March 7, 2005
Volume 8, Issue 3
Welcome City Canyon Records
Please warmly welcome City Canyons Records to the Content 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.
City Canyons Records bills itself as a label without borders and it lives up to its name, both musically and geographically. One of the more exciting emerging indie labels with a roster of critically acclaimed artists, City Canyons' most current release is "Enter the Mysterium" by the UK's Peter Ulrich, former percussionist of the legendary band, Dead Can Dance. Mysterium's blend of world, pop, ancient and darkwave music has international distribution and coincides with the reunion and world tour of the former core of Dead Can Dance, Lisa Gerrard and Brendan Perry.
Other City Canyons releases include "Intimations of Sorrow" by hard rockin' Finnish group, Valerian; "Underneath the Ice" by the coolly brilliant UK artist David Steele; and "The Secret's Out" by the queen of bluesy pop rock, Jen Elliott and her band Bluestruck. Upcoming releases include "Slow Burn" by a great new group from UK, Anemo; "Here's Us," a lyrical treasure created by NY singer/songwriter Sara Wendt; and a new album by Jen Elliott and Bluestruck, "That Damn Song."
Altnet Advances Advertising Model
Excerpted from ZDNet Report by Kristyn Maslog-Levis
Online digital entertainment distributor and DCIA Member Altnet has confirmed plans to share revenue with independent music labels.
Customers include V2, Artemis, Epitaph/Anti, Side One Dummy and Palm, Simmons/Latham, and Koch Media. Labels share revenue generated from advertising that appears in the user interface of popular peer-to-peer (P2P) applications.
"Developing an effective revenue-sharing strategy where the P2P community as well as the record labels benefit has always been the primary objective for Altnet," said Altnet President Lee Jaffe.
"Through this advertising fund, top-tier indie entities together with Altnet, Kazaa and other P2P application providers, will raise the value of media being sold inside file-sharing programs," he said.
Altnet licensors will share in the initial pool. The fund will be allocated proportionately based on licenses issued, whether music is offered for sale, trial, or free.
Jaffe said the fund will serve as a catalyst to develop a business model for P2P resembling radio that is based upon audience segmentation and media performance.
Altnet expects the fund to grow through participation of advertisers and labels who seek innovative marketing using technologies offered via the Internet.
Kevin Bermeister, Altnet Chief Executive Officer, said the business model will provide a partnership between music labels and the advertisers of P2P applications such as Kazaa and eDonkey to segment target demographics that each advertiser is seeking.
"Altnet's key capacity is really to bridge the content transaction of end users with that of advertisers. There is value in an advertiser being able to target a certain user demographic," he said. Bermeister added that this model can be applied globally with independent labels and artists.
"Independent labels are doing extremely well with us. Progressively, they are seeing the benefits of P2P," Bermeister said. Altnet is currently building relationships with advertisers as part of the new business model.
Report from CEO Marty Lafferty
 The Distributed Computing Industry Association (DCIA) last week filed an amicus brief with the US Supreme Court in the MGM v. Grokster case and participated in a related press conference at Public Knowledge. DCIA Member Grokster is a Respondent in this case.
The DCIA was one of twenty-five parties supporting the Respondents.
Other organizations filing in their support included the Consumer Electronics Association, Computer and Communications Industry Association, Home Recording Rights Coalition, Cellular Telecommunications & Internet Association, US Telecom Association, US Internet Industry Association, American Conservative Union, National Taxpayers Union, Consumer Federation of America, Consumers Union, Free Press, Public Knowledge, Eagle Forum, Educational Defense Fund, American Civil Liberties Union, National Library Associations, Internet Archive, Project Gutenberg, Creative Commons, National Association of Shareholder and Consumer Attorneys, Free Software Foundation, New Yorkers for Fair Use, and National Venture Capital Association.
Companies that filed in support of the Respondents included DCIA Members Altnet and Sharman Networks, as well as Intel, AT&T, BellSouth, MCI, SAVVIS, SBC, Sun Microsystems, Verizon, and several emerging technology companies.
Academicians were well represented by researchers Felix Oberholzer-Gee and Koleman Strumpf, professors Edward Lee, Peter Shane, and Peter Swire, Charles Nesson, Internet law professors W. Fisher III, J. Zittrain and J. Palfrey, Jr., professor Glynn Lunney, Malla Pollack and other law professors, computer science professors, media studies professors, innovation scholars and economists, 60 technology law professors and USACM.
A number of musical artists also filed in their support, backed by DCIA Members Rap Station and Sovereign Artists.
We are especially grateful to DCIA Member Seamless P2P's President Luke Rippy and his associate Darnell Washington, CTO of NucoreVision, for speaking at the press conference on the value of P2P technologies similar to those of Grokster to government agencies, educational institutions, and Fortune 500 corporations.
Luke discussed decentralized P2P tools that have improved enterprise efficiency in such areas as group collaboration, secure instant messaging, voice over IP communications, multi-user text messaging, file transfer, and secure IP video.
Darnell added examples of educational uses of P2P in statistical research, medical and industrial product development, design and architecture, and governmental uses of P2P in national security, service continuity, and disaster planning.
DCIA Members span all sectors of the distributed computing industry, including content providers, software developers and distributors, and service-and-support companies. The DCIA and its Members have an important stake in the outcome of the MGM v. Grokster case.
In just the few short years that P2P technologies have been made available to the public, DCIA Members have begun to build successful and profitable businesses that depend on the distributed computing properties of P2P.
Without the Sony-Betamax standard, which was set by the Supreme Court more than two decades ago and has informed technology development ever since, many of our Members would be unable to continue their innovative work.
Banning Respondents' software not only would stifle innovation, it would maintain an inefficient entertainment distribution monopoly in the hands of a few major Hollywood interests, who have demonstrated a pattern of initially rejecting innovations in distribution technologies before ultimately adopting them and enjoying resurgent growth through new business models.
P2P Supporters of Supreme Court Arguments
Excerpted from Digital Music News Reports by Paul Resnikoff
A large group of P2P supporters have banded together ahead of major Supreme Court action, with many artists and technology manufacturers lending their support.
High Court arguments begin later this month, with groups like the RIAA pushing for a reversal of the momentous MGM v. Grokster decision. But several high-profile artists helped to paint P2P as a critical promotional and distribution tool.
That sentiment was echoed by other groups, including the Electronic Frontier Foundation (EFF), Public Knowledge, and the Distributed Computing Industry Association (DCIA).
Meanwhile, consumer electronics manufacturers continued to adamantly oppose any alterations to the pivotal Sony-Betamax decision, with the Consumer Electronics Association (CEA) actively involved. All filed briefs with the court favoring the P2P applications.
The Supreme Court proceedings are scheduled to begin March 29th, with a decision expected this summer. At root is whether or not applications like Grokster can be held liable for the infringing actions of their users. So far, the courts have ruled in favor of decentralized P2P applications, determining that the networks cannot exert control over the behavior of file-sharers.
While the RIAA and major labels have been staunchly opposed to P2P, the artist community has been divided on the issue. Most recently, artists like Chuck D and Jason Mraz have planted themselves on the side of peer-to-peer, supporting Grokster in its upcoming Supreme Court battle. Both have realized the massive promotional value that these networks can offer, with Mraz relaying some powerful testimonials from die-hard fans.
But what about everyone else? For artists that are not guaranteed multi-platinum sellers, P2P can help to propel other, more powerful revenue streams. Ticket receipts and merchandise sales are two examples, representing lucrative opportunities that are not shared with the label. A lost CD sale with a lousy artist percentage could actually lead to a high-priced concert ticket purchase, creating a business model that makes more sense. Meanwhile, new experiments like targeted advertising revenue on P2P networks are already attracting independent labels like V2, Artemis, and Palm.
So what happens if the Supreme Court reverses MGM v. Grokster? While the implications for the consumer electronics and technology sectors would be massive, the impact for file-sharing overall would most likely be negligible. That is because peer-to-peer is inherently a global phenomenon, and a decentralized one at that. Cutting the heads off of a handful of US-based P2P companies will not be enough to kill the hydra. And individuals have mostly shown a blatant disregard for copyright law, comfortable taking a legal risk. That could end up creating a bittersweet victory for the RIAA, while artists and independent labels gradually create new business models that are focused on taming, rather than killing, the P2P beast.
Progress Foundation Chooses SVC Financial
DCIA Member SVC Financial Services, a provider of media and mobile transaction solutions, last week announced that the Progress Foundation has selected SVC's Mazarin Media Platform to help elevate public awareness and fundraising to support Progress Foundation's work with the mentally disabled.
For 30 years, everyone at Progress Foundation has been dedicated to developing a range of community services as an alternative to hospitalization and incarceration in the mental health system.
"Using SVC's Mazarin Media Platform, we can reach a wider audience. The Mazarin platform allows us to present our story in a very compelling way, a way that we hope will inspire contributors, accelerating contributions," said Steven Fields, Executive Director for Progress Foundation. "We're looking to SVC and their media solutions to help us continue to fund and grow our programs. This should prove to be a big boost for our operation."
Majors: Raise Music Download Prices
Excerpted from Inside Digital Media Report by Phil Leigh
A story in the Financial Times credits unnamed music executives with acknowledging that the industry is contemplating raising prices for digitally distributed recordings. In our analysis, whoever is advocating such a change understands the digital music market about as well as a cow comprehends algebra.
A price increase cannot be justified on a cost basis. It actually costs less to sell music over the Internet than it does to sell it in the form of a CD. When music is sold over the net there are no manufacturing costs, no inventory costs, and no physical distribution costs. Finally, there are no returns and allowances reflecting a common practice that permits traditional retailers to return unsold CDs for credit on future purchases. Historically this last factor has been one of the largest costs to the record label industry.
The profit margin available to online stores is already quite small. The labels are charging iTunes about $0.65 per track and music publishers are tacking on another $0.08. Given a selling price to the consumer of $0.99 that leaves Apple with about a 26% Gross Margin which must be used to offset all other expenses associated with running the store and that's not much.
Consumers are likely to resent an unjustified price increase. The labels should have learned by now that there's not a saint's chance at a political convention of eradicating P2P. Getting one shut down only seems to motivate programmers to develop yet another version. Often the mutant version is technically more pernicious than the prior one. Mass movements can spread without the belief in a God, but never without the belief in a devil. An unjustified price increase will merely once again encourage zealots to cast the record labels in the role of a devil.
Coming Events of Interest
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IP and Creativity Conference – Connect with leaders who are shaping today's intellectual property issues. Policy makers, CE manufacturers, media, think tanks, academics and Hollywood executives convene March 16th in Washington, DC at this Consumer Electronics Association (CEA) sponsored event.
This jam-packed conference includes top industry, academic and media luminaries, including Arlen Communications' Gary Arlen; RIAA's Mitch Bainwol; Congressman Rick Boucher (D-VA); Senator Norm Coleman (R-MN); CDT's Alan Davidson; MPAA's Dan Glickman; LA Times' Jon Healey; CED's Charles Kolb; Washington Post's Jonathan Krim; CH Potomac's David Leibowitz; EFF's Fred von Lohmann; CEA's Gary Shapiro; Public Knowledge's Gigi Sohn; and UNC's Professor Koleman Strumpf.
Register today at www.CE.org/IPandCreativity.
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Future of Digital Music Forum – "What's after iTunes?" is the theme for The 2nd Annual DallasBlue Future of Digital Music Forum being held on Thursday March 24th, from 5:30 PM to 9:00 PM at Swan Court in Richardson, TX.
Five years ago the question was "What's after Napster?" Today iTunes is the poster child for Hollywood in a far more complicated environment. Overall music sales are flat. Broadband, the digital home, and wireless are increasingly pervasive. P2P continues to thrive despite an adverse environment. Online music services are popping up like weeds.
An expert panel spans the technology and entertainment sectors. Presentations and moderated discussions examine the convergence of music, consumer marketing, and technology. Sponsored by DCIA Member RazorPop.
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Supreme Court Oral Arguments – The US Supreme Court will hear arguments March 29th on whether companies that provide peer-to-peer (P2P) software violate copyright laws if their users commit copyright infringement. The Court's date for oral arguments in the case, MGM v. Grokster, coincides with an expected decision in a similar high-profile case in Australia, which involves Kazaa.
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Digital Hollywood Spring – An extraordinary group of over 300 speakers will be featured during the 16th Annual Digital Hollywood Spring at Loews Santa Monica Beach Hotel in Los Angeles, CA March 30th-April 1st. Digital Hollywood is the leading gathering of entertainment, media and technology executives.
Tracks and panels with special relevance to the DCIA include subjects ranging from DRM & Piracy: Digital Rights Management in Film, Music and Technology; to P2P Super Distribution: Evolution of the Content Distribution Revolution.
Speakers (with DCIA Member links) include CEA's Michael Petricone; Digimarc's Reed Stager; Digital Containers' Chip Venters; EMI's Ted Cohen; Envisioneering Group's Rick Doherty; FOX's Ron Wheeler; INTENT MediaWorks' Les Ottolenghi; Jun Group's Mitchell Reichgut; MasurLaw's Steve Masur; Microsoft's Derek Broes and Andy Moss; P2P Cash's Tom Meredith; Overpeer's Marc Morgenstern; and ThinkAndLink's Gerd Leonhard.
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CONNECTIONS Digital Home Conference – This executive marketing conference, to be held May 11th-13th at the Hyatt Regency near the San Francisco Airport in Burlingame, CA combines Parks Associates' market and consumer expertise with insights from key industry strategists to provide a comprehensive analysis of current and future "Digital Living" technologies.
DCIA Members Digital Containers' CEO Chip Venters and Trymedia Systems' SVP Gabe Zichermann will be featured speakers.
Parks Associates' research shows that roughly one-third of all US households now have broadband access and nearly 20 million have a home network. The combination of these solutions is changing the paradigm for access to mainstream music, movies, television programs, and games. Currently one-third of all Internet households listen to online radio stations each month, and a comparable number download music files. Likewise, 10% of all Internet households access on-demand video content each month.
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