August 16, 2004
Volume 5, Issue 10
DCIA Summer Meeting
Special thanks to each of the participants in our Summer Meeting, held August 10, 2004 at the Sheraton Universal Hotel, Universal City, for helping make this a very productive session.
New company Media Rights Technologies (Gerd Leonhard, CEO) demonstrated its offerings to DCIA Members and guests. MRT's business development leader Kelli Richards and technologist Eric Bittonio outlined MRT's mission to "fill holes" in digital rights management (DRM) technologies by offering a player plug-in to enhance existing solutions. For audio it's called X1; for video SecureDVD. MRT's basic concept is to protect the pathway to content files. Please visit BlueBeat to see MRT in action.
We are especially grateful to representatives of the ten-company P2P Revenue Engine (P2PRE) project, including Sam Yagan, CEO of MetaMachine (eDonkey); Mike Farley, COO of Digital Containers; Sean Ward, co-founder and CTO of Relatable; and Tom Meredith, CEO of P2P Cash, for discussing the project with DCIA Members and staff, while their leader, INTENT MediaWorks (IMW) President Les Ottolenghi, oversaw logistics for P2PRE's bicoastal presentations to content rights holders involving more than forty participants.
Altnet, with 80 independent music labels, and Trymedia Systems, with 10 leading games publishers, demonstrate that content entered into P2P file-sharing environments by rights holders can be protected using DRM technologies and monetized using payment service solutions. One of the best immediate uses of P2PRE will be to help these entities expand current revenue streams and develop new ones, and we look forward to working with industry-leading entertainment attorney Douglas Mark to make that happen.
The P2PRE project compliments Altnet and Trymedia's successes by addressing content entered into P2P file-sharing environments by consumers. Its overriding goal is to demonstrate to major music labels and movie studios, through proof-of-concept testing and market-trials, to be conducted during a six-phase project rollout, that consumer-entered content can also be protected and monetized in P2P redistribution.
Participating companies include Shared Media Licensing, which will contract for test content; eDonkey, which will provide P2P software to distribute it; INTENT MediaWorks, which will package test content in three representative ways: 1) with advertising, 2) in subscriptions, and 3) for a la carte sales; Digital Containers, which will apply DRM to protect test content; Relatable, which will use acoustical fingerprinting to identify test content entered into P2P distribution by consumers; MediaGuide, which will match consumer-entered P2P files with their corresponding files in a rights-holder registry; AlmondNet, which will manage advertising support; Clickshare, which will handle payment processing; Peppercoin, which will track test content usage in subscriptions, and P2P Cash, which will issue payment tokens to unlock authorized files of test content for viewing or listening by consumers.
The first five phases can be summarized as a series of steps, each of approximately two-months duration or until reasonably satisfying all participants that its objectives have been met, focused on demonstrating protection and monetization of content: first, sample content entered into P2P by rights holders; second, that same sample content entered by consumers; third, the full library and catalog of participating rights holders; fourth, each transaction of all content entered by consumers; and fifth, expanding this from a closed test-P2P-program to an open commercial P2P-software-application. The sixth phase is commercial deployment, with other major rights holders and P2P software providers, and is projected to take six months.
The P2PRE project has been in development for the better part of a year, and some of the companies have been working on their parts for three years or more. It represents an extraordinary collaboration among these participating firms resulting in a very robust solution for P2P. We look forward to the commencement of testing, trials, and rollout of the P2 Revenue Engine.
Report from CEO Marty Lafferty
One of the major takeaways from last week's seminal discussions of the P2P Revenue Engine (P2PRE) project is the need for a common vision among all participants in order for this project to be successful.
Within the ten participating P2PRE companies there is a realism that needs also to be shared among content rights holders. The project has been compared to changing an engine on a jet-plane in mid-flight during a meteor shower and barrage of anti-aircraft fire, and it does not need to be made harder by the imposition of unrealistic demands.
We have spoken earlier about core principles and performance criteria that include mutual respect for all stakeholders: rights holders being able to require that their registered content perform according to usage rules that they stipulate for its redistribution; file-sharing program suppliers being able to require that current software performance and traffic levels be enhanced rather than impaired; and users being able to require that their experience yield anticipated benefits while not exposing them to unexpected risks.
Two reasons that P2P is uniquely attractive among online offerings, and which foster its continuing steady growth, are its exponentially greater content inventory than alternative delivery channels and its enormous flexibility in enabling participation, not only as a consumer but also as a producer and distributor of content.
All of the solutions-side P2PRE participants "get" this and are dedicated to enhancing and expanding these attributes competitively. Some content providers also understand P2P's unique features and are ready to participate in P2PRE on realistic terms.
Some don't, however, and seem to be trying to impose harsher restrictions on this new distribution channel than have been allowed in preceding ones when, if anything, P2P can support a much more expansive perspective.
Adult content is an example. If this were a VHS/DVD rental store, they would be saying, "We can't allow any adult content in the same store, just a few shelves away from our movies." If this were a cable TV system, they would be saying, "We can't allow any adult pay-per-view movies on the same channel line-up, just a few remote-control button-presses away from our movies." If this were an online centralized-download store, they would be saying, "We can't allow any adult material on the Internet, just a few mouse-clicks away from our movies."
Unknown material, which may include unauthorized as well as original and new hybrid forms of content, is another example. While P2PRE offers a way to protect and monetize a participating content provider's files by using a rights-holder registry, applying DRM, and conducting marketing activity; it simply cannot, as a condition precedent for participation, take responsibility for the ever growing tsunami wave of myriad copies of other content being entered by an ever increasing universe of consumers.
Tens of millions of files have been acquired from unprotected sources, copied with unrestricted hardware, modified with unfettered software, and placed into shared folders.
Increasingly, P2P software applications, which have multiplied to more than one-hundred twenty programs available to consumers globally, feature interoperability. A user today enters search terms that can discover and deliver results from literally billions of individual files on more than a hundred million PCs.
The analogy one P2PRE participant made to particularly unrealistic demands was, "I feel like we're planning a deep-sea fishing expedition, but one guy keeps saying the only way he'll go is if we completely drain the ocean, and even then he'll only reel-in the fish that beg him to be caught."
The common vision shared by P2PRE participants is this: As a consumer, I will be able to upload any files I wish to my shared folder, and P2PRE, without invading my hard-drive, will take care of making quality-necessitated substitutions and applying rights-holder DRM with associated usage and licensing rules before other users can download these files.
P2PRE will also do this for files where I'm the rights holder, enabling me to offer my own material for sale and be compensated for advertising revenue it generates.
Likewise, I will be able to search an infinitely expanding worldwide inventory of content, and be offered choices ranging from free (which may be promotional, low bit-rate, and ad-supported) to opt-in subscription, to a la carte – often simultaneously.
I will not need to worry that material I wish to download is unauthorized, mislabeled, or unavailable.
As P2PRE participants can attest, this shared vision will not be made a reality overnight, and it will take all parties, including content rights holders, working together through all six phases of the P2PRE rollout and beyond, for it to be fully achieved.
State AGs Letter and CDWG
We responded last Thursday to the August 5th letter from state attorneys general (AGs) and appreciate the opportunity to communicate with them. Their letter was timely, as the Consumer Disclosures Working Group (CDWG), which is described in our response, is now in the midst of its initiative focusing on P2P software risks, in which the involvement of the AGs individually, and their trade association, the National Association of Attorneys General (NAAG), collectively, can be especially helpful.
The CDWG received and discussed feedback from federal officials last week and is now working to develop an online demonstration, featuring several exemplary P2P software programs, to show how its standardized software-risks-disclosure regime can be voluntarily implemented.
The DCIA and our Members would welcome the views of NAAG and the AGs, not only on that, but also on what more can be done, particularly in the consumer communications area. We want to hear their ideas on how to respond to concerns about communications regarding P2P in order to help consumers understand the technology and make informed decisions about its use.
We have called NAAG to request a meeting, and will keep DCIA constituents informed of our progress in establishing a working relationship with the state attorneys general.
P2P PATROL Set to Start
The DCIA intends to launch the second of three anti-child-pornography programs this week, as well as place this entire initiative under a new DCIA-supported umbrella organization, PEER-TO-PEER PARENTS AND TEENS REACT ON LINE (P2P PATROL).
The new program, focusing on deterrence, comes just three months after the first wave of enforcement actions were made public in May 2004, and will be announced along with the establishment of P2P PATROL.
No amount of child pornography is acceptable, and the DCIA and its Members are committed to doing all we can to eliminate this illicit content from P2P file-sharing environments. The target for the deterrence program is users who are on the threshold of involvement with child pornography.
P2P PATROL will be accepting financial contributions to help defray expenses incurred by software companies for work they need to perform in order to participate. We are thankful for the donations received to date. To find out how you can contribute, please contact sari@dcia.info or call 888-864-DCIA.
The target for the third P2P PATROL program, focusing on education and scheduled to launch in November, will be users who inadvertently encounter undesirable material online. Its goal will be to provide consumers with the tools they need to recognize, report, and remove (i.e., hard-drive wipe) criminally obscene content. P2P PATROL will also take advantage of advanced collaborative-filtering techniques to purge such files from redistribution.
DCIA Members now planning for September presentations to law enforcement agencies about P2P PATROL include Chip Venters, CEO, Digital Containers; Les Ottolenghi, President, INTENT MediaWorks; Marc Freedman, CEO, RazorPop; and Chris Haigh, President & CEO, SVC Financial.
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