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With theft of intellectual property estimated in the billions last year, Sony appears to have found a way to hinder cyberthieves by arming its music with digital content controls that regulate use. Says Scott Burnett, marketing director of IBM's Digital Media, which helped Sony on the project, "Digital content controls can be used to create super-distribution rights and tie them not just to music but to any type of information, allowing it to be sharedbut only under certain conditions. The opportunities for businesses of all types are enormous."
Sony is not alone in contemplating the possibilities. Law firms, financial services companies and publishers are also getting into the actto thwart theft, yesbut also to rethink marketing strategy and expand the use of online collaboration to create products with less worry over leaks. Indeed, what had been seen as a movement to halt pro-Napster forces dead in their tracks has evolved into a new way to sell across a variety of industries. From media and communications powerhouse Sony to animal health researcher Vetstream Ltd., some companies are no longer so afraid to see the Net as a viable distribution channel, and are willing to experiment with a slew of expensive new software and strategies aimed at fighting theft, ensuring privacy, encouraging collaborationand creating new business models.
It's no wonder interest in digital content controls is growing. In a September 2002 survey by PricewaterhouseCoopers and the U.S. Chamber of Commerce, 138 companies said they lost between $53 billion and $59 billion in 2001 from theft of their intellectual property and proprietary information. The most commonly cited areas of theft? Research, customer lists and financial data. And the greatest impact of such thefts were increased legal fees, loss of revenue and loss of competitive advantage. Further, while three fourths of those surveyed said their company's intellectual property was vital to their success, only 45 percent said management was concerned about information loss and was taking the necessary precautions. Some companies, though, are starting to see some results.
Congressional Quarterly Inc., for example, says that the number of people who subscribe to its CQ Daily Monitor rose by 7 percent last year, thanks to the use of new digital content controls. Meanwhile, software game maker Electronic Arts says in-house controls on digital content, which limit distribution of original artwork beyond company walls, convinced EA executives to boost its use of online collaboration among far-flung employees to produce computer games. This has speeded time to marketby weeks for some products, says CIO Marc West.