On the rights track: auditude software could be weapon, or bring a trace, in content fight.

The unexpected emergence of music and video file-sharing Internet sites such as YouTube.com provided one of the top media stories of the year.

It also provided some of the biggest headaches for the creators of copyrighted content such as musicians and performers whose work became fair game in a newly discovered corner.

Enter Auditude Inc., a tiny Los Angeles company whose founders say they have developed software that can clear up the whole mess.

"We are trying to provide accountability and metrics for the media and broadcast industries," said the firm's 29-year-old chairman, Nicholas Seet. "A lot of the people who own content have no idea how, when and where their content is being used on the Internet."

Some rights holders, such as Universal Music Group, have come out swinging. Universal last week sued News Corp. MySpace.com for unauthorized use of its music, after filing similar suits against Sony Corp.'s Grouper and independents including Bolt.com. A number of other media firms are waiting in the legal wings to see if Universal's suit is successful.

All of the legal wrangling over copyrights and file sharing is music to the ears of Seet. To illustrate the roblem, Seet pointed to the full segments of the Fox TV series "Family Guy" available on YouTube.

"I loaded this page and you've got the 'Family Guy' episode, the full 22 minutes," Seet said. "Running right below the 'Family Guy' episode was a banner ad for the Universal movie, 'Let's Go to Prison.' So the question you have to ask is, does Fox mind? And of course, they mind.

"The next question is, why haven't they done anything about it?" said Seet. "The answer is they can't."

Seet said that with Auditude's software, which provides a sort of "rights fingerprint," they might be able to.

"We call it Copy ID," Seet said. "It's actually a video search tool. We're actually searching based on the content. Again, the magic is that we can detect content even if it's been highly compressed in user video form, sped up, altered, anything like that."

Auditude then compares that characteristic signature against its mammoth content database, which contains everything that has run on television and cable in the past year, plus more than 3.5 million songs. The technology for the software grew out of the traffic and advertisement measurement work that the firm, which launched in 2000, was doing for companies including NetZero Inc., Clear Channel Communications and the ad agency Deutsch Inc.

The firm tracked music usage in advertising, TV programming, radio and on cell-phones. The company, which employs between 10 and 15 workers at its Flower Street offices downtown, expanded and began to offer CD identification and MP3 video identification to stem piracy and copyright violations. In the process, the Copy ID software was developed.

Armed with the potentially groundbreaking software, Seet entered and won the nation's largest business plan competition at Rice University in 2005. The $130,000 prize money helped, Seet said, but the biggest boost was from the investments that came from members of the Rice competition judging panel, including Compaq Computers Inc. founder Rod Canion and Jack Gill, founder of Vanguard Ventures Inc. Auditude also went on to win California's largest business plan competition after entering the UCLA Anderson School of Management Knapp Competition.

Litigation landslide?

The stakes in the copyrights tussle are high, both for the distributors and content creators. Universal's suit against MySpace seeks $150,000 for each incident of copyright infringement, for example, which literally translates into billions of dollars. That's a lot of money, even for News Corp., or an online giant like Google Inc., which recently purchased You.Tube for $1.6 billion.

The Safe Harbor Act essentially maintains that user-generated content on Internet sites is protected from litigation, provided the site was willing to take the material down if asked.

"If you accept what YouTube is telling you, that they have a genuine interest in taking down material, this will help the content users," said Larry Iser, a rights attorney with Kinsella Weitzman Iser Kump and Aldisert.

Beyond rights issues, Auditude's usage tracking would provide a gauge for pricing online advertising which could be tied to particular videos or music, a business model the file-sharing firms are moving toward. That means potential clients for Auditude include the distributors, the rights holders and consumers. The distributors, likely the most lucrative, have been the toughest of the segments to crack. Both YouTube and MySpace have installed rights tracking software developed in-house or with partners.

"They can do most music content, as long as its high quality and it hasn't been altered too significantly," Seet said, "but they can't do television and movies. We can."

So if the software that Auditude has developed is a virtual Rosetta Stone for the file-sharing community and the content creators, what's stopping everyone from coming aboard?

It could be the lack of a sales push. Seet admits that he currently represents half of the firm's sales force, and that's a problem.

"I'm a techie," he said. "Pretty much all of our people are techies. It's not an area that I enjoy, or am particularly good at, so a salesman would be great. But he'd have to understand the technology."

By DAN COX

Staff Reporter