But hackers aren't the only people unhappy with SDMI. The hack-SDMI challenge is revealing deep fissures within SDMI itself -- a rift separating the technology companies charged with implementing digital watermarking from the entertainment companies that want their music protected now. Specifically, the technology companies are convinced that the watermarking "solutions" SDMI has created are fundamentally flawed.

A successful effort by hackers to break the watermarks, suggest representatives of some of those technology companies, might jeopardize almost two years of work by the coalition of record labels, consumer electronics companies, technology start-ups and computer manufacturers that makes up SDMI. But this wouldn't necessarily be a bad thing.

I spoke with half a dozen SDMI project members, all of whom requested anonymity. All hailed from computer, software or other technology-related firms; all were disgusted with SDMI and the so-called solutions the recording industry is pushing. For them, the hack-SDMI challenge is a huge opportunity. Some of SDMI's geekier members are actually rooting for the hackers to bust all the different watermarks. They want to return to square one -- and possibly be forced to come up with new models for music distribution that would be both consumer and artist friendly.

For two years, executives at these technology companies have watched in frustration while the record labels have strong-armed the SDMI project to conform to their own ideas of the future of digital music. Although many of the participating technologists say they do want to help build an online music industry, they think that so far SDMI is going about it in entirely the wrong way.

In the words of one frustrated member: "I'm completely amazed at the idiocy of the open-source movement in opposing ["Hack SDMI"]. If I were a hacker or an open-source person and I didn't like what SDMI is trying to do, I would think that I would want to break the technology -- to make sure that it doesn't work, and to make sure that it doesn't get implemented." After all, if watermarks fail, there is nothing else for SDMI to fall back on: "Not breaking it is the worst thing they can do. If they break SDMI, there will be nothing to implement."

Or, in the words of another insider: "The only people who like SDMI are the record labels and the companies trying to sell them technology ... [The rest of us are] mainly there to prevent bad things from happening; I would say this is most of the participating computer and consumer electronics companies, if not all of them."

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