October 18, 2004
Volume 6, Issue 7
INTENT Launches Ad-Supported Music
DCIA Member INTENT MediaWorks believes consumers shouldn't have to either pay or face legal trouble for music they download.
The company has presented music labels with a radical proposal: let consumers download their clients' music for free in exchange for receiving ads targeted by their file-sharing behavior.
Indeed, the P2P Revenue Engine (P2PRE) project, led by INTENT, provides for content to be distributed via P2P in ad-supported promotional versions as well as opt-in subscriptions and a la carte sales.
"The missing ingredient in enabling all of this – until now – was relevant advertising," said Les Ottolenghi, INTENT's President & CEO.
INTENT has signed about 500 musicians, independent record labels, and others to make their works available via P2P software programs, including Grokster and Kazaa, which are distributed by DCIA Operations Group Members. Advertising firm and fellow P2PRE participant AlmondNet provides the technology to offer P2P users the choice between paying or accepting ads.
Ottolenghi is hopeful that both music rights holders and consumers will think ads are a good exchange for free downloads. He reasons that major labels would rather have music fans generate revenue from ads than not pay in any form, and that users would rather agree to receive ads than risk prosecution for copyright infringement.
In the last 12 months, the average number of US households with a member using P2P to download free music has ranged from 4.7 to 6.4 million with higher levels since March 2004, according to music industry research firm The NPD Group. Conversely, the number of consumers paying for downloads reached a peak of 1.3 million in April 2004 and has since fallen to below a million.
NPD VP Russ Crupnick said that while the industry had expected steadily increasing demand for paid music services, the number of downloads has diminished: "Our research suggests that at this stage of the business, it's not so much about building share as it is about creating demand."
Go-Kart Films in the Works
DCIA Member Go-Kart Records will provide a new home to underground filmmakers with its freshly launched Go-Kart Films.
"Thousands upon thousands of unique visions thrive in independent filmmaking communities around the globe," said CEO Greg Ross. "Many of these don't fit into Hollywood's preconceived idea of what should and shouldn't be released and, because of that, we felt compelled to start Go-kart Films."
Its first film will be "Horns and Halos," examining the story behind the George W. Bush biography, "Fortunate Son."
Report from CEO Marty Lafferty
 We are greatly appreciative of the thoughtful consideration demonstrated by US Senators Barbara Boxer (D-CA), John Cornyn (R-TX), Richard Durbin (D-IL), and Gordon Smith (R-OR), who invested their time, during the enormously busy days leading up to the current pre-election Congressional recess, to write a letter of commendation for the anti-child-pornography initiative now being undertaken by DCIA Members and other industry leaders:
"As you know, we have taken an intense interest in digital media issues associated with Peer-to-Peer (P2P) services. In the August 23, 2004 edition of the Distributed Computing Industry Association (DCIA) Newsletter, you challenge your readers not to engage in the blame game but to 'solve the problem.' We hope to continue that effort…
…We commend the DCIA for the P2P PATROL ('Peer-to-Peer Parents And Teens React On Line') effort you are taking to reduce the use of P2P software for distributing child pornography…
…The use of the P2P PATROL to identify and warn users with regard to child pornography is laudable…
…Thank you for what you have done, and for responding to our suggestions in this letter."
As previously reported, the first two programs of P2P PATROL, related to law enforcement support and deterrence, have launched, and several DCIA Members and non-Members are now participating. To find out how you can join P2P PATROL, please contact sari@dcia.info or call 888-864-DCIA.
The next step will be our quarterly working session, scheduled for early November, with both law enforcement and private sector representatives, focusing in part on the third P2P PATROL program, related to education.
Participants include federal and state agencies as well as senior executives of BayTSP, Digital Containers, Digimarc, INTENT MediaWorks, RazorPop, and SVC Financial. NCMEC has agreed to review the educational work product being finalized after this session, which will comprise a set of tools enabling P2P users to recognize, remove, and report criminally obscene content.
We plan to introduce the fully-dedicated P2P PATROL online resource and to report to Senators Boxer, Cornyn, Durbin, and Smith on P2P PATROL's implementation and effectiveness – including which companies are involved in the program and which are not – by the end of the year, so that they can assess its impact on America's families.
As requested, we also plan to engage with the Senators and their staffs to discuss in-process efforts to reduce the misuse of P2P software for copyright infringement of games, movies, music, and software – hopefully, as soon as Congress reconvenes in mid-November.
We wish to obtain their input, and that of other interested Congressional leaders, on warnings and notifications to protect copyrighted material, developed with federal regulatory authorities during recent months by the Consumer Disclosures Working Group (CDWG), comprised of industry-leading P2P software developers and distributors, now available for review at the P2P Software Risks Online Demo.
"The Peer-to-Peer Distribution of Copyrighted Works Development Act of 2004" proposal, previously presented to the Copyright Office and Senate Judiciary staff, will be re-presented in greater detail.
We also look forward to providing our assessment of the kind of database, or rights-holder registry, which will be necessary to make the P2P Revenue Engine (P2PRE) project fully successful, specifically with respect to protecting the rights and interests of singers, songwriters, screenwriters, and other creators.
In addition, we will present other types of systems and business models that could be implemented by DCIA Members working with related private sector interests, and what would be needed from copyright owners and other parties in implementing each of these in order to protect America's creative industries.
Public Interest Groups Support Sharman
Three consumer and privacy organizations last week requested that they be allowed to join court hearings in Sydney involving the Australian recording industry's dispute with DCIA Charter Member Sharman Networks.
The Australian Consumer Association (ACA), Electronic Frontiers Foundation (EFF), and New South Wales Council for Civil Liberties (NSWCCL) have applied to appear at the hearings on an amicus basis according to News.com.
The three entities had formed a working group some time ago and have drafted affidavits to be submitted to the court asking to sit in on the proceedings as "friends of the court."
As explained by NSWCCL President Cameron Murphy, "We decided to come together because there are serious public interest issues at stake." He said the working group felt it could assist the court in evaluating issues that may not have been represented otherwise.
Their chief concern is that the case could have potentially been heard solely on technical arguments, without taking the public's interest into account. According to Tony Smith writing for The Register, "The fact that P2P code can be and is used to share files with the permission of the copyright holder should be taken into account in the case."
"It is not the right response to be banning peer-to-peer (P2P) software because there are many other public interest uses that negate that," noted Cameron Murphy.
Examples of legitimate uses of P2P file sharing include the distribution of information by community organizations. Amnesty International and the Free East Timor Association are examples of groups that have used P2P file sharing in such a manner.
"The main purpose of this software isn't music piracy. It is there to distribute legitimate information which serves the public interest," Mr. Murphy added. Since acquiring the rights to distribute Kazaa, Sharman Networks has, in fact, taken a great many proactive steps to combat copyright infringement and to license content for authorized P2P distribution.
The argument that file-sharing software should be banned in order to defeat piracy "is as ludicrous in my view as banning blank CDs or blank DVDs, or banning the computers themselves," he concluded.
Trial judge Justice Murray Wilcox has delayed the trial several times this year as the parties have struggled to reach an accord on the usage of material seized in a controversial February raid. The case is currently due to recommence late next month.
Coming Events of Interest
- Pirates of the Silver Screen – The Hollywood Chamber of Commerce and Alschuler Grossman Stein & Kahan LLP (AGSK) will host a luncheon on October 21st at the Hollywood Roosevelt Hotel where Mayor James Hahn and entertainment industry leaders will discuss strategies to combat film, DVD, and Internet piracy.
Movielink President & CEO Jim Ramo will moderate a panel with Amy Lemisch, Director, California Film Commission; Ron Wheeler, Senior Vice President, FOX; John Malcolm, SVP Anti-Piracy Operations, MPAA; Pamm Fair, National Executive Deputy of External Policy, SAG; Jeffrey Briggs, Partner and Chair of Intellectual Property and Patent Litigation Practice Group, AGSK; and Marty Lafferty, CEO, DCIA. Please call 323-469-8311 or e-mail info@hollywoodcoc.org.
- DRM Strategies Expo - DCIA P2P Revenue Engine (P2PRE) participant MediaGuide's Steve Lubin will be a featured speaker on the Fingerprinting Panel moderated by Digital Economics' Donald Jasko at 10:00 AM on October 26th at this JupiterMedia sponsored event.
The DRM Strategies Conference & Expo will be held October 25th through 27th at the Sheraton Universal in Los Angeles. Please call 203-662-2857 or e-mail registration@jupitermedia.com.
- Digital Entertainment Conference & Awards – The DCIA is proud to sponsor this first annual conference and awards show, focusing on innovation, entrepreneurship, and brand development in digital entertainment.
Co-produced by Billboard and Digital Media Wire, the "Billboard Digital Entertainment Conference & Awards (DECA)" will be held on November 4th and 5th at the UCLA Tom Bradley International Center. Seventy industry leaders will be speaking at the two-day conference on content and technology developments, including business, legal, and technology issues impacting the creative and business communities. To learn more about the conference and awards show, please call 323-822-0936.
The DCIA will hold its Fall General Meeting for Members only Thursday evening November 4th in conjunction with DECA. Please contact DCIA Member Services leader Karen Kaplowitz at karen@dcia.info or 888-890-4420 for Membership information.
P2P File-Sharing: Consumer Protection and Competition Issues – The Federal Trade Commission (FTC) will host a public workshop December 15th-16th to explore consumer protection and competition issues associated with the distribution and use of P2P file-sharing software.
The workshop is intended to provide an opportunity to learn how P2P file-sharing works and to discuss current and future applications of the technology.
Interested parties are encouraged to submit comments electronically at FTC P2P Workshop Comments. A detailed agenda and additional information on the workshop will be posted on the FTC's web site at FTC P2P Workshop Agenda.
The workshop will focus on uses of P2P file-sharing technology, the role of P2P file-sharing technology in the economy, identification and disclosure of P2P file-sharing software program risks, technological solutions to protect consumers from risks associated with P2P file-sharing software programs, P2P file-sharing and music distribution, and P2P file-sharing and its impact on copyright holders.
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