New copy protection for optical media announced
CDs and DVDs with embedded smart cards may be the next step
in media copy protection. Doc Witness has developed a technology
that should work with existing media drives, making it an especially potent weapon against pirates:
The technology works by turning an ordinary CD drive into a smart-card reader. A photodetector at the edge of the CD turns the drive’s laser light into electrical pulses, which travel to the embedded smart card and request the key. If the card deems the request legitimate, it returns the key as an electronic signal that an onboard light-emitting diode converts into light and beams back to the drive.
The technology is definitely cool, but it could hinder fair use, and that's not so cool. Still, I suppose it will only be a matter of time before some teenager working out of his parent's basement will find a way around the copy protection.