The goal: Defining digital publishing beyond CD-ROM

Though met with little public fanfare, the news that Steve Arnold was leaving his post as vice president of the New Media Group at LucasArts Entertainment in San Rafael, CA, was a signpost for the digital media industry. After seven and a half years at Lucas, Arnold has taken a post as president and CEO of Interactive Home Systems, Inc. (IHS), a company founded and chaired by Microsoft’s Bill Gates.

Experience and clout. IHS was founded in 1989 with the intention of creating the technology and the business framework to develop digital image banks for works of art. Arnold’s experience in interactive technologies, combined with Gates’s formidable financial and industry clout, make IHS and the framework it builds for its business worth watching closely.

After joining Lucasfilm in 1984, Arnold first managed the Games Group of Lucasfilm Computer Division. He established Lucasfilm Learning in 1987 to develop tools and titles for multimedia in education. In 1990, he established Rebel Arts and Technology, a LucasArts public-space entertainment software venture for theme parks, shopping malls and new entertainment venues.

Arnold also held VP and director positions at Atari during its halcyon days. And Gates, as most people know, is the driving force behind the world’s largest and most influential microcomputer software company.

Acquiring new skills. Images and video have assumed a starring role in media-based titles, so the licensing of digital rights is a new skill that many owners and developers are trying to perfect. Because of Gates’s high profile, content owners and developers have carefully watched Microsoft with both excitement and caution.

A DIGITAL HOME MUSEUM

Gates cut his first deal with the Seattle Art Museum in March 1991 for nonexclusive rights to more than 1,000 of the museum’s collection of 18,000 objects. It was IHS’s first step toward creating a so-called digital “museum” where, as former IHS general manager Terry Lipscomb said in one report, interactive walls bearing high-definition screens could be programmed to display alternating sets of images.

Though such a project probably sounds a little Star-Trekkish now, it’s widely believed that Gates is developing just such a museum for his own home. In addition, the project neatly highlights the problems any company faces in developing digital media products — the first of which is the licensing of content.

Licensing concerns. According to museum consultant David Bearman, president of Archives and Museum Informatics of Pittsburgh, PA, copyright holders were and are excited by the prospect of making large image banks available for multimedia titles, but they are hesitant about the actual business terms that IHS was proposing.

“I don’t know what change in direction happened since Steve came, but…18 months ago…IHS had been interested in making a one-time payment in exchange for a permanent license,” says Bearman. “That’s not particularly attractive in a market that no one knows what its size or potential will be. There are just too many questions about digital image rights and how one protects them to make anyone comfortable with the notion of giving away even nonexclusive permanent rights.”

Though Arnold is somewhat circumspect on the subject, he says the actual terms of licensing agreements aren’t as important to IHS as its broader charter: nothing less than a redefinition of digital publishing for the next decade. To achieve this goal, IHS is attacking a series of thorny, mission-critical problems.

Prying loose the fingers. First and foremost, IHS will tackle the building of a comprehensive image base. This project will entail solving a universal problem: prying loose the fingers of skittish content providers from their properties to make them available for licensing in the first place.

In addition to being concerned about licensing agreements, it’s also likely that owners will require solid reassurance from whomever buys digital rights that they can protect properties from piracy and alteration.

Though IHS isn’t yet talking about this area of concern, Gates may have a head start: Microsoft has already announced that it intends to support a security scheme called public-key encryption in certain upcoming product releases, and Gates’s familiarity with the technology makes it likely he’ll consider it for IHS as well.

How to protect properties? Public-key encryption is based on a simple yet highly efficient mathematical formula that, when applied to digital data, produces a file that’s not only unreadable but irreproducible without proper “keys” provided by both the user and the owner of the file. It also ensures that the file has not been altered in any form.

Public key is so effective that the National Security Agency has been bucking to keep it out of the public’s hands, so far without success. The system has not yet been deployed on a large scale to protect digital media, but it is already being used by one company that distributes digital audio into the home. It is also being considered by a major studio to protect digital movies from being copied after they’ve entered the distribution channel.

Improving images. But equally important to the licensing questions is what Arnold calls “doing justice to the work” — i.e., the quality and presentation of digital images. Until IHS has scaled that technical hurdle, he says, IHS will only worry about establishing working relationships with a few key sources of material.

What are the IHS engineers working on? “We’re building the software technology to create and manage digital libraries of high-resolution images,” says Arnold. IHS engineers have already developed image enhancement tools to reproduce, as closely as possible, the quality of the original image.

What specific tools and techniques IHS is developing, as well as what it will do with them once they’re finished, is unknown. But given Microsoft’s clout in standards-setting, one might also assume that the company will eventually sell or license its technology to other title producers.

The importance of IHS. If IHS can meet basic security requirements and provide quality image reproduction, its next task will be to convince content owners that licensing their images to IHS for interactive titles will result not only in revenue, but in products that provide access to more and better information — and a higher quality of interaction — than a viewer might get by simply walking through a museum.

Robert Abel’s seminal Guernica videodisc demonstration project, a rich melange of video, still images, sound and text about the famed Picasso painting, is proof that the concept indeed has “legs,” as they say in the movie biz. Unfortunately, Guernica never made it out of the prototype stage, partly because of the very copyright roadblocks that IHS is trying to break through.

Raising the level of discussion. Another area IHS will tackle is to help creative professionals, museums and photographers explore and understand the capabilities of digital media and digital publishing for the future, beyond the formidable limits of today’s technology.

“The concept does much more than cover digital images for art,” says Arnold. “We want to provide the capability for production people to create a wide array of applications, as well as develop a system that allows broader access to this information for everyone.”

These goals are ambitious. But whatever else you might say about Gates, once he gets his teeth into a project he doesn’t let go. He’s certainly been visionary in the area of digital media — Microsoft has championed CD-ROM since 1984, long before there was a dime to be made from it, and it has consistently put its money where its mouth is to further CD-ROM’s adoption.

Unfortunately, now that CD-ROM technology is finally being adopted on a wider scale, its defects are also becoming more apparent. Thus, it appears, Gates and his team are gearing up for a new challenge, and IHS looks to be their chosen vehicle for launching the next wave of innovation. As Arnold says, “We’re changing it all, and it’s not all about computers.”

- Denise Caruso