March 27, 2012 at 10:05 am

Gee Beyond Can Buy Beyond Oblivion, But Without Intertrust’s DRM

The bankruptcy court where the case was heard is not usually bedecked in a flag, as it is here.

Gee Beyond, the company headed by former Beyond Oblivion CEO Adam Kidron, can buy the assets of the bankrupt Beyond Oblivion, a judge ruled on Monday.

The sticking point — an objection by digital rights management providers including investor Intertrust, whose CEO Talal Shamoon sat on Beyond Oblivion’s board — was resolved, as reported by Law360 (subscription or trial registration required). The court decided that Gee Beyond wouldn’t be able to use contracts that would have allowed Beyond Oblivion to wrap music in Intertrust’s DRM, resolving the DRM provider’s Objection.

Why wrap music downloads in DRM in 2012 in the first place?

Part of Kidron’s vision for Beyond Oblivion was to allow the company’s DRM-protected files to proliferate on file sharing networks. Users of Beyond-enabled devices would have been able to play the files while they remained unplayable for other users — a strategy that seems eerily familiar to that of Qtrax, another music startup with lofty “legal P2P” ambitions that failed to realize its potential.

On the surface, losing the DRM wrappers could actually be a good thing for Gee Beyond’s chances of rising from Beyond Oblivion’s ashes. The prospect of users sharing DRM-protected files on bit torrent, when the same users could simply download the exact same set of songs directly from Beyond Oblivion, seems rather bleak. In addition, hardcore file sharers encountering these DRM-protected files would likely have reacted to them negatively, rather than seeing them as a reason to buy one of the company’s “Boinc”-enabled devices.

On top of that, consumer-facing DRM has become an anachronism, when it comes to music. Every major digital download store (iTunes, Amazon, etc.) now sells unprotected files, while subscription services (Spotify, Rhapsody, MOG, and Slacker) use some degree of DRM — but not the kind that the user encounters. A username and a log-in have replaced DRM, because most music players these days are connected to the internet and can validate a user’s right to play files in real time (or store them safely within an app).

However, Intertrust’s technology appears to be woven into Beyond Oblivion at a fairly deep level; Gee Beyond, in the words of one source, “will have to start from scratch on the clients.” That means it will apparently have to rebuild much of the product for which it just paid $4.2 million (“$2.5 million in cash, $1.5 million in senior secured notes and $200,000 in assumed contract liabilities,” according to Law360) – including an iOS client that had been approved by Apple.

What’s next for Gee Beyond? We’ll keep you posted if we hear anything (please do the same).

(Photo courtesy of NewYorkApartment)