Late on May 1st, Kevin Rose, the founder and CEO of Digg.com, made the following blog posting:

“Today was an insane day. And as the founder of Digg, I just wanted to post my thoughts…

In building and shaping the site I’ve always tried to stay as hands on as possible. We’ve always given site moderation (digging/burying) power to the community. Occasionally we step in to remove stories that violate our terms of use (eg. linking to pornography, illegal downloads, racial hate sites, etc.). So today was a difficult day for us. We had to decide whether to remove stories containing a single code based on a cease and desist declaration. We had to make a call, and in our desire to avoid a scenario where Digg would be interrupted or shut down, we decided to comply and remove the stories with the code.

But now, after seeing hundreds of stories and reading thousands of comments, you’ve made it clear. You’d rather see Digg go down fighting than bow down to a bigger company. We hear you, and effective immediately we won’t delete stories or comments containing the code and will deal with whatever the consequences might be.

If we lose, then what the hell, at least we died trying.”

In case you’re not sure what this is about, there’s a www war going on over DRM. On one side is the AACS Licensing Authority, the organisation responsible for the AACS copy-protection system, used by both Blu-ray and HD DVD. A hexadecimal key had been posted on the web since the end of last year and it unlocks AACS. As a consequence, media assets have been stolen. Videos published on Blu Ray and HD DVD have been featuring on P2P services and unknown numbers of videos have been acquired illegally. For its part, the AACS has sent out ‘cease and desist’ notices to websites that publish the key, but all that has achieved is a backlash—one aspect of which was the takeover of Digg by links to sites that publish the key. There is now no point at all in AACS trying to suppress the publication of the key. That train left the station a long time ago.

Legally, the AACS has the right to suppress the hex code under the US Digital Millennium Copyright Act, which forbids the publication of information on how to hack DRM schemes—but go tell that to ISPs in Moldova and Kazakhstan. The AACS LA has now issued a patch that expires the key and the Blu-ray Disc Association has announced its acceleration of the introduction of a second-layer of DRM.

All of this suggests to me that DRM is doomed to fail in the long run. There is now a large group of people who see nothing wrong in undermining DRM schemes and will undoubtedly be happy to popularise any hack to any DRM scheme that anyone comes up with. New DRM schemes had better be very good or they’ll quickly become very dead.

So, Kevin Rose just bet the potential fortune locked up in his Digg shares against the AACS LA. Will the AACS LA pursue legal redress? and if they do, will it destroy both the AACS LA and Digg? It could. But if Digg goes down, then it will probably rise from its ashes like a Phoenix, just a few months later.