This report describes a pay broadcasting system for the Internet. This system would enable tens of thousands of people to access an identical video stream simultaneously. In this proposed system, contents are broadcast to all terminals using IP multicast. Contents are encrypted so that legitimate users can decode them with a private key and session keys. As a key management scheme, the Tracing Traitor scheme is adopted because it offers advantages in scalability. The system can also embed digital watermarks, which act as a psychological deterrent to illegal copying and distribution of copyrighted contents. Finally, implementation of an application system is described and efficient broadcasting of contents with this system is demonstrated.