e.Digital Corporation (fka EDIG)

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SDMI Continues Slide with a Net Loss of 18 Companies
June 05, 2001 by Dave Brigham


Amid speculation of its pending demise due to ongoing technical and political struggles, the Secure Digital Music Initiative has reported a net loss of 18 member companies.

In a routine filing with the Federal Trade Commission, SDMI said nine companies have joined the music security effort, and 27 have left the initiative, since its last filing on September 21, 2000. The filing is required under the National Cooperative Research and Production Act of 1993.

An SDMI spokeswoman could not provide the initiative's total current membership, which has been as high as 200. A list at the SDMI web site includes 147 companies and organizations.

New member companies include NTRU Cryptosystems, Tokyo-based J-Phone Communications and Seoul-based MPMan.com. The FTC filing also lists IBM as a new member. However, the computer industry giant first joined SDMI as part of the 4C Entity (IBM, Intel, Matsushita, Toshiba) when the initiative was founded in December 1998 [see 12.15.98 RIAA Initiative to Establish Standard for Downloadable Music]. Those four companies have since joined as separate SDMI members.

The members departing SDMI include online music companies ARTISTdirect and Musicmaker.com; digital watermark technology developers AudioTrack Watermark Solutions and Cognicity; and digital media technology companies HitHive, Loudeye Technologies and Supertracks. At least some of these companies have struggled financially, with ARTISTdirect, Loudeye and Supertracks laying off workers over the last several months, and Musicmaker going out of business.

Supertracks left SDMI last October; company CEO Charles Jennings said at the time that SDMI is "not connected to where the market is going."

Cognicity submitted two proposals to SDMI a year ago for screening technology that would facilitate a second phase of a proposed security standard for commercial digital music [see 05.03.00 EMI, Others Submit SDMI Technology Proposals].

Last month, executives from the music, consumer electronics and information technology industries that make up SDMI effectively threw in the towel after a two-and-a-half year effort to create a sealed system of protected CDs and playback devices that would reject unauthorized music files [see 05.29.01 SDMI Pushed into Dormancy by Disagreements, not Watermark Vulnerabilities]. Members were not convinced that existing components of a technology system could do the job and operate without problems, SDMI members said.

SDMI is scheduled to meet again in September, though some members said the project is probably dead in the short- and mid-term; other members believe the initiative can make headway.

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