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February 7, 2005
Volume 7, Issue 11

Napster Tackles Apple in Super Bowl

Excerpted from Reuters Report

Napster has unveiled a portable version of its music subscription service, backed by a $30 million ad campaign that takes aim at rival Apple's popular iPod player.

Napster's promotion included a Super Bowl television spot urging fans to compare the costs of spending $10,000 to buy and transfer 10,000 songs from Apple's iTunes store to an iPod, with the $15-per-month fee to carry songs from a catalog of over a million tracks on Napster-compatible players.

Some analysts were surprised by the $30 million that Napster plans to spend on its promotion, which represented about 70 percent of what many had expected it to spend on a full year of marketing.

But Apple's flashy and expensive campaigns in support of its iPod have raised the bar for competitors, they said.

"Apple has spent roughly a hundred million dollars or possibly twice that much to market iTunes and iPods. Now, Napster is stepping up to the plate," said analyst Rob Enderle of the Enderle Group.

Until recently, music subscription services have been restricted in their ability to transfer songs they provide to portable players, while Apple has sold millions of the portable iPods by allowing users to buy songs from iTunes and store them on iPods.

Chris Gorog, Napster's chief executive, said the company hoped to convince consumers that pay-for-download services were more expensive and "antiquated" by comparison with Napster's subscription model.

"I think there's no question that the companies emerging as owning the top market share in this business are spending on marketing," he said.

With new digital rights management (DRM) software by Microsoft called Janus, subscription providers say they have an answer for users complaining about not being able to take their music with them beyond their personal computers.

Apple's iTunes has sold some 230 million songs to date and over an estimated 10 million iPods. By comparison, Napster ended 2004 with 270,000 paid subscribers.

P2P PATROL Working Session

P2P PATROL (Peer-to-Peer Parents and Teens React On Line) held its quarterly working session for law enforcement and the private sector last week in Dallas, TX. This is the industry's voluntary initiative to combat child pornography in the P2P environment.

P2P PATROL currently offers three programs, focusing on enforcement, deterrence, and education, and operates the P2Ppatrol.com website providing information to help file sharers recognize, remove, and report instances of illegal child pornography inadvertently encountered online.

Attendance more than doubled from last quarter's inaugural meeting, and included representatives of federal, state, and local law enforcement; as well as ten industry-leading companies. This session featured presentations of work undertaken since the last meeting by ASACP's Cydata Services, DCIA Member RazorPop (owner of TrustyFiles), BayTSP, and Digimarc.

Key takeaways from the meeting are that P2P usage is not anonymous and that users' IPs are traceable by authorities using forensic software tools. P2P application developers are committed to working with law enforcement by several different means to ensure that child-pornography traffickers will be apprehended while also balancing civil liberties concerns.

Pop-up warnings generated in response to entering search terms that are known to be associated with child pornography were demonstrated by RazorPop. A certification program for participating P2P software distributors is now in development.

Attendees agreed to build a process that will ensure that P2P is not a good environment for child-pornography offenders. New investigatory tools presented for evaluation are very promising and ongoing reviews leading to their adoption will continue. As a priority going forward, the P2P PATROL will focus on what can improve the efficiency and productivity of investigations by official agencies.

P2Ppatrol.com website revisions and a RazorPop press announcement are planned for later this week following up on last week's working session.

Lastly, since innovation towards more efficient technologies is inevitable, innovation towards greater cooperation between P2P software developers and law enforcement must be a top-of-mind priority for participants. Please contact sari@dcia.info or call 888-864-DCIA to find out how you can contribute to P2P PATROL.

Report from CEO Marty Lafferty

We very much hope you will attend this year's Media Summit New York (MSNY) on February 9th & 10th, and join us on Wednesday for the DCIA's special evening session and networking event: "HOW TO MAKE MONEY VIA P2P – 15 Companies in 2 Hours!"

Our session will take place in the McGraw-Hill Building Main Auditorium (49th St. & 6th Ave.) starting at 6:15 PM, and the after-party will take place at Crash Mansion (199 Bowery & Spring St. in Greenwich Village) starting at 9:30 PM.

We are very grateful to our event sponsors Alston & Bird, City Canyons Records, Javien, and Sharman Networks (owner of Kazaa).

With Supreme Court action pending on MGM v. Grokster, industry observers predict that 2005 will be the year when the entertainment and technology sectors finally move to harness peer-to-peer (P2P) file sharing for licensed major content distribution.

A host of new companies already provide ways to earn substantial revenue from file sharing, and our session will introduce you to these emerging stars of P2P and let you find out firsthand what they have to offer.

Learn "How to Do Business in P2P." This session will take the mystery out of marketing content profitably and safely through P2P. We will start with new figures on industry growth trends from BigChampagne.

Next, DCIA Government Relations Leader Doug Campbell will kick-off "INTRO TO P2P" featuring top industry lobbyist Phil Corwin, economist Michael Einhorn, and business model strategist Bennett Lincoff.

Then an "INDUSTRY OVERVIEW" will be introduced by DCIA Best Practices Leader Elaine Reiss with Trymedia Systems' Gabe Zichermann and Streamcast Networks' Mike Weiss (owner of Morpheus).

DCIA Member Services Leader Karen Kaplowitz will moderate our keynote discussion on "CURRENT STATUS" of the distributed computing industry led by INTENT MediaWorks' Les Ottolenghi, Relatable's Pat Breslin, Digital Containers' Chip Venters, Clickshare's Rick Lerner, P2P Cash's Tom Meredith, Javien's Leslie Poole, and Shared Media Licensing's Shelley McIntyre.

And finally, "NEW ENTRIES & ORIGINAL CONTENT" will be introduced by DCIA Consumer Research Leader Rich Feldman, and showcase RedSwoosh's Travis Kalanick, Upto11.net's David Sabel, Alston & Bird's Aydin Calginalp, Digital Static's Alford Harris, and Jun Group's Mitchell Reichgut.

City Canyons Records' Trebor Lloyd will host the DCIA gala that follows immediately at Crash Mansion in the Village. Network with new wave music distributors and party with City Canyons' artist Jen Elliott and Bluestruck.

According to music critic Hank Bordowitz, "Jen Elliott has the goods. Fusing the sensibilities of the Rolling Stones with the Ronettes, she and her band manage to be tougher and sexier than either. Nor is the sound really retro. Great rock is timeless, and Jen Elliott makes great rock."

Trebor adds, "Come interact with the leaders in the growing Internet commerce market for paid digital content. These cutting edge companies offer ways for turning Web content into profit. It's all happening at the big DCIA Party at Crash Mansion!"

French Rally Behind Downloaders

Excerpted from Report in Network Nine News

Dozens of French musicians, intellectuals, and politicians are criticizing a "repressive" crackdown against people who download copyrighted music over the Internet.

The campaign is believed to be one of the first of its kind in Europe to unite musicians and consumers in a backlash against the music industry's tactic of filing lawsuits against downloaders.

"We denounce this repressive and disproportionate policy," said signatories of the campaign, led by weekly Le Nouvel Observateur in its edition published Thursday.

"Like at least 8 million other French people, we also have downloaded music online," the open letter said. "We demand a stop to these ridiculous legal pursuits."

Well-known artists including Manu Chao, Matthieu Chedid, and Yann Tiersen, score composer for the hit French film "Amelie," added their signatures to the campaign entitled "Free up music!"

Several well-known Green Party and Socialist Party lawmakers and French anti-globalization protester Jose Bove were among other French personalities who joined the campaign.

French Industry Minister Patrick Devedjian said he agreed that, "Every campaign of blind and brutal repression is not only ineffective, but harms all people concerned."

RIAA Sues the Dead

Excerpted from Report in The Register by Andrew Orlowski

Lawyers representing several record companies have filed suit against an 83 year-old woman who died in December, claiming that she made more than 700 songs available on the Internet.

"I believe that if music companies are going to set examples they need to do it to appropriate people and not dead people," the deceased woman's daughter, Robin Chianumba, told AP.

"I am pretty sure she is not going to leave Greenwood Memorial Park to attend the hearing." Gertrude Walton, who lived in Beckley, WV, hated computers, her daughter added.

The RIAA's embarrassment doesn't end there. Chianumba said that she had sent a copy of her mother's death certificate to record company lawyers in response to an initial warning letter, over a week before the suit was filed.

But here's another interpretation of this distasteful litigation. Wouldn't the RIAA members be better off if a compensation scheme was extended to digital music?

Perhaps the RIAA doesn't believe it can maintain the charade for much longer.

Coming Events of Interest

  • 2005 Media Summit New York - Held at the McGraw Hill Building, February 9th–10th, this will be the premier international conference on entertainment, media, and distribution technologies. This year's theme is "Global Media + Technology Innovation = Communications Revolution."

The DCIA will participate in a P2P Panel Wednesday afternoon and present a special evening session "Making Money via P2P – 15 Companies in 2 Hours" and networking event on the evening of February 9th in conjunction with MSNY. Please contact Member Services leader Karen Kaplowitz at 888-890-4240 or karen@dcia.info for more information.

  • Digital Music Forum - The 5th annual DMF is set for March 2nd at the French Institute Alliance Francaise in New York. DMF is the premier event for music industry decision-makers focused on business models and legal issues impacting music.

    Shawn Fanning, Co-Founder of SnoCap will be the keynote this year, and featured panelists include Phil Corwin, Chief Lobbyist for DCIA Member Sharman Networks (owner of Kazaa); Jeff Bronikowski, VP of eLabs, Universal Music Group; Martin Elgison, Partner of DCIA Member Alston & Bird; and Ted Cohen, SVP of EMI Music.

  • Canadian Music Week - Headquartered at the Fairmont Royal York in Toronto, March 2nd-5th, CMW will be the largest music and entertainment convention in Canada.

  • The DCIA Is proud to participate in "Redemption Song: Profit from P2P" moderated by LA Times correspondent Joseph Menn March 3rd at 2:45 PM. P2P has been the killer app driving the billion-dollar broadband business, and can generate new revenues for music rights-holders. There are a slew of new companies offering moneymaking P2P plans. This panel will consider whether it's time to talk carrot instead of stick.

  • Supreme Court Oral Arguments – The US Supreme Court will hear arguments March 29th on whether companies that provide peer-to-peer (P2P) software violate copyright laws if their users commit copyright infringement. The Court's date for oral arguments in the case, MGM v. Grokster, coincides with an expected decision in a similar high-profile case in Australia, which involves Kazaa.

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