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The idea was originally to try to create artificial scarcity by these means. Well, obviously that didn't work and was a huge waste of cash. Watermarking is a decent compromise, although it's still not perfect.
Why? Watermarking is NOT prohibitive of fair use. I can play a file with a watermark in it's meta-data on ANY device I please. However! Browsing though my 'drm-free' mp3 collection from Amazon and iTunes reveals 'watermarks' in the form of a simple ID number for the purchase. Not a huge invasion of my privacy, and certainly a step in the right direction.
So, if they find that this 'watermarked' mp3 is available on thousands of torrents and other p2p networks they obviously know that I'm one of the dreaded file-sharers who are out to get them.
Personally I'm surprised that watermarking wasn't the first option as it was already very popular in the digital art communities to 'imbed' invisible watermarks in your photographs that could not be cropped out or removed without some SERIOUS photoshop skill. Watermarks have the potential to be dangerous, so I think privacy groups definitely need to watch the situation as it develops.
Also: there are basically infinite numbers of methods for watermarking in loosy compression formats (JPEG, MP3, any videocompression), and you can never know, which happens, since you can't tell if it's original or watermarked.
The mp3s I bought from Nuclear Blast (I love Nightwish and was willing to pay for them, but I don't use CDs at all) had a number in the name of the zip file - I guess it was the transaction ID and I suspect they're watermarked. Which was also suspicious when two legally downloaded instances of their charity single Eva hadn't got the same MD5 hash.
For me it's basically fine: I spread it amongst my closest friends, but did not upload anywhere, to not hurt the people I admire as musicians. This is called incentive, and it's the thing that could stop the mindless spreading of music tracks.
While it's certainly a good argument, that the marginal costs of creating a new mp3 instance is around zero (it takes computer power comsumption), the thing is that certain kind of music is much more enjoyable at home with good speakers than on a concert, and some such bands have a very spreaded international fanbase, which makes touring costly and less profitable (like such kind of music can't be played open air with good quality etc). And I think we should support the artists we like. Not all of them who you have ever heard a good song from, but your favourites.
5-7 years from now this will be the norm.
Made possible by the Dept. of Homeland Security and a very backwards FCC.
Agree 100%.
I would only add that I feel one of the reactions will be that the increasingly large pool of artists choosing to operate outside the influence of major distribution will also adopt this technology to similar effect.
It's much easier, theoretically, for an indie or 'emancipated' artist to implement watermarking on their own scale for their own specific needs than it is for them to try and wrap their own content in some kind of DRM.
So hopefully an existing independent coalition will jump on this idea now and get it rocking so indies and newly freed musicians can get paid the right way.
Look at today's public performance rates. The majority of working musicians see mere pennies each quarter from their performance rights agencies NOW for radio play. With no govt. intervention, or third party accounting, all monies will disappear in a black box.
The real answer in all this is total net neutrality and a return of the commons back to the people.
A strong FCC which is free of lobby influence is a start.