Sharing The New Strategy In Wireless Content Protection

NEW YORK -(Dow Jones)- The wireless industry is taking a different tack in protecting mobile music and other media from piracy: Let people share.

Content for cellphones is becoming an increasingly important aspect of the wireless business. As voice matures, carriers consider media such as ring-tones and video clips their new cash cow, with industry experts predicting the U.S. market will grow to $7.5 billion by 2009. But the content providers are still hesitant to fully commit to this arena without adequate security, hence a new level of copyright protection that could be out as early as the holiday season.

Ironically, this mobile DRM 2.0 (digital rights management), allows consumers to loan out their content, albeit on a limited and controlled basis. It's a feature the wireless industry is looking at as a catalyst for growth.

"Its flexibility should allow for the safe viral spread of music and sharing of content," said Richard Wong, an executive with Openwave Systems Inc. (OPWV). The company makes software that enables the purchase of media on cell phones, and is a founding member of the Open Mobile Alliance, or OMA, which pioneered the standard.

Content geared specifically for handsets has hit mainstream. Entertainment tracker Billboard has a chart for the hottest ringtones (Mariah Carey's "We Belong Together" was No. 1 this week). But the wireless industry hopes the ease in which media can be disseminated will accelerate the adoption of these services.

"If one person finds it compelling, chances are his friend will find it compelling too," said Adam Zawal, wireless analyst for research firm Yankee Group. "If there's an easy way to send it throughout the community, that will spur the market."

One feature, called super distribution, allows for the temporary transfer of a song or video clip's digital rights to one person from another. A complementary feature rewards the lender if his friend purchases the song after sampling it for a day. At the same time, it prevents lasting piracy.

"I call it digital Tupperware," said Willms Buhse, working group chairman for the OMA, referring to the friends-hooking-friends approach.

The content represents an important stream of cash at a time when average revenue per user - as illustrated in the most recently reported quarter - generally fell throughout the industry.

Zawal estimates U.S. consumers will spend $7.5 billion on mobile content in 2009, compared with $800 million spent last year. He doesn't have any conflicts of interest to report. Experts say the international market will be even larger.

Locking Down A Standard

As alluded to by its namesake, OMA DRM 2.0 represents the second version of a standard developed by the alliance, a group of more than 400 members that include major players such as Motorola Inc. (MOT), Nokia Corp. (NOK), Cisco Systems Inc. (CSCO) and Verizon Communications' (VZ) wireless arm. The original version, approved in late 2002, protected content downloaded to one phone, and introduced the concept of a secure license.

The newest version allows the license to be transferred from one phone to another, or to electronic devices such as digital video recorders or computers. Rights to a movie purchased on your phone, for instance, can be zapped into your settop box at home.

Included in the new standard are individually encrypted licenses and a trust mechanism that requires authentication between the handset and the party issuing the digital rights. In addition to stored clips and songs, it will protect live broadcasts.

Offering stringent security is necessary in coaxing the content providers to release high-quality media. Movie studios will be more willing to release full movies rather than just trailers if they know the films will be protected from piracy. It could also spur more music choices and content geared specifically for mobile phones.

"From a music perspective, it is a very important requirement for music labels," said Alberto Moriondo, Motorola's worldwide director for mobile devices. "OMA 1.0 doesn't have the robustness to deliver full tracks with security that the labels want. 2.0 will address that."

The OMA technology isn't alone. Microsoft Corp. (MSFT) has its own standard, Janus, which is the dominant technology on computers. It joined the alliance because its technology is seldom used on handsets. Apple Computer Inc. (AAPL), meanwhile, uses Fairplay for its iTunes online music store.

Motorola's line of ROKR phones, which can access iTunes, will use the FairPlay technology. The company, however, will also have phones with OMA DRM 2.0 sometime in the second half. Only a handful of phones in general will have the technology this year.

Experts believe these various methods will coexist for a while, but having an eventual standard is key.

"If it weren't going to happen in a synchronized way, it tends to delay the adoption of content over wireless," Jorge Fuenzalida, director of technology and strategy for consulting firm inCode.

Another complication comes from a dispute over the amount of licensing fees that the industry has to pay.

"The challenge we're seeing is pricing at the 11th hour," Motorola's Moriondo said. "Resistance is coming from operators and manufacturers."

ContentGuard Holdings Inc. Chief Executive Bruce Gitlim, one of the intellectual property owners, believes the fees are reasonable. The company is one of several that have banded together under MPEG LA, an organization that is facilitating the negotiations.

"There is demand for the level of trust that 2.0 enables," said MPEG LA spokesman Lawrence Horn. "The market has a big appetite for this technology."

But the parties are balking at the high price for copyright protection, which isn't the only security concern. Other issues such as anti-virus measures are also on the radar.

"DRM 2.0 is powerful, and allows for flexibility, but it's not sufficient for the overall security model," Openwave's Wong said. Because it provides software to the carriers, the company won't be hit with licensing fees.

While Horn wouldn't discuss where the negotiations were at, he expects an agreement to be hammered out later this year.

-By Roger Cheng, Dow Jones Newswires; 201-938-2020; roger.cheng@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 9th August 2005