A method and system is presented for a digital licensing scheme that separates the license from the digital file containing the copyrightable material. According to the present invention, the files can be downloaded from any server, and transferred from user to user, even after the file has been licensed. The present invention utilizes producer software running on a vendor's computer, server software running on a computer provided by the license provider, and player software operating on the user's computer. Digitally encrypted communication streams keep communications between the producer software, the license provider, and the player software confidential. A software component running on the user's computer checks to make sure that the appropriate product license has been purchased. This is accomplished by comparing the product ID in the product license with the product ID contained in the product file. The software also checks that the person seeking to play the product file is the user that actually paid for the license. This is accomplished by comparing the user ID in the product license with a user ID in a user license. Finally, an operating system ID found in the user license is compared with the same information obtained from the currently running operating system, to ensure that the user license was created for the currently operating computer.