TTR's Antipiracy Technology Could Be Music to the Labels' Ears
This Israel company has an intriguing way of preventing digital audio from being copied onto optical media or into the popular MP3 format
TTR Technologies, a little-known company whose stock trades on the Nasdaq but is headquartered in Israel, expects to be a major beneficiary of piracy. Far from being a bootlegger, TTR ( TTRE ) has developed antipiracy technologies -- digital solutions that prevent illegal copying of audio content onto optical media, such as CD-ROMs or digital video disks (DVDs). The need for such technology is urgent: In the music industry alone, some analysts estimate that piracy cost some $5 billion in 1998.
So what is TTR's solution? Its chief product, called MusicGuard, inhibits illegal replication of CDs without affecting music quality, and it doesn't require any changes in the recording studio. The basic patented technology is embedded on the glass master in CD production facilities. Simple modifications to an encoder, explains Thadhani, allow insertion of subtle distortions across CD tracks that render copies unusable.
So attempts to duplicate a MusicGuard-protected CD either abort or produce unacceptable audio quality, says Thadhani. Any attempt to produce MP3 files from protected CDs also fail, he adds. Another plus, he says, is that the TTR technology isn't vulnerable to attacks by hackers, unlike software-based techniques that seek to protect music.
"HIGHLY INTERESTED." TTR has successfully completed field trials of the product in 850 households in Britain, according to Emanuel Kronitz, the company's chief operating officer. "The major recording studios are highly interested in our technology," says Kronitz. The recording company that is said to be ready to ink a licensing agreement with TTR has been monitoring these tests.
In another sign that TTR could be the real thing, Macrovision ( MVSN ), the world leader in marketing copy-protection and rights-management technolgies, has acquired an 11% stake in TTR. In a pact signed last year with TTR, Macrovision agreed to jointly develop and market copy-protection products that will prevent duplication of audio content on CDs, DVDs, and other optical media. TTR also granted Macrovision a 10-year licensing pact to use TTR's proprietary technology in exchange for royalty fees.
Macrovision is a giant compared with TTR. The former has a market capitalization of $2.4 billion, with its stock now trading at 60 a share. It posted sales of $37.3 million last year and earned $7.2 million, or 19 cents a share. TTR, on the other hand, trades at 6 1/2 a share and has a market value of just $103 million. It has yet to make a penny.
Marcial is Business Week's Inside Wall Street columnist
TTR Technologies, Inc., designs, markets and sells proprietary anti piracy products. The company has developed and commercialized products for the software and entertainment industries and is expanding its product range and reach through in house development and joint ventures. TTR has a joint development and marketing agreement for music CD copy protection with Macrovision Corporation (Nasdaq:MVSN). TTR owns 50% of ComSign, the exclusive Israeli affiliate of VeriSign, Inc. (Nasdaq:VRSN). For more information about TTR Technologies, visit http://www.ttrtech.com.