Media Wonk

Sonic, the hedgehog - September 26, 2007

Jim Taylor doesn't know what to do with his time, now.

The Sonic Solutions senior VP started thinking about how to burn a downloaded movie to a DVD-R using CSS more than four years ago while riding a train to a meeting in Tokyo, and he's spent the better part of the years since doggedly--at times, seemingly quixotically--pursuing the idea.

As a maker of DVD authoring tools, desktop burning software (Roxio) and other content management solutions, Taylor saw upside for Sonic saw upside in facilitating on-demand manufacturing of DVDs, both via customer-manufacturing and retail kiosk applications, and in desktop applications and electronic sell-through.

To get the major studios to go along, however, he knew the content would have to be encrypted using CSS--Content Scramble System--the same encryption system used on commercially pressed discs--not because CSS is such an effective form of copy-protection (it isn't) but because its use would trigger a host of other design obligations on drive makers spelled out in the CSS license agreement. As an access control technology, moreover, CSS enjoys legal protection under the DMCA, while alternative forms of copy-protection, such as anti-ripping software, would not. Most importantly, using CSS would also guarantee that the discs would play on any set-top DVD player, all of which are CSS enabled.

The problem: CSS was designed specifically not to work with recordable media. So Sonic had to come with a way to fool a DVD burner into accepting a recordable disc.

The engineering turned out to be the easier part, however. Far harder was getting the content owners, consumer electronics makers and IT companies to agree on how the system should work and how it should be implemented, a process that dragged on through nearly three years of often acrimonious negotiations.

For the past 18 months, Taylor has chaired the inter-industry committee charged with approving the engineering and resolving the political disputes. Late last year, it appeared an agreement had been reached, and Sonic and others could begin selling CSS burning software and authoring tools.

But there was a catch: the CSS master license was controlled by Toshiba and Panasonic (Matsushita), who owned the underlying IP. Before CSS burning could go ahead, Toshiba and Panasonic would have to sign off on the new terms of the CSS license that covered on-demand manufacturing.

In the years since the CSS burning negotiations began, however, Toshiba and Matsushita became heavily invested in HD DVD and Blu-ray Disc, respectively, and began to have second thoughts about green-lighting an application that might steal of high-def's thunder with retailers and consumers. For the past 12 months, the "final agreement" on burning has sat on the desks of Toshiba and Panasonic, awaiting their blessing, while Taylor and others involved began to ask themselves why they had invested three years of their lives in ultimately pointless negotiations.

Last week, however, the dam finally broke, and CSS got its blessed, final approval.

"I think Panasonic just ran out of excuses for delaying it," Taylor told me, sounding more relieved than jubilant.

Tomorrow, Sonic will announce a series of partnerships and licensing agreements related to retail and consumer deployments of on-demand manufacturing using CSS. But Media Wonk got a chance to speak with Taylor earlier this week to ask him whether the approval has come too late for on-demand manufacturing to have much impact on the standard-def DVD business.

"Well, this is definitely a transition technology, and we were hoping to start the transition two years ago, but I think it's still a viable business," Taylor said. "It's a transitional technology for two reasons: One, eventually everything is going to be in high-def; and two, eventually we're going to move to electronic delivery, with no physical media involved."

Both of those developments, however, "are 10, 12, 15 years away," Taylor said. "Standard definition isn't going to go away anytime soon. There are still 1.4 billion players out there worldwide. That's a huge installed base, and it really primes the pump for a long-tail [content] model if you can figure out how to make releasing niche content make sense economically. That's what we think on-demand does. If we and our content partners, if everyone in the value chain does a good job of finding good niche product and making it available with a good consumer experience, I actually think there's a very big opportunity for the industry."

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