Remember the Internet browser war between Netscape and Microsoft? When the war began, the anti-Microsoft camp claimed that the future of the Internet was at stake. Doomsday pundits and Microsoft haters proclaimed that Microsoft was plotting to control access to the Internet and was somehow going to exact a toll from each of us using Microsoft’s free browser.

Once the Microsoft antitrust trial began, “toll booth” claims diminished, as there was no proof that any software company could control access to the Internet by merely giving away a free browser. The main reason the toll booth argument disappeared was that the Internet was built with HTML, an open standard content format that every other browser could read, display, and process. Microsoft couldn’t control the HTML standards, and Netscape and others were free to build products that displayed HTML content. The rhetoric after the antitrust trial proclaimed that Microsoft’s threat to the Internet was gone.

But while Janet Reno was mugging for the television cameras after the antitrust trial court victory, Microsoft continued to build the infrastructure for the real toll booths to the most important content on Internet: secured digital media and, eventually, secured digital books.

Building the Real Toll Booth

In the near future, the Internet will be the primary source of digital media-based entertainment, eventually displacing some radio, CD, and television use. If one company solely owned the tools and technology needed to create, distribute, protect, and view all popular digital entertainment content available on the Internet, it could become the toll booth everyone feared.

Microsoft is striving to become that singular provider now. In the past five years, Microsoft has become a dominant player in the streaming video, digital audio, and soon, the electronic books market. Microsoft has been busy making its digital media products the standard, proprietary content format for an increasing array of digital entertainment content. A growing number of content producers, Web site developers, and electronic book publishers have made Microsoft media technologies, including the newest product, Microsoft Reader for electronic books, their standard.

To establish dominance, Microsoft is promising content producers the ability to sell copyright-protected, encrypted digital content on the Internet to millions of consumers who already have free (but proprietary) content viewers installed on their Windows PCs and

Pocket PCs. Unlike other media content formats such as MP3, Microsoft’s formats include a digital rights management system (DRM), a sophisticated encryption and decryption system that prevents unauthorized copying and redistribution and also mandates the use of Microsoft viewing applications registered to users.

Content producers, reacting to the potential piracy losses that Napster/Gnutella technologies pose, believe that DRM-protected content is the answer to the copyright infringement problem and the key to secure, profitable content sales on the Internet. While DRM provides the typical protections against copying, sharing, and alteration, it also offers unparalleled opportunities to wring new revenue from digital content for both Microsoft and the content producer.

The Plan in Action

In addition to creating an e-book browser (Reader), Microsoft bought and developed content creation and encryption tools (ReaderWorks) that package the e-book content in encrypted form, only readable using Microsoft Reader. The full version of Reader only runs on Windows PCs and requires the user to keep a Microsoft Hotmail Passport Account as a security key. Secured Reader e-books cannot be shared, copied, or altered unless the publisher has granted the purchaser those rights at the time the user-specific e-book was created, irrespective of the notions of fair use embodied in copyright law.

While other e-book formats and DRM options exist (including secured PDF), Microsoft has been rushing to make Reader the de facto standard in the growing e-book world and has signed top authors to make their e-book content either available free (in Reader format exclusively) or available first in Reader format. Microsoft is also aggressively seeking partnerships with publishers, content producers, and resellers including Barnes & Noble and Amazon.com to make Reader their preferred e-book content format. Book publishers, formerly reluctant to distribute on the Internet, are beginning to flock to Microsoft’s DRM-protected e-books for their electronic book pilot projects.

Welcome to the Turnpike of the Future

Entertainment content producers will be taking proactive steps to move their content into DRM-protected forms and to aggressively fight piracy. The recording industry and DVD producers have had a nearly perfect track record in shutting down large pirated-content sites in high profile court cases.

Consumers, now addicted to the instant gratification of digital content on the Internet, will begrudgingly accept DRM protection schemes. But neither consumers nor content producers will likely tolerate multiple content formats, especially if those formats each require proprietary browsers. Consumers will demand that entertainment content be published in a de facto standard format, and producers will be forced to share their revenues with a standard-bearer. Microsoft is positioned to be that standard-bearer. And in this browser war, there is no Netscape to complain or offer alternatives for the consumer. The Department of Justice may have won the first battle, but the war is far from over.

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