July 10, 2006
Volume 14, Issue 1
TribalWeb Offers Free P2P File Sharing
Friends, families, and other groups and associations in the UK now have the opportunity to share photographs, films, or documents of any size on their own private network, thanks to the launch of a new peer-to-peer (P2P) file-sharing service by TribalWeb.
This follows a hugely successful launch in France, which has attracted more than 120,000 users in its first year. "We are delighted with the response to the new software," confirms Co-Founder, Stéphane Herry, "which has attracted users of all ages, both male and female."
"The range of networks they have set up is equally diverse, from families sharing videos of loved ones, to genealogists exchanging family history documents, to DJs sharing mixes with other DJs on their networks!"
The launch of TribalWeb has made the sharing of large files among such groups possible for the first time. Until now, the options available have either been highly complex, prohibitively expensive or, as in the case of e-mail, only capable of sending small files and with no certainty that they have been received.
"In contrast, by adopting optimization technology focused on achieving efficient file exchange, we have been able to accomplish our goals of simplicity, speed, and security," confirmed Herry. "TribalWeb is installed simply by downloading the software from our website: you select those whom you wish to join your private network and there is no restriction on file size."
"Only users of the network can see shared files: similarly, only the sender and receiver are aware of each individual exchange; broken exchanges automatically resume with no data loss and all network data is 128-bit encrypted. All these features are free and TribalWeb provides e-mail assistance to resolve any problems or queries."
The introduction of TribalWeb into the UK market coincides with the launch of Version 2 of the software. Previously, shared folders could only be downloaded as read-only files; the new version will also offer recipients a write, or upload, option. TribalWeb 2.0 also includes an improved graphical interface, together with the introduction of English, German, and Spanish versions.
P2Market Provides for P2P Conversion
P2Market Ltd., headquartered in Switzerland, has found a way to convert P2P networks into a modern Internet marketplace where authorized file exchanges can occur, assuring owners of copyrighted material a profitable outlet for their works. When downloading and sharing music or movies, P2P users buy and sell files among themselves and pay copyright owners of the material a pre-negotiated fee.
P2Market has developed software for two main P2P networks: Gnutella and BitTorrent. The next aim is constructing software for other existing networks by adding copyright control in their data transfer processes.
Owners of copyrighted works can now register their material on the P2Market website and set trade parameters for their files – including a minimum price – over which they have complete control. No one on the market can sell a file cheaper than the minimum price, which goes directly to the copyright owner.
If the seller markets the file(s) for higher than the minimum price, the copyright owner also receives a percent of this difference, called a copy-tax. The remainder goes to the P2P user who has sold the file. A file can be downloaded/shared via the file exchange network only if the copyright owner sets the trade parameters and permits its distribution.
This new system allows P2P users to open P2Market accounts for exchange/trade operations. Every user can be a buyer and seller. When users download a file, they set their preferable buy price. When users share a file they set their selling price. The money settlement is done automatically by downloading the file. Copyright fees are also automatically transferred to accounts of the copyright owners.
Report from CEO Marty Lafferty
 Every successful entertainment distribution channel reflects a balance – some would say a tension – between two basic components: content and consumers; or more fundamentally, supply and demand.
On Friday, the music industry received the best indication to date that digital distribution has the potential to more than offset continuing declines in CD sales.
Embracing and harnessing P2P, along with adopting new long-tail marketing programs to supplement traditional platinum-driven promotion efforts, could dramatically accelerate this trend, and the DCIA believes the time is right to do that.
According to Nielsen SoundScan, album sales declined another 4.2% during the first half of 2006 to 271 million (which includes 14 million digital albums with the vast majority still comprised of CDs and cassettes); while digital download single-track sales increased by 77% to 281 million.
In terms of "album equivalent" units (adjusting for both online and offline sources of sales plus the number of DLs that are singles), this translates to 257 million offline unit sales with online reaching 42 million units – for a total of 299 million – representing a 0.2% overall increase over last year.
At the same time, consumer usage of P2P increased by 12% despite 6,000 year-to-date (YTD) music industry infringement lawsuits and, according to the LA Times among other industry observers, even in those cases where P2P software "firms no longer exist, the software they distributed still works," and there are "plenty of non-commercial file-sharing programs, maintained and updated by a decentralized cadre of volunteers."
In several other instances of media analysis regarding development of P2P as a music distribution channel one year after the MGM v. Grokster decision, and in addresses given at the P2P MEDIA SUMMIT, the music industry’s current P2P conversion campaign received constructive criticism.
"Conversion" refers to a two-pronged strategy to convert file sharers into paid download consumers and to convert P2P programs that file sharers use into paid download platforms. The criticism suggests that conversion might be more effective if it were to take place on the supply side rather than on the demand side of the equation.
How would current revenues compare if the music industry changed from applying legal pressure to effect such a wholesale conversion of the P2P marketplace to first assessing realities of current P2P technologies and consumer behavior and then meeting them closer to "where they are" with a new business model?
Instead of continuing discord, if the music industry had monetized the P2P distribution channel during the first half of 2006 by means of an ad-supported business model, for example, such as those now being pioneered by INTENT MediaWorks and LTDnetwork, digital distribution revenues could have matched offline album sales instead of representing less than 15% of the total.
The facts that only 22% of albums sold so far this year were new releases versus 39% during the same period last year, and that R&B and rap CD sales dropped by 20% for the period, provides even greater impetus to support licensing P2P for ad-supported distribution now, given the potential value to music marketers to more fully exploit P2P as a promotional medium, as well as a new revenue stream in its own right.
To understand the economics of ad-supported P2P, it is important to distinguish this model from the paid download model of centralized online stores in terms of basic monetization and usage metrics. While the paid download model generates a one-time-only payment (typically $0.99) per track, the ad-supported P2P model generates revenue every time a track is played.
This is accomplished by means of integrated interactive advertising (which can be a mix of audio-only and multi-media). A per-play ad-supported P2P media file automatically reports when it has been heard or seen (and this same technology can be used to change one advertising message for another, for example if a flight ends while the track is still being actively replayed) each time a playback device connects to the network.
Given current P2P traffic levels of approximately 10 million average simultaneous users per month, on a per-song basis, in order for the existing P2P distribution channel to generate revenue equal to current digital download sales, listeners discovering, previewing, and sampling music on P2P would only need to listen to tracks once and advertisers pay only a $2 net cost per thousand (CPM).
Because there is the very strong likelihood that consumers will listen to songs more than once, and creative marketers will find ways to net more than $.002 per play from advertising incorporated into three-to-four minute (3:00-4:00) music tracks, the P2P channel – even with music remaining free to P2P users – can realistically generate an order of magnitude more revenue than centralized online store paid downloads.
How would this be different from the typical open P2P adware business model being employed today? The adware model is divorced from content. Whether one file is being redistributed by a user or several thousand files, and whether these files are offered as pass-along paid downloads or made available in-the-clear, has no bearing on adware revenue generated by the P2P user.
Rather, such revenue is generated through ads offered as a condition of using the P2P software, the most advanced of which are contextual advertising based on other online activity (for example, a user visiting automotive sites is served an ad for car loans). These ads have been proven to be much less intrusive and 40 times more efficient than random pop-ups, but are unrelated to the viewing or listening experience of the media being redistributed, and therefore drastically under-value the P2P channel.
Free over-the-air broadcasting industries have enjoyed nearly a century of success in content-based advertising revenue generation, and many observers have described P2P as the radio of the 21st century in terms of its role in new music discovery.
This is not to say that P2P can only generate advertising revenue. As previously noted, layering premium subscription offerings and paid downloads as tiered services on top of ad-supported licensed-content P2P can further increase revenue, and competing with free can be achieved by being better than free as in many other industries; but first, a great deal of money can be generated by doing a better job of monetizing "free" – and it is clearly time to do that. Share wisely, and take care.
College-Based Services Face Issues
Excerpted from Digital Music News Report
College-based download and subscription services are facing rocky times, according to a recent report in the Wall Street Journal. Several companies are battling for the campus crowd, including Ruckus, Cdigix, Napster, and Rhapsody, but students appear lukewarm on the prospects.
"Some schools have dropped their services, and others are considering doing so or have switched to other providers," the report asserts, while specifically pointing to defections involving Cornell and Purdue.
The report also focuses on USC, which dropped Napster after low uptake, and is now experimenting with Ruckus. "USC decided last year that it was finished with Napster after fewer than 500 students signed up," the story states.
A key problem with the services is the lack of flexibility, especially compared to open, P2P file-sharing networks and services like iTunes. With most campus-based services, downloaded tracks are tethered and depend on monthly subscription payments. Often, those payments are blended into existing student fees, but access to tracks require continued payment after graduation.
Additionally, iPod incompatibility is a major sore spot, especially given the dominance of the players on college campuses. Meanwhile, many universities may have agreed to support the various services to avoid any legal action, though so far the RIAA has not issued suits against universities.
Video-Sharing Site Raises $15 Million
Excerpted from Digital Media Wire Report
Metacafé, a three-year-old video-sharing site that serves more than 400 million video files each month, announced that it has raised $15 million in its second round of venture capital financing. Accel Partners led the investment round; previous backer Benchmark Capital also participated.
Metacafé, which competes in the video-sharing space with YouTube, Google Video, Veoh Networks, and others, said its revenues have grown more than tenfold since the beginning of 2006. The company will use the new funds to open its US headquarters and invest in marketing, contributor remuneration, and new distribution technologies.
"Pirates" Seizes YouTube
Excerpted from Online Media Post Report by Erik Sass
The Walt Disney Company launched a campaign on YouTube.com for the movie "Pirates of the Caribbean: Dead Man’s Chest," marking the first time a national marketer has advertised on the popular video-sharing site.
The campaign – which was live for just 24 hours – included rich media banner ads featuring a panning close-up of "Pirates" star Johnny Depp alongside a digital clock counting down the hours, minutes, seconds, and milliseconds to the movie’s premiere.
Julie Supan, YouTube’s Director of Marketing, said the deal was a "milestone" for the site, marking the first time a major brand took out ads on YouTube, as well as the first time the site ran graphic ads.
Disney was the sole advertiser on the site, with the banner ad running both on the home page and every "watch page" – that is, the page that opens to play a video that has been selected by a user.
In terms of ad metrics, Supan said the site garners more than 80 million video views a day.
Although the "Pirates" banner ad was attention-grabbing and slickly produced, Supan said YouTube might still tweak its ad model as it rolls out later this summer. "This is not necessarily the final version of our new ad model," she said. She added that YouTube’s new ad sales force is now working throughout the country to sell to national advertisers.
Looking to the future, Supan predicted that more marketers will soon follow Disney’s lead. "Lots of advertisers are contacting YouTube now, because they better recognize the opportunity it presents," she said.
Host Big Files in the P2P Cloud
Excerpted from CNET News Report by Rafe Needleman
Red Swoosh is a very cool system that enables the downloading of a big file (like a video) to be distributed among all the people who already have it, so that the original publisher of the file doesn’t have to pay for bandwidth each time it is downloaded.
Wait, you say, that sounds just like BitTorrent. It is, indeed, the same idea: users who download the file share the bits they’ve got with others.
But Red Swoosh is easier to use that BitTorrent. You don’t have to create "trackers" or learn a new application – you just prefix your file link with http://edn.redswoosh.net and the file becomes part of the P2P cloud.
Users who want to access the file do need to install Red Swoosh software (Windows only, no Mac or Linux version yet). It’s small and has no user interface, and the company promises to not abuse your PC’s bandwidth or spy on you.
But I’m not sure non-nerds will be willing to install the software as long as video sites like YouTube, and download sites like Download.com, allow direct downloads for free.
However, video sharing sites may ultimately join this or another P2P network, especially when they begin serving bandwidth-intensive HD videos.
If you want to employ the service, you can’t just point Red Swoosh to a file on your PC to make it available. It has to already have a public URL.
This also sets Red Swoosh apart from BitTorrent, and adds a measure of accountability to the system, so it’s much less likely to be used for infringement. It is a minor roadblock (it adds a step to publishing) but also has a big user benefit: if there are no users online who’ve already downloaded a file, the Red Swoosh network can go to the online source to get it – you won’t have the dead tracker problem you do with BitTorrent.
Why Streaming Will Supersede TV
Excerpted from Adotas Report by Pete Neumann
It is very difficult for brand advertisers to accurately measure engagement, abandonment rates, and consumer follow-up on television ads. When video ads are shown on the Internet, they handily yield the data that addresses all of the challenges just mentioned. The very nature of how media is served on the Internet allows advertisers to learn how much of any commercial was viewed, if the users clicked on associated ad units, and what they did from there.
Today, with the deep, verging on ubiquitous, penetration of broadband access, marketers are able to target highly desirable demographic groups. Better yet, 62% of consumers prefer to obtain their video content free, and they are OK with it being video-ad subsidized. Marketers are poised for great success in the next phase of the online revolution.
In March, The Online Publishers Association (OPA) released a survey highlighting the current impact of video ads. According to the survey, nearly 31% of respondents visited the advertiser’s website as a result, with 8% making purchases. Equally notable, video ads inspire 14% of viewers to visit a brick-and-mortar store to follow up in-person.
The snail’s pace for change to IPTV can be better understood by looking at a recent survey of ad agency reps (webadvantage.net), which found that 36% of respondents had "little to no" experience with online video advertising, and 63% were "very concerned with" how to keep consumers engaged with video ads. While this survey indicates that many media buyers are somewhat baffled and therefore slow to adopt this new advertising modality it is clear by the commitment to reallocate funds that the same execs recognize the opportunity and the need to figure it out.
Marketing User-Generated Content
Excerpted from MediaPost Report
The jury is still out on whether consumer-generated content is a good idea for marketers, but that hasn’t stopped a long list of major advertisers from experimenting with the new and controversial genre. Emerald Nuts, Chevrolet, and Cartoon Network have all recently created promotions and contests around such content, in which consumers create material to run on a brand’s website.
The marketers’ hope is that such interaction will lead to a loyal relationship with a brand, but some experts are skeptical. "Consumers who participate certainly feel pumped," says Marian Salzman, trend spotter and Chief Marketing Officer at ad agency JWT. "But I’m not sure that any one response makes that much difference. Their voices give a marketer relevancy, but without celebrity you somehow lack the megaphone effect. So it’s a toss-up if consumer-generated is a big wow."
Site Tempts Video Makers
Excerpted from NY Times Report by Peter Wayner
Lulu.tv is creating a fund from monthly account fees that it will use to pay creators of most-watched videos posted on its website.
The website, which lets people upload and watch video clips, said last week that it would begin charging a $14.95 monthly fee for a "pro" account and putting 80% of that money into a special fund. Each month the money will be distributed among the video creators, with the biggest share going to the person who attracted the most viewers.
Free accounts with fewer features will be available, but those users will not share in the revenues. To get the process moving, the company is priming the pot with $5,000.
Other video sites are trying different approaches to bringing in cash. YouTube, the most popular of the genre, has a deal with NBC to promote its new television shows on a special section of the site. Revver.com will share 50 percent of its advertising revenue with those who post videos there.
Bob Young, the chief executive of Lulu Enterprises who also started the open source software company Red Hat, said Lulu.tv was an experiment inspired by the traditional television broadcasting world, where the networks buy shows from producers, and shows succeed or fail based on the ratings.
"The problem with that model is that it’s very capital-intensive and it’s so limited," he said. "On the Internet, there’s an infinite number of channels. There’s no reason why there can’t be several hundreds of different ‘Friends’-like shows because the market is so vast."
Making Sense of Travel 2.0
Excerpted from PhoCusWright Report By Bob Offutt & Cathy Schetzina
Online travel isn’t what it used to be. Startups and established players alike are working to understand the dynamics of Travel 2.0, our industry’s fulfillment of the Web 2.0 promise, and define their role in it. This has been a year of experimentation, beta launches and observation, as travel companies that have unleashed Travel 2.0 tools wait anxiously to see how they are received by freshly empowered consumers.
Travel 2.0 is being enabled by a plethora of new technologies, trends, practices, and standards somewhat reminiscent of the dotcom boom. Some of these new technologies and trends will survive because they generate business value, have strong social network support, or both. Others will atrophy. The same holds true for the start-ups that have been formed to capitalize on the new trends and technologies – and while some in the travel establishment appear to be working under the assumption that Travel 2.0 is a make-or-break proposition only for newcomers, others are making inroads that are likely to lead to share shift in the near future.
Here are the areas of focus that show the greatest potential business value and an assessment of which travel companies stand to benefit from them: really simple syndication (RSS), open APIis/web services/mashups, advanced user interfaces, contextual advertising, and group-forming networks.
Tankafritt Offers P2P Insurance
Excerpted from Engadget Report by Evan Blass
Here’s an innovative business plan for you: start up an insurance company whose sole purpose is to cover your customers’ fines should they get busted for file-sharing copyright infringement.
Well believe it or not, a Swedish entrepreneur has begun to offer this very service to fellow citizens. For only $19 per year,Magnus Braath’s company Tankafritt promises to pay any penalties incurred from being fined for copyright infringement, and he’ll even throw in a free T-shirt. (Yes, you guessed it, the shirt actually does read "I got convicted for file sharing and all I got was this lousy T-shirt").
Braath claims that he started the business as a statement against recent changes in Swedish law that criminalized downloading, and that low conviction rates and relatively minor fines will allow him to keep the venture financially solvent.
Hey Magnus, if you’re looking to expand your operation, we hear that Spain’s just passed some legislation that will probably create quite the demand for your unique little service – who knows, with some hard work and a bit of luck, you could end up becoming the Geico of software and content copyright infringement.
Coming Events of Interest
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Special Industry Showcase – July 11th at the Cutting Room (19 W 24th St.) in New York, NY. If you’re in the mood for some groovy dance moves, mixed in with some rock, jazz and blues, then please join us for a special industry showcase at 9:30 PM. Joan Rivers will be kicking off the night with her infamous comedic stand up act around 8:00 PM, so come by, have a drink, and relax before DCIA Member Kirsten DeHaan’s band hits the stage!
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Search Insider Summit – July 19th at Key Stone Resort, Keystone, CO. This event is a way for marketing and advertising professionals to share leading edge information on search marketing in a comfortable learning environment. Over one hundred marketers and agency decision makers will come together to share information and learn more about Search through general sessions, keynotes, research presentations, case studies, etc.
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Building Blocks 2006 – August 15th–17th in San Jose, CA. The DCIA is pleased to participate in this premier event for transforming entertainment, communication technologies and the global communications network: TV, cable, telco, consumer electronics, mobile, broadband, search, e-mail, VoIP, RSS, blogs and websites: "Disruptive Thinking – Change Agents That Transform the World –Where Content is King and Technology Rules."
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6th Annual Future of Music Policy Summit – October 5th–7th at McGill University in Montreal, Canada. FMC sees hosting this Summit in Canada as an opportunity to expand its perspective on a range of issues – from copyright, to sampling, to digital royalties, to radio, to how various musical communities are managing change. The music marketplace has become truly global, and some of the biggest challenges are navigating the assortment of legal and licensing schemes that encourage and/or impede the promotion and sale of music.
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