Microsoft "watermarked" music

Microsoft deal may lead to free, but "watermarked" music

By John McBride | Published: August 19, 2007 - 11:02PM CT

Microsoft has agreed to license its audio watermarking technology to Activated Content Corp. of Seattle. We all know watermarking's place as a part of the music industry's DRM toolbox, but Activated—already a DRM watermarking player—now wants to use Microsoft's watermarking technology to get into the advertising business. Watermarks... and ads? Yep.

According to the announcement of the deal, "Microsoft's audio watermarking technology consists of digital audio software tools that will allow Activated Content to insert and extract non-secure data into audio files that they can use to offer additional services to the audio file end users." DRM provides few "additional services" to end users, so it's clear that the two companies are either taking the concept of "spin" to new levels or else they're talking about something else entirely.

We believe that "something else" can be found in an Activated white paper called "The Future of Watermarking" (PDF). In it, Activated compares watermarking to digital fingerprinting (which can tell you without using metadata that a digital music file is, say, "Stairway to Heaven") and points out that watermarking can go way beyond. It can certainly be used in conjunction with DRM software to limit rights, but it can also be used to deliver targeted advertising to listeners.

According to Activated, their approach can identify a particular music file with remarkable specificity and could even track its movement. "This content is 'Stairway to Heaven', distributed through Starbucks, last transferred through the Hear Music kiosk in downtown San Francisco on Dec. 8th to a registered Hear Music user who has this profile and uses a Microsoft Zune," says one particularly creepy example.

This entire thread of information is certainly subject to the normal ethics surrounding permission-based marketing, but Activated points out that all this data can be used without ever needing personally-identifiable information (wags might counter that it wouldn't be hard to track down; using a Zune is in itself quite personally identifying).

Extending the scenario, once the consumer gives a copy to a friend and the watermark is recovered, a very targeted advertisement opportunity is present. The elements that are potentially still valid are "Stairway to Heaven," "Starbucks Hear Music," "San Francisco," and even many of the elements of the first friend's profile. This makes for a very valuable advertisement opportunity—one that advertisers might be willing to pay Activated a lot of money for.

Perhaps Activated's plan will demonstrate that an ad-supported content business model can work, and the music industry will move away from its single-minded focus on DRM. While an absence of DRM would be welcome, would Activated's vision of an ad-supported model be a major improvement?

Non-DRM watermarks are gaining in popularity as consumers discover the sour taste of corporate content restrictions. Even major record labels like Universal are dropping DRM in favor of mere watermarks, though these will be far less specific than the ones envisioned by Activated. For Activated's model to work, digital music stores and kiosks will need to encode the watermark into the file on the fly, which involves a lot of backend processing power and additional code. Universal will only insert a general watermark that makes it easy to see where legally-purchased files end up (that is, do they make it to peer-to-peer networks?).

In the end, it's not an either/or question. DRM-free music is coming, but Activated is also imagining a world in which music could be distributed freely, supported by ads. More choice is always welcome, but it remains to be seen if users would feel comfortable with this level of tracking, even if it might mean free tunes.

source : arstechnica.com