Last week, The Wall Street Journal had a story about Arbitron's People Meter, a new portable device that helps the radio ratings measurement company determine the exact amount of time a user spends listening to particular radio stations. Radio stations insert an inaudible signal that only the device picks up, and testers are supposed to carry the devices at all times, so regardless of where they listen (work, home, car, grocery store), the People Meter knows. This is more accurate than the old way of asking radio listeners to record their habits in a paper diary--users tended not to record every station change or stations they heard inadvertently.
In Philadelphia, one of the first two markets where the People Meter is being used, it's finding that users listen to more radio than was previously thought, switch stations more often, and listen to more classic rock and less urban contemporary. (Although the latter point may be because many younger users aren't carrying the meters as much as Arbitron expected--a problem that's caused the company to offer refunds if it can't meet promised sample sizes.)
Arbitron's also tested the device for use with in-store radio networks such as the InStore Broadcasting Network (in use in more than 12,000 stores nationwide) and Mall Radio Network, and TV and Internet ratings giant Nielsen has similar technology.
Imagine if content owners, working with Arbitron or Nielsen or another enterprising company, could convince digital distributors (like iTunes) to insert watermarks into their songs. Then, these companies could measure every time a user listened to a downloaded song--a computer, an iPod connected to an external source (I'm not sure if it could possibly work with headphones), a file burned to CD and subsequently re-ripped and traded. Instead of relying on DRM, content owners and distributors could allow unfettered trading, create some sort of pooled payment system--a sort of tax on blank CDs and Internet access and music software, for instance--then compensate copyright holders based on actual usage.
The biggest problem: most shared songs are ripped from CDs. And it's too late to insert any sort of watermarks into those CDs. Horse, barn door, open. So any such plan would cover only content distributed through approved downloading services. Then again, Apple has sold more than 3 billion songs through iTunes, so it's not exactly insignificant.
Also, it's in the interest of radio stations to cooperate with Arbitron, as that's how advertising dollars are allocated. In the case of digital music, many of the distributors are actually trying to sell something else--usually the hardware devices or associated software necessary to play the files. (That's certainly the case with Apple and Microsoft, and other device makers, like Nokia, are getting into the act as well.) They don't really care what happens to the files after they're downloaded. So any such push would probably have to come from content owners, who aren't exactly known for promoting cutting-edge digital technology.