Competition For Drm Supremacy Heats Up

Microsoft, Liquid Audio, Real Networks, and RioPort own what little digital-rights management (DRM) business there currently is in delivering protected online music to consumers with personal computers. But when it comes to providing security for next-generation mobile Internet-enabled devices—a segment of potentially tremendous growth as legitimate subscription services take root—the scramble for technology-standard supremacy is on.

With forecasts from the likes of McKinsey & Co. and Merrill Lynch predicting that entertainment for wireless devices will generate more than $12 billion in revenue worldwide in the next five years, everyone from DRM specialists to music publishers are laying groundwork they hope will help establish the still-nascent market. Joining that push to capture the next wave of business opportunities in the DRM segment is IBM, which has been dabbling in the DRM business for the past few years and worked with some of the major labels on their early digital music tests in the late '90s.

The company—thus far largely boxed out of the existing music DRM market for downloads, rental-downloads, and on-demand streams by larger and/or more aggressive competitors—has announced it is launching an updated version of its EMMS DRM software. Instead of PC-based music applications, IBM wants to capitalize on the shift of digital music to portable devices like the Apple iPod, cell phones, personal digital assistants, and even home-based entertainment servers that double as stereo systems.

IBM says it has been working with Sony Electronics and NTT DoCoMo in Japan on the transfer of secure files to portable devices, including cell phones. The DRM has also been expanded to manage video downloads, streamed media, and picture and text files.

But IBM has its work cut out for itself. DRM is by no means a profitable business segment. In fact, a lack of the business in the face of rampant digital piracy and slow deployment of legitimate alternatives has buried, or at least severely crippled, a number of companies that were operating in the space—InterTrust, Reciprocal, Supertracks, Magex, and A2B among them. Meanwhile, Real and Microsoft—already owning strong relationships with the majors—have been aggressively cutting deals with device manufacturers and chip makers to make their media players and, in turn, DRM technologies, the standard for digital media off the PC.