February 25, 2008
Volume XXI, Issue 2
P2P-Next Receives Multi-Industry Backing
P2P-Next, a pan-European conglomerate of industrial partners, media content providers, and research institutions, this week received a multi-million dollar grant from the European Union. The grant will enable the group to carry out a research project aiming to identify the potential uses of peer-to-peer television (P2PTV) for the future. This move, in some ways, echoes the US IRIS project.
The more than twenty partners, including AHT International, the BBC, Delft University of Technology, the European Broadcasting Union (EBU), and Oversi, intend to develop a Europe-wide "next-generation" Internet television distribution system, based on P2P and social interaction.
The P2P-Next project will run over four years, and plans to conduct a large-scale technical trial of new media applications running on a wide range of consumer devices.
It is the intention of the project to allow audiences to build communities around their favorite content via a fully personalized system. This technology could potentially be built into video-on-demand (VOD) services, and plans are underway to test the system for major broadcasting events.
The project has an open approach towards sharing results. All core software technology will be available as open source, enabling new business models. P2P-Next will also address a number of outstanding challenges related to content delivery over the Internet, including technical, regulatory, and commercial issues.
Luis Rodriguez-Rosello , head of networked media at the European Union, said, "This ambitious project is investigating new ways to deliver video using the P2P paradigm making it possible for everybody to distribute videos from anywhere to any number of people anywhere in the world."
Dr. Johan Pouwelse from Delft University of Technology added, "P2P technology already dominates Internet traffic and is key to our research and development mission of making near-zero cost TV broadcasting available to all Europeans."
The DCIA plans to partner with P2P-Next on upcoming projects and events.
EU Invests $22 Million in Open P2P Project
Excerpted from CNET News Report by Matt Asay
It's ironic how different Europe can be from the United States. While the US continues to engage in a mindless rampage against the future of digital distribution, Europe is actually investing in that future.
To be exact, it's putting $22 million toward P2P technology, in a BitTorrent-minded project called P2P-Next.
Surely European broadcasters are against the move, right? After all, research suggests that 50% of those using BitTorrent are doing so to "steal" TV shows.
European broadcasters believe this situation presents an opportunity rather than a threat: one of the biggest names taking part is the BBC, which will use the new BitTorrent client to stream TV programs.
Other partners in the P2P-Next project are the EBU, Lancaster University, Markenfilm, Pioneer Digital Design Centre, and VTT Technical Research Centre of Finland. The main goal is to develop an open-source, BitTorrent-compatible client that supports live streaming.
The current project will help broadcasters find better ways to reach the TV-downloading online audience, and offer high quality on-demand television.
Now if only we could work on US industries threatened and potentially enriched by digitization and downloading.
The software industry might actually more fully embrace open source. The entertainment industry would find ways to monetize the heavy demand for its products, as evidenced by file sharing.
The EU apparently recognizes that the way to monetize P2P is to get out in front of it and enable it on superior terms to those available by more illicit means. Imagine that.
Report from CEO Marty Lafferty
 We are very pleased to announce our second wave of speakers and sponsors for the upcoming P2P MARKET CONFERENCE.
This first-of-its-kind DCIA event is scheduled for Friday March 14th at the Princeton Club of New York, and is being held in conjunction with Media Summit New York (MSNY).
Our roster of newly confirmed speakers, with top P2P industry executives now attending from every continent, is led by BitTorrent's recently appointed CEO, Doug Walker.
This will be Doug's first address at a DCIA-sponsored industry function, and we are thrilled to have the benefit of his participation.
This prestigious group also includes 1-Click Media's Arthur Madrid, Azoogle Ads' Don Mathis, Brand Asset Digital's Joey Patuleia, DoubleV3's Benjamin Masse, Microsoft's See-Mong Tan, Pando Networks' Laird Popkin, RawFlow's Mikkel Dissing, SafeNet's David Hahn, Trispen Technologies' Jaco Botha, TVU Networks' Kap Shin, Ultramercial's Dana Jones, Verizon Communications' Doug Pasko, and Zattoo's Sugih Jamin.
In addition to our primary focus at this global gathering on commercial development, we will also invest time to discuss the renewed debate over net neutrality, exploring the latest arguments from content providers and ISPs, and current actions by regulators and consumer advocates around the world responding to these forces. Stay tuned for more announcements about this aspect of the conference.
Previously announced speakers include Abacast's Mike King, AHT International's Praveen Bhutani, DigitalContainers' Chip Venters, Frankfurt Kurnit Klein & Selz's Rick Kurnit, FTI Consulting's Bruce Benson, JamboMedia's Rob Manoff, Javien Digital Payment Solutions' Leslie Poole, KlikVU's Lowell Feuer, Manatt's Bill Heberer, MediaDefender's Chris Gillis, Media Global Intertainment's Jakob Schwertz, MediaPass Network's Daniel Harris, Oversi's Eitan Efron, Pando Networks' Robert Levitan, PeerApp's Frank Childs, P2P Cash's Tom Meredith, QTRAX's Allan Klepfisz, Rebel Digital's Robin Kent, RightsFlow Entertainment Group's Patrick Sullivan, TAG Strategic's Ted Cohen, Unlimited Media's Memo Rhein, Velocix's Phill Robinson, and VeriSign's Steve Condon.
The P4P Working Group (P4PWG) will be convening in New York just before the P2P MARKET CONFERENCE to review results from its currently in-process field test to demonstrate a new method for reducing ISP network resource consumption at the same time as increasing throughput for P2P payload delivery. The P4PWG will also be discussing expansion plans along several dimensions and will make its report at the P2P MARKET CONFERENCE.
The P2P MARKET CONFERENCE will highlight progress in advancing new business models and revenue generation at various levels of the emerging distributed computing industry.
In the business-to-consumer (B2C) arena, developments are now moving beyond conventional ad-supported, subscription, and paid download methods of monetizing the distribution of copyrighted works, as value propositions shift in response to increasingly empowered users.
In the business-to-business (B2B) arena, work is also now underway that similarly reflects the value of improved quality of service (Qos), speed of delivery, and dramatically reduced costs for participants at multiple points in the distribution chain, who are taking advantage of the latest P2P-related offerings.
The P2P MARKET CONFERENCE is being held in conjunction with Media Summit New York (MSNY), and registration for both events yields a substantial savings for attendees. For more information, please visit www.dcia.info/activities/p2pmcny2008.
Pre-registration rates, which save attendees up to $325 end March 7th. To register, please visit www.dcia.info/activities/p2pmcny2008/register.html.
P2P MARKET CONFERENCE sponsors include FTI Consulting, Javien Digital Payment Solutions, and QTRAX. For sponsor packages and speaker information, please contact Karen Kaplowitz, DCIA Member Services, at 888-890-4240 or karen@dcia.info. Share wisely, and take care.
P2P - The Next Big Thing
Excerpted from Globe & Mail Report by Harvey Schacter
Get set for the P2P Economy. What sideswiped music companies, Hollywood studios, and newspaper companies could soon strike you, as individuals both consume and create content in peer-to-peer (P2P) sharing that undercuts traditional industries.
P2P tops the list of twenty transformations on the Harvard Business Review's annual Breakthrough Ideas list. Online expert Stan Stainaker says P2P is already being felt in financial services, as websites like Kiva.org extend micro-credit, and can be expected to hit energy and other industries.
Obama Leaves Clinton in Dust on Web
Excerpted from MediaPost Report by Mark Walsh
The good news for Hillary Clinton online last month: traffic to her campaign site more than tripled to 1.1 million as the build-up toward Super Tuesday sent voters to candidate sites in droves.
The bad news: Traffic to BarackObama.com grew fivefold to 2.2 million in January, leaving Clinton trailing by a much wider margin in attracting visitors online.
Obama and Clinton remained the top political draws on the web last month, according to new data from comScore.
But whereas Obama and Clinton stood relatively close in generating traffic in December (417,000 to 378,000), the once-underdog candidate has now doubled his lead over the former First Lady. The surge only reinforces the long-standing advantage Obama has enjoyed in attracting online support through his appeal among younger voters and independents.
Beyond site traffic, Obama is well ahead of Clinton in just about any Web 2.0 metric that has emerged during the 2008 election: Facebook supporters (589,224 to 120,216), MySpace friends (287,715 to 185,709), and YouTube views (21.1 million to 7.6 million).
Perhaps most important, Obama has been able to use the Internet as a key fund-raising tool. Of the $32 million his campaign raised in January, $28 million came from mostly small donors online.
On the Republican side, presumptive nominee John McCain showed the biggest gains last month, with traffic to his site more than tripling to 596,000 from 165,000 visitors. Even with that increase, however, he still trailed the online audiences for Internet favorite Ron Paul, Mike Huckabee, and ex-presidential hopeful Mitt Romney in January.
Internet is the New TV
Excerpted from Los Angeles Times Report by Alex Pham & Dawn Chiemelewski
Buyers of this year's most advanced televisions might notice a curious new feature - a little jack that connects the sets directly to the Internet.
The web connections could eventually upend the way TV programs have been distributed for decades. The goal is to one day replace every set-top device - cable boxes, TiVos, media center computers, stereos and game consoles - so all you need is a TV set that does it all, via the Internet.
As broadband gets faster, TVs get more powerful and entertainment companies put more content online, viewers might be able to call up any show, movie, song, or amateur video at any time without needing local TV stations or cable subscriptions.
"An Internet connection gives consumers the opportunity to define the experience they want on their TVs," said Randy Waynick, SVP of Marketing for Sony Electronics, which has signed deals to bring content from CBS Interactive, Yahoo, Sports Illustrated, and others to its web-enabled Bravia sets. "This is TV at your schedule.
"Manufacturers such as Sony, Sharp Electronics, and Panasonic Consumer Electronics see a web connection as a competitive edge.
But it's also a foothold in the future of television. Millions of Americans are planning to purchase new sets ahead of the national transition to an all-digital broadcast in February 2009, when TV stations will abandon their old analog frequencies. Households that still tune in to free over-the-air TV will need a new TV or digital converter box to watch shows.
"The Internet is the new ether," said Paul Liao, CTO for Panasonic. "First you had broadcasting over the air. Then you had cable, and then satellite. Now fiber optics are bringing programming to the TV.
"For networks, providing shows via the Internet broadens their potential audience and creates opportunities for interactive advertising.
"When you do these direct deals between TV manufacturers and content providers, the entity getting squeezed out is the middleman," said Will Richmond, President of Broadband Directions, a market intelligence and consulting firm.
"Consumers benefit when there's choice, competition, and better technology," he said. "We're now getting a perfect storm of all three."
Zennstrom and the TV Revolution
Excerpted from BBC News Report by Rory Cellan-Jones
Niklas Zennstrom must be the most important digital entrepreneur to have emerged in Europe over the last five years. He has given us free music with the Kazaa file-sharing service, free phone calls through Skype, and is now touting free television through his Joost service.
He has pioneered P2P technologies that threaten to disrupt the music, telecommunications, and television industries.
Last year Joost raised $45 million from investors - after initial funding from Zennstrom and his Skype co-founder Janus Friis - to launch a platform enabling TV firms to put their content in front of a global audience.
Joost is going to take longer to reach a big audience than Skype, partly because of the need to reach complex deals with media owners.
Zennstrom believes this global platform can prosper by serving viewers with all sorts of special interests, from fly-fishing enthusiasts to gadget fans.
2007 was supposed to be the year that internet television took off, with the launch of a whole clutch of services with wacky names and big ambitions.
But two things have happened - the viewers have been slower to take to online TV than expected, and the big established broadcasters have launched their own platforms, keen to avoid the mistakes of the music industry which handed the digital initiative to Apple's iTunes service.
The Swedish serial entrepreneur has a track record of producing services that people want to use and tell their friends about.
CollegeHumor to P2PTV Leader Joost
CollegeHumor, the definitive source for irreverent student humor and leading online source of original comedy videos, this week announced that it will bring its high-quality original videos to peer-to-peer television (P2PTV) leader Joost, the world's first broadcast-quality Internet television service.
CollegeHumor's original videos will be made available on Joost through the newly launched "CHTV: CollegeHumor Original Videos" Joost channel.
Initial programming includes a collection of CollegeHumor's most popular original series, including "Street Fighter: The Later Years," "The Michael Showalter Show," "Prank War," and "Hardly Working."
Additionally, CollegeHumor will provide hit video satires "Brohemian Rhapsody," "Minesweeper: The Movie," and "Facebook Off." Moving forward, as CollegeHumor continues to launch new original videos the company will continue to make them available to Joost viewers through the CHTV Joost channel.
"We are excited to be partnering with Joost to launch the CollegeHumor channel because it gives us an opportunity to introduce our original videos to a new, savvy audience," said Ricky Van Veen, Co-Founder & Editor-In-Chief of CollegeHumor. "Joost's high quality, full-screen platform is one of the few places where our high-definition (HD) widescreen originals can look as good as they do on CollegeHumor.com."
Yvette Alberdingk Thijm, EVP of Content Strategy & Acquisition for Joost, said, "CollegeHumor is a pioneer in online video entertainment, and a perfect partner for Joost. Their shows - which are written and produced specifically for web audiences - are hysterical, and because of their commitment to high production values, they look great on Joost."
Founded by Janus Friis and Niklas Zennstrom, Joost combines the best of TV and the best of the Internet by offering viewers a full-screen audiovisual experience enhanced with the choice, control, and flexibility of Web 2.0.
Joost is the first online, global P2PTV distribution platform, bringing together advertisers, content owners, and viewers in an interactive, community-driven environment.
FiOS Campaign "Blows Away" Competition
Excerpted from Marketing Daily Report by Laurie Sullivan
Movie-maker Michael Bay pushes on a remote detonator to blow-up a barbecue grill and swimming pool, becoming the first celebrity to kick-off a series of television spots for Verizon FiOS TV and FiOS Internet that the carrier plans to run this year.
In the 30-second FiOS Internet ad that began running Sunday, Bay - known for directing "Transformers," "Pearl Harbor," "Bad Boys" and "Armageddon" - spoofs his supercharged Hollywood persona by blowing up things throughout a contemporary home, demonstrating that Verizon "blows away" cable Internet service with upload and download speeds that are exponentially faster.
The ads aims to convey that "when it comes to the Internet, there's nothing more powerful than fiber optics straight to the home," said Geoff Walls, Executive Director of Marketing at Verizon. "We wanted to talk about the incredible difference fiber provides when uploading information - about 25 times faster than cable, and a superior Internet experience."
Walls says Verizon wants consumers to understand that if they use anything other than FiOS Internet service they may get acceptable download speeds, but insufficient speeds on the upload.
Fiber optics provides Internet subscribers with Internet download speeds of up to 50 megabits per second (Mbps) and upload speeds of up to 20 Mbps.
MiniNova Hits 4 Billion Downloads
Excerpted from Slyck.com Report by Thomas Mennecke
There are two juggernauts of the BitTorrent community, The Pirate Bay and MiniNova. While The Pirate Bay takes most of the headlines for the world's largest tracker, MiniNova has flown quietly under the radar and has become the world's largest indexer.
With a clean interface and a search engine that returns relevant results, MiniNova has accumulated a following that as of today downloaded their 4 billionth torrent file.
At MiniNova's start, Niek van der Maas, Business Developer & Founder of MiniNova, conceptualized his creation as a mere side project.
"When we launched back in January 2005, we were the first BitTorrent site to offer a sophisticated search engine, sorting of search results, and categorization," Niek said. "We try to keep our lead by innovating and extending our website with new features. Many things changed in the past years, but one thing will always be the same: we try to offer the #1 P2P directory and search engine."
The MiniNova concept caught on. By May 2006, MiniNova's fledgling user base downloaded 400 million torrent files. Eight months later, in January 2007, Niek's creation would hit1 billion downloads - an achievement reached just days shy of its two-year anniversary.
The time between each billion accelerated in 2007 and, by May, MiniNova accounted for its 2 billionth download. MiniNova's growth was now stratospheric.
Only 4.5 months later, in November 2007, MiniNova reached the 3 billion torrent milestone. By now, MiniNova had confirmed its presence at one of the leading BitTorrent trackers. To accommodate its increasing popularity, server power was added.
Server power is great for downloaders. However, what about giving back to the artists?
Taking advantage of MiniNova's position as one of the top ranked websites, Niek launched MiniNova Content Distribution (CD), an avenue for any aspiring artist to seed his/her work. The goal of the initiative was to allow any computer user, even with marginal skill, to expose his/her work to the world with just one mouse click.
"Many people are interested in publishing their content on MiniNova, but that's not an easy job. Most content producers have no technical knowledge of P2P and BitTorrent at all. We're changing this with the introduction of CD."
Today, MiniNova's users have downloaded their 4 billionth torrent file. That places MiniNova in a position that exceeds iTunes, and MiniNova hopes to support level-minded distribution rather than reactionary copyright protection.
"A site that captures a traffic profile and audience like MiniNova is in a better position to negotiate deals than start-ups. In the coming months, we'd like to extend our Content Distribution (CD) service and allow more premium publishers to share their content.
It's clear that BitTorrent is here to stay. The protocol will probably evolve and be extended in several ways. P2P-streaming of audio and video content will be increasingly popular, making file-sharing easier than ever. Hopefully ad-supported downloads will be supported by all major content studios in a few years. We will do our utmost to be on top of these developments."
Becoming one of the top-ranked sites on the Internet is no small task, especially when many similar sites are facing litigation from the entertainment industry. The challenges include complying with DMCA requests, providing an insatiable supply of server power/bandwidth to millions of users, frequently upgrading software/hardware, and constantly innovating.
"It has changed my life, and those of my colleagues, in many ways," Niek reflected. "The past three years were very exciting, and there is no way I would have missed this experience. This all would not have been possible without the support of our users and moderating team! We are very grateful to everyone who helped us accomplish this major milestone."
MiniNova has finally reached 4 billion downloads. With an exponential rate of growth, 8 billion downloads could arrive by the end of this year.
P2PTV Could Cure Ailing Hollywood
Excerpted from MediaPost Report
Hollywood, which celebrated the 80th annual Academy Awards this weekend, has largely ignored the looming threat/opportunity of the Internet. This is a mistake, the Economist says, because media is slowly being subsumed by the Internet. Hollywood, whether it wants to or not, will be required to embrace the digital revolution.
Once upon a time, Tinseltown worried that TV would destroy the movie business. It did not. That said, DVD sales are down 3% year-over-year, while box-office revenues are flat. But production costs keep going up as writers, directors, and actors demand more money from each film.
These trends make financing harder to come by. Meanwhile, millennials, or those raised during the digital revolution, aren't buying DVDs or CDs; they're downloading, often times without authorization.
Hollywood is ignoring the trend while trying desperately to cling onto decaying DVD sales. The problem of unlicensed downloading will eventually be sorted out.
But in the meantime, instead of turning away, Hollywood needs to recognize that on-demand entertainment is the future, so they should be renting and selling films over the web using peer-to-peer television (P2PTV).
LimeWire Taps Redeye Content
Excerpted from Digital Music News Report
LimeWire is defending itself against a long-running and massive recording industry lawsuit. But the peer-to-peer (P2P) giant is also striking paid content deals along the way.
The latest involves Redeye Distribution, which brings roughly 20,000 tracks from 200 labels. That includes music from Lisa Loeb, Widespread Panic, Afroman, Chuck D, and Bell X1, among many others. Downloads from those artists are being loaded into the LimeWire Store, a planned section for paid purchases.
That could alleviate some legal pressure, and help LimeWire build a case for its more legitimate uses. But LimeWire is mostly used for its seamless, P2P swapping capabilities, as well as its massive, free content selection.
Redeye joins previous licensees Ingrooves, Nettwerk Productions, and IRIS. The LimeWire application - owned by Lime Wire LLC - is also presenting a stable of Redeye acts at South by Southwest (SXSW) in Austin, TX, another industry-friendly move. LimeWire first announced its web-based store in August of last year.
A Free & Legal P2P Music Service
Excerpted from Cool Tech iAfrica Report
Where can consumers find "legal" peer-to-peer music software?
Stating the obvious, peer-to-peer (P2P) software is not "illegal" - it's what you share with others that makes the whole deal legitimate or not.
In other words, you can use any P2P software and if the files you share are authorized, then you're fine. Of course, your real question is whether there's a P2P service that actually has licensed music files on it.
Fortunately, there is. It's called QTRAX.
It's still in the beta phase and busy ironing out some problems, but the important thing is that - according to QTRAX - the music files that you download from them are free and, more importantly, legal.
The artists of the songs and the record labels apparently get compensation for the songs you download through ads sold on the service.
It sounds too good to be true and time will tell whether the record labels continue to support QTRAX, but for now, it's time to find that favorite song of yours!
DoubleTwist Beta Makes Facebook P2P
Excerpted from DailyTech Report
DVD Jon, or Jon Lech Johansen, is one of the most famous hackers in recent history, claiming the DVD encoding and Apple's FairPlay digital rights management (DRM) as two of his highest profile encryption victims.
His experience cracking these formats caught the eyes of DoubleTwist Ventures, whose goal is to allow consumers to transfer media from any device to any other device unhindered.
With Mr. Johansen's help, DoubleTwist developed the desktop client, DoubleTwist Beta, which allows music and media to be shared among a large list of players, regardless of the encryption scheme on the files involved.
It also allows files to be shared over social networking sites via tie-in applications.
DoubleTwist Founder & CEO Monique Farantzos argues that media files should be more like e-mail - it shouldn't matter the service you create the file on or the type of file, or the hardware: all files should work together seamlessly. She worked with Mr. Johansen and about ten others to develop the software during the past eight months.
The 20-something Mr. Johansen is pleased that DoubleTwist recruited him as he feels that it's an opportunity to bring his success to a wider audience. He says, "It's one opportunity to write something for your website for use by a couple thousand geeks," and he goes on to explain how DoubleTwist is different, stating, "The goal was to make something your parents would use."
When you plug in an iPod, Zune, or other player, the client automatically recognizes your files and lets you drag them onto your computer, or drag them onto other players, bypassing the local protection schemes.
You can also add files stored on your hard drive onto players, or back-up files from your player onto your hard drive. The system means that files bought on iTunes are freed from Apple's control and can be copied to virtually any device.
The client automatically re-records iTunes files that you own into the MP3 format - and it will not touch files you don't own. The client is also compatible with many phones. Better yet, the client interfaces with Facebook via a tie-in application called TwistMe, and lets you share files with users you've befriended.
The Facebook application makes file sharing as simple as drag-and-drop, and once the direct transfer is complete, it will appear in your friend's desktop client.
DoubleTwist has plans to interface its client with all major social networks, creating a new revolution in P2P. Ms. Farantzos sees this capability as key, stating, "It closes the loop between the web, devices, and the desktop."
She says the site isn't trying to target one brand of DRM, but rather DRM in general. She adds that her company is following an industry-wide trend evidenced by companies such as Amazon and Simply Audiobooks, which have gone DRM-free or partially DRM-free.
Ms. Farantzos says, "Digital media is dominated by two players, Windows Media and iTunes, and they each have their own agenda...we see ourselves as the Switzerland of digital media. We are format and device agnostic."
Now Facebook users can enjoy a revolutionary piece of software that both breaks down barriers and provides a unique P2P experience.
Ultramercial Does Engagement Pricing
Excerpted from ClickZ News Report
In the wake of coverage of VideoEgg's new per engagement pricing strategy, we heard from established engagement player Ultramercial.
Company rep Lori Jones pointed out that every person who sees Ultramercial's "Day Pass" interstitial unit engages with the ad, and she indicated it charges CPMs of $50 and up for its publishers.
"If the 75 cents cost-per-engagement quoted by VideoEgg is accurate, they're going to do very well," she said. "As a comparison, Ultramercial charges our advertisers on a CPM basis for our full-screen premium access ads. This works out to be about 5 cents to 25 cents per engagement, which lasts on average 50 seconds."
For the uninitiated, Ultramercial's trademarked unit lets publishers like Salon and TheStreet, as well as P2P distributors, offer ordinarily paid-content for free by requiring site visitors to click through the ad experience. Just a reminder that some ad formats are inherently sold on engagement.
Javien CEO Reacts to MySpace Plan
Excerpted from Wired News Report by Eliot Van Buskirk
Rumor has it that MySpace will soon offer free, ad-supported music from all four major labels, in exchange for a revenue split along the lines of what the site already does with Sony BMG music videos.
One would imagine that the CEO of the company that processes micro-payments for MySpace's SnoCap-created MyStore would resist such a plan, and one would be right.
Leslie Poole, CEO of Javien Digital Payment Solutions, issued the following statement explaining why he thinks MySpace should combine a free model with its existing pay-per-song model, rather than going 100% free and ad-supported:
"Just because the advertising-supported business model has worked for some of the industries that have made the move into the e-content space, like newspapers, for example, doesn't mean that it will necessarily work for the music industry.
As a top e-commerce solution provider for online and mobile music sellers, we work in close connection with companies who want to leverage the most effective business model to sell their music online. From our experience, it does not seem that an ad-based model alone is strong enough to support music e-commerce, let alone to revamp the industry.
There are a couple of reasons why the ad-based model is unlikely to work for the music industry, but the main explanation is that the target music industry audience post-college, financially independent, tech-savvy, 24 to 35 year olds are more likely to pay a minimal fee for music delivered in an easily manageable format than to listen to music with front-ended advertisements.
Ad-based models typically allow listeners to access the music on specific sites but don't allow them to convert, save or download the music.
The average on-the-go consumer wants to put it on their iPod, have it in their stereo, and play it in settings where they may not have Internet access without a download option and combined with the additional annoyance of short advertising clips, listeners are going to turn to other music providers, even if it isn't free.
The rumored MySpace ad-based site is an interesting idea in theory, but in order to draw in enough unique visitors to make it worthwhile for the record companies, I think ultimately a combined ad-based and priced model will be more successful.
Allowing users to listen on the site with ads and also providing the option to download for a fee will combine the best features of both options.
The bottom line is that while free music is nice, people want music when, and how, they want it, and ad-based models can't provide that experience."
New P2P Class Action Filed Against Comcast
Excerpted from Telecommunications Reports Daily Report
The allegations that Comcast Corp. has interfered with subscribers' P2P file-sharing communications continues to trigger requests for government intervention, this time in the form of a class action lawsuit against Comcast of the District LLC.
The law firm of Gilbert Randolph LLP said it filed the action this week with the Superior Court for the District of Columbia on behalf of Dr. Sanford Sidner and all district residents who have subscribed to Comcast's high-speed Internet service in the past three years.
The filing says Comcast engaged in misrepresentation and false advertising by claiming to provide "unfettered access to all the content, services, and applications that the Internet has to offer."
Comcast's Defense of P2P Practice Meets Skepticism
Excerpted from Network World Report by Brad Reed
Comcast's critics aren't backing down after the company defended its traffic management practices in an FCC filing last week by asserting that its tactics fall well within the bounds of reasonable network management practices.
Comcast has been under fire from advocacy groups such as the Electronic Frontier Foundation and the Free Press since last October when the Associated Press reported that the company was actively interfering with some of its customers' ability to share files online.
Essentially, the AP has reported, Comcast has been employing technology that is activated when a user attempts to share a complete file with another user through peer-to-peer technology such as BitTorrent and Gnutella.
As the user is uploading the file, Comcast sends a message to both the uploader and the downloader telling them that there has been an error within the network and that a new connection must be established.
Because the message sent to users does not appear to be sent directly from Comcast, many critics have accused Comcast of sending forged or spoofed packets that they say are deceiving to consumers.
In Comcast's filing with the FCC, which came a little more than a month after FCC Chairman Kevin Martin announced that the FCC would investigate complaints about Comcast's P2P traffic-blocking, the company came out swinging against its critics by accusing them of using "extremist rhetoric" and "inflammatory hyperbole" in their accusations.
Comcast says that it only interferes with P2P traffic when such traffic is at a high enough level to "degrade the activities" for all of its high-speed Internet customers.
Comcast acknowledges in its filing that it sends out TCP reset packets to delay or stop P2P uploads. The company vehemently denies, however, that these TCP RST packets are "forged" and insists that they are only used "to signal that there is an error condition" on the network.
"This action is nothing more than the system saying that it cannot, at that moment, process additional high-resource demands without becoming overwhelmed," writes Comcast, which compares its methods with those of "a traffic ramp control light that regulates the entry of additional vehicles onto a freeway during rush hour."
Comcast's critics, however, take issue with how the company characterizes its methods. For instance, when the EFF first tested Comcast's network for TCP RST packet use, it noted that such that such packets were not present in similar tests it conducted on connections provided by AT&T, Sonic, or overseas ISPs.
As the EFF noted at the time, several other ISPs have to deal with heavy users of bandwidth on their networks, and many of them use tactics such as dynamic per-user traffic shaping that mitigate individual user's impact on their network by setting limits on how much data-per-second any user can transmit.
Additionally, the EFF says that it found no evidence in its tests to show that Comcast only targeted its jamming efforts at excessive bandwidth consumers, and that Comcast has sent TCP RST packets for BitTorrent file uploads that ranged from 500KB to 500MB.
Finally, the EFF says that Comcast's claim to use TCP RST packets only to delay the transfers of files over P2P networks is misleading because "at a low level, the forged RST packets cause the targeted TCP connections to die as soon as computers try to establish them."
Seth Schoen, the EFF's staff technologist, says Comcast's decision to employ TCP RST packets to manage heavy traffic is puzzling because it has created such a public backlash against the company.
"Comcast has been subject to class-action litigation, an FCC complaint, and lots of public criticism for doing this," he says. "It's also clear that some portion of its users are angry about the fact that this is happening, or about the way Comcast misled them about the source of the problem when they tried to ask tech support what was wrong."
The Free Press has been similarly unbowed in its criticism of Comcast. In comments filed with the FCC this week, the advocacy group accused Comcast of blocking traffic from BitTorrent and Gnutella to bolster its own online offerings, such as Fancast.
The Free Press also shared the EFF's view that Comcast's claims to be merely "delaying" P2P file transfers to be misleading and accused the company of employing "anti-competitive tactics to maintain market advantage."
"Comcast is making a desperate attempt to spin its Internet blocking," said Marvin Ammori, General Counsel for the Free Press. "Cut through all the jargon, and this much is clear: Comcast isn't managing bandwidth, it's undercutting competition."
The FCC officially began investigating the Comcast controversy last month when the Wireline Competition Bureau announced that it was seeking public comment on a Free Press petition that claimed Comcast's P2P blocking violated the FCC's Internet Policy Statement.
The deadline for replies with the bureau is February 28th.
Whitehall Gives ISPs Piracy Deadline
Excerpted from Financial Times Report by Jean Eaglesham
The British government on Friday told Internet service providers (ISPs) they will be hit with legal sanctions in April next year unless they take concrete steps to curb unauthorized downloads of music and films.
Britain would be one of the first countries in the world to impose such sanctions. Service providers say what the government wants them to do would be like asking the Royal Mail to monitor the contents of every envelope posted.
Andy Burnham, Culture Secretary, told the Financial Times on Thursday that the deadline was a "clear signal" of the government's determination to tackle rampant piracy, which the music and film industries blame for the slump in CD and DVD sales.
The move is a significant escalation in efforts to make Internet providers take action against the estimated 6 million UK broadband users who download unlicensed files every year.
A creative industries strategy paper published on Friday commits the government to consulting on anti-piracy legislation this spring "with a view to implementing it by April 2009."
ISPs say it would be almost impossible to check and stop unauthorized downloaders. The industry has cited data-protection curbs that prevent them from inspecting the contents of data files.
The strategy paper will not set out a blueprint for how the legislation would work. "We're saying we'll consult on legislation, recognizing there are practical questions and legitimate issues," Mr. Burnham said.
The concept of a "three strikes" regime of escalating sanctions, referred to in reports of a leaked early draft of the strategy, had "never been in the paper", he said.
The Department for Business, which will lead the bill's development, said on Thursday night that the proposal raised "difficult legal issues," particularly in relation to European laws on online privacy and e-commerce.
But the government is adamant that the complexity of the issues involved will not prevent it from legislating if necessary. Ministers are frustrated by the slow progress of talks between ISPs and the music and film industries.
Mr. Burnham said there was "no burning desire to legislate." But he warned that ISPs could forestall statutory sanctions only if there were "considerable moves forward ... a change in the nature of the dialogue with good and innovative business solutions that can address the problem in a different way."
Europe's Anti-Piracy Laws Not Likely in US
Excerpted from Online Minute Report by Wendy Davis
A UK lawmaker this week threatened to introduce a bill requiring ISPs to crack down on piracy unless the companies voluntarily take steps to stop it.
That move follows a new "three strikes" law in France that requires Internet access companies to cut-off users who engage in piracy three times.
These kinds of laws might sound good to record labels or movie studios, but implementing them is another matter. Not only do such laws pose practical problems, but they'd probably also be unconstitutional in the United States.
In fact, it's hard to imagine how the government could order an ISP to cut off a user's means of communication without violating First Amendment free speech principles. Just as the authorities here can't generally cut-off people's phone lines or shut down newspapers, they also can't order the service providers to do the same.
Still, that's not to say US Internet access companies won't consider policing their networks on their own. AT&T for one is already mulling using technology to filter out pirated content.
But that prospect raises a whole new set of practical concerns - namely, that filters don't work. Users that are determined to get around filters can defeat them by encrypting content. Additionally, currently deployed filters can't tell whether a user is making fair use of copyrighted material.
Instead of trying to insert themselves into legal battles between entertainment companies and alleged pirates, ISPs would do better to focus on figuring out how to increase their capacity.
As things are, companies like Comcast are impeding traffic to legal peer-to-peer (P2P) sites like BitTorrent to prevent congestion on their networks.
That type of interference will ultimately hurt entertainment companies, which increasingly distribute their work online, as well as consumers.
If entertainment companies want to be proactive about the web, they should be devoting themselves to finding ways to increase bandwidth capacity, rather than trying to burden ISPs with policing duties.
Australia Considers UK-like Law
Excerpted from WebProNews Report by Mike Sachoff
The Australian government is considering legislation that would force ISPs to take legal action against users who download content without authorization.
The proposal is similar to legislation that is being considered in the UK that would implement a three-strikes policy against consumers who share unlicensed files by using P2P technology to download music, TV shows, and movies for free.
Under the three-strikes policy, a warning would be issued to first time violators, the second strike would lead to a users Internet access being suspended, and the third strike would cancel the user's Internet access.
Music Industry Piracy Investigations (MIPI) General Manager Sabiene Heindl said her group had been lobbying for the policy for a year. "Because P2P file sharing involves these music files sitting on individual people's computers, there is very little that MIPI can do to remove those files or stop them being shared," she said.
"That's why we have been pushing a proposal to ISPs for a 'common sense' system of warning notices which, if unheeded, would ultimately result in users having their accounts suspended or disconnected."
National Internet Industry Association (NIAA) chief executive Peter Corones said, "ISPs are not the enforcers of copyright." They are "a mere conduit" for Internet connectivity.
Canada Says it out Loud with Legal P2P Proposal
Excerpted from Digital Music News Report
Legalized file-swapping has been a concept since the late 90s, though major content holders have mostly resisted the possibility. Despite immense volumes of P2P-based swapping and acquisition, most major label efforts have been focused on paid downloads, subscription initiatives, and more recently, broader content bundling and ISP-level filtering and enforcement.
The result is that file-swapping is almost always a gratis endeavor, one that leaves rights holders out of the equation entirely.
Against that backdrop, some executives are starting to consider more radical possibilities. Just recently, the Songwriters Association of Canada (SAC) floated the idea of a $5 surcharge on ISP monthly accounts, in exchange for a file-sharing free-for-all.
The proposal, reported by the Toronto Star, could inject annual industry revenues with between $500 million and $900 million.
The proposal comes alongside a quickening CD sales slide, and increased consumer appetite for massive volumes of DRM-free content.
Time for ISPs & Content Owners to Get on Same Page
Excerpted from Jupiter Research Blog Report by Mark Mulligan
News of the UK government's proposal to pass legislation to compel ISPs to stop unauthorized file sharing on their networks appears to be polarizing debate and bringing out the usual discussion of privacy concerns, etc.
They key issue here is that it is in the interest of content owners and ISPs to reach collaborative, voluntary agreement. If both parties could come together and create a viable and compelling (dirt cheap) alternative to unlicensed content online for consumers, ISPs would be able to monetize traffic and content owners could extract revenue from otherwise elusive audiences.
To compete against free, and of course (in the case of music), with Apple, content owners need to empower ISPs with groundbreaking licenses. The shift to free or near-to-free legal content is of course well underway - just consider SpiralFrog, QTRAX, Comes With Music, MusicStation Max, iMeem etc. for music and iPlayer, 4OD, ITV.com, ABC.com, Hulu, etc. plus the plethora of P2PTV offerings for video.
An all-in-one content bundle that ISPs could wrap into broadband packages for little additional cost to the consumer would take this to a logical next step. But there isn't much room for charging a premium - my colleague Ian Fogg points out that home broadband is becoming increasingly commodified. A family content bundle might just be a differentiator for ISPs and would certainly be a door opener to mainstream audiences for content owners.
Record Industry Internet Attitude
Excerpted from The Telegraph Report by Shane Richmond
My first reaction to a press release from the BPI is usually, "Are you still here?" Home taping, bootlegging, and Internet file sharing have, supposedly, been "killing" the record industry for years and yet they refuse to die. Even by their standards, their announcement this week was mind-boggling.
The British Phonographic Industry (the name alone shows how in touch they are) said this week, "For years, ISPs have built a business on other people's music. Yet they have paid nothing to the creators of that music, and done little or nothing to address illegal downloading via their networks."
Read that again: "For years, ISPs have built a business on other people's music." Really? Did you sign up with your ISP so you could download music illegally? Me neither. Yet the record industry, which apparently thinks the world revolves around it, once again wants somebody else to fix its broken business model.
If unauthorized file sharing is going on, why is that the responsibility of ISPs? When U2's manager Paul McGuinness made a similar claim recently, Techdirt rightly pointed out that this is like "blaming the guys who paved the road on which the stolen car was driven."
In a post this morning, Mike Masnick wrote, "The entertainment industry is still unwilling to adapt its business model to the new distribution mechanisms of the Internet. That should be a reason to change the business models - not change the rules of the Internet."
Alarmingly, as we reported this week, the Government appears to be taking this gibberish seriously.
The proposals under consideration are full of holes. They say nothing about how ISPs would identify unauthorized downloading or how it would be distinguished from legitimate traffic, not to mention the question of how an individual can be "banned" from the Internet.
Those victimized by the proposed legislation could, if the record industry's history is anything to go by, include pensioners and dead people.
Even if these measures can be installed satisfactorily - and by satisfactorily, I mean in a way that does not involve innocent customers being treated like criminals and vastly inconvenienced - it won't be long before someone finds a technical work-around. There are already plenty of ways to anonymize Internet activity. This legislation will merely make them more widespread.
So why are we bothering again? Ah yes, the BPI says, "Downloading costs the record business hundreds of millions of pounds a year."
There's probably a study somewhere that supports that "hundreds of millions of pounds" claim but it's in the interest of these trade bodies to maximize their notional losses.
The assumption behind the BPI numbers is that every download is a lost sale. It takes just a moment's thought to realize this can't be true. At least some downloads must be driven by curiosity - people downloading albums that they wouldn't risk £10 on. If they like them, perhaps they'll buy them, or maybe they'll buy future records from that artist or tickets to a concert.
In contrast to the BPI's claims, there are plenty of studies, such as this Canadian government report from last November, that suggest that file sharers buy more music.
The BPI claims that the money it is losing "will have serious consequences for investment in British culture in the long-term if it is allowed to continue."
That's questionable too. While the record industry focuses its efforts on propelling TV karaoke contest winners up the charts for short-term gains, the real innovation is going on elsewhere.
SliceThePie, a British website that helps artists find funding from music fans, claims that it will finance more artists in 2008 than EMI, Sony BMG, or Warner Music did last year.
The most significant record business development of the last twelve months was the groundbreaking release of Radiohead's In Rainbows.
The album was made available on the band's website as a free download and yet, when it was released on CD earlier this year, it still went to number one in the UK and the US.
Remind me again how free downloads kill record sales?
According to the BPI, "an Internet that rewards creativity, while offering music lovers unprecedented choice and value for money, is in the long term interest of all of us."
But that's not the way they behave. While independent artists create imaginative and successful business models, the record industry persists in offering services that are confusing, needlessly limited, and over-priced.
Perhaps the record industry should fix these problems before they start a witch hunt among web users. ISPs must resist this wrong-headed plan, and they deserve our support in doing so.
Coming Events of Interest
Digital Music Forum East - February 26th-27th in New York, NY. Major and indie music label executives, artists, technology and consumer electronics leaders come together for this "must attend" event. The DCIA will conduct the closing session interview with QTRAX Chairman & CEO Allan Klepfisz.
Canadian Music Week - March 5th-8th in Toronto, Canada. The 26th installment of this international festival. Conference registration includes access to performances by over 500 of the hottest global artists throughout 41 downtown venues. Register early to secure your place and save. The DCIA will moderate a P2P panel on Thursday afternoon focused on P2P and music.
Media Summit New York - The fifth annual MSNY, March 12th-13th in New York, NY. Jointly produced by Digital Hollywood, McGraw-Hill, Business Week, and Standard & Poor's. Keynoting this year will be Robert Iger, President & CEO, The Walt Disney Company.
P2P MARKET CONFERENCE - March 14th in New York, NY in conjunction with the Media Summit New York (MSNY). The industry's premiere marketplace focused on the unique global revenue generation opportunities available in the steadily growing universe of open and closed P2P, file-sharing, P2PTV, and social networks, as well as peer-assisted content delivery networks (CDNs).
P2P MEDIA SUMMIT LA - May 4th in Los Angeles, CA. The third annual P2P MEDIA SUMMIT LA. The DCIA's flagship event featuring keynotes from industry-leading P2P and social network operators; tracks on policy, technology and marketing; panel discussions covering content distribution and solutions development; valuable workshops; networking opportunities; and more.
Digital Hollywood Spring - May 5th-8th in Los Angeles, CA. With many new sessions and feature events, DHS has become the premiere digital entertainment conference and exposition. DCIA Member companies will exhibit and speak on a number of panels.
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