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The widespread use of the Internet raises issues regarding intellectual property. After content is downloaded, no further protection is provided on that content. DRM (Digital Rights Management) technologies were developed to ensure the protection of digital information. In this paper, we explore the issues associated with content distribution and digital rights management. We develop a modified Imprimatur model based on a multi-level content distribution model and, based on those two models, we present the formal model of a new DRM system and identify the properties that a DRM system should have. We design a prototype DRM system that distributes due royalties among participants, enforces content usage rules, and distributes content keys securely in the content distribution channel.