Microsoft Eases Up on Digital Recordings

When it comes to battling video piracy, Microsoft Corp. can’t seem to find a happy medium.

Last month, the company trotted out a new version of its operating system, dubbed Windows XP Media Center edition, which enables consumers with specially equipped computers to make digital recordings of TV shows. But the software drew catcalls from reviewers because it automatically slapped all recordings with electronic locks that limited their use.

Stung by the criticism, Microsoft agreed to apply the locks more sparingly and implement one of the standard copy-protection techniques used by Hollywood. But the change, expected to be announced today, quickly peeved studios because it may let consumers record premium programs such as pay-per-view movies in violation of built-in copyright protections.

“We have some real concerns about content that enters an unprotected input into a personal computer, where the rights associated with the content are not being obeyed,” said Brad Hunt, chief technology officer with the Motion Picture Assn. of America.

In other words, the studios liked Microsoft’s restrictive version better.

On the other hand, analyst P.J. McNealy of GartnerG2 research firm said Microsoft’s new approach is more in tune with consumer expectations.

“Consumers consider broadcast TV disposable to begin with,” McNealy said, citing a recent GartnerG2 study that found almost two-thirds of the people surveyed believe it’s legal to give a copy of a recorded TV program to a friend--something they may not have the right to do. “I think allowing this kind of portability of broadcast TV is in sync with consumers’ expectations.”

The Windows XP Media Center software, due on some high-end PCs later this year, is designed to store, organize and play music, TV programs, pictures and homemade videos. The initial Media Center PCs from Hewlett-Packard Co. are expected to hold at least 40 hours of programs on its high-capacity hard drive and burn countless hours more onto disc with their built-in DVD recorders.

To guard against piracy, Microsoft initially designed the software to scramble any recorded TV program--even the ones burned onto DVDs. The scrambling would have prevented the discs from being played on any PC other than the one that recorded them, requiring all stored shows to be viewed on that PC.

Murari Narayan, marketing director for Microsoft’s Windows eHome Division, said the criticism from customers and analysts persuaded the company to change its software before it hit the market. Now, he said, Media Center PCs will look for a standard anti-copying signal used by broadcasters and scramble only the programs designated for protection.

That standard--known as Copy Generation Management System, or CGMS--lets broadcasters and program owners set three different rules for shows: unlimited copying, copy once or no copying. Under Microsoft’s approach, any program marked “copy once” or “no copying” could be recorded onto the hard disk but not played on any other device.

Any other program could be recorded onto unscrambled DVDs in a Microsoft format that could be played on any PC running the latest Windows software, Narayan said. By the end of the year, he added, consumers will be able to record those programs onto standard DVDs that would work in any DVD player.

“What we’re enabling is the content provider to actually set the [recording] policy,” he said. “We are simply a device that respects their policy.... We are giving them an option, we are giving them a solution.”

But in the MPAA’s view, Microsoft is giving them a problem. To the studios, “copy never” doesn’t mean “store for an unlimited time on a hard drive”--particularly not when the program is a pay-per-view movie that’s not supposed to be recordable.

“We have high-value content that has rights associated with it ... and we would like devices to respect the rights associated with those CGMS bits,” Hunt said.