Content identification technologies -- watermarking and fingerprinting -- continued their steady increases in adoption during 2008.  Fingerprinting took steps toward being ensconced in legal frameworks for policing copyright infringement; watermarking technologies had less market impact but appeared to be positioned for more growth in the coming year.

Several court cases in the US and Europe resulted in opinions that could institutionalize fingerprinting (or watermarking) as approved or even required methods of policing network services for copyright infringement.  We covered most of these in our year-end review of legal developments; it remains to mention that the "800 pound gorilla" in this area is Viacom's litigation against Google (YouTube), which is still in discovery phase. 

Text fingerprinting also achieved more momentum in 2008.  The leading vendor in the space, Attributor, ventured beyond its base of news wire services such as AP and Reuters to consumer publishers by signing Conde Nast as a customer early in the year.  Then in September, another vendor entered the text fingerprinting market: iCopyright, a service that provides rights licensing and fulfillment services for online text content.  iCopyright's new Discovery service complements the company's core services by seeking out potentially illegal uses of customers' content as well as offering licenses to it.  (The other important vendor in text fingerprinting is Advestigo of France, which claims the French wire service AFP as a customer.)

Fingerprinting also found new applications beyond infringement detection.  These included "name that tune" music recognition for the iPhone (Shazam) and an application called TuneUp that fills in missing or incorrect metadata for users' iTunes libraries. 

But the most interesting was the growth of fingerprinting as an engine for contextual advertising on user-generated content networks.  This application was pioneered by imeem for music in 2007.  This past November, the fingerprinting vendor Auditude reinvented itself as a contextual ad platform for video by signing deals with MTV and MySpace.  The way this application works, when users upload content to these networks, the fingerprinting engine identifies the content and causes a contextual ad to be served up alongside it.  We believe that this application will be huge and that Auditude was prescient in positioning itself here instead of trying to compete in the overcrowded copyright filtering space -- where Vobile and Audible Magic appear to be the frontrunners anyway.

As far as watermarking is concerned, the landmark development in the field was the Digital Media Manager service that Digimarc and Nielsen launched in 2007.  We didn't hear much about this service this past year other than that some trials are going on. 

The small video watermarking vendor USA Video Interactive finally announced a deal with a major studio, Fox Home Video.  Medialive of France released technology that cleverly combines video watermarking with DRM and announced a customer for it in the in-flight entertainment market this past month.

Apart from that, the watermarking industry laid important groundwork for future adoption by working with the advocacy group Center for Democracy and Technology (CDT) on a white paper that establishes guidelines for preserving user privacy in watermarking.  This should help to head off negative publicity particularly for so-called transactional watermarking applications, in which the identities of individual downloaders (or their devices) are embedded in content as watermarks at download time.  CDT did similar work on DRM in 2006.

Finally, the content identification industry underwent many structural changes in 2008: imeem acquired the fingerprinting-based digital music commerce platform Snocap in February; Sony acquired the audio fingerprinting and music metadata database provider Gracenote in April; and Philips spun out its content identification unit -- including MediaHedge video fingerprinting and Teletrax broadcast monitoring -- as the independent company Civolution in October.