Watermarks date back at least to the 13th century, when paper manufacturers found a way to "mark" sheets with an unremovable, barely-visible signature to denote either the paper’s origin, ownership, or both. Watermarks have come a long way, and companies such as Macrovision and Digimarc have made a king’s ransom offering "digital watermarking technology" to today’s purveyors of content.

These days, digital watermarking is now being tasked to make money on unauthorized file distribution. The proposition is simple: what if video and audio content flowed freely online, sans DRM, but owners were somehow compensated when files were played or accessed? That’s the basic idea behind Digimarc’s latest patent. 

According a patent filing at the US Patent and Trademark Office, Digimarc’s "Method for monitoring internet dissemination of image, video and/or audio files" is a monitoring service that scans the Internet, consuming content as it goes. The system downloads audio, video and images, and then scans them for watermarks. If it finds a watermark it recognizes, the system then contacts that mark’s registered owner and informs them of the discovery.

Digimark announced their successful patent application this month, but the patent has been a long time coming. It was first filed in November of 1998, long before the YouTubes and MySpaces of the world existed. Now Digimarc is promoting the monitoring system as the cure to what ails these social networking sites. According to Bruce Davis, Digimarc chairman and CEO, the system could help build "viable business models" in an arena rife with "disruptive changes in entertainment distribution and consumption."

"Much of the repurposed content on YouTube, for example, contains copyrighted entertainment," Davis said in a statement. "If social networking sites implemented software to check each stream, they could identify copyrighted subject matter, create a report, negotiate compensation for the value chain and sell targeted advertising for related goods and services. There is no need to impede consumers. In fact, the specific identification of the content could guide provision of related goods, services and community designed to maximize the consumer’s enjoyment of the entertainment experience."

For the system to work, players at multiple levels would need to get involved. Broadcasters would need to add identifying watermarks to their broadcast, in cooperation with copyright holders, and both parties would need to register their watermarks with the system. Then, in the event that a user capped a broadcast and uploaded it online, the scanner system would eventually find it and report its location online. Yet the system is not designed to hop on P2P networks or private file sharing hubs, but instead crawls public web sites in search of watermarked material. As such, this "solution" is more geared towards sites like YouTube and less towards casual piracy, which rarely involves posting things to a web site.

Generally we’ve laughed off most watermarking solutions because they seemed like solutions in search of a problem. Now that Google has learned the hard way that content owners want to be paid when their content shows up on YouTube, we may see more of these "solutions" in the future.

Via ARS Technica