Q&A with François-Xavier Nuttall, CEO, AudioSoft

Founded in 1996, AudioSoft has developed the first business-to-business online system for managing digital copyrights that tracks downloads, previews and webcasts by country of consumption, reporting the relevant information to the appropriate rights owners and their representatives.

With its corporate headquarters in San Francisco and its European headquarters in Geneva, Switzerland, AudioSoft is a respected international leader in worldwide digital copyright management.

First Conferences: François-Xavier, copyrights protection and reporting systems are considered key issues to guarantee a prosperous music industry on the net. AudioSoft established itself successfully first in France, which is not the easiest market concerning copyrights. What is your experience looking at the different countries in Europe?

François-Xavier: Managing copyrights on the Internet directly implies that we need to operate on a worldwide basis. Having first approached the French market, one of the world's most complex framework, has given AudioSoft a true understanding of the global copyright market.Europe is a very demanding market in terms of Internet copyright management services for 2 reasons : The Internet is mainly US driven and the European legal framework is much more fragmented.

We are obviously looking at the major European markets like Germany, UK or France, with each their own specificities. But the needs are fairly urgent, as most of the music streams originate from the US.

Q: The SDMI, the ‘Secure Digital Media Initiative', specification intend to answer consumer demand for convenient accessibility to quality digital music, enable copyright protection for artists' work, and enable technology and music companies to build successful businesses. What is the current situation?

A: SDMI is currently finalizing the portable devices specifications. The Seattle meeting at the end of January is expected to provide the final specifications. At the next meeting, scheduled for February in San Diego, California, SDMI will launch a new working group called ‘Interoperability', that will define the basic framework for a software only SDMI format. AudioSoft is proposing a specific copyright dedicated Meta-Data structure, allowing all major Music Industry Institutions to embed their own content identification code for copyright tracking. We believe that such a technical environment is necessary for a global copyright system to fully operate.

Q: AudioSoft meanwhile offers Data Management Service, Rights Management Service and Copyright Information Center Service. Can you give as us some examples and also explain how it differs from your competition?

A: AudioSoft core business is to capture data relative to music transactions on a worldwide basis. Based on this raw data, AudioSoft generates usage reports to Copyright Holders around the world, allowing them to track the usage of their repertoire.Our products vary whether they address Publisher, Record Labels or Webcasters.Our service is very unique in the sense that for the first time since Beaumarchais (the initiator of the copyright concept in the 18th century), there exists a true global tracking device for copyright. Traditionally, all copyright operations were territorially based and the Internet has challenged that concept. AudioSoft is here to enable the traditional Industry to operate on a global basis.

Q: What differs AudioSoft from Microsoft, LiquidAudio, a2b or RealNetworks?

A: This is an important question as people usually get confused by the nature of all these different businesses. Here is a little clarification:

Microsoft or Intertrust operate systems called DRM (Digital Rights Management). It is more precisely tools to protect and deliver content.On top of these platforms, you have the E-commerce tools providing electronic payment, license servers and customer management tools. These are provided by Reciprocal or Magex/Natwest.Liquid Audio is a particular case as it is a global system providing all the functionalities.RealNetworks, traditionally providing streaming servers, is now leveraging its user base to become the universal end user.

AudioSoft operates as a cross-platform service, sitting on top of all these partners. It is a complementary system that will monitor all music transactions, independently of the technology, to the purpose of worldwide copyright management.

Q: AudioSoft recently launched FNAC direct, the leading Music shop in France. What is the user response?

A: End users are typically driven by brands, hence the FNAC Music shop on-line has attracted lots of traffic. This being said, the deployment of our core business, Copyright management, requires all our Company's resources, hence we will be divesting ourselves from these type of operations in the near future.

Q: Can you talk about your collaboration with AOL?

A: Since 1998, AudioSoft's technology has been integrated within winamp. Last year winamp has been bought by AOL, and more recently OAL has bought Warner Music. So we are obviously looking at expanding this relationship, but it is too early to define the exact scope.

Q: What are your plans in the States?

A: The US is by far the largest market in terms of providing Music on the Internet. All the major companies working in that space are based in the US. It is a necessary place for AudioSoft to be present. We now have our Corporate Headquarters in the "Audio Alley" in San Francisco.AudioSoft is also planning on fueling its expansion from the Nasdaq.

Q: What is your vision for AudioSoft in the world market?

A: The mp3 phenomenon has set the expectations for the future of the Music Market: Music must be easily available at all time from anywhere. But mp3 is lacking a business model - ie a long term revenue stream. The Music Industry is now understanding the market, and acting accordingly. Such a deployment of content will only re-enforce the need for a global and accurate tracking mechanism.

Q: François-Xavier, thank you for the interview.