May 31, 2004
Volume 4, Issue 11
Coming DCIA Events for June
Please plan now to attend these events of interest, in which the DCIA and its Members are actively participating.
June 2-3: Branded Entertainment Marketing for The Savvy Consumer - Universal Sheraton, LA - Network with marketers from HP, 20th Century Fox, Clear Channel, Chrysler, Coca-Cola, 24 Hours Fitness, NBC Universal, Paramount, the Gap, and 50 more industry insiders who share their success stories on how to foster brand awareness, create maximum impact, and increase sales. The dramatically changed media landscape has forced brands, entertainment, and media companies to redefine and reinvent "advertising" for a new generation of empowered consumers. Savvy consumers can be reached - with greater impact and at lower costs - but only on their own terms, and on their own turf.
June 11-13: Global Entertainment and Media Summit Los Angeles - Los Angeles Hilton and Conference Center , LA - The entertainment industry as we once knew it is over. It's time to build a new one. During this weekend event, some of the most brilliant and creative minds from the worlds of music, film, media, gaming, and new media will get together to create new opportunities and possibilities for artists, filmmakers, musicians, and the industry, including peer-to-peer (P2P) file sharing. You are invited to participate in the event that is championing a change in the entertainment landscape where the artist and industry unite to realize unprecedented possibilities.
June 17: The Law and Economics of File Sharing & P2P Networks - Cato Institute, Washington DC - Can copyright law and P2P file-sharing software coexist? A bitter battle over this question continues to rage years after Napster debuted and introduced the world to the phenomenon of file sharing by means of P2P software. Does file sharing really have a detrimental impact on music and movie sales? Can copyright law and affected industries adapt to live with P2P software applications? This Cato sponsored conference will offer a balanced discussion of these questions and the future of copyright law in the post-Napster era.
June 18: Digital Media Conference Washington DC - Hilton McLean, Tysons Corner , VA - Join leading executives and the press for the premier executive forum focused on digital media developments in the greater Washington , DC area. How are traditional business models being reinvented? What are the challenges and opportunities involving digital media? What do you need to do to stay competitive in the technology age? Be a part of this inaugural event, which brings together business and government leaders who are transforming the greater Washington, DC area into a national center for digital media innovation and policy development.
Report from CEO Marty Lafferty
 Despite another round of nearly 500 widely-publicized lawsuits brought last week by the RIAA, the number of US music downloaders continues to climb - by more than five million so far in 2004. Industry observers generally believe that distributed computing is still in its infancy.
For their part, leaders among P2P software providers now outpace other areas of the technology sector in their responsiveness to consumer quality-of-experience and safety issues. Their rate of developing and deploying enhanced software not only fuels additional growth, but also increasingly demonstrates a level of responsibility commensurate with being suppliers of the most popular software ever distributed on the Internet.
In sync with this steadily ramping consumer adoption curve, an expanding number of independent music labels have been adding P2P as a legitimate distribution channel, taking advantage of robust digital rights management (DRM) solutions available for file-sharing environments to monetize enormous traffic levels.
The number of licensed P2P music downloads is now more than an order of magnitude greater than that of centralized on-line music stores, despite the fact that the latter are stocked with a hundred times more titles. The supply-side issue that remains to be solved is the boycott of P2P by major labels.
Refuting past misinformation, the first quarter's double-digit music CD sales growth confirms research claims that unauthorized P2P is not yet displacing sales of recorded music; and movies and games fortunately continue to see very strong sales growth as well. But inevitable quality and delivery-speed improvements, as well as a coming generation of digitally sophisticated consumers, who will not look to a plastic product to "tangibilize" the value of an entertainment experience, do not augur well for this indefinitely to be the case.
The time is clearly ripe for entertainment and technology interests to come together and commercialize P2P for legitimate purposes. An added benefit of filling the channel with mainstream content is that this will further displace undesirable material (much as sales and rentals of popular movies came to outperform the pornography on VCRs that at first dominated that medium). New licensing initiatives will create an expanded marketplace.
In this context, it is ironic to witness a number of radically desperate measures still being considered on the Hill - as though no one has delivered the message to Congress that it's time to quietly curtail those soon-to-be-obsolete efforts. The fact that the most outrageous of these are moving, without the normal procedural safeguards of comprehensive and balanced committee hearings, almost suggests a vain rush to avoid being exposed as embarrassingly out-of-date.
The two most troubling of these recent bills, as previously reported, propose to harness the enormous resources of federal government essentially to keep alive a now-moribund business model. Online digital distribution has become a reality and selling plastic as the exclusive means to market recorded music is now passé. No new law will reverse that fact.
HR 4077 proposes to place ordinary file sharers, even if they haven't actually uploaded a single track, in federal prison for three years or longer under a vague legal standard that effectively seeks to outlaw P2P. Adding insult to injury, it would compel ISPs to send threatening warnings from the FBI to potentially millions of US citizens, based on unsubstantiated claims of possible infringement.
S 2237 would shift the cost of RIAA-type lawsuits away from entertainment interests and onto the US taxpayer, by having the Department of Justice bring tens of thousands of lawsuits on behalf of large multi-national media conglomerates. Taken together with HR 4077, this measure would set the stage for a dismally frightening police state, where a dying business's newly acquired and apparently insatiable appetite for bludgeoning its customers, in order to punish them for moving on to a more efficient technology, would be shamelessly indulged.
A temporary loss of perspective on the dangers that our nation's founders understood regarding copyright monopoly abuse is understandable. But not being able to regain a healthy balance within a reasonable timeframe is beginning to seriously threaten the rights of users of copyrighted works as well as imperil the progress of society at large that copyright was intended to foster.
Rather than divert law enforcement resources away from the far more serious threats of terrorism and dangerous crimes to criminalize and prosecute the otherwise law-abiding majority of US citizens, Congress should take a comprehensive look at how best to conserve copyright's purpose of encouraging progress in the new age of digital technology.
Perhaps with the speed of digital technology development - not to mention the speed of widespread digital distribution itself - the time has come to urge rights holders to position themselves to make a fundamental decision more quickly: whether or not to license digital media for a given copyrighted work; and if so, to provide non-discriminatory terms for doing that, without the kind of delay that has caused the negative dislocations and embarrassing exposures that have so far characterized their response to P2P.
New Music File-Sharing Technology Thesis
The Future of Online Music, By Andrew Laycock
This Leeds University report analyzes 317 responses to questions aimed at Internet users, who download music using such P2P software as Kazaa, LimeWire, and Soul Seek. It states that any point in time some 3 million consumers now concurrently use Kazaa to share 600 million music files that can be listened to on users' computers, transferred to portable devices, or copied and played using normal CD players.
The enormous abundance of titles available is more important than that much of this music may currently be free, according to this thesis, which suggests that P2P software users will pay for a service with the flexibility and diversity of currently open file-sharing applications.
P2P more than any new advancement reflects the potential of the World Wide Web - a seemingly limitless virtual structure of text and imagery. File sharing offers a vast pool of multimedia content.
The RIAA's monolithic litigation strategy initially may have had modest short-term success, but overall its primary effect has been to advertise and improve file-sharing activity, per this report.
Publicity surrounding the Napster case essentially informed the world that free music was available in abundance on the Internet, and recent legal action has been severely detrimental to the music industry's PR image.
Moreover, the music industry's suing fans is clearly a problematic route to get to legitimate downloading, which must be the inevitable outcome. The development of file-sharing technologies has been accelerated because of the legal action against it. Problem solving is intrinsic to software evolution: computer programmers are essentially trouble-shooters.
Legitimate P2P file sharing has the potential to play a significant role in the future of the music industry and any other industry involving the sale of digitized intellectual property. When file sharing is licensed, industries whose commodities are information can stop fearing piracy, and start to profit from it.
Analysis of press reports about falling profits for the music industry actually show that more albums are being sold than ever before: it's just that prices are falling due to competition with other entertainment industries (e.g., the movie industry, which is seeing a boom in DVD sales - exactly like the music industry did when it went digital with the CD in the eighties - and very rapid and continuing growth in the games industry).
P2P file sharing is fascinating because it is so relevant to our time: something which will be profoundly important to the future of the intellectual property industries and to the Internet. In addition, society will benefit as a whole as P2P is embraced by content rights holders. Copyright law is intended to provide monetary rewards to those with creative ability. In a digitally connected world where anyone can publish their own work, and potentially be rewarded for it, creativity will undoubtedly flourish.
Behavioral Analysis of Online Downloading
A Fogging of Basic Values, by Jon Eglin
This book is an attempt by a founder of MusicRebellion.Com (Digonex Technologies, Inc.) to offer a rational, behaviorally-based view of the P2P marketplace and to promote relevant, highly evolved Digonex service offerings.
The music industry in theory represents a little over 0.1 percent of the gross domestic product. Said another way, it is at least a forty-billion-dollar-a-year industry worldwide, or was in a previous incarnation. It is just the first domino in a series of industries that could fall in an interdependent, digitalized, global economy.
There are serious socioeconomic implications in the moral fabric of America that reach into politics (copyright law, first amendment issues, and so forth), certainly the economy and jobs, music ownership (formerly a major "fun" part of life), cultural artifacts, attitudes, philosophical justifications, and the fogging of many of our basic values.
Some businesses have been changed forever and can never go back to the way they were. This is not about good guys and bad guys. At the end of the day, the issues of socio-economics, institutional and governmental stability, and disruptiveness are part and parcel of this changing society.
It is truly a new world. The purpose of this book is to articulate a behavioral approach to technology and how the Digonex system meets the download industry at its moment of revolution and e-commerce at its point of globalization. Digonex was initially conceived as a pricing engine platform driven by consumer demand, and it is this feature that makes it uniquely compatible with the Internet marketplace.
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