October 13, 2008
Volume XXIII, Issue 11
PopKomm: The Second Coming of QTRAX
Excerpted from Billboard Report by Andre Paine
Eight months after its initial launch promotion at the MidemNet conference in Cannes, QTRAX is on course according to its New York-based Chairman & CEO Allan Klepfisz. During a live demonstration of QTRAX - the free, ad-funded, legal, hybrid peer-to-peer (P2P) service - at the PopKomm music conference in Berlin, the only hitch was a slow Internet connection to the site from the exhibition center.
Klepfisz confirmed that Universal Music Group (UMG) and EMI Music are on board - both majors announced their deals in June - and their music can now be downloaded from the service in the US. Klepfisz was the opening keynote speaker at PopKomm's P2P & MUSIC CONFERENCE, organized by the US-based Distributed Computing Industry Association (DCIA).
"P2P remains a dirty word to some people in the music industry," said Klepfisz; but there was undoubtedly more industry acceptance in the room of the need to monetize P2P users rather than sue them.
RightsFlow President & CEO Patrick Sullivan worked on the legal case against Napster for the National Music Publishers' Association (NMPA) several years ago, but now wants engagement. "It's really back to the consumers and what they want," he said. "We shouldn't be an industry dictated to by attorneys."
Klepfisz demonstrated QTRAX's added social network features: it incorporates a browser and users can share playlists and get recommendations. He said, "Our view is that we want our partners to be very fully involved. That refers to major partners, indie partners, all partners," he said.
"It's important to have an ad-supported service that has a very good chance of being viable, and provides the consumer with really high quality."
During the P2P & MUSIC CONFERENCE, Madrid-based MP2P Technologies was awarded the 2008 DCIA Pioneer's Award. "With the release of Blubster 3.0, P2P meshes with Web 2.0 to take the discovery of music to a whole new level," said CEO and developer Pablo Soto. "We are honored and grateful to celebrate its release while simultaneously receiving this award from the DCIA, an organization devoted to propelling P2P to new heights."
PopKomm featured three days of trade fair, industry conference, and a live program featuring over 400 artists.
LimeWire Seeks Legitimacy
Excerpted from Fortune Magazine Report by Devin Leonard
The music file-sharing company LimeWire is trying to shed its pirate image. It just might work, too.
Recently, Nat Hays, Chairman of Brooklyn's independent +1 Records, wanted to break a record by one of his label's new bands, The Morning Benders. So he went straight to Apple's iTunes Music Store.
That was no surprise. iTunes is the biggest retailer of digital music. But Hays also enlisted a less expected partner: LimeWire, the music file-sharing service detested by so many of his major label colleagues.
"I consider LimeWire a really important player in what we are trying to do," said Hays.
LimeWire is trying to reinvent itself as a legitimate music service with much to offer. It is supporting independents like +1 and even courting the big four record companies - Universal, Warner Music, EMI and SonyBMG - with an offer to transform its network of users into a Google-like music search engine that would be extremely lucrative for them.
"We'd love to work with the entire music industry," said LimeWire CEO George Searle. "I think there are some people in the majors who see the potential of LimeWire."
Not long ago, the thought of the big labels going into business with LimeWire would have been laughable. But the music industry is changing rapidly. Earlier this year, Universal was suing MySpace in federal court for copyright violations. Now the majors are joint venture partners in the social network's new ad-supported free music service.
In the end, some would say, the future of LimeWire and the big record labels, too, may boil down to this: does the music industry want to embrace the future (or even the present) and work with its one-time adversaries like LimeWire? Or would it rather go down fighting its last and most epic battle over copyright infringement in the digital age?
+1 Records' Hays has made his choice. His label made a live EP by The Morning Benders for LimeWire's new music download store. LimeWire returned the favor by creating fliers for the EP. The band is passing them out to fans on tour.
"They are thinking outside of the box and investing in the band," said Hays, referring to LimeWire. "Those are the kind of people we want to work with."
The LimeWire Store has only been open since March, but it offers almost two million independent label songs for 99 cents from bands like Death Cab for Cutie and The Hold Steady. The company added music by these two popular bands and many more through a deal announced in August with The Orchard, a big online music distributor.
"The Orchard didn't take this step lightly - we were in talks with them for 18 months," said Orchard CEO Greg Scholl. "In the end, we are pragmatists and recognize that 90 million users have downloaded their software."
LimeWire's search engine plan is even more ambitious. LimeWire's Searle says the company would like to compensate record labels and their artists when users request their songs. The technology company has hired prominent music industry attorney Michael Guido, whose clients include Jay-Z, Avril Lavigne, and OutKast, to sell the plan to the majors.
"This is something that should have happened a while ago," he said. "People now lament the opportunity they would have had if they'd licensed music to Napster. This opportunity is a million times bigger than Napster."
Later this month, LimeWire will announce plans to let users create their own private social networks within its P2P universe. That will be attractive to major label executives, many of whom talk about the growing importance of social networks like MySpace and Facebook to the future of the business.
"We've always been a social sharing network, but we never have described it like that," said LimeWire COO Kevin Bradshaw.
Report from CEO Marty Lafferty
 Congratulations to Patricia Schwan and the entire PopKomm team for an enthralling conference with many interesting and lively discussions. The festival featured more than 400 artists and provided exciting insights into 2008 country partner Turkey's music market.
We are especially grateful to the keynote speakers, panelists, sponsors, and attendees of the P2P & MUSIC CONFERENCE within PopKomm for providing very stimulating and valuable sessions.
Above all, thanks to Thomas Reemer, CEO of Berlin-based CUGate, our conference development partner and organizer of the Global Perspective panel.
CUGate is a content and technology provider offering a unique technical solution to track, trace, and seal content, thus re-establishing lost digital distribution channels and enabling legal P2P models. The company handles all aspects of international licensing/processing content to established markets and new thriving ones like China, India, and Russia. To exploit the generated worldwide distribution by “CUGate Content,” “CUGate Ad It” acts as the ad broker between the content arm and the distribution arm of CUGate.
Ron Berry opened the conference with a presentation highlighting the Isle of Man's exciting new e-business development programs that provide incentives for P2P and digital music companies to locate operations and facilities and do business in ways that take advantage of several packages of attractive enticements being provided by the Isle of Man. There are opportunities that every DCIA Member company and distributed computing industry participant should explore in depth.
Allan Klepfisz gave a compelling opening keynote address on the impressive progress QTRAX has made in both licensing and service development, and took time to provide delegates with a live demo of the service. QTRAX offers a rich environment for music with many value-adding creative and editorial elements. It has done an incredible job of integrating its browser with links to relevant experience enhancements, from more information to recommendations to additional playable media.
Pablo Soto discussed the newly released Blubster 3.0, which integrates both technology advancements that improve its efficiency and reliability, and also product features that increase its consumer benefits, combining Web 2.0 social media characteristics with the core attributes of P2P. He also reviewed SoundShare, an advanced collaborative filtering concept, and Omemo, a social storage platform. Finally, he made an impassioned plea for collaboration among music industry and technology industry representatives.
Stephen Alstrup made a strong case for differentiating fully authorized, secure P2P implementations, such as Octoshape's, which have been adopted for live P2P streaming implementations by major global broadcasters, from unfiltered file-sharing download applications. P2P is a technological tool that can be implemented for secure, reliable, efficient distribution of creative works - in ways superior to the old server-client architecture in terms of each of these important considerations.
Kevin Bradshaw discussed the continuing consumer growth of LimeWire, now estimated to reach 90 million monthly users cumulatively worldwide. He expressed LimeWire's willingness to work with owners of musical creative works to develop marketing and monetization programs that will exploit this traffic. He also provided a preview highlight of a new version of LimeWire, featuring many new social network features, which will be coming soon.
Memo Rhein outlined Unlimited Media's solution for identifying and following files as they travel across P2P networks. This makes it possible to market music tracks in a precisely targeted manner, even in open file-sharing environments. Uniquely, Unlimited Media is working to provide the tools to equip every participant throughout the P2P distribution channel and value generating chain. While many of the brands presenting at PopKomm were B2C, Unlimited Media is totally focused on B2B. It is important to note as well that Unlimited Media is on the forefront of reshaping the digital marketplace in China, with strong ties to the government.
Jan Marc Kuelper described arvato mobile's innovative and robust GNAB P2P platform for media distribution. He illustrated a customer case study involving an ISP bundling a P2P music subscription with DSL at a flat rate, and its marketing strengths for acquisition and retention. Then he further explained the operational cost implications and advantages of the GNAB hybrid P2P approach, for which detailed calculations demonstrated a clear cost savings of 50% in distribution costs versus a non-P2P approach. Finally, given changing market conditions and the challenges of convergence, Jan Marc provided a detailed vision of a possible future scenario for profitable expanded distribution of music and music-related products and services.
Ariel Napchi of HIRO Media positioned the enormous opportunity to monetize music videos online with advertising, given the very high popularity of this genre and its very desirable demographic. With HIRO's Positive DRM, ads are protected - it is impossible to strip them. Using HIRO's solution, ads are targeted and personalized to individual users, who in turn are encouraged to share the music videos virally using P2P and social networks. All views are tracked and counted, even if the videos are downloaded via file-sharing applications, transferred, and played back on different devices. HIRO's customers see a 300-to-400% increase in revenue versus pre-rolls, with CPMs of $40-to-60.
Clive Gardiner demonstrated We7's rapidly growing multi-dimensional music monetization system, featuring ad-funded streams, a la carte paid MP3 downloads, and ad-funded downloads. He outlined some of We7's marketing magic and detailed its two principal forms of advertising: display advertising and targeted linked audio ads with visuals. Clive generously shared four key learning points from its beta launch: users accept audio ads preceding tracks; on-demand streaming is very popular; the marketing long tail applies here; and all age groups want free legal music. Keys to We7's marketing success have been targeting and customer relationship building and maintenance.
Jim Burger provided historical context for copyright law and conflicts between content providers and distribution technologies over time and offered insights from his unique perspective at Dow Lohnes. Today's environment is particularly stressful given the content sector's recently escalated attempts to outsource enforcement to Internet service providers (ISPs) in the wake of the ineffectiveness of a massive five-year consumer litigation campaign and several high-profile P2P cases.
Clearly, artists should be in control - they are the valuable scarcity; and there is even a question of whether labels are still needed, at least in their legacy roles. And P2P should be used by artists to know and serve their audiences.
All participants in the P2P distribution chain - artists, aggregators, software firms, ISPs, and consumer electronics manufacturers; and those who would regulate them - have a choice: whether to have as their major thrust the attempt to clamp down on infringement and keep alienating fans or to primarily work to innovate and monetize P2P, which would be a radical change from where many of these entities are focused today. Share wisely, and take care.
Piracy & Privacy: A European Perspective
Excerpted from Mondaq News Report by Jacqueline Klosek & Tamar Gubins
The entertainment industry is dealing with challenging times. Technology has dramatically altered the ways in which consumers access music, movies, and other entertainment.
Just as technology has and will likely continue to alter the distribution means for entertainment, it has and will likely continue to provide new means for users to access entertainment media by unauthorized methods.
As the entertainment industry and consumers pursue their respective interests, legislators and policymakers continue to struggle to develop solutions that strike a proper balance between protecting commercial property interests and protecting individual privacy rights and freedoms. Please click here for the full report.
MP2P Technologies Releases Blubster 3.0
MP2P Technologies announced this week the release of Blubster 3.0, the latest version of the company's flagship P2P file-sharing software. The release follows a recent Spanish court ruling in favor of P2P.
Blubster 3.0 represents the company's most ambitious offering to date, uniquely situating the company for unprecedented growth both by means of better network connections and the addition of all file types. Additionally, the new version incorporates social media (Web 2.0) features that bolster discovery of new music and media in an interactive community experience.
"As digital music continues to appreciate widespread consumer adoption, we are releasing Blubster 3.0, which bridges the efficiency of P2P to today's wildly popular social media culture. As recording artists increasingly adopt new business models, our company supports them and their audiences in ensuring distribution and meaningful discovery of new content," said Pablo Soto, CEO of MP2P Technologies.
Many of Blubster's new features stem from popular social media and community-driven experiences. Blubster 3.0 builds upon the prior version's popularity. All file types are now supported - audio, video, software, etc. - and are searchable by category; advanced browsing is offered for better search results through suggestions in the search field, similar to Google's toolbar; and tag clouds are included - to promote discovery of great new content.
In addition, the interface has been improved for a better overall look-and-feel; there is enhanced community experience - featuring ratings and comments. Blubster 3.0 boasts a fully featured video and audio player - users can play as they download; and there are translations into multiple languages, including Spanish, French, German, Italian, Portuguese, and English.
The 2008 DCIA Pioneer's Award was presented on Friday to MP2P's CEO Pablo Soto during the inaugural P2P & MUSIC CONFERENCE at PopKomm in Berlin, Germany.
The DCIA Pioneer's Award is presented annually to that company which has demonstrated the greatest persistence on the forefront of transitioning distributed computing technologies for commercial purposes.
Pablo Soto is considered one of the "fathers of P2P" together with P2P luminaries Justin Frankel (Gnutella), Shawn Fanning (Napster), and Bram Cohen (BitTorrent).
His progressive accomplishments in P2P technology have garnered worldwide press recognition, including CNN, The NY Times, Reuters, AP, USA Today, C/Net, Rolling Stone, CBS News, San Jose Mercury News, among many others.
Approaches to Commercialization of File Sharing
Excerpted from Heise Online Report by Stefan Krempl
The development of business models around P2P networks was a central theme at the P2P & MUSIC CONFERENCE Friday during PopKomm in Berlin.
In view of the fact that over 450 million users worldwide have file-sharing software programs installed on their computers, it is time to move past the question of consumer adoption and focus on commercialization of P2P, emphasized Marty Lafferty, CEO of the Distributed Computing Industry Association (DCIA), opening the first congress of this type at the global music fair.
P2P and file-sharing services are projected to generate 28 billion dollars per year for Internet service providers (ISPs) in three years. In addition, other participants in the distribution chain could and should profit from the P2P-boom.
Relations between technology-focused file-sharing service providers and the music industry have been, since the days of Napster, not exactly friendly. P2P remains a dirty word for many record labels, reported Allan Klepfisz, Chairman & CEO of advertising-supported file-sharing music portal QTRAX, which debuted at the beginning the year.
Consumers will choose services to use for their P2P connections, however, based on considerations beyond which ones allow them to discover music tracks free-of-charge. Crucial to competitive success to a service in this space will be such differentiators as providing artwork, photographs, editorial content, and links to related material.
Many fans have developed sophisticated pallets, and will pass over professional studio recordings for exotic and rare concert recordings and other one-offs, that are generally not included in label catalogs.
Slowly, the music industry has been warming up to the idea of a "free" business model - as long as advertising revenue can be generated at each instance of involvement of the user.
After seven years of development work, Klepfisz explained during his opening keynote presentation, QTRAX is now very grateful to have Universal Music and EMI on board.
For the first time, a platform based on the Gnutella P2P protocol will offer free-and-legal song files out of nearly the entire catalogs of both large labels in high-quality downloads in the US. Many of the pieces will be to a large extent transferable to portable devices as well.
Free-of-charge will finally no longer stand for unlicensed, low quality, or unauthorized files.
Eric Garland, Founder of BigChampagne, the US market research firm specializing in P2P, explained the failure of the entertainment industry in its battle against copyright infringement on the Internet and the opposition of consumer advocacy interests.
In the US, where large record labels and their syndicate, the RIAA, mounted this anti-piracy campaign, "the majors have clearly cut back their expenditures for this kind of activity." This is simply because of a cost benefit analysis, since the millions spent on complaints would not have provided a pay-back, since they were "mainly against children." In addition, file-sharing activities have steadily continued to grow - slowly, but permanently.
Garland and Lafferty indicated that the quantity of music files exchanged via P2P is now in the order of a billion a month. According to Garland, the entertainment industry is now directing its attention to cooperative exertions and graduated answers to address infringement. Requests to harness Internet access providers as enforcement agents, however, are not being accepted by the telecommunications industry.
Lafferty referred moreover to the fact that in the P2P industry, there is enormous, ongoing, and steadily increasing differentiation, typically trending towards more content-friendly solutions.
MP2P Technologies not only has a new version of Blubster, but also SoundShare and a P2P-based social storage platform, Omemo.
2007 was the year when peer-to-peer television or P2PTV finally arrived, representing a huge breakthrough for video distribution with services such as Joost, Babelgum, Zattoo, Veoh Networks, and the newest DCIA Member in this space, TVU Networks.
The newest iteration of P2P is peer-assisted or hybrid-P2P content delivery networks (CDNs). These incredibly sophisticated platforms give rights holders enormous flexibility in managing online delivery of their copyrighted works.
Cost, speed, and terms-and-conditions for content redistribution can each be precisely controlled. Downloads to play in real-time, downloads to play later, and live streaming transmissions can all be supported with the unprecedented advantages of P2P.
Leading examples in this category are Kontiki, Pando Networks, GridNetworks, Solid State, Velocix, Ignite Technologies, CloudShield, Octoshape, and Abacast.
We have traditional media business models coming to P2P represented by QTRAX with ad-supported music, iMesh with a subscription model, and Vuze with paid downloads. The same title or track, in fact, can be presented to users simultaneously in a sponsored version, as part of a package, or as a premium a la carte item. P2P can create an extremely robust and flexible marketplace.
P2P telephony revenue is represented by Skype, which created 2.6 billion dollars in value for investors when acquired by eBay. Interactive advertising from Ultramercial and HIRO Media are very exciting in the P2P space, and even the anti-piracy activities from SafeNet and MediaDefender are evolving towards monetization through promotional marketing programs.
Legal v. Illegal, Round... I've Lost Count
Excerpted from Copyright Alliance Report by Patrick Ross
PopKomm wrapped up with a P2P & MUSIC CONFERENCE hosted by the Distributed Computing Industry Association (DCIA). It drew a good crowd and featured a very impressive collection of speakers.
My closing panel addressed what I consider to be the heart of the issue: music licensing and what options are out there to see more licensed P2P services. This session came after speaker-after-speaker - all of them operating unlicensed P2P services or at least not licensed by major labels - had chastised labels for not licensing them.
I said that it was the labels that had what P2P users wanted; they didn't use P2P because they like the technology, they used it to obtain songs.
So maybe, just maybe, P2P operators should extend an olive branch to license holders and try to come up with ways to encourage them to participate.
There's no harm in trying out new revenue models, including advertising. That's what QTRAX is doing. Its leaders have plugged away at it, they now have some major label music licensed, and I'm told they do a pretty good job of keeping the network closed to songs that aren't licensed.
I very much want QTRAX to succeed, if only to show the infringers that there are honest ways of doing business. I told all of this to the PopKomm audience, but also noted that I don't think the focus should be on how to better P2P providers.
There are only two things that matter: 1) giving consumers music the way they want, when they want it, at a price point they find reasonable; and 2) ensuring songwriters, artists, and their publishing and distribution partners are rewarded for their efforts.
There are experiments going on in this area using technologies other than P2P, such as subscription services, songs bundled on devices, paid download, limited-time unlimited downloading, etc.
Being technology-agnostic, I said, if it turns out the most efficient way of delivering music to fans is to duct-tape 8-tracks to rocks and drive around throwing them through windows, then that's the distribution method I'll support.
I dismissed the suggestion of a global compulsory license, which was even easier to do than normal, because so many people had approached me at this conference sharing horror stories about how they believe they are owed money by some collection agency in some other country and they can't get it.
Look, any time you eliminate the market and try to have some centralized collective running the show, you guarantee one thing - every party in the transaction will be dissatisfied.
I have no objection to P2P technology. It's as old as the TCP/IP protocol itself, and was used extensively by scientists and educators long before we heard about it in the music context.
It is incredibly efficient, and while it's a bandwidth hog, there are smart minds in the tech and entertainment spaces working on a more efficient P4P approach.
Asked by Sari Lafferty about the future 2-to-3 years from now, I said it seems likely you could have some more licensed P2P services, assuming they respected rights holders and promised a revenue stream.
There are some short-term licensing deals for various services that should be up for renewal around that time, so if P2P can come to the table with the right proposal, I can't imagine why pragmatic license holders wouldn't listen.
Cloud Computing & Content Delivery Networks
Excerpted from Sys-Con Media Report by Reuven Cohen
With Amazon recently stating that it plans to start offering a content delivery network (CDN) service as part of its S3 offering and Microsoft reportedly creating its own CDN in partnership with Limelight, there seems to be a renewed interest in CDNs.
Whether for public usage like Amazon's or private like Microsoft's, the market for pay-per-use content delivery services is heating up. The Microsoft CDN, which it calls an Edge Content Network (ECN), is designed to beef up the company's infrastructure to handle "Internet audiences and content offerings that are orders of magnitude larger than today," according Debra Chrapaty, Corporate Vice President of Global Foundation Services for Microsoft. Chrapaty has said that the ECN will include at least 99 nodes around the world.
So what else is going on in the CDN world? The answer is simple: P2P.
One of the most disruptive technologies to appear in the world of globalized computing by far is the emergence of P2P technology for NON-consumer usages such as business continuity.
Leading this charge are companies like Pando Networks and the unique P4P technology. I recently met with the Pando team in New York and needless to say I was extremely impressed. Pando Networks describes itself as a small company on a big mission; to establish a new Internet infrastructure standard for efficient, secure, and commercially viable rich media delivery.
At the heart of Pando's platform is the new P4P technology. For those who are unfamiliar with P4P, or Proactive network Provider Participation, it is a method for software to optimize global P2P connections. P4P proponents say that it can save Internet service providers (ISPs) significant costs, and that using local connections also speeds up download times for P2P downloaders by 45%.
Pando describes its system as a hybrid P2P platform that leverages both P2P and HTTP protocols to optimize content delivery for performance and cost efficiency. The general idea is as content becomes more popular, bandwidth is transparently offloaded from CDN servers to consumers ("Peer Cloud").
As content moves up and down its consumer demand curve, Pando intelligently shifts among sources and protocols in real-time.
What's great about P4P is that it's a logical fit in existing cloud storage deployments, which could include Mosso's CloudFS or Amazon S3: seed your CDN from the cloud, let your users do the rest.
As we continue our long march from the desktop to the cloud, management of digital assets on a global basis will be a key component. CDNs are well on their way to becoming one of the more important aspects of this big shift toward the cloud.
Groups Work Together on Authorized Downloading
Excerpted from Daily Vidette Report
In 2005 college students were to blame for 15% of all unlicensed downloads of movies. In 2007, the RIAA sent out a voluminous number of pre-litigation letters to consumers for unlicensed music downloading.
Comcast works with both the Distributed Computing Industry Association (DCIA) and the Internet Engineering Task Force (IETF) to solve problems that arise from unauthorized downloads.
"What such organizations do is put together speaking opportunities and forums where people come together to talk about critical issues," Charlie Douglas, Director of Communications for Comcast, said. "They also have a number of working groups."
"The intent of working groups is to get representatives of industries together from different backgrounds to tackle difficult issues."
Comcast is also working with the new P4P technology, which is an emerging methodology for improving the productivity of P2P networks. P4P works more efficiently than conventional P2P over Internet service provider (ISP) networks.
IETF and the DCIA are looking to provide more efficient and safe ways for users to get the files they want. "This is at the forefront of design for the whole architecture of the Internet," Douglas said.
ISPs Raise Broadband Speeds to Meet Coming Demand
Excerpted from Communications Daily Report by Jonathan Make
Cable operators, incumbent telcos and network overbuilders are increasing broadband speeds to meet rising consumer demand for video streaming, content uploading, multiplayer gaming and social networking, executives told us.
Prices at most companies we surveyed generally stayed the same or rose slightly as ISPs have promoted higher speeds in recent years to lure new customers and keep current ones.
But analysts said few broadband subscribers seem to need the companies' fastest broadband packages, because computers in some homes can't process information quickly enough to make use of them and few people use online applications needing the speeds.
The highest download speed of 50 Mbps is available to some Comcast, Verizon, and SureWest customers, executives said. AT&T's maximum speed for its U-verse service is 10 Mbps, and Charter tops out at 16 Mbps, company officials said.
Standard cable-broadband offerings in many places are 5 to 6 Mbps downstream and 500 kbps to 2 Mbps for uploads, an NCTA spokesman said. Cable speeds have risen in recent years, but prices have stayed about the same, he said.
Some telcos are testing 100 Mbps service, said USTelecom Senior Vice President Tom Amontree.
Cable, landline and wireless-phone providers and others spent more than $30 billion on networks in the first half of this year, he said. Executives said customers demand higher speeds and seem to use them, so ISPs likely will continue to ramp-up speeds.
Web speeds have doubled every 20 months some places, Amontree said. "Speeds are just going to keep climbing." There's been "a big shift in how typical consumers think of the Internet, from being a place where you go to seek out information to a place where you go to store and share your own information," and faster broadband speeds have contributed, he said.
After ISPs dramatically raise download speeds, they may need to increase upstream speeds because more subscribers will use cloud computing to store photos and video, said ABI Research analyst Mike Wolf.
"Over time, upload speeds become just as important as downstream speeds, as more consumers use cloud-based storage to back up their content and share their content with others."
Telco and cable executives and analysts agreed that increased video streaming is among the online applications increasing Internet traffic most.
Other bandwidth-heavy broadband uses include P2P applications, telecommunicating, social networking and online gaming, they said.
"Customers are using their broadband connection to download music and videos, play bandwidth-intensive games, share photos and perform a variety of other actions without waiting even a couple of seconds," said Jitesh Bhayani, Charter's Director of Operations Marketing. "Consumers' desire for increased speed will only expand as more sophisticated applications become available."
Build it and they will come seems to be the premise of some ISPs raising download and upload speeds in anticipation of more-sophisticated, bandwidth-sapping applications.
Verizon believes "that if we can offer these services then application developers will create more uses for them," a spokesman said. "Existing services such as photo-sharing sites will begin to optimize their services to leverage these speeds."
CEO Marty Lafferty of the Distributed Computing Industry Association (DCIA), representing P2P and other companies, said it may cost $100 billion over the next five years for US ISPs to build out their networks to handle an expected 50-fold increase in traffic from 2006 to 2015.
"All of our media distribution is going to move to the Internet," Lafferty said. Speed increases are "demand driven and it's all about this migration," he said.
ISPs should widely sell 100 Mbps downstream service and increase upload capacity so it's closer to download limits, he said.
"You want to be able to support high-definition (HD) video without creating congestion, without having serious issues with buffering. You want the quality to be there so it's push and play."
Senior Vice President Harold Feld of the Media Access Project called faster symmetrical speeds a must. "If we want to encourage the development of new services, if we want to put a new resource out there that's going to be taken up for all kinds of interesting opportunities, then we should be acting to boost bandwidth."
ISP executives said demand for their highest speeds is increasing. "Customers are willing to pay extra to get additional speeds," said Haavard Sterri, SureWest's Executive Director of Product Marketing. "When they realize they like that speed, they are willing to stay with it at that price" after introductory offers expire, he added.
"The speed is very important for the gamers." The telco's most popular broadband package, 10 Mbps symmetrical, costs $51.99 monthly for those who buy at least one other SureWest product, said Senior Product Manager Becky Horan. The symmetrical 50 Mbps product costs $191.99 bought that way.
Verizon also is seeing increased sales of its 20 Mbps FiOS symmetrical package, the spokesman said. The price is $64.99 monthly for those with service commitments of at least a year, and 50 Mbps downstream and 20 Mbps upstream is $89.95 to $139.95, he said. "As the Internet becomes increasingly interactive and users create and send as much content as they receive, faster upload speeds are becoming a necessity for many."
AT&T's monthly broadband prices range from $14.95 for 768 kbps DSL service to $55 for a 10 Mbps U-verse product if they're purchased with other company services, a spokesman said. The telco doesn't require subscribers to sign a contract to get those rates, good for two years, he said.
Some analysts believe demand for ISPs' fastest tiers is limited for now. They see speed increases as a way for companies to prepare for more future use of heavy bandwidth applications.
"Online video is still a nascent activity," said Heavy Reading's Adi Kishore. "It's going to grow considerably, and increased capacity will be that much more important in the future."
Pike & Fischer analyst Scott Sleek sees speed increases as "a lot of future-proofing," he said. "Some of the P2P crowd and hardcore gamers are probably very attracted to this. Beyond that I think it's a huge question. There may be a little bit of putting the cart before the horse."
Network Neutrality Foes Should Target "Joe Six-Byte"
Excerpted from Information Week Report by Paul McDougall
A panel of industry insiders said Internet service providers (ISPs), content distributors, and others who are concerned that the explosion of video file-sharing sites is clogging up the Internet need to do a better job of informing everyday web users about the downsides of network neutrality rules - which prohibit ISPs from giving online traffic from some sources priority over traffic from others.
"There is a perception that network neutrality is democratic," said Andreas Koch, Director of Service Provider Strategy and Planning at Juniper Networks. But the flip side, said Koch, is that network neutrality rules protect "bandwidth hogs" at the expense of Internet users with average usage patterns.
Aditya Kishore, Senior Analyst at telecom research organization Heavy Reading, said network operators who oppose network neutrality - a concept that's favored by Democratic presidential candidate Barack Obama - would do well to steal a page from Republican VP candidate Sarah Palin's playbook and tailor their message toward "Joe Six-Byte."
The problem: P2P services and other sites that regularly send massive files back-and-forth across the Internet are causing performance degradations that penalize consumers who only use the web for e-mail and occasional browsing.
Advocates of network neutrality argue, on the other hand, that the rules prevent large companies from dominating the Internet by paying ISPs to give their sites priority on the digital traffic lanes.
But it's no longer just file-sharing sites that are causing congestion on the Internet. John Dillon, Chief Marketing Officer at Velocix, noted that the BBC's posting of TV episodes on its website has created a huge traffic burden for ISPs.
"Network neutrality a year ago was all about P2P. Today it's about many other services," said Dillon. "ISPs have to take steps to deal with what's happening."
To read more please visit Contentinople.com.
Veoh Networks Studies Ad Receptivity Differences
When it comes to advertising, not all online video viewers are created equal, according to a new commissioned study conducted by Forrester Consulting on behalf of major P2PTV service Veoh Networks.
Released this week, "Watching the Web: How Online Video Engages Audiences" reveals that while some online video viewers still only "snack" on short clips, there exists a large audience of young, influential, engaged viewers who watch a great deal of long-form online video and pay attention to the brand messages delivered to them in online video environments.
The study found that Engaged Viewers (viewers who watch more than an hour of online video a week) make up nearly 40% of all online video viewers and watch nearly 75% of all online video.
Of these Engaged Viewers, those who spend the most time consuming and sharing long-form content: are more likely to watch videos all the way through; pay more attention to online video than they do TV; interact with and rate the videos they watch more frequently; are twice as likely to recall in-video ads and post-rolls than non-Engaged Viewers; agree more readily that advertising is fair and helps pay for their free experience; and consider banner ads and ads that come in between videos (mid-rolls) most effective.
"As online video viewing continues to grow as a primary source of entertainment, it will create many new opportunities for content providers and advertisers alike to reach engaged, influential audiences," said Steve Mitgang, CEO of Veoh Networks. "Now is the time for advertisers to re-think their approaches to marketing in online video in order to captivate these valuable viewers as they drive online video into a mainstream entertainment medium."
For Engaged Viewers, online video viewing is not a fad but rather a growing consumer habit: 61% of Engaged Viewers expect to spend significantly more time watching online video in the next year.
The study also found that Engaged Viewers are young: while 13- to-24-year-olds make up only 15% of the online population, they represent more than 35% of Engaged online video viewers. In addition, Engaged Viewers watch an average of 6 kinds of video content - from animation to TV shows to movie trailers - during the course of a month.
The study further segmented Engaged Viewers into three sub-groups based on time spent watching video, types of videos watched, comfort level managing the video viewing experience, propensity to share videos, and amount of attention paid to online video compared to TV: Watchers, those who spend just over an hour watching video each week but, besides showing up to watch, don't engage the experience deeply by controlling playback or sharing videos; Controllers, those who go one step further; these younger viewers take an active role in controlling their video experiences and feel that online video is important to their lives; and Connectors, though just 7% of online viewers, consume 20% of all online video and do 42% of all online video sharing.
Connectors and Controllers are especially valuable because they not only watch more online video than others, but they are shaping what others watch through their sharing. The most desirable viewers - Connectors and Controllers - watch long-form video more often than Watchers do, so sites that offer a great deal of long-form video are the ideal places to reach them.
Long-form video sites not only attract these viewers, but they also foster an environment that secures more viewer attention and engagement with advertising.
Given that both Connectors and Controllers spend more time on long-form video sites, they are more apt to feel that advertising is a fair trade off to pay for online video services. Even more important, Connectors are significantly more likely to notice brands and feel ads are useful when presented with products they are interested in.
As online video viewing matures, advertisers can take advantage of the unique opportunity to reach valuable Engaged Viewers by starting with the following:
1. Think Advertainment, not Advertisement. Engaged video viewers are more open to enjoying the advertising they watch giving marketers an opportunity to create ads that are as entertaining as the video clips they are paired with. Make the advertising a part of this engaging environment by telling compelling stories rather than consistently repeating the same 30-second spot.
2. Active mindset = greater action. Engaged video viewers are more involved in every aspect of the viewing experience, including the advertising. In contrast, watchers who sit down to watch a 1-minute user-generated clip come to the screen with very different mindsets. Consider having multiple creative units depending on the mindset and propensity to engage with the medium.
3. Think about all the ad units on the page as a team. All viewers feel advertising can be annoying. But none of them said it had to be annoying. Engaged viewers respond to ad formats that don't intrude unfairly. Their preference for banner ads supports this. But banner ads can be supported by a comprehensive ad experience that ties display ads, sponsorships, and in-video ads together into a coherent package.
4. Target it and they will come. As more viewers spend more than an hour a week viewing online video, it's time for advertisers and the sites that enable them to start matching ads to viewers more intelligently. The easiest place to do this is with long-form content, where the choice of programming - an episode of one's favorite tv show - says more about a viewer than a short clip about a dog on a skateboard ever can.
Forrester Consulting conducted this study with more than 1,013 people who watch online video at least an hour each week. These responses were calibrated against Forrester's ongoing Consumer Technographics research to ensure response validity. Building on this insight, a sub-sample of 10 individuals who completed the online survey and gave explicit permission to be contacted for a follow-up interview were recruited to participate in 10 one-hour, phone-based in-depth interviews to discuss their experience with online video more fully. The combination of rigorous quantitative measures and qualitative insight paint a picture of today's engaged online video viewer.
Is Online Safe from the Meltdown?
Excerpted from eMarketer Report
Online ad spending data from the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) for the first half of 2008 is in.
The numbers seem generally strong, showing double-digit growth compared with the first half of 2007 in several categories: search, display - which includes banners, rich media and video -and e-mail ad spending. And the total US online ad growth rate of 15.2% is nearly the same as eMarketer's 17.4% projection for all of 2008.
Yet online classified ad spending was down by more than 5% and may turn out to be a canary in the coal mine, showing the first signs of dizziness in an increasingly toxic environment.
"The negative growth for classifieds closely reflects economic weakness," said David Hallerman, Senior Analyst at eMarketer. "Whether used on eBay to sell products, on job sites by employers, or for real-estate sales, classified ad buys tend to be short-term purchases with short-term objectives.
"In contrast, most display-related ads, such as banners or video, are contracted ahead of time. For that reason, they are less of a mirror of the current state of online advertising than classifieds," Mr. Hallerman continued.
The problem is not that banks spend so much on ads themselves. In a recent MediaPost article, ZenithOptimedia said, "The bank failures will have a fairly small direct effect on ad expenditure, since financial advertising contributes only about 4% of global ad expenditure, but fears for the future will cause consumers to cut their spending, while companies carefully inspect their budgets to find cost savings."
Jack Myers also noted that the ad industry was undergoing a major transformation even before the crisis hit.
"The danger of ascribing downward spiraling economics of ad spending to the economy alone is that it camouflages several more endemic causes for ad spending declines," Mr. Meyers wrote earlier this week. "The media marketplace is transitioning from one in which demand has exceeded supply (even as supply has grown exponentially) to a marketplace in which the availability of supply is outpacing demand."
The IAB does not forecast the future, but many companies that do have recast their numbers in recent months.
As PaidContent detailed in a recent roundup:
Barclays changed its US online ad forecast for 2008 through 2012 to $24.79 billion (+16.9%), below its previous forecast of $26.17 billion (+23.4%), in May. They expect online advertising to rise at a 14.3% three-year compound annual growth rate (CAGR), resulting in the Web accounting for 13% of total US ad dollars by 2011.
J.P. Morgan lowered its 2008 US display market estimate to $8.2 billion from $8.6 billion. MediaPost said that represented 14% year-over-year growth, compared with its previous estimate of 20% growth. J.P. Morgan now expects online display to reach $9.4 billion in 2009, down from its previous estimate of $10.0 billion (16% growth compared with a previous estimate of 17%).
Cowen said in July 2008 that 2008 US online ad market growth would be 16% year-over-year, a drop from its previous estimate of 19%.
MAGNA also reduced its 2008 online ad spending estimates in July 2008 to 12% growth, down from the 16.5% it predicted in December 2007.
eMarketer estimated in August 2008 that online ad spending would reach $24.9 billion this year, down slightly from its March forecast. That still represents 17.4% growth over 2007.
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FUNimation Entertainment Joins Joost
Starting in November, FUNimation Entertainment will launch its video channel on leading P2PTV service Joost with a sampling of shows from its wide-ranging library of anime. More programming will be added monthly and will be available for free, in-browser viewing to Joost users in North America.
In addition to viewing popular series, fans will also have the opportunity to interact with each other and form communities around FUNimation content.
Using the social features of Joost, they can share favorite episodes, form groups around their favorite shows or character, or express their thoughts about a particular show or moment through comments and "shouts."
"Joost recognizes that there exists a varied entertainment landscape and a thirst for unique content," said Gen Fukunaga, President & CEO at FUNimation Entertainment. "Partnering with them offers us the opportunity to provide the content fans are already looking for, while also reaching new audiences."
Fukunaga adds, "We understand that entertainment fans across the board want web-based free on-demand programming. In the anime industry, FUNimation is leading that charge with our online syndication strategy based on strong relationships with partners such as Joost."
Danny Passman, Global Head of Programming for Joost, said, "Joost knows what anime fans want - they want to be able to watch their favorite shows online in their entirety, and they want an easy way to talk about their favorite moments, shows or characters with other fans. Adding the full-length, dubbed, and subtitled fan-favorite shows from FUNimation to Joost gets us even closer to our goal of being the online destination for premium anime."
Martesko-Fenster Joins Babelgum
Excerpted from Variety Report by Michael Jones
Progressive P2PTV service Babelgum has hired indie film vet Karol Martesko-Fenster as General Manager & Publisher in a bid to expand its year-round programming.
Babelgum is positioning itself as a free Internet TV platform that offers full-screen quality programming with a focus on indie film and festivals.
Martesko-Fenster is charged with increasing acquisitions and partnerships as well as managing the company's online film festival, of which Spike Lee is Jury Chairman.
"Babelgum's film programming is mainly focused on people who are passionate about indie film," said Babelgum CEO Valerio Zingarelli, "and Karol's passion for this material is just what we need."
Martesko-Fenster was Co-Founder and Publisher of IndieWire and Filmmaker Magazine before becoming GM and film topper for Palm Pictures and its RES Media Group, overseeing the release of Doug Pray's "Scratch" and Julio Medem's "Sex and Lucia."
China's P2PTV PPLive to Raise $20 Million
Excerpted from Reuters Report by George Shen
PPLive, China's second-largest P2PTV service by market share, aims to raise $20 million from venture capital investors by next month, according to the company's prospectus.
PPLive is seeking $20 million in the third round from venture capital fund investors after Softbank China Venture Capital, BlueRun Ventures, DFJ and Dragon Ventures invested in the P2PTV firm in the past two years, according to the document.
"This round of money would be spent on content acquisition, new products and services development, bandwidth investment, as well as potential M&A," said a potential investor who had been briefed on the private fund-raising plan.
Softbank China Venture Capital is a China-focused fund of Japan's telecoms provider Softbank, and BlueRun Ventures' major investors include cell-phone maker Nokia. Dragon Ventures is a China fund of US venture capital firm DFJ.
PPLive is ranked second in terms of online video market share in the world's fastest-growing major economy, according to industry researcher Analysys.
In the third quarter of this year, PPLive had 17.6% of market share, compared with 18.1% for P2PTV market leader UUSee and 10.3% for smaller P2PTV rival PPStream, Analysys said in its research report.
In July, PPLive, which has more than 100 million users, inked a content partnership with CCTV of state broadcaster China Central Television.
PPLive, which wants to copy the success of YouTube, the world's most popular video-sharing site owned by Google, in China, plans to list about 2010, according to Chinese media reports.
China overtook the United States this year as having the world's largest number of Internet users. At the end of June, it had 253 million web users, according to the China Internet Network Information Center.
P2PTV is particularly popular among Chinese college students who have limited access to television on campus.
PPLive and other video site rely on advertising for profits, but analysts have warned that corporate advertising spending is set to slow sharply this year.
Mufin Debuts Music Fingerprinting & Finding
Excerpted from Digital Media Wire Report by Mark Hefflinger
Mufin this week announced the beta launch of its new audio fingerprinting and music discovery service.
Co-developed at the Fraunhofer Institute - which invented the MP3 format - Mufin's (short for "Music Finder") technology automatically generates a unique audio fingerprint of a song, based on more than 40 acoustical characteristics.
The company launched with over three million songs from major and independent labels in its library, and is offering a MySpace widget.
Shareaza 2.4 Released
Excerpted from ZeroPaid Report
Shareaza is a P2P file-sharing client which supports the Gnutella, Gnutella2, eDonkey, BitTorrent, FTP and HTTP network protocols; and handles magnet links, ed2k links, Piolet links, and the now deprecated Gnutella links.
Released by developer Michael Stokes into the open source community in June 2004, Shareaza 2.4 celebrates more than 4 years by presenting almost 900 changes from the previous release. It contains numerous bug fixes and major changes to provide better stability of the client. It is also the first release to provide IRC support.
Windows 98/Me support has been discontinued - and Vista enhanced - with multi-generation upgrades in underlying platforms. TorrentWizard is now bundled. New IRC Chat provides easy support and community, and countless new and improved features are integrated subtly throughout.
This latest stable release was done in 9 months of solid dedication under difficult circumstances. On December 19th, 2007, the project's domain name, Shareaza.com, was hijacked and redirected to an unrelated site, promoting the download of a client known as ShareazaV4. As a result, the original project was forced to move its home page to SourceForge.
In Defense of Piracy
Excerpted from Wall Street Journal Report by Lawrence Lessig
Digital technology has made it easy to create new works from existing art, but copyright law has yet to catch up.
In early February 2007, Stephanie Lenz's 13-month-old son started dancing. Pushing a walker across her kitchen floor, Holden Lenz started moving to the distinctive beat of a song by Prince, "Let's Go Crazy." He had heard the song before. The beat had obviously stuck.
So when Holden heard the song again, he did what any sensible 13-month-old would do - he accepted Prince's invitation and went "crazy" to the beat. Holden's mom grabbed her camcorder and, for 29 seconds, captured the priceless image of Holden dancing, with the barely discernible Prince playing on a CD player somewhere in the background.
Ms. Lenz wanted her mother to see the film. But you can't easily e-mail a movie. So she did what any citizen of the 21st century would do: She uploaded the file to YouTube and sent her relatives and friends the link. They watched the video scores of times. It was a perfect YouTube moment: a community of laughs around a homemade video, readily shared with anyone who wanted to watch.
Sometime over the next four months, however, someone from Universal Music Group (UMG) also watched Holden dance. Universal manages the copyrights of Prince. It fired off a letter to YouTube demanding that it remove the unauthorized "performance" of Prince's music. YouTube, to avoid liability itself, complied.
This sort of thing happens all the time today. Companies like YouTube are deluged with demands to remove material from their systems. No doubt a significant portion of those demands are fair and justified. Universal's demand, however, was not. The quality of the recording was terrible. No one would download Ms. Lenz's video to avoid paying Prince for his music. There was no plausible way in which Prince or Universal was being harmed by Holden Lenz.
YouTube sent Ms. Lenz a notice that it was removing her video. She wondered, "Why?" What had she done wrong? She pressed that question through a number of channels until it found its way to the Electronic Frontier Foundation (EFF) on whose board I sat until the beginning of 2008.
The foundation's lawyers thought this was a straightforward case of fair use. Ms. Lenz consulted with the EFF and filed a "counter-notice" to YouTube, arguing that no rights of Universal were violated by Holden's dance.
Yet Universal's lawyers insist to this day that sharing this home movie is willful copyright infringement under the laws of the United States. On their view of the law, she is liable to a fine of up to $150,000 for sharing 29 seconds of Holden dancing.
How is it that sensible people, people no doubt educated at some of the best universities and law schools in the country, would come to think it a sane use of corporate resources to threaten the mother of a dancing 13-month-old?
What is it that allows these lawyers and executives to take a case like this seriously, to believe there's some important social or corporate reason to deploy the federal scheme of regulation called copyright to stop the spread of these images and music? "Let's Go Crazy" indeed!
People are increasingly creating something new out of the old. Please click here for the full article.
IFPI Loses Another P2P Case
Excerpted from TorrentFreak Report
A man accused of being a music infringer has been cleared by a Danish court. The man denied the claims of IFPI, based on his assertion that someone else must have accessed his wireless router to commit the infringements. This is the second major defeat for the IFPI in Denmark over the so-called "wireless defense."
The music industry anti-piracy lobby IFPI has taken a severe beating in Denmark recently. In September the major Danish ISPs issued a joint statement rejecting the IFPI's demands for a "3 strikes" agreement aimed at ultimately disconnecting alleged infringers from the Internet, labeling it as a "contravention of the law". However, the defeats don't end there.
The IFPI also accused two Danish women of being Internet infringers, after they claimed to have monitored unauthorized file-sharing activities on an IP address registered to one of them. The IFPI demanded $62,000 in compensation from the pair, stating that even if their Wi-Fi had been used without their knowledge, they are ultimately responsible for what happens on their Internet connection. Eventually a court ruled in favor of the women and acquitted them of all charges.
Now, the IFPI has suffered another defeat, again in a wireless defense case. Previously, a middle-aged man from Randers, Denmark, was found guilty of Internet infringement in a case brought by the IFPI on behalf of music copyright holders. The man was ordered to pay compensation of around $11,000 and told to delete the infringing files from his computer.
The defendant denied that he had done any of the alleged infringing and claimed that he operated an unencrypted wireless network which anyone could access.
However, in the Vestre Landsret, one of Denmark's higher courts, the decision of the Municipal Court in Randers has been reversed, according to a Comon.dk report.
The court found that the IFPI held no proof that the IP address owner - the defendant - was the same person that carried out the infringements. This fact - that an IP address does not positively identify an infringer - is the same worldwide.
The lawyer for the defense, Per Overbeck, who also successfully defended the two women who won their wireless defense case in another of Denmark's higher courts, noted a difference in the cases, but one which didn't affect the outcome for the defendants:
"The two women who were acquitted by the Ostre Landsret, were in a household with multiple computers, so more people in the household had access to them," he said. "The man in Randers was living alone in his apartment and had only one computer, but his apartment is in a complex so in principle many others can access his Internet connection."
Although IFPI lawyer Torben Steffenson has yet to comment on the ruling, he is expected to say that the IFPI does not accept the decision of the High Court, and that they will take the case to the Supreme Court in order to win the case.
That is unlikely to change the fact that in these cases the burden of proof is with the plaintiff.
Coming Events of Interest
Spirit of Life Award Dinner - October 15th in Santa Monica, CA. The City of Hope Music and Entertainment Industry Group will award the 2008 Spirit of Life Award to Doug Morris. Dinner packages and advertising information can be obtained through Mary Carlzen and 213-241-7328.
P2P & VIDEO CONFERENCE - October 27th in Santa Monica, CA. The DCIA proudly presents an all-new day-long conference in conjunction with Digital Hollywood, focused totally on P2P solutions for the television and enterprise A/V industries. How to protect and monetize video content in the steadily growing P2P marketplace.
Digital Hollywood Fall - October 27th-30th in Santa Monica, CA. With many new sessions and feature events, DHF has become the premiere digital entertainment conference and exposition. DCIA Member companies will exhibit and speak on a number of panels.
DDEX Conferences – Digital Data Exchange (DDEX) Implementation Conferences on October 23rd, 28th, and November 6th in New York, NY; Santa Monica, CA; and Paris, France respectively. Automation of B2B data exchange for digital content markets. Registration required.
P2P MEDIA SUMMIT LV - January 7th in Las Vegas, NV. This is the DCIA's must-attend event for everyone interested in monetizing content using P2P and related technologies. Keynotes, panels, and workshops on the latest breakthroughs. This DCIA flagship event is a Conference within CES - the Consumer Electronics Show.
International CES - January 8th-11th in Las Vegas, NC. With more than four decades of success, the International Consumer Electronics Show (CES) reaches across global markets, connects the industry and enables CE innovations to grow and thrive. CES is produced by the Consumer Electronics Association (CEA), the preeminent trade association promoting growth in the consumer technology industry.
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