Matsushita set to buy digital music business

The producer of electronic products signs a deal to buy Preview Systems' electronic music distribution business.

2 min read
Anti-piracy technology company Preview Systems is selling its electronic music distribution business to Matsushita Electric for $1 million in cash.

Preview Systems said Tuesday that under the deal, Matsushita Electric--a producer of electronic products sold under brand names such as Panasonic and National--will have nonexclusive rights to the source code for all components of Preview's ZipLock System, which provides digital rights management for digital music and video.

A Matsushita representative confirmed the deal but declined to comment.

Mountain View, Calif.-based Preview Systems said it will transfer to Matsushita its active customer contracts, which include Arcstar, a service provider operated by NTT Communications, and LabelGate, a service provider operated by Sony.

The announcement is part of Preview Systems' latest efforts to wind down its operations. In May, the company closed shop, selling its software security technology to Aladdin Knowledge Systems.

Preview Systems, which once contributed to laying the groundwork for the delivery of secure digital goods, has faced heated competition in the digital rights management arena with rivals such as InterTrust Technologies and Microsoft--which are currently in a legal dispute over patents.

"We believe that the value of our technology may be better (used) when combined with that of another company," Vincent Pluvinage, chief executive of Preview Systems, said in a statement. "This agreement with Matsushita validates our technology, ensures that our music customers will continue to receive a high level of ongoing support, and delivers additional value to our stockholders."

Eric Scheirer, an analyst at Forrester Research, said that the deal represents Preview's final scramble to sell its remaining assets. "Preview is going out of business, and it's a fire sale more or less to get rid of their assets at whatever price they can on behalf of their stockholders," he said.

Matsushita Electric is part of a group known as the 4C Entity, which is making efforts to lock down content.

The group, which is also made up of Intel, IBM and Toshiba, created a technology, dubbed Content Protection for Recordable Media (CPRM), that would add a piracy-blocking mechanism directly into data storage drives. The technology would stop protected content from being transferred to a drive with CPRM built in.

"I don't think there's anything particular or magical about Matsushita except that they're a company that is interested in technology just as many others" are, Scheirer said. "I wouldn't be any more surprised if it had been a Microsoft or an IBM or a Texas Instruments or any kind of hardware or software company that was the buyer."