Amnesia was one of 19 applicants to receive AU$250,000 from Telstra last week to create applications to encourage the take-up of broadband. They have also received positive responses from record labels, and have been working with EMI for 18 months, according to Iain McDonald, the managing director of Amnesia.
"It will be out in the next 12 months, but we want it out much soon. Time is the enemy...the stumbling block for us is the industry to supply content," said McDonald. "I have no doubt our technology will be ready."
McDonald compares the problem facing the music industry with that facing cinemas when videocassettes became commercially available, which the cinemas faced by reinventing themselves as a "night-out experience".
"CDs haven't reinvented themselves, companies still put out crappy four-page booklets [in the cover]," McDonald told ZDNet Australia . "Consumers are paying top dollar for not much."
For McDonald, selling music online is all about creating a good experience for the consumer. "People are willing to pay for downloads, but not at the wrong price and for the wrong experience." People who download music will also have access to CD-covers, lyric sheets and loyalty schemes.
The technical solution proposed by Amnesia is two-fold. There is an online component which will manage the rights of the label, but still allow the user to own the music they've purchased and use it how they want without transferring it to their friends. "If people want to download music they want to listen to it on the PC as well as on the stereo," said McDonald.
The user will own a license - stored online - to the music they've purchased, which will allow a limited number of CD burns. However, the technology - a program that will transparently surround the music file - will prevent the song being played on another users' computer. If the owner of the license upgrades their computer they can transfer the licenses to all their songs to the new computer.
McDonald said the record labels were aware that this would not completely stop piracy, but would reduce it to a level similar to that found with music CDs.
The second component to the solution is an offline component, which McDonald claims is the key to the success of the solution, and he won't provide details until the system is patented.
"There is a key thing which will allow people access to the music and payments offline," said McDonald. "This is the vehicle that opens the model to everybody instead of people just discovering stuff online...we're not relying on people going to a Web site."
McDonald said the offline component would be an educational tool, provide something in the hand and look after payment. He points out that credit card payments have been a bad experience for many people online, and that kids - traditionally the most voracious purchasers of music - usually do not have credit cards. The Amnesia solution will have a number of payment mechanisms.
The big benefit for the music companies is a higher availability of their catalogue. "Two percent of music owned by companies is on sale in stores," said McDonald. "The other 98 percent is unavailable to most people."
"This is aiming to address those people who download music through [illegal] systems as their only option," said McDonald.
Amnesia will be working with Creative Digital Technology on the security of the product. "[The transaction] has to be done very securely because when a song is downloaded the artist gets a royalty," said McDonald.
The fundemental flaw is that as soon as this is released there will be someone who figures out how to rip the CDs and put them on the internet. Thus defeating the whole purpose.