August 21, 2006
Volume 14, Issue 7
Pando Surpasses One Million Downloads
DCIA Member Pando Networks announced that just three months into its public beta, more than one million people have installed and used its free and user-friendly application. Pando software allows consumers to send and receive high quality digital media with their existing e-mail accounts. Since its initial private beta release in late 2005, Pando's network has successfully transported nearly 3 petabytes (3 million gigabytes) of data.
Pando users can securely send up to 1GB of digital media – home movies, folders of family photos, business presentations, and other large files – to anyone with an e-mail address. No registration or new e-mail account is required. Underneath its simple interface, Pando is powered by the company's enhanced BitTorrent technology; Pando uniquely combines the distribution efficiencies of peer-to-peer (P2P) technology with the "send-and-forget" ease of e-mail.
Javien Introduces Next Generation E-Commerce
DCIA Member Javien Digital Payment Solutions unveiled DPS V8.0 of its e-commerce technology this week at Building Blocks 2006.
"In response to the needs of our customers, we are pleased to have developed our most flexible and comprehensive ASP software to date," said Leslie Poole, Javien CEO. "Digital content providers are increasingly challenged to meet the needs of consumers and business customers who demand choice in how they experience and pay for content. Our technology continues to evolve with the changing demands of our customers."
This next generation of Javien Micropay features an adaptive technology that allows clients to establish business rules that change based upon user history. The technology can employ various rules depending upon an individual buyer’s behavior or the collective behavior of a category of individuals over time. With the exponential growth in digital content sales attributed mostly to the downloads of music tracks, the increase in sales of products at price points below $5 has created a much greater need for the cost-saving benefits of adaptive micro-payment technology.
Javien clients can also take advantage of a number of new billing options and extend business outreach on a more global scale. DPS V8.0 empowers clients to use a variety of billing options – bill to land line phone, SMS, bill to PayPal accounts, and ACH. Expanded international support allows clients to accept currencies of 40 different countries.
Finally, the next generation software offers improved merchandising capability through prototyping and expanded shopping-cart features.
Cybersky-TV Schedules CTV Launch
DCIA Member Cybersky-TV announced plans to make its revolutionary CTV P2P television software available starting September 1st.
"With CTV, users can broadcast what they like and receive transmissions where they like – at home, in the office, or on mobile – everywhere the Internet can be accessed," said Cybersky-TV CTO Guido Ciburski. The advantages of CTV are promising: a DVD, video-file collection, or TV card are sufficient in order for users to set-up a personal TV station.
Thanks to CTV’s use of P2P technology, all viewers share in the real-time distribution of video data. Server costs are voided completely and there are no traffic costs, even if a million viewers are watching the same stream at the same time.
Many broadcast TV stations and cable networks are already interested in doing IPTV this easy way. Minimal monthly costs are expected to be almost immediately offset by increased advertising income.
The core of CTV is a completely new scheme of television and mass broadcasting. This is a new base technology, which will relieve all server-based streaming technologies.
Report from CEO Marty Lafferty
 Congratulations to Digital Hollywood President Victor Harwood on a very productive foray to Silicon Valley for Building Blocks 2006.
We are very grateful to Next Generation P2P panelists John Beezer, President of Shared Media Licensing; John Jones, SVP Programming of MusicNet; Don Kosak, CTO of Lycos; Billy McNair, CEO of Peerflix; Les Ottolenghi, Co-Founder & CEO of INTENT MediaWorks; and Chip Venters, CEO of Digital Containers; for their terrific contributions.
John B. explained the Weedshare super-distribution model that allows listeners to play a downloaded song three times before purchasing it, and then incentivizes them with sales commissions to redistribute the track to others. Weedshare allows content rights holders and P2P software distributors to partner in the encouragement of file sharing. He was upbeat about recent legal settlements and looks forward to a major label doing a large promotion on P2P as the next indication of forward progress.
A key to successful use of P2P, from SML’s experience, is to create an environment where music feels free through readily accessible pre-purchase sampling. He urged the technology sector to focus on digital rights management (DRM) interoperability.
John J. provided an overview of MusicNet’s relationship with the P2P industry as an aggregator of popular music for sublicensing to P2P companies, with the example of the iMesh subscription service for which MusicNet provided 2.5 million licensed music tracks. He concurred that a key to acceptance of paid models is marketing, with free trials playing a very important role.
MusicNet also provided content for the newly re-launched BearShare as a portable P2P platform. P2P has enormous commercial potential; now that legal battles are ending the real work is beginning. A challenge to content providers is to respond more nimbly, because technology will always evolve rapidly. A challenge to technology providers is to make DRM invisible, and a recommendation to content and technology interests for collaboration is to find ways to monetize certain catalog segments without DRM.
Don outlined Lycos’ ability to support the sharing of very large files in the 5-to-10 gig range and P2P streaming technology used for the enormously wide distribution of World Cup 2006. He noted that while unlicensed content redistribution via P2P continues to be working better than licensed, the pieces are starting to come together: entertainment industries seem to be changing from trying to stop P2P to seeking to harness it for authorized uses. They need to focus on convenience and availability in doing so.
Draconian implementations of DRM will drive users to darknets. Don urged Mr. Jobs to open up the iPod – its closed state is having a negative impact on the industry – and, more broadly, called upon hardware manufacturers to create systems that promote and support fair use.
Billy described Peerflix as a P2P business model operating in the physical world, which enables users to trade DVDs that Peerflix never touches. He said that that motion-picture studio adoption of P2P is moving slowly, but that the channel will need movies and the studios will need P2P to succeed with digital distribution.
Billy cited Kazaa’s settlement as symbolic of the growing commercialization of P2P: now the P2P industry needs to become comfortable with its legal status and define how to use filtering effectively. More content will be licensed and that will lead to more marketplace success. Entertainment industry leaders need to standardize and endorse interoperable DRM. Financial projections for P2P adoption are compelling.
Les summarized INTENT’s role as a distributor of content over every type of open P2P network. The company has been ramping up delivery and will transact 65-to-70 million ad-supported licensed music and video files during August, anticipating continuation of an almost 50% monthly increase near-term. He agreed with Billy’s views regarding the movie industry with current P2P video mostly short-form including a growing proliferation of user-generated material. He voiced concerns in the post-settlement world that darknets may attract users unless licensed P2P platforms provide clear added value, delivering content to consumers the way they want to receive it.
Les urged entertainment industry leaders to dive in and learn how to use P2P now. If the majors fail to do that, the effects of lower creation costs for higher value content thanks to better digital production tools, coupled with the lower costs of P2P distribution and superior quality of service, will pose a real threat. He noted that INTENT is beginning to see spikes in usage at 10:00 AM and 2:30 PM representing over-35-year-old women downloading content at home. He said DRM must combine protection with interoperability and transportability, serving as a lightweight enhancement for content distribution.
Chip recapped Digital Containers’ offering of super-technology for the transfer of digital goods, which encourages broad content redistribution by carrying payment systems with the files. He said for large content distributors to win competitively going forward, they will need to use P2P; but meanwhile the P2P industry is still fighting to overcome the handicap of a dearth of licensed content.
Chip said that despite real progress in the wake of the MGM v. Grokster decision, media coverage of P2P continues to hang a pall over the industry that depresses good news of such positive history-making deployments as Kontiki and BBC. The fact is that it’s inevitable that P2P will be adopted because of its superior efficiencies.
During audience questions and closing comments, Chip indicated that YouTube could save more than 90% of its current bandwidth costs, estimated at over one million dollars per month, by adopting P2P. Les indicated that INTENT’s bandwidth costs are in the fifteen-thousand dollars per month range thanks to P2P. Panelists concurred that FireFox’s upcoming implementation of P2P will be a positive for the industry. John B. said he is increasingly intrigued by the potential of P2P in the mobile space. Don agreed that wireless adoption will mark a huge advance for P2P, which to achieve its full potential, needs to be the channel not only for music, but also movies and games.
John J. said that as P2P evolves, its success will be relative to how well it helps users succeed as hunters and gatherers versus competing Internet technologies. Chip raised a provocative question for all industry participants to address by using P2P to fulfill long-tail marketing – what if the content finds you. The suggestion was made to abandon the term "P2P," which has been so maligned, and substitute a term like "super-distribution."
Les concluded by noting that all of the panelists represent parts of the back office that will make super-distribution truly possible as P2P commercialization continues, and that consumers inevitably will move towards the most efficient channel. Share wisely, and take care.
Nets Play Nice with Web Foes
Excerpted from Globe & Mail Report by Grant Robertson
When NBC signed its landmark deal with the video-sharing website YouTube recently, it was a move that would have been unthinkable for the US network only six months ago.
NBC, one of the biggest broadcasters in television, was turning to a much smaller online video-sharing site for help reaching audiences. Some saw it as a humbling admission that conventional TV could no longer fight the web.
YouTube, one of several Internet sites where users upload their own footage or post clips of network shows, gets 13 million viewers a month in the United States alone. Realizing the power of those numbers, NBC is now several weeks into supplying the site with clips from a select few shows, hoping to entice web surfers back to the traditional TV set by stirring up buzz for its programs.
"Rather than putting our heads in the sand and saying this doesn’t exist, we’re trying to jump in and embrace it," John Miller, Chief Marketing Officer of NBC Universal, said about the deal.
Lessons Learned from YouTube
Excerpted from Media Post Report
There have been a lot of stories in the impatient press about YouTube’s inability to find a suitable business model. Themes range from "How are they going to monetize it" to "Is YouTube the new Napster?" to "There must be a video bubble."
John Dvorak of MarketWatch wants everyone to calm down and take a second to appreciate that a site that’s barely a year old now delivers roughly 100 million videos a day. Don’t worry that the online video phenom has yet to find a way to make money: remember Google? The search engine came years before SEM.
"You must assume that with all the marketing brains out there one of them can find a way to make money," Dvorak says. It’s perhaps more important that we appreciate that the phenomenon is going on, and maybe try to figure out why. First of all, it’s now abundantly clear that people have a massive desire to share video clips with each other.
But Why YouTube? Because, as Dvorak says, "Nobody – and I mean nobody – made sharing video easy until YouTube."
There are almost no barriers to entry: you can upload video from any format or any software you please and the site automatically converts your files into Flash movies. "I have seriously looked at the alternatives to YouTube," he says. "With no exceptions they are all flawed." Funny how it should all come to down to ease-of-use and convenience, huh?
User Generated Videos Keep Growing
Excerpted from Ken Radio Broadcasting Report
A new report from In-Stat indicates that the potential market for online video content worldwide will grow from 13 million households in 2005 to 131 million households in 2010.
One of the drivers behind this growth is the widespread adoption of broadband, and In-stat predicts that by 2010 there will be 413 million broadband households worldwide, up from 194 million in 2005.
Aggregators such as Google, Yahoo, AOL, and Apple have all thrown their hats into the online video ring and are competing for eyeballs with the likes of YouTube, MySpace, and other social networks. Recent data from Nielsen/NetRatings show that YouTube is attracting significant numbers of Internet users, particularly those over 35 years old.
It is still the early days for the online video market, but there is little doubt that the Internet will grow in significance as a distribution platform for video content. This presents portals and aggregators with an opportunity to generate pay-per-view and advertising revenue; it posses risks to traditional broadcasters who may lose audience online, and it opens up another arena for advertisers and marketers.
Leaked Videos Give Fans Early View
Excerpted from Wall Street Journal Report by John Jurgensen
A new television show called "Jericho" has a small but dedicated group of fans, who’ve been buzzing about the show online. The reaction has been surprising – considering that CBS won’t air "Jericho" until late September. Viewers are responding to a leaked video of the pilot that’s been flying around the Internet.
Networks have increasingly been experimenting with giving viewers early looks at coming shows on their official websites, as well as on iTunes and through DVD rentals. But recently at least ten unaired pilots have been leaked – apparently without the networks’ permission – to P2P networks that allow users to download files stored on each others’ computers. In many cases, the pilots appear to have been "ripped" from official DVDs made for reviewers and company executives.
It’s unclear whether the leaks resulted from security breaches or quiet efforts to promote the shows. In either case, Internet leaks can sometimes pay off for TV shows. In June, a TV pilot called "Nobody’s Watching," which the WB network had passed on, was leaked to the video-sharing site YouTube. It generated enough of an audience online that NBC decided to pick up the show for development.
At least four of CBS’s fall pilots have been circulated on the web, a development that CBS spokesman Chris Ender calls "both flattering and frightening." He adds, "We’re pleased that there’s an early demand for our shows, but the marketing benefits can’t excuse what is infringing use of our programming."
The number of people trading the files is still relatively small. According to Wiredset, a digital marketing agency that’s been tracking the trading, the leaked pilot for ABC’s "The Nine," for instance, has been downloaded about 36,000 times in the past month with BitTorrent, a program for downloading large files.
While viewer comments online have been generally positive, some have raised concerns that several new serial thrillers – such as NBC’s "Heroes," about a mysterious phenomenon that endows everyday people with superpowers – are too similar to ABC’s hit "Lost."
BBC Archive Goes Online
Excerpted from Daily Variety Report by Katja Hoffmann
The BBC will make its video archive of 1.2 million hours of film available to Internet users.
Ashley Highfield, the pubcaster’s online operations topper, wants the BBC to have a more prominent role in the online market, which is dominated by US players Microsoft, Google, Yahoo, and Apple.
"We’ve got one of the world’s largest archives. And yet, because we’ve got so few channels – routes to our audience – 99.9% of that content stays on the shelves. We ought to liberate it and make it available how, when and where our audience would like to consume it," Highfield told the Independent newspaper.
The BBC has transferred some 300,000 hours, 25% of its archive, to digital. Highfield expected that "a few hundred hours" of archive footage would be available on the BBC’s Web site by next year.
Some shows are accessible to online users via the site’s "watch again" facility. Next year, Highfield intends to launch the pubcaster’s iPlayer, which will allow viewers to watch BBC programs for a week after broadcast.
RawFlow Offers QuickStart Free Trial
Excerpted from Pocket-lint Report by Amber Maitland
A new streaming tool from DCIA P2P MEDIA SUMMIT (P2PMS) participant RawFlow promises to make it easier for small businesses and individuals to upload content to a P2P network.
QuickStart lets anyone already streaming audio or video content set-up a P2P streaming network in three steps, and promises to cut down on bandwidth costs by up to 90%.
RawFlow launched the software to tap into a number of businesses that find themselves suffering from high bandwidth costs as their audio and/or video broadcasts grow in popularity.
QuickStart software creates a network that uses the upload bandwidth capacity of viewers or downloaders. In tests with Denmark Radio and NexusLive, audio content bandwidth costs have been reduced by 90% and live video streaming costs by about 50%.
The software supports various video and audio files, and even lets users connect through a small plug-in to create a secure network for sharing files. Please click here for a thirty-day free trial.
LimeWire Selects Legal Counsel
Excerpted from Digital Music News Report
Ahead of a major lawsuit involving the RIAA, LimeWire has now selected Charles Baker of Porter & Hedges, LLP, to lead its defense. Baker has been involved in the defense of StreamCast Networks, owner of the Morpheus file-sharing application. That application was recently part of the Supreme Court ruling in MGM v. Grokster, which determined that firms can be held liable for infringement if they actively induce illegal activity. StreamCast has also faced a tough reception from a lower district court, which is applying the inducement litmus test accordingly.
The story on StreamCast has been messy, though Baker will bring P2P-specific expertise into the LimeWire defense. The RIAA is a formidable opponent, though the details - which include internal LimeWire e-mails, memos, and other documents - will be a critical component of the upcoming case. Earlier this month, the RIAA initiated its legal assault on LimeWire, a favorite among file-swappers. The trade group, which filed its case in the US District Court in Manhattan, is seeking damages of $150,000 per infringing file.
Altnet Sues StreamCast for Patent Infringement
DCIA Member Altnet has commenced patent infringement proceedings against StreamCast Networks in US District Court. Altnet and other plaintiffs allege that StreamCast intentionally infringes Altnet’s TrueNames patents in conducting its file distribution business.
The patents infringed, 5,978791 - 6,415,280 - 6,928,442, are well established and recognized as critical to efficient online P2P file distribution. Altnet relies on these patents to sell licensed content worldwide.
Michael Speck, Manager of Enforcement Programs said, "StreamCast’s determination to continue infringing has left us with no choice but to prosecute."
StreamCast, which claims to have distributed over 144,000,000 copies of the infringing software, already faces major copyright infringement allegations before the same California Federal District Court in Los Angeles. Its distribution continues unabated despite being put on notice twice this year in relation to its infringing conduct.
Altnet is seeking judgment from the Court that includes declarations, injunctions, and a trebling of damages because of the willful and deliberate nature of the infringements.
"StreamCast’s brazen patent piracy underpins its massive copyright infringement business. It is simply running out of opportunities to go legal," said Michael Speck.
Sony Refused P2P Patents in UK
Excerpted from The Register Report
Sony cannot patent inventions in the UK that remove the anonymity of the P2P user experience and put social networking at the heart of file-sharing. The Patent Office ruled last week that the inventions are not eligible for patents.
Sony filed two patent applications for complementary inventions. One describes a means of exchanging information between computers or other devices in a network. The other describes ways of using that information.
The application for the "system and method for reviewing received digital content" describes building a web community.
When a P2P user downloads a piece of content from another user’s computer, be it a song or a game or a movie, he normally knows nothing about that user – or where that user obtained the content. Sony’s proposal would change that experience.
Sony describes a method for attaching a user history to content when it is shared among computers or other devices. When one user downloads a song, he can see who had it last and what he thought about it.
Patent examiners initially objected that the inventions described computer programs and were not eligible for patent protection in the UK. The view of the patent examiners was upheld.
BearShare Relaunches as Subscription P2P
MusicLab announced the beta of a new version of its recently acquired BearShare P2P software application. BearShare 6.0 will include the introduction of a ToGo portable music subscription service, allowing users continued access to free tracks along with premium content offered at rates competitive with current subscription and single-track download services. Additionally, BearShare will feature social networking capabilities. Users can create, share, and browse profiles on the BearShare network while searching for new music.
BearShare ToGo will support all MP3 and PlaysForSure portable devices.
"In our continuing effort to grow the authorized P2P marketplace, we gave full consideration to the rights of copyright holders while introducing features that greatly enhance the consumer experience," said Robert Summer, Executive Chairman, of MusicLabs’ parent iMesh.
BearShare 6.0 will offer more than 15 million tracks available for sharing by users. This includes a primary offering of more than 2.5 million premium licensed songs from major and independent labels, as well as individual postings.
BearShare gives consumers access to great breadth and depth of musical content, enhanced discovery functions, music sharing features, and a vast social networking community. Within the community, users are able to browse and share profiles, pictures, and music libraries. Additionally, users are able to invite and add friends to their personal BearShare web page, as well as post comments and send messages and instant messages.
The service offers consumers both a subscription plan and a la carte options for premium content, with the ability to download and burn music and videos. Available in the US and Canada, the service is free for 30 days and will transition to a subscription plan thereafter. BearShare is a broadband-enabled service that supports Windows Media Player 10.
Pirate Party Offers P2P Anonymity
Excerpted from The Inquirer Report by Nick Farrell
A Swedish political party, the Pirate Party, is running a file-sharing operation on which users are guaranteed anonymity.
The service, Relakks, which will cost five euros per month to join, is designed to promote free speech, the organizers say.
According to the Party, its new network is a darknet, which means that anyone will be able to use its service without fear of being monitored or logged. Users get an untraceable address where they cannot be personally identified.
In a statement, Rickard Falkvinge, Chairman of the Pirate Party said there were many legitimate reasons to want to be completely anonymous on the Internet. He added that if the government can check everything each citizen does, nobody can keep the government in check.
The right to exchange information in private is fundamental to democratic society, Falkvinge said.
He maintains that there are many more fundamental values at stake than simply the file sharing of copyrighted content. He said the use of copyright laws to monitor all private communications over the Internet is wrong.
Until his party had the opportunity to change the laws to ensure that citizens’ right to privacy is respected, it had a moral obligation to protect the citizens from the effects of the current routine surveillance.
Coming Events of Interest
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2006 Word of Mouth Marketing Forum – September 21st–22nd in Arlington, VA. Learn the ins and outs of one of the most innovative and efficient marketing techniques. New tools and technology have made Word of Mouth Marketing one of the best strategic tools marketers can use to build brand awareness and customer loyalty.
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OMMA Awards– September 26th at the Marriot Marquis in New York, NY. The OMMA Awards honor the brand marketers, agencies and content providers who continue to push the potential of online advertising creative. The OMMA Awards celebrate the year’s most innovative and brilliant creative work in 27 categories. Submission deadline is July 28th.
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Digital Music Forum West – October 4th-5th in West Hollywood, CA. Don’t miss the opportunity to participate in the premier event for music industry decision-makers focused on business models and legal issues impacting music. For sponsor packages and to submit speaker proposals, please contact Tinzar Than Sherman at 323-822-0936 or by e-mail at tinzar@digitalmediawire.com.
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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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