Life after Napster: new file-sharing method keeps record labels happy. (Black Digerati).

Amid the furor over Napster, Gnutella, and the like, one startup says it has the solution to keep record companies and their artists happy. San Francisco's BayView Systems launched Duolizer, a digital audio and video control system designed to give content owners security and flexibility when distributing their digital assets.

In simple terms, the technology breaks the media file into two parts. The larger section, which can be downloaded in its entirety, is dubbed the flexible file. It contains about 90% of the data and can be shared like any MP3 or similar digital file. However, it's distorted because BayView scoops out strategic bits of information, and the amount of distortion is at the control of the content owner. "You can hear the song; it's fully dynamic," says Ron Cadet, BayView's president and CEO. "You've got full bass, full treble, and the whole length of the Song, but you definitely know it's distorted."

The second piece, the secure stream, is delivered from the content owner via a secured server and is combined with the first piece when superior quality is desired. "It's as if [the user] had the original copy," says Cadet. On playback, the secure stream disappears because it is discarded as it is consumed in real time; a new copy of the secure stream is distributed whenever full quality is desired because a separate secure stream is required for every single playback. "That's how the record companies have the control they need," says Cadet. The technology is a bridge between people on the one side who want to share files over networks such as Napster (which helps create a buzz for the artist and song), and the record companies on the other side giving them security and control, he says. Besides EMI Records, Bayview has agreements with three of the top-five record labels.

What does this mean for the Napsters of the world? Not much. Users can still trade music online, however, the songs won't be of the same high quality--unless they obtain permission from the content owner, such as subscribers of services from MusicNet or PressPlay.

Although EMI has a 5% equity stake in BayView, Cadet plans to work with other major labels to "Duolize" their digital music. He is initially targeting the business-to-business space but also has a consumer model in sight.

BayView charges record companies for the use of the system and is offered as a hosted application, which allows their customers to use a Web interface to place their music on BayView's in-house server. With a per-project (per-CD) charge in the $10,000 to $15,000 range, if business ramps up as expected, the future looks promising. In time, going public may even be an option. "Our investors are definitely looking for a return on their investment," says Cadet. "Given today's initial public offering (IPO) scenario, that may be difficult, but who knows what the situation can look like two years from now. It can be a totally different picture."

BayView has raised approximately $2.1 million in venture capital from investment firms targeting women and minority entrepreneurs, and is in talks for a third round. Cadet expects the company to be profitable by the fourth quarter of this year. The company was launched last July; just in time for EMI Recorded Music's pre-release of a Garth Brooks "Duolized" single to radio stations and other media outlets last fall.