December 27, 2004
Volume 7, Issue 5
The Weed Files to Host CD Baby's Catalog
Internet Telephony Magazine
The Weed Files, established in September 2003 and based in Sainte-Foy, Quebec, is partnering with CD Baby to distribute Weed files of the largest independent music seller on the Web. Close to 70,000 tracks will be made available starting at the end of December.
Downloadable at no cost, Weed files can be played three times for free and shared legally via peer-to-peer (P2P) file-sharing programs. Once purchased, the files can then be played at will, burned to CD, and transferred to a portable player.
"At a time when the music industry seems to have lost touch with the needs of the artists it represents and the listeners it claims to serve, the Weed service emerges and proposes a model that gives control back to the artists, rewards listeners who play an active role in the propagation of the music they like, and can even provide the ingredient that's been missing in P2P," said Christopher Stewart, owner of The Weed Files.
"Weed enables people to do for music what blogs have enabled them to do for information, and gives them a way to support content creators directly," he added. To date, more than 7,000 artists have had their music "Weedified" including Chuck D, Heart, Sir Mix-A-Lot, Built to Spill, and Kristin Hersh.
CD Baby handles online sales and distribution for close to 80,000 independent artists and labels. Since its foundation in 1998, CD Baby has sold over 1 million CDs to customers worldwide and paid over $11 million dollars to musicians.
Weed is a service of DCIA Member Shared Media Licensing, a group of musicians and software developers based in Seattle, WA. Weed encourages file sharing and makes payments to musicians while at the same time rewarding file traders who respect artists' rights.
Panelists Clash Over Impact of File Sharing
Excerpted from Technology Daily Report by Sarah Stirland
A panel of speakers representing the music and technology industries and academia found little common ground Thursday as they argued over the role that file-sharing software plays in the music industry.
At an event hosted by the FTC, Cary Sherman, president of the RIAA, painted a portrait of economic devastation fostered by file-sharing software companies. But three dueling economists presented competing studies that showed opposite results of the music-sharing phenomenon on industry sales.
Meanwhile, Sam Yagan, a young, New York City entrepreneur and president of software company MetaMachine [distributor of eDonkey] pilloried Sherman and the recording industry for being slow to respond to the realities of new technologies and consumer desires.
And Les Ottolenghi, the founder of INTENT MediaWorks, said he has had trouble convincing major movie studios and recording labels to use his company's technology to legitimately and securely distribute their products to the users of peer-to-peer software.
Summarizing the current state of affairs for the music industry, and the bigger picture for the entertainment industry as a whole, Future of Music Coalition Policy Director Michael Bracy cited statistics from a survey recently released by the Pew Internet and American Life Project. Pew found that musicians are equally split on whether file sharing helps or hurts their careers and earnings.
"Given these various factors in the emerging broadband marketplace, pent-up consumer demand for digital music, and an explosion in the amount of music released, the fundamental opportunity and challenge is to facilitate the development of a legitimate digital music marketplace – and this market is emerging" he said.
As evidence, he cited statistics released by SoundScan showing that in the first four months of 2004, consumers bought 35.3 million downloads. He said the company projects that consumers will purchase more than 100 million e-music downloads for the entire year. That amount still only represents a tiny fraction of the marketplace, Bracy said.
"We need to acknowledge that the digital transition is complicated, and it includes multiple, competing markets dependent on evolving technological innovation and regulatory policy decisions," he said.
Report from CEO Marty Lafferty
Once again, we thank the Federal Trade Commission for conducting its very valuable two-day public workshop December 15th-16th focused on peer-to-peer (P2P) file sharing. More than any other event in 2004, the FTC P2P Workshop should be a harbinger of constructive progress for the distributed computing industry in 2005.
FTC staff who developed and moderated the seven panels focusing on consumer and commercial issues deserve a tremendous amount of credit: Mary Engle, Beth Delaney, Bev Thomas, Tom Pahl, Alden Abbott, John Delacourt, and Haj Hadeishi. Susan Creighton, Director, Bureau of Competition, should also be commended for her closing remarks.
Last week's DCINFO examined day one. Day two's focus was the impact of P2P file sharing on commerce and in particular on the distribution of copyrighted works, with an emphasis on music. In addition to Sarah Stirland's coverage in Technology Daily (above), we have included excerpts from three representative articles (below) for those unable to attend.
Several proposals were presented for solutions to the dilemma posed by un-copy-protected works being duplicated from CDs and DVDs onto hard drives, and then redistributed over the Internet without rights-holder authorization by users of P2P file-sharing programs. Upon reflection, these recommendations can be placed along a spectrum of what can be described in layman's terms as ranging from "loose" to "tight" controls.
The "looser" solutions seem to have as their drivers one or more of three premises: A) technical challenges associated with controlling usage (or even simply tracking downloads) of individual works on multiple networked devices are insurmountable; B) existing copyright laws need to be changed, having gotten out of balance with respect to protecting rights holders versus advancing overall benefits to society; and/or C) affected parties, even within individual industry segments, have such divergent interests that consensus on one-or-more private sector solutions will prove unworkable.
The "tighter" solutions seem to have as their drivers one or more of these premises: A) given time and resources, digital rights management (DRM) technologies will eclipse advances in decentralized distribution and permit access control; B) copyright laws are on a path to more fully equate with property laws, which is desirable as the information society (increasingly valuing intangible works) completes its transition to the digital age; and/or C) affected parties, acting in their self interests, will arrange themselves into conventional supplier-distributor relationships (specifically content provider and reseller roles) once new structure(s) have been revealed.
As we listened to recommendations and also heard more about what is currently working, it occurred to us that getting to the so-called ultimate or final solution may not be as important as getting more industry participants started on a path towards commercial development – and off their paths of destructive litigation and legislative upheaval.
Imagine if P2P file sharing, for example, were to evolve along the lines of a compressed three-phased history of television. The first phase would be to add advertising to content, which would continue to be freely distributed, but with the effects of having marketing expertise applied, while also having the stigma of copyright infringement removed, combining so as not to diminish current traffic levels.
DCIA Member INTENT MediaWorks spoke about its current success in sponsored-content distribution at the workshop, and Altnet is mounting a very exciting new initiative based on advertising-supported content.
Taking a macro-view of the industry, in round numbers, if an average of 10 million active P2P users can generate $25 million per month from non-content related advertising (based on their having to pay $30 per year if they purchased adware-free versions of file-sharing software), then the 2.5 billion files they are estimated to redistribute monthly could generate at least $125 million per month more based on a very conservative $5 CPM for transactions from content-based advertising.
The second phase would be to add a degree of additional control by means of cost-effective "actuarial" tracking of high-value files to create the equivalent of basic and premium tiers of cable service. This would be based on analyzing and statistically projecting samples of P2P protocol traffic. Users would pay monthly subscriptions to P2P-content-package-purveyors, who could be the software providers, content rights-holders, or new third-party agents. The DCIA's second-of-three P2P Music Models (Model B) examined this, with participants calculating that this could generate an incremental $300 million per month.
The third phase would be to add the more complete degree of access control with which cable and satellite television subscribers are familiar in the form of pay-per-view or video-on-demand, combined with advanced DRM to support fair-usage of content on multiple devices with common ownership. As in the television business, this degree of control would not be expected to be de rigueur for every file at every stage of its life cycle, and such variations as "made-for" works, sequential distribution windows, and future innovations taking full advantage of new technologies and business models could be envisioned. It is easy to picture the P2P distribution channel generating more than a billion dollars per month to entertainment industries at this phase.
As we are about to commence 2005, which hopefully will be the most productive year so far for advancing the distributed computing industry, from our work in this area over the past eighteen months, there are four questions to help distinguish the more promising from the less well-conceived approaches offered by companies or groups of companies. These should help prioritize where to invest resources in further development and support.
1) From the content rights-holder's perspective, does the proposed solution offer the ability to determine whether or not to license an individual work for P2P redistribution, to determine multiple concurrent wholesale pricing scenarios and other terms-and-conditions, to set various usage parameters, and to readily make changes to any of the above?
2) From the consumer's perspective, does the proposed solution offer the ability to access public-domain, un-copyrighted, and copyrighted works seamlessly and on attractive terms that reflect that in this distribution channel, the P2P software user contributes storage, bandwidth, transmission, and even some of the marketing expenses, normally borne by infrastructure providers?
3) From the P2P software provider's perspective, does the proposed solution protect, if not enhance, the performance of current applications in terms of such important parameters as convenience of overall usage, speed of search, level of accessible content inventories, efficiency of content delivery, choice of alternative content selections, and sense of community?
4) From society's perspective, does the proposed solution fully capitalize on the promise of emerging technologies and advanced business models in the digital realm to benefit creators and consumers of content, such as the ability to simultaneously offer a given file as a free (ad-supported / promotional) version, as part of an opt-in subscription (e.g., tethered virtual-streaming), and as an a la carte purchase with usage rights closely approximating ownership of physical copies where time- and device-shifting are supported?
Enjoy your holidays and let's commit to working together to make next year one of history-making progress.
P2P Backers Propose New Distribution Models
Excerpted from IDG News Service Report by Grant Gross
A complete rewrite of the US copyright system was just one proposal aired Thursday during a contentious series of panel discussions at a Federal Trade Commission (FTC) workshop on peer-to-peer technology.
The US Congress should overhaul copyright law that allows a broken distribution model used by the music and movie industries to freeze out P2P, a lawyer formerly in the music industry said at the conference, held in Washington, DC.
A new digital transmission right for music, added to copyright law by Congress, would allow artists to get paid and consumers to have access to a wide range of music, said Bennett Lincoff, former Director of Legal Affairs for New Media at the American Society of Composers, Authors, and Publishers (ASCAP).
The voluntary licensing model, administered through a collective of artists similar to ASCAP and other publishing organizations, would pay artists based on an online census of how much of their music is being traded and would encourage music companies to distribute their music as widely as possible, Lincoff said.
Others at the forum rejected Lincoff's idea, the subject of a paper published in November 2002, as a form of compulsory licensing that would require Congress, not free markets, to determine the value of a downloaded song.
"The problem with compulsory license (plans) as a solution to something like this is they're all quite clumsy," said Stanley Besen, an economist and Vice President of business consulting company Charles River Associates Inc. "They require someone to set the prices."
Sam Yagan, CEO of MetaMachine, questioned how the music and movie industries could object to his desire to make money.
Yagan warned that future generations of P2P software will be fully encrypted and fully anonymous, distributed by programmers with no profit motive. "If you want to increase legitimate use of these networks, let us sell your products," Yagan said to the MPAA and RIAA.
Yagan also questioned legislative efforts focusing on current uses of P2P software because of rapidly changing uses of technology. "When we resort to these regulatory solutions, there's a chance we'll get it wrong," he said.
Lincoff, the former ASCAP lawyer, said current legal download services often restrict how many times a song can be copied to other devices. That's why a digital transmission license is needed, he said.
"If the industry offered what consumers really want, the overwhelming majority would pay for it," he said. "If that's not true, then all surely is lost."
Consumers are now looking elsewhere because pay-per-download services don't give them unfettered control over the music they buy, he added.
Meanwhile, the entertainment industry wants Congress to protect its outdated business model, he said. "The industry has no right to demand that public policy support its desire to do business in a particular way."
More P2P Bluster at FTC Workshop
Excerpted from Digital Music News
The P2P debate continued to smolder, with the FTC holding the latest match. P2P proponents kept the pressure on legislators to avoid draconian regulatory measures, insisting that legitimate solutions exist. But the RIAA remains unconvinced, challenging P2P operators to prevent users from grabbing free content immediately.
With that atmosphere as a backdrop, eDonkey chief executive Sam Yagan challenged the RIAA to embrace an impartial study to determine the real effects of P2P file-sharing. But RIAA chief Cary Sherman balked at the request, sensing a delay tactic.
Other models were also placed on the table, including the "P2P Revenue Engine (P2PRE)" sponsored by the Distributed Computing Industry Association trade group. Per DCIA chief executive Marty Lafferty, the P2PRE system "works universally with all P2P software and for all registered content. Consumers are free to rip content from unprotected CDs and DVDs and put the resultant files into their shared folders, and then not worry about it. The system automatically applies rights-holder stipulated rules for each content file (or substitutes files for quality reasons) during the upload process".
But just how much did the discussions push the ball forward? Various stakeholders appear well-entrenched. That puts more weight on the upcoming Supreme Court decision, expected by this summer, with major implications beyond the P2P and record label industries.
RIAA Willing to Embrace 'Legitimate' Services
Excerpted from BNA Report by Alexei Alexis
"It's clear that consumers are very interested in getting music digitally," [RIAA President Cary] Sherman said at a workshop sponsored by the Federal Trade Commission. "The recent and rampant increase of 'legitimate' online distribution services has been made possible by very aggressive licensing efforts by record companies, artists, and other copyright holders."
The FTC held a two-day workshop to examine various concerns raised over P2P file-sharing software, including that many consumers are using the technology to trade copyrighted works over the Internet for free.
Sherman said the RIAA is open to working with P2P file-sharing companies that can figure out a way to allow consumers to trade music files without infringing copyrights. The music industry has partnered with such new companies as California-based SNOCAP to provide music via P2P, he noted. Sherman also mentioned that he was "encouraged" by work that the Distributed Computing Industry Association was doing to come up with a similar model.
New Models to Generate Revenue for Industry
DCIA President Marty Lafferty told BNA that Members of his association are negotiating new P2P file-sharing models that can help generate revenue for the music industry, as well as technology companies. The DCIA is a voluntary, consensus-based organization, with representation from "all substantially affected sectors of the distributed computing industry," including developers of P2P software.
According to Lafferty, participating DCIA Members include INTENT MediaWorks which offers artists and content owners "a secure way" to distribute content via P2P.
Examples of other DCIA Members now distributing licensed content via P2P are Altnet, Digital Containers, Jun Group, Shared Media Licensing, and Trymedia Systems.
Coming Events of Interest
- Digital Hollywood at CES 2005 - Digital Hollywood will present a full program at the Consumer Electronics Show in the Las Vegas Convention Center North Hall, January 6th-8th.
The DCIA is proud to moderate "Next Generation P2P Music and Film - DRM, Paid for Pass-Along, and Other Distributed Computing Models and the Entertainment Industries" featuring Adrian Sexton, Executive Director, Business Development, Lions Gate Entertainment; Richard Conlon, VP Licensing, BMI; Derek Broes, Windows Client Strategic Relations & Policy, Microsoft; Marc Morgenstern, Vice President, Overpeer; Mark Ishikawa, Chief Executive and Technology Officer, BayTSP; Michael Weiss, President & CEO, StreamCast Networks, and Gerd Leonhard, CEO, ThinkAndLink.biz and Senior Advisor, Media Rights Technologies.
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P2P PATROL - Parents And Teens React On Line - The industry's anti-child-pornography initiative will hold its quarterly working session with private sector and law enforcement representatives in Dallas, TX on February 1st. For more information and to learn how you can contribute to P2P PATROL, please contact sari@dcia.info or call 888-864-DCIA.
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The DCIA will hold its Winter General Meeting the evening of February 9th in conjunction with MSNY. Please contact Member Services leader Karen Kaplowitz at 888-890-4240 or karen@dcia.info for more information.
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