Xerox and Microsoft Team To Protect Digital Content

Xerox Corporation (NYSE: XRX) and Microsoft (Nasdaq: MSFT) have joined forces to tackle copyright protection in the digital age.

Xerox announced Thursday that it is spinning off the Xerox Rights Management Group into a new company called ContentGuard, Inc. The new venture, funded in part by an investment from Microsoft, will deliver software solutions to protect and manage books, music, and other content distributed over the Web.

Quest for More Control

“While there have been a limited number of solutions available to address this issue, this is the first time that two major companies such as Xerox and Microsoft have partnered to bring digital rights management to the masses,” said Alan Weintraub, research director of GartnerGroup.

Xerox said its new solution will “give publishers and authors more control over their digital material, thus allowing them unprecedented freedom and innovation in delivering and marketing digital content to consumers.”

Content Piracy Cases Multiplying

The ease with which digital music files and e-books can be shared over the Web has put artists, authors, and publishers on the offensive in recent days.

Napster has been sued for copyright infringement by the Recording Industry Association of America (RIAA), the rock band Metallica and rap artist Dr. Dre, all of whom are complaining that the company’s MP3 swapping software allows users to easily pirate copyrighted music.

MP3.com is also under fire for allowing people to pirate music. Former Beatle Paul McCartney sued MP3.com, claiming that the company’s online service allows users to copy and store the contents of CDs, thus violating copyright law.

Even novelist Stephen King is vulnerable. When his book, “Riding the Bullet,” was released exclusively as an e-book last month, hackers broke the encryption and begin distributing copies for free.

Technology for Content Protection

Xerox says that ContentGuard provides the technology for products and services that are designed to securely distribute digital content over the Web, allowing content developers and publishers to control how copyrighted materials are used, copied and purchased.

According to Xerox president and CEO Rick Thoman, “This technology, supported by an extensive portfolio of Xerox patents, solves one of the most critical challenges facing Internet commerce: content protection.”

ContentGuard will remain primarily a Xerox holding, with Microsoft taking a “significant” minority stake. Other investors are expected to be named later.

Currently, ContentGuard offers products for protection and management of such digital content as market research, business reports, patent applications, books, sheet music and academic course packs. Plans are under way to develop digital rights management software for audio and video material.

Common Standard

ContentGuard, Microsoft, and Xerox will collaborate to further develop digital rights management technology and standards. Plans include the establishment of XrML (eXtensible rights Markup Language) as a common standard for all forms of digital information and entertainment. XrML will be licensed royalty-free to the industry to enable interoperability across digital rights management systems.

Microsoft Reader, a new software product for displaying e-books, will be the first Microsoft product to incorporate the ContentGuard technology when it debuts this summer.