October 31, 2005
Volume 11, Issue 1
Welcome Thought Machine to the DCIA
Please warmly welcome Thought Machine, Inc. to the Platform Group. We look forward to providing valuable services to this newest DCIA Member and supporting its contributions to the distributed computing industry.
Six-year old Thought Machine, through its principal executive Stephen Semeniw, brings an extensive and unique international media/entertainment and Internet industry background to the DCIA. Thought Machine is actively engaged in working with companies in the fields of the Internet and related IT and technology infrastructure.
Its primary focus includes sales, marketing, business development, international markets, and strategy. Client engagements have covered television distribution (cable/satellite), music distribution, digital photo, online intellectual property (IP) management for soft and hard goods, and digital signage, among others.
Prior to Thought Machine, Stephen worked internationally based in London and Amsterdam for 5 years in the Naspers / MIH Ltd. organization, a global television, Internet, entertainment, and technology holding company active in over 50 countries.
He was also instrumental in Nethold's launch of multilingual digital satellite television in western European markets with a multi-faceted business development, content acquisition, and network planning role.
Seamless Signs INTENT MediaWorks
The previously announced beta test of DCIA Member Seamless P2P, a subsidiary of Seamless Wi-Fi (OTC BB: SLWF), with fellow Member INTENT MediaWorks, has been successfully completed. As a result, INTENT has agreed to license SLWF's Phenom encryption software.
INTENT MediaWorks is one of the largest distributors of authorized peer-to-peer (P2P) download digital media in the world. The company helps content owners tap into and profit from the secure, legitimate distribution of their copyrighted works through P2P networks and the Web.
INTENT integrates the viral power and authentic nature of P2P file sharing with online marketing to sell music and videos, and deliver advertising-supported content to an audience of over 60 million consumers per month.
"This union presents a compelling opportunity for SLWF. INTENT MediaWorks' connections to music labels, movie studios, and independent artists will result in significant exposure for Phenom," said Al Reda, Seamless Wi-Fi CEO.
"We look forward to working with INTENT and are confident that this partnership will be mutually beneficial and economically rewarding. This licensing agreement marks a major milestone for the company and we eagerly anticipate similarly positive end results for our existing, on-going, and future beta test deployments," he continued.
Seamless Wi-Fi is a provider of the next generation of communications, pushing the future of high-speed wireless data, voice, and video delivery for hotels, restaurants, and cafes – anywhere that people on the go need to get connected. Seamless is forging a network of Wi-Fi hot spots around the country to enable business people and everyday consumers to stay connected, anywhere, anytime.
Softwrap Grows with German Games
DCIA Member Softwrap, a leader in digital rights management (DRM) is proud to announce an exciting addition to its German licensees with the signing of Play+Smile Marketing GmbH, a joint venture between Zone 2 Connect GmbH - a well known developer of German localized games - and rondomedia GmbH - one of the leading publishers in casual games and a distributor for several partners, including Atari and Ubisoft.
Play+Smile has designed a world-class website from which to market its games that have been protected utilizing Softwrap's proprietary DRM technology.
Softwrap spokesman Dylan Solomon commented, "The unique Play+Smile website incorporates a fun and community-based approach to selling games in German speaking Europe. Its team is highly professional and we look forward to a successful relationship."
An added advantage of utilizing Softwrap is that if an end-user passes the purchased software to a friend, they too have the ability to purchase a license. This creates viral sales, prevents casual piracy, and allows adopted end-users the ability to purchase when and how they like.
Thorsten Unger, Director of Play+Smile, added, "We are very proud of what has been achieved in a very short period of time; the entire end user experience is consistent from website to trial and purchase for all our games. This has been achieved with the aid of Softwrap, which has been flexible and very efficient in customizing its user interface to reflect our corporate image. Play+Smile has been well received by end users and we look forward to continued growth."
Report from CEO Marty Lafferty
 TELECOM '05 participant Kshitij Kumar of C-COR said it well when he proclaimed "Next Generation Peer-to-Peer – Where Do Telcos Fit In" as the best panel at this year's conference "because you are looking at going-forward solutions rather than rehashing old technologies of the past."
Congratulations to DCIA Member panelists Les Ottolenghi of INTENT MediaWorks, Frank Chindamo of Fun Little Movies (FLM), Chip Venters of Digital Containers, Steve Stebbins of RightsLine, and Stan Moyer of Telcordia for earning this accolade.
Viodi's Ken Pyle characterized their work on this IP Video Track Session as defining an ecosystem for making peer-to-peer (P2P) a legitimate distribution channel for digital content.
Les Ottolenghi provided background information about INTENT MediaWorks' parent company Digital Commerce and INTENT's Palladium platform for licensed content distribution via P2P. For more than two years, INTENT has worked with content producers – encoding and broadcasting copyrighted works into P2P distribution using techniques to optimize search results.
INTENT's aim has been to collaborate with rights holders in developing a unique P2P business model that allows consumers to continue to do what they are doing while also monetizing each transaction. INTENT has accomplished this with high-value sponsorships and personalized advertising, integrating several super-distribution methodologies in the process.
When all is said and done, consumers will decide the winning and losing business models for the P2P distribution channel.
Frank Chindamo demonstrated original content from Fun Little Movies' (FLM) mobile comedy network, now distributed in 25 countries on cell-phones and other distributed computing platforms. FLM produces and acquires short comedies, developing unique sponsorship and co-marketing approaches tailored to the target audiences for each property.
Its award-winning "Love Bytes," for example, is co-presented with people2people.com. "Gagsters" vignettes invite submissions from their young viewers.
FLM sees the P2P universe as both an attractive mainstream marketplace and a proving ground for its works. If P2P users screen and share a short-form work in sufficient numbers, this can lead to further development into full-blown television series and/or feature-length movie versions of FLM franchises.
Chip Venters expressed Digital Containers' views that transparent content security remains a necessary enabler for P2P to become a fully accepted distribution channel and that superior efficiency and delivery speed will make P2P the most competitive of digital platforms. This will be the case especially for larger content files versus centralized storage-and-delivery alternatives.
Chip explained Digital Containers' approach to leveraging assets like bandwidth while providing the technology for valuable content files to report their activity and thereby be monetized in P2P environments.
He introduced Digital Containers' federated network concept for finding, delivering, and tracking files through distributed repositories. He said that a key to channel growth is proving to rights holders that their fear of lack of control within these architectures is unfounded.
Steve Stebbins of RightsLine began by noting that P2P users increasingly want content more personalized and are consuming greater quantities, often in smaller portions, creating complications for entertainment rights aggregators.
RightsLine provides comprehensive ways for them to manage and monetize their copyrighted works. Evolving rights restrictions encompass distribution points, time periods and exclusions, languages and territories, black-out periods, as well as royalty collection and payments.
Complex agreements with artists, owners, payment structures, and releases all benefit from RightsLine's technologies that automate much of this process. P2P also adds new challenges such as managing segments of longer-form works at the clip level for special promotions, which RightsLine can also support with its IP management business process.
Finally, Telcordia's Stan Moyer discussed a role for Internet service providers (ISPs) to competitively differentiate their offerings. Stan gave the example of an IPTV architecture, and asked what if ISPs could leverage the advantages of P2P such as scalability, no hot spots, and ability to swarm, in their provisioning of digital content distribution services.
To do so, key factors include the ability to authenticate source and destination users and process royalty payments, ensure veracity of digital content pre-and- post-transfer, and manage network resources.
The platform for this would consist of a network-based server and a small piece of client code that enables network operators and service providers to mediate P2P content redistribution among parties. High quality-of-service (QoS) content distribution would be achievable by combining P2P with dynamic network resource management.
Audience discussion included identification of parties to take responsibility for P2P content mediation, rights management including consumer-originated material, organization of extremely large content selections for consumers and related recommendation software, content integrity and security, parental controls, the philosophy of enabling versus controlling redistribution, and conversion from largely unauthorized to licensed content traffic.
Please click here to participate in a survey of interest. Share wisely, and take care.
Skype CEO Updates Company Direction
Excerpted from ZDNet Report by Robert Shaw
At the Internet Telephony Conference & Expo last week, DCIA Member Skype CEO Niklas Zennström gave the luncheon keynote address. Skype is aggressively planning to open its payment system for ringtones and third-party software. Fellow eBay company PayPal will be a preferred option, but Skype will take credit cards, too. Skype will be promoting recording systems for podcasts. Voice content enablement, based on subscription models that could be handled via PayPal and other Skype-approved payment methods, will be increasingly marketed.
More than 1,000 software and hardware developers are affiliated with Skype, with a stream of others on the way. Although Skype Groups is intended for business users, Skype is not planning a staffed sales effort to make inroads into enterprise IP telephony. Instead, it will do this via partner products likely to appeal to business users. One such example is Skype partner Salesforce.com's integration of Skype links into their CRM system.
For more detailed coverage, please see Tom Keating's report in TMCnet.
Digital River Exceeds 3Q Expectations
DCIA Member Digital River (NASDAQ: DRIV), a global leader in e-commerce outsourcing, last week reported revenue of $53.2 million for the quarter ended September 30. This represents an increase of 35% from revenue of $39.4 million in the third quarter of 2004. This performance exceeded the company's third quarter revenue guidance of $52.5 million, provided on July 27.
Net income for the third quarter of 2005, prior to the amortization of acquisition-related expenses and $4.5 million of non-cash income taxes, was $18.9 million, or $0.50 per share, excluding the impact of the company's contingent convertible notes. These results represent a 79 percent increase compared to net income, on a similar basis, of $10.6 million, or $0.29 per diluted share, in the third quarter of 2004. This performance also exceeded the pro forma diluted net income per share guidance of $0.48, provided by the company on July 27.
"In the third quarter, we again exceeded our revenue and earnings expectations," said Joel Ronning, Digital River's CEO. "Our business continues to scale and our strategic growth initiatives are paying off. Revenue generated through international markets, strategic marketing services, and our oneNetwork online sales channel contributed to our solid third quarter performance."
Peerflix $8 Million & 100K P2P DVDs
Peerflix, an online P2P service that allows members to trade DVDs, last week announced that its members are currently offering more than 100,000 DVDs for trade on its new P2P network.
Peerflix also announced its latest round of funding that will optimize its P2P platform for continued growth. The eight-million dollar round was led by Battery Ventures and included follow-on investments from 3i and BV Capital. The investment will be used to develop new product offerings for Peerflix members, scale the company's infrastructure, and deliver the Peerflix experience to more customers in North America.
"We are thrilled to see that DVD owners everywhere are embracing Peerflix as a powerful entertainment community. With over 100,000 DVDs available for trade on our network, members can easily keep their DVD libraries fresh and, for only $0.99 per trade, convert their 'Sin City' into 'Napoleon Dynamite,' 'The Little Mermaid' into 'The Incredibles' or 'The Sopranos' into 'Sex in the City,'" said Billy McNair, co-founder of Peerflix.
Peerflix announced general availability of its DVD trading service in September 2005 after a 12-month beta development phase. Less than 45 days later, Peerflix members have grown the network to feature more than 100,000 DVDs that include titles from new releases, classics, and anime, to comedy, action, children's, and instructional movies.
Peerflix itself carries no inventory and does not participate in the transaction: it simply matches people and products while optimizing for trade speed, frequency, and geography.
"Internet users have clearly shown an interest in peer-to-peer media networks, and we believe the Peerflix team has created a compelling offering based on a sound business model. With Peerflix, we see a P2P community that provides mainstream movie fans with a new way to get movies without contracts or high monthly fees," said Battery Ventures' General Partner Roger Lee, who joins the Peerflix Board of Directors in conjunction with the financing.
PassAlong Networks Adds CD Baby
PassAlong Networks, developer of innovative technologies, including the p2pREVOLUTION platform for digital music, last week announced an agreement with CD Baby, an online distributor of CDs by independent musicians, to make its extensive catalog available through PassAlong Networks.
CD Baby is the latest addition to PassAlong's fast expanding library, including EMI, Sony BMG, Universal Music Group, Warner Music Group, plus IODA, The Orchard, and other independent labels.
"Our main objective is to provide artists with the tools they need to distribute and earn revenue from their music, and through this agreement PassAlong Networks can help us accomplish this," said Jozef Nuyens, Co-founder and SVP International Label Relations for PassAlong Networks.
The agreement with CD Baby will add over 650,000 tracks from over 65,000 independent artists. The array of different music genres brings an eclectic mix to the PassAlong music library including artists like Melissa Ferrick, Bruce Lash (of Prozak for Lovers), Giacomo Fiore, and Brian Perry.
"We're excited to be working with PassAlong because it allows us to increase exposure for the many wonderful independent artists we work with," said Gray Gannaway, Head of Digital Distribution at CD Baby. "Independent music thrives when the recommendation process is from one friend to another, and PassAlong's technology allows for easy discovery of our many artists."
SNOCAP Announces New CEO
SNOCAP, the end-to-end provider of digital licensing and copyright management services for the digital music marketplace, last week announced its appointment of Rusty Rueff to the position of CEO.
"As millions of consumers move to the Web to purchase digital music, SNOCAP enables access to the broadest catalog of music by allowing rights holders to manage their distribution across multiple channels and providing retailers with the ability to create cost efficient and customizable offerings. Rusty will provide experienced business leadership at a time when SNOCAP is poised for tremendous growth," said Jeff Mallett, SNOCAP's Chairman.
"I'm very excited to join the SNOCAP team. It is a phenomenal time for the company and for the delivery of digital music," said Rueff. "I am convinced SNOCAP will be a global leader, providing tremendous benefits for artists and rights holders, for online retailers and, most of all, for music lovers around the world. It is a privilege to lead a team that is so passionate and committed to transforming the online music marketplace."
"As CEO, Rusty will continue to lead us on the path to achieving our company vision," said Shawn Fanning, SNOCAP's Founder. "Rusty's track record speaks for itself; not only has he demonstrated leadership by directing companies through significant growth but he has the desire, passion, and commitment that is a 'must' for SNOCAP."
Rueff most recently served as Executive Vice President for Human Resources at Electronic Arts, the world's largest interactive entertainment software company with revenues of over $3 billion. Reporting directly to EA's Chairman & CEO for the past seven years, Rueff has been a member of the senior management team that has quadrupled the company's revenues and grown the talent force to over 6,500 global employees while being the market share leader for the fastest growing form of entertainment.
EA is known for delivering award winning digital media integrated with major brands, studios, technologies, and celebrities from around the world.
iMesh 6.0 Beta Trial
iMesh, the first open P2P firm to work proactively with the recording industry in transitioning to an "authorized" service offering, last week announced the start of its public beta.
"After working more than a year to build our authorized P2P service, we are pleased to offer the music industry a comprehensive solution to Internet music piracy," said Bob Summer, Executive Chairman of iMesh.
"There's genuine excitement about the offering," said RIAA CEO Mitch Bainwol. "We're hopeful that P2P becomes a legitimate part of the distribution of music."
The new iMesh offering provides access to 15 million music tracks from the Gnutella and iMesh networks. Consumers can access various tiers of service, ranging from downloads of 2 million authorized tracks to public domain and unclaimed content. iMesh 6.0 offers consumers a subscription plan and a la carte options.
iMesh will offer a free introductory period of the new service for 30-to-60 days. Users who choose to opt-in to the new model will then be charged $6.95 per month.
Key service features include: "My Library," which highlights music tracks a user has downloaded in one area; "Search iMesh," which allows users to access tracks; "Discover," which provides information on genres and artists; and "Community," which enables users to express themselves to other iMesh users. iMesh supports Windows Media Player 10 and is compatible with "Plays for Sure" devices.
"iMesh faces a huge uphill battle," said former Sony Music executive Mark Ghuneim. "Why will people pay for something they are used to getting for free?"
Please click here for Digital Music News' review of the beta.
Coming Events of Interest
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The Blogging Enterprise – November 2nd in Austin, TX. A one-day conference that will explore blogging, podcasting, and video podcasting and their potential benefits and value in building brands, educating prospects, making sales and cultivating customer loyalty. Attendees will depart with new ideas and a better sense for how to implement this new technology successfully.
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P2P Litigation Summit - November 3rd at Northwestern University Law School, in Chicago, IL sponsored by Electronic Frontier Foundation (EFF) and Privacy Resolutions. This conference brings together public and private defense attorneys, clients, investigators, advocates, and academics to discuss the latest developments in P2P litigation. Please click here for more information and to register for the conference.
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The Old Model Doesn't Work Anymore: How Consumer Controlled Media Is Re-Shaping Your Online Go-To-Market Strategy – November 11th in Scottsdale, AZ. Time-shifted, networked, and high power forms of consumer based marketing. Speakers on topics ranging from podcasting and RSS to online word-of-mouth marketing, social networking, and power laws of the Internet. A high level diagnosis of marketing today and a detailed analysis of how to channel these new consumer-connecting media.
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Search Engine Marketing Seminar – November 16th in Long Island, NY. Join Search Engine Marketing Pioneers, Prime Visibility, for this hands-on full day event and learn how to get your website on the first page of Google, Yahoo & MSN. Featured as leading SEO experts on A&E's Biography Channel, this seminar also includes a free live site clinic where audience member websites will be analyzed.
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The Digital Entertainment & Media Expo (DEMXPO) – November 30th-December 1st at the Century Plaza Hotel in Los Angeles, CA. Join over 1,500 senior-level executives at the premier event for the digital entertainment and media Industries. Over 150 featured speakers cover the key issues you need to know in digital music, mobile, digital video, gaming, and digital advertising.
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Search Engine Strategies Conference & Expo – December 5th-8th in Chicago, IL. Real-time actionable information to grow your business through search engine marketing. Ins-and-outs from top search experts and the search engines themselves. Access to the world's most comprehensive gathering of search engine marketing & optimization-related solutions providers and potential partners. Please click here to learn more about this event.
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Digital Hollywood at CES – January 5th-7th at the Las Vegas Convention Center North Hall. The Consumer Electronics Show will have over 140,000 attendees; 2,500 exhibitors; 4,000 press representatives; and keynotes by Bill Gates, Chairman, Microsoft; Howard Stringer, Chairman & CEO, Sony; Paul Otellini, CEO, Intel; and Terry Semel, Chairman & CEO, Yahoo. The DCIA will moderate the "Next Generation P2P" panel on January 7th.
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