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November 17, 2003
Volume 2, Issue 7

DCIA Members in the News

Altnet Patent Enforcement

DCIA Charter Member Sharman Networks, Ltd. (SNL) this week announced an international advertising campaign targeting UK , US, and Australian consumers and urging content rights holders to distribute their copyrighted works through KaZaA.

The campaign is a call-to-action for peer-to-peer software users to communicate that they are willing to pay a fair price for movies, music, and games; and is also intended to inform entertainment companies that they are missing a huge opportunity by not serving file-sharing communities.

CEO Nikki Hemming said, "It's mobilizing a grassroots force we believe is already there, to get them to write to the industry, to politicians, to each other. I imagine that if we add 60 million voices to my one voice, then we really will pump up the volume."

SNL's "JOIN THE REVOLUTION" campaign will be executed in print media and on college campuses. A new version of KaZaA Media Desktop (KMD) is launching in conjunction with the ad campaign. The DCIA supports SNL's message and urges major content rights holders to license their content for P2P distribution.

Report from CEO Marty Lafferty

A curious thing happened this week as a result of separate meetings in different cities with a software developer and an independent music label.

Without prior interaction, these two parties contributed the same new idea for countering music copyright infringement.

I look forward to giving credit to the originators of such fresh out-of-the-box thinking as soon as we can publicize their participation.

One firm focused on the behavior of "fans" and the other on the behavior of "files," but both ended up at the same place.

First "fans." The music file-sharing universe is populated by three "types." Those who are: 1) genetically predisposed to make-and-share play-lists, who pre-P2P would create party and drive mixes for their friends, who are now "Cyber-DJs;" 2) eager recipients who enjoy the output of the first group, who are now "Active P2P Listeners;" and 3) disinterested audiences, who are now the "PC-Music Oblivious."

The fan focus of the new idea is on enlisting "Cyber-DJs" by serving their unmet needs in a rapid conversion of P2P into an authorized music environment.

Next "files." P2P is predominated with consumer-originated unauthorized music files. There is also a smaller amount of rights-holder-seeded content protected by digital rights management (DRM) technology which enables licenses and payment requirements to be transported along with files from user-to-user. 

The file focus of the new idea is on equipping heavy uploaders with a means for applying such DRM to registered copyrighted works in their shared folders prior to redistributing them.

What unmet needs do "Cyber-DJs" have? They need to be legitimized and empowered. They need the means to authorize their existing music collections; they need the means to acquire, mix, and share new music; and they need the means to earn recognition and reward for the added value they provide.

At least one software company has developed a "File Fixer" software program that "Cyber-DJs" could download to use in conjunction with their shared folders that would apply the same DRM as the labels themselves use to protect copyrighted music tracks.

At least one music label has developed a "Music Miles" incentive program that could give productive "Cyber-DJs" -- based on the relative popularity of their play-lists of "File-Fixed" content -- access to new music, publicity, and cash for serving as a new category of micro-distributors.

If this new idea sounds familiar, that's probably because it's reminiscent of the existing and very promising Altnet "Peer Points" consumer incentive program now fully integrated with the latest version of KaZaA. "Peer Points" rewards consumers for storing and sharing licensed content. In fact, this new idea could be one of several future extensions of Altnet's "Peer Points" program.

Ultimately, "Cyber-DJs" could become an exciting new and glamorous profession, with sponsorships, including from brick-and-mortar as well as online music retailers, providing coupons and other cross-promotional elements, bringing "Cyber-DJs" fully into mainstream music distribution.

Follow-Up on 11/3 DCINFO FAQ

In an effort to provide additional information for participants in the development of the second-of-three alternative business models focused on commercial distribution on music using P2P technologies, we want to provide more data regarding the roles of those who need to be involved in executing various elements of the actions outlined in "frequently asked questions" covered in the 11/3 issue of DCINFO.

For background, these represent issues raised during our ongoing private meetings with leaders of the music industry focusing on detailed discussion of the 10/8 business model, and these answers track with that model.

Phases 1 & 2

Who will be responsible for digital rights management (DRM) of files distributed in P2P? The selection and implementation of the DRM technology generally rests with the content rights holder working in conjunction with the P2P software companies. Typically, the content rights holder will set the terms and conditions for licensing, and work with the P2P software companies to ensure that management of its copyrighted material complies with such terms. The DCIA can serve a role here in establishing and monitoring general performance standards, without endorsing particular companies or methods.

Who will be responsible for giving P2P search results priority treatment to licensed files? This is generally accomplished by a wholesaler who acts as an intermediary between the content rights holder and the P2P software company subject to terms and conditions negotiated on a case-by-case basis. The DCIA can serve in a limited mediator capacity to support the commercial success of this approach.

How will unauthorized material be "displaced?" Who will be responsible for its displacement? This is a function of a critical mass of content rights holders and P2P software companies distributing a large enough quantity of licensed content to effectively displace unknown content or content of unknown quality, which will render its access inconvenient, eventually displacing it altogether. Multiple parties working in coordination will bear this responsibility.

Who will be responsible for incentivizing P2P users to share only licensed content? This can best be accomplished with content rights holders, wholesalers, and P2P software companies each contributing to inventive programs for rewarding consumers to share exclusively licensed content. The DCIA can contribute to the success of this by identifying and promoting best industry practices.

Who will be responsible for maintaining P2P traffic during conversion to a commercially authorized distribution environment? Again, multiple parties, including content rights holders, wholesalers, and P2P software companies, will bear responsibility for accomplishing this by means of a balanced approach combining attractive consumer offers with the introduction of monitoring and related control mechanisms.

Phase 3

How will the payment gateway be structured? Who will be responsible for ensuring that content providers are rewarded for every instance of upload or download? For this to be effective, it needs to be accomplished at the ISP level on a universal basis, using file identification technology to monitor registered copyrighted content distributed via P2P regardless of which P2P software application is being used. The development of this identifying technology will need to incorporate a mechanism that enables registrations and the recognition of files as they pass through the 'turn-style.' Router manufacturers and software development firms will likely take responsibility for providing turnkey solutions to ISPs. The DCIA can help by establishing industry standards and seeking any necessary legislative support to ensure its efficacy.

Who will be responsible for determining pricing, packaging, and promotion of licensed content with this proposed P2P model? As reflected in current DRM models, content rights holders will retain ultimate control of this aspect, either by means of a statutory rate or by implementing marketing communications programs working with the ISPs to ensure that their billing systems support the required variable pricing. The DCIA can assist by soliciting any necessary legislative support for this.

Who will be responsible for protecting consumer privacy? This will be the responsibility of the ISPs and possibly outsourced billing services suppliers using billing solutions similar to pay-per-view (PPV) and video-on-demand (VOD) delivery of movies via cable and satellite that track and bill consumers for specific movie titles. The DCIA can support this by engaging with consumer advocacy groups to understand their concerns and help ensure that these are addressed in industry adopted solutions.

Who will be responsible for ensuring that this proposed system is "bullet-proofed" in such a way that consumers can't get around it? This will be the responsibility of the ISPs and their technology suppliers, which will need to adapt sufficiently robust solutions that anticipate actions by hackers and plan counter-maneuvers to protect these new revenue streams. The DCIA can support this aspect, again by seeking any necessary legislative support.

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