A UK startup has some interesting ideas about protecting video content: offer it as high-quality, unencrypted MPEG-4 files already formatted for various user devices. Instead of shackling users with artificial technological limitations on what they can do with their files, Streamburst hopes to secure content using a bit of personalization and a unique watermarking system, and they've already put their system to work selling the Ewan McGregor motorcycle trip documentary Long Way Round.

Burn to DVD? Fine. Transfer video to any portable device? No problem. Don't treat users like criminals? Check.

This approach to content is so different from the one taken by most Hollywood studios that we caught up with Róbert Bjarnason at his home in the UK to talk about his new company and to ask him one simple question: is he crazy?

Long way round

It's become a mantra of sorts, not just on this site but among the content industry at large: piracy is a business model. To compete with it effectively, content companies have two choices. They can pour millions into robust new DRM schemes (see HD DVD, Blu-ray, and Windows Vista for examples) and then use the power of the law to hammer any users who are found violating their copyrights. That approach hasn't been working so well. It's slow and expensive; it generates the worst sort of PR; and it risks creating a new generation of pirates who discover that they have no alternative if they want to exercise their fair-use rights.

The other way to compete with piracy is by actually attempting to compete: lower prices, no DRM, and making it easier to pay for a high-quality legal file than to pirate it.

Bjarnason and his two partners are taking this approach with their new UK company, Streamburst. Last summer, Bjarnason was looking for something new. He'd been working on web sites for Long Way Round, the 2004 documentary about Ewan McGregor's 19,000-mile trip across Europe, Asia, and North America on motorcycle. The show had been off the air for some time, and the producers had plans to repackage the episodes as mobile phone clips.

The project evolved as the team realized that laptops and iPods offered a much superior viewing experience and decided to offer the shows for all three devices. Bjarnason and two partners formed Streamburst to make the project a reality, and they coded the entire backend system using Ruby on Rails and standard open-source tools, all in under four months. Because they already had work from Long Way Round, the company was launched without any external funding—it was just the proverbial "guys in a garage."

Building the storefront and encoding the video clips at different resolutions was straightforward stuff; the team's real innovation came when they looked at the piracy problem and decided on a novel approach to it.

Don't call it DRM

Bjarnason and Co. wanted the video files to be open and unencumbered, but they still needed to make it easy for for honest people to stay honest. The scheme they hit on does not resemble any traditional DRM. Bjarnason tells me it's an "anti-piracy scheme," not a restriction mechanism.

The first part of the scheme appends a five-second introduction to each purchased show. It's simply a screen that shows the name of the person who paid for the download. It functions as a reminder that the file is intended for personal use, but it's not heavy-handed, and it doesn't restrict use. The video files are unencrypted MPEG-4 and can be burned to DVD for archiving or for watching on a home theater.

But can't people simply strip their names out of the file? Sure they can, says Bjarnason, if they have an MPEG-4 editor. But it would take more time to do that (and to reencode the file) than it would to simply pirate a copy; Bjarnason says it's "harder than downloading." Besides, people who have just paid money to download a show shouldn't be treated like criminals, and are less likely to be the ones seeding P2P networks around the world.

The second part of the scheme is a "watermark." That is, it's not technically a watermark in the usual sense of that term, but the encoding process does strip out a unique series of bits from the file. The missing information is a minuscule portion of the overall file that does not affect video quality, according to Bjarnason, but does allow the company to discover who purchased a particular file.

The goal is to make people more accountable for their actions without artificially restricting those actions. Because of its design, the watermark even survives most editing changes and format shifts; burning to DVD and then ripping back onto a computer doesn't eliminate it.

Finally, the price is kept low. Although Streamburst doesn't make these decisions, its first partnerships with McGregor's production company have sold videos for £1.35 each—less than the £1.89 charge for individual music videos in the iTunes UK store.

Their first storefronts opened on December 18, selling episodes of shows like Long Way Round and Missing Face (a documentary which donates all profits to UNICEF). In their first month, they managed to sell more than 1,000 video clips. No, they won't be giving iTunes execs sleepless nights for quite some time, but they aren't trying to. Instead, the focus is on allowing independent producers to put out their work and get paid for it without shackling customers into restrictive DRM schemes.

I've seen the future... and it is Iceland

Streamburst is brand new—they first set up shop in September and only launched their corporate web site this week—but they already have plans to expand. Bjarnason hails from Iceland, and though he works in the UK, he'd love to get involved with the film industry in his native country. The Streamburst system is unlikely to be adopted by major Hollywood and European studios in the near term, so Bjarnason next hopes to turn to Iceland's indie film community.

The team has also developed a technique for distributing the files via BitTorrent without losing the customized watermark; the video comes bundled inside a activation program that encodes the username and watermark into the file when it's purchased. But until Streamburst stores get a critical mass of users, it's actually more efficient to distribute files through the web. Should traffic pick up, the team already has a new distribution system ready to go.

Will a system that relies on a Reagenesque "trust, but verify" approach to protecting content gain any traction in a famously paranoid industry? Here's hoping. DRM doesn't stop piracy anyway, so it's not impossible to imagine some future day in which the lion will lay down with the lamb, and studios will stop making criminals of those who want to rip a DVD to their iPod to get them through a long commute.

Unfortunately, as Ken recently noted, DRM isn't really about piracy at all, but more about making users pay a second time for the "privilege" of format-shifting their purchased content. Even Apple loves the current regime. Companies that "think different"—like Streamburst—face a tough battle, but it's one worth fighting, and the company stands a decent chance of carving out a niche in the independent video market. Here's hoping for more such innovative thinking in 2007.