October 2, 2006
Volume 15, Issue 1
Welcome CacheLogic
Please warmly welcome CacheLogic to the Platform 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.
CacheLogic provides a suite of complementary products that deliver traffic management and network intelligence solutions to the Internet service provider (ISP) sector and media delivery solutions to the content community.
CacheLogic was founded in January 2002 and since its inception, the company has built a successful business and established a proven track record in the design, development, and implementation of world-class solutions for peer-to-peer (P2P) technologies.
CacheLogic has committed significant resources to ensure that it understands the changing nature of traffic across the Internet and, in particular, its impact upon service provider networks.
In January 2004, CacheLogic set up the Streamsight Monitoring Network (SMN) to provide traffic analysis from within ISP networks across the globe.
Today, through its proven track record, market-leading P2P Management Solution, and commitment to research and development, CacheLogic is considered the leading authority in its field. CacheLogic provides regular analyses and expert opinions to leading press and analyst organizations.
Additionally, through its work with digital rights holders and broadcasters on their strategies for the distribution of licensed video content using P2P technologies, CacheLogic has established VelociX, its peer-assisted media delivery platform. This platform enables content owners to harness the benefits of P2P technology while offering the benefits of a content delivery network (CDN).
CacheLogic’s VP of Engineering, David Ferguson and CacheLogic’s VP Sales, North America, George Daum, served as panelists at the P2P MEDIA SUMMIT WDC in June; and CacheLogic’s CTO Andrew Parker is scheduled to be a principal speaker at the upcoming P2P MEDIA SUMMIT LA on October 23rd.
Nettwerk Shows Music Industry Future
Excerpted from Top 40 Charts Report
Barenaked Ladies is an indie band again, releasing "Barenaked Ladies Are Me" last week on its artist-run label, Desperation Records.
Terry McBride, CEO of DCIA Member Nettwerk Music Group (dubbed the "next-gen music company" by Wired Magazine) and manager of Barenaked Ladies said, "Generating revenue, especially in the artist-run model, is about selling music in various media. That is how success is measured, not by physical album sales."
Here is what you might miss if you only look to the charts for information: individual digital track sales, digital albums purchased directly from the BNL, Nettwerk and MySpace websites, the combined sales of the standard album and deluxe edition, USB flash drive sales, ring-tone sales, stem sales from their remixing contest and more.
Additionally, you won’t see the difference in revenue that a band generates from an artist-run label as opposed to a band on a major label; an artist-run label can earn as much as $5 per album.
Once all of these missing entities are factored together, a difference close to 30% of North American sales is missing from the chart equation.
"The artist-run model is the future. If we can break bands using this model, the industry will be forever changed," McBride says. "We are making a music company, not a record label."
Report from CEO Marty Lafferty
 We hope to see you this week at the Digital Music Forum in Los Angeles, CA. The DCIA will have an exhibit booth where you can meet our Members, including Gary Croke, the US marketing leader for DCIA’s newest Member, CacheLogic; Brent Muhle, General Manager of Nettwerk Music Group; as well as DCIA staff.
On Wednesday at 4:45 PM, the DCIA will present "The Evolution of Peer-to-Peer and Music" panel. P2P file-sharing technologies are establishing a robust new marketplace for licensed music distribution.
With exponentially more traffic than competing channels, and users who are actively seeking to discover and acquire new music, now is the time for bands, singer-songwriters, and other rights holders to explore P2P opportunities.
Growth of the file-sharing distribution channel is explosive. P2P now accounts for more than two-thirds of Internet downstream traffic and three-quarters of upstream traffic.
For music creators and rights holders, the revenue opportunities from ad-supported P2P distribution, P2P subscriptions, P2P paid downloads, as well as P2P marketing programs and promotional campaigns are enormous and expanding daily.
DCIA Member panelists include Chip Venters, CEO, Digital Containers; Joey Patuleia, VP, Artist Relations, INTENT MediaWorks; Daniel Harris, CEO, MediaPass Network; and John Desmond, VP, MediaSentry Services, SafeNet.
Eric Garland, CEO of BigChampagne, the DCIA’s official industry data resource, will also participate.
Michael Weiss, CEO of StreamCast Networks, developer and distributor of Morpheus is also scheduled to speak on this panel.
Other DCIA Member speakers and moderators at Digital Music Forum include Brent Muhle, General Manager, Nettwerk Music Group; and Aydin Caginalp, Partner, Media and E-Commerce Group, Alston & Bird.
To more thoroughly explore P2P file-sharing, also plan now to attend the DCIA’s first-ever P2P MEDIA SUMMIT LA.
The P2P MEDIA SUMMIT LA is a must-attend event for content creators and rights holders, P2P application developers and distributors, solutions providers and service-and-support companies interested in profiting from the realization of the file-sharing marketplace to its fullest potential.
The Conference will be held Monday October 23rd. The Exposition will be held Tuesday through Thursday October 24th-26th in conjunction with Digital Hollywood Fall (DHF).
Your registration for the full Conference & Exposition includes admission to DHF and represents up to a $300 savings over regular rates for these events individually.
The Conference – at the Doubletree Guest Suites Santa Monica, CA – presents leaders of this rapidly emerging high-growth industry from around the world.
Don’t miss the first-ever P2P MEDIA SUMMIT LA. Please click here to register, or call 410-476-7965. Share wisely, and take care.
US Online Ad Revenue Surges 37%
Excerpted from Reuters Report
US Internet advertising revenue rose 37% in the first six months of 2006 compared with a year earlier, hitting a record of nearly $8 billion, according to a study released Monday.
In the second quarter, Internet advertising revenue totaled nearly $4.1 billion, a 36% increase over the same period in 2005, and up 5.5% over the first quarter of 2006, the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) reported.
Their study comes days after Yahoo last week raised concerns that ad spending in new media could be slowing.
In warning about its revenue, Yahoo pointed to weakness in advertising from automobile and financial firms, two key sectors in marketing.
Since the disclosure, analysts have been divided over whether the issue is solely Yahoo’s or signals a wider slowdown in online ad spending.
Until now, signs have pointed to strong growth for online ads, largely at the expense of newspapers and radio.
Monday’s figures suggest that at least through the second quarter, Internet advertising revenue continued to surge.
Search-related advertising rose 40% in the first half of the year, while classified ads rose 20%, according to the study.
YouTube’s Video Poker
Excerpted from NY Times Report by Saul Hansell
Chad Hurley affects a calm, almost detached demeanor, even as the website he runs, YouTube.com, has provoked a frenzy of consternation among executives of record labels, TV networks, and movie studios. For millions of Internet users, the site that opened to the public less than a year ago provides a daily fix of odd and interesting video clips, from White House speeches to frat house pranks.
YouTube has also become a vast repository of video taken without permission from television shows and movies, not to mention home movies constructed — with nary a cent paid in royalties — from commercial music and imagery.
Mr. Hurley was surrounded by curious media executives at Allen & Company’s annual Sun Valley mogul-fest in July. They wondered: friend or foe? Is he earnestly working to make YouTube and its exuberant users conform to the existing standards of copyright law and contractual obligations? Or is he cynically flouting the law to enable YouTube to grow rapidly, calculating that he will be able to cut a more advantageous deal later, or perhaps sell the company to someone else who will be able to sort through the mess of liabilities?
In an interview this week, Mr. Hurley, not surprisingly, portrayed himself as mainly trying to improve the site for its users while working to find arrangements that will satisfy Hollywood.
"There are going to be bumps along the way, but we’re trying to make an effort to make the new model work for everyone," he said. "We’ve been developing features and working on the problem."
YouTube has started to attract mainstream advertisers and the site has become financially stable, Mr. Hurley said, despite the huge cost of showing more than 100 million video clips a day. Potentially most significant, Mr. Hurley pointed to a deal signed recently with Warner Music that he hopes will be a model for dealing with Hollywood and record companies from now on. YouTube is developing technology that will identify Warner music used in a video that is uploaded. When the site plays those videos, it will share some of its advertising revenue with Warner and others with copyrighted material that is used.
Digital River Supports Volume Licensing
DCIA Member Digital River a global leader in e-commerce outsourcing, this week introduced an expanded online volume licensing solution tailored for software publishers targeting the small and medium-sized business (SMB) marketplace. The solution enables publishers to quickly and more effectively sell multiple licenses online either directly to their customers or indirectly through online retailers and value-added resellers (VARs). The enhanced solution also offers a full suite of global e-marketing capabilities to help the publishers, online retailers, and VARs build brand awareness.
"We are in a unique position to draw upon an established set of e-commerce assets – including our global platform, digital download capabilities, e-marketing expertise, and channel relationships – to create a natural online extension for publishers, retailers, and VARs into the SMB market," said Joel Ronning, Digital River’s CEO. "By leveraging this new solution, we intend to create marketing relationships among publishers, retailers, and VARs interested in selling volume licenses in the SMB space, while offering small and mid-sized companies immediate online access to business-critical software."
One of the distinguishing features of Digital River’s enhanced volume licensing solution is its broad suite of e-marketing services. The global e-marketing capabilities that are available through this solution include targeted online advertising, affiliate marketing, deferred payments, and e-mail and co-op marketing programs.
"The e-marketing programs that are part of our volume licensing solution are focused on helping companies create brand awareness and equity as they expand globally," said Jim Wehmann, Digital River’s Vice President of Global Strategic Marketing. "We’ve been extremely successful in helping publishers penetrate the business-to-consumer market. Now we are looking to capitalize on growing demand in the business-to-business market."
P2P Radio Goes Mobile
Excerpted from The Register Report by Andrew Orlowski
Popular P2P music-sharing service Mercora has released a client for mobile devices. Mercora enables members to share songs and playlists across its network with royalties collected and distributed to rights holders.
Mercora dropped its subscription fee last year in favor of a revenue stream from contextual ads. The mobile service, however, will be priced at $4.99 a month, with discounts for one-year or two-year sign-ups. A free trial will be available until the end of the month.
The initial mobile client, called Meriden, will be for Windows Mobile 5.0 or PocketPC devices. Mercora says it will consider versions for Symbian and Java.
Apple has shunned building wireless connectivity or radio functionality into its hit iPod player. Mercora is just one of a number of start-ups seeking to bridge the gap between home media collections and mobile devices, each in a slightly different way.
Michael Robertson’s MP3Tunes Music Locker allows you to sync your music library across devices, including PCs, Nokia S60 smartphones, and a TiVo. Orb Networks allows you to listen to your home music collection on a phone, but also shares your home TV stream, or photo album, to another PC or mobile device. Orb recently signed a deal to bundle its software with a Hauppauge TV tuner card, turning it into a low cost Slingbox.
Mercora provides a fascinating parallel with News Corp.’s MySpace, which owes its success to on-demand streaming music. Recording rights holders and composers are keen to see MySpace pay a share of royalties, which News Corp. doesn’t believe it should do. Mercora’s decision to build its technical infrastructure around paying rights holders - albeit in tiny amounts each time - makes MySpace’s stance harder to maintain. And News Corp. is a lot wealthier than Mercora.
MySpace May be Worth $15 Billion
Excerpted from Reuters Report
MySpace, the social-networking website, could be worth around $15 billion within three years, measured in terms of the value created for shareholders of parent company News Corp., a Wall Street media analyst forecast on Wednesday.
RBC Capital analyst Jordan Rohan said he had come away from a meeting with Fox Interactive, the managers of MySpace, believing that "media investors may not fully appreciate what has already been done with MySpace or what may lie ahead."
"$15 billion in a few years? It is possible," Rohan wrote in a research note to clients.
MySpace was acquired by Rupert Murdoch’s News Corp. for $580 million less than a year ago. It now boasts more than 90 million active users.
Rohan said MySpace could demonstrate a value of between $10 billion and $20 billion within a few years. Acknowledging he was making an "audacious claim" he justified the forecast on the basis of MySpace’s "raw, unprecedented user/usage growth."
He also said the site’s "massive" international appeal, capacity to become "an intellectual property distribution powerhouse" and experienced management team lent credibility to his prediction.
Rohan based his view on an extrapolation of estimates for the value of Internet properties ranging from $1 billion for both MySpace rivals YouTube and Facebook to the market capitalization of $120 billion for Google.
He said MySpace was currently sold out of space for video advertising. The CPM, or price per thousand ad views, on a premium show such as Fox’s "The Simpsons" runs as high as $35-40 on MySpace, he said.
MySpace management believes its video service ranks No. 3 among US web users behind Yahoo and YouTube, Rohan said following the Tuesday meeting with Fox officials.
Britain is adding 25,000 MySpace member profiles per day. Australia has 2 million unique users. MySpace France began public testing three weeks ago, he noted.
MySpace is internally developing a MySpace Web application to run on mobile phones that should be launched in three to four months with a major US carrier, he said.
Skype Offers Credit for Referrals
Excerpted from Tech Digest Report
This seems like a good way to bump up your Skype phone time - as long as you’ve got a few computer-savvy mates - refer your friends for a Skype account and DCIA Member Skype will credit your own account.
There’s no catch - if you’re an existing user, simply get three friends to sign-up for Skype and get 30 free minutes of SkypeOut credit.
In addition, you and your friends will go into a drawing to win gadgets from Skype-friendly firms, including Sony, Philips, Logitech, USRobotics, Plantronics, and SanDisk.
The offer lasts until midnight October 19th. Visit this page and enter three email addresses - and if they sign up, you’ll get the credit.
Feast of Fun with Flo
Excerpted from The Star Report
DCIA Member PlayFirst has done it again. Flo is back to serve up more fun in this sequel to the highly addictive game from a couple of years back.
For those of you who do not know Flo, she was once a corporate accountant stuck in the rat race and grew tired of the stressful and monotonous lifestyle. She chose to be her own boss and run her own restaurant – that was in Diner Dash. That game required intrepid gamers with quick reflexes to help Flo open a chain of five-star restaurants.
In this sequel, she is called back by her restaurant owners because they are being threatened by the greedy Mr. Big. Mr. Big is a shady character who is bent on monopolizing the food market and plans to open a Mega Multiplex Food Plaza.
To acquire the space for his plaza he has hiked up the rent for all the restaurants on his property, hoping to force the owners to close shop and leave the way clear for his grand scheme. Flo gets wind of his dirty tricks and is game again to defend her comrades.
There are more tasks, and of a greater variety than in the original. Upon completing each level, you will be able to decide how to improve the atmosphere of the restaurant from a list of decoration options. Complete a level with expert scores and you will be able to unlock the secret decor selection.
Play Diner Dash 2 as well as over 40 premium full-version PC games without buying a CD by clicking here.
The Small Screen’s Very Own Film Festival
Where better to watch the first annual Small Screen Film Festival finalists than on the small screen? Aimed at empowering filmmakers across the globe with new platforms to access wider audiences, DCIA Member Indie911’s Small Screen Film Festival is taking place not at a movie complex but in cyberspace, allowing audiences anywhere on the globe to participate.
Indie911’s Small Film Festival features thirty-one films from six countries including the Iraqi film "Drifting On the Wind" directed by Maythem Ridha and grand-prize winner "Lucky" by UK director Avie Luthra.
"Distribution is the last thing you think about as a short filmmaker," said Luthra, "You just want to get it made and make it well. Indie911 is a real gift. Not only does it provide an excellent platform for showing shorts, but it also thrives on independence – just like every short filmmaker."
Indie911’s Small Screen Film Festival is one of few international film festivals catering to content on the small screen for short films. "The short is an art-form unto itself," contends Justin Goldberg, Founder & CEO of Indie911, one of the largest online networks for independent filmmakers and musicians. "The mobile short will soon take its place in the evolution of entertainment."
Wallop Adds $10 Million and Launches Beta
Wallop this week completed a $10 million second round of venture-capital financing led by Norwest Venture Partners and launched its beta product, a breakthrough innovation in the social networking space with a unique business model.
More than four years of research at Microsoft combined with Wallop founders Karl Jacob and Sean Kelly’s vision for leapfrogging existing social networks, led Wallop to focus on the larger trend of self-expression online with the simplicity people experience in the real world.
Wallop taps into the $3 trillion-a-year offline industry of self-expression as it moves online by delivering a robust platform for the more than two million Flash professionals to easily generate revenue doing what they love, in a unique marketplace.
Wallop’s model empowers users to further enhance their online image by purchasing ready-made, interactive forms of self-expression, or what Wallop calls "Mods" from Flash developers and designers who are members of the Wallop Modder Network (WMN).
Thanks to this rapidly growing group of Modders, Wallop’s marketplace is populated with original Flash content, such as interactive characters, stylistic backgrounds, graphical features, and games, ready for purchase by the broad market of Wallop consumers.
Monetizing self-expression is already a successful business online, and with Wallop’s business model, Modders get 70 percent of the revenue to easily earn income on their own schedules.
Peace Between P2P Users & Hollywood
Audible Magic has released a new add-on module upgrading its CopySense Network Appliance to help universities enforce network policies as well as filter unlicensed sharing of copyrighted works.
"We’ve spent years working closely with educational institutions to help them find peace between students and the entertainment industry," said Audible Magic CEO Vance Ikezoye. "Furthering the mission of education is our goal with these new features."
The new Education and Administration Module, available for both existing and new installations of the CopySense appliance, allows campuses to determine their own network use policies and select from a range of actions in response to violation attempts.
Ikezoye remarked, "Institutions have been telling us they not only want to prohibit unauthorized network traffic, but they also want to gently educate and motivate students toward appropriate network use. In any of these scenarios, the institution can choose to keep user identities anonymous and just let the CopySense Network Appliance do the work without collecting user information."
Morpheus Loses in Court, May Appeal
Excerpted from Beta News Report by Ed Oswald
File-sharing network Morpheus lost a crucial case earlier this week. A US District Judge ruled that StreamCast, the service’s parent company, aided copyright infringement.
StreamCast was the only P2P service to continue litigation after the Supreme Court’s Grokster ruling.
"The court’s ruling is disappointing," the company said in a statement. "StreamCast will consider its options, including appealing the decision. In the meantime, Morpheus will continue to discourage users from infringing upon copyrighted works."
The Recording Industry Association of America (RIAA) lauded the ruling, saying the court’s ruling clearly indicates that P2P networks are responsible for the actions of their members.
Another major P2P network, LimeWire, was sued by the RIAA in August.
In an interesting twist, LimeWire has countersued, claiming the RIAA was using its copyrights to bully companies it does not approve of out of the Internet distribution business.
LimeWire Countersues Record Companies
Excerpted from PC Advisor Report by Nancy Gohring
P2P file-sharing software developer LimeWire has countersued the biggest record companies, charging them with anti-competitive behavior.
The suit, filed Monday in the US District Court for the Southern District of New York, comes on the heels of a suit filed by 13 record companies against LimeWire, accusing the developer of music piracy and demanding damages that could amount to $476 million.
LimeWire now charges the record companies with colluding to create a monopoly over the digital distribution of copyrighted music. The record companies "have engaged in these unfair business practices for the specific purpose of eliminating sources of decentralized P2P file sharing and acquiring a monopoly over digital distribution of commercially valuable copyrighted music and movie content", the lawsuit reads.
The alleged unfair business practices include collusion among the record companies to price their licensing rates in such a way that independent music sellers can’t afford to stay in business, LimeWire said.
LimeWire added that a since-changed policy at the record companies of requiring licensees to negotiate only with certain companies that represent a group of record labels resulted in artificially high licensing fees.
LimeWire also charges the record companies with trying to extend their monopoly by forcing music distributors to work only with their affiliated filtering system supplier. LimeWire says it developed a filtering application to prevent unauthorized downloading and encourage licensed content purchasing. But the record companies refused to give the developer access to the metadata that uniquely identifies each song in order for the filtering system to work, LimeWire claims.
The company is asking for a jury trial. The record companies named in the suit include Arista, Atlantic, BMG, Capital, Electra, Interscope, Laface, Motown, Priority, Sony BMG, UMG, Virgin, and Warner.
The suit follows some high-profile settlements by other leading P2P networks. In July, Kazaa, distributed by DCIA Member Sharman Networks, agreed to pay at least $100 million to four record companies and an additional amount to motion-picture companies to settle lawsuits. Earlier this month, eDonkey, distributed by DCIA Member MetaMachine, agreed to pay $30 million to settle similar suits.
eDonkey Still Brays Despite Being Shut Down
Excerpted from Inquirer Report by Chip Mulligan
The earlier news of LimeWire’s legal wranglings with the RIAA reminded me of something I’d meant to look into. How had the world of file sharing changed since the RIAA shut down eDonkey 2000 and forced its owner MetaMachine to pay $30 million?
The eD2K network does not have a single group of centrally-run servers that can be shut down, and there are multiple clients that can connect to it, such as eMule hosted on SourceForge.
eMule version 0.47c quickly found around 150 active servers, and connected to "Big Bang," an eD2K host with multiple servers and a website.
So has the RIAA closure had an effect? I looked for a Billboard Top 10 hit. According to Billboard.com, in top place is Justin Timberlake with the single "sexyback" and the album "futuresex/lovesounds."
610 identical copies of a 5MB MP3 of the single, 84 of the video, and 150 individual files, plus 116 perfect copies of the same RAR version of the 2CD album were returned from a single eMule search.
With the servers reporting over 18.3 million users logged on and 2.2 billion files shared at the time of press, there are clearly those who do still actively file-share over the "closed" eD2K network, so it rather puts the RIAA’s bold statements about the legal result, such as "With this new settlement, another domino falls," into context.
Coming Events of Interest
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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 digital business models and legal issues impacting music. The DCIA will present a special panel on P2P featuring Chip Venters, CEO, Digital Containers; Joey Patuleia, VP, Artist Relations, INTENT MediaWorks; Daniel Harris, CEO, MediaPass Network; Michael Weiss, CEO, StreamCast Networks; John Desmond, VP, MediaSentry Services, SafeNet; and Eric Garland, CEO, BigChampagne.
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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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Webcasts, Downloads & Ring-Tones – October 11th in San Francisco, CA. The National Association of Record Industry Professionals (NARIP) presents an overview of the legal and practical aspects of the NEW recording industry Whether you are an artist, manager, lawyer, record executive, or producer this music business overview is essential to understanding new income streams such as digital downloading, webcasting royalties, mobile music deals, video games and certain types of branding.
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P2P MEDIA SUMMIT LA – October 23rd-26th in Santa Monica, CA. The Fall DCIA Conference & Exposition will cover policy, marketing, and technology issues affecting commercial development of this emerging high-growth industry. Exhibits and demonstrations will feature industry-leading products and services. For sponsor packages and speaker information, please contact Karen Kaplowitz at 888-890-4240 or karen@dcia.info. Plan now to attend.
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Digital Hollywood Fall – October 24th-26th at Loews Santa Monica Beach Hotel in Los Angeles, CA. The preeminent digital media and entertainment conference in the country. This year featuring more than 70 different sessions and over 450 speakers. The DCIA will moderate "Track I: Next Generation P2P Music and Film - DRM, Paid for Pass-Along and Other Legal Distributed Computing Models and the Entertainment Industries."
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Digital Hollywood Europe in London – November 29th - December 1st at ExCeL London, The Docklands. The DCIA will moderate two P2P panels featuring Ingjerd Jevnaker, Marketing Manager, RawFlow; Daniel Harris, Founder, Kendra Initiative; Bruce Benson, Senior Managing Director, FTI Consulting; Les Ottolenghi, Founder & CEO, INTENT MediaWorks; Chip Venters, CEO, Digital Containers; Daniel Klaus, CEO, Music Nation; Jonathan Friend, CTO, Friend Media Technology Systems (FMTS); Xavier Casanova, CEO, Perenety; Tom Meredith, CEO, P2P Cash; and Phil Morle, Director of Technology, Sharman Networks.
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