July 12, 2004
Volume 5, Issue 5
Welcome to P2P Cash
Please warmly welcome P2P Cash, Inc. to the Operations Group. We look forward to providing valuable services to this newest DCIA Member and supporting its contributions to commercial development of the distributed computing industry.
Peer-to-peer (P2P), as a class of applications, takes advantage of resources available at the edges of the Internet - storage, processing, cycles, content, communications - without relying on central control points for interaction among people on the internet.
P2P Cash is the first company to leverage proprietary business rules and integration with public standards for financial information interchange (XML and Web Services) to create the Intelligent Cash Unit (ICU) standard for P2P direct payment systems.
The greatest demand for P2P applications is at the consumer level, where parties directly exchange information and files with one another. P2P Cash is an example of how these applications can also be used to transfer cash from one individual to another without ever involving a bank or other financial institution.
As competition and changes in technology drive the cost of a transaction towards zero, financial service companies must create revenue by adding value to these transactions. Customers are demanding reduced transaction costs with increased functionality, including security and privacy. External regulatory agencies complicate matters with often conflicting regulations intended to combat global threats ranging from the annoyances of spam to the dangers of terrorist financing.
P2P Cash, with its patent-pending ICU, offers the first electronic payment system that directly meets these needs. In addition to a secure transaction with integrated on-repudiation, P2P Cash's ICU acts as a digital container to manage business rules associated with the transaction, including electronic contracts and secure distribution of digital products.
Businesses, including micro-payment systems such as PayPal, benefit from P2P Cash's support for open standards and component-based technology. The P2P Cash ICU is TOKEN based, not account based. Banks, credit unions, and micro-payment systems can all act as authorized ICU issuing and validation agents.
Consumers benefit from reduced cost and greater flexibility with added value: a simple-to-use, transparent solution; multiple payment options through a common interface; simplified international operations; reduced transaction expenses; guaranteed privacy (with a commensurate reduction in spam).
Most important, the P2P Cash solution builds trusted relationships throughout the supply chain. This helps increase customer lifetime value while reducing costs, including those incurred preventing and prosecuting fraudulent activities.
P2P Cash's experienced management team includes Tom Meredith -CEO: 8 years of experience in the online financial services industry; Rob Chmiel-CFO: Disney, Barnes & Noble Online; Joe Bouler-COO: Visa International, Equifax Director, LogicWorx CEO.
Report from CEO Marty Lafferty
 Rather than continuing to voice concerns over unintended consequences of currently proposed US federal legislation, let's focus for a change on constructive business solutions that address copyright infringement globally.
The degree of difficulty in crafting new laws responsive to rapidly advancing technologies, including P2P file sharing, is daunting. Those who are engaged in this activity face almost insurmountable challenges.
The best-and-highest purpose of such measures should be to simultaneously benefit rights holders so they can be compensated according to terms-and-conditions they set, benefit innovative distribution software providers so that they can receive their fair-share for delivering consumers in astonishing numbers and at virtually no incremental cost-per-new-customer, and benefit end-users so that their contributions of bandwidth, storage, transmission, and even some aspects of marketing, are also rewarded.
And the minimal goal should be to punish only bad actors - those who are impeding the development of this new marketplace - without causing collateral damage.
But looking at alternatives to legislative assistance, from a purely mechanical standpoint, there are two discreet problems to be solved: 1) to support artists entering original copyrighted works into P2P distribution so that consumers access that content under rules set by rights holders; 2) to accomplish essentially this same result when consumers are the ones to enter content into P2P distribution from unprotected sources.
DCIA Members have solved the first problem. Using robust P2P digital rights management technologies and innovative business models, they are enabling progressive independent labels and musicians, among others, to pursue their chosen profession and generate revenue through the P2P distribution channel. Typically the fan bases for these niche artists have previously been deemed too small to permit their participation in the traditional music industry - not even the exclusively major-label supplied download stores. But now they are growing their audiences using P2P.
The second problem is currently hampering development of the licensed content P2P marketplace.
To be viable, proposed solutions need to support consumers entering content into distribution using any current or future P2P software application and other consumers accessing it from the same or a different file-sharing program.
One approach, of several being explored, is to develop a system that will accomplish the following six steps.
The first step is to identify the file before it is uploaded for redistribution. Acoustic fingerprinting, or a similar technique, must be used to match the file to an identified-content database. Unknown files need to have their fingerprints added to the database for subsequent examination.
The second step is to match the file's ID to a rights-holder registry. This needs to comprise all interests for each piece of content where multiple parties are entitled to remuneration.
The third step is to assess the quality of the file and, if warranted based on rights-holder set parameters, substitute a higher quality file for an inferior one.
The fourth step is to apply rules based on then-current terms-and-conditions for how that file is to be accessed. A range of consumer options should be supported for accessing each file.
These include pricing alternatives from free by virtue of being ad-supported to part of larger subscription package(s) to a la carte sales. Usage options range from limited play on a single device to unlimited plays on multiple devices. Consumer incentives, such as sales commissions for redistribution, also need to be stipulated. The demonstrated promotional value of sampling should also be protected by the marketing choices that are made.
The fifth step is to affix the specified digital rights management technology to enforce the given terms-and-conditions, beginning with the file's next recipient and continuing with all subsequent downloaders.
And the sixth step is to attach the called-for reporting and payment service(s) to track downloads for ad-supported options and bill for monthly subscriptions or a la carte micro-payments.
Note that this is not about blocking or filtering-out or spoofing or decoying or doing anything other than facilitating transactions at levels comparable to, if not higher than, what consumers experience with open P2P applications. Computer performance must not adversely be affected. Convenience, reliability, and ease-of-use must be paramount.
DCIA Members collectively now represent nearly all of the requisite skill sets and qualifications to make this blueprint a reality. A small number of non-Members have also been identified and recruited to help build what we call the "P2P Revenue Engine." This is not to imply that the completion of this work will be immediate.
One multi-billion dollar question that remains is how to ubiquitously deploy this P2P Revenue Engine and ensure that it will work with all current and future P2P software applications on all file-sharing client PCs. There are several ways that this could happen, and marketplace response will ultimately determine which one(s) prove most effective.
We expect to be able to resume this work once the July Congressional recess begins.
Uniform Consumer Disclosures
As planned, following up on the June Senate Commerce hearing at which DCIA Member INTENT MediaWorks' President Les Ottolenghi testified, the DCIA's Best Practices leader, Elaine Reiss, has established a working group for leading P2P software distributors to develop a set of uniform consumer disclosures. Please contact her at elaine@dcia.info to participate.
Elaine notes that, "While the Internet generally exposes users to risks associated with encountering a vast range of digital materials, none are unique to P2P file sharing; but as the newest Web-based industry we are proud to exemplify the highest standards."
Elaine's working group is currently evaluating an approach that features a message box that would appear above-the-fold on P2P software download-site pages and link to a standardized P2P software risks-disclosures page. This in turn would be divided into five sections describing risks, with links to obtain more information from the FTC, as well as to special features and tools that the participating P2P program provides to help mitigate the risks. The goal would be to ensure that all new users read the disclosures and understand the risks before downloading the software.
A voluntary, consensus-based approach is being taken by Elaine's working group, with the goal to establish a P2P-equivalent of the standardized "nutrition label" found on packaged foods, which would be attractive to P2Ps, acceptable to the FTC, and valuable in protecting consumers.
Request for Assistance
Eradication of child pornography should be the goal of every participant at every level in the distributed computing industry. We are proud of our P2P software-providing Members for taking a zero tolerance stance and backing it up in word and deed.
In October 2003 the DCIA began a three-phase program working with international agencies on 1) enforcement, 2) deterrence, and 3) education initiatives.
Enforcement, involving covert operations, resulted in 1,000 cases being initiated in the first round. Results were analyzed and steps are now underway to improve the case-to-conviction close ratio. We urge ISPs also to make responsiveness to law enforcement agencies in cases of suspected child pornography the highest priority.
Looking to the future, our education initiative is making progress as well. Elements are in development that will help users recognize, report, and remove (i.e., hard-drive wipe) criminally obscene content inadvertently encountered, as well as take advantage of advanced collaborative-filtering techniques to purge such material from redistribution.
But we are also ready now to launch the first deterrence initiative, targeting users who are on the threshold of involvement in illegal activity. We believe this will prove to be a powerful and effective weapon in our arsenal for combating child pornography. It is ready to be deployed, and DCIA Members are ready to do their parts in implementing it. However, to encourage its adoption more broadly, we are now requesting financial contributions to help defray the expenses incurred by software companies for work they need to perform to participate.
If you want to help combat child pornography, please contact Sari Lafferty at sari@dcia.info to learn about the specifics of the DCIA's deterrence initiative and receive assurances that your contribution will only be used to defray the actual costs of participation.
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