One of the most divisive debates about the Internet has been the future of Napster. The fight featured new and old technologies battling over big dollars.
Napster is a Web site that allows users to download music at no cost. The Web site, which has 38 million users, gives users who download its software access to the music on the computers of all the users who are willing to share. Users type in a song title and Napster generates a list of other users who already have the song. Clicking on the selection copies the file from one user’s hard drive to the other’s. Once users save the downloaded song on their computers, they now “own” the tune. They can email the song to friends or burn their own CDs.
Artists like Metallica joined with media giant Bertelsmann and sued Napster, claiming the technology not only violated copyright laws but was really was tantamount to stealing, since they received no royalties for any Napster downloads. The technology has coined the term “to napster,” which means being able use things for free that you would normally have to pay the owner for.
On November 1, Bertelsmann announced it would work with Napster to develop a fee-based service for the music exchange; in return for an undisclosed sum to Napster, it agreed to drop the lawsuit.
Despite the resolution of the Napster controversy, the proverbial barn door is still open. TrustData Solutions, a software outsourcing provider based in San Jose, California, offers an outsourcing solution that makes it impossible to napster any digital file. Its software protects digital information both on and offline by allowing the owner of the data to determine exactly who can see the information, which can be a simple Microsoft Word document to an application service provider’s (ASP) executable program.
Enabling “Trusted” Ecommerce
Protected digital information in today’s connected world has a host of usages. First, it may remove a major barrier to ecommerce. In Europe, Jeffrey Baumgartner, a European Internet marketing executive, reports a lack of consumer trust and confidence have been identified as key reasons why many people do not buy online. “If more people are more confident about buying online, that means more customers for all of us,” he wrote in the Iconoclash.
“We enable trusted ecommerce,” says Carrie Walton, executive director, marketing, for TrustData.
TrustData is zeroing in on ASPs. In fact, the company’s original name was ASPSecure Corporation. The same customer wariness applies here. “Many businesses are cautious about utilizing the ASP model due to the concerns about the privacy of their data,” says Larry McArthur, chairman of TrustData. The company’s software helps dispel that concern.
In addition, ASPs want to make sure one branch of a company, which has paid them, doesn’t share the application with other branches who haven’t paid, a la napster. According to the Software and Information Industry Association, revenue lost to software piracy for business applications during 1998 reached $11 billion worldwide. That translates to four out of every 10 copies are pirated.
The TrustData software has tracking capabilities that tell the ASP how many times the software is being used, who used it and when. The audit abilities provide an impartial history of performance, which both parties can use to track service level agreement (SLA) compliance. Walton adds that the audit data allows ASPs to learn how their buyers actually employ their applications.
Approval Becomes a Marketing Decision
And TrustData’s application will help both U.S. health care providers and† financial institutions comply with new federal laws mandating privacy. Health care providers have to worry about HIPPA, a U.S. rule that requires all health care transactions remain secure and confidential. The Gramm-Leech-Bliley Act guarantees the same in the financial world. The program’s audit trail helps these companies prove their compliance with the laws.
The key to the program, according to Walton, is to control the data once the user disconnects from the Internet. “This is the time the document is at risk,” she explains. Once a document sits on a hard drive, users are free to email it or print it and then share it with non-paying friends and colleagues. TrustData’s software, which features digital rights management, allows the security to stay with the data; documents can not be shared unless the owner of the data grants permission.
Determining who can see the document then becomes a marketing decision. Walton uses Garth Brooks’ fan club as an example. The popular country singer has a large fan club; membership allows the fans to hear his new music before the public release. Using the TrustData technology, the fan club can download the tunes but they can not share them with friends. Or, Brooks can allow radio stations to download the new CD but only hear the songs twice before the official release date. The singer can sell his work as well since the software has a payment module.
“The owner of the data sets the rules, online and off,” Walton says. The software, which resides on the customer’s site, maintains a roster of authorized users.
TrustData uses technology developed by InterTrust Technologies. The company has a license to market the application. TrustData, which was incorporated in November, 1999, then develops software solutions using the InterTrust platform.
TrustData has signed a partnership agreements with Fasoo.com, which is marketing this privacy solution to the Asian ASP market. Fasoo.com is a spin-off from Samsung which is based in Seoul, South Korea.
Forming a JV with Magex
The company also formed a joint venture with Magex, a British company that acts as a financial clearing house. Initially, the partnership is focusing on Magex’s current clearing services customers. “Our partnership with TrustData means that players in all levels of the software market will have access to global Magex service as well as the added benefit of being able to consistently track product usage and revenue streams,” says Glen Jennison, head of IT and operations at Magex.
Regardless of what the federal judge decides, TrustData customers don’t have to worry about napstering.
Lessons from the Outsourcing Primer:
- Software privacy is a costly problem for ASPs.
- Controlling data after disconnection from the Internet is the key to controlling unauthorized usage.
- Controlling document usage can become a strategic marketing decision.
- Privacy and security will create trust in ASP customers who worry about the security of their data when using an ASP.