A Toll Booth for File Sharers

The world’s largest record company is teaming up with Microsoft Corp. and other companies to try to change the way people use the Internet to buy music, movies and games.

Vivendi Universal’s Universal Music Group, Microsoft and the five other companies are expected to announce today that they are collaborating on technology to ensure payment to copyright holders while letting computer users share digital products, as tens of millions of people do on networks like Kazaa.

Companies from chip makers to discount retailers are eager to figure out how to profit from delivery over the Internet, which is rife with pirates.

File-sharing networks are very good at distributing songs, videos and software for free -- although the networks are frequently used for illegal copying.

They also can distribute digital material wrapped in electronic locks that enable copyright owners to charge users for the contents.

But the dominant brand of electronic lock, which Microsoft provides, has limited capabilities, said Albhy Galuten, senior vice president for advanced technology at Universal Music Group.

“It doesn’t provide any sort of complex or innovative business models, which is why nobody uses it,” he said.

Universal, Microsoft and the other companies -- Japanese telecommunications giant Nippon Telegraph & Telephone Corp., chip maker ARM Holdings, Internet security company VeriSign Inc. and rights-management specialist Macrovision Corp. -- have joined forces in what they call the Content Reference Forum.

The name derives from what the forum aims to do, which is to create a system in which people would share customized links, called “content references,” rather than the music or movie files themselves.

It would work like this, according to forum President Michael Miron:

Clicking on a link would trigger a series of hidden electronic messages that would determine what kind of digital file your PC could be offered, how much you should be asked to pay for the file and how your money would be split among the various participants in the distribution chain.

That approach would enable companies to change prices and other terms on the fly.

For example, Galuten said, a record label could offer an album free to the first 5,000 people who download it, then charge $2 to the next 5,000 people, then $5, and so on.

It also would provide a bridge between incompatible types of software and across international borders with differing distribution rules, said Miron, who is also chief executive of ContentGuard Holdings Inc., a firm that makes rights-management software.

The links could work on existing file-sharing networks. But copyright owners would have to convince users to share and download links instead of actual songs, movies and software programs.

The forum isn’t the only group offering a way to sell goods through file-sharing networks. Woodland Hills-based Altnet Inc., which helps companies sell digital goods through the Kazaa and EDonkey networks, has deals with several video game, software and independent movie and music companies.

On Tuesday, Altnet announced agreements with three independent labels offering selected releases from classic rock and blues artists, including Jethro Tull and Ike Turner.

In other developments in the online music market, Music Choice is expected to announce today a partnership with Santa Clara-based Roxio Inc.’s Napster service to enhance the free online radio service that Music Choice plans to offer next year to cable-modem users.

Through the partnership, people will be able to buy downloadable versions of songs as they play on Music Choice’s channels.