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August 24, 2009
Volume XXVII, Issue 8

From Foe to Friend: Kazaa Founder Now Infringement Fighter

Excerpted from Sydney Morning Herald Report by Kelsey Munro

A few short years ago, Kevin Bermeister was the music industry's public enemy number one, pursued by lawyers and private investigators over his file-sharing business Kazaa. Now Mr. Bermeister, who paid out a reported $150 million in a 2005 legal settlement with the major labels, has created a new weapon against music infringement that could make him the industry's new best friend.

Called Copyrouter, it is technology that detects when a user is trying to download a copyright-infringing version of a song from a file-sharing network, and replaces it with a legitimate - paid - version. Users are asked before the download if they agree to pay for the copyright-protected version through their next monthly Internet service provider (ISP) bill.

In an ongoing Australian trial, preliminary results revealed yesterday suggest around 30% of the diverted transactions result in the user agreeing to pay. The idea is the technology could ultimately be rolled into an "all-you-can-eat" or subscription model for music bundled with the bill from your ISP.

"When I started Kazaa in 2001, we went to the music industry and said, 'We think we can move piracy to a paid model'," Mr. Bermeister said. "That's how we started. We got into trouble because we got too close to the piracy, because the industry wanted to make a point, because of a variety of reasons.

"But in the end, we remain very focused on what we believe is the driving factor behind consumers that use P2P-based file-sharing software - and that's convenience. People drift towards the most convenient solution. It's powered by free, but if it wasn't convenient it wouldn't matter; people wouldn't go to it even if it was free."

He argues that ultimately consumers, rights-holders, and ISPs will benefit from consumers paying for content, dismissing privacy concerns by pointing out that Copyrouter only looks for "absolute acts of infringement."

The technology, developed by Cisco Systems, works at the local ISP level by identifying the unique bit-sequence that exists in a particular file. If that file is an infringing copy of a song, its number is stored in a database, owned by Bermeister's company, called the Global File Registry.

Up to 300 infringing versions of copyrighted songs may be "mapped" to the one legitimate copy, so when a user attempts to download an infringing copy, he or she is automatically steered to the licensed version.

Mr. Bermeister, who runs his US company Brilliant Digital Entertainment from his home in Sydney, announced the preliminary results of a three-month Australian case study involving 8,000 customers of three small ISPs at the Australasian Music Business Conference at Olympic Park this week.

"The labels are very excited and anxious to see something come to fruition," Mr. Bermeister said. "The ISPs are cautiously optimistic and I think deservedly so." A US trial of the system is expected to begin later this year.

Kazaa was relaunched in July for US consumers as a paid file-sharing service.

QTRAX Announces Global Roll-Out

QTRAX announced this week that it will begin its highly anticipated global roll-out with a launch in the Asia pacific region on Thursday October 29th. Initially, the P2P music service will operate in China, Hong Kong, Taiwan, Philippines, Indonesia, Singapore, Malaysia, Australia, and New Zealand.

Before the end of the year, QTRAX will also launch in the US & Canada and the UK. Within the first-half of next year, it will roll-out to the rest of the world.

"Asia and, in particular, China is a very compelling place for a global Internet and music company to initiate its roll-out. There are a myriad of stats that could be quoted, but here are a few key ones: China had 298 million Internet users in 2008 and is growing at an annual rate of 41.9%. In Asia, Internet users grew by 474.9% between 2000 and 2008, as opposed to 280.7% for the rest of the world. More than any other online activity, China clobbers the US and the rest of the world in terms of music downloading - 83.7% download music in China versus less than 40% in the US," said Allan Klepfisz, QTRAX President & CEO.

"Entering the Asia-Pacific region with marketing relationships that not only deliver audience but also advertisers and consequently revenue, holds a lot of promise as far as we're concerned," added Klepfisz. "And these are areas where music has not been fully monetized. Unlicensed sites have dominated, but even the local incarnations of authorized sites have not produced notable results. Principally, this has been because of inadequate work on the ground to ensure revenue," continued Klepfisz.

"In my decades of dealing with the advertising industry, I have never been confronted with an unfolding opportunity of these dimensions," observed Lance Ford, Chief Sales & Marketing Officer and Co-President, Rebel Digital.

"Blue chip global brands, with whom I have done business throughout my career, will, I believe embrace the opportunity of reaching the 13-35 demographic via QTRAX," commented Robin Kent, Chief Strategy Officer and Co-President, Rebel Digital.

"After years of intense licensing efforts, resulting in a completely unique set of licenses, it is truly exciting to have our global roll-out begin imminently," added Rick Riccobono, EVP Global Rights Licensing, QTRAX.

"We have developed some substantial funding and strategic support in Asia-Pacific and I am very pleased to see QTRAX come to fruition in the region," commented Chai Ong, Executive Director, QTRAX.

QTRAX is the world's first free-and-legal P2P music service and showcases an innovative ad-supported downloading model that easily directs revenue back to artists and rights holders.

QTRAX has successfully signed licensing deals with major labels, music publishers, and leading indies. QTRAX will soon provide fans with access to a colorful and diverse catalog with millions of high-quality, high-fidelity digital music files. Based in New York, NY, QTRAX is a subsidiary of Brilliant Technologies Corporation, a publicly traded technology holding company.

BreakingPoint Emulates P2P Download and Streaming Networks

According to a study by iPoque, a leading European provider of deep packet inspection (DPI) solutions, P2P continues to dominate network bandwidth, comprising 43-70% of Internet traffic depending on region. This same study also revealed that P2P streaming is now the fastest growing application across networks.

The ability to test network equipment and application servers using both of these popular application protocols is now critical to ensuring the performance and security of network devices.

BreakingPoint now provides realistic network traffic simulation of the world's most used P2P download and streaming applications for realistic testing of network equipment and application servers.

PPLive, the world's largest all-video network, is a P2P streaming video service that was created at Huazhong University of Science and Technology. PPLive streams live television and film programs on top of hundreds of millions of video clips, films, and plays.

QQLive is an interactive P2P distribution platform for streaming media developed by Tencent, China's largest and most used Internet service portal. QQLive has more than 100 TV channels and can be viewed in a variety of ways including through the web and desktop programs.

In October 2008, BreakingPoint introduced support for China's QQ instant messaging (IM) application, the most used IM application in the world.

This week's addition of QQLive and PPLive provide BreakingPoint users with complete and realistic testing of the world's most used P2P, IM, and video streaming applications including encrypted BitTorrent, eDonkey, Gnutella, PPLive, and QQLive.

Dennis Cox, BreakingPoint CTO notes, "P2P applications are clearly the most popular protocols on networks today; the immense popularity of PPLive and QQLive are simply the latest evidence." 

"As millions of people use these and other similar applications, it becomes crucial for service providers and network device manufacturers to adopt new testing methodologies."

"Testing today's network equipment and application servers means simulating the real network; a diverse set of global applications, realistic throughput, and live security strikes. Ignoring these factors is a sure-fire recipe for network performance degradation and security vulnerabilities. BreakingPoint testing tools are updated weekly with the latest application protocols and security strikes. Your network doesn't stay the same week after week, neither should your testing equipment."

Report from CEO Marty Lafferty

Photo of CEO Marty LaffertyThe DCIA is working with Digital Hollywood and the P2P-for-Games Working Group (PFGWG) to present our first-ever day-long P2P & GAMES CONFERENCE in Santa Monica, CA on Thursday October 22nd in conjunction with Digital Hollywood Fall, which this year has significantly expanded to include a number of co-located events of enormous interest to DCIA Members.

The inaugural P2P & GAMES CONFERENCE will focus on consumer issues, business models, revenue generation, market trials, content protection, and case studies that demonstrate the benefits of P2P and cloud computing for the distribution of games and updates to networked devices from PCs to consoles to mobile-phones. Digital Hollywood Fall is the premier entertainment and technology conference in the country.

To extend the reach of the P2P & GAMES CONFERENCE to those unable to personally attend the event, which is being held in the Catalina Room of Loews Santa Monica Beach Hotel, the DCIA will be producing a live interactive webcast of the event that will also be immediately recorded and viewable on-demand after the conference.

If you would like to speak at the P2P & GAMES CONFERENCE, please contact me at your earliest convenience. We are putting together the conference agenda and speakers list to be included in the promotional materials and conference programs now.

Please call +1-410-476-7965 or e-mail PGC@dcia.info at your earliest convenience.

The DCIA's newest initiative, the P2P-for-Games Working Group (PFGWG), which published its Mission Statement in July, is now actively recruiting members and planning its first meeting / conference call for September.

The PFGWG's mission is to work jointly and cooperatively with leading peer-to-peer (P2P) software developers and distributors, online games publishers and marketers, and other qualified entities involved in games distribution over broadband networks, to ascertain appropriate and voluntary best practices to optimize the commercial distribution of digital games and updates to games systems of end-user consumers, including computers, game consoles, handheld and mobile devices, by means of P2P applications, P2P-enabled software, and related P2P technologies.

The mission will be carried out in two or more phases. Phase one will focus on consumer protection. Phase two will focus on intellectual property (IP) protection. Additional follow-on phases may be added as determined by PFGWG participants.

The objectives for phase one are to: provide P2P software developers and distributors with practices and procedures designed to instill the greatest degree of consumer confidence in, adoption of, and satisfaction with P2P technologies used for the distribution of digital games and updates; provide online games publishers and marketers with practices and procedures designed to instill the greatest degree of consumer confidence in, adoption of, and satisfaction with digital games and updates distributed by means of P2P technologies; and offer consumers optimal transparency, control, and value when using P2P technologies for the distribution of digital games and updates.

The objectives for phase two are to: provide P2P software developers and distributors with practices and procedures designed to commercially optimize P2P technologies used for the distribution of digital games and updates to protect the IP of such content offerings; and to provide online games publishers and marketers with practices and procedures designed to commercially optimize digital games and updates in terms of IP protection for such content offerings being distributed by means of P2P technologies; and offer relevant vendors and Internet service providers (ISPs) with recommendations to participate in the commercial enhancement of IP protection for digital games and updates distribution by means of P2P technologies.

The overall goals are to: determine, validate, and encourage the adoption of methods for P2P software developers and distributors and online games publishers and marketers to work together to enable innovative business models for digital games and updates distribution using P2P technologies and protecting the interests of consumers and IP rights-holders; provide compliance monitoring, digital rights management (DRM), online data tracking, payment services, and other support entities, as well as ISPs, with opportunities to commercially enhance the distribution of digital games and updates by means of P2P technologies; and establish appropriate and voluntary best practices for the deployment of P2P technologies for digital games and updates distribution to meet the above identified objectives in a way that can be sustained by all of the necessary participants.

Potential participants include P2P software developers and distributors; online games publishers and marketers; compliance monitoring, digital rights management (DRM), online data tracking, and payment services firms; Internet service providers (ISPs); and DCIA Member companies.

We are now recruiting a balanced representation of core members. Please call +1-410-476-7965 or e-mail PFGWG@dcia.info for more information or to sign-up.

Our next steps will be to draft and reach agreement on practices and procedures to fulfill the objectives of phase one; to organize and conduct testing to validate the benefits of these approaches to end-user consumers, P2P software developers and distributors, and online games publishers and marketers; to draft and reach agreement on practices and procedures to fulfill the objectives of phase two; to organize and conduct testing to validate the benefits of these approaches to P2P software developers and distributors, online games publishers and marketers, vendors, and ISPs; to prepare and publish voluntary DCIA guidelines for the recommended PFGWG business practices and procedures and their adoption based on results of the testing; and to develop and implement a compliance program.

As previously noted, continued growth of online games representing numerous genres on many types of networked devices is very exciting, and the increasing interest of publishers and marketers in harnessing P2P technologies for distribution of games and updates in a wide variety of ways is particularly encouraging.

P2P for games is currently an area of ongoing rapid expansion and enormous promise. The games industry is digitally sophisticated, aggressive, prolific, and highly innovative - in many ways the ideal content partner for the P2P industry.

The games industry has demonstrated the greatest potential to exploit the advantages of P2P and to address outstanding issues associated with this powerful technology. We look forward to a productive collaboration on the PFGWG. Share wisely, and take care.

Rationale for Online Gaming

Excerpted from Research Brief Report

At the Casual Connect conference in Seattle, WA WorldWinner, a provider of online game competitions, announced the results of a survey in which more than 500 online game lovers revealed how playing casual games affects their mood, particularly during the current state of the economy.

Key findings of the survey include: 87% of game lovers report a positive mood boost from playing online games; 59% play games online to help forget their worries and problems; 44% play to keep their mind sharp between job hunting, working, or studying; and 62% play online games as a de-stressor when job hunting online.

Peter Blacklow, President of WorldWinner and EVP of GSN Digital, concludes that, "The state of the economy is affecting our leisure activities just as much as it's impacted our working lives and stress levels. Our business brings people a welcome break."

For additional information from WorldWinner, please click here .

P2P Not to Blame for Content Industry Failures Says EU

Excerpted from ReadWriteWeb Report by Sarah Perez

A new study commissioned by the European Union has finally proven what many have suspected all along: Internet users don't want to pay for content. Period. And nothing is going to change their minds.

The report finds, in a surprising contradiction to what industry executives have been spouting for ages, consumers' behavior has nothing to do with the peer-to-peer (P2P) technology that has given rise to all-you-can-eat systems for free downloads of copyrighted content.

In fact, many people claim that they wouldn't pay for online content even if all other free options were taken away. This finding has dramatic implications for the future of business, and not just in the entertainment industry, either. If people won't pay for content, how will companies survive?

The answer to this question is simple, but the actual solutions are hard. It's clear that new business models are needed when it comes to online content, but what should these new models look like? How should they work? No one really seems to know yet.

The European Commission's Digital Competitiveness Report is a comprehensive annual resource, which looks at everything from broadband penetration to use of social networks and more. One of the chapters in the report, published earlier this month, deals specifically with online entertainment.

In this chapter, the EU study reports on the state of the online entertainment industry, revealing factoids like "less than 5% of Europeans have paid for online content in the last three months."

The most interesting results from the report, though, are not the details about who pays, but about who doesn't. Among the non-payers, factors like lower prices would convince about 30% to pay while things like better quality, wider choice, better availability, and others would convince between 15-20%.

Yet one figure stands out: only around 20% of online users would pay for online content if all the other free options suddenly disappeared.

The impact of this finding didn't escape the notice of the EU researchers, who go on to point out that this seems to mean, contrary to what industry execs say, unauthorized copying is not to blame:

"The low percentage of individuals that consider the possible lack of freely available online content as a reason for paying, calls into question the argument put forward by representatives of the content industry that European consumers will in the long term suffer from a lack of commercial availability of high-quality content if the current model of audiovisual content distribution, based on unlicensed copying, is not curbed."

Instead, what seems to be happening is that people pay for their Internet connection and then gorge themselves on the abundant free content that's available online. Because there's so much out there which costs nothing at all - from web news to streaming video to software applications - Internet users tend to balk at the idea of actually having to pull out their wallets to make a purchase. It's the Internet itself that has led us down this path to a place where old monetization models simply no longer apply.

The report goes on to look at the business models of all sorts of content sites in detail including online news/newspapers, video, movies, music, and online games. While the ways consumers access these different types of content may vary (RSS-ing news, streaming videos, downloading music), the findings are relatively consistent across the board. With only a few exceptions, many of the current business models are not sustainable.

So what's the answer? There isn't really a good one just yet. Many businesses try "freemium" models that convert power users to paying users. Other sites try sustaining themselves through online ads (which is difficult to do in a down economy). But the best ideas for new business models may very well be the ones that haven't even been thought up yet. The only question is whether or not they'll be discovered in time before more content-producing industries fail.

Cloud Computing as Future of Gaming

Excerpted from 1UP Report by Sam Kennedy

Earlier this week at GDC Europe, which is going on before Germany's GamesCom 2009 officially kicks off, Silicon Knights President Denis Dyack spoke about cloud computing and how the technology is set to revolutionize - and in some respects save - the games industry. While some of his presentation was already covered in an editorial he wrote about distributed computing earlier this year, there were a few interesting new takeaways from his GDC session.

Dyack started by beating a familiar drum about commoditization (how technology drives down the value of products) and how it's impacting intellectual property (IP) in all forms of media, from music (people sharing songs for free) to TV (he admitted to BitTorrenting his favorite shows). Games, too, have seen serious issues with copyright infringement.

"Technology makes it so easy for people to get all of these things for free." However, a cloud service, which streams these items to a user, could solve that problem. "I'm not a proponent of any specific cloud technology," Dyack reassured, referring to OnLive and GaiKai, the two cloud gaming services that have been announced so far. "But where I'm coming from is purely about economics and IP preservation."

He also pointed to some other reasons why cloud services will help gaming, such as the problem with hardware always changing. Never mind that people wouldn't need to ever upgrade their machines, a cloud service could offer games from any hardware - even titles that no longer run on today's machines could still be played (Dyack pointed to Silicon Knights' first game "Cyber Empires," released in 1991, as a perfect example of that - today's PCs won't run the title any longer).

"It doesn't really matter what hardware is behind the cloud," said Dyack. "The actual hardware becomes completely irrelevant." He also pointed out that the industry moving to cloud services would allow developers to stop having to code on multiple platforms, which is where so many of the resources go to these days, and for all games to be judged against each other equally and without the barriers of the platforms (so a title like "Resistance" could actually be pitted against a "Gears of War").

So it's clear that cloud services could offer lots of benefits for gamers and the game industry, but what about the negatives? Dyack believes there won't be any. Regarding any of the latency issues people have observed in early tests, "these will be overcome in time," he claimed.

"As bandwidth increases and compression methods get better, you won't be able to tell. Dyack pointed to certain online multiplayer games as an example of what can be achieved in terms of reducing latency. "We've been playing videogames with people across the globe for some time."

Another concern for many is the lack of owning games on physical media, to which Dyack shrugs off as a shift in peoples' expectations over time. "There is no answer other than over time it's going to stop mattering. Our belief in physical media for games is going to become dated. It's going to become less important."

Dyack is so convinced that cloud technology is the future for games that he imagines we'll see lots of different services emerge. "Consider clouds like cable channels," he explained. "I wouldn't be surprised to see a Sony cloud, a Nintendo cloud, or a Microsoft cloud." 

He's so bullish on the notion that he stated that 2009 may be remembered as "the end of the golden era of videogames" - where the first cloud models for games were announced and the industry moved away from consoles.

Cloud Consulting Firm Reports 51% Revenue Growth 

Excerpted from EDL Consulting Report

In the latest indication that cloud computing continues to grow despite a worldwide decrease in global IT spending, cloud computing consulting firm CoreMatrix Systems just announced that it saw a 51% increase in revenue for the second quarter of 2009 in comparison to the company's revenue for the same period last year. 

According to Open Source magazine, one of the largest explanations for the "explosive growth" of the company is the recent tripling of customer service and support-related customer relationship management (CRM) services. 

CoreMatrix Systems - whose customers include American Express, Citigroup, and Merrill Lynch - provides computing consulting services focused on the planning, design, implementation, adoption, and support of on-demand software-as-a-service (SaaS) solutions for medium-to-large businesses, particularly with CRM applications. 

"In tough economic times, companies are looking for ways to work smarter," said Frank McMahon, Co-Founder of CoreMatrix Systems. 

"Solutions like Salesforce.com really hit the sweet spot by not only offering the economic benefits of SaaS, but also giving companies better visibility into one of their most important but often untapped resources - customer data." 

Recent surveys from Telecom Trends International and Research & Markets projected that the cloud computing services market will generate between $45.5 and $160.2 billion in revenue by 2015.

Voxel Enters the Cloud Computing Market

Excerpted from Conteninople Report by Ryan Lawler

Voxel is branching out from its business as a managed-hosting and content delivery network (CDN) provider to offer cloud-computing services, putting it up against similar offerings from Amazon Web Services and Rackspace Managed Hosting .

Voxel is touting its new VoxCLOUD cloud-computing service, which operated as "SilverLining" while it was in alpha testing, as the only service of its kind to have a presence in the US, Europe, and Asia.

While the company has long had a presence in the US and Europe, its Asian operations started in earnest in May, when Voxel went live with its first point-of-presence (POP) in Singapore.

Another key differentiator for Voxel is its ability to offer both dedicated managed servers and virtualized servers to its customers and enable those customers to manage both infrastructures through APIs and a common desktop control panel built on Adobe Systems' rich Internet application (RIA) platform called "AIR."

"It's about mixing and matching traditional infrastructure with cloud infrastructure, and making it into one seamless infrastructure," says Voxel CEO Raj Dutt. "If they've got physical infrastructure and cloud infrastructure, they can view both side-by-side in our control panel."

"The point should be made that the amount of CPU you get for 10 cents an hour with Amazon hasn't changed in three years, but processor speeds have doubled at least once, and maybe twice in that time," Dutt says.

In contrast, Voxel is coming to market with a price performance equation that is based on the processing capacity of today's chips, Dutt says. And unlike Amazon, which hasn't changed its pricing since its Electronic Computing Cloud (EC2) launched, Voxel plans to re-calibrate prices as time goes on.

"We believe the cost equation should get better over time," Dutt says.

One other key advantage that Dutt talks up is universal pricing for data transfer across all of Voxel's offerings. The company's Universal Transfer pricing treats all data the same, blending bandwidth from dedicated and virtual servers, as well as the company's CDN, into a single bandwidth line item.

The pricing structure automatically adjusts based on the amount of bandwidth customers use, so they don't need to worry about negotiating bandwidth commitments beforehand. Prices start at 20 cents per GB for the first 10,000 GB, and go as low as 9 cents for customers that are pushing 500,000 GB or more.

That price stands regardless of geography, which is a key differentiator, particularly in the Asia-Pacific market where bandwidth costs are much higher than in the US or Europe.

Social Gaming Start-Up Lands $2.8 Million

Excerpted from TechCrunch Report by Stefano Bernardi

Scoreloop has just closed its second financing round, with a $2.8 million cash injection from new investors Earlybird and existing investor Target Partners, the seed funder for the Munich-based company.

The funds will be used to fuel the growth of the company and solidify its position, especially in the realm of the iPhone. Since launching its technology in May 2009, Scoreloop has over 500 registered game developers that have published more than 40 Scoreloop enabled games in the iPhone App Store.

Three months after the release of its community application, Scoreloop has found a great validation for its product, while Earlybird gets in on one of the most interesting new business areas around.

Scoreloop offers a software developer kit (SDK) for mobile game developers that instantly adds social gaming to their applications with features such as challenges and a points system. The company offers its technology for free to developers and monetizes the points system.

"We are continuously receiving excellent feedback from game developers and publishers, as Scoreloop offers a unique set of tools for social features and monetization strategies. We are thrilled to be working with two of Europe's premier VCs with Earlybird as an additional partner joining our existing investor, Target Partners." said Marc Gumpinger, CEO of Scoreloop.

Earlybird's Roland Manger says this is a new market for its fund and Scoreloop fills a gap in its portfolio. Earlybird was looking to get into the new mobile market, without a particular interest in gaming technologies until it found Scoreloop. 

He points at the significant growth potential: "Scoreloop's technology and the community platform solve many problems both developers and users are facing in the mobile app-world. Scoreloop will help developers make their games more attractive while improving monetization, and users will be able to find games relevant to them much quicker."

Droidify: The Short-Lived Unofficial Spotify Android App

Excerpted from MobileCrunch Report by Jeremy Kessel

Spotify, a free and increasingly popular P2P music streaming service available on the other side of the pond and currently by invite only in the US, has yet to launch an official Android Market application.

But not to worry. A group of Spotify fans have developed Droidify, an unofficial Spotify client for Android.

The free app lets you search, browse, manage playlists and listen to the millions of songs available from Spotify on your phone. You can use it with both 3G and Wi-Fi.

Primarily intended to tide over Android-totin' Spotify users until an official app is released, Droidify doesn't currently offer any offline functionality, while the official app apparently will. But hey, it's free and its available now.

Update: And now it's gone. Turns out Droidify wasn't allowed under the agreement terms that Spotify had set up with music labels. Spotify contacted Droidify's developer and asked nicely, and the dev took it down. Oh well.

Universal Music Taps BigChampagne for Online Metrics

Excerpted from Digital Media Wire Report by Mark Hefflinger

Universal Music Group (UMG) on Tuesday announced a long-term partnership with BigChampagne, a provider of information and analytic tools about online media consumption.

Under the deal, UMG will receive analysis of songs and listening patterns from millions of users of social networks and online music services, including file-sharing networks.

Other BigChampagne clients including Viacom/MTV and Clear Channel's Premiere Radio Networks.

New Owner Presents Details on Authorized Pirate Bay

Excerpted from PC World Report by Mikael Ricknas

The prospective buyer of the file-sharing site The Pirate Bay (TPB) is planning to implement a system that lets copyright owners remove content from the site, Global Gaming Factory (GGF) said on Wednesday.

GGF announced plans to acquire TPB for $7.8 million in June. GGF shareholders will decide at an August 27th meeting whether the deal should go through or not.

GGF detailed some of its plans in documents prepared for the shareholders meeting. It hopes to turn TPB into an authorized service by signing license deals with copyright owners.

Until the necessary deals are signed, the company will use a system that will be in place on August 27th, which can identify copyright-protected content. Copyright owners can then either leave the content on the site and receive compensation or provide instructions to have it removed. But they will have to get in contact with GGF; otherwise the content will still be available for download, according to CEO Hans Pandeya. GGF will not remove content on its own, he said.

There is no risk that all content will be removed on August 27th, according to GGF. Talks with the entertainment industry have led GGF to believe that a majority of the content will remain available. The company is convinced it will be able to sign deals with a majority of the world's major record labels within three months of the acquisition of TPB being approved, and the movie industry will be onboard within a year, it says.

Users will be charged a monthly fee to access content on the new Pirate Bay or earn "frequent file-sharing points" by sharing storing capacity on their computers and paying for content that way, according to Pandeya. He wasn't ready to say what the monthly fee will be.

No personal data about users will be shared, GGF said.

Clone Site of The Pirate Bay Launches

Excerpted from Digital Media Wire Report by Mark Hefflinger

A 21.3GB file containing all of the nearly 900,000 .torrent files available at file-sharing hub The Pirate Bay (TPB) has itself been uploaded to BitTorrent, and re-launched in working form at a new site called BTArena, according to TorrentFreak.

An anonymous user is said to have created the copy of the entire contents of TPB, which contains links to bits of music, movies, software, and other files available for download from computers worldwide. That file was then uploaded to BitTorrent - including to TPB itself - then downloaded and turned into a working clone of TPB by BTArena administrator Alex. 

"Right after TPB decided to sell and become 'legal' I was thinking about moving its torrents to http://tracker.btarena.org, but there are many low quality torrents on the index. Now thanks to a user, other users can still use a TPB backup," Alex told TorrentFreak. 

TPB is currently in the process of being acquired by Global Gaming Factory, which plans to turn the notorious site into a properly licensed, paid service that compensates copyright holders.

Please click here for a report on the "Top 6 Torrent Alternatives to Pirate Bay."

Network Strategy and the Anti-Defense

Excerpted from Harvard Business Report by Umair Haque

Last week, I wrote a post about the tactics of 5G warfare, network strategy. Judging by the comments, quite a few of you got it - but some of you thought it was sci-fi.

So here's a simple, powerful example of perhaps the most radical tactic: the anti-defense, as I described it.

"You can't defend a centralized structure against a network attack in the traditional sense (just ask Twitter). But you can anti-defend against a network attack, by decentralizing your own resources to the edges - something that, in physical warfare, is a big no-no. When resources are spread and replicated across as broad, diverse network of your own as possible, if one node goes down, the others stay up."

Sounds kind of Blade Runner. Or does it? Consider what just happened at The Pirate Bay (TPB).

TPB couldn't defend itself through traditional means: its principals were found guilty of copyright infringement. So what happened next? An anonymous network member launched a perfect anti-defense, replicating TPB's torrent info from the hub directly to the edges. That's a textbook example of an anti-defense.

Now, record labels aren't fighting one TPB - they're fighting many. And they don't have the resources or competencies to win that war - they're already almost bankrupt. That's a radical example - and it's also very real.

The TPB example illustrates a general rule of an interconnected world. Every time a file-sharing network is shut down, a more efficient one rises in its place. The P2P endgame is simple: a maximally decentralized, hyper-efficient network where the marginal cost of transmitting the entire Internet is effectively zero.

Trying to block the formation of networks is like trying to stop a tsunami with a spork and a Superman outfit. You're going to get bulldozed. The only solution is to challenge, dilute, and redefine the incentives that cause networks to coalesce in the first place. And that's what the 5G post was all about.

File Sharing - What is the Story?

Excerpted from Technology Examiner Report by Melissa Good

The ability to share your favorite things over the Internet has become one of the hallmarks of why people like it as much as they do. Sharing pictures, your favorite places to eat, and so on, goes on every day all day on social networking websites and in e-mail.

Another sort of sharing also takes place, when people share their favorite music, movies, and television programs. These materials are available at many sites on the Internet - media can be purchased in many formats in many places at often reasonable prices.

But a significant percentage of users also share this type of content by sending files and downloading files from other users using P2P file-sharing services. P2P works by keeping copies of material on many people's computers, and then, when someone looks for that material, it starts downloading from those sources rather than from a central computer system.

There are many legitimate reasons to share files. Unix and Linux distributions (called distros) are distributed this way. Many legitimate media providers use this type of service to distribute their material because the files are large and P2P allows them to leverage the bandwidth and resources of a large number of subscribers.

P2P is usually in the news, though, for unauthorized file sharing, which is one of many ways P2P technology is being deployed today. This happens when someone obtains a digital copy of a movie, or a song, or other copyrighted content, and offers it to everyone for download without compensation to the rights holders.

To be honest, this is a very gray and murky area for a lot of people. The content producers, on one hand, worked to make this material and that is how they make their living. On the other hand, there are many who feel that if they legitimately purchase a piece of media it is theirs to do as they wish with, including offering it to their friends for no charge.

That debate is not in the scope of this column. What is in the scope is to advise that the technology also exists to identify users who share this material on the Internet and the legal consequences of this can be significant. Content providers do not just investigate large scale file sharing, they also pursue users who are sharing as few as a hundred or less files on their systems.

The way users are identified is by their Internet addresses, and the traffic for this can be traced back to your physical location in most cases because your Internet service provider (ISP) keeps track of what Internet protocol (IP) address was issued to your Internet modem at any particular time.

So if they know files were shared on August 23rd between the hours of 2 and 4 AM, they put in a legal request to your ISP and ask who had that IP address during that time period.

That can mean anyone using your home network - friends, neighbors, your family - can produce traffic that could be identified as file sharing and your ISP could be required to turn over information identifying you to investigating legal entities.

The Department of Justice has just given an opinion that the large damage awards that have been won in cases prosecuting people for file sharing are constitutionally valid. This can turn a case of sharing files into a bankrupting and criminal event from something as simple as installing a program, and doing a little experimenting to see if your favorite track from the Beatles is available "out there."

Obama Backs Record Industry in File-Sharing Verdict

Excerpted from Online Examiner Report by Wendy Davis

The Obama administration is asking a judge to reject a Minnesota woman's argument that a jury verdict ordering her to pay $1.92 million for sharing 24 tracks is unconstitutional.

"Defendant's suggestion that the actual harm can be measured to the 'tune of $1.29 for each of the 24 songs' ignores the potential multiplying effect of file sharing," the Department of Justice (DOJ) argued in papers filed this week with a federal district court in Minnesota.

In June, a jury found that Jammie Thomas-Rasset willfully infringed on the record labels' copyright by sharing tracks on Kazaa and ordered her to pay $80,000 per track. The copyright statute provides for damages between $750 and $150,000 per infringement.

Thomas-Rasset moved to set aside the verdict for several reasons, including that the damages were unconstitutionally disproportionate to the economic injury she allegedly caused.

The Justice Department didn't take a position regarding her other arguments, but made clear that it believes that the damages set out by Congress are constitutional. "The Copyright Act's statutory damages provision serves both to compensate and deter," the administration wrote. "The inadequacy of actual damages and profits to compensate copyright owners is evident under the circumstances of this case. It is impossible for a copyright owner to calculate actual damages when an online media distribution system is used to distribute its copyrighted sound recordings without authorization."

Of course, US District Court Michael Davis might not agree. Last year, Davis set aside a previous jury verdict finding Thomas-Rasset liable for copyright infringement and ordering her to pay $220,000, or $9,000 per track. Davis set aside the verdict because of a mistaken jury instruction, but he took the opportunity to criticize the jury's decision about damages. "While the court does not discount plaintiffs' claim that, cumulatively, unauthorized downloading has far-reaching effects on their businesses, the damages awarded in this case are wholly disproportionate to the damages suffered by plaintiffs," he wrote.

Aside from the legal merits, a $1.92 million award against a non-commercial user has generated some very bad PR for the record industry.

Richard Marx, one of the musicians whose tracks Thomas-Rasset shared, said he was "ashamed" to be connected with the case. 

Moby, not an RIAA fan, blogged that, "Punishing people for listening to music is exactly the wrong way to protect the music business."

Please click here for a report on Walter Mossberg's interview with Moby.

Copyright and Wrong

Excerpted from The New American Report by Thomas Eddlem

"The Obama administration told a federal judge Friday the $1.92 million jury verdict against a Minnesota woman for sharing 24 music tracks on Kazaa was constitutionally sound," Wired News reported, "despite defense claims it was unconstitutionally excessive."

And as a civil - rather than a criminal - matter, it certainly was excessive. The judge in the case had earlier instructed the jury (an instruction struck down on appeal) that the woman, Jammie Thomas-Rasset, need not have had anyone actually download a song from her Kazaa account in order to qualify for damages up to $150,000 per song.

"The current damages range provides compensation for copyright owners because, inter alia, there exist situations in which actual damages are hard to quantify," the Obama administration's attorneys wrote in a court brief. "Furthermore, in establishing that range, Congress took into account the need to deter the millions of users of new media from infringing copyrights in an environment where many violators believe that they will go unnoticed."

The problem with that statement is that civil suits were originally designed for recovering damages, while criminal suits are designed for deterrence. The current copyright law, the so-called Sonny Bono Act of 1998, almost has it in reverse. Criminal charges are almost never filed in practice, while civil suits by the recording industry is the general method of "deterrence" that has no connection to actual damages.

The US Constitution does allow Congress to pass laws to protect copyrights and patents, but the current law goes far beyond the constitutional authorization. Article I, Section 8 reads, "Congress shall have the power to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries."

The power of Congress to issue copyrights and patents is restricted to "limited times" and to the promotion of "progress of science and useful arts." The US Constitution makes no pretense that an author "owns" his work; it only states that there is a public purpose in giving him a limited time to enjoy exclusive commercial duplication of it.

When the Founding Fathers established copyright protections, they gave authors a long 28 years of exclusivity for their writings. It was a long time, but it was still a limited time. Today, copyright protection extends more than 100 years, a virtual eternity. The extension of copyright over the years has had nothing to do with promoting the arts and sciences and everything to do with the lobbying efforts of greedy corporate behemoths in Hollywood and the music industry buying up copyrights and trying to keep them out of the public domain forever.

Current copyright law is actually inhibiting the development of technology, often because of Hollywood and the music recording industry. The recording industry's hold on the law has even led to the banning of new digital recording technologies being introduced, with a federal judge banning the sale of Real Networks' DVD copying software on August 11th. The same judge also banned sale of a similar technology by Kaleidescape the next day.

Real Networks is in the process of suing the major Hollywood recording studios on anti-trust grounds. After all, why should the corporate elite be the only ones who can copy their own DVDs?

Nobody decides not to write a novel or produce a play because they would only get 28 years of copyright protection instead of 100-plus years. But in the intervening time between the Founding Fathers and today, the law has more emulated the globalist 1886 Berne Convention for the Protection of Literary and Artistic Works than the vision of the Founders.

This movement that arose out of the Berne Convention adopted a new term called "intellectual property (IP)." When children are very young, they often sing songs, and when someone else sings the same song, they object saying, "No, that's my song. You can't sing it."

While most people grow up, the mega-corporations in the recording industry have not. The whole idea of recording a work or writing a book is for the work to be heard or the book to be read, but the gigantic recording industry is geared toward restricting access to works. They are still clinging to the idea that no one else can sing their song ever. It's their "property," just like the four- and five-year-old children's arguments.

Passing works into the public domain, even 100 years out and long after the death of the author, is "theft" to the recording industry megaliths. The result is that the copyright exception to the general American policy of free trade is strangling trade.

The whole copyright insanity has gone so far off the constitutional reservation that a number of years ago the Wall Street Journal ran a front page story about the grandchildren - grandchildren - of the author of the song "My Buddy," who were whining about how their grandfather's song had passed into the public domain. The grandfather had long passed on, the song had been written in 1922, but the grandchildren claimed they had been robbed of their "property" and weren't getting royalties from the song.

They had the audacity to complain, despite the fact that none of them had any role in producing the song and their grandfather had more than 50 years of copyright protection from the song. Naturally, the Wall Street Journal gave them sympathetic treatment.

The recent absurd jury verdicts in music cases reveal that copyright law needs to be pared down to the level that the Constitution proscribes.

Pirate Party Coming to the UK

Excerpted from Computerworld Report by Carrie-Ann Skinner

A political party which aims to fully legitimize file swapping for non-commercial reasons has been officially registered in the UK.

The Pirate Party has already won a seat in Sweden, home to controversial BitTorrrent search-engine The Pirate Bay (TPB), after it gained 7.1% of votes. Now the party is recruiting members and seeking funding in a bid to gain a seat in the UK's next general election, which must take place by June 2010.

UK Party Treasurer Eric Priezkalns told Sky News, "The reason for launching a party is to give those people an opportunity to express their concerns about piracy, about privacy, and about how the mainstream parties aren't responding to that agenda."

The Pirate Party hopes to change copyright law, to decriminalize the use of file-sharing networks to share music and video while still giving artists a "fair deal."

"With 21st century technology and the way the laws are now there is no room for sharing. It's either you are buying or you are stealing. There is no middle ground," added Priezkalns.

The party also said it plans to campaign against the government's Digital Britain proposals that plan to tackle Internet infringement by allowing Ofcom to request that Internet service providers (ISPs) warn offenders of their unauthorized actions and possibly even suspend their Internet access.

Other issues supported by the party include free speech and a stop to excessive surveillance.

Coming Events of Interest

Bandwidth Conference - August 27th-28th in San Francisco, CA. Annual gathering of music/media executives and digital music professionals. Bandwidth explores the evolving musical experience - how people discover, purchase, interact with, and are exposed to new music.

Cloud Computing Conference - September 9th in San Diego, CA. Topics will include what's being done in the cloud today, separating myth from reality, while learning about the cloud's opportunities and challenges, gaining an overview of the multi-vendor, multi-product cloudscape combined with real-world examples and insightful analysis.

all2gethernow! - September 16th-18th in Berlin, Germany. An "open source" forward-looking Music 2.0 substitute for the postponed PopKomm, one of the leading international conferences and expos for the music and entertainment businesses worldwide. 

New York Games Conference - September 30th in New York, NY. Join games industry leaders - including  leading videogame publishers and developers, carriers, portals, technology companies, advertising execs, venture capitalists, lawyers, analysts, and many more.

FMC Policy Summit 2009 - October 4th-6th in Washington, DC. Future of Music's (FMC) annual event where, this year, music, technology, policy and law are going "back to the future." Early-bird discounts are now available.

P2P and Games Conference - October 22nd in Santa Monica, CA. The DCIA's first-ever event focusing on the use of P2P and cloud computing technologies for the distribution of games and updates. Industry leaders from around the world will participate.

Digital Hollywood Fall - October 19th-22nd in Santa Monica, CA. With many new sessions and feature events, DHF has become the premiere digital entertainment conference and exposition. DCIA Member companies will exhibit and speak on a number of panels.

Cloud Computing Expo - November 2nd-4th in Santa Clara, CA. Fourth international conference on this subject. Cloud computing is a game changer. The cloud is disrupting traditional software and hardware business models by disrupting how IT service gets delivered.

Copyright 2008 Distributed Computing Industry Association
This page last updated August 30, 2009
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