Method to manage protected file transfers between portable media devices

A method of using a computer to ensure appropriate royalty payments to Copyright Owners when DRM files are transferred between portable media devices, the method comprising the steps of:

• (a) providing at least two i2i devices, including at least one source i2i device and a target i2i device, the source i2i device having a file transfer counting mechanism for monitoring and disabling the transfer of digital files between portable digital media devices, and further including hardware for providing a secure Internet interface capable of connecting the source device to a Credit Vendor server via a network-connected computer, thus facilitating the purchase and storage of credits for authorizing a specific number of DRM file transfers, as well as monitoring and updating of the file transfer counter;
• (b) prepaying by the Credit Vendor to a DRM File Source Company to obtain virtual credits for transferring DRM files;
• (c) connecting the source i2i device to the Credit Vendor server via a global computer network, such as the Internet, and effecting a purchase and download of one or more of the virtual credits, which then authorize and enable the transfer of content between the source i2i device and a target i2i device without the use of a standard computer system;
• (c) effecting payment from the Credit Vendor to the DRM File Source Company for the virtual credits downloaded to the source i2i device;
• and
• (d) at will transferring a file from the source i2i device to a target i2i device.