Working to rebound from its ongoing scuffle with the Justice Department, Microsoft’s research division is concocting a way to foil the plans of audio and video pirates the world over.

The project, dubbed the “Secure PC,” is listed as a going concern for Microsoft Research’s cryptography group. As hatched by MS Research cryptographer Paul England, the idea is to gin up recording- and film-industry support for the PC as a distribution channel by making it a “secure delivery system for audio and video.”

Since the recent litigation brought by the recording industry against Napster, terms like “MP3” and “file-sharing” have burrowed their way into the popspeak of the day such that most consumers probably now know that Napster serves as an online music-trading post and not a sleep-aid product. Likewise, MP3 is a file format, which allows compression of audio files at near-CD quality. Being compressed, the files are small enough for quick transmission over the Net and through systems like Napster and the less popular Gnutella.

“‘MP3’ recently surpassed ‘sex’ as the most popular search engine keyword entry,” according to Microsoft Research.

“Now that’s popularity,” it concludes, popularity enough to hold at bay widespread distribution of audio and video files by the recording and film industries, fearing a sock to their profit margins because of content pirates.

England points out any 14-year-old kid with a “ripper” program can copy a CD and post it online for friends and strangers alike to share and distribute. As such, “we must convince the record industry that the PC is better than the compact disc in terms of piracy,” he says.

The solution, according to MS Research, “involves making minor modifications to the PC’s hardware to allow Microsoft to make a secure version of the Windows Media Player.”

With these minor modifications, “record companies could release their records in an encrypted, unable to be copied Windows Media Audio format that would only work on the secure version of the Windows Media Player. A similar arrangement could be reached with the movie studios for film distribution.”

Microsoft’s Secure Audio Path Technology is already geared to prevent any copying of files. It keeps the content encrypted until the moment the soundcard processes it for play.

But getting beyond mere software encryption is considered key.

“Companies are working to engineer copyright protections at the hardware level because software barriers are proving too easy to break,” says Sonia Arrison director of the Pacific Research Institute’s Center for Freedom and Technology, noting a recent example in which three MIT programmers managed to descramble the holy grail of multimedia — DVD encryption — with just seven lines of Perl code.

“There’s a whole community of skilled engineers out there with a religious-type mission to break whatever codes companies design to keep them out,” she told WorldNetDaily. “It’s a sort of high-tech version of David vs. Goliath in which gimpy geeks battle big business and bad government.”

On the big business side, Intel and IBM are already en route to hardware-level protections. According to’s John Borland, the “anti-piracy protections” would be built “directly into storage drives, memory cards, chips and other hardware parts,” making it impossible to copy or save any protected digital material.

Microsoft is optimistic about the possibilities. While little is known about the actual specs of the Secure PC, an encryption agreement between software and hardware makers is near, says England, and “we should see some hardware for content protection within a year.”

This sort of encryption, hope Intel, IBM and Microsoft, will make the PC a better venue for entertainment distribution than even established technology, such as compact discs — which are fraught with piracy problems.

Critics, on the other hand, see it as a way to hamper the freedom of the user.

“The industry is clearly trying to prevent all copying of copyrighted materials, even legal copying, at every possible juncture,” says John Marttila, director of the Electronic Frontier Foundation’s Campaign for Audiovisual Free Expression. “Anyone who then circumvents these copy-prevention schemes can then be prosecuted for violating the anti-circumvention provision of the Digital Millennium Copyright Act, even if the person was exercising their fair-use right to make a copy or excerpt.”

While these are valid concerns, according to Arrison, who freely admits “some of these initiatives could go too far,” she’s quick to point out that marketplace competition can smooth over the exclusivity problems.

Wayne Crews, director of Technology Studies at the Washington, D.C.-based Cato Institute, backs up Arrison on this.

“If Intel and IBM go dogs on this and embrace the ‘dark side,'” he told WND, “then consumers can just switch to AMD and Dell — or whoever else wants to fill the shoes of open networking. And artists are always free to embrace open file-sharing instead of Time Warner.”

Marttila’s concerns could be realized, however, if politicians attempt to step over market solutions to remedy the situation.

With competing forms of encryption, both software- and hardware-oriented, reaching a solution to file filching and pirating copyrighted content has been less than successful thus far. The Secure Digital Music Initiative, brainchild of the recording, technology and consumer electronics industries, has been puttering away for two years at finding a widespread, acceptable form of copyright protection. They’ve had little luck to date.

“The interesting thing about those who want to share files on the Internet and those who want to stop the file-sharing is that both oppose the other guy’s technology,” says Crews. “Record companies would love to shut down Napster and other file-sharing technologies. Meanwhile listeners — or at least their alleged defenders — would like to disallow watermarking technology, secure hardware and bots that search for unauthorized copies.”

The cacophony has some screaming for legislation.

“There are so many interests that have to be on the same page,” says Forrester Research analyst Eric Scheirer. “I think the only way this would work is through legislation.”

But Crews and Arrison both warn that legislation may be too ham-fisted. Turning lawmakers loose on the problem is the “one situation [about] which users should be worried,” says Arrison. “If the recording industry’s lobbyists convince Congress that hardwiring copyrights so that people can’t back up their own files should be written into law, that would be a bad law and against principles of fair use.”

“The risk is embracing legislation that favors any side,” says Crews. “We don’t want legislation mandating that all companies incorporate rights-management technologies. But on the other hand, we don’t want legislation banning these technologies, either. Government mustn’t mandate trusted systems. But it shouldn’t interfere with them, either.”

While protracted legal clashes in the courts may leave many too many loose ends and sap too many resources that could otherwise go toward innovation, some worry legislation is too swift and final a solution.

We are in “tread lightly” territory here, as Marttila points out. “Remember, we are still at the dawn of this digital revolution, and the architectures we establish now will have a dramatic impact on society tomorrow. Important fair uses, such as making backups and excerpting materials out of copyrighted works for educational or critical purposes, are in jeopardy.”

Even without decisive legislation, the effects on file-sharing are already being felt.

As Napster continues to implement court-ordered filters to screen out copyrighted material, Webnoize, a company that tracks the digital entertainment industry, says the network is hemorrhaging users. For the week ending March 22, Webnoize said the average of daily visitors to the file-swapping station dropped 25 percent.

This has hurt artists like Britain’s Toby Slater, who, as he told Wired News in an interview, uses Napster to promote his band. Now, after being selected by Napster as a featured artist last August, it’s hit or miss whether his material will be available for download.

Webnoize analyst Matt Bailey says some of Napster’s wayfaring users are picking up their files and emigrating to other music networks such as Gnutella and Music City, but traffic at those networks hasn’t risen to the degree that Napster’s has fallen — presumably leaving MP3 downloaders offline, nursing the file-swapping blues.

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