April 19, 2004
Volume 4, Issue 5
Coming DCIA Events in Los Angeles
Digital Media Summit - April 28-29 at the Universal Sheraton. Learn about business opportunities using digital technologies that create, deliver, and distribute existing and next generation entertainment. Explore new revenue models. Meet the experts at the cutting edge of digital media delivery. Discover how to make money from new distribution channels including P2P. The Walt Disney Internet Group's Steve Wadsworth, Sony Pictures Digital Networks' Patrick Kennedy, and TiVo's Marty Yudkowitz will keynote. Panel participation includes the DCIA.
Business Roundtable - April 29 at the Peninsula Hotel. "Competing with Free: Has Digital File Sharing Made the Record Companies Obsolete?" A breakfast discussion will be led by DCIA CEO Marty Lafferty on the way digital technology is transforming the music business and the lessons to be learned for other content providers on the information superhighway. RSVP by fax to 310-907-2102 or mmartin@agsk.com.
DCIA Spring Meeting - May 12 at the Wilshire Grand Hotel. Our agenda will focus on legitimate distribution of P2P games, music, and movies. This meeting will present technical and business solutions. It will address the key questions of how to overcome the problem of a massive number of P2P users expecting content to be free - and how to change consumer preferences to licensed versions. A light buffet dinner will be served. Pre-register at info@dcia.info or call 888-864-DCIA for more information.
Report from CEO Marty Lafferty
 The DCIA and Members Claria Corporation and Sharman Networks have participated in the Consumer Software Working Group (CSWG) led by the Center for Democracy & Technology (CDT) from its inception.
Now we join with twenty-four (24) companies and organizations in signing-on to its initial work product that is being distributed at the FTC Spyware Workshop Monday morning and posted on CDT's website.
The DCIA has also been working proactively and cooperatively with the FTC and is participating in the first panel at Monday's workshop.
The DCIA broadly defines "spyware" as software installed without consent that provides no benefit and, more specifically, as a pejorative term to describe software that installs itself on consumers' personal computers without their knowledge or consent and does one or more of the following: gathers personal data about users and/or tracks their usage behavior without consent, supplies this information to undisclosed third parties for undeclared purposes, utilizes processing capabilities for unknown tasks without permission, and makes itself difficult to uninstall.
This nefarious software may change settings or configurations, install unauthorized dialers or keystroke loggers, or deliver spam to others undisclosed to its unknowing users. The DCIA opposes spyware and all DCIA Members certify that they do not distribute spyware.
The DCIA broadly defines "adware" as software installed with consent that provides a benefit and, more specifically, to describe beneficial software that enables installation and usage of valuable computer programs by consumers at no cost or at a reduced cost in exchange for receipt of online advertising.
Adware clearly communicates its value proposition before installation and during operation, fully discloses and clearly explains its functionality, requires positive affirmation of permission before being installed, respects end-user privacy while serving ads, provides easily understandable explanations of what it is doing, and is not difficult to uninstall. The DCIA supports adware.
We are particularly interested in establishing high standards and defining best practices for the nascent distributed computing industry. We believe four tenets characterize appropriate treatment of consumers in general: 1) Consumers elect to install software based on informed consent. 2) Consumers receive full disclosure of software functionality prior to giving permission to install. 3) Consumers give permission by affirmatively accepting an end user license agreement and privacy statement. 4) Consumers receive reminder disclosures during software download/installation with the option to cancel.
We feel that six added tenets characterize appropriate treatment of consumers with respect to the provision of adware: 1) Consumers receive applications that offer benefit and utility that they would otherwise have to purchase in exchange for accepting advertising. 2) Contextual marketing advertisers do not gather personally identifiable information about users without receiving express permission in advance. 3) Contextual marketing advertisers deliver advertising anonymously unless they have received express prior consent for personalized service.
In addition, 4) Adware providers prominently offer users access to more information and links to customer support during the operation of their software. 5) Adware providers maintain a customer support function reasonably adequate to respond on a timely basis to user inquiries. 6) Exemplary adware programs offer system tray icons, are listed in start/program menus, are easily uninstalled by add/remove programs, and label served ads with their source.
We support the FTC's exploration of the spyware issue - it is of concern to us all. And as a trade association whose mission includes supporting commercial development of peer-to-peer (P2P) technologies, the DCIA must emphatically state that P2P file-sharing software and spyware have no particular interrelationship.
In the fullness of time, the elimination or reduction of spyware will help increase distribution of P2P file-sharing software by removing a stigma that has been wrongly associated with it by certain of its opponents.
Join the Anti-HR 4077 Coalition
We are grateful to Public Knowledge's Gigi Sohn for assembling a coalition of leading technology and telecom companies, trade organizations, and public interest groups, which has attracted nearly fifty (50) participants in its first few days, to oppose the Piracy Deterrence and Education Act. Sign up at HR4077 to join with the DCIA and a diverse group with broad interests in helping to stop this ill-conceived bill.
HR 4077 may well be based on a mistaken premise: that unauthorized peer-to-peer (P2P) file sharing has significantly harmed the music industry. A recent Harvard/UNC study, as well as a growing body of empirical data, strongly suggest that this is not the case. Moreover, sufficient attention has been paid to user-side issues and the time has finally come for copyright holders to introduce the "carrot" of legitimate licensed content redistribution via P2P before the "stick" of enforcement is once again revisited.
Despite best efforts of leading P2P software suppliers to offer viable solutions, major music labels have failed in any market-based way to mitigate their alleged losses or reduce instances of copyright infringement. Instead, they turn to Congress to divert the might of federal law enforcement to intimidate and incarcerate individual users, in an attempt to destroy file sharing technology and be relieved of the need to license their content to P2P application providers.
Against this background, HR 4077 threatens to take criminalization of individual consumer non-commercial conduct to unprecedented heights. The bill would set a trap for the unwary and make felons of millions of the young and old alike, in an impractical attempt to stamp out an activity that on balance probably does not hurt copyright holders at all, and may in fact benefit them.
The copyright laws already permit rights holders to recover, through civil suits, statutory damages which may be far greater than any actual harm suffered. It is their right and duty to protect their interests, rather than expecting criminal law enforcement authorities to do that task for them at public expense.
HR 4077 would reward major global entertainment companies, not only for failing to protect their own content in the digital realm, but also for boycotting innovative start-up software firms and refusing to license willing P2P suppliers as legitimate retail resellers.
We suggest that in this area the far better role for Congress, given its mission of promoting the public interest, should be to encourage the major record labels to extend to consumers a way for them to legitimately purchase the music they want through the technology - P2P file sharing - that they want.
This approach not only would prevent the criminalization of millions of consumers, but would also bring substantial new revenues to the music industry, as it ends its openly self-destructive and harmful boycott, and begins to license its content using P2P distribution technologies that already have been adopted en masse.
The HR Judiciary Committee should examine whether the entertainment industries' refusal to license their federally-protected content for legitimate distribution via mutually beneficial P2P business models adequately serves, or undermines, the bedrock purpose for which the Constitution authorizes copyright: "To promote the Progress of Science and useful Arts" for the public benefit.
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