M&E Daily

Digimarc CFO: Company Continues to See ‘Large Growth Opportunity’

The bulk of Digimarc’s revenue continues to come from its core business that’s mainly centered around the central banks and its counterfeit deterrence system for much of the world’s currency, but the company continues to see a “large growth opportunity ahead” for its Digimarc Barcode technology, according to CFO Charles Beck.

“The more emerging part of our business is nearing an inflection point” as it targets the world’s largest retailers and brands for Digimarc Barcode, he told the Liolios Gateway Conference in San Francisco Sept. 7.

The company continues to roll out Barcode and raised $18 million in June and $40 million in August 2016 to help that effort, he said.

There is an “abundance of interest in our platform now,” Digimarc CEO Bruce Davis said on an earnings call in July, pointing out at the time that early adopters of Digimarc Barcode included Walmart and Wegmans. The latter retailer reported that 2,100 of its 3,000 private-brand products had been enhanced by Barcode and about 1,400 were on its shelves already, he said.

Traditional UPC barcodes work only on printed objects, but Digimarc Barcode works on printed objects, as well as audio and video, Beck pointed out Sept. 7. The technology will ultimately “improve accuracy and efficiency within the supply chain,” he said, noting that it makes checking out at retail registers faster and easier, especially for self-checkout.

The company’s core business, meanwhile, is still generating profit for Digimarc, he said. Digimarc has been working with the central banks for about 18 years, there are eight years left on that contract, and “they have a five-year option” on the contract, he said. Most of the world’s currency is enabled with Digimarc currency and that business accounts for about 65% of its revenue, he said.

Digimarc technology has also already been used for audience measurement, including TV, radio and movies, he said. But the company is “consolidating all of that work into a licensable software and services platform,” he said.

Surprisingly not mentioned by Beck was a new partnership announced Sept. 7 by Digimarc and publishing solution provider Erudition Digital under which the companies said they’re developing a new anti-piracy solution for e-books. The new solution combines Digimarc Barcode for Digital Documents and Custos for eBooks products, and “leverages Bitcoin and the blockchain to provide a more effective, reader-friendly approach to combatting” e-book piracy, the companies said in a news release.

Global e-book piracy is a “major challenge for publishers, and many of the anti-piracy solutions in the marketplace suffer from drawbacks,” the companies said. Hard Digital Rights Management (DRM) solutions, for example, can be removed and restrict access, inconveniencing legitimate users, the companies noted. Traditional watermarking “doesn’t impact honest users, but is limited because it relies on infringements being detected to be effective,” they said.

Based on a patented technology used to protect screener copies of movies, Custos for eBooks delivers better protection minus the “usability pitfalls of widely used measures,” the companies said. It works by adding “imperceptible Bitcoin bounties” in e-book files using Digimarc Barcode, they said.

“The Custos approach is revolutionary in that it attacks the economy of piracy by targeting uploaders rather than downloaders, turning downloaders into an early detection network,” the companies said, adding: “The result is pirates turn on one another, sowing seeds of distrust amongst their communities. As a result, the Custos system is capable of penetrating hard-to-reach places such as the dark web, peer-to-peer networks and even email.”