1. © 2003 Verance Corporation. 1 Verance Copy Management System Presentation to CPTWG ARDG April 10, 2003

2. © 2003 Verance Corporation. 2 Presentation Overview Verance Copy Management System for Audio Content (VCMS/A) –Performance Specifications –Format Support –System Architectures –Deployment Status Applying VCMS to Protecting A/V Content (VCMS/AV) –Technical Considerations Conclusions

3. © 2003 Verance Corporation. 3 VCMS/A: Overview Multi-industry consensus audio watermark for audio only content Core technology from Verance, tailored to music industry requirements, independently evaluated, and adopted by consensus Provides persistent copy status signaling in audio and playback control, record control, and generational copy management functions in consumer devices Perceptually transparent, robust to a wide range of distortions, large data payload, low processing requirements Mature, proven technology with significant deployments Adaptable to evolving market needs, technical requirements

4. © 2003 Verance Corporation. 4 VCMS/A: Performance Specifications Perceptual Quality –Absolute transparency to golden ears on 96/24 content Data Payload –4 CCI bits per 15 seconds (3 assigned [1 remark-able]; 1 rsvd.) –8 Usage ID bits per 15 seconds (reserved) –60 Content ID bits per 30 seconds (reserved) Robustness –36 dB SNR noise –6 kHz bandlimiting –32 kbps/channel codec –+/-10% linear speed –+/-4% PITS Computational Requirements –Detect from 48/16/2 PCM: 10 MIPS, 16 kB data, 8 kB code –Remark on 48/16/2 PCM: 20 MIPS, 32 kB data, 20 kB code (proj.) –Wow & flutter –Echo/reverb –EQ +/-6dB/oct –Channel mixing 6 2 1 –Dynamic range compression

5. © 2003 Verance Corporation. 5 VCMS/A: Performance Validation Performance validated through independent evaluations –1997 MUSE Program for Digital Media Management in the European Music Sector –1998 4C Entity Evaluation of Audio Watermarks for use in Copy Protection System Architecture (CPSA) –1999 Secure Digital Music Initiative Evaluation of Screening Technologies for SDMI Portable Device Specification, Phase I –2000 Secure Digital Music Initiative Evaluation of Screening Technologies for SDMI Portable Device Specification, Phase II –2001 JASRAC STEP 2001 Project for Certification of Digital Audio Watermark Technology

6. © 2003 Verance Corporation. 6 VCMS/A: Format Support Watermarked audio can be distributed in any format –Packaged media CD, DVD-V, DVD-A, SACD, etc. –Electronically distributed media Webcasting, subscription services, downloaded content, etc. –Broadcast media Free-to-air, digital music services, satellite radio, etc. Watermark enforcement required in compliant secure formats –4C Entity Copy Protection System Architecture (CPPM/CPRM) DVD Audio playback and record control SD Card Audio record control –SDMI Portable Device Specification Media player application record control Portable music device record control

7. © 2003 Verance Corporation. 7 VCMS/A: System Architecture Defined Watermark States: –copy freely, one copy allowed, no more copies –sdmi upgrade trigger set/not set (obsolete) Compliance Rules: –Screen all unencrypted content for watermark at inputs –Accept copy freely and unmarked content –Reject content marked no more copies –Handling of one copy allowed is format dependent DVD playback: Reject if unencrypted DVD recording: Allow but encrypt and mark no more copies SDMI recording: Accept –Device must be tamper-resistant –Compliance is self-certified

8. © 2003 Verance Corporation. 8 VCMS/A: Deployment Status Content Owners –All major labels distributing watermarked EMD content Hundreds of thousands of tracks embedded –One major label distributing watermarked packaged media Hundreds of DVD Audio titles Consumer Products –All DVD Audio players and recorders include watermark detectors Over one million consumer devices (including hybrid DVD-V/DVD-A) Detectors included in many OEM chipsets (e.g. Cirrus Logic, Hitachi, MEI, Sharp, ST Micro, Toshiba, Zoran) –All SD Card Audio devices include detectors Hundreds of thousands of consumer devices Primarily cellular phones for the Japanese market –Some portable music devices Devices from Philips, SonicBlue/Rio, Samsung, and Sony –No adoption in software media player market

9. © 2003 Verance Corporation. 9 VCMS/A: Representative Customers

10. © 2003 Verance Corporation. 10 Use audio watermark to protect A/V content by adapting VCMS/A technology Benefits: –Existing implementations accelerate deployment –Common core technology reduces resource requirements –Larger adopter base amortizes economic costs –Existing standard status facilitates acceptance VCMS/AV: Adapting VCMS/A to A/V Content VCMS/A VCMS/AV COMMON CORE TECHNOLOGY

11. © 2003 Verance Corporation. 11 VCMS/AV: Technical Considerations Performance Specifications –Transparency, Robustness, Data Payload, Computational Requirements, Effectiveness System Architecture –Watermark states, Compliance Rules, Harmonization of Audio and A/V Compliance Rules Format Support –Formats, Devices, System Architectures

12. © 2003 Verance Corporation. 12 Conclusions VCMS is proven and accepted solution for music VCMS is a potential near-term solution for A/V content VCMS provides substantial flexibility and expandability as market needs and tech environment evolve

13. © 2003 Verance Corporation. 13 Verance Copy Management System Presentation to CPTWG ARDG April 10, 2003