February 9, 2004
Volume 3, Issue 7
Welcome INTENT MediaWorks
Please warmly welcome INTENT MediaWorks LLC (IMW) as the newest company to join with Altnet, BlueMaze Entertainment (BME), Claria Corporation, Digital Containers (DCI), Grokster, and Sharman Networks (SNL) as DCIA Members. IMW brings an important new voice to DCIA's Platform Group, and its views will be significant as we continue to develop business models and introduce win-win solutions for peer-to-peer (P2P) digital media distribution.
A new entrant in the distributed computing industry, IMW is establishing a standard for legal, secure, and profitable distribution of digital media, and carving a niche as a trustworthy steward and savvy marketer of digital content.
In less than three years, P2P file exchange has emerged as a significant social and technical phenomenon with more than 80 million active consumers utilizing software applications to access digital music, video and games. IMW's launch and alignment with the DCIA come at a time of opportunity and challenge for companies and public interests groups, which are trying to keep up with an incredible pace of technological change and dynamic consumer behavior.
Based in New York and Atlanta , IMW is a privately held distributed media company designed to help partners tap into and profit from secure distribution and commercialization of digital media. IMW's business model and value proposition integrate the viral power and authentic nature of P2P file-sharing with digital rights management technology, e-commerce solutions, and market segmentation methodologies to drive revenue and support marketing objectives. While the cost of traditional media is skyrocketing, IMW's model promises to activate the rapidly growing P2P platform at a fraction of the cost of other online models or multi-media applications. For more information, please call 404-518-8161 or visit www.intentmediaworks.com .
According to IMW Founding Partner, Les Ottolenghi, "The winning strategy for overcoming early market challenges and commercializing P2P distribution of entertainment content requires ingenuity, integration, fair play and good old-fashioned smarts. INTENT MediaWorks has a win-win approach for partners who are interested in leveraging the fastest growing application in consumer media. We have joined the DCIA and committed our support with a P2P business model that serves the interests of a wide range of stakeholders, including content publishers, consumer electronics and technology companies, access providers, corporate sponsors and consumer interest groups."
IMW will present its business model with fellow Platform Group Member Digital Containers at the DCIA 2004 Winter Meeting on Monday evening. To celebrate its official launch and membership in the DCIA, IMW is also co-sponsoring a special invitation-only event with Content Group Member BlueMaze Entertainment after the meeting. The event is expected to draw some of Manhattan 's top emerging musical artists.
Report from CEO Marty Lafferty
 I hope to see you personally at our Winter Quarterly General Meeting on Monday evening at 6:30 PM in Concourse A of the NY Hilton.
Senator Norm Coleman, Chairman of the Permanent Subcommittee on Investigations, will be joining us at this meeting to address the Congressional view of our nascent industry, as well as outline plans for his upcoming P2P Summit.
In addition, DCIA Charter Member SNL CEO Nikki Hemming will deliver opening remarks from Sydney by video, and DCIA Government Relations leader and Fleishman-Hillard SVP Doug Campbell will highlight anticipated US legislative activity of relevance to P2P this year.
We are especially looking forward to the P2P demonstration that will be conducted jointly by IMW's Les Ottolenghi and Darby Abbott along with DCI CEO Chip Venters.
Security and privacy continue to be at the forefront of issues affecting the Internet overall, and we believe it is important, as proponents of the commercial development of business opportunities utilizing some of its most advanced technologies, to continue to examine opportunities for improvement of practices that are responsive and responsible in these areas.
Accordingly, we have invited FBI Cyber Division IIU Chief Arnold Bell to update us on law enforcement activities and outline potential ways for Members and prospective Members to contribute to education and deterrence. Likewise, CDT Global Internet Initiative Policy Director Ari Schwartz will join our meeting to discuss current activity focused on protecting consumer interests, particularly with respect to privacy, disclosure, and control. CDT has been working specifically in the adware / spyware arena of interest to us and we look forward very much to his report.
Charles Nesson, of Harvard's Berkman Center for Internet and Society, will grace us once again with his presence and lead an interactive session on strategies for P2P. Those who attended our Fall 2003 Quarterly Meeting will remember Charlie's stimulating and provocative discussion of Law, Technology, and Ethics.
The centerpiece of this Winter Meeting will be our discussion of the three alternative P2P music distribution models that have been developed with input from hundreds of contributors during the past several months. DCIA Member Services leader and New Ellis Group President Karen Kaplowitz, ReachTV EVP Mark Ellison , and Arlen Communications President Gary Arlen , will join me to present this part of our meeting.
Our goal is develop a consensus as to which of these model(s), or aspect(s) of them merit further exploration towards potential implementation, as well as which can be discarded at this point. You can now review and comment on these models at www.dcia.info , and Model C is summarized below. Additional alternatives are welcome as well.
It is important to acknowledge that each of these three business models represents very different viewpoints, extending far beyond the Membership of DCIA. We are very grateful to the generous contributions of ideas from diverse entertainment and technology interests who have participated in their formulation.
Lastly, we hope you'll join us for our after-party at the Cherry Bar of the W Hotel, courtesy of sponsors INTENT MediaWorks and BlueMaze Entertainment.
P2P Music Distribution Model C
DCIA Digital Music Distribution Business Models
As with the preceding alternative two models completed in October and December 2003, to help facilitate side-by-side comparisons, this business model is organized to be implemented in three phases over a timeframe of approximately three years.
In Phase 1, music rights holders wishing to monetize their files would have them registered and fingerprinted or watermarked with agreed upon technology(ies) for this purpose. These technology(ies) would permit the identification of label-seeded and consumer-originated files of the same recording of a song.
Wholesale license fees for tracks distributed online would be negotiated by music rights holders with P2P and non-P2P resellers on a case-by-case basis as is customary for entering into such business arrangements. An associated ISP POP hardware and/or P2P client software traffic file identification solution would be implemented to detect such registered and fingerprinted or watermarked music files, regardless of their origin, as they are transported via P2P protocol.
Related DRM solutions would be agreed upon and implemented, that would be applied per rights holder established rules to such files as they are transferred to users who have initiated P2P searches for them. Micro-payment billing / collecting /allocation systems would be introduced to enable participating ISPs and/or P2P software companies to serve as online music distributors.
Unregistered and unfingerprinted or unwatermarked files would continue to be redistributed in the P2P environment as they are currently, and rights holders would retain their rights to oppose unauthorized redistribution.
A consumer incentive program would be implemented in Phase 2 to provide legacy/heavy P2P users with the ability to replace or remove pre-existing files in their collections containing registered and fingerprinted or watermarked songs with the highest quality label produced versions of such files.
Along with this would be the provisioning of a user-friendly system enabling consumers who desire to become P2P music resellers also to do so, piggybacking on the ISP and/or P2P software music file identification system(s) introduced in Phase 1. Other to-be-determined steps would be implemented to ensure that registered and fingerprinted or watermarked songs could be consistently identified and be downloaded reliably at the highest quality.
Finally, Phase 3 would see the development and implementation of a system to permit consumers to also register and fingerprint or watermark original content to be monetized in P2P environments.
The culmination of the rollout of this model would be defined as ubiquitously deployed and accepted methods for protecting both professional and amateur copyrighted works by both companies and consumers in P2P distribution. After this would be achieved, to the extent deemed desirable and feasible at the time by all parties, to-be-determined approaches for addressing the retransmission of unknown music files could be explored.
SNL Complies with Australian Court Order
Kazaa Offices Raided in Australia
Regrettably, last week, DCIA Charter Member SNL was served with a "search and seize order" from the Federal Court of Australia acting on behalf of music recording industry interests there. SNL has complied, but will also apply to have this order set aside.
SNL characterized this action as an attempt to "discredit Sharman Networks and Kazaa software, following a number of recent court decisions around the world that have ruled against the entertainment industry's agenda to stamp out peer-to-peer technology."
"Sharman bought the Kazaa software two years ago with the express purpose of building it into a legitimate channel for the distribution of licensed, copyright protected content."
DCIA's charter calls for all Members to oppose copyright infringement. Although we have no direct knowledge of the court order in Australia , or what motivated it, our understanding from press reports is that its purpose was to seek evidence of involvement in copyright infringement.
As a trade association, we trust the integrity of our Members to comply with our bylaws. In fact, substantial evidence will probably be found of SNL's active involvement in programs to deter copyright infringement and commercialize P2P distribution of copyrighted musical works. In our view, that endeavor should now become the focus of content interests as well.
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