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AOL OKs Deal With InterTrust

June 29, 2000

SAN FRANCISCO (AP) _ America Online signed a deal with InterTrust Technologies to use that company’s piracy-proof system to distribute music, videos and literature over the Internet.

Santa Clara, Calif.-based InterTrust provides digital rights management software that allows companies to control the sales and distribution of various digital content.

``By choosing InterTrust ... we can offer our members and content partners a comprehensive digital trust system they can both benefit from,″ said Jonathan Sacks, AOL’s general manager.

The deal was announced Tuesday. America Online has given no timetable on when they would begin selling music and video online, spokeswoman Wendy Goldberg said.

The technology will be added to an upgraded version of the AOL’s popular Winamp music player. The small software application is used to play MP3 files as well as other audio formats.

Future versions of that popular player will likely be unable to play bootlegged MP3 files obtained through Napster and similar file-sharing programs that have become enormously popular. A recent study revealed that 11 million American have downloaded music over the Internet but only 2 million have paid money for songs online.

Extensive security measures such as those provided by InterTrust are necessary before major record labels will agree to sell their music online.

InterTrust technology works by placing digital content, such as a song file, in an InterTrust ``DigiBox,″ secure digital packaging which can only be accessed by other InterTrust utilities.

The e-commerce infrastructure provided by InterTrust can provide users such as AOL with a database that stores the user’s rights, identities and transactions. It can also allow for payment clearing, user profiling and advertising.

InterTrust’s technology is difficult to hack, said Susan Billheimer, an analyst with Zona Research. But luring music buyers from the free song-swapping software currently available on the Internet may be tough sell.

``Given that there is free content out there from Gnutella or Napster it will be difficult for music,″ Billheimer said.

But, she said consumers may be attracted by the ease of use and speed of transactions made possible with such e-commerce solutions.

``What it does do is get consumers over that initial hurdle. `How do I download music?′ ″ Billhemier said. ``They may find that they like this and be willing to pay for music downloads.″