The New York Times – John Markoff

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SAN FRANCISCO, June 13– A digital video and music distribution company plans to announce on Wednesday that it will make its movies available as encrypted files on the Internet using the controversial Gnutella software, a company spokeswoman said today.

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The company,, based in Mount Lebanon, Pa., obtained national visibility in April when it announced it would make 12 full-length feature films from Miramax available in a pay-per-view format.

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The company now has several films available from its Web site that can be viewed using Microsoft’s Windows Media Player and its digital-rights management technology, which is intended to prevent piracy. The files are generally larger than 100 megabytes, which can take a long time to transfer, but the company is focusing on users of new high-speed cable and digital subscriber line network connections.

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The new distribution plan, analysts said, is an effort to leverage the file-sharing qualities of the Gnutella system to increase the marketing reach of commercial products.

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Until now, Internet file-sharing software like that developed by Napster, iMesh, Scour and others has created a bitter dispute over the threat that the Internet might pose to the music and video industries as they move into the digital world.

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Some analysts argue, however, that while the Internet might force content distributors to jettison their traditional business models, the current controversy over music piracy does not present an ultimate threat to intellectual property in the digital era.

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“We believe that these kinds of distribution schemes will become increasingly common as the music and movie industries realize the kind of threat they are under,” said Rob Enderle, an Internet industry analyst at Giga Information Group in Santa Clara, Calif.

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Sightsound is both renting and selling digital movies online using Microsoft’s software to view and charge for the films. Although the company plans to issue a news release on Wednesday announcing the distribution using Gnutella, a company spokesman said today that its executives would not be available to comment on the announcement because the company is in a “quiet period” before an initial public offering.

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Gnutella was originally developed by programmers at Nullsoft, a subsidiary of America Online, but the company forced the programmers to stop developing the software soon after it was made available to the public because of its potential use in pirating content.

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Since that time, other independent software developers have continued to refine the software. Gnutella differs from the Napster music distribution system in that there is no central index. Rather, indexes are created in a composite fashion based on each Gnutella client program querying other Gnutella users.

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The various files that are shared are stored locally on individual users’ machines.

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Mike Monasco, a developer at, a small group that is refining the Gnutella technology, said today that this was the first such effort to use Gnutella commercially. “We also plan to offer encryption for Gnutella, using our own patented technology, which we will be offering as an open-source project,” he said.

A potential Achilles’ heel of all the efforts to protect digital information is that software pirates have so far had great success in attacking various protection schemes. Last year, for example, the encryption scheme underlying Microsoft’s Windows Media audio format was broken only a day after it was introduced.

A Sightsound spokeswoman said today the company did not want to challenge pirates but that it would use commercially available encryption technology to protect its content.

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