Sealing Up Digital Rights

Now that a flock of formerly high-flying technology vendors has gone down in flames (Reciprocal and Digital Goods: remember them?), it may seem odd that a 50-person business based in London should be winging toward the publishing sector. But that’s just what SealedMedia is doing, having scored $16.5 million in a third round of funding last fall to plunge into that black hole called digital rights management. As Martin Lambert, SealedMedia’s founder and CTO, made clear in a recent conversation, part of the firm’s current success may lie in an unsentimental view of where digital rights are heading. If anyone needs any hints: it’s not just toward ebooks anymore.

“I don’t think it’s very good news for the electronic version of trade books at the moment,” he says, “because it’s a high-volume, low-value market, and the technologies applied in this space are extraordinarily immature.” So much, perhaps, is obvious. But Lambert thinks the first generation of consumer ebooks took a giant step backwards, because of rights technology that locked a book to a particular computer. You could only access your ebook at work or at home (or on a dedicated device that you lugged with you), but not in both places. SealedMedia’s solution, which they’ve been developing since 1996, gets around this problem by storing user rights on a central server, meaning you can open a locked file from anywhere, as long as you have the password. (Password-swapping is discouraged, because you can’t read a file in more than one place at one time.) This technology can also protect a whole range of file types, including Adobe PDFs, HTML documents, and the whole suite of Microsoft Office formats, including PowerPoint presentations, plus audio and video files. All users need to do is download a small “unsealer” program to their computer, and they’re ready to roll. Support for mobile devices is coming soon.

Among the company’s 40 customers is Cavendish Publishing, a legal publisher in the UK which was losing sales when students couldn’t reliably find its expensive law textbooks stocked at stores. With electronic rights already covered in all its author contracts, the publisher rolled out 400 backlist ebook titles (and the first electronic customer turned out to be in Portugal). Ebooks are priced at up to 50% off the hardcover edition, and individual chapters are offered for sale. Purchasing a full license allows unlimited viewing and one-time printing, as well as access from any computer, and offline use for a specified length of time.

Other customers include Time Warner’s, which is offering a Shrek “enhanced animated storybook”; Harcourt, which is enabling downloads of electronic reprints through aggregator sites; Pearson Education, which is making York Notes study guides available online; and Congressional Quarterly, which has launched e-delivery of its daily digest (and upped revenues by over $200,000). Now, Lambert says, he’s aiming to sign up the McGraw-Hills and Reeds of the world, which can offer DRM for trade applications. “At the end of the day, if you put yourself in the shoes of a consumer, you have zero interest in DRM,” he says. “All you want is the content at a fair price. More accurately, you can already get the content at a fair price: you can buy a printed book. Ebooks will only work when someone says, this is miles better than the printed book.”