A DRM scheme that may be optionally invoked by the owner. With the DRM protection turned on, the media is encrypted before it is distributed in a P2P network, and is decrypted prior to its use (play back). The peers may still efficiently distribute and serve without authorization from the owner. Nevertheless, when the media is used (played back), the client node must seek proper authorization from the owner. The invention further provides a hierarchical DRM scheme wherein each packet of the media is associated with a different protection level. In the hierarchical DRM scheme of the invention there is usually an order of the protection level. As a result, in one embodiment of the invention, the decryption key of a lower protection layer is the hash of the decryption key at the higher protection level. That way, a user granted access to the high protection layer may simply hold a single license of that layer, and obtain decryption keys of that layer and below. The invention further provides for a process for managing digital rights to a scalable media file wherein a different encryption/decryption key is used to encrypt each truncatable media packet with a base layer without requiring additional storage space to store the key.