The Content Reference Group, led by Microsoft and Universal Music Group, is touting a smart DRM solution, using what they call a reference file, an intentionally nebulous term. I assume it's a Windows Media Player file type. When opened in the Windows Media Player, the file starts a process that determines how and where the associated content will be used, charges the appropriate amount, and delivers the file in the proper format.

This design works well for the web, email, IM, and podcasting where format incompatibility can be an issue. It's a lot easier to send one small reference files, then to worry about recipient formats and multiple files in different format.

The reference file however does not work for P2P for multiple reasons.

1. P2P users aren't concerned with incompatible formats. P2P already has a de facto standard in open media formats like MP3.

2. P2P uses Distributed computing to deliver the whole file. A reference file kicks off a server download that doesn't use P2P.

3. P2P users are suspicious of files that don't look authentic. Suspicious files are ones that are not the expected full file size and that are not open format, like the reference file.

4. The strength of P2P is also its weakness. Small files are regularly spoofed by advertisers and others. Reference files will similarly be faked, diluting their usefulness.

Secured files like those distributed by Altnet, Weed, Intent Mediaworks, and others are appropriate DRM for P2P and its users. Reference files are not.

The Content Reference Group has a significant challenge to get widespread P2P adoption. It will need to provide an incentive to P2P software developers who can educate users, promote the files, and highlight them in the software.

From the article:

The group is hoping to make online content distribution more flexible and help break down barriers between incompatible formats and copy-protection technologies. Currently, people who send files through file-trading networks, or via e-mail or instant messaging, are largely locked in to sending a specific file that may not be readable by people who lack the appropriate software or hardware.

Most entertainment content sold online is encoded in proprietary formats and wrapped in anticopying technologies such as Microsoft's Windows Media or Apple Computer's FairPlay. That means that someone who wants to share a Windows Media-encoded song purchased through Napster's online song store can't share it with someone who wants to buy it and play it on an Apple iPod, for example.

Under the new technology, people would share the "Content Reference" file instead, which would point them to authorized versions of the content that would automatically fit whatever device or computer software the recipient is using.