Salon Technology reports that all 3 of the Secure Digital Music Initiative's Watermarks have been broken by hackers. SDMI recently offered a $10,000 bounty to anyone who could break one of their 3 watermarking codes. SMDI adamntly denies the claims that the codes have been successfully hacked and notes even if they had been broken it was a planned scenario, thus the $10,000 bounty.

Bob Stuart, co-founder of Meridian and developer of Meridian Lossless Packing which makes high resolution 5.1, 70 minute albums fit on DVD-Audio discs, commented in an interview at last week's CEDIA Expo in Indianapolis that the DVD Watermarking issue isn't as bad, sonically, as everyone is making it out to be. Stuart acknowledges that the watermarking is the last hurdle to the exciting new technology, however he noted that the watermarking is somewhat misunderstood. According to Stuart, watermarking can be intermittently placed in a music playback source specifically at more dynamic sections where the ill effects of the watermarking are less obvious. Watermarking can also be placed in the silence between tracks.

To date, a major challenge for the Sony/Philips Direct Stream Digital (DSD) one-bit recording system at the heart of Super Audio CD (SACD) concerns the way it has carried out the digital signal processing (DSP) operations that is required for most modern digital recording and mixing, especially multi-track. Until now, this has meant converting the one-bit DSD data stream into something very much akin to the Pulse Code Modulation (PCM) technology it seeks to replace. DSP techniques rely on performing operations on digital words, and if your audio is a single-bit DSD data stream, it won't work.

"Watermark could reduce the perceived quality of DVD-A to somewhere betweena good MiniDisc and a below-average CD," says a leading classical recording engineer. The record industry's search for a "watermarking" system that would make itpossible to trace the origin of digital audio recordings despite their processing through internet audio compression techniques such as MP3 (MPEG I Layer 3) and the copying of high-density digital media such as DVD-Audio discs, has run into another major problem.

DVD-Audio, the technology that will replace the CD as the world’s standard for music playback, is still in development with the hold up being CSS codes for copyright protection. The big manufacturers have players ready to roll but until Working Group 4 gives the standard the OK everything is on hold. In a way the waiting period is good in that it gives the record companies and media empires a chance to understand how 24/96 resolution is better than 16/44.1 as well as how 5.1 audio gives them a one -- two punch when trying to resell their lucrative catalogs. Catalog sales make up more than half of most labels yearly profits and with Gen-X demanding more WOW factor from their music technology, DVD-Audio is going to be able to ride the market success of DVD-Video.