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Softbank drives hard on commerce

Softbank Net Solutions details its system for delivering digital products over the Internet and other networks.

Softbank Net Solutions has detailed its comprehensive system for delivering digital products over the Internet and other networks.

It also announced its first two resellers, Universal Music Group and Vger Technologies, a new medical information firm.

Softbank Net Solutions' service, the Rights Exchange, is designed to let businesses meter, sell, and securely distribute digital content (such software, video, medical records, legal papers, music, and other content) across any digital medium. It protects the intellectual property of content owners, and ensures they get paid when someone uses the content.

Rights Exchange is based on technology from InterTrust Technologies. It includes a license clearinghouse and InterTrust's secure container or "wrapper" technology, called DigiBox, which allows content creators to track and get paid for software or digital content--even when the original buyer passes it on to others.

The DigiBox technology allows a creator to put the content as well as business rules, such as pricing or usage limits, into a secure container. Online distributors also can add their own business rules--and marked-up prices--into the same secure container.

When a user pays for the content, the DigiBox is opened and payment data forwarded to the Softbank Net Solutions clearinghouse, which distributes money under the business rules. If an original buyer passes content to another person, the DigiBox also collects and distributes payments from the additional user.

"We provide a tamper-resistant, end-to-end e-commerce service for the metering, distribution, and sale of digital content," said Paul Bandrowski, president of Net Solutions. As in the physical world, he added, transaction terms must be flexible and the infrastructure must support multiple tiers of distribution.

Net Solutions' service allows selling options such as pay-per-use, rent-to-own, and subscriptions. For example, in health care systems, the service probably will be used to assure that only authorized individuals see sensitive health records.

The company's business model will be similar to Visa's credit card business. Net Solutions is building the infrastructure to handle the back-end processing but licenses the technology to "master services partners," which function as wholesalers in vertical industry segments. Vger Technologies will work in the health care industry; Universal Music Group will work in entertainment.

The wholesalers can, in turn, license resellers called "direct services partners," which also can sign up directly with Net Solutions. The service can be branded by each partner, and Net Solutions will collect a transaction fee of 1 to 4 percent.

The company sees health care, publishing, financial services, software, and entertainment segments as early targets.

"We don't expect to have positive cash flow until mid-1999," said Bandrowski, indicating the company's business plan is based on achieving profitability only when it handles billions of transactions a year.

Net Solutions will have competitors, including CyberSource and LitleNet, although Net Solutions and LitleNet signed a partnership late last year.

Secure container companies, most now working in the electronic software distribution (ESD) segment, will compete with Net Solutions. Release Software, which also embeds business rules with its secure wrappers, is closest to the Net Solutions model, but Portland Software, Test Drive and IBM's Cryptolopes have similar services.

Net Solutions was formed last year as a spin-off from Softbank Services Group, which provides outsourced sales, tech support, and fulfillment for technology companies. Softbank now owns about a third of Net Solutions, which anticipates raising another $10 million to $12 million in venture funding by the end of this year.

Net Solutions expects to begin pilot testing Rights Exchange early next year, with a full rollout midyear.