Archive for April, 2008

While we have covered this in the past, recent comments on EngadgetHD’s post about the Fox deployment highlight the issues faced by everybody in the content distribution business.

First of all, EngadgetHD is a source for hardware geeks first and foremost. Their pages are packed with information on the latest news from chip makers, especially those for high end graphics and gamers, but also all things techie. Today they have a post on a little known inventor claiming to have a ‘free energy’ device that will end the fossil fuel era.

So one might imagine that the readers are among those who know and understand, if not use the dark net for sharing movies for instance.  Scroll down on this post and you will see a good sample of that audience’s response- suspicion, not knowing the difference between watermarking and DRM, fear of it being cracked and becoming “another way of punishing legitimate customers.” And there is one who says that sharing isn’t illegal.

These are all examples of the current state of the motion picture industry.

Fundamentally, none of us want to buy from someone we don’t trust. Or from someone who doesn’t trust us. Yet that is exactly how the industry actions in piracy prevention have been interpreted by ‘consumers’.

Key to the watermarking promise is that with this type of security, a content distribution company can focus on make use of the power of the internet for both distribution of the content and building relationship with customers. Both through direct contact and tracking, marketing and promotion can focus on people known to like a particular type of film, or actor, or subject. By smart use of geographical information, people who want to see a film that is no longer available in theaters in their town might be able to buy the file directly from an internet store before the DVD hits rental stores. The potential is huge, but cannot be realized until the trust issue has been resolved.

In other news- Last Friday the US Trade Representive issued its annual SPECIAL 301 Report, which is an annual review of the global state of intellectual property rights

(IPR) protection and enforcement, conducted by the Office of the United States Trade

Representative (USTR) pursuant to Special 301 provisions of the Trade Act of 1974 (Trade Act).lists countries

See the full report here.

Daily Variety’s report led noting ‘progress’, but the overall tone was negative.

Some of you may have seen this author’s recent appearance on MoneyTV in which the mission and product of this company was reviewed, along with the announcement of our successful implementation at Fox Home Entertainment was discussed.

One of the points ( of the many that I struggled to jam into those precious moments of exposure) was that this is a landmark, a ‘stake in the ground’ of significance.

First let me share the basis of the analogy. The ‘territory’ of the distribution business is divided up into the mountain top, which is the now six major studios, and multiple hills, some of which send their products to the mountain top, and others that feed multiple lesser channels. For watermarking, the studios are a relative ‘green field’- an as yet untouched marketplace. At the same time these companies are also extraordinary walled gardens, where getting into business with them has multiple barriers, and the processes to overcome them are often outside what might be thought of as usual and customary.

Once inside those walls, the plots of territory for USVO and watermarks in general to work and cultivate are many. From the beginning of production till a product arrives at ‘library’ status, its value to the copyright holders depends on judicious use of both containment and exposure.

We all get teased by the promotional exposure of films ‘coming soon’ or the involvement of recognizable names, or subjects while they are in production or actively being marketed. The key to a successful product is having the public be aware of it, and develop a desire to see it, whether at the theatre, or renting or buying it for home viewing, or waiting for it to reach broadcast or cable. The vast expense of distribution is in the marketing effort which generates this awareness and desire.

Unintended release (piracy) of the product exploits the marketing without ensuring a cash return to the copyright holder. Thus from the first image captured, to the last possible stream of revenue, control of the product is desirable. Conversely, wide dissemination is also desired, because the more people with access to the product, the higher the potential return, provided that access is under license and thus revenue generating.

Within the complex enterprise of motion pictures today, the production, post production, marketing and theatrical distribution processes today, a product crosses departmental, business unit, and vendor boundaries thousands of times in a variety of forms, states, and media. Each and every one of those is a transaction that can, and should be watermarked.

Each of those boundary crossings require an analysis of security threat, workflow and optimum implementation before USVO can determine the opportunity represented by developing the unique appropriate application of its technologies. So while we have made it inside the walls of one of the occupants of the mountain top, our working of the fields within will require creative industrious effort.

That effort is significantly bolstered by the ‘stake in the ground’ that the existing implementation is. It is a point of location, stability and credibility. It is a point to push off from, not just within the NewsCorp enterprise, but all of the other occupants of the mountaintop.

Today, USVO announced, in conjunction with 20^th Century Fox Home Entertainment, its successful installation of MediaEscort as part of its marketing to the home video retailer business.

Over the next few posts we will examine the significance of this.

First and foremost, it represents the first server based installation of our MediaEscort application in a revenue generating relationship. The product is on the client’s server, placing SmartMarks on client product on a per delivery basis. Every single copy of a movie, television or cable show delivered to home entertainment retailers gets a unique traceable mark that is of a quality and provenance recognized by courts as a valid trail of evidence for enforcement of the license agreements that govern the transaction associated with that delivery.

That’s a mouthful, so let’s break it down. When you ‘buy’ or even receive for free (as the buyers at a home video retailer do), a movie what you get is a license to use that content. The license specifies terms and conditions for that use. Most of us have downloaded or installed software and routinely do not read the license agreement presented. We just click ‘I agree’ so we can get on with it. When you watch a movie, whether you bought or rented the DVD or tape, you agree to the license terms and conditions. Hardly anyone knows what those are. They include you agreeing not to charge people to watch the content, to not duplicate it for use outside your home, and not to make copies for sale. The home video retail buyers have similar and more restrictive terms.

When you violate that license, the party that has been wronged-  in this case that would be a distributor like our client Fox- has recourse through the courts, especially when the damage can be shown in sales of the product outside of the license. Proving the provenance of the pirated content has been a challenge as identifying each individual copy of a show is complicated logistically as well as technically. ‘Complicated’ as in expensive. By the way there are other forms of recourse too.

In SmartMarks, USVO provides a mark that satisfies the courts. In MediaEscort, USVO has provided a solution to the technical and logistical complexity that can, and in the Fox Home Entertainment installation, achieve a cost reduction.  That’s right. Added value in a lower cost process has been achieved.

Let us emphasize that this is just one B2B activity in a single business unit – Home Entertainment-  in a large enterprise – NewsCorp- in a much larger segment- the motion picture industry – of a growing part of the world economy – motion pictures and television delivered in many media – broadcast, theaters, on the web, cable etc.  By itself, it doesn’t make USVO a profitable company. The landmark is that this is a breakthrough, a demonstration, and the beginning of a shift in how this industry will successfully engage the digital technologies changing the world we live in.

We are clear that this is a beginning, although it has taken a lot of effort and time to get to this point. We look forward to sharing with you more about the significance, both for the company and our effort to make digital  content distribution not just safe, but more profitable and powerful than what has preceded it.