Universal Music to Test Piracy Protection

Seagram’s Universal Music Group has signed an agreement with Sunnyvale, Calif.-based InterTrust Technologies to begin testing a piracy-fighting digital distribution security system, sources said.

InterTrust’s DigiBox software acts like a “virtual” envelope that can wrap around any digital content (from compact discs to MP3 files) and deliver it securely via the Internet or through other methods, including retail store kiosks or cable set-top boxes, sources said.

The technology is encrypted with a security lock and encoded with a set of rules that would allow Universal to offer consumers a wide variety of options before conducting a transaction. For instance, Universal could encode the software with rules that allow a consumer to listen to a song for 30 seconds or rent it for a day before deciding to purchase it.

In theory, a computer user could also distribute a downloaded DigiBox among friends, and whoever wanted to buy the music would charge it to a clearinghouse identified in the software, sources said. The clearinghouse would then pass on the money collected from each credit card transaction to Universal.

InterTrust is a privately held company that has spent the 1990s researching and developing systems for digital rights management and content protection. It has already cut a number of deals in the health-care and banking sectors.