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August 22, 2005
Volume 10, Issue 3

Skype Surpasses 150 Million Downloads

50 million new users of DCIA Member Skype's software have been added since April bringing total Skype downloads now to over 150 million, and making Skype one of the most popular Internet telecom companies in the world.

SkypeIn customers choose a country and area code and are assigned a regular telephone number. Anyone may call a SkypeIn user wherever the user travels, providing huge cost savings over mobile roaming rates.

Skype Voicemail customers can receive messages up to 10 minutes long from any phone. They may also record personalized voicemail greetings, playback messages – even while offline – and send incoming calls to voicemail if they are away, offline, or simply busy on another call.

SkypeOut allows global calling to public telephone numbers at local rates. More than 1.2 million people now use SkypeOut. With the combination of SkypeIn and SkypeOut, users are empowered to expand modern communications by sharing benefits with non-Skype users. Skype eliminates billing surprises offering all premium services on a prepaid basis.

Softwrap Signs Videogame.it

DCIA Member Softwrap, a UK-based provider of digital rights management (DRM) technology, said on Friday it has signed an agreement to provide security technology for Videogame.it, an Italian distributor of downloadable games.

Softwrap's technology, which has been used to secure 21,000 game and software titles, will allow users to try out Videogame titles before purchasing them.

Go-Kart Films Audience Promotion

Go-Kart Films – the motion picture company started by DCIA Member Go-Kart Records – has launched a promotional contest to attract viewers for its collection of amazing alternative films.

The first place winner will be able to select 10 items from the label's catalog, and also receive a DVD of 'Charlie's Death Wish' autographed by Motorhead frontman Lemmy and film actor Ron Jeremy.

Report from CEO Marty Lafferty

We encourage additional experimentation with advertising-supported business models for peer-to-peer (P2P) distribution of licensed content.

DCIA Members Altnet, BlueMaze Entertainment, INTENT MediaWorks, Jun Group, Shared Media Licensing, Scooter Scudieri, Unity Tunes, and Visionary Strategies among others are now pioneering important efforts in this area.

Their current work comprises the first stage of a more far-reaching migration strategy that we expect these and other Members to lead, ensuring that the file-sharing phenomenon ultimately becomes fully embraced by major entertainment rights aggregators.

As previously noted, the P2P distribution channel is sufficiently robust, from a technology standpoint, to support a full range of business models which compensate rights holders – from free-to-user cross-promotional and sponsored offerings, to individual unit sales, to recurring subscriptions and premium packages, to hybrids incorporating all of these and more.

The critical issue from a marketing standpoint is how to convert the abuse of P2P for unauthorized purposes into sanctioned usage without dampening the enormous popularity of file sharing. According to many industry estimates, this conversion represents the greatest potential for content monetization in the digital realm, unless the transition process itself decreases traffic levels.

An apt analogy for this envisioned migration of P2P to its full potential is the seventy-five year history of the television programming industry. And the good news is that, with the benefit of collaboration among all affected parties, it could be foreshortened from that number of years to as many months for P2P.

When TV was first invented, there was a great deal of speculation about what business models would prove the most successful. Remember this was in the early part of the last century – far before the advent of any form of digitization.

Some were convinced that the only way to create a revenue stream to pay for program content would be by some sort of sales or use tax on television sets. For file sharing, this would correspond to recommendations for a compulsory licensing regime or an ISP excise tax, which have been repeatedly rejected by major entertainment interests who have held out for more precise control over digital distribution of copyrighted works.

The first breakthrough for television program revenue generation came in the form of title sponsorships, where early TV shows – not much more than cameras pointed at radio broadcasts – were funded by packaged goods marketers. Translating this to P2P, digital content files can already be sponsored with interactive banners and tiles, as well as streaming tips and tails, that will ring the cash register not only with every download by each P2P user, but also with each play on every device, without requiring implementation of digital rights management (DRM).

The next advance for TV was the invention of the commercial, followed over time by what has now become the standard format multi-commercial pod. In the world of file sharing, this can correspond to P2P innovations in contextual advertising that fully utilize digital rendering and communications technologies. The videogame industry is now advancing promising examples of this, such as animated billboards seamlessly imbedded within online games that advertisers can purchase for finite flights targeting specific player demographics.

Next came subscription television. Initially community antenna television (CATV or cable) systems were built for reception in areas where over-the-air signal strength was weak, but to succeed in highly populous urban franchises, channel capacity was expanded and new forms of programming were created, such as vertical channels – all news, sports, or movies – versus horizontally programmed broadcast networks.

Naysayers said no one would pay for television programming because it had been free for so long. But scheduling innovations coupled with truly original programming combined to drive penetration levels to 87% of homes-passed and license-fee revenues to surpass ad revenue on an industry-wide basis.

For P2P file sharing, all sorts of new packaging and channel creations are possible, from thematic genres to custom playlists to virtual streaming – we have not even scratched the surface of what is possible in this area. Music, for example, can go far beyond just selling singles and albums. But as with television, this can be built from a solid foundation of free-to-the user ad-supported P2P content that logically should come first.

Finally, television programmers deployed pay-per-view (PPV), initially according to predetermined schedules, and most recently as true video-on-demand (VOD) permitting flexible start-times, interruptions, and replays, which in the P2P world directly translates to a la carte sales. This has not yet delivered the revenue levels of ad-supported and subscription television business models, which P2P practitioners should note.

While technological development and implementation practices continue to progress to make DRM more consumer-friendly in terms of transparency, fair-use, and privacy protection, why not perfect advertising-supported P2P?

VeohNet P2P Video Distribution

Veoh Networks, the first Internet television peercasting network, last week announced its VeohNet protocol, a video transport system that significantly surpasses the capabilities of existing P2P systems in effectively distributing high-quality video.

Veoh Networks, which will launch in beta in the coming weeks, was founded by Dmitry Shapiro, a technologist best known for creating the world's leading P2P security software employed by more than one million enterprise users today to manage and regulate applications like BitTorrent and Grokster.

"Our engineers and I spent the last five years dealing with various P2P networks including BitTorrent, eDonkey and FastTrack, as well as the dozens of applications that support these protocols, including Grokster, Kazaa and Morpheus," said Shapiro. "Our focus from inception has been respecting the rights of content owners."

According to a recent MIT study, existing decentralized swarmcast systems are fundamentally limited in their ability to penetrate firewalls, requiring users to open ports in order for the systems to work effectively. VeohNet uses advanced firewall traversal technology to provide excellent performance to all users without firewall adjustments or decreasing security requirements. VeohNet was specifically designed to provide DMCA compliance.

Get Your DTV Via Mac P2P Program

Excerpted from MacNewsWorld Report

A new Internet TV service follows an explosion of similar activity this summer. Earlier this month, HDNet began experimenting with the release of its high-quality content online using P2P tools. The first release was a 20 minute, 1.3 GB clip of the recent space shuttle launch, with more content promised over the coming weeks.

Now an organization called the Participatory Culture Foundation – an offshoot of the P2P activist group Downhill Battle – has launched the beta version of its DTV software, an application that collects and distributes independent video online.

The software, initially developed for Apple's Macintosh computers, has the clean lines of the popular iTunes, and full-screen video based on BitTorrent technology.

Though most of the initial content will be video blogs and independent media, the group also has an agreement to distribute programming from former Vice President Al Gore's new television operation, Channel.tv.

Anyone will be able to publish into the system by using tools the foundation produces for turning video into fast-downloading BitTorrent files. A Windows version of the software will be available later in the year.

File Share and Share Alike

Excerpted from NY Times Report by Charles Solomon

BitTorrent has been especially popular among fans of Japanese animation, or anime – 'fansubbers' who swap their own subtitled versions of programs and frequently get them into circulation before the original series is on the market. Fansubbers think of themselves as enthusiasts sharing material they love.

ADV Films, the largest distributor of anime in the United States, has decided to publicize its new series 'Gilgamesh' and 'Goddanar,' releasing promotional packages – not in stores, but via BitTorrent.

"BitTorrent has been used extensively in a kind of underground environment up until now," said David Williams, a producer at ADV. "There's a large group of people who have it on their systems. We figured why not give them material to download that would help them learn about some of our products."

In late July, as a test, ADV released a trailer for the series 'Madlax' through BitTorrent. The positive response led the company to assemble more extensive packages for 'Gilgamesh' and 'Goddanar' that include biographical information about the characters, images, and statistics of the giant robots, promotional clips, and links to online reviews.

Dossiers about giant robots might not seem like the highest calling to which 21st-century technology can be put, but "the response to the 'Madlax' trailer was just phenomenal," Mr. Williams said.

Imeem Launches P2P Social Network

Excerpted from Internet News Report by Michael Kerner

The social networking space added another player last week with the launch of Imeem. The service aims to stand out with privacy features, a strong open source foundation, integrated IM, blogging, plus file- and photo-sharing features.

Imeem takes its name from the concept of the 'meme,' a thought or an idea that takes on a life of its own. Like most social networking sites, Imeem will have discussion areas. Unlike most others though, Imeem is a hybrid P2P social network.

That means most data actually resides on the user's PC as opposed to a hosted website. 'Circles of trust' are defined by the user who allows access only to certain individuals. Blogs, pictures, file sharing, and IM further complement the social network.

Beyond permission-based access to the blogs, files, IM, and discussion areas, communication in the Imeem network is secured by the advanced encryption standard (AES).

"We wrote Imeem so that it would be easy for people to create their own personal private networks so that way they can bridge the gap between being landlocked on their PCs and not having to completely give up control of the content they want to share," Dalton Caldwell, co-founder & CEO, told Internet News.

Windows Vista P2P Engine

Excerpted from The Register Report

Windows Vista comes equipped with its own, under-the-hood P2P networking system.

The code's presence was detected after a number of beta testers spotted unexpected levels of network traffic coming in and out of machines loaded with the preview code Microsoft released last month.

The P2P subsystem uses Microsoft's Peer Name Resolution Protocol (PNRP) and is used to link machines in much the same way applications like LimeWire and BitTorrent do. The software giant's goal is the ability to provision network services without the need for a server.

PNRP has been around since Windows XP Service Pack 1 - it's part of the Advanced Networking Pack. However, while the feature is disabled by default in the production software, it's enabled by default in the Vista public beta.

Microsoft said the feature will be turned off when users install the finished version of Vista.

DRM Networks Protects PI Content

DRM Networks, a leading digital rights management (DRM) license clearing house, announced last week that it is providing Wurld Media with DRM protection for content traded on its recently launched P2P network, Peer Impact (PI).

PI is the first P2P to sign agreements with all four major music labels, as well as several independent music labels, and the Independent Online Distribution Alliance (IODA), also announced last week. The service, launched on August 5, has more than 500,000 digitally protected music tracks available on its network.

With DRM Networks solutions, PI is able to offer content on its network that is protected from potential copyright infringement as well as content in unprotected format. DRM Networks provides a set of advanced technologies that enable content owners to protect their digital media by encrypting content and securing access only to those who have obtained the rights to use that content.

Windows Media Rights Management has become the standard for the deployment of digital media for online distribution channels and is compatible with Windows Media 9 and 10, as well as most brands of portable devices.

After the P2P Revolution

Excerpted from Digital Music News Report by Michael Bloom

A new music model is emerging based on peer communication, enabling users to search, discover, and share content more easily. A new breed of sanctioned services are hoping to capture the viral excitement that P2P offers, including SnoCap, Mashboxx, iMesh, and Peer Impact.

Sites like eMusic, MySpace, and Yahoo Music are increasingly satisfying a consumer need to discover new tunes. Beyond that is a stable of music recommendation systems, including concepts from MusicStrands, Savage Beast, ChoiceStream and even Sun Microsystems.

A large number of customers still use free P2P to sample new artists and styles. Michael Weiss, head of Streamcast Networks (owner of Morpheus), points to P2P as a vital tool for market research and viral advertising. Labels routinely reference P2P sharing data to stay connected to the pulse, helping to keep major marketing dollars away from duds.

Others envision a radically different pricing structure, including Wired editor-in-chief Chris Anderson. In his Long Tail theory, Anderson
suggests that songs be sold at a price point that will make the unreliability and poor quality of pirated downloads unattractive to the bulk
of listeners. In free market economics, competitive forces push industries to stay vital or get left by the wayside.

Ever since Dick Clark and Don Kirshner discovered the massive buying power of teenagers in the late fifties, the Hollywood hit machine has been surfing the next big peer activated wave. Now, instead of heading to the record store, teens and young adults are turning to one another online for the 'next big thing.' That presents a major challenge for the industry, with new sharing behaviors proving tough to monetize. So far, nothing has stepped in to rival CD sales levels, though the marketplace is flooded with new models and experiments. Whatever new go-to-market approaches do survive, peer-to-peer communication is likely to play a key role.

CEA to RIAA Re: CD Burning

Consumer Electronics Association (CEA) President & CEO Gary Shapiro responded to media reports of the RIAA's heightened focus on music copied onto blank recordable CDs:

"It is time for the music industry to finally get serious about building digital business models. Content creators should focus their considerable resources and marketing prowess on finding and expanding new business models rather than constricting consumers' rights and strangling new technologies."

Coming Events of Interest

  • Future of Music – September 11th-13th in Washington, DC. Since 2001, the FMC Policy Summit has played host to over 500 stellar panelists and speakers including musicians, business leaders, scholars, policymakers, legal experts, and advocates. Widely praised by advocates and industry alike, FMC's events have gained a reputation as a kind of Geneva where all sides in any number of contentious music industry fights can get together and play nice for a few days.

  • Kagan's Digital Media Summit – The theme of this year's conference, which will be held on September 12th-13th at the Four Seasons / Mandalay Bay in Las Vegas, NV will be "New Opportunities For Monetizing Content." The DCIA will participate in the panel entitled "MIXING MEDIA'S POTION: Content Security Plus E-Commerce Fulfillment and On-Demand Delivery." DCIA Members receive a 50% discount on registration. Please contact DCIA Member Services leader Karen Kaplowitz for more information at 888-890-4240 or karen@dcia.info.

  • Digital Hollywood Fall – "Transforming the Entertainment Industry." Scheduled for September 19th-21st at Loews Santa Monica Beach Hotel in Los Angeles, CA. The preeminent digital media and entertainment conference in the country. This year featuring a series of special University Project workshops. The DCIA will moderate "Track I: Next Generation P2P Music and Film - DRM, Paid for Pass-Along and Other Legal Distributed Computing Models and the Entertainment Industries." DCIA Members are also planning to host entertainment.

  • Technology Law Institute – A Digital Media Rights panel will be featured September 20th at the Headquarters of the State Bar of Georgia, in downtown Atlanta, GA. Kilpatrick & Stockton's James Trigg will moderate with speakers Renay San Miguel from CNN, Kevin Lapidus from YellowBrix, and Marty Lafferty from the DCIA.

  • Internet Telephony Conference & EXPO – DCIA Member Skype CEO and founder Niklas Zennström will deliver the keynote address at this major conference at the Los Angeles Convention Center, CA October 24th–27th. His address, which will be delivered live from London via Internet Telephony Videoconference, will take place Tuesday, October 25th at 12:15 PM PT. Click here to register for the show.

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