Microsoft said today that the next version of its digital rights management technology will allow subscription music to be transferred to portable devices. Up to now, subscription music has been tethe
Microsoft said today that the next version of its digital rights management (DRM) technology will allow subscription music to be transferred to portable devices. Up to now, subscription music has been tethered to the computer, in part, because portable devices have not been able recognize conditional-ownership content.
The new Windows Media DRM will support devices that use secure time clocks and other meters that require the device to be re-synched to a computer after a certain amount of time, or a certain number of plays, to validate that a subscription is current.
AOL, MusicNow LLC , Napster LLC, VirginMega and OD2 have all announced support of the technology, as have device makers Archos, Creative Labs Inc., Dell Inc., Digital5, iRiver International, Samsung, PRISMIQ, Pure Digital, Rio, SimpleDevices, Inc, and 2Wire Inc.
Chris Gorog chairman/CEO of Napster parent Roxio, says that subscription portability is "the biggest step forward in the fight against digital piracy." He says that the technology should "catalyze the recurring revenue model for record labels and artists."
The move comes as the legal download market is growing in popularity with consumers. Apple announced last week that it has sold more than 70 million tracks in its first year of business. Apple's rivals are hoping that subscription portability can be their competitive answer to the dominance of iTunes and the iPod.
The Microsoft announcement sets the stage for a fight between digital service operators and the recording industry over how much subscription portability should cost. Subscription companies are hoping to price a music service with portability at $15 to $20, sources say. Labels-concerned about cannibalization of the download market-are said to want double what they currently get for subscription content.
The labels like the download business because it is a permanent ownership proposition that closely approximates physical sales. Subscriptions, by contrast, are recurring income streams that offer much lower immediate compensation on a per-track basis. For example, a label may collect a one-time 65-cent wholesale fee on an a single download. In a subscription model, a label may collect a few cents each month a consumer holds onto a conditional ownership track.