Distributed Computing Industry
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Virus Alert

Draft AG Letter

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Data Bank

Techno Features


March 22, 2004
Volume 4, Issue 1

Welcome CinemaNow and RazorPop

Please warmly welcome CinemaNow and RazorPop to the Content and Operations Groups, respectively. We look forward to providing valuable services to these newest DCIA Members and supporting their contributions to commercial development of the distributed computing industry.

CinemaNow, Inc. was founded in 1999 and its investors include Lions Gate Entertainment, Microsoft, and Blockbuster. The company is located in Marina del Rey, CA. According to CEO Curt Marvis, "CinemaNow holds the Internet distribution rights to the most extensive and comprehensive library of feature films available on-demand via the public Internet and private broadband networks."

The CinemaNow film library contains over 4,200 feature length films, shorts, music concerts, and television programs from more than 150 licensors including 20th Century Fox, Disney, MGM, Miramax, Warner Bros., Lions Gate Entertainment, Lot 47 Films, Vanguard Cinema and Visionbox Media.

The company's pay-per-view system offers films for a limited rental period at a variety of price points, download-to-own (also known as digital sell-through) allows users to download a permanent copy of a digital file for unlimited playback on that device, and the subscription service provides users with an unlimited number of viewings of select titles for a single monthly or yearly fee.

CinemaNow uses PatchBay, a proprietary content-on-demand distribution and digital rights management system. PatchBay allows for the managing, tracking, and syndication of content while protecting intellectual property rights, enforcing territorial restrictions, administering business rules, maximizing advertising revenue, and generating comprehensive reports. Current PatchBay licensees include Walker Asia and Chunghwa Telecom (film distribution), NHL.com (sports programming), Phish (musical group), and Arescom (hotel broadband provider).

RazorPop, Inc. is an Internet marketing, technology, and entertainment company. RazorPop develops innovative software and related service offerings for digital entertainment consumers and businesses that want to reach them. RazorPop, based in Dallas, TX , was founded in January 2001 and recently announced the release of its TrustyFiles 2.1 peer-to-peer (P2P) file-sharing software.

CEO Marc Freedman noted, "TrustyFiles is already known for two things. First is superior speed and results. Second is no spyware. With TrustyFiles 2.1 we add a third key feature that takes file-sharing software to the next level with multiple network access, including the FastTrack network used by Kazaa and Grokster."

"We architected TrustyFiles for end-to-end performance. We developed it internally. The multi-network engine core is totally ours, totally Windows, and totally tuned for our users' computer environment. That's why TrustyFiles speed and results are superior."

Three modes of operation are available to TrustyFiles' users: Personal File Sharing for exchanging files with a defined user group, Private File Sharing to protect confidential files, and Public File Sharing to search for hundreds of millions of files among TrustyFiles, Kazaa, Grokster, eDonkey, Overnet, iMesh, Morpheus, Limewire, Bearshare, Shareaza, and other FastTrack and Gnutella network users.

TrustyFiles is a small 1.2MB total download. Its security features include a blocklist to protect from invasive users and virus scanning. Other features include global search results, multisource downloading, partial file downloading, multiple sharing directories, file compression, and TrustyLink, Gnutella Magnet link, and Kazaa Sig2Dat link support and generation. For advanced users, options menus enable full customization of display, operations, network settings, blocklists, and graphic styles.

Report from CEO Marty Lafferty

While consumer lawsuits have drawn attention to the music copyright infringement issue and created an enforcement "stick," what's still missing is a truly effective "carrot."

What is the desired consumer behavior to replace unlicensed music file sharing? Empirical data suggests that trying to drive consumers away from peer-to-peer (P2P) usage to centralized-server online music stores will have very limited impact. What is needed is a universal solution for licensed P2P music offerings.  

While our forming industry still needs to do better with the difficult work of education surrounding copyright infringement, above all we need to be able to direct consumers to the legitimate uses of P2P to sample, purchase, and redistribute music by authorized means.

It is essential, in this context, to note that there has been unauthorized copying of copyrighted works for as long as there has been a means of doing so.  No solution will entirely stop this, and the amount of alleged infringement that takes place through the internet by any means, websites or P2P, is largely unknown.  It is even more unknown that if unauthorized internet copying were stopped, how much would just switch to another form.

However, without the "carrot" of a legitimate way to distribute major label music via P2P, the "stick" of punishment for doing it the wrong way is only a half-measure at best.

Accepting infringement of copyrighted recordings online is no more tolerable than allowing shoplifting or vandalism in retail stores. When people routinely break the law, our social fabric is torn apart, which unfortunately is what has happened to the music business.

But to dramatically change the tone and direction of this conflict, it is not enough to be honest brokers of information; industry participants on both the content and technology side also need to be responsive and innovative marketers, who embrace the new topology of the Internet and provide music to consumers legitimately in the way that they demand.

The best way to take the perception off the table that leaders of the music industry are digitally challenged is to find the way to license Kazaa, Grokster, TrustyFiles, and other P2P software suppliers as retail music resellers. Companies like Altnet and INTENT MediaWorks are ready with modular turnkey solutions.

Progressive independents like BlueMaze Entertainment are beginning to set examples for others. Analysts would overwhelmingly welcome viable commercial solutions whereby the major labels began making money from P2P.

Absent that, the idea of the paid digital download, having celebrated its first birthday, will not grow much further than a fractional niche offering against the growing enormity of P2P traffic.

Without accepting the reality of distributed computing and its implications for the future of digital media distribution to the masses, the music industry will not be offering consumers the music they want, in the formats they want, where they want it, when they want it, and at prices they can afford.

More viable business models for online retailing are needed, the single most important being P2P, with its huge and growing installed base of active users. And we have to put those business models to work starting with market trials and then ramp up to full-scale implementation.

Even with more than 80 centralized music downloading services now licensed, in their totality, these are getting less than one percent of the music traffic of P2P, which continues to expand.

The answer is not to slash prices at the centralized stores; it is to provide real value in sync with the capabilities of P2P technology. Unbundling CDs to sell individual tracks. Rebundling tracks into innovative mixes and compilations. Authorizing usage options from single-device-single-plays to unlimited portability. 

Attractively pricing all of these alternatives to also reflect such metrics as popularity and stage in product life-cycle - from micro-payments of a few cents to many dollars. DRM technology firms and payment services companies like Digital Containers and Clickshare can make this happen.

A significant new business can begin to be built almost immediately, with major music labels serving as content suppliers and P2P software firms as retail resellers using existing P2P digital rights management (DRM) solutions that work today. All that's missing is for the major labels to license their content.  

There will always be hackers, and software piracy that poses all sorts of problems, but in partnership with the most advanced technology companies, including P2P software suppliers and technology services firms like Seamless P2P, the music industry will be in a much better position to address these issues than if it remains at odds with them.

There will always be kids who would love a world where music and movies and games could be downloaded for nothing. But there can also be kids who will be excited by the opportunity to earn income in a new profession as "Cyber DJs or Mixologists or Tastemakers," introducing a whole new category of micro-distributors using P2P software to redistribute licensed music, taking advantage of services such as those of Shared Media Licensing.

The center of gravity in the distributed computing industry at the end of the day is the content creators - the people who write and perform the music. The balance of value has been allowed to swing too far for too long to consumers whose early adoption of P2P caught all sectors of our young industry off guard. Now we need to come together to bring that back into balance.

The music business can be great again with leadership and vision - and harnessing P2P will be an essential part of that.

DCIA at Digital Hollywood and GEMS

Entertainment transformation and convergence will be in full swing at the Digital Hollywood Spring Conference, March 29-31 at Loews Santa Monica Beach Hotel in Los Angeles , CA. "Transforming the Entertainment Industry" promises to be a passport to the future of the entertainment, technology, media and advertising industries.

Digital Hollywood is a three-day event with over 280 industry-leading speakers. Its extensive agenda for the Spring 2004 event for the first time features multiple sessions focusing on peer-to-peer (P2P) distribution and DRM solutions for music, video, games, and software.


Featured speakers include Christian von Burkleo, SVP of Altnet; Chip Venters, CEO of Digital Containers; Les Ottolenghi, Founding Partner of INTENT MediaWorks; Luke Rippy, CEO of Seamless P2P; and Gabe Zichermann, VP of Trymedia Systems. DCIA CEO Marty Lafferty will moderate.  

While the debate over legal issues in music and movie distribution of content continues, the distributed computing industry is making strides in taking its technologies into the mainstream.

With many evolving solutions on the way from paid-for-pass-along along with various DRM solutions and advertiser based options - and now an active trade association to enhance the solutions in the marketplace. In this session we go beyond the legal issues into the practical applications of P2P in the marketplace.

Then in New York City , April 3-4, join us at the Global Entertainment and Media Summit. The music, film, video, and media worlds come together to address new opportunities for creative control.

This year's event features more than 40 seminars, workshops, clinics, and keynotes presented by industry leaders, including sessions focused on helping content providers harness the power of P2P for secure and profitable distribution of their copyrighted works.

The DCIA will be presenting a keynote presentation and hosting a GEMS exhibit booth for DCIA Members . More details to come in next week's DCINFO.

Creative Commons at South by Southwest

Music License

A non-profit group focused on increasing the amount of downloadable free-to-use digital media, announced in Austin, TX last week the launch of a new music sharing license and related search engine. Creative Commons made the announcement at the South by Southwest music exposition.

The music sharing license enables musicians to protect their commercial and other rights while making their songs legitimately available to download and share.

Works protected with the Creative Commons music sharing license will then also be indexed in the organization's new "Get Content" search engine. In addition to music, the "Get Content" index also includes other genres of content whose owners have authorized their works for sharing and, at their option, also to be used in new commercial works and/or made into derivative works.

Copyright 2007 Distributed Computing Industry Association
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