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October 4, 2004
Volume 6, Issue 5

Bands Play for Online File Sharing

By Kim Reinstadler in the Grand Rapids Press

Music that rocks can shrivel and die if there is no way to share it. Fifteen Michigan and Ohio bands are lined up to perform this Saturday October 9th in a groundbreaking peer-to-peer (P2P) benefit concert.

Kris Sosa, a guitarist with pop-punk group Sweet Something Else, says that as a musician, he understands both sides of file sharing. "Producing our CD was a ton of work," Sosa said. "I'd be mad if someone stole it and sold it to make money for themselves.”

"But there's another side to file sharing," he said. "It's about the only way that an independent band can get national exposure. This promotion is essential to groups that aren't signed by a major record label."

Sosa said the band developed the beginnings of a worldwide following, selling their CD, stickers and T-shirts to fans on both US coasts and in Europe. Without P2P file sharing, Sweet Something Else would have remained unknown outside of West Michigan, Sosa said.

He supports Downhill Battle's position that the RIAA has created an environment that stifles diversity of musical expression by allowing major labels to pay radio stations to play their songs.

The practice is illegal, but the organization contends the practice continues through third-party independent promoters.

Pay-for-play radio makes it next to impossible for independent labels to get mainstream air time.

The result, Sosa says, is that some of the most creative music being recorded is being marginalized by a monopoly on distribution.

"File sharing helps level the playing field between bands that have recording contracts and those who don't," Sosa said.

Report from CEO Marty Lafferty

We heartily congratulate Digital Hollywood Founder & Director Victor Harwood for a very successful Fall Conference with more than 2,000 attendees and several exciting new programs and special events of specific relevance to our industry.

Newest DCIA Member Indie911 Founder Justin Goldberg spoke on the "P2P – Voice of Artists and Content Creators” panel and DCIA Member P2P Cash CEO Tom Meredith was in attendance throughout the three-day event.

Special thanks to "Next Generation P2P” panelists Mark Ishikawa, CEO of BayTSP; Jim Flynn, CEO of Artio Systems; and Ted Cohen, SVP, D3 – Digital Development & Distribution at EMI Recorded Music; who joined DCIA Members Les Ottolenghi, President of INTENT MediaWorks; Chip Venters, CEO of Digital Containers; and Gabe Zichermann, VP of Trymedia Systems to discuss industry development.

Please click here for coverage of the companion panel featuring DCIA Charter Member Altnet President Lee Jaffe, Music Reports CEO Ron Gertz, StreamCast Networks President & CEO Mike Weiss, Microsoft Director of New Policy Andy Moss, Buy.com SVP Elizabeth Brooks, and Overpeer VP & GM Marc Morgenstern, moderated by Envisioneering Group President Richard Doherty.

After reviewing P2P user demographics provided by Parks Associates and briefly introducing the P2P Revenue Engine (P2PRE) project, which is led by INTENT MediaWorks' Les Ottolenghi, panelists gave divergent views of the current P2P marketplace.

Mark Ishikawa estimated the amount of copyright infringement in the P2P environment at 3-to-5 million instances per day. He noted that, "It's hard to compete with free,” and that in his view, "addressing the mindset of consumers is critical.” He said that the industry needs to continue to pursue DRM solutions that are easy-to-use and difficult-to-crack, but that P2PRE may need operating-system-provider support in order to be successful. He sees the most critical issue as infringement with rights holders looking to recapture the market and monetize the P2P channel.

Jim Flynn painted a picture of the potential of P2P to drive content delivery costs to zero, but because bandwidth is not yet sufficient, there is the need to use a hybrid approach for now. Jim said, "With P2P the capacity for delivery increases with availability.” He said P2P is a technology that enables new business models which threaten established business models, and that for content provider executives the question has to be, "How long do you fight it before you decide to go along with it?”

Ted Cohen indicated that he is not adverse to the concept of P2P and outlined progress since the original Napster to the point that, "Now people are coming in daily to pitch prospective P2P solutions, but it's EMI's job to protect artists from trading one bad situation for another.” He said that probably 80% of current traffic on P2P is pop-music hits. Ted touted EMI's recent licensing of Pass Along, which provides a quasi-P2P offering called "1Pass” encouraging "friends to turn friends on to music,” and added that within the current fiscal year, he believes there will likely be a real P2P breakthrough.

Les Ottolenghi described INTENT MediaWorks' business model that focuses on "helping emerging artists distribute their content through P2P generating multiple revenue streams, with the greatest success at this time coming from ad support,” probably in part as a result of having to compete with free major-label tracks. He cited the example of a new artist who recently generated 20 million impressions with a single track.

In response to Ted's question about what that translated to for the artist, Les answered, "An MTV contract.” Les went on to say that protection of new content is no longer an issue, and that the challenges in P2P are becoming more marketing oriented, from building awareness to establishing a brand for artists through the medium.

Chip Venters described the P2P marketplace as a "super-distribution system for digital goods.” He said that, "While some entities may not know how to respond to this technology, there will be plenty of marketers who will find ways to monetize the traffic.” He demonstrated the cost advantages and efficiencies of decentralization in the "new content infrastructure” over the "old content infrastructure” with its centralized architecture.

Gabe Zichermann said that Trymedia Systems enables the protection, sale, and distribution of games digitally, noting that there have been more than 200 million downloads of games to date. By 2007, Gabe estimates that 50% of all games will be sold on the Internet. Eighty percent of consumers polled said they would pay for games downloaded in that way. He emphasized P2P's uniqueness in providing both search and discovery for music, games, and movies.

When asked about the next big change coming to P2P, Gabe said, "Nasty legislation.” Chip said, "The P2P Revenue Engine.” Les said, "Other types of commerce on P2P such as travel with incentives for users in additional super-distribution models.” Ted said, "Embracing P2P monetization with legitimate companies.” Jim said, "Public company executives able to look at a spreadsheet and justify P2P on the bottom line.” And Mark said, "Unenforceable knee-jerk legislation.” Chip Venters has always been the most extraordinary of industry visionaries.

Altnet Parent Earns Prestigious Honor

Brilliant Digital Entertainment Garners Top Ten Ranking in ''Fast 50"

DCIA Charter Member Altnet's parent company, Brilliant Digital Entertainment (OTCBB:BDEI), has been named to the prestigious Technology Fast 50 Program, as one of the ten fastest growing technology companies in Los Angeles, by Deloitte & Touche.

"To make Deloitte's Fast 50 list, companies within the greater LA area must have seen significant, impressive revenue growth from 1999-2003," said Tim Lovoy, Deloitte partner, Technology, Media & Telecommunications practice.

"Brilliant Digital has proven to be one of the fast-growth success stories in this city, and we applaud their success and vision, which we attribute to their leadership."

"We are honored to be recognized as one of the Deloitte Technology Fast 50 companies in LA," said Kevin Bermeister, CEO of Brilliant Digital Entertainment. "This award is the result of our continuing commitment to peer-to-peer (P2P) application providers and our determination to provide solutions for content owners to promote their secure digital media files through P2P distribution channels."

Brilliant Digital Entertainment is the parent company of Altnet and a developer of advertising, transaction processing, and content creation technologies for the Internet. Altnet provides content owners a secure platform to sell their files and rewards consumers with easy access to licensed content. Through its TopSearch preferred search listings, Altnet reaches an estimated seventy million users and is the leading distributor of rights managed content in the world.

Shared Media Licensing up for Global Awards

SML Nominated for Recognition of the Weed Music Distribution Model

Technology leaders around the world have recognized DCIA Member Shared Media Licensing (SML) with nominations for two prestigious awards. Seattle-based SML operates "Weed", an innovative service that pays file traders for sharing music on the Internet.

Last month, the World Technology Network (WTN) announced that SML President John Beezer had been selected as a nominee for the Entertainment category of the 2004 World Technology Awards, being held in association with Nasdaq, Microsoft, TIME magazine, Science magazine, and CNN.

Winners will be announced Friday October 8th in San Francisco at the World Technology Summit. The World Technology Awards honor individuals and companies from twenty technology-related sectors. Recipients are viewed by their peers as being the most innovative and doing the work of the greatest likely long-term significance in their field.

On October 1st, at the Popkomm 2004 conference in Berlin, SML competed against eleven other companies for the Innovations in Music and Entertainment Award. As an IMEA finalist, SML is recognized as being among the most innovative new ventures in music and entertainment. The jury is composed of prominent executives and visionaries in music and digital entertainment.

Since Weed debuted in December 2003, artists ranging from unsigned independents, to Grammy-winners like Sir Mix-a-Lot, and multi-platinum artists like Heart, have embraced the Weed concept. Check out thousands of Weedified tracks at 96 Decibels, an independent content provider for SML.

Coming Events of Interest

Micropayments '04 – DCIA P2P Revenue Engine (P2PRE) participant Peppercoin is co-sponsoring Micropayments '04, an executive forum to educate content owners, merchants, payments and technology companies, banks and financial services institutions on the potential of small payments, and to facilitate discussion regarding present and future small payment solutions.

More than 200 senior executives representing the disciplines of payments, retail, financial services, and technology are scheduled to attend this event on Tuesday October 5th at the Waldorf-Astoria Hotel in New York City.

The full-day program features keynotes, six panels, and luncheon at the Waldorf Astoria. Confirmed speakers comprise an impressive array of senior decision-makers from content, payment and technology firms, including keynoter Alex St. John, CEO of WildTangent. For more information, call 323-822-0936.

Telecom '04 - DCIA Member Trymedia Systems' Gabe Zichermann and the DCIA's Marty Lafferty are featured speakers in this IP Video Conference at 11:15 AM on Wednesday October 13th at the Venetian Hotel, Las Vegas, entitled "Get in the Game — How do Games Play in a Service Providers' Plans?”

Online games are a proven market that will continue to experience double-digit growth as increasingly sophisticated online gaming communities continue to develop.

Gabe and Marty look at the impact of games on ISP content strategy and different ways ISPs can use gaming as a differentiator in their product offerings.

DRM Strategies Expo - DCIA P2P Revenue Engine (P2PRE) participant MediaGuide's Steve Lubin will be a featured speaker on the Fingerprinting Panel moderated by Digital Economics' Donald Jasko at 10:00 AM on October 26th at this JupiterMedia sponsored event.

The DRM Strategies Conference & Expo will be held October 25th through 27th at the Sheraton Universal, Los Angeles, CA and will be the most comprehensive event on DRM business and technology issues ever held - a must-attend for those involved in content security in both consumer media distribution and information security for businesses.

DRM Strategies will provide the chance to compare important DRM technology solutions. The conference will focus on fundamentals of DRM, shed light on future DRM directions, and provide incendiary debate on today's controversial issues surrounding digital copyright.

Digital Entertainment Awards – The DCIA is proud to sponsor this first annual conference and awards show, focusing on innovation, entrepreneurship, and brand development in digital entertainment.

Co-produced by Billboard and Digital Media Wire, the "Billboard Digital Entertainment Conference & Awards” will be held on November 4th and 5th at the Tom Bradley International Center in Los Angeles. Seventy industry leaders will be speaking at the two-day conference on content and technology developments, including business, legal, and technology issues impacting the creative and business communities.

Attendees will be more than three-hundred fifty senior decision makers and innovators at leading entertainment and technology companies, artists, investors and members of the press. To learn more about the conference and awards show, please call 323-822-0936.

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