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May 22, 2006
Volume 13, Issue 6

One Billion People Online

Excerpted from eMarketer Report

According to Worldwide Online Access: 2004-2010, the world reached a milestone in late 2005 as Internet access became available to one billion people worldwide, with approximately 845 million using it regularly.

"The US is the single country with the largest Internet population with 175.4 million users at the end of 2005, followed by China at 111 million," said Ben Macklin, eMarketer Senior Analyst and author of the report. "Despite China’s continuing strong Internet growth, eMarketer expects the US to maintain its lead over China, at least until the end of the decade."

Broadband access also continues to grow and account for an ever–larger percentage of total Internet access. "At the end of 2005 there were 195 million broadband households worldwide, up from 142 million in 2004, an increase of 37%," said Macklin.

"Despite a maturing broadband sector in Western Europe, North America, and some parts of Asia, the large populations of China, India, Russia, Turkey, Brazil, and Mexico, all of which saw strong broadband growth in 2005, will ensure that global broadband subscriber growth remains in double digits for many years to come."

eMarketer estimates that there were 108.1 million broadband users in the US at the end of 2005, with over 40% of US online households still using dial-up. This will decline to less than 15% of US online households by 2010.

Word-of-Mouth Marketing

As word-of-mouth (WOM) marketing picks up steam as a way to build on positive consumer experiences in support of brands and revenues, marketers are seeking hard data about how to direct their WOM efforts.

A new study from Lucid Marketing provides insights, such as the fact that women are more likely than men to share a positive experience with a business (91% to 83%) or recommend an enjoyable product (95% to 89%).

Full-time employees make substantially more daily contacts than those not in the workforce, while those with higher household earnings are more likely to make recommendations than those earning less. The study also shows that women tend to prefer verbal communications to other forms of contact, whereas men tend to prefer e-mail.

Google Gives P2P Insights

Excerpted from Slyck.com Report by Thomas Mennecke

Google Trends is a new comparison tool used to compare the search frequency of various topics. The data is an aggregation of searches conducted globally. Google Trends is experimental in nature, although it appears to be accurate enough to demonstrate the popularity of a topic over time.

For example, Google Trends is useful for tracking the popularity of various peer-to-peer (P2P) clients. By comparing mainstream P2P applications, the general popularity trend of each client is apparent.

As progress is made on Google Trends, the information provided should become more accurate. For now however, it gives a generalized indication on popular topics in file sharing, digital distribution, and just about anything else you can think of.

Report from CEO Marty Lafferty

Photo of CEO Marty LaffertyOnline registration and discounted hotel rates are now available for the June 22nd–23rd P2P MEDIA SUMMIT, and the DCIA is continuing to add exciting speakers and special sessions.

New speakers being announced this week include Fritz Attaway, Executive Vice President and Washington General Counsel for the Motion Picture Association of America (MPAA) on the Policy Track, and Srivats Sampath, President & CEO of Mercora on the Marketing Track.

The MPAA is an assembly of seven of the world’s largest producers and distributors of theatrical films, television programs, and home video entertainment. They are the Walt Disney Company, Metro-Goldwyn-Mayer (MGM), NBC Universal, Paramount Pictures Corporation, Sony Pictures Entertainment, Twentieth Century Fox Film Corp., and Warner Bros.

Reporting to MPAA CEO, Dan Glickman, Fritz Attaway provides legal advice and direction for all federal public policy activities of the association. He also participates in the management of worldwide public policy interests for the association and its member companies. The issues of primary concern to MPAA include communications, copyright, and international trade matters impacting MPAA member companies. Fritz joined MPAA in 1976 after serving as Attorney-Advisor in the Cable Television Bureau of the Federal Communications Commission (FCC).

Mercora’s mission is to catalog and organize the world’s music and make it universally searchable and legally listenable. Its strategy is to create the world’s largest music catalog by leveraging P2P technologies and user-contributed content formatted as CD-quality broadcasts. Mercora delights its listeners by providing great search, discovery, personalization, and community services. It upholds the letter and spirit of copyright law through compliance and reporting, and pays performance royalties to organizations that represent songwriters and music record labels.

Srivats Sampath was most recently with McAfee before merging the company with Network Associates in 2002. He served as McAfee’s Founding President & CEO from 1998, guiding the company through a successful IPO in 1999, achieving "the top 5 performing stocks" ranking on NASDAQ for 2001, and helping it grow into the largest managed consumer security services company with over 4 million paid subscribers. Prior to founding McAfee, Srivats was with Netscape Communications, a provider of Internet software and services, as Vice President of Server Product Marketing.

Also new this week, a proposed working group, focused on sharing information regarding successful case studies that involve profitable marketing of copyrighted works using P2P technologies, will hold its formative meeting at the P2P MEDIA SUMMIT. Of particular interest to this group initially will be data from the numerous promotional and ad-supported projects underway in the file-sharing marketplace. Interested parties should call 888-890-4240 or e-mail karen@dcia.info for more information and to sign-up to attend this meeting.

In conjunction with this first annual DCIA Conference & Exposition, DCIA Government Relations leader Doug Campbell will lead a delegation to the Hill to update key legislators and other federal agencies on the latest advances in commercial development of P2P as a viable distribution channel. Space is extremely limited, so please call 888-864-3242 or e-mail doug@dcia.info this week if you wish to participate in this additional activity.

As previously noted, the P2P Digital Watermark Working Group (PDWG) will hold its quarterly meeting during the P2P MEDIA SUMMIT and publicly report on its progress to date. The PDWG is planning to organize and conduct a pilot study and recommend voluntary practices based on its results. Please call 888-864-3242 or e-mail pdwg@dcia.info.

P2P MEDIA SUMMIT keynotes will include P2P program distribution executives representing the world’s largest file-sharing networks, the best-connected P2P service offerings, and the most advanced file-sharing software applications available today, plus stimulating panels featuring diverse leaders from this emerging high-growth industry.

Special sessions will feature Friend Media Technology Systems’ (FMTS) new P2P information system, the BBC-BitTorrent-CacheLogic-NTL trial in the UK, and Alston & Bird’s P2P-firm value optimization workshop.

Our live entertainment showcase for the June 22nd DCIA Conference networking cocktail reception is being executive-produced by Music Dish Network’s Eric De Fontenay; our outstanding artists will include Drew Gonsalves, Kirsten DeHaan, and Scooter Scudieri.

The June 23rd DCIA Exposition is being held in conjunction with the Digital Media Conference, and your registration for the full DCIA Conference & Exposition includes that event as well.

Now in its third year, the Digital Media Conference is a "must-attend" event for media, entertainment, and technology businesses, educational institutions, and government agencies involved in the digital distribution of media.

Exhibits and demonstrations will feature industry-leading products and services. Additional exciting speakers and special sessions will be announced in coming weeks.

Don’t miss the opportunity to participate in this 2006 inaugural event. You may register online or call 888-864-3242 to register. For sponsor packages and speaker information, please contact Karen Kaplowitz, DCIA Member Services, at 888-890-4240 or karen@dcia.info. Share wisely, and take care.

Altnet Settles Patent Case

In 2004, DCIA Member Altnet, its parent company Brilliant Digital Entertainment (BDE), and Kinetech, a patent licensing firm, filed a lawsuit in US District Court alleging patent infringements by the Recording Industry Association of America (RIAA), Loudeye, Overpeeer, Media Sentry (now part of SafeNet), and several individuals.

Overpeer and Media Sentry were engaged by the music industry to flood peer-to-peer (P2P) systems with "spoofed" (i.e., fake) files. The plaintiffs alleged that these files were damaged or otherwise counterfeit and that the methods used to distribute them infringed two patents critical to P2P business. The lawsuit came after RIAA executives and other defendants received multiple notices regarding the subject patents and their infringement.

Altnet, on behalf of the plaintiffs, announced this week that a settlement has been reached with the Loudeye and Overpeer companies. Overpeer admitted that its P2P interdiction activities infringed the TrueName patents as alleged. Both companies have further undertaken not to engage in those activities in future.

Altnet CEO Kevin Bermeister said, "We welcome this settlement as an important step toward the acknowledgement and recognition of the TrueName patents as a prerequisite to legitimate utilization and exploitation of P2P technology. This validates the position Altnet has held with regard to treatment of piracy occurring within P2P applications and establishes with clarity the underlying importance for Altnet to be considered an integral part of the future online entertainment industry."

The settlement was filed in the Los Angeles District Court and the case against the remaining defendants will continue with a trial likely in 2007. The Speck Consulting Group has been engaged to manage the Altnet patent enforcement program.

NetAlter’s P2P System

The edge of the Internet is dominated by a largely undiscovered mesh of information beyond the reach of major search engines and other online information retrieval tools. Easy availability of inexpensive bandwidth and local processing power in the form of powerful personal computers has brought P2P computing to the forefront.

Besides file sharing, P2P can also offer real-time cost-effective collaborative solutions such as personal networking, grid computing, enterprise solutions, etc. After years of research and development, NetAlter Software has conceptualized its personal networking tool, the NetAlter P2P System.

Its System is based on a unique Information, Communication, and Computation (ICC) architecture which provides for a P2P framework that serves as a mechanism for peer discovery and interaction among computers. NetAlter offers its disruptive P2P solution based on advanced features and functions using a trusted flexible hierarchical layer model.

Users who want to take advantage of NetAlter functionality install a browser application that offers P2P connectivity and collaboration. Once installed on their PCs, users can form personal networks by encouraging other people to install the browser application and register with their group.

Discovery of NetAlter-based communities by other people and groups is initiated using a super-node directory which is listed on the highest capable node in the network with the maximum available bandwidth and local resources in terms of processing power and disk storage. These super-nodes function as proxy discovery servers; hence the system has very low downtime.

NetAlter serves both the client-server as well as P2P model so that users can take best advantage of both systems following open and publicly available protocols, which makes the cost minimal. Security issues are addressed using a proprietary standards-based digital media verification process that ensures uniqueness of identity and auditing of transaction inventory.

Please click here for a white paper on NetAlter’s P2P System for personal computing.

ISP Cuts Costs with P2P

The leading telecommunications company in Thailand, True, has reduced bandwidth costs by 60% with an advanced solution from PeerApp. UltraBand 2000 caches popular P2P content at this Internet service provider’s (ISP) and multiple system operator’s (MSO) service locations. This cuts bandwidth needed for P2P file transfer and sharply reduces True’s international traffic as well.

PeerApp developed UltraBand 2000 as a scalable, multi-gigabit, carrier-grade solution. Among the benefits True cited are that UltraBand 2000 places P2P bandwidth capacity under its control, eliminating the vagaries of leasing additional bandwidth at market rates. UltraBand 2000, markedly contains costs, works with all P2P protocols, and is transparent to subscribers during both their P2P & non-P2P experiences.

"In addition to controlling its bandwidth costs, True is now able to manage peak and seasonal P2P traffic, and prepare for future P2P traffic growth. The content acceleration feature of UltraBand 2000 provides new revenue opportunities for ISPs. A return on investment (ROI) is realized within a matter of months," said Robert Mayer, CEO of PeerApp.

UltraBand 2000 caches P2P traffic on scalable Dell blade servers using EMC SAN storage technology. In addition to supporting all major P2P file-transfer protocols, the PeerApp solution manages millions of concurrent connections, while residing in a centralized location to expedite maintenance. UltraBand 2000 supports ISP networks with up to 90% P2P traffic achieving over 80% hit ratios.

PeerApp’s market potential is particularly high in Asia, as well as South America and the Middle East, where undersea cable access is falling behind broadband subscriber growth. The huge customer base of ISPs in the US, such as Verizon, Comcast, and AOL, plus traffic volume on US networks make PeerApp’s technology a viable solution in North America as well.

Skype Goes for Broke

Excerpted from Business Week Report by Olga Kharif

Using DCIA Member Skype’s bargain-basement phone service just got even cheaper. Skype customers can now make calls from personal computers to landline or wireless phones within the US and Canada for free, instead of the usual 2-cents-a-minute.

The web calling company was acquired by auction giant eBay in October for $2.6 billion. Skype founders Niklas Zennström and Janus Friis and other Skype owners and executives stand to get a windfall of about $1.5 billion if certain growth targets are met in the coming years. EBay hasn’t specified what the goals are, but they center on sales, gross margin, gross profit, and the number of active users of Skype’s service.

Skype says it’s pleased with its growth. According to Henry Gomez, General Manager for Skype in North America, "We are very, very satisfied with the growth, it’s been flying."

Kontiki Powers Film Network

Ioko, a specialist in digital and on-demand media, and P2P software firm Kontiki (now part of VeriSign), a leading provider of intelligent infrastructure services for the Internet and telecommunications networks, have partnered with the BBC to launch the BBC Film Network.

The interactive online service, which is free to the first 10,000 subscribers, allows emerging British filmmakers to showcase their work online and gives viewers up-to-the-minute access to the latest short-film releases.

The service has been developed and managed by Ioko using Kontiki’s Delivery Management System (DMS). By providing licensed distributed online media content, users now have access to entertainment that was previously limited to television and cinema channels. It brings an advanced level of quality screening to UK film lovers via PCs and enables British producers and filmmakers to distribute DVD-quality short films to a broader audience.

The Kontiki platform was chosen because security, speed, value, and ease-of-use were key business objectives for the service. Fast download speeds are ensured through secure P2P delivery technology, with an average download time of a short film taking 15 minutes using a one-megabit broadband connection.

After subscribing to the service, viewers can receive e-mail alerts on the latest short films as they are released and when downloads begin. Subscribers automatically receive new films, eliminating the need to search for them. Once downloaded to a PC, films can be viewed repeatedly for 28 days, after which time files are automatically removed from the hard drive. Windows Media Digital Rights Management (DRM) technology is used to grant a user license once the film commences playing and then monitor the usage period.

P2P Pando Raises $7 Million

Excerpted from Digital Media Wire Report

Intel Capital, the venture arm of chipmaker Intel, has led a new seven-million dollar funding round for Pando Networks, developer of a P2P distribution network for consumers’ digital media. Pando said that the investment will support the launch of its first consumer offering, a network for sharing personal media, such as home movies, family photos, and business presentations that are too large to send through e-mail. The system runs through a free, downloadable application.

Go-Kart Records Online Release

The European arm of DCIA Member Go-Kart Records is streaming the entire album of its upcoming release, Germany’s own "The Very Job Agency." About a year ago, band members decided to quit their day jobs and make money by going on the road to play shows full-time. This went so well that the band has now played over 80 shows without having an album out. This will change with Go-Kart’s release of their same-titled debut album in Europe in early June. Please click here to listen to the new album.

P2P Network for Podcasts & People

Excerpted from Washington Post Report by Frank Ahrens
Morpheus, the popular P2P file-sharing software, is celebrating its fifth year in existence – and a bumpy five years it’s been – with a new version allowing users to share podcasts.

Last summer, the Supreme Court ruled that such services can be liable for copyright-infringing activity of their users. Grokster shuttered in November 2005. Other services settled with the entertainment industry and launched sanctioned services. Morpheus-owner StreamCast Networks also looked to settle, but last month said the talks had collapsed and now seeks a jury trial.

During all this, StreamCast has pushed onward, now to embrace podcasting – recordings of everything from college lectures to garage-band music for use on MP3 players, chiefly, the Apple iPod. Podcasts let users download, say, Rush Limbaugh’s daily radio show, and play it whenever they want.

The new Morpheus 5.2 lets users upload their audio and video podcasts, search for other podcasts on the Web, and download them.

For StreamCast, the benefits are obvious: adding podcasts means more users, and more users means more ad revenue for the free version of its software. Also, perhaps more importantly: fewer copyright problems. Though podcasts are copyrighted like all music and movies generated by labels and studios, most amateur podcasters do not forbid distribution of their work. Therefore, Morpheus should not get in legal trouble for facilitating their swapping around the web.

Sharman Sues P2Pnet.net

Excerpted from Slyck.com Report by Thomas Mennecke

DCIA Member Sharman Networks retains the intellectual property rights to Kazaa, the P2P client that connects to the FastTrack network. On May 10, 2006, Sharman Networks and CEO Nikki Hemming filed a libel complaint against Jon Newton of p2pnet.net, Interserver, Inc. (p2pnet’s webhost), "John Doe," "Jane Doe," "Richard Roe," and "Jane Roe."

In response to an inquiry from Slyck.com, Sharman Networks detailed additional information on its motivation for the libel complaint. "Sharman Networks Limited and Nikki Hemming have filed a libel lawsuit in the Supreme Court of British Columbia against Jon Newton of www.p2pnet.net.

The Writ of Summons charges that Mr. Newton has published false and injurious statements which are calculated to damage Ms. Hemming and Sharman Networks.

The writ was delivered following two formal attempts, on May 5 and May 8, requesting Mr. Newton to remove the material in question and post an apology on www.p2pnet.net. Only after being served with the writ did Mr. Newton act to remove – if only temporarily – the defamatory material.

The libels were so gratuitously offensive, personal, and unnecessary that Miss Hemming had little choice but to respond by asserting her rights through legal action after attempts to remedy the matter without litigation failed. The libellous story and postings complained of in the writ were so significantly beyond anything relevant to any business matters in the P2P market that Sharman Networks Limited and Ms. Hemming felt they had no option but to take action.

"Sharman Networks Limited and Ms. Hemming are suing for general, special, aggravated, and punitive damages."

Nettwerk Music Group Exhibits

Excerpted from Archinect Report

SOUNDINSIGHT, 20 Years of Art in Music, opens May 25th at The SYNC in Vancouver before also traveling to Los Angeles and Nashville. The exhibit documents DCIA Member Nettwerk Music Group’s dedication to the arts - featuring limited-edition prints from albums by Sarah McLachlan, Delerium, and Barenaked Ladies. As well, it will showcase new conceptual and interpretive art, highlighting the present-to-future progression of Nettwerk and Artwerks Design. Featured works include art for Avril Lavigne, Billy Talent, and Old Crow Medicine Show.

Coming Events of Interest

  • First Annual DCIA Conference & Expo – June 22nd-23rd at the Intercontinental Holiday Inn, Tysons Corner, McLean, VA. The first-ever global P2P MEDIA SUMMIT will cover policy, marketing, and technology issues affecting commercial development of this emerging high-growth industry. Exhibits and demonstrations will feature industry-leading products and services. For sponsor packages and speaker information, please contact Karen Kaplowitz at 888-890-4240 or karen@dcia.info. DCIA Members Music Dish Network and Javien are our media and e-commerce partners respectively. Plan now to attend.

  • Washington Digital Media Conference – June 23rd at the Ritz-Carlton, Tysons Corner, McLean, VA. DCIA Conference & Expo attendees can attend this executive briefing on emerging business, policy, and technology issues & opportunities at half-price. This is a must-attend event for media, entertainment and technology businesses, educational institutions, and government agencies involved in the digital distribution of media. The Washington Post calls the event: "a confab of powerful communicators and content providers in the region."

Copyright 2008 Distributed Computing Industry Association
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