P2P services continue to terrorize content owners, Divx will be able to play its ace in the hole: DRM. MP3 never offered a secure alternative to record companies and now it's nearly too late. Divx, on the other hand, can say to the movie industry, look, people are ripping your DVDs to shreds and encoding them into our format. Why not release secure versions in our format? Unlike rivals Microsoft and RealNetworks, Divx has the stick, not just the carrot. The question is, will the movie industry take the carrot, or like the recording industry play avoidance games.