August 9, 2004
Volume 5, Issue 9
DCIA Summer Meeting and P2PRE
As previously noted, the DCIA's Summer 2004 Quarterly General Meeting will take place in Los Angeles, CA this Tuesday morning, August 10th. Unlike most of our DCIA meetings that welcome outside qualified participants and are open to the media, this one will be exclusive to DCIA Members and invited prospectives only. Please call DCIA Member Services leader, Karen Kaplowitz, at 888-890-4240 for Membership information.
The DCIA Summer Meeting will be held from 8:00 AM to 10:30 AM PT at the Sheraton Universal Hotel, Universal City. Breakfast will be served. A toll-free conference line has been established for those Members who cannot attend in person but would like to participate by phone. If you have not already done so, please confirm your attendance with Karen or by e-mailing info@dcia.info.
Our agenda will feature a detailed discussion of the P2P Revenue Engine (P2PRE). This very exciting project is being lead by INTENT MediaWorks' President Les Ottolenghi, facilitated by the DCIA, and developed by ten uniquely qualified participating companies. "The P2P Revenue Engine represents ten remarkable companies coming together to provide one very robust solution for major rights holders to monetize their copyrighted works in peer-to-peer (P2P) distribution," states Les.
DCIA Members, such as Altnet and Trymedia Systems, have demonstrated that content entered into P2P file-sharing environments by rights holders can be protected using digital rights management (DRM) technologies and monetized using payment service solutions. They, in fact, now represent the largest distribution of authorized content on the Internet. The P2PRE is focused on media contributed by consumers.
Participating DCIA Members include Shared Media Licensing, with its advanced Weedshare business model and technology; INTENT MediaWorks, which processes and packages entertainment content with advertising and for sale in P2P distribution; Digital Containers, with its patented P2P-centric DRM solutions; Relatable, which has a wealth of experience using its proprietary TRM acoustical fingerprinting to identify and manage large content databases in file-sharing environments; Clickshare, with its highly evolved payment processing and affinity marketing programs; and P2P Cash, which offers a new decentralized P2P payment technology featuring Intelligent Cash Units (ICUs), or traveling tokens, to unlock authorized files of content for viewing or listening by consumers in P2P.
"While others, including some of the world's largest technology players, have developed various products and services that theoretically could be assembled or aligned to accomplish what the P2PRE has set out to do, nowhere else have the right components been integrated with a total focus on this huge business opportunity," Les notes. "No one has ever combined the kind of agility and diversity of skills with the specific relevant experience that our P2PRE team brings to this endeavor. Their incredible talents along with their amazing hard work have earned them a chance potentially and literally to make history."
At Tuesday morning's meeting, the DCIA will provide an overview of this industry-making project; discuss the plans for its six-phase proof-of-concept, market-trial, and implementation plan; outline its proposed business processes; and conduct a risk analysis of the P2PRE project.
We are privileged to have the commitments of several of the CEOs and other senior executives of participating P2PRE companies who have agreed to be present personally at what promises to be a compelling session.
The meeting will also feature a special live demonstration of Media Rights Technologies' new offering, being conducted by Kelli Richards.
Report from CEO Marty Lafferty
 We received a letter dated August 5th from the National Association of Attorneys General (NAAG) signed by forty-seven state attorneys general to which we must take exception.
Propaganda taints the letter, which disregards advances made by leading P2P software providers and seriously misrepresents the perspective of consumers.
From the first sentence of this letter, the original version of which surfaced in March under questionable circumstances and was quickly sidelined, it is rife with unfounded allegations, wrongful misinformation, and distorted exaggerations.
Its opening salvo ignores the accomplishments of the Consumer Disclosures Working Group (CDWG), a voluntary self-regulatory initiative facilitated by DCIA Best Practices leader Elaine Reiss. The CDWG has benefited from the active participation of industry leading P2P software suppliers, including both DCIA Members and non-members, working together as responsive and responsible corporate good citizens.
The CDWG has delivered a work product that responds fully, not only to the three potentially credible issues raised in the MPAA/NAAG letter's introductory paragraph – which are then expanded with inaccurate embellishments – but also to two others that our young industry itself identified and is addressing preemptively. The CDWG's high-quality deliverable is now being reviewed by appropriate officials and is on a fast-track for implementation.
It is unfortunate that a letter signed by even a single state chief legal officer can be typified by such wholly fictitious assertions as, "File-sharing technology can allow its users to access the files of other users even when the computer is off."
The real issue here remains the boycott of P2P by major content rights holders. Hollywood interests seek to discredit file-sharing software developers and distributors by highlighting abuses of their technology and overstating its risks relative to other Internet environments. This is being done in order to gain leverage in negotiations to harness this medium for distribution of their copyrighted works.
Their actions are being taken, not out of concern for the public, but rather to exert control over this new distribution channel. Their campaign of half-truths is meant to distract public officials and the media, and to dissuade consumers from using their preferred choice of technologies.
We are disappointed that, after individually inviting each state attorney general to meet to discuss industry developments and/or arrange live P2P technology demonstrations when they visited Washington DC in mid-March, that none did.
We are disappointed that Attorney General Lockyer, after committing to meet with us to discuss the initial version of this terribly misguided letter, failed to do so.
We are disappointed that after being promised we could participate in two NAAG meetings in June that included P2P discussions, that we were excluded from both.
These were unbalanced events that have resulted in NAAG being hijacked, presumably unwittingly, in an unwholesome and probably unlawful mission to kill P2P technology rather than embrace file sharing for authorized distribution of mainstream entertainment content.
We reiterate our call to state attorneys general to expand their fact-finding beyond the falsehoods being disseminated by opponents of this nascent industry. We urge them to consider the remarkable technical progress being made as well as the continuing steady growth in both consumer adoption of file sharing and successful commercial use of P2P by independent labels, studios, film-makers, and musicians.
We are heartened, at least, to read that the attorneys' general letter ends with an invitation to work with them, which is what we have been asking to do since early Spring. We sincerely hope that NAAG's new President, VT Attorney General William Sorrell, will restore integrity to the leadership of a revered institution that sadly has been subject to manipulation by rich and powerful special interests.
Use iPod, Go to Jail?
By Dawn Chmielewski & Therese Poletti in Mercury News
Millions of people could soon be carrying illegal devices in their pockets.
That's the message from the "Save the iPod" campaign. Holmes Wilson, an organizer of the Web-based movement, warns that the Inducing Infringement of Copyrights Act now pending in Congress threatens to silence the popular music player. In other words, your right to bear beats is in danger.
Crazy?
The Induce Act would give the music industry and other copyright holders new legal grounds to sue any business that profits from encouraging people to illegally distribute songs, movies, software, games and other copyrighted works. The proposed law targets popular online file-swapping software such as Kazaa.
The Electronic Frontier Foundation, a San Francisco digital liberties group, argues that music player makers like Apple Computer also could be held liable under the act. In an academic, pot-stirring exercise, EFF attorneys drew up a hypothetical lawsuit the record labels could bring against Apple.
"A substantial element of the iPod's commercial viability can be traced to its ability to play infringing music files, whether downloaded over the Internet using P2P or the result of promiscuous hand-to-hand copying of sound recordings among friends and acquaintances," wrote EFF attorneys in the fake lawsuit.
Given that the iPod holds up to 10,000 songs – more than most people's CD collections – Apple knew and intended that iPod owners would be getting their music from elsewhere, including P2P.
This is the company, after all, that promoted its music technology with the advertising slogan, "Rip, Mix and Burn."
The prospect of Washington politicos poaching iPods from millions of consumers has struck a chord. In its first week, www.savetheipod.com generated 10,000 faxes to members of Congress, according to its organizers.
"We want to point out to people that this small cartel of five record labels haven't done anything good for music in the past 20 years," said Wilson, an independent musician with an even bigger agenda in mind. "It's high time they disappeared."
Apple, for its part, is not involved in the campaign.
As for us, we'll give up our iPods when you pry them from our cold, dead hands.
Group Wants to Induce Downloads
By Xeni Jardin in Wired Magazine
A coalition of tech groups and free-speech advocates launched a project Tuesday to distribute video and audio of recent Senate Judiciary Committee hearings on the Induce Act – using the very peer-to-peer software the bill seeks to outlaw.
Organizers of P2P Congress said they wanted to prove that peer-to-peer file-sharing technology can be used for a broad range of non-infringing purposes, and they hope the online experiment will help kill the Induce Act, a bill also known as the Inducing Infringement of Copyrights Act (S 2560).
As written, the act would penalize technology companies and consumer electronics makers for creating any device that could "induce" or encourage users to make unauthorized copies of copyright material such as music, movies or software. Critics have said devices like the iPod could be illegal under the law.
The group's founders said the distribution method makes coverage of government hearings accessible in a manner that would not be economically feasible using traditional webcasts or conventional sources like cable TV.
Since Friday, project participants have been "seeding" copies of last week's Senate hearings using P2P software programs including BitTorrent, eDonkey, Gnutella, Grokster, Kazaa, Morpheus, and TrustyFiles.
The Senate Judiciary Committee broadcasts its hearings online, but does not offer archives for people who couldn't catch the hearings live.
Dissemination via P2P file-sharing software programs, in contrast, is effectively free, permanent and becomes more efficient as popularity increases and more users share the burden of file redistribution.
"Government shouldn't be in the business of banning technology that makes free speech possible in new ways, and helps boost political participation and awareness," said P2P Congress founder John Parres.
Movie studios and the Recording Industry Association of America have embraced the Induce Act, introduced by Sens. Orrin Hatch (R-Utah) and Patrick Leahy (D-Vermont). Between 1999 and 2004, Hatch received $159,860 in campaign donations from the TV, movie and music industries, according to Opensecrets.org, which monitors campaign donations. In the same period, Leahy received $220,450. They each received less money from the Internet, computer and telecommunications industries.
But tech companies are banding together to shoot down the Induce Act, arguing that it would give Hollywood veto power over which devices can be brought to market and threaten America's dominance in the software and hardware industries. Everything from Apple Computer's iPod to digital camcorders and CD burners could be threatened, they say.
"If enacted, a lot of useful technology could be found unlawful," said Rep. Rick Boucher (D-Virginia).
"To 'induce' someone to violate copyright -- there's no standard for that, and the bill doesn't define a new standard, so any technology that facilitates copying or recording could be found in violation," Boucher said. "That includes paper, pencils, and copy machines. I'm not sure that (the Induce Act's) proponents fully understand how extreme the scope is, but if and when they do perhaps they'll modify it or come to the reasonable decision not to move it forward."
Future plans for P2P Congress involve becoming an online clearinghouse for a broad range of government hearings. People could record Senate webcasts, for instance, then submit audio or video files to the group for broader peer-to-peer distribution.
"If people begin to think P2P stands for 'power to the people,' we've done our job," said P2P Congress' Parres. "We just want to induce free speech."
Thought Leadership – The Copyright Gap
By Tim Wu, Lawrence Lessig Blog
Here's the hypothesis: today's telecom and copyright laws often regulate similar subjects, but with a big difference. The telecom laws slightly favor market entrants, while the copyright laws favor the incumbent disseminators. The result is a "copyright gap" that grows larger every day.
Imagine you're a startup, a market entrant, with a new way of getting information to people. Would you want to enter a market regulated by copyright or the telecommunication laws?
Under US telecommunications law, you'll likely be unregulated as compared to your incumbent competitors. That's what made Vonage a success – it doesn't face the rules that control Verizon. It's also what made AOL a success in the 1990s and WiFi in the 2000s. The only thing you need to fear today is possible network discrimination, though the net neutrality movement and Michael Powell's threats have helped keep that in check.
Yet if you happen to fall under the copyright laws – you have a better way of delivering material that's copyrighted – the structure of copyright says you need the permission of the market incumbents to carry on a regular business. Think of the story of Internet radio, or Kazaa, iTunes, and so on.
The result: The Copyright Gap. We have great, competitive VoIP and e-mail markets, but still don't have much in the way of Internet TV, video-on-demand, or the giant Internet libraries once promised. Now obviously there are some justifications for this regulatory disparity, but to my mind not particularly convincing ones.
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