In-store DVD burning possible in late '07
FROM CES: Tech provider MOD Systems demonstrates kiosk
By Paul Sweeting -- Video Business, 1/10/2007
JAN. 10 | LAS VEGAS—With the recent breakthrough in inter-industry discussions on approving an on-demand DVD-burning system using CSS encryption, commercial deployments of in-store burning could begin at major retail chains before the end of 2007, according to executives at MOD Systems, a leading provider of technology for managing and merchandising digital media at retail.
MOD, which manages the in-store CD burning at Starbucks’ Hear Music outlets, recently announced a deal with Sonic Solutions to integrate Sonic’s DVD burning software into its retail platform.
At the Consumer Electronics Show here, the company demonstrated its system using a newly introduced in-store burning equipment developed by TitleMatch Entertainment, one of a handful of kiosk and equipment vendors looking to move quickly into custom DVD pressing.
“Once the studios have done their security due diligence and are comfortable with our system, there’s no reason [retail deployments] can’t happen this year,” said former Warner Home Video president Warren Lieberfarb, who is advising MOD and sits on its board of directors. “Once we acquire the content, everything else is in place.”Privately funded MOD Systems is the brainchild of former Microsoft and LoudEye executive Anthony Bay and former Fullplay technology developer Mark Phillips.
Before forming MOD, the two were involved in developing the in-store music sampling platform used in Trans World Entertainment’s F.Y.E. stores.
MOD’s first retail client was Starbucks, where it replaced Hewlett-Packard as the principle technology provider for Hear Music’s in-store sampling, compilation and burning system.
The company recently signed a second deal with “a major consumer electronics retailer that also sells a lot of entertainment products,” according to Bay, who declined to name the chain.
For now, the new deal covers only music and is aimed at helping the retailer replace much of its in-store CD footprint with virtual inventory.
“One of the big things we’re announcing here at the show is that we’ve completed all of our licensing agreements with the major record labels, which includes approving our security auditing process and our system for handling collections and royalty payments,” Bay said. “I think that’s going to be very helpful to us in dealing with the studios.”
Although MOD is seeking approval and adoption of its system from the record labels and studios, it does not intend to license content directly, Bay said.
“That’s between the retailer and the content owners,” Bay said. “We don’t have any interest in the transaction itself. Our job is to make sure it happens securely and is fully auditable. When we talk about ‘acquiring’ product, we’re talking about getting the content owners comfortable with putting their content on our servers.”
MOD also has developed new user stations, or “pods,” that are much less expensive for retailers to deploy than earlier in-store sampling kiosks.
“We’ve greatly reduced the capital investment for the retailer, which is one of the biggest issues that has prevented in-store burning from working in the past,” Bay said.
With its deals now in place, MOD will maintain a library of tens of thousands of songs on its servers. Retailers will be able to customize the selection of titles they want to offer through the system, which will then be housed at a corporate server, either at MOD’s end or at the retailer’s own data center.
Individual stores will then need their own servers to manage the system locally.
“We’ve put a lot a work into figuring out where the most efficient place to host content is at any given point in the system,” Bay said. “That’s a lot of what we learned from developing the LoudEye system.”
The three-tiered server system also will be used for video.
“You’ll see tests on the movie side during the first half of the year,” Bay said. “Depending on how those tests go, you’ll see commercial deployments in the second half.”
Interest from both retailers and studios at the show has been high, according to Lieberfarb.
“Both the studios and retailers are wrestling with the same questions of how do you operate in a world with both physical and virtual inventory,” Lieberfarb said. “So I think our timing couldn’t be better.”
