News

A "digital rights management" (DRM) company has been awarded a patent for its "tickets" to Internet-based entertainment. Bethesda, MD–based ContentGuard Holdings, Inc. announced July 27 that it has been granted a patent for its "digital ticket" system, which allows users access to digital entertainment—music, video, graphics, and e-books—from any Internet-connected device.

ContentGuard's business model appears similar to the phone card model, where users buy a fixed number of minutes, which can be used from any telephone. ContentGuard codes can be embedded in users' computers, cell phones, MP3 players, or in credit cards that provide verification of the right to view or hear the desired content, according to the announcement. Digital tickets are said to work on any platform and will free users from the need to use any particular device. Like credit and ATM cards, they also offer copyright holders the opportunity to track usage, an aspect that some privacy advocates may find objectionable.

"Digital ticketing is a dramatic step forward in helping make more content available to consumers when, where, and how they want it, while protecting the rights of content owners," said Michael Miron, ContentGuard's co-chairman and CEO. "It enhances flexibility by extending it to the offline world and allowing you to take the rights with you, which allows for greater interoperability." Miron's company is a spin-off of Xerox Corporation; its digital ticketing system is said to enjoy the full support of Microsoft.

The DRM gold rush is in full swing. Many companies are developing copyright-secure content access systems, among them Digimarc, which received its 25th digital encryption patent the same week that ContentGuard received its first. "There are dozens or hundreds of companies out there that have intellectual property that may or may not be necessary for enabling online music businesses in the long run," said Jupiter Research analyst Aram Sinnreich.

As of June 29, there was no word from any major music labels as to whether they would adopt the ContentGuard system. An endorsement from Microsoft, of course, can and will carry tremendous weight in the decision-making process.

The patent announcement came just a few days ahead of the July 30 opening of hearings by a federally appointed, three-member copyright arbitration royalty panel (CARP), which will eventually determine how much webcasters must pay to record labels for the right to stream music. Representatives from the labels, and from performers' and songwriters' organizations, will ask for "0.4 cents a song or 15% of an Internet company's revenues," according to a brief report by the Hollywood Reporter. Internet audio amounts to less than $10 million annually, stated the report, but could eventually "become a lucrative source of income for both performers and labels."