Time Warner, Microsoft in DRM Play

Big names in content and software are making more moves in the Digital Rights Management (DRM) space.

Media giant Time Warner has taken an investment in DRM provider Content Guard, along with Microsoft, an existing investor in the Bethesda, Maryland, based digital content company.

Time Warner and Microsoft said they have purchased additional equity in the company from Xerox , the originator of Content Guard’s technology for an undisclosed amount.

Content Guard is principally involved with the creation of DRM technology that it patents for licensed use. Its portfolio of DRM technology includes 16 currently issued patents as well as an undisclosed number of additional technologies that are in the patent pipeline.

For example, Content Guard’s XrML is the basis of the recently approved ISO MPEG REL, Rights Expression Language standard, which assigns rights and usage to digital objects.

“The thing we’re most interested in seeing is the next stage of development of a marketplace that has been talked about a lot. {now} it’s maybe showing the beginning of signs of real life,” Michael Miron, CEO of Content Guard told internetnews.com .

“I think it’s fair to say that in the spring of 2000 when we launched, there was a lot of euphoria about how fast the market would take off. Of course that’s always followed by a period of disillusionment. But now with the promise of working more closely together with Time Warner and Microsoft, [we’re] taking the inventions that we’ve done and the standards that we’ve begun to get issued and actually trying to make something happen in the marketplace.”

The DRM marketplace, according to Miron, is full of ideas and is a ripe opportunity as digital media devices proliferate.

“We think that ultimately the marketplace for digital content will be bigger than the one of today. We do not see this as a zero sum gain,” he said.

“We think it will open up new ideas, new ways to distribute and use content which will widen consumer choice, and by working closely together with companies that can make things happen. We’re exited about assisting with initiatives that result in implementations.”

According to Jupiter Research Analyst Todd Chanko, Time Warner’s investment in DRM is significant for a number of reasons.

“Time Warner’s investment signals Big Media’s understanding that, a) not only is DRM key to developing future revenue strategies, but b) the current fragmented state of DRM spells danger for creating impervious DRM” — but ironically, a business opportunity for the DRM platform that leapfrogs ahead to become industry standard, Chanko told internetnews.com . (Jupiter Research and this publication are owned by the same parent company.)

The Microsoft/Time Warner partnership on DRM issues essentially began last year when the two companies settled then-named AOL Time Warner’s charge that Microsoft’s bundling of its IE browser in Windows was an abusive business practice that harmed Time Warner’s Netscape unit.

“Microsoft contacted Time Warner to inform them of this opportunity,” David Kaefer, director of business development, intellectual property and licensing for Microsoft, told internetnews.com . “Since the agreement in May, 2003 we have been working on ways to advance the growing partnership between the companies.”

According to Microsoft’s Kaefer, the joint investment of Microsoft and Time Warner in Content Guard makes sense.

“Time Warner is a content-rich company with a vested interest in furthering DRM solutions. Microsoft is a company committed to furthering digital delivery of information and content and our customers are looking to us to contribute further in the area of DRM innovation,” he said. “This joint investment pairs our companies’ dual strengths and will allow us to further partner on development in this important space.”

Kaefer characterized Content Guard’s technologies and patents as being fundamental to the development of standards based DRM solutions. “Together, ContentGuard, Time Warner, Microsoft, and other partners, continue to work towards the day when we can successfully protect the content that consumers enjoy today and into the future.”

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