Who is the manager of "managed copy?"

Microsoft is a member of the HD DVD Promotions Group, having joined it last September along with Intel for a handful of reasons, the company said. Among those reasons, given in a public list of grievances, was that the two companies wanted to take a stand in favor of the consumer's right to be able to make backup copies of legitimately obtained, licensed movies and other content.

The software component that enables a consumer to make such copies is a part of Advanced Access Copy System (AACS) copy protection, whose final specifications would be just about ready, were it not for continued debate on this issue. AACS will be the copy protection system for HD DVD, and part of a "triple-threat" system for Blu-ray. So however AACS decides to implement mandatory managed copy (MMC), that decision will affect both Blu-ray and HD DVD manufacturers - as well as, of course, companies like LG Electronics who are building hybrid players.

But now that the format debate has become so prolonged, Microsoft's Richard Doherty now admits that the issue of MMC transcends formats altogether. "It's not a format thing at all," he told TG Daily. "Managed copy comes from AACS, so it will apply to both formats equally. The decision of how to implement the menu that does it, and the [copying] transactions, [is made by] the studio who's authoring the title."

Over the last several months, nearly all sides in the dispute have said they are in favor of "managed copy" or "mandatory managed copy," but then got caught up in a quagmire over just what the "mandatory" part refers so. "The idea of mandatory managed copy, and specifically the word 'mandatory,'" explained Doherty, "relates to the ability of the user to make a copy of all the media, with very rare exceptions. So a managed copy - without the word 'mandatory' - means the ability to make a copy of the disc, or essentially a legal rip, into another content protection system onto your hard drive, or onto your portable player, under the control. The 'mandatory' part is specifically put there to mean, studios can't arbitrarily turn it off - that you have the expectation as a consumer that you can rip every disc."

Doherty's explanation carries weight, not only because it represents Microsoft's take on the issue of MMC, but AACS' as well, and MMC is a crucial part of AACS. Anyone interpreting MMC differently, from AACS' perspective, is misinterpreting it. Still, the misinterpretations continue, which have led to the main reason why a complete AACS 1.0 specification has not yet been drawn up. The so-called "interim agreement," version 0.91, which Toshiba, Sony, and other high-def manufacturers have agreed to, enables them to produce high-def players for the time being, since both formats mandate the inclusion of AACS.

"By far, the biggest part of the interim-ness of that agreement," remarked Doherty, "is the fact that managed copy has not yet been completed. Under the interim agreement, the managed copy infrastructure has not been completed and is not ready to go, so managed copies are not actually authorized, or certainly not mandatory, in the interim period. The specifications are nearly complete - in fact, the AACS published specifications as part of the interim agreement have all the technical detail of how you make managed copies. But the infrastructure, all the details of the mandatory obligation are not in place in the interim."

By signing the interim agreement, Doherty told us, manufacturers agree to be bound to whatever provisions for MMC that the group as a whole agrees upon later. But for now, without the MMC provisions having been completed, there is no managed copy in the first generation of either HD DVD or Blu-ray players, although conceivably it could be added later by means of a firmware upgrade. "The reason we did that," Doherty stated, "was to make sure there was no legacy problem with discs; that even the discs published today under the interim agreement can be fully copy-able under machines that can make managed copies in the final agreement."

Furthermore, Doherty noted, content publishers and studios who choose to utilize AACS' provision for watermarking content, under the interim agreement, must also agree to be bound by whatever MMC provisions are fully agreed upon by all members.

As we reported on Wednesday, although it's likely that the MMC process will require an Internet connection in order for consumers to acquire permission from movie studios' so-called Clearing Houses to copy discs, and perhaps pay to do so, neither Blu-ray nor HD DVD players will be required by AACS to have an Internet connection. More specifically, they will not be required to have a dedicated or exclusive wired Internet connection, as earlier AACS documents indicated, and as multiple sources had told TG Daily and Tom's Hardware Guide in the past.

While conceivably, a kind of managed copy process is technically possible by means of an automated system launched by the interactive layer of a high-def disc, Doherty noted, the culmination of such a system into active service is very unlikely. Instead, he believes, high-def players will use Internet transactions to appropriate managed copies of licensed material. However, there is no mandate, and will never be one, he said, for high-def players to feature Internet connectivity. Players without Internet connections, he explained, will simply not be able to make copies either.

For the first time, however, Doherty did concede that there will be some mandate that applies to the studios. "The terms of the copy are under the studio control," he told TG Daily. "So if they want to charge money, and how much money to charge, are [matters] completely under their purview."

However, we also learned, those terms are not to be embedded on discs, but instead provided by Clearing Houses by means of the Internet connection. As Doherty explained, players themselves will eventually (under the AACS 1.0 specification, once that's completed) contain the full program necessary to initiate and complete the managed copy transaction, as well as execute the copy process. While the option for making managed copies may be made available through a movie's menu, if the studio leaves out that provision, the player itself can manage the entire process without the disc's intervention.

"It is the clear intent of the AACS specification," stated Doherty, "that if a content author does nothing in regards to managed copy, that disc will still be copy-able, presumably from a menu that comes from the player itself. This is meant to be a very positive thing, in the sense that we don't want to burden authors - especially small content producers - with having to worry about how to do the managed copy in their menus. If they don't have the time or bandwidth, the process can just happen behind the scenes with no work on the authoring side."

Doherty's statement contradicts reports that first-generation high-definition discs may not be able to be copied, by virtue of the AACS 1.0 specification not having being completed in time for their publication. Even first-gen discs, Doherty assured us, should have managed copy capability under the new system, once it's implemented.

The fact that AACS will not require dedicated Internet connections, changes the entire flavor of the dispute over how the Clearing Houses are managed. If dedicated connections would have been required, the argument over who controls the ISPs that manage those dedicated connections, would not have been moot. Now, it's clear that you can use your own LAN for the connection.

But that wouldn't conceivably preclude some crafty CE manufacturer from coming up with a kind of home entertainment powerhouse device, Doherty perceived, that could include a high-def disc player, and that could also use a dedicated Internet connection for its own purposes. AACS would never require it, but that doesn't mean it couldn't happen anyway. "It is certainly possible," he surmised, "for someone to build a device that integrates a number of different services into it, that are unrelated to AACS and unrelated to next-generation optical. For example, they could build in not just an optical playback, but then also a set-top box which is communicating through a special service, or a set-top box which is doing VoD [video on-demand] download to their hard drive."

One new class of device could be a combination VoD player and DV-R, using HD DVD or Blu-ray as the recording mechanism. A dedicated ISP connection could be used to enable the consumer to dial up whatever content she wanted, download it to the console, and burn it to the player. AACS might be involved in governing the playback of that content once burned to the HD DVD-R or BD-R, he said, but it would not be protecting the VoD transaction - that's outside the AACS scope. In such an instance, Doherty conceded, "it depends on the interpretation of the rules which are still to be determined in the final agreement, as to if you made a recordable disc like that from some kind of special service, how managed copy would work."

In his keynote address to the Mix '06 conference last Tuesday, Microsoft chairman Bill Gates advised attendees to enjoy the format war while it lasts, he said, because it'll be the last one. From here on out, he said, "it's all bits." We asked Richard Doherty what he thought Gates meant by that comment. "It does feel to Microsoft that optical discs are very much a legacy format," he responded. "It's really just a carrier for bits, just a carrier for information. Until we get our broadband infrastructure up, and other infrastructures up in the world to deliver bits, this has been a relatively efficient way to deliver a large number of bits. At the same time, it's inconvenient for a number of reasons. You have to go to the store to pick up the discs, or you have to wait for your NetFlix discs to arrive in your mailbox. Other kinds of services coming down the line, where you pick your movies and they're downloaded directly to your hard drive, or you stream them across the Internet - all of these other methods for communicating content, we think, are ultimately quite superior to packaged media. So we do see that as the future, and this is perhaps the last kind of packaged media that we're going to see."