Licensed to bill

The simplest digital rights schemes will be like the one in Napster's upcoming music-for-pay service. Songs that enter the Napster network will be converted automatically to a new, copy-protected format that the service is calling .NAP. The conversion uses software from PlayMedia Systems Inc., of Los Angeles, the company that wrote the first MP3-playing software, AMP, and modified it for use by the Napster player. (While details of Napster's business model have yet to be disclosed, music industry observers expect that customers will pay about US $5 per month for a set number of songs.)

RealNetworks' DRM was equally simple until a year ago. RealPlayer, its media player, and RealJukebox, an MP3 storage and playback program, could use other companies' plug-ins for digital rights management. Typically a media player plug-in is software supplied by, and downloaded from, a source other than the player's maker; it then installs itself. It enables its user to play music with new file formats or encoding schemes not recognized by the player as originally manufactured. To illustrate, Universal Music Group and InterTrust Technologies Corp., in Santa Clara, Calif., jointly wrote a plug-in to allow Universal's music to be played on RealNetworks' Jukebox player.

RealNetworks now sells what it calls an e-commerce package for content providers that offers a more complete set of DRM capabilities, though still limited to its own media players. This is true of Microsoft's DRM software as well. Both companies provide software with which content providers may copy-protect music and other content, plus additional software, built into their media players, which consumers use to purchase a key that unlocks the content. The key, or license, may come from a subscription or from a single song purchase or rental; it may be purchased from the content provider directly or through a distributor or retailer. Each of these business models must be supported by DRM software; indeed digital systems are expected to offer new rights never before considered. (For example, an e-book company recently experimented with a $1 right to read a book for 10 hours, after which the right must be renewed.)

The DRM-based license is also what makes it possible to play a protected song on one device, though purchased on another. At best, though, any song under the aegis of either Microsoft or RealNetworks would be playable only on devices running that company's player. This is where InterTrust, without a player of its own, has an edge, in that it has the potential to work with many players.

Currently, InterTrust's DRM works with at least three players: those of RealNetworks, MusicMatch, and Sonique, a division of Lycos Inc. By taking a neutral stance in the player battle, InterTrust, as its name suggests, hopes to become a universally trusted intermediary for content providers as well as player manufacturers. As InterTrust division president Ed Fish put it, "If I'm MusicMatch, for example, do I trust Microsoft for rights management when I have a competing player?"

End-to-end solutions

If you are a content provider, though, there are obvious advantages to the kind of end-to-end solution that Microsoft and RealNetworks provide: a single source of copy protection, rights management, and a popular media player. Hence an announcement made by InterTrust in September, forming what it calls a rights alliance program. Intended primarily for media distributors, such as telephone companies or satellite television providers, the program seeks to assemble all the pieces needed to create a music-on-demand system, including integration with software from Portal Software Inc., of Cupertino, Calif., for management of subscriber databases and billing. Naturally, Microsoft offers similar services to content providers, but mainly through its own products, instead of allowing a choice of other companies.

Choosing among these DRM companies will not be easy. RealNetworks popularized the PC as a music platform with its media player, and there are 200 million copies out there. In addition, the company has gained experience in selling content through an arrangement called GoldPass. This collaboration with CBS and other entertainment companies sells monthly subscriptions to live events online, including professional sports games from Major League Baseball and the National Basketball Association. In fact, late last year RealNetworks claimed that its products are used in 85 percent of all streaming content.

Microsoft has even more copies of Windows Media Player in the hands of users, 350 million all told, and is expected to increase that lead with its new desktop operating system, XP. The company is working hard to see that its player, or at least its format for encoded content, is supported by hardware manufacturers. Amir Majidimehr, general manager of Microsoft's Digital Media Everywhere group, points out that the company has distributed 9000 copies of its software development kit to developers. The company would also like to become a significant music distributor through MSN Music, a part of its MSN Internet service.

This very efficiency, though, in keeping so many pieces of music delivery under Microsoft's own roof, has some people worried about privacy and security.