Sell content to consumers in the P2P marketplace - first by digital watermarking and DRM, then through uploader incentives and user participation programs.
Implement and build-out the new business model in three phases:
- Phase 1: Combine file-fingerprinting with DRM for label-seeded and consumer-originated copyrighted music in P2P.
- Phase 2: Provide incentives to high-volume file-sharers to convert legacy music collections and become licensed redistributors.
- Phase 3: Introduce user-friendly software system to permit consumers to register and monetize original musical works.
Introduce file-fingerprinting system to apply DRM to copyrighted music in P2P distribution regardless of its points of origin.
Implementation and build-out:
- Establish watermarking technologies - fingerprints applied in post-production to ID same recordings of songs whether seeded or ripped into P2P.
- Agree upon ID-reading / DRM-applying software and hardware solutions.
- Contract P2P software companies and/or broadband ISPs to deploy systems and serve as online P2P music resellers.
- Unregistered music files continue to be redistributed in P2P as currently.
Target results at approximately 400 million paid downloads per month representing two-thirds of major music file-sharing activity with a fifty percent conversion rate yielding monthly revenue approaching $320 million.
Prepare for phase 2 - uploader redistribution incentives:
- Develop file-replacement / DRM-application consumer technology.
- Define economics for pre-existing music file conversion program.
- Prepare turnkey file-sharing distributor's kit and communications.
Incentivize active file-sharers with revenue-sharing program for upgrading and applying DRM to music files they redistribute.
Implementation and build-out:
- Promote incentive program to heavy uploaders in advance of deployment.
- Deploy consumer-level pre-existing music file removal/replacement and DRM-application software.
- Develop micro-distributor channel with marketing support programs for most productive cyber-DJs and file-sharing mixologists.
Project total P2P music sales growth to approximately 600 million licensed downloads per month including continued expansion and improved efficiency of label-seeded and consumer-originated new release files and monthly revenue of $420 million.
Ubiquitously deploy ID/DRM system to protect consumer-produced as well as professional copyrighted musical works.
Implementation and build-out:
Develop technologies to permit consumers to insert file-fingerprints and register their own recorded musical works for P2P distribution.
Define economics for consumers to become self-publishers and self-distributors of such original music.
Roll-out program broadly to consumers and closely monitor adoption rate.
After full marketplace acceptance, evaluate TBD methods for potentially filtering unknown music files in manner acceptable to all affected parties.
Target 2.25 billion downloads of copyrighted DRM encrypted files per month at average effective price of $.40 per track with sales revenue ultimately ramping to $900 million per month. Online music sales will grow to outperform traditional music sales.
Without the broken market, the industry would normally be expected to grow in line with GDP (2.7% per year).
If the music Industry does not embrace the new online distribution model, it will likely continue to see an erosion of sales (forecast to be -2.1% CAGR over 4 years).
In the short-term, P2P sales of watermarked / DRM-protected copyrighted music combined with non-P2P online sales create a revenue stream for music labels and publishers to more than offset this potential decline.
The advent of licensed uploader content redistribution will dramatically increase the total revenue generated from P2P music distribution.
The new business model will yield market expansion greater than the traditional model - growing at nearly 10% CAGR over 4 years.
The introduction of watermarking/registration and consumer-applied DRM for original amateur music will complete the commercial development of P2P music distribution.
Traditional sales will never fully disappear because many will prefer not to interface with a computer or will want to buy special edition releases.
Overcoming Political Gating Factors
Commercial players to agree to and convey support for business model.
Considered legislative actions need to be consolidated and focused upon solutions.
RIAA members need to stop discrediting P2P and engage in substantive discussion.
Overcoming Trade Gating Factors
Labels, publishers, ISPs, and P2Ps to establish cohesive industry view.
Establish technical path for watermarking and DRM applications.
Develop technologies to securely bring these to consumer level in stages.
Continue successful user interfaces at application level as consumer role grows to micro-distribution and publishing of DRM-protected work.
Overcoming Revenue Growth Gating Factors
Lack of integrated watermark-reading / DRM-applying / instant micro-payment charging system is key impediment to growth.
P2P software companies must ultimately support a contiguous DRM solution.
Music companies and ISPs must support implementation of new industry model.
RIAA consumer education - to coordinate with phased roll-out of model.
Labels need improved digital production and marketing techniques.
The DCIA is a consensus-based non-profit trade association established in July 2003 to address the wide range of vital issues affecting the ability of content creators and rights holders, software providers, technology and telecommunications companies, and other stakeholders to create commercial business opportunities using distributed computing technologies such as P2P file-sharing software applications.
The DCIA works to:
- Establish business practices to commercialize distributed computing, including file-sharing P2P software applications, while protecting the interests of stakeholders. DCIA potentially will also mediate the creation of technical standards.
- Encourage the voluntary adoption of such practices and related codes of ethics in affected industry segments.
- Provide information to shape public policy and promote consumer awareness of key issues affecting distributed computing.
- Where deemed necessary by its Membership, the DCIA will pursue legislation that will establish enabling mechanisms for agreed-upon standards-and-practices and/or oppose proposed legislation that its Membership believes would impede legitimate commercial development of distributed computing.
Human history has shown that while technological change often seems disruptive, painful, and chaotic at first, it is not only inevitable, but also beneficial and constructive for the advancement of civilization.
Innovation is essential to the continued growth and progress of any society, and once the floodgates of such a widely accepted change as P2P have been opened, there can be no going back to the way things once were.
In this case, consumer acceptance has outstripped the ability of both the technology, which is still in its earliest stages, and related industry practices, as a result of their current lack of responsive business models, to profitably accommodate such widespread activity.
An urgent response is needed to create solutions frameworks for industries with vital interests in whether, and how, P2P succeeds commercially.
It should be abundantly clear to all parties that, metaphorically speaking, the tide of change has burst through the retaining wall of past industry practices, and the flood of distributed computing is upon us.
The onset of this new industry has already begun -- it is the harnessing and refining of it that we must examine and seek to influence today.
The mission of the DCIA is to support the realization of the full potential of distributed computing while protecting consumer, business, and intellectual property rights; ensuring interoperability; and maintaining the highest standards of security, availability, and quality of service.
The discussion that the DCIA is leading now revolves around the issues of how to best guide, shape and channel the flow of ideas and proposed actions to the benefit of all affected constituencies, from business communities to the public at large. With change can come growth, and with growth, new opportunities.
We believe that positive outcomes can be better achieved through collaboration than through confrontation, and that it is in everyone's interest to gauge the current situation constructively and to contribute actively towards mutually beneficial solutions.
The DCIA was created in response to the opportunities and challenges posed by the continuing evolution of file sharing into a unique means of sharing ideas and opinions, creative works, and even computing power. We recognize that no single industry sector alone can resolve the issues raised by P2P - or harness its full potential - but believe that by working together in a balanced and structured manner involving all relevant business interests, real progress can indeed be made.
Our goals are to map a route through changes in attitudes, business practices and consumer behavior to reach firmer ground where the enormous value and potential offered by P2P can reward commercial as well as consumer interests, and foster the acceptance of solutions that are both sustainable and profitable to all parties.
DCIA's initial focus has been to collaborate with P2P software companies, music labels and publishers, and telco- and cable-owned broadband ISPs, to devise and discuss alternative models to monetize any consumer behavior that currently does not reward creation or respect intellectual property -- specifically with respect to copyrighted works of the music industry. Our intent has been to spur the development of constructive business alternatives and to support a process for adoption and implementation of the most promising of them.
The three (3) alternative P2P music distribution business models signal a start of that process. The collaborative approach taken in creating these models has presented an opportunity for major stakeholders to think creatively and participate actively in our ongoing efforts.
These are not meant to be end-all and be-all proposals, but rather are intended to serve as launching pads for further cooperation. Each is presented in the spirit of encouraging open-and-honest dialogue, and hopefully, will be taken as such.
DCIA's objective is to provide qualified proposals from multiple sources with an open-and-honest hearing, to shape options, and to help principals decide upon one or more optimal business models to implement as expeditiously as possible.
DCIA plans to fulfill the role of the honest broker in facilitating constructive solution-focused discussions among music labels and publishers, telcos and broadband ISPs, P2P software companies, and relevant technology suppliers.
The DCIA's organizational structure centers around its three Membership divisions: the DCIA Platform Group - for communications and computing hardware companies; the DCIA Operations Group - for distributed computing software and related applications providers; and the DCIA Content Group - for media content creators and rights holding companies. DCIA's charter calls for each Group to contribute equally to DCIA's budget and to retain equal voting rights.
Groups are empowered to structure and elect their own Governing Boards in a manner most appropriate to Group needs. Association resource allocations for policy, public relations, research, and working group efforts are to be agreed upon by the Executive Committee, which has Membership representation of two Board delegates from each Group.
Member Voting Rights
The DCIA's Membership structure is based on a bicameral system of governance, allowing all of its Members to participate as fully as possible in the organization. Member responsibilities include: recommending DCIA policies, positions, and priorities; participating in meetings and working groups; recommending conference agendas; and suggesting projects.
Each Group (Platform, Operations, and Content) is represented by two Members it elects to serve on DCIA's Board of Directors. The Executive Committee is comprised of the Board of Directors and the DCIA CEO who serves as Chairman. The Executive Committee sets the positions and policies of the organization and provides primary governance, including in the following areas: driving strategic direction of the DCIA, approving budgets and staff appointments, setting conference and meeting agendas, assigning projects and working groups, adopting standards-and-practices recommendations, approving special initiatives and calls for raising funds.
Involvement Drives Results
The surest way to influence change is to participate actively. The DCIA urges you to accept our invitation and join our Membership. Market segments working in isolation lack the ability to cooperate with other stakeholders, and will inevitably conceive of solutions that fail to take critical perspectives into account. It is only when disparate interests come together that profound and comprehensive changes can be wrought. The DCIA is not an exclusionary organization. Quite the contrary - we welcome every concerned party to join with us and become a force for reconciliation, collaboration, and progress. Working together, we will develop, implement and achieve long-term solutions that serve the needs of all parties.