Distributed Computing Industry
Weekly Newsletter

In This Issue

P2P Weblog

Industry News

Data Bank

Techno Features


January 16, 2006
Volume 11, Issue 12

P2P File-Sharing Levels Hit All-Time High

Excerpted from Digital Music News Report

File-sharing levels hit record levels in December, according to figures provided by leading peer-to-peer (P2P) monitoring firm BigChampagne. The data, obtained by Digital Music News, shows an average simultaneous user level of 6.98 million during the holiday month. That beats a previous high of 6.87 million, recorded in July, and easily doubles a figure of 2.89 million from September, 2003, when file-sharing lawsuits first began.

The December levels also represent 26.9 percent jump over figures from the same month in 2004. Globally, gains were also substantial, moving to 9.55 million average simultaneous users, up 26.0 percent over the previous year. Average simultaneous user levels offer a more accurate barometer of P2P file-sharing levels than metrics like total files, which can be clouded by spoofed or bogus downloads.

The file-sharing jumps are happening alongside breakneck increases in paid downloads. In the US, the final two weeks of 2005 were record-setting ones for the industry, driven by Christmas iPods and download store gift cards. Final week song purchases reached 20 million, which raised the annual paid download mark to 352 million.

That comfortably doubles figures from 2004, though paid totals are easily dwarfed by file-sharing volume. Whether paid downloads will ever rival file-sharing levels is speculative at this point, though proponents of the paid space point to a coming shake-up involving large P2P applications like eDonkey and LimeWire.

For more data, please click here.

Welcome Friend Media Technology Systems

Please warmly welcome Friend Media Technology Systems Ltd. (FMTS) to the Platform Group. We look forward to providing valuable services to this newest DCIA Member and supporting its contributions to commercial development of the distributed computing Industry.

FMTS has created software that has two principal functions. First, the FMTS system is capable of blocking unauthorized transmission of content on P2P networks. Second, the FMTS system is capable of capturing a significant amount of data with respect to activity on P2P networks.

Due to the design of the FMTS system, relying on content comparison and in-depth network research generated by FMTS, it is possible to protect material against unauthorized distribution very quickly after its creation.

For example, should a copyright owner wish to protect work-in-progress, such as a studio recording or filming, details of such material can be input to the system to provide immediate global protection. This provides the advantage of early protection through the cessation of unauthorized pre-release distribution and the potential ability to trace the leak of such material from within the content handling cycle.

This also prevents third parties from creating unintended benefits through publicity generated in the run-up to a major release by using the details of such an item to distribute their own content, knowing that a large number of people will be looking to download pre-and-early-release copies of the genuine article without authorization.

The FMTS system also provides the following research and statistical data: the ability to track network participants among multiple sessions, thereby producing detailed activity logs; a broad view of activity thanks to the gathering of network-wide data, not just scanning for which nodes are sharing what files; instantaneous cross-referencing of data for trend analysis; and identification of obfuscated content.

The CEO of FMTS is Jonathan Friend, who is 23 and from Birmingham, England. He is the principal developer of the system for FMTS. Jonathan previously developed software used in such diverse sectors as logistics and energy management, as well as a secure digital rights management (DRM) system, which won awards at the British Association of Science Fair and the International Science and Engineering Fair.

Report from CEO Marty Lafferty

Photo of CEO Marty LaffertyThe US Supreme Court ruling in MGM v. Grokster presented an opportunity for the distributed computing industry to take affirmative action toward narrowing the gap in collaboration between technology providers and the content community, and we would like to start that process now.

The DCIA understands that the High Court focused on the question of intentional encouragement of copyright infringement by users of file redistribution software. Within the decision, the Court identified digital watermarking as one of the key technologies that could be used by content rights holders and P2P file-sharing applications providers to deter infringement of copyrighted works.

One of our biggest challenges has been to satisfy major entertainment content rights aggregators that digital products can be effectively managed – for profit – in P2P environments. Moreover, it has been difficult to satisfy prospective content partners that embracing P2P does not necessitate a wholesale change in fundamental and long-standing business practices and models in order to harness the efficiencies and reach of P2P.

We understand that major music label and movie studio rights holders have concerns that their content – in original state, derivative states, and copied states – is extremely difficult to adequately identify and have its "rights state" determined (e.g., authorized vs. unauthorized) – and consequently to manage within an open P2P environment. These concerns appear to be exacerbated by the belief that all digital environments have natural points of vulnerability, or "analog holes" that can never be patched (e.g., once burned to optical media, content falls back into the clear).

The DCIA has engaged with a variety of constituents over this fundamental issue: the separation of content from the content's identification/rights association, or asset metadata, as a natural result of digitization. Through our discussions, we concur with the Supreme Court that digital watermarking – which has already gained strong adoption by the content community in the business-to-business (B2B) segment of the distribution chain – offers meaningful resolution to the issue at hand.

Digital watermarking is the process by which data is imperceptibly woven into content while maintaining the content's source quality and yet which survives unintentional and malicious attacks. Successful commercial deployments of watermarked-based systems by the music, movie, and advertising industries have already had a significant impact on pre-release infringement and monitoring/reporting accuracy.

Digital watermarking has been widely deployed by all major music labels and movie studios for forensic tracking, and has been deployed by major studios for copy protection and by broadcasters as well as studios for broadcast monitoring. There are presently billions of watermarked objects in the market.

The DCIA believes that this technology, which is available from multiple vendors worldwide, is not only a natural solution for content providers, but one that we as an industry should embrace. We therefore reach out to our content partners in light of the Grokster decision, and invite them to adopt this technology and embed watermarks that identify content, state, and/or specific allowable uses.

Our P2P software distributing Members, for their parts, voluntarily and individually, will provide detection capabilities at the appropriate point(s) in the P2P value chain to recognize and respect those rights for licensed content and to enable new business models that rely on legitimately licensed content to flourish.

As the content community has already begun adoption and realized success with digital watermarking technology, we further believe that the extension of their current use of the technology within the P2P marketplace should be deemed cost-efficient and a no-lose proposition.

Furthermore, we believe that by incorporating watermark detection in P2P clients and systems, the P2P community will truly establish a collaborative and mutually profitable environment for all parties.

Moreover, watermarking is synergistic with pattern recognition (fingerprinting technologies which may help identify legacy content) and can be integrated into solutions that provide multiple methods to effectively and reliably identify content whatever the distribution path or format.

The DCIA calls upon our Members, and the content community and technology providers more broadly, to support the adoption of digital watermarking for identifying copyrighted content to solve the content and rights association separation issue.

Consumers are looking to the P2P industry and the content community to provide the leadership and vision that enables them to access media content where, when and how they like. Digital media products can be effectively managed, for profit, in a P2P environment.

Embracing P2P does not necessitate a wholesale change to fundamental and long-standing business practices and models in order to harness the efficiencies and reach of P2P. A path to help make that possible is before us if we can work together to define the system and requirements that leverage available technology.

We invite leading content and technology companies to join our Members in the formation of a new P2P Digital Watermark Working Group (PDWG) to establish business standards and practices for the use of digital watermarking to help secure licensed content in the steadily growing P2P distribution channel.

Qualified representatives are encouraged to call 888-864-3242 or e-mail PDWG@dcia.info for more information or to sign-up to participate in the new working group. Share wisely, and take care.

Telcordia Extends Maestro Portfolio

Building on its global momentum in IP Multimedia Subsystems (IMS), DCIA Member Telcordia last week launched Telcordia Ringback Tones and Telcordia Location-Based Services as additional components of the Telcordia Converged Applications Suite. Designed to be integrated into all wireless and wireline networks, the new applications run on the Telcordia Converged Application Server, supporting PSTN as well as IMS-based protocols such as SIP.

With customer deployments in all regions of the world, the new Telcordia IMS capabilities will ensure that operators can offer subscribers added value through differentiated and personalized services. The Converged Applications Suite is a set of applications that enable operators to rapidly launch pre-built services, speeding their time-to-market.

"The addition of these new applications to our Maestro portfolio underlines Telcordia's commitment to IMS and to helping operators derive value from all their networks through our Converged Applications Suite," said Scott Erickson, President, IMS Service Delivery Solutions.

"Telcordia is reducing the complexity of rolling out new revenue-generating services and offering operators rapid time to revenue for high-value services. The first two in a series of expanded applications in the Maestro portfolio will provide operators with an extra level of advanced subscriber offerings to help them gain a competitive advantage."

Ringback tones, selected by the subscriber, take the place of the ringing tone the calling party hears when making a call. According to Ovum, phone personalization services, such as ring-tones and logos generated $4.3 billion in 2003 for operators. It is now expected that global ringback tone revenue alone could generate more than $2.4 billion in revenues by 2008, outpacing the current $2.3 billion generated by ring-tones.

Location-based services enable operators to create and launch new consumer and business offerings using the ability to determine a user's location, with full user privacy and network security.

Please click here for more information about the Telcordia Maestro IMS Portfolio.

Centale Acquires Revolution Ads

DCIA Member Centale, an online marketing and technology solutions firm, last week announced the acquisition of Revolution Ads, an online marketing firm with 75 million permission based e-mail opt-ins categorized by demographics such as age, gender, income, home owner, occupation, affinities, etc. and matched with corresponding postal records.

Centale markets desktop-capturing executable programs branded by third-party advertisers. This allows the advertiser the opportunity to communicate continuously with the consumer (by capturing the desktop) without additional access fees, resulting in increased ROI for the sponsoring brand.

Patrick T. Parker, Chairman & CEO of Centale said, "This strategic acquisition positions us to accelerate our growth and earnings potential."

The acquisition of Revolution Ads eliminates Centale's cost of list rental, thereby dramatically increasing net profit margins to as high as 50%. Centale presently estimates its annual advertising inventory at between $21 and $27 million.

PlayFirst Gets $5M in Funds

Excerpted from Red Herring Report

DCIA Member PlayFirst said Wednesday it received $5 million in a second round of funding, bringing the company's venture capital to $10 million and reflecting growing interest in the casual online game market in the United States.

PlayFirst said it would use the new funds to help independent game makers create new games and attract new customers for the casual category, which includes simpler games that involve solving puzzles or exercising a skill.

The funds came from existing investors Trinity Ventures and Mayfield Venture Partners, and a new investor, Rustic Canyon.

The company's flagship game, "Diner Dash," already has 10 million players. PlayFirst distributes its games on 450 sites and via P2P on the Internet.

Computer users are playing casual online games at a growing rate, with IDC Research estimating that casual gamers in North America spent $240 million on downloadable games last year (please see Top Ten Trends: Online Games).

"The casual games market is experiencing rapid growth, and digital distribution has fundamentally changed the business model for content creators," Rustic Canyon's Nate Redmond said in a statement.

Margins of PC casual games are as high as 70 percent, with an investment of just hundreds of thousands of dollars. Console games typically cost more than $10 million to make, and the hit-driven business means most games are ignored regardless of the huge investment.

Softwrap Enables Global Distribution

Running With Scissors (RWS), the "World's Most Dangerous Software Company," has inked a deal with DCIA Member Softwrap, which will allow the "POSTAL" game line to be sold virtually anywhere on the globe through a simple online transaction. Thanks to Softwrap's ability to deal in a wide range of foreign currencies and pay systems, RWS games will now be securely delivered to anyone, anywhere via online access.

RWS products such as the multi-player "POSTAL 2: Share the Pain" and the explosive climactic installment, "POSTAL 2: Apocalypse Weekend" have sold millions of copies around the world and the "POSTAL" universe will be transformed into a major motion picture for release in 2007.

"We believe that people have the same right to play any game they want to as they should have the right to read books, see films, and listen to music of their choosing, " declared Vince Desi. "Our games are ESRB-rated and their contents clearly explained. No one is being harmed and the Earth will not spin off its axis because a game with a notorious reputation is sold around the world via the Internet."

For more information on "POSTAL" products and gear, please click here.

Nettwerk & SNOCAP Strategic Partnership

DCIA Member Nettwerk Music Group will make the Electronic Arts (EA) catalog of original game compositions available to SNOCAP's proprietary digital registry. Music from popular game franchises such as "The Sims," "Medal of Honor," and "Need for Speed" will be available to SNOCAP users around the globe.

Nettwerk entered into an agreement with SNOCAP in early 2005, and in November EA and Nettwerk teamed to launch EA Recordings - a groundbreaking digital music distribution label that delivers EA's rich catalog of wholly-owned compositions and remixes to Digital Service Providers (DSPs) worldwide.

"It's no surprise that the consumer demand for game music has grown significantly with the heightened popularity of games as a true mass market entertainment medium," said Rusty Rueff, CEO of SNOCAP. "Nettwerk and EA's original music catalog further diversifies the content available to consumers in the digital music marketplace, and SNOCAP is thrilled to bring their audio content to game fans online while ensuring that the content rights are respected and followed."

"SNOCAP is opening new doors for the types of content that consumers desire and thus enabling them to experience more variety and categories of digital music," said Terry McBride, Co-Owner & CEO of Nettwerk Music Group. "New listeners will be able to discover these unique compositions, while existing fans can expand their gaming experience by accessing their favorite EA soundtracks through online music services."

P2P Wins Enthusiasts in Blogs & Broadcasts

Excerpted from South China Morning Post Report by Sam Graham

In the days following the 2004 Boxing Day tsunami, the number of casualties soared along with the volume of images and videos that captured the terrifying power of the waves. With thousands of tourists on hand, there were plenty of video cameras ready to capture the destruction.

Soon, these videos were posted on the Internet and collected for download on websites and blogs such as Waxy.org.

In a day, demand was too much for Waxy and the videos were moved to Archive.org, a website dedicated to building a library of past and present websites. But even the so-called "largest repository of public-domain audio, video, and text in the world" could no longer handle the surging demand for the videos.

The conditions were tailor-made for P2P application BitTorrent, which reduces demand and stress on centralized servers by transferring data directly between people who had the videos and those who wanted them.

P2P is increasingly being harnessed for legitimate broadcasting and other uses. Chris Holland, a blogger who collected tsunami videos and distributed them using BitTorrent, distributed 151 gigabytes of video with only 1.26 gigabytes uploaded by the server originally hosting the videos.

With content providers having to pay to upload material, using P2P passes the cost of distribution on to those who download by taking advantage of the capacity of all users to upload information to other users.

Applications such as BitTorrent break files into small pieces. When downloaders want a file they will obtain the individual pieces from different people across the internet before putting the pieces back together to form the original file.

The result is an effective solution for distributing large files at only a fraction of the cost of the traditional central server distribution model. Not surprisingly, major content producers are beginning to take notice.

The BBC will soon complete a trial of its Integrated Media Player (iMP), which allows people in Britain to download television shows for viewing on demand. Viewers will have seven days after the initial broadcast of a show to watch it before it expires.

Given that a 30-minute TV program is about 200 megabytes and demand is likely to be high, the stress on the BBC's servers would be huge if videos were sent directly to everyone who requested the shows.

Using a P2P distribution system for iMP, much of the bandwidth demand is shifted to the users. Instead of directly sending all the video, the BBC will rely on users who have already downloaded the videos to distribute the vast majority of data.

"The media landscape is changing with the advent of new technologies, and audiences are changing the way in which they interact and view content," a BBC spokesman said.

With the advent of personal video recorders (PVRs), there is a growing trend towards watching content on demand rather than according to broadcasters' schedules. P2P file sharing allows the BBC to cater to this trend.

It is not only the giants that are interested in the cost savings.

Multimedia blogs, often produced by just one or two people, are also seeking to harness the technology for distribution of large files as their popularity increases.

Rocketboom is one of the most popular video-blogs, with up to 100,000 daily viewers. Its presenter, Amanda Congdon, has gained geek stardom by putting a twist on news, technology, and the arts in a daily three-minute video.

With server costs at about $3,000 a month, there is significant money to be saved by using P2P networks for distribution.

"Costs go up as we get more popular," Mr. Baron said. "The costs are low enough that there are plenty of ways for this kind of thing to support itself."

BitTorrent and its P2P brethren are helping the Internet deliver on its promise of converting media consumers into producers and distributors.

BSkyB Introduces P2P Sharing

Excerpted from Times Online Report by Rhys Blakely

BSkyB, the satellite broadcaster, last week announced plans to deploy a P2P system to distribute video content online.

BSkyB, which is 37.2 per cent owned by News Corporation, will transmit full-length films in the form of digital files over broadband Internet connections.

The links created between consumers in P2P systems use Internet bandwidth – the capacity of the Internet to transmit information – more efficiently than individual links between broadcasters and households. Effectively, the technology means that Sky's eight million customers will be able to copy the film files from each other.

It will be used to power "Sky by Broadband," the Internet television service the broadcaster launched last week. The announcement is a coup for Sky. The BBC is still working on its own version of the software and has only released a test version so far, available to 5,000 users.

The technology which will be employed by Sky will ensure that film files will expire after one month. They will only be playable by Sky's subscribers in the UK.

Internet video distribution is shaping up to be a viciously competitive business. In the past week, Google, Yahoo, and Microsoft, the three largest Internet companies, have all unveiled services, tools, and partnerships aimed at bring films to consumers over the web.

Kontiki, the company that will supply the technology that will power the Sky service, said that more than 200 movies will be available to download from launch.

A Kontiki spokesman told the Red Herring site, "Content providers and the broadcasters are finally seeing there's a business model so they can distribute video to their existing customer base."

Coming Events of Interest

  • Nine So Fine – DCIA Member City Canyons Records in conjunction with Black Dog Promotions presents songwriter Sara Wendt performing materials from her newly released "HERE'S US" at the Ninth City Canyons Showcase at New York's Red Lion on January 17th. Sara Wendt is a creative force in Manhattan's independent music scene and has been recognized by her contemporaries as an outstanding songsmith, each song a polished gem of elegant music and evocative lyrics.

  • MidemNet Forum at MIDEM – The World's Annual Forum for Digital & Mobile Music January 21st-22nd, Cannes, France. Confirmed keynotes to date are EMI Group Chairman Eric Nicoli; Ken Lombard, President of Starbucks Entertainment; Patricia Langrand, Senior EVP of Content for France Telecom and Nokia's EVP and GM of Multimedia Anssi Vanjoki. MidemNet forum will welcome the world's leading digital music experts and global authorities on mobile music. Please contact DCIA Member indie911 CEO Justin Goldberg at justin@indie911.com or 310-943-7164 if you plan to attend.

  • NATPE 2006 – The National Association of Television Program Executives conference January 24th-26th in Las Vegas is the only American market serving the worldwide television industry, whether you're looking to meet with colleagues, find new partners, learn about the burgeoning business opportunities of mobile and digital, or share ideas. Preview NATPE 2006 here.

  • Digital Commerce Summit 2006 - January 31st in New York. Digital Media Wire invites you to attend this one-day executive forum for content owners, merchants, payments & technology companies, banks & financial services institutions, ISPs, MSOs, P2P vendors, and wireless & mobile companies focused on payment solutions and commerce strategies for digital content, including games, music, film, television and video products.

  • Media Summit New York – February 8th-9th in NYC. The 2006 Media Summit New York is the Premier International Conference on Motion Pictures, Television, Cable & Satellite, Broadband, Wireless, Publishing, Radio, Magazines, News & Print Media, Advertising and Marketing. The DCIA will participate with the CEA and MPAA in discussing "The Piracy Freight Train: As Entertainment, The Law & Technology Collide."

  • Defining the Problem, Developing Solutions – The Anti-Spyware Coalition's first public workshop to be held on February 9th at the Capitol Hyatt in Washington, DC will address the impact of spyware on businesses and individuals and will include interactive panels on public education, policy and enforcement, corporate security, and industry guidelines. Confirmed speakers include FTC Chairman Deborah Majoras, Wall Street Journal Columnist Walt Mossberg, and Pew Internet and American Life Associate Director Susannah Fox.

  • New Communications Forum 2006 – March 1st, Palo Alto, CA. NCF brings together the industry's leaders from around the globe to discuss the impact of participatory communications on media, marketing, PR, and advertising. This year the conference will examine how blogs, wikis, podcasts, and other emerging tools, technologies, and modes of communication are affecting organizations.

  • First Annual DCIA Conference & Expo – June 22nd, Tysons Corner, McLean, VA. Panel tracks at this first-ever global "P2P Media Summit" will cover policy, marketing, and technology issues affecting commercial development of the emerging file-sharing industry. Exhibits and demonstrations will feature industry-leading products and services. Plan now to attend. For sponsor packages and speaker information, please contact Karen Kaplowitz at 888-890-4240 or karen@dcia.info.

Copyright 2008 Distributed Computing Industry Association
This page last updated July 6, 2008
Privacy Policy