Distributed Computing Industry
Weekly Newsletter

In This Issue

P2P Safety

P2P Leaders

P2PTV Guide

P2P Networking

Industry News

Data Bank

Techno Features


May 18, 2010
Volume XXX, Issue 10

GenosTV Advances towards Commercial Launch

Here is the link to watch the full presentation from GenosTV last week.The service introduction was well received by industry insiders and new media journalists who attended the company's standing-room-only (SRO) event at Digital Hollywood.

CEO Rob Shambro was also featured on Simon Applebaum's Tomorrow Will Be Televised this week. Please click here to download the program.


Excerpted from BitTorrent Blog Report by Claude Tolbert

Last week, BitTorrent participated in the first-ever P2P & CLOUD MEDIA SUMMIT held in conjunction with Digital Hollywood. The aim of the summit was to explore current policy, technology, and content issues as well as next-generation business opportunities related to P2P and cloud-based commercial offerings.

My presentation titled The Glass Half Full: The Unfulfilled Potential of File-Sharing Networks, focused on the surging growth in video over the Internet, and how the P2P industry and BitTorrent specifically, can facilitate new business models that leverage distributed networks; greater access speeds for the last mile; and cloud computing services. The cause for focus on this lever was made by the tremendous growth in video consumed via the Internet even though it continues to be dwarfed in the US by video consumed via the television.

What is the winning model? How will you help me, the content creator, make money? We did not propose a single path but a variety of initiatives centered on BitTorrent as a platform for the rich media experience; an evolution that would take our widely distributed client beyond its current use case to an application and service delivery mechanism for rich media experiences over the Internet.

Various definitions of success exist for forums such as this. However, a clear sign that our message resonated with industry participants in attendance were the number of inquiries that I received immediately after the presentation concluded.

The Summit provided a rich environment for sharing information and an understanding of common themes. A few of these themes included:

Legal Landscape - The continued complexity as rulings emanate at a state, federal, and international level. Will products and services evolve to "solve" challenges in the marketplace?

Business Model Creation - There is no consensus on a "winning" model for sharing of content. Depending on the type of content, customer segment, and place in the world, participants toggled between favoring subscription, paid download, or sponsored models. Everyone did agree that experimentation/trial would continue to refine models.

Rich Media Partnerships - The discovery of rich media continues to be a challenge. A vast collection of content exists but better mechanisms are needed to match users and content. Creating partnerships in this new ecosystem is difficult given the early stage of these working arrangements.

So, what do you think the future media model looks like? You can check out my presentation here.

Content Ubiquity: Threat, Opportunity, and Reality

Excerpted from MultiChannel News Report by Marisa Guthrie

Attendees at Wednesday's opening general session at The Cable Show must have felt a sense of sinking deja vu as the discussion with such industry leaders as Comcast's Brian Roberts, CBS Corporation's Leslie Moonves, and Time Warner's Jeffrey Bewkes re-hashed the same issues that have been plaguing content creators and distributors at this time last year.

Moderated by former Federal Communications Commission chairman Michael Powell, who has segued from the federal payroll to Providence Equity Partners, the panel cogitated on the brave no-longer-new world of alternative screens and whether the proliferation of screens and technology presents a "great threat" or a "great opportunity," in Powell's words.

"It's reality," Roberts said, stating the obvious. "So you've got to turn it into an opportunity. In my opinion, video wants to be on any device any time."

The key, he added, is creating a business model that consumers want to use and that allows all content providers and distributors to get paid.

In a video segment at the panel, Roberts demonstrated a prototype iPad app that lets users control their cable box. The Comcast Xfinity remote interfaces with set-tops allowing subscribers to easily search television content from the Apple device. A pop-up keyboard lets users search for content by name, as opposed to scrolling through hundreds of channels on their set-top. Users can switch channels via the iPad's touch-screen guide and also invite a friend to watch what they're watching, a popular staple of social networking sites.

Roberts conceded that Comcast, its merger with NBC Universal currently proceeding through the regulatory process, needs to step up its tech innovation. And his iPad demonstration filled that bill, although he did not say when the app would hit the market.

"I think the strategy of the cable operator side of Comcast is not to make the big bet but to be the big enabler," he said. "The creative community adapts to the technology. So, too, do the providers. The major goal is giving you all of the content that you want to watch but on a device you want to watch it on."

Report from CEO Marty Lafferty

Photo of CEO Marty LaffertyP2P & CLOUD MEDIA SUMMIT keynote presentations are now available online here for KPMG's Mark Lundin, BitTorrent's Claude Tolbert, Cisco Systems' Geng Lin, Aleric's Vincent Hsieh, Rovi Corporation's Michael Papish, Giraffic's Assaf Benjamin, and Alcatel-Lucent's Mark Peterson.

As noted last week, we will alert DCINFO readers as soon as the archival webcast, produced by Abacast, is available online.

Meanwhile, here's a summary of our Digital Hollywood - P2PCMS panel on Next Generation P2P: Content in the Cloud.

We are grateful for the insightful contributions of Aleric's Vincent Hsieh, CEO; Ascent Media's Mick Bass, VP of Alliance Management; Grab Networks' Marcien Jenckes, President of Media and Content; Panvidea's Doug Heise, VP of Marketing; RedThorne Media's Ian Donahue, Co-Founder; TVU Networks' Jim O'Brien, Senior Advisor; and Flycell's Adrian Rubio, SVP of Corporate Development; who served as panelists.

Vincent outlined Aleric's highly-secured cloud-based end-to-end data management services. He views Amazon as a cloud-computing test bed, not suitable for critical data where security is a concern. Aleric's vision is to provide customers with simplicity in a controlled environment. The company has just started five projects in a period of just two months. Vincent added that a new concept in data delivery is machine-to-machine (M2M), essentially the new incarnation of peer-to-peer (P2P) for the mobile environment.

Aleric's questions to prospective customers include: are you competitive today, will you be tomorrow? Are your offerings compelling? Can Aleric save you money? Can it help you make more money? Very direct and applicable to others as well.

Mick described Ascent Media as a services company focused across the supply chain that functions in part as a private cloud provider. He indicated that the adoption of cloud computing by the entertainment sector is coming faster than we may think. Yet there are issues, such as in digital formats, where fragmentation of incompatible genres is proliferating, and in the need for vastly greater efficiency in the licensing and deal flow aspects at the top of the distribution infrastructure. Another question is what content to include and exclude from such cloud-based distribution. With software-as-a-service (SaaS) maturing, metadata exchange services will become more important.

Marcien characterized Grab Networks as a large content syndication network. He noted that the cloud can be "in the eye of the beholder," in terms of whether content is coming from a cloud network or data center, and the consumer doesn't differentiate. A key is to be able to deploy hybrid models to meet specific needs. The typical industry observer's envisioned "celestial jukebox" or "box-office in the sky" for cloud-delivered content is eminently doable given available technologies. Beyond cost containment and greater efficiency, the real value depends on the data itself, however. The cloud is an extension of the underlying business model.

He also cited key reasons why online video is not yet profitable: production and distribution costs are still too high; rights licensing is still inefficient. Once video is online, audiences cannot find it; "discoverability" is not sufficiently developed. The right business models cannot be applied to online video yet. And online video does not yet scale. These choke points need to be cleared to make online distribution of video profitable.

Doug discussed Panvidea's digital post-production services, preparing content for any platform by leveraging the Amazon EC2 cloud. People tend to think of the cloud in all-or-nothing terms. In reality, cloud options are beginning to be accepted, especially where there is "spikey" demand with down times leaving 85% of the processing capacity that is necessary during spikes otherwise unused. An issue with cloud adoption is the closed walled-garden approach, which doesn't support sufficient portability and accessibility to achieve its full potential.

Sometimes the technology itself can be a barrier, Doug added, when the need is clearly for more and more flexible models. Media companies find themselves in a bind now, because advertising alone won't support online distribution of entertainment content.

Ian offered RedThorne Media's vision for a better television delivery system than is currently available. He observed that it's troubling that revenue models don't work online, which is why television programmers are reluctant to migrate to new platforms. The RedThorne view is that what is needed is a TV service that people are willing to pay for to be able to watch on any device at any time. DECE represents a start in that direction, but the question there is how does one get a pay-out. Repackaging of programs needs to be a primary consideration to reflect the realities of ubiquitous on-demand TV program delivery. It is also important not to work against traditional revenue streams.

Jim began by emphasizing TVU Networks' value as a P2PTV service to expatriates. He said this exemplified a major value provided by TVU Networks is in creating new revenue sources for content rights-holders. He sees cable multiple system operators (MSOs) as moving to edge switching, which brings them closer to P2P and cloud-based distribution. Upstream distribution options for TV stations and cable programmers are in fact being vastly increased by services such as TVU's, and these are profitable now.

Adrian provided an overview of Flycell as a distributor of content to mobile devices that was now diversifying to also provide a casual games portal. He indicated that most of Flycell's competitors were embracing subscription models where users essentially pay for access to a suite of service offerings. He doesn't see the entertainment industry adopting cloud-based distribution as rapidly as fellow panelists do. He does see an important focus for the industry in being to offer reception of content on any device anywhere. The consumer will decide what is acceptable at the end of the day, and that's how the business will advance. Share wisely, and take care.

Moguls: Models Matter Most

Excerpted from Hollywood Reporter Report By Alex Block

Industry leaders discussing the implications of consumers having media everywhere all the time surprised themselves by having more on which to agree than disagree during the opening general session Wednesday at The Cable Show

"I think you're going to find this panel in violent agreement with each other, and that is a sea change," CBS Corporation President & CEO Leslie Moonves said. "As one of our guys said, 'Wireless is useless if it is hitless.' " 

"The interesting thing that has happened is the dialog has changed," he added. "A few years ago, there was wariness between technology and content. Now we welcome all formats to get our content out there as long as the economic model fits what we do." 

During the panel "Media Everywhere: Implications of the Always-On Network," moderated by former FCC chairman Michael Powell, there also was agreement that rapidly changing technology is altering every aspect of society, industry, and people's lives. 

Time Warner CEO Jeffrey Bewkes, one of the most vocal advocates of the "TV Everywhere" initiative, said they already are seeing that with new platforms and devices people are watching and using media more, and are excited about the content they now can access. 

"The question becomes is the business model going to work," he said. "Is there a way to give this to people but also make sure it is profitable to deliver this product?" 

Comcast CEO Brian Roberts said the cable industry and content providers have taken huge financial risks that the new opportunities will pay off. He said for cable operators, the "big bet has been to be the enabler," who can deliver all the new content, data, and evolving platforms. 

Fox's Tom Rothman had a different concern. He sees a downside to having content everywhere unless it is done in an orderly fashion. 

"I actually don't believe it's ultimately good for content creators for everything to be everywhere all at once," he said. "Yes, it's a reality, a fact of life, but all of those transitions have been managed over the years by windows. I believe that windowing (releasing content in a sequence over time), which in the popular consciousness is unpopular is hard to do, but it is vital." 

Bewkes agreed that there is a need for windowing the release of content, especially movies, but said there isn't really a choice about whether it is evolving. He said about 20 million homes now have broadband service, a number that will soar to more than 50 million in a year. 

The bigger challenge to Bewkes is the entry of such other players as Apple, Google and Wal-Mart, who skim off profit and can impact pricing. There also are the social networks including Facebook or Twitter, which are a growing force but also create new opportunities. However, he added, it is these third parties who often link back to the content creators, bringing huge and needed traffic and sales. 

"If you look at the sweep of history, it is getting more efficient and profitable to deliver this product," Bewkes said. 

Moonves noted that viewing is up for many major events on TV, which he attributes to viewers' ability to interact with what they are watching. He said during the Super Bowl and Grammys, for instance, many people were online or on social networking sites at the same time, making it an interactive experience. 

"Every piece of technology that has come into being has been a friend of content," Moonves said. "The more places it is, the better for programmers as long as we get paid for it. For someone as old as I am, it's overwhelming, but to experience and put it out there is the best for everyone." 

Technology guru Marc Andreessen of Andreessen Horowitz said an area where the changes are even more rapid is in games, where much of the action is online. He said there is a "massive seismic shift in the videogame industry," as players are drawn to free sites where they are then pitched upgrades that they pay for to enhance the experience. He called that the "intersection of trends" in media. 

Andreessen also said he is a major media consumer and has a commercial high-speed line in his home that costs him $4,000 a month. 

That brought a laugh from Moonves, who said selling Netscape must have been profitable. 

Moonves said that as they figure all this out, the challenge will be to measure usage and remain relevant. 

Roberts, whose company is involved in acquiring NBC Universal, agreed but said there is another challenge: No matter how good traditional industries are at adapting to changes, that might not be enough. 

"One of our problems has been it can be more fun and cooler on some of these other platforms," Roberts said. "The technology is moving faster. We have to get on that bus. We can't stay on our bus. We have to ask, how do we embrace this technology but not throw away the old business models?"

BT Invests in OnLive to Take Cloud-Delivered Games to Europe

Excerpted from Games Venture Beat Report by Dean Takahashi

OnLive has raised a new strategic round of funding from British Telecom (BT) as part of a plan to expand its games on demand service to Europe.

The deal is a big endorsement and will help the company respond to interest from gamers in Europe, said Steve Perlman, chief executive, in a blog posting today. The amount of the BT investment was not disclosed, but BT said it will take a 2.6% stake in OnLive.

"We'll be working together with BT to bring the OnLive Game Service to the UK, such that it operates reliably and with high quality over the U.K.'s internet backbone to BT's broadband customers," said Perlman. "BT has an exclusive right to bundle the OnLive Game Service together with their broadband service offerings in the UK, although UK gamers will also be able to order the OnLive Game Service directly from OnLive to run over any UK Internet service provider (ISP)."

OnLive has been testing in Western Europe since 2009. It has a data center in Wales and Perlman said in an interview that the service has been tested across borders, everywhere from the UK to Italy and from Scandinavia down to Spain. There will likely be a different OnLive service in each country, due to regulatory and other reasons, Perlman said.

"The good news is it works very very well," he said. "In some cases, it works better than in the US."

That's because broadband operators such as BT can guarantee a high minimum service level in the UK. OnLive has created a videogames on demand service, using cloud technology, which allows it to stream high-quality 3D video games to consumers. Rather than process games on consoles or PCs, it taps servers in data centers to do the processing job. Then it sends compressed video to its subscribers. That allows it gamers to play high-end games on low-end hardware and enjoy games instantly, with no download times.

Palo Alto, CA-based OnLive has been developing the service for eight years. It plans to launch the service with 25 games on June 17th. Users can try demos for free and full subscriptions will cost $14.95 a month, not including game purchase or rental fees. Perlman said the US launch is still on schedule.

Partners include Electronic Arts, Ubisoft, 2K Games, THQ, and Warner Bros. Interactive Entertainment. The games will also include new releases like Mass Effect 2, Borderlands, Assassin's Creed II, as well as other titles. Perlman said there are quite a few more new partners that are unannounced.

The BT investment will likely stir more interest in OnLive. Perlman said that his company is not actively looking for more money, but there are a lot of potential strategic investors that have approached OnLive to invest in the company and partner with it. Perlman said there were some unannounced relationships that have not yet been revealed.

The latest funding is another vote of confidence for what has been a highly risky project. Skeptics have said that the Internet is too tempermental and broadband connections are too slow to accommodate fast-action games. But Steve Perlman, chief executive, demoed the working technology at our GamesBeat@GDC conference in March. The challenge is to scale the service for lots of users.

OnLive's basic technology is compression, which squeezes game data into a compact form so that it can be transferred over a broadband connection to a server, where the data is computed. Then a video is sent back over the broadband line to the user's computer. OnLive tries to make this round-trip happen so fast that the user doesn't notice that the computing is happening in the cloud, rather than on the user's own computer.

The Mac version of the service will be particularly interesting, as Mac gamers have had to wait for their games for a long time after they're published first on the PC. But OnLive will have competition that includes rivals such as Gaikai, InstantAction, Otoy, Valve and a variety of others.

OnLive's goal is to disrupt the traditional retail distribution of high-end games, as well as high-end game hardware. It lets gamers play games almost instantaneously over a network. The network is so fast that no game downloads are necessary and the processing of graphics content happens in servers, which then send images to the user's computer screen.

Gamers can buy and start playing a game almost instantly; that upsets the retail market. Meanwhile, since the heavy-duty processing takes place in servers in a data center, OnLive allows gamers to play on relatively simple hardware. You could play a high-end game like Crysis on a netbook or laptop without heavy-duty 3-D graphics chips in them. Or, you could use a Micro Console TV Adapter from OnLive, which converts the images so they can be displayed on a screen; hence, you could play a high-end PC game on your TV set, using only the Micro Console.

Last summer, for instance, OnLive rounded up the capital needed to deploy the network from AT&T and Lauder Partners. Other backers include Maverick Capital, Autodesk, and Warner Bros. Interactive Entertainment. Now the company is in the midst of a beta test.

The OnLive Game Service will let gamers discover, explore, purchase and play video games. Much like the Netflix DVD rental service's online component, it lets you play games on the network instantly. You simply click on an icon for a game and it launches over the broadband connection.

The OnLive service will include online game service features much like Microsoft's Xbox Live service for the Xbox 360. You can have your own permanent gamer tag (identification), user profiles, friends, chat, and the ability to challenge friends in multiplayer matches. The company's Brag Clips feature records your online game matches and lets others watch them as videos. You can pause and resume a game, even on a different platform. Games can be purchased or rented, with actual per game pricing to be announced at E3.

Other big titles include Dragon Age Origins, Prince of Persia: The Forgotten Sands, and Metro 2033. By June, some of these games will be old. But Perlman said more games will be announced over time. The MicroConsole TV Adapter won't be available in June, but will ship later in the year.

Perlman said that the company's 100-plus employees have been toiling away at building the network across five different data centers and then testing it. The service can't suffer from delays, known as lag, or gamers will complain loudly. That's also why OnLive is expanding the service little by little.

Keys to Success in Cloud Computing 

Excerpted from ChannelWeb Report by Jennifer Bosavage

Seems everyone wants a piece of the cloud computing market. In a panel moderated by CRN Senior Editor Steve Burke during Wednesday's Cloud Computing Is All the Rage virtual trade show sponsored by Everything Channel, participants discussed how to be successful in the space that is taking the industry by storm.

First and foremost, solution providers who've been successful in the space have shown true commitment to the model. "You are a revolutionary, and you know yesterday's technology is dying, as opposed to evolutionaries. They have two or four people committed to it. When you do something that you're not committed to, the results show it," said Bobby Napiltonia, SVP of Worldwide Sales and Alliances at eMeter. "The hardest thing is to get off the crack of selling hardware and software and learn how to move over to selling success."

EMeter is in the smart-grid space. Instead of rolling trucks to customer sites, it performs remote disconnects and connects on the fly, services which are entirely new in the energy supplier market. The company is transforming how customers buy energy, and how suppliers provide it. Second, while there is a lot of talk about cloud, solution providers can point to relatively few implementations of solutions. As Scott Lewis, Novell VP of Partner Marketing and Enablement, noted, "Ninety-five percent of the conversation is about cloud, but only about five percent is about implementation of cloud. Joining those worlds together is where we're seeing some action."

For example, Len Couture, Managing Director at Bluewolf, described an implementation for a utility company that saved time and money by rolling trucks out to customer sites more efficiently. In addition, customer satisfaction increased. "It's about collaborating with the client, being able to understand what's going on inside the company, and around it."

Finally, while solution providers must be fully invested in the cloud - having just partial interest as opposed to real interest is akin to throwing good money after bad, noted Mark Trang, Senior Director, Global Partner Marketing and AppExchange at Salesforce.com - they mustn't lose touch with their core competencies. Solution providers "tend to lose sight of that; they just want to jump in. The rules and economics of delivering value to customers don't change," said Trang. "They have a long-standing relationship with customers and are viewed as trusted advisors." Some expertise, such as a background in managed services, are more easily transferable than others. Build on those relationships while moving business to the cloud.

A case in point is the American Data company. The solution provider, a long-time .net developer, got involved with Salesforce.com and Google, and it now specializes in developing only cloud-based solutions. The change was not evolutionary but fundamental: The leader of the company saw how technology was moving toward the cloud and got on board, taking his customers, which include eBay and Farmers Insurance, with him.

Cisco's Profit Surges 63%

Excerpted from Wall Street Journal Report by Don Clark

Cisco Systems provided more evidence that a rebound in corporate technology spending is gaining momentum as customers in a growing number of regions snap up more varieties of communications and computing hardware.

The big Silicon Valley maker of networking gear on Wednesday reported that profit surged 63% in its fiscal third quarter on revenue that rose 27%.

Cisco said positive conditions should continue in the current period as the company benefits from investments made during the downturn to move into new businesses and expand its market share.

"This quarter was probably the strongest quarter we've had in our history," said John Chambers, Cisco's CEO, during a conference call with analysts.

Cisco's remarks add to bullish sentiments that have emanated lately from tech giants that dominate key markets.

International Business Machines (IBM), which has branched out from computing hardware to technology services and software, earlier Wednesday predicted it would double its earnings by 2015. Chip giant Intel on Tuesday predicted earnings and revenue would increase at double the rate of prior expectations over the next few years.

The rebound in demand - which started with consumers, followed more recently by purchases by businesses - seems to be nearly as sharp as the recession-driven slump that hit the tech sector in the second half of 2008.

Cisco was among the first big companies to experience the slump, but it reported a strong recovery in the quarter ended in February and had predicted further gains in the third period.

The revenue growth it reported Wednesday exceeded the high end of its guidance.

"Cisco's numbers represent further evidence that corporate technology spending is in full recovery mode," said Bill Kreher, an analyst at Edward Jones.

Cisco reported profit for the period ended April 25 of $2.19 billion, or 37 cents a share, compared with earnings in the year-earlier period of $1.35 billion, or 23 cents a share. Revenue rose to $10.37 billion from $8.16 billion.

Cisco's latest results included a one-time tax benefit and costs associated with currency hedges related to the company's recently completed purchase of the Norwegian conferencing company Tandberg. Excluding those and other one-time items, Cisco put profit at 42 cents a share.

The company, based in San Jose, CA, is best known for switching and routing devices that help companies connect to the Internet. Those businesses rebounded sharply in the quarter, Cisco said, driven partly by demand for new products.

Revenue from switches jumped 40%, Mr. Chambers said, while revenue from routers rose 23%. Another factor, he added, was the improving balance as the recovery began to spread to new regions around the world.

Mr. Chambers noted the company's sharp growth rates may appear to moderate in the future, largely because comparisons to depressed year-earlier periods will end.

But Cisco projected revenue, including contributions from Tandberg, in the current quarter will increase 25% to 28% from a year earlier.

Cisco's gross profit margin, which stood at 65.3% in the third quarter, is likely to range from 64% to 65% in the current period, said Frank Calderoni, the company's CFO. He said any margin declines would likely reflect the effect of acquisitions and an increasing proportion of low-end products in Cisco's sales.

Highwinds Launches P2P-Based HD Streaming Service

Highwinds, a leader in content delivery and hosted IP services, this week announced the availability of Infinite HD for streaming high-definition (HD) video live and on-demand over its content delivery network (CDN). Setting a new standard for delivering HD video to online audiences, Highwinds' Infinite HD is built on technology that provides the most resilient and consistent HD streams available in the industry today, together with the features necessary to deliver advanced HD viewing experiences.

Infinite HD is the result of Highwinds' robust, global CDN coupled with the Octoshape Infinite Edge throughput optimization technology. Unlike TCP or chunked HTTP-based protocols, P2P-based Infinite HD is far less susceptible to latency and packet loss, allowing Infinite HD to have the highest probability of successful HD stream delivery to the last mile. When there is contention in the last mile or in the core, other technologies fail to deliver consistent streams and are forced to rely on bitrate adaption technologies, which require higher overhead and support lower average bitrates than Infinite HD.

Though the new Infinite HD platform is making its debut into the market today, Highwinds has a number of customers who are already using the platform and player technology. Infinite HD was first used to deliver last year's PGA TOUR Playoffs for the FedExCup, and it continues to power the streaming of major media, entertainment and sporting events, including THE PLAYERS Championship, which was held May 6-10, 2010. In addition to gaining early customer adoption of Infinite HD, Highwinds has also garnered industry support from its ecosystem partners, including Octoshape, whose technology is integral to Infinite HD, and Digital Rapids, who has created encoding profiles specific to Infinite HD to support broadcast-quality streaming.

"As consumer demand for ubiquitous HD video grows, we continue to see increased HD traction from traditional broadcasters and online content owners. However, HD technologies used to deliver HD video today fail to deliver a consistent experience," said Steve Miller, president and CEO of Highwinds. "As such, we launch Infinite HD as a proven streaming innovation after having successfully delivered several high-profile live events with unprecedented quality. Additionally, Highwinds customers who stream video with Infinite HD can experience advanced viewing features including DVR, instant replay, picture-in-picture and live data feed overlays."

Network Traffic Company PeerApp Wins $3 Million in Funding 

Excerpted from Globes Report by Batya Feldman

Sources inform ''Globes'' that Israeli start-up PeerApp has obtained a venture loan from Hercules Technology Growth Capital of the US.

PeerApp was founded in 2002, and develops solutions for easing network traffic loads. The company's products enable Internet service providers (ISPs) to cut costs by reducing traffic loads caused by applications that require extensive bandwidth, such as file sharing, content, and video files.

The company has raised $27 million to date, not including the new loan, from Israeli funds Evergreen Venture Partners and Cedar Fund and from Boston-based Pilot House Venture Group.

Pirate Bay Bidder Pandeya Taps Ted Cohen to Facilitate Deal

Excerpted from Digital Media Wire Report by Mark Hefflinger

Hans Pandeya, whose latest attempt to acquire file-sharing hub The Pirate Bay comes in the form of a bid launched by a public American company called BMSV, has hired TAG Strategic's Ted Cohen to help facilitate the deal, Wired News reports. 

Cohen, the former head of digital at EMI, was previously retained to work on similar plans to transform file-sharing services Napster and LimeWire into legitimate distribution services. 

"Ten years ago, I went through this with Napster - there should be a way to pull this off," Cohen told Wired, of a potentially licensed Pirate Bay. 

"If the industry wasn't ready ten years ago, I think they are possibly ready for it now." "If you can convert 30% of The Pirate Bay users to a paid subscription, everybody sees the wisdom in that now, more-so than they did two or three years ago. I don't think it's a fool's quest," added Cohen. 

The Pirate Bay's brand reputation and past actions that infuriated copyright owners could pose obstacles to such a deal, however. 

"Branding was a serious challenge for BitTorrent when we did the license agreements, and it's proving difficult for a lot of other companies in a similar space," Ashwin Navin, the Co-Founder of file-sharing software firm BitTorrent, told Wire. 

"For example Boxee has a hard time, DIVX has a hard time - these companies that have pushed the envelope on copyright tend to get categorized as renegades, and the lawyers have a hard time - and the entertainment brand managers have a hard time - embracing those brands."

Another Win over a File-Sharing Company

Excerpted from LA Times Report by Jon Healey

A federal judge ruled this week that the company behind the LimeWire file-sharing network was liable for infringing the major record companies' copyrights, exposing the company and its former CEO, Mark Gorton, to potentially enormous financial penalties.

The ruling didn't come as a huge surprise; LimeWire is similar to other second-generation file-sharing networks (Kazaa, Morpheus, Grokster) that the courts had previously held secondarily liable for infringement. Its distributor, Lime Wire LLC, has long known it was in the music industry's cross hairs, but it didn't try to protect copyrighted works to the degree that, say, BitTorrent has done.

What's most interesting about the ruling is the route that US District Judge Kimba Wood took to find LimeWire and Gorton liable.

Relying on the Supreme Court's ruling in MGM v Grokster, Wood held that the defendants deliberately induced LimeWire users to violate copyrights, and that it profited from the infringements. Here's a snippet from the ruling (Wood refers to the company Lime Wire by the initials LW):

"The following factors, taken together, establish that LW intended to encourage infringement by distributing LimeWire: (1) LW's awareness of substantial infringement by users; (2) LW's efforts to attract infringing users; (3) LW's efforts to enable and assist users to commit infringement; (4) LW's dependence on infringing use for the success of its business; and (5) LW's failure to mitigate infringing activities."

Most of those factors are non-controversial applications of the Grokster principle that folks who encourage piracy in order to profit from it are liable for infringement. Wood cited internal documents to show that LimeWire executives knew most of its users were downloading unlicensed songs, and that they sought out such users through, among other things, "press campaigns on college campuses relating to 'file-sharing and getting free MP3's.'"

The company aids would-be infringers, Wood wrote, by enabling them to search by categories (such as Classic Rock and Top 40) that "inevitably guide users to copyrighted recordings." She also noted that the more users it attracts, the more revenue it collects from advertisers and consumers who buy the ad-free version of the software.

Wood's fifth factor, however, suggests that liability might ensue merely from the way a technology is designed and used. According to Wood, LimeWire built a filter into the software that could block copyrighted works from being downloaded, but left it inoperative unless users turned it on. A separate filter, however, barred users from sharing the songs they bought from the LimeWire store:

"This selective filtering further demonstrates LW's knowledge of infringement-mitigating technologies and the company's intentional decision not to employ any such technologies in a way that meaningfully deters LimeWire users' infringing activities. Failure to utilize existing technology to create meaningful barriers against infringement is a strong indicator of intent to foster infringement."

As for former CEO Gorton, Wood cited precedents that held company executives liable for infringements when they had the ability to supervise them and they benefited from them. She went on to note:

"Gorton directed and approved many aspects of LimeWire's design and development. Gorton admits that he conceived of LimeWire and decided that the program should be decentralized and should use P2P technology. Gorton oversaw the development of LimeWire's filtering system, and decided that the filter should be turned 'off' by default. This evidence, taken together, also establishes that Gorton knew about the infringement being committed through LimeWire."

Several questions were left unanswered by the decision, including whether LimeWire was capable of substantial non-infringing uses. That issue, however, affects only the record companies' claim that LimeWire was liable for contributory copyright infringement, which is essentially a moot point if the company is liable for inducing infringement.

LimeWire's statement from CEO George Searle after the hearing follows:

"LimeWire strongly opposes the Court's recent decision. LimeWire remains committed to developing innovative products and services for the end-user and to working with the entire music industry, including the major labels, to achieve this mission. We look forward to our June 1 meeting with Judge Wood."

Mitch Bainwol, head of the RIAA, offered a somewhat different reaction, focusing on the filtering issue and Gorton's liability:

"LimeWire is one of the largest remaining commercial file-sharing services. Unlike other P2P services that negotiated licenses, imposed filters or otherwise chose to discontinue their illegal conduct following the Supreme Court's decision in the Grokster case, LimeWire instead thumbed its nose at the law and creators. The court's decision is an important milestone in the creative community's fight to reclaim the Internet as a platform for legitimate commerce. By finding LimeWire's CEO personally liable, in addition to his company, the court has sent a clear signal to those who think they can devise and profit from a piracy scheme that will escape accountability."

The Continuing Need for Detente & Collaboration

Excerpted from Crawdaddy Report by Max Mobley

Why? Why is the music industry in its current dismal shape? Why do CD record sales continue to plummet while vinyl record sales steadily increase? Why, amidst all the bad news surrounding the business of music, did the Black-Eyed Peas' "I Gotta Feeling" just break the record for the biggest paid download ever?

Seriously, what is going on? Obviously, downloading and digital media's perfect copy replication has something to do with the current state of affairs, but that can't be the only reason, can it?

In my opinion, that doesn't even cover half of what's going on. There simply has to be more to it. I know the record companies blame file sharing for much of it, and they have their biased studies to "prove" it. But I never once believed that was the real problem.

Face it: downloading music files over the Internet is as easy as arresting Mexicans in Arizona for skin color violations. I remember this secret website we P2Pioneers knew about, where, without sharing a thing we could find a song we wanted and download it for free - done, finite - save as, hit play, no guilty conscience.

And I didn't boot my computer the next day to find out I now have a toolbar I can't get rid of and my web browser now only goes to porn sites. I did not feel guilty about free music because of some moral compass problem - I believe artists should be rewarded for their art. The reason I did not feel guilty for downloading is because for me and millions of others, downloading a song for free was a precursor to going out and buying the album.

A University of Amsterdam study by Professor Nico van Eijk shows not just that there "is no clear relationship" between file sharers and declines in music sales, but that file sharers actually spend more on music, concert tickets, and merchandise than non-file-sharers. At least that is the case in the Netherlands where the study was conducted.

The study also holds up Sweden to help validate the study's findings. Sweden is Mecca for both licensed and unlicensed music sites. It's home to The Pirate Bay, which is unlicensed, and Spotify, which is licensed. They even put a Pirate Party member into the European Parliament. And yet, between 2000 and 2008, revenues for recorded music in Sweden roughly stayed the same.

Dr. van Eikj's study does not say that file sharing has no impact on the current state of the music biz, but clearly the key factors to the problem lie elsewhere - like the industry's choice to abstain from innovation, which is also covered in the study.

Instead of embracing the digital age, or the broadband age that followed, the music industry decided to make file sharing illegal. Imagine if instead they had capitalized on the technology and came up with innovative distribution models and other business words. Scarier still, we're one-tenth into the millennium and the best ammo the record execs have is to threaten to pull out of streaming radio, and maintain their pursuit of college kids who file share. Some labels are also drastically lowering CD prices, and that is, I believe, a smart move.

In addition to their Draconian responses, labels are now going after 360 deals, meaning they get a cut of everything - tour receipts, fragrance profits, music sales, etc. From an artist and fan point of view (POV), that seems like a sellout by the artist. But then, I've never been offered a 360 deal so how would I know. I know I don't want to smell like a Crooked Vulture but I do want to listen to them, so how viable can the 360 deal be long term?

I believe another component to the music industry problem is that there is simply too much music. Basic supply and demand. If you live a connected life, then music is probably in your ear holes nearly every waking minute - from ring tones to drive-thru menu displays to everything on TV, music is the new 39-cent hamburger. And the experience of digesting it sometimes isn't that different.

That is a problem the record industry and the 360 deal actually created: If silence were a traded commodity, I'd start buying shares of it.

Coming Events of Interest

Broadband Policy Summit VI - June 10th-11th in Washington, DC. The most comprehensive, in-depth update about the implementation of the FCC's National Broadband Plan. No other forum provides the detailed coverage, expert insight and networking opportunities you'll receive at Broadband Policy Summit VI. The expanded program includes top-notch faculty who will address the most pressing broadband issues in six panel discussions, two debates and four keynote addresses.

Digital Media Conference East - June 25th in McLean, VA. The Washington Post calls this Digital Media Wire flagship event "a confab of powerful communicators and content providers in the region." This conference explores the current state of digital media and the directions in which the industry is heading.

NY Games Conference - September 21st in New York, NY.The most influential decision-makers in the digital media industry gather to network, do deals, and share ideas about the future of games and connected entertainment. Now in its 3rd year, this show features lively debate on timely cutting-edge business topics.

Digital Content Monetization 2010 - October 5th-6th in New York, NY. DCM 2010 is a rights-holder focused event exploring how media and entertainment owners can develop sustainable digital content monetization strategies.

Digital Music Forum West - October 6th-7th in Los Angeles, CA. Over 300 of the most influential decision-makers in the music industry gather in Los Angeles each year for this incredible 2-day deal-makers forum to network, do deals, and share ideas about the business.

Digital Hollywood Fall - October 18th-21st in Santa Monica, CA. Digital Hollywood Spring (DHS) is the premier entertainment and technology conference in the country covering the convergence of entertainment, the web, television, and technology.

Copyright 2008 Distributed Computing Industry Association
This page last updated May 23, 2010
Privacy Policy