Yes, common-key ( a file) and Content ID (any string uniquely representing your content) is used to generate final encryption key.
When fetching f4m file, a drm meta is generated which embeds the license (so client (AIR app/Flash app) need not to contact the license server). DRM is either embedded into the F4m or served seperately. This is unique per content.
Actual content file are encrypted with the encryption key and is thus cachable. DRM meta-data has all the info about the kind of clients it is acceptable and time-validity of embedded license as enforced by the policy file on the server.
There are two modes :
1. Flash Access
With PHDS, license is always embedded in the drm meta-data
While in FlashAccessV2(V3) protection scheme, drm meta includes the license server url (from where license has to be fetched).
In FMS, under apache=>conf=>httpd.conf you can set proper protectionscheme .
for encryption settings for FlashAccessV2(V3)