System and method for controlling distribution of digital copyrighted material using a multi-level marketing model

A method for tracking marketers of a digital product comprising the steps of:

• updating history data stored within a watermark associated with a digital product every time the digital product is transferred, wherein the history data includes data associated with individuals who have transferred the digital product to another individual;
• accessing the history data;
• transacting a sale of the digital product;
• and
• rewarding the individuals who have transferred the digital product to another individual for effecting a sale of the digital product.

A vendor server for tracking marketers of a digital product, said vendor server comprising a processor executing computer code for performing functions including:

• storing user data associated with a plurality of registered users, wherein said user data includes a user identification code (userID) and payment information corresponding to each registered user of the plurality of registered users;
• receiving watermark history data associated with a product, the watermark history data including the userID corresponding to registered users who have transferred a file associated with the product for marketing the product;
• transacting a purchase of the product by a user;
• and
• updating payment information corresponding to the registered users who have transferred the file.

A consumer server for tracking marketers of a digital product, said consumer server comprising a processor executing computer code for performing functions including:

• receiving a data packet associated with a digital product marketed by a user of another processor, wherein the data packet includes a watermark storing history data including identification for each user that transferred the data packet to another user and a product content file;
• transmitting the history data;
• transacting a purchase of the digital product;
• and
• receiving decryption data for decrypting the product content file.