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February 12, 2007
Volume 16, Issue 8

Chip Venters on Super-Distribution

Whether or not you attended the P2P MEDIA SUMMIT NY last week, please click here for Digital Containers CEO Chip Venters’ definitive discourse on super-distribution. Chip’s portrayal of a content super-distribution ecosystem for the creation, distribution, and sale of digital goods in distributed networks provides a brilliant road-map for success.

When adopted, among other benefits, Digital Containers’ approach will render the latest dispute between Apple and the Recording Industry Association of America (RIAA) moot. In his presentation, Chip illuminates a practical and comprehensive process for optimizing commercial distribution of copyrighted works by means of peer-to-peer (P2P) technologies.

Les Ottolenghi on Monetizing P2P

Excerpted from CNET News Perspective by Les Ottolenghi

Intent MediaWorks CEO Lee Ottolenghi says the more consumers learn about file sharing, they less willing they are to pay for content. Once media-hungry consumers get a taste of free music, video, and games through file sharing, there's no turning back. File sharing offers consumers the complete package: rich media delivered directly to their computers, phones, and e-mail addresses at no charge. Why would anyone want to return to a linear distribution system that requires more effort, more money, and more limitations?

The millions of people now sharing music and video via computers, cell-phones, and e-mail represent an unprecedented distribution force. This viral super-distribution model is fast and efficient, and consumers love it. The proliferation of file sharing has produced a market that is now flooded with "free" media. While media consumers revel in their bonanza of digital goodies, the entertainment industry struggles with the question of what to do about file sharing.

The entertainment industry is all about change and is usually pretty agile when it comes to adapting to new developments, but file sharing has been an endless source of frustration. Reeling from the initial shock of seeing profits drop, the entertainment industry's first response was reactionary. Even a novice marketer should have known that lawsuits were not only an unsustainable strategy; they would alienate the fan base – never a good idea. Seeking new ways to promote and protect old mechanisms such as CDs hasn't worked, either.

Apple rallied with iTunes, a solution dependent on sharing content through one vehicle, the iPod. File sharers thought it was cute, for about a minute. Today, consumers want access to all portals (web, cell-phone, MP3 players) and all media. They refuse to be locked down to one platform. While iTunes continues to be the best-known site for downloads, its popularity may have peaked.

According to analysis by Forrester Research, iTunes experienced a collapse in sales revenues in 2006. From January to December, monthly revenue plummeted 65 percent, and the average transaction size reportedly dropped 17 percent. If consumers are not turning to services like iTunes for their music, where are they going? The store? Hardly. CD sales have fallen 23 per cent over the past five years.

The good news for the industry is that a huge fan base with a potential for extraordinary profit has emerged. Opportunities for profit lie within the P2P distribution model, including an inexpensive path to market for lesser-known groups and new music.

Entertainment companies need to start where any good business model begins – with the consumer. To find profit in the realm of super-distribution, media providers have to follow the one thing that crosses all media and all portals, and that is the file itself.

As music and video files travel from websites to social networks, and from phones to file-sharing services, there are means to track them every step of the way. Like an electronic E.T., a digital media file can phone home at each new location, providing a data portrait of the types of consumers who have an interest in that particular medium. The information captured creates a clear picture of a market and allows companies to develop campaigns to reach specific target audiences.

Advertisers, for instance, will pay big bucks for a well-defined market like that.

Unlike lawsuits and decoy files, ad-supported downloading is just one of the many promising ways to bridge the digital divide. The super-distribution model carries content from one consumer directly to more similar consumers. This opens the door to a new breed of advertising, promotions, and even targeted selling. Advertisers won't have to conduct surveys to determine where they should send a piece of direct mail or in which cities to purchase airtime.

Market opportunity abounds for those who adapt and embrace two critical strategies: first, embrace file sharing and adopt creative new business models, unlocking adjunct revenue from sources with deep pockets; second, be willing to pay for an innovative inroad into increasingly well-defined markets.

The future of music is P2P file sharing. Consumers have opted out of the old system, which they found cumbersome, slow, and expensive. They will never return.

Report from CEO Marty Lafferty

Photo of CEO Marty LaffertyThanks to all who participated in the P2P MEDIA SUMMIT NY, the DCIA’s best attended and most productive conference to date. Congratulations also to Digital Hollywood for its highly successful Media Summit New York (MSNY).

Attendees were deluged with valuable information and introduced to many important contacts. Participation in these timely NYC events will help accelerate development of delegates’ businesses.

The DCIA plans to post P2P MEDIA SUMMIT NY presentations here during the week ahead to facilitate further discussion.

Meanwhile, please click on these links to download three white papers published for the summit: DIGITAL WATERMARK TECHNOLOGIES: Applications in P2P Networks from the P2P Digital Watermark Working Group (PDWG), Couch Potato Famine: Prospering through an Era of Disruptive Change in Media from FTI Consulting, and Fixing What’s Badly Broken from Bennett Lincoff Law.

Underscoring the latest conflict between Apple and the RIAA this week were reports of increased growth in unlicensed music distribution via open P2P networks.

We commend the music industry for settling copyright disputes with major P2P program distributors and for licensing several instances of closed P2P offerings, each of which holds enormous promise. This has effectively laid groundwork for the real work that still must be done.

We urge label and publisher leaders now to work in earnest with DCIA Members to monetize the exponentially greater and steadily increasing consumer traffic in the open P2P environment.

The tools exist to support a mix of promotional, branded, ad-supported, co-sponsored, packaged, subscription, and paid-download P2P music business models – with varying degrees of content management solutions – to optimize the still virtually untapped multi-billion dollar opportunity represented by music file-sharing demand.

It is not a question of DRM yes or no, but rather how much, where, and when. To what degree should third-party payments for aggregated audiences play a role and to what degree should direct listener payments play a role. The P2P distribution channel is sufficiently robust to simultaneously accommodate and support an unprecedented range of music commercialization.

With major P2P litigation completed and content licensing underway, now is the time for music companies to experiment with many different approaches to P2P revenue generation.

Through such efforts, the optimal mix of sponsored and paid distribution can be determined based on response from this enormous marketplace, which currently demonstrates demand in excess of a billon music tracks per month.

Meanwhile, we are thrilled with progress being made in the exploration and adoption of P2P for commercial purposes by the motion picture and television industries.

Those who attended the P2P MEDIA SUMMIT NY realize that last week’s self-serving admonitions from YouTube owner Google about the Internet being unable to accommodate video distribution are no more accurate than a pre-cable TV broadcaster saying there could never be more than twelve TV channels.

There will be vastly increased efficiency of video distribution through P2PTV and related hybrid distributed computing technologies such as swarming, caching, streaming, and content acceleration, thanks to companies like Abacast, CacheLogic, damaka, Oversi, PeerApp, Raketu, RawFlow, and VeriSign.

P2PTV is off to a terrific start in 2007 with much more to come. P2P MEDIA SUMMIT NY delegates had the opportunity to learn firsthand about exciting innovations from such services as Babelgum, CyberSky-TV, Democracy TV, Joost, Octoshape, Pando, PeerTV, PPLive, Ppstream, SopCast, StreamerOne, Tvants, TVKoo, TVU-Player, and Zattoo.

The DCIA will work with P2PTV developers to ensure compliance with copyright laws and provide opportunities for the most attractive of these technologies to have a significant presence at NAB.

INTENT MediaWorks, the DCIA, the Digital Watermarking Alliance (DWA), and the Motion Picture Association of America (MPAA) last week publicized the completion and distribution of "DIGITAL WATERMARK TECHNOLOGIES: Applications in P2P Networks."

PDWG Chairman Les Ottolenghi also led a meeting of the working group in New York. Representative Member companies of the DCIA reconfirmed their willingness and desire to move forward to design proof-of-concept testing and market trials working with digital watermarking vendors and content providers. The testing design process would remain open and under trade-association guidance as was the white paper.

Leaders for two new DCIA-sponsored working groups were also named at the meeting: one to begin to investigate fingerprinting, metadata, hash-code, and potentially other individual P2P content management solutions (each of which may enlist its own working group depending on initial findings); and one to serve as an oversight content management solutions working group to bring together and integrate the various individual P2P solutions.

Digital Containers CEO Chip Venters has agreed to serve as the leader of the former effort (PIWG), and BUYDRM CEO Christopher Levy has agreed to serve as the leader of the latter effort (POWG).

Interested qualified parties who would like to explore participating in one of the P2P individual content management solutions groups may contact chip by e-mailing PIWG@dcia.info, and those interested in participating in the P2P oversight content management solutions group may contact Christopher at POWG@dcia.info.

Parties who would like to explore participating in the original P2P Digital Watermark Working Group can contact Les at PDWG@dcia.info. Share wisely, and take care.

iMesh Receives Pioneer’s Award

The 2007 DCIA Pioneer’s Award was presented to iMesh and accepted by its Executive Chairman Robert Summer at the first annual P2P MEDIA SUMMIT NY on Tuesday February 6th at the Princeton Club of New York.

The DCIA Pioneer’s Award is presented annually to that company which has demonstrated the greatest persistence on the forefront of transitioning distributed computing technologies for commercial purposes.

iMesh was the first popular P2P file-sharing program to settle copyright grievances and re-launch as an entertainment industry sanctioned service. iMesh has pioneered the subscription business model and led the way in licensing content for authorized P2P distribution. The company now operates what has become the longest standing P2P service in the world.

Work on iMesh began in 1998, with the introduction of the first iMesh in 1999 - slightly after the original Napster. iMesh was the first to introduce many technologies to the P2P world, such as multi-source downloads (known today as swarming), effective resumes, video downloads, offline searches, and more.

In July 2004, iMesh made history by being the first file-sharing service to announce an agreement with the US major record labels. Today, iMesh is leading the revolution once again, being the first company to offer an authorized file-sharing service. This new service blends free file sharing with authorized content, a vibrant community, and more.

The P2P MEDIA SUMMIT NY featured keynotes from top P2P software distributors, panels of industry leaders, a luncheon session, and networking cocktail reception with live entertainment.

Net Grows to Meet Fresh Demands

Excerpted from BBC News Report by Darren Waters

Last week a Google executive said the net would struggle to deliver high quality video over the web.

Vincent Dureau, Google’s head of TV technology, said that the web could not scale to meet surges in demand and so could not deliver a good experience. "It’s not going to offer the quality of service that consumers expect," he said.

Many analysts are predicting an explosion in video over the web in the coming years, along with demand from other services such as social networking and Internet telephony.

Internet service providers (ISPs), networking companies, and content providers are all re-thinking how the network is used to deliver material such as video and audio.

VeriSign, which provides the backbone for much of the net, including domain names .com and .net, is investing $100 million (£51m) over the next three years to increase bandwidth tenfold for new services.

Ken Silva, Chief Security Officer at VeriSign, told BBC News, "The Internet for the last decade has grown primarily based on user interaction, such as going to a website or sending an e-mail. That’s going to change pretty dramatically. Things that never were on the network before will be on it."

He said mobile phones, net telephony, and TV delivered via the net were going to force explosive growth on the net.

"We used to count Internet devices based on the number of computers connected to the net, now it is going to be the number of objects."

The data involved in one hour of video can equal the total in one year’s worth of e-mails, and the advent of high definition video is putting greater demands than ever on the net.

Analyst Gartner reports that over 60% of all data uploaded from computers is P2P traffic - data being sent from one computer to another.

And research by CacheLogic says that 60% of the P2P traffic on the net is video - be it a TV show or a movie. On average, across the world, these files are 1GB in size, it reported.

The chief executive of Joost, one of the most talked about online video services recently, is confident that the net will deal with the new tasks thrown at it.

Fredrik de Wahl said, "The infrastructure providers have done a great job expanding network capacity to meet consumers’ desire for more voice, video, and data services. We have every confidence the future needs will be met."

He said innovators would continue to "develop new compression technologies, fiber utilization, and delivery strategies to enable ever-more traffic to flow."

In the UK, BT is trialing its ADSL2+ network which should give customers up to 24Mbps while cable firm NTL/Telewest is trialing broadband with up to 50Mbps.

While in the US, telecoms providers like Verizon are rolling out fiber-optic networks, promising speeds of about 30Mbps and potentially up to 100Mbps.

The fat pipe, as the network is known, is still getting fatter.

2-of-3 Web Users Stream Video Weekly

Excerpted from MediaPost Report by Shankar Gupta

As online video became more prevalent last year, its popularity with web users surged, according to a new study by Advertising.com.

Eighty-four percent of consumers recently surveyed by the ad network said their consumption of online video last year either stayed the same or increased from 2005; 66% now view streaming video at least weekly. Please click here for more.

P2PTV Will Transform Television Online

Excerpted from The Economist Report by Claudio Munoz

Bosses in the television industry have been keeping a nervous eye on two Scandinavians with a reputation for causing trouble. In recent years Niklas Zennström, a Swede, and Janus Friis, a Dane, have frightened the music industry by inventing Kazaa, a P2P file-sharing program widely used to download music.

Then they horrified the mighty telecoms industry by inventing Skype, another P2P program, which lets Internet users make free telephone calls between computers, and very cheap calls to ordinary phones. (The duo sold Skype to eBay, an Internet-auction giant, for $2.6 billion in 2005.)

Their next move was to found yet another start-up – this time, one that threatened to devastate the television industry.

It may do the opposite, as it turns out. The new service, called Joost, and now in advanced testing, is based on P2P software that runs on people’s computers, just like Skype and Kazaa.

And it does indeed promise to transform the experience of watching television by combining what people like about old-fashioned TV with the exciting possibilities of the Internet. But unlike Kazaa and Skype, says Fredrik de Wahl, a Swede whom Messrs Zennström and Friis have hired as Joost’s boss, Joost does not "disrupt" the industry that it is entering.

Instead, rather than undercutting television networks and producers, he says, Joost might, as it were, give them new juice.

That is because Mr. de Wahl and his Joost team, working mostly in the Netherlands, have bravely ignored the totems of the Internet-video boom. Chief among these fashions is letting users upload anything they want to a video service – which might include clips of themselves doing odd things ("user-generated content") or, more questionably, unlicensed videos from other sources.

The celebrated example of this approach is YouTube, which is now part of Google, the leader in Internet search. Its big problem, however, is that it can be infringing (if copyright is violated) and fiendishly hard to turn into a business.

On February 2nd, Viacom, an American media giant, became the latest company to demand that YouTube remove copyright-infringing clips from its website.

YouTube has struck deals with some media firms, including NBC and CBS, to allow their material to appear on its site, and had been trying to thrash out a similar agreement with Viacom.

Many observers regard Viacom’s move as a negotiating tactic. But whether YouTube can make money is unclear. Last month, Chad Hurley, YouTube’s chief executive, sketched out plans for generating advertising revenues and sharing them with content providers, but so far his firm has none to speak of.

Joost is also ignoring the two business models seen as the most respectable alternatives to advertising. One is to make users pay for each television show or film they download, but then to let them keep it.

This is the tack chosen by Apple, an electronics firm that sells videos on iTunes, its popular online store; by Amazon, the largest online retailer; and by Wal-Mart, the largest traditional retailer, which launched a video-download service this week.

The other approach is to let users subscribe to what is, in effect, an all-you-can-eat buffet of videos, and then to "stream" video to their computers without leaving a permanent copy.

This is the approach taken by, for instance, Netflix, a Californian firm that mostly delivers DVDs to its subscribers by post, but now also streams films.

The reason that Joost is ignoring all of these methods, says Mr. de Wahl, is that none has much to do with the experience of simply watching TV, which most people enjoy.

Unlike the download or streaming approaches, he says, "TV is not about buying today what you want to watch tomorrow, it’s about turning it on and watching."

And in contrast to the "lean-forward" context of "snacking" on a YouTube clip in one’s cubicle while the boss has stepped out, TV is a longer and more relaxed "lean-back" experience.

Hence Joost’s most shocking innovation, which is not to change the practices that TV adopted decades ago. It will be free, with advertising breaks — no more than three minutes per hour — either before, during or after a show, depending on the market. Americans, says Mr. de Wahl, are more tolerant of interruptions.

Joost has "channels," like ordinary TV, but these are now play-lists of videos that start whenever it is convenient for the viewer. Viewers can import their instant-messaging buddy lists and chat online with friends while watching the same program.

For advertisers, such engagement is worth something, because the activity proves that somebody is watching, rather than being asleep or out of the room. Combined with other information, such as the computer’s IP address and hence its location, advertisers will be able to target their spots much more accurately –all "Desperate Housewives" fans in a particular neighborhood, for example – and thus ought to pay a premium.

By bringing television to more screens in more social contexts, all this could provide new models for program-makers to finance their productions and offer advertisers new ways to reach consumers. And so Joost and rival services could end up rejuvenating the 75-year-old medium.

VeriSign to Help Internet Users

Excerpted from Blogging Stocks Report by Brian White

Let’s face it – there are hundreds of billions in shareholder equity tied up in the assurance that the Internet will keep humming along, day after day. Companies like Yahoo, Google, and eBay absolutely rely on the uptime of the Internet for the daily operations of their businesses. Take the Internet away, and those three companies go away like turning off a light switch.

So, it comes as good news that VeriSign is upgrading technical areas of the Internet – to the tune of $100 million – to ensure web surfers and customers can get to their virtual destinations more easily. With the rapid growth of the Internet and its user base just in the last five years – with no slowdown coming – this is great news to anyone with investments tied to the functioning of the Internet.

VeriSign manages registration for the .com and .net Internet domains, as well as providing the leadership to assure that typing in www.google.com into your web browser gets you to, well Google. Remember that Internet addresses are actually made of numbers, but to make it easy on customers, letters are used and then are translated on the fly by servers to get you to the correct destination. With both hackers and normal users upping the Internet-based requests every single day, it’s good to know that VeriSign is being proactive. Because, none of us wants the Internet to come to a screeching halt (not that it would happen).

EU Firms Turn to P2P for Next-Gen Comm

Excerpted from VNUNet Report by Robert Jaques

When it comes to embracing next-generation communication systems, European small firms are catching up with their bigger rivals thanks to P2P technology.

Frost & Sullivan reported that the European P2P telephony markets enjoyed a 0.3 per cent penetration in 2006, and estimated that this will reach 3.6 per cent in 2012.

"The availability of large system capabilities at the price of small systems is incentive enough to gain interest from small enterprise stakeholders," said Frost & Sullivan industry analyst Shomik Banerjee.

"What remains to be demonstrated are the fundamentals pertaining to ease-of-use and maintenance."

Banerjee added that the sub-20 employee segment of the enterprise communication market is by far the largest in terms of number of businesses. Moreover, this segment has fallen far behind in the race to use the latest technologies.

However, although the market size and scope is huge, it is highly dispersed, emphasizing the importance of channel effectiveness in order to generate business.

Unlicensed Music Downloading on Rise

Excerpted from Afterdawn Report by Dela

Despite lawsuits filed against thousands of US citizens by the Recording Industry Association of America (RIAA), the number of people engaged in "unauthorized file sharing" and their number of music transfers has soared in the past year. The record industry still wants to stamp out P2P sharing, which it blames almost exclusively for a 23% worldwide decline in sales of music CDs between 2000 and 2006.

To give you an idea of the size of unlicensed file sharing, DCIA industry data resource BigChampagne estimates that over 1 billion tracks are exchanged monthly. Compare that against Apple’s iTunes service, which has sold just over 2 billion songs in total since it launched back in 2003, which also represents over 70% of the licensed music download business.

In essence, P2P currently accounts for 500 times more music files being transferred monthly than iTunes.

Russ Crupnick, an analyst at consumer research group NPD, noted a 7% rise in the number of US households engaged in file sharing, and a 24% increase in unlicensed downloads over the past year.

"P2P remains an unacceptable problem," said Mitch Bainwol, RIAA Chairman & CEO. For more information, please read Yinka Adegoke’s article in Reuters.

To Steve Jobs & Mitch Bainwol

Posted by DCIA Member Bennett Lincoff Law

Following is an open letter to Steve Jobs and Mitch Bainwol prompted by their recent statements regarding the role of digital rights management (DRM).

Mr. Jobs says that DRM cannot effectively protect recorded music when it is transmitted digitally. He is right. The music industry’s many experiments with DRM have all met with effective technological countermeasures. Moreover, news of each successful hack quickly found its way to everyone who cared. There is no reason to believe that the results will be different next time, or ever.

For his part, Mr. Bainwol insists that DRM is essential to the music industry’s survival in the digital age.

The problem is that the Internet is fundamentally incompatible with the music industry’s traditional sales-based revenue model. Through the Internet, the market for sale of individual recordings can be saturated in a moment’s time and without payment of any royalties to songwriters, music publishers, recording artists, or record labels. Neither law, nor technology, nor moral suasion will change this fact.

Mr. Jobs suggests, and I agree, that DRM should be abandoned as a tool for the protection of recorded music. However, before Mr. Jobs can implement his DRM-free utopia, the music industry must have a viable alternative business model by which it can continue to thrive. Mr. Jobs has not suggested one. Mr. Bainwol denies that one is needed; intending, instead, to continue efforts to preserve the industry’s sales-based revenue model. In any event, in the absence of an alternative business model suited for digital transmissions of recorded music, Mr. Bainwol cannot even begin to discuss the possible elimination of DRM.

I propose such an alternative in the attached white paper.

Mine is a comprehensive approach to rights licensing and rights management that does not depend on the efficacy of exclusionary DRM technology for its success. A solution that simultaneously protects the integrity of copyright, promotes technological innovation, facilitates the growth of all manner of licensed digital audio services (including P2P), and meets consumer demand. In the aggregate, music industry rights holders would do no less well financially under my proposal than they do now under the system that my proposal would replace.

With this alternative business model in hand (which includes a plan for its implementation), there can be no further justification for the music industry’s failure to respond constructively to the changed circumstances imposed on it by emergence of the global digital communications network.

Fans, Labels Split on Unlocked Music

Excerpted from LA Times Report by Alana Semuels & Michelle Quinn

A world without digital handcuffs on downloaded music sounds pretty good to Eston Bond, a 21-year old senior at the University of Michigan.

Bond, a self-proclaimed music lover, is sick of the anti-copying software that limits how he can listen to music downloaded from Apple's iTunes and other online stores. If it weren't for those restrictions, he said, he'd buy a lot more music — and listen to it in more ways.

"It would free up a fair amount of my music collection to play on other audio players, and not be locked to an iPod," Bond said.

Music fans who have long wished the recording industry would eliminate anti-copying measures gained a powerful ally this week: Apple Chief Executive Steve Jobs, whose company's iTunes and iPod dominate the online music market.

The recording industry's trade association and some musicians Wednesday derided Jobs' call for record labels to stop wrapping their songs in software that seeks to curb music piracy, but also prevents music purchased through iTunes from playing on Apple competitors' devices and vice versa.

Some loosening of restrictions is inevitable as the music industry grows more comfortable distributing songs over the Internet, the critics said. But they argued that setting music free would roil an industry that is finally pulling out of a five-year slump — one that coincided with the rise of Napster and other online services that allowed widespread piracy.

Rather than dump the copying protections, as Jobs advocated Tuesday, the labels might be more inclined to tweak the rules and restrictions that come with DRM, such as restricting playback of iTunes songs to five computers.

"There's collateral damage if you knock out" DRM, said Ted Cohen, a former EMI Music Group executive and now managing partner at Tag Strategic, a digital music consultancy. "There's a reasonable midpoint that is consumer friendly."

So far, the four major labels have not said if they are considering selling music without electronic locks. They worry it would kill the incentive to buy music.

The RIAA, the record labels' trade group, suggested that Apple adopt an approach that Jobs has already dismissed: license the company's anti-piracy technology to rivals such as Microsoft and Sony, so the music and devices they sell can all work together.

But a few labels and independent artists have experimented with ways to sell digital music without locks.

Through Yahoo Music, EMI sold tracks by Norah Jones and Christian rock band Relient K in the MP3 format, which places no limits on how often a user can copy a song or on what devices it can be played on. EMI spokeswoman Jeanne Meyer called the experiment "positive," but wouldn't disclose further details.

Two major labels are taking another approach: They have signed deals with INTENT MediaWorks, an Atlanta-based company that lets users of LimeWire and other P2P networks download songs in exchange for viewing ads, said President Les Ottolenghi.

15 billion unlicensed songs are downloaded yearly, said Eric Garland, CEO of BigChampagne, a Beverly Hills-based online market research firm that specializes in entertainment. Songs wrapped in anti-copying software are infringed as often as songs that aren't, he said.

"What we have today is a dysfunctional honor-code system," Garland said. "The job for the music industry is to win listeners away from the unauthorized market. And they can do that by giving people a better consumer experience by making it easier to buy music online."

Artists are divided about whether getting rid of digital restrictions would increase the amount of money they make from music.

Many are less concerned about the technical details of how their music is sold online than they are about continuing to get paid, said Jenny Toomey, a rock musician and national director of the Future of Music Coalition, a non-profit organization that represents independent artists.

"Transitions are frightening," she said. "But that being said, the benefits of this technology can't be underestimated."

EMI Pushes MP3-Based Plan

Excerpted from Digital Music News

EMI has been aggressively pushing an MP3-based plan, according to a recent Wall Street Journal article.In early January, an informant told Digital Music News that a major label was preparing to position a large percentage of its catalog as open MP3s, and signs pointed to EMI.

The Journal piece strengthens that argument, noting that the label has been "holding talks with several online retailers about the possibility of selling its entire digital music catalog in the unprotected MP3 format," citing several sources.

EMI has been in advanced discussions with numerous digital music providers, including MTV, Napster, and RealNetworks, and a major portion of those negotiations revolved around upfront cash payments to EMI. The one-time payouts were positioned as an insurance policy against potential losses, according to the piece.

The providers balked at those demands, according to various sources, though EMI subsequently requested counter-proposals. That is part of an ongoing negotiation, and one that could result in a major move. The development heightens the importance of an open letter by Steve Jobs, which called for labels to drop protections from their digital catalogs.

The ongoing EMI discussions may have spurred the Jobs letter, though other labels remain unenthusiastic. The RIAA was first to rifle back against the Jobs proposal, and Warner Music Group Chairman Edgar Bronfman, Jr. sounded the protectionist message on Thursday.The other majors, Universal Music Group and SonyBMG, have also been siding with DRM.

P2P File Sharing is Here to Stay

Excerpted from Warez.com Report

Finally, a mainstream media outlet has managed to put two and two together and come up with 3.75, as close to 4 as it’s likely to get.

There’s a huge disparity between what’s happening in the real world of online music and the fictitious corporate world reported by the world press, relying on data self-generated by Warner, EMI, Universal Music, and SonyBMG.

To all intents and purposes, there’s only one corporate player: Apple. And stacked against what happens every minute of every day of every month on the P2P networks and independent download sites, Apple’s claimed sales, unsubstantiated and unaudited as they are, don’t amount to a hill of beans.

According to Fox News, "Despite success in suing people who download music without authorization, the music industry is still bleeding millions of dollars in sales to online infringement."

It would be more accurate to say it’s hemorrhaging money because of bad management, bad business decisions, and bad product as it tries to sue its own customers into toeing the corporate-drawn bottom line.

"It is a major issue for an industry that is desperately trying to boost revenue from licensed downloads to make up for falling sales of compact discs (CDs)," says Fox.

In contradiction to a statement made last year claiming file sharing has been "contained" and "is flat," the story has RIAA boss Mitch Bainwol now saying "folks" engaged in file sharing, "are doing more of it."

Meanwhile, "the industry’s strategy continues to be to slow down P2P sharing and hope that digital music sales will eventually make up the shortfall," says the story, which has Larry Kenswil, Universal Music’s top digital executive admitting something the P2P community has known since day one, namely, "P2P is not going to go away."

However, he also says, "The relative problem will drop for us." Not until the "Big 4" stop trying to sue their customers into buying low quality, grossly over-priced product and admit that business models from the 1970s don’t, and won’t, work in the digital 21st century.

Coming Events of Interest

  • ISOC-IL/IPv6 Forum-Israel Conference – February 19th-20th in Tel Aviv, Israel. The IPv6 Forum-Israel is presenting two days of panel sessions, tutorials, and hands-on training in IPv6 at the Annual 2007 ISOC-IL (Israel Internet Association) Conference. The IPv6 Forum-Israel program can be found at www.ipv6forum-israel.com. To register, please visit www.isoc-il-org.il. Or for further information, please e-mail info@ipv6forum-israel.com.

  • CONSUMER 2.0: Meeting the Demands of the Connected Consumer - February 21st-22nd in Toronto, Canada. The era of mass media is giving way to one of personal and participatory media. People no longer passively consume media but actively participate, which usually means creating content, in whatever form and on whatever scale. To remain relevant, advertisers and the media need to tap into this energy for innovation and communication by integrating the social media with their marketing mix.

  • Digital Music Forum East – February 27th–28th in New York, NY. For the past six years, the most influential decision-makers in the music industry have gathered at Digital Media Wire’s annual music conference. They come to network, do deals, and share ideas about the future of the music business. Participants have described the event as a "melting pot of the best of the best in digital music" where ideas are shared and opinions don’t go unchallenged.

  • IPTV World Forum – March 5th-7th in London, England. Mikkel Dissing, CEO of DCIA Member RawFlow, will speak on "TVoverNet: Threat or Opportunity." The company will also demonstrate SelfCast, its revolutionary new live publishing tool for user-generated broadcasting at Booth 70. SelfCast can be built into any existing social community site to allow for live broadcasting of video and audio.

  • Cross-Media Metadata Summit for Content Description, Visibility, Search, and Discovery – March 9th at the Frontline Club, London W2, England. The summit will identify strategies and tactics to drive adoption of metadata syndication ecosystems that enable content owners to increase visibility of their content.

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