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April 17, 2006
Volume 13, Issue 1


Arvato Mobile Acquires SPV

DCIA Member arvato mobile, part of the Bertelsmann Group, has acquired one of Europe’s largest independent record labels, SPV, as a partner to supply original content production and worldwide marketing. SPV’s acquisition by Europe’s number one provider of mobile entertainment marks the label’s entry into the mobile marketing arena.

The alliance with SPV will enable arvato mobile to strategically expand its rock and metal portfolio. The two companies’ joint offerings will zero in on exciting content such as Motorhead, Sepultura, Type O Negative, Motley Crue, Judas Priest, and Blackmore’s Night.

“SPV will provide us with the support we need to penetrate new markets. This move also confirms our competency in the mobile and digital marketing of musical content, and brings us a crucial step closer to long-lasting and comprehensive media control chart coverage,” said David Barret, arvato mobile’s Vice President for Content & Product Management.

The two companies will realize joint worldwide marketing of music downloads, as well as the entire sound carrier catalog (mobile and online) of all visual content such as images and videos.

With its innovative white-label peer-to-peer (P2P) offering GNAB and the Entertainment Platform 2 (EP2), arvato mobile possesses two state-of-the-art platforms for processing and distributing digital content.

Weed Files Adds New Music Portal

Artists and labels are invited to direct their browsers to the newly launched artists.weed-files.com and sign up for free accounts that will allow them to create artist pages, upload Weed files and promotional material such as photos and banners, post news bulletins, and select featured and podsafe files.

With improved look, layout, and navigation, the website also offers new content such as file details pages and new functionalities such as a visitor rating system to help increase interaction between artists and fans.

The portal also features an innovative browsing engine designed to help listeners discover music suited to their own tastes, based on tags that artists provide to describe themselves and their content.

Downloadable at no cost, Weed files can be played three times for free and shared legally. Once bought, the files can be played at will, burned to CD, and transferred to a portable player.

Artists receive 50% of the revenue from every sale of their files, and don’t need to be signed to a label or have a full album produced to get started. Listeners who redistribute their files are rewarded with up to 20% of the sales price.

To date, close to 90,000 titles from such diverse artists as Tom Waits, Count Basie, The Presidents of The United States of America, Roger Joseph Manning Jr., Abby Travis, Kelly Clarkson, and countless others, have been made available in the Weed format. Weed is a service of DCIA Member Shared Media Licensing.

Softwrap Partners with Softonic

DCIA Member Softwrap has signed a strategic partnership agreement with Softonic, Europe’s leading software download portal with over 45,000 programs, including freeware, shareware, and trial version software titles available with reviews written in Spanish, German, and English.

Under the agreement, Softonic will combine Softwrap’s encryption technology with its own electronic software distribution (ESD) services to provide software publishers a complete end-to-end e-distribution solution. This will allow Softonic’s software partners to offer full versions of their products as a trial download from which users can then easily purchase a license code through the Softonic e-store. Softonic’s software partners will also be able to secure their non-trial versions for digital download with Softwrap’s cutting edge encryption technology.

“Softwrap brings a crucial element to the ESD mix that Softonic has to offer. Softwrap’s encryption is a cut above the rest leaving us confident to recommend it to any software vendor,” commented Softonic’s Tomas Diago. “Softwrap also brings a wealth of software vendors to the party that are able to distribute their software through the Softonic network.”

Dylan Solomon, spokesman for Softwrap, added, “Softwrap is delighted to be working with Softonic and views the selection of Softwrap as yet another testament of the quality and security of our technology.”

Report from CEO Marty Lafferty

Photo of CEO Marty LaffertyThe Walt Disney Company’s announcement that it will offer TV programs for free online dominated new media news coverage this week with representative reports ranging from Business Week to the New York Times and Washington Post to USA Today.

In one way, this news augurs well for the advertising-based business models supported by the DCIA.

Disney’s plan is to offer four popular shows – “Desperate Housewives,” “Lost,” “Commander in Chief,” and “Alias” – on a sponsor-supported basis via the web starting the morning after they have been broadcast on the Disney-owned ABC television network.

Users will be able to view, pause, fast-forward, and rewind the programs at no charge, but not the advertisements. Ford, Procter & Gamble, Toyota, and Unilever are among the major consumer brands that initially will provide commercial support.

Disney’s Anne Sweeney said, “It’s a learning opportunity, about recognizing that none of us can live in a world of just one business model.”

While we agree that this trial is well conceived from the standpoint of its consumer value proposition and could pave the way for massive online video programming adoption, we urge Disney to team with the DCIA as soon as possible to rework its technical approach by using the P2P, compression, and swarming technologies offered by our Members in lieu of its introductory methods.

The manner in which Disney plans to distribute its large files – video streaming – conflicts with the basic architecture of the Internet, which is better suited for sending such data through a series of interim touch-points between distant computers via enhanced P2P file sharing.

Should its offering attract a large audience and Disney expand to additional programs, and then other major studios and broadcast networks also do so, Internet service providers (ISPs) would be severely strained.

Bandwidth consumption and demands on computer systems would increase enormously, driving the need for new infrastructure investments before current capital expenditures for broadband deployments have been amortized by ISPs, and threatening use of the Internet for important business communications and other commercial purposes in the meantime.

While the Internet is capable of handling an increasing volume of video downloads using P2P applications, especially when enhanced with compression and swarming technologies, and in fact together these already account for well over half of all Internet usage, streaming video requires an entirely different process for networks and computer grids to accommodate.

Moreover, the quality of the Disney experiment’s viewing experience will be inversely proportionate to its popularity – and therefore self-defeating. Delivering bits of video data between a server and distant PCs via streaming will limit the video quality of its streamcasts to short, uneven, bursty, unreliable viewing experiences, and the greater the demand for a particular program episode the worse those sessions will be. Consumers likely will not tolerate such degradation beyond a novelty phase.

ABC may have chosen online streaming because it provides a way to determine the rate at which video is delivered, and thereby prevent users from fast-forwarding through commercials as they could with a digital video recorder (DVR) and TV set. However, DCIA Members can provide technology for commercial integration in the P2P environment that will not only stop ads from being bypassed, but also allow rights holders to change sponsors mid-flight and provide unprecedented tracking data.

In summary, the costs to ISPs and content providers would be much lower, the quality of viewer experience and therefore the likelihood for mass-market online video acceptance much higher, and the reliability and flexibility in the execution of advertising much improved, if Disney would abandon its current technological implementation in favor of using distributed computing technologies.

DCIA Members, by developing and implementing P2P, compression, and swarming applications – mostly using independent content, have aptly demonstrated their ability to accomplish large video-file redistribution, with the added benefit that the more popular the property, the more efficiently it will be delivered to viewers.

The DCIA and our Members would welcome the opportunity to work with Disney to translate its excellent consumer proposition to a higher quality as well as more affordable, practical, efficient, reliable, and scalable distribution model. Share wisely, and take care.

Skype Buys Sonorit for $27 Million

Excerpted from Reuters Report

DCIA Member Skype, the popular web-based phone calling system, acquired Sonorit Holding AS and its US-based voice-over-Internet unit, Camino Networks, in a stock deal worth about $27 million.

Skype, a unit of eBay, has agreed to buy all the outstanding shares of Sonorit for about 700,000 shares of eBay stock. Based on eBay’s closing share price of $38.09 on Monday, the transaction is valued at roughly $27 million.

Sonorit, based in San Francisco, also has offices in Aalborg, Denmark, and Stockholm, Sweden. It has 10 employees. Skype said the acquisition allows it to add several experts in online voice engineering to its own team of technologists.

Sonorit is headed by Jonathan Christensen, President and Chief Executive. Its Chief Technology Officer is Soren Vang Andersen.

In2Movies Beta Launch

Excerpted from Heise Online Report

On Wednesday, movie actors Jasmin Tabatabai and Herbert Knaup helped inaugurate In2Movies, a joint venture between Warner Bros. and DCIA Member arvato mobile, which will address new target groups via the Internet.

Movies that are purchased are stored on the customer’s hard drive and are permanently playable. More than 300 movies and TV series were available for purchase at the launch of In2Movies, including such recent releases as “Harry Potter and the Goblet of Fire.” Current Hollywood blockbusters cost 14.99 euros, roughly as much as a DVD.

Older movies such as “Sophie Scholl” or “Batman Begins” are available for 7.99 euros, while “Goodbye Lenin” is available for 6.99. Warner Bros. plans to charge between 99 cents and 1.99 euros for episodes from TV series.

The technical highlight of this portal is the GNAB download system that arvato mobile developed. According to Kurt Smit, Executive Director of Digital Downloads at arvato mobile, downloads of movie files up to 2 gigabytes in size are “outsourced to consumers.”

As with other P2P networks, customers provide upload capacity in this service, which Smit believes represents “the big bang” in the film industry. In return for this upload capacity, consumers receive “MoviePoints.”

Smit explained that a customer who offers bandwidth for a movie in great demand would receive 250 such points. Once you have 5,000 points, you can trade them in for a free download.

In addition, customers also receive MoviePoints when they register for the service or recruit new customers. Furthermore, In2Movies plans to promote the concept of community by allowing users to set up their own homepage with a list of recommended movies in what is called a “MovieBox.” And if downloads are launched from there, the operator of the MovieBox will also receive points.

The file-sharing functions are supported by a central download service. Smit explained that P2P is intended to improve service during peak demand. The system is monitored by a central computer that keeps account of downloads. It also makes sure that a download does not have to be relaunched completely if it is interrupted.

Microsoft’s DRM 10 is used. The files, which are saved in the WMV format, cannot be burned on DVDs. However, a backup copy may be made as long as it cannot be played on a DVD player. The videos are encoded for downloads at 1.5 megabits-per-second.

In2Movies CEO Wilfried Geike says he would like to see the platform move beyond a “Warner service.” His goal is to “offer a broad range of movies for all interested parties.”

P2P Part of MSFT’s Ecosystem

Excerpted from Australian IT News Report by Brian Buchanan

P2P is no longer a dirty phrase, Microsoft’s Erik Huggers says. Once a byword for illegal downloads on the Internet, he argues it is now a crucial part of distributing legal content.

In a speech during the Milia conference arm of the MIPTV trade fair, he revealed a distribution deal with Spain’s Terra Networks using P2P. Huggers is General Manager of Microsoft Windows Media in the US. He told the conference P2P was viewed as a privacy threat a year ago, but now it was accepted by big companies.

“This deal is about using Windows Media digital rights management (DRM) to help companies harness P2P for the legal distribution of video across home platforms,” he said.

DRM protects distribution and downloading content and P2P is becoming a key part of the Microsoft “ecosystem”. He said digital content had truly arrived, but consumers were often still in the dark.

He was optimistic and expected companies would rise to the challenge of educating consumers and competing with piracy. Microsoft is focusing on home-networking technologies, such as downloading content via the PC and then watching it on the TV in the living room.

Huggers said MS Media Player 11 would be out by the end of the year for the Vista operating system and possibly even earlier as an update for XP.

PeerBox Brings P2P to Phones

Excerpted from MobileMag Report

P2P is coming to your mobile phone. A company called Nareos is launching a trial version of a mobile P2P downloading service called PeerBox. Once you have downloaded the application, you have access to over 50 million songs available on P2P networks.

As you would expect, you can search by either artist or song title. PeerBox will also recommend tunes similar to your choice that you might also enjoy.

The final version of PeerBox is planned to go a step further. You will be able to speak the name of a song or artist into your handset. If you hold your phone close to the music, the system will recognize and locate that song for you. If the song is not copyrighted, it is yours. If there is a copyright you can have it after paying a fee.

The trial will run on the Symbian operating system. It is available in English to start, but is planned to be in Spanish, Chinese, Japanese, Korean, Portuguese, French, German, and Italian. You can download a trial from peerboxmobile.com.

See Saw at MSNY

Excerpted from e-Content Magazine Report by Michelle Manafy

McGraw-Hill’s recent Media Summit was peopled by a who’s-who of media – with bigwigs from Fox, Disney, ABC, NBC, and MTV in attendance. Given the event’s allegiance with Digital Hollywood, it isn’t a surprise that entertainment media powerhouses dominated the event.

But collecting the most important players doesn’t guarantee a good game. It is an inherently flawed concept to have a conference about the media with sessions dominated by the media. Still, I saw glimmers of an industry beginning to accept the consumer-generated realities of the online content marketplace.

One panel, the Piracy Freight Train, seated Fritz Attaway, EVP and Washington General Counsel of the Motion Picture Association of America, next to Michael Petricone, VP of Government Relations of the Consumer Electronics Association: content watchdog vs. tech pundit.

The juxtaposition of their views offered some amusing scuffles, yet StreamCast CEO Michael Weiss (Morpheus) proffered one of the most astute observations about the content business today, “The real challenge is how to turn downloaders into buyers.”

Marty Lafferty, CEO of the Distributed Computing Industry Association, said, “Look at the numbers of P2P users and conceive of monetizing them,” while Petricone added, “Downloaders can be your best customers,” and Weiss summed it up beautifully saying, “Consumers will dictate the business model.”

A trend arose in other sessions and vendor conversations: the emergence of legitimized P2P networks. Content providers are working with their former nemeses, P2P companies, to build business models.

“One of the things we all appreciated about the old Napster was that you could find anything,” said Atri Chatterjee, Marketing VP of MERCORA, which has partnered with P2P brand Grokster. “Now you have to do this in a copyright-compliant way.”

His company provides an old-school, peer-based music discovery universe without piracy by using a radio model (listen but don’t record; labels receive royalties as in terrestrial radio) within a closed P2P environment, in which rights can be rigorously managed.

Ian Blaine, CEO of thePlatform, said he can envision “a day when user-generated content emerges as traditional media.”

And according to Lafferty, “Consumers are outpacing both the entertainment and technology industries and, at this point, we are just trying to keep up.” The customer continues to push the boundaries of what is expected from the media and even the definition of media itself. We need to see the future of media reflected in the eyes of its consumers.

MVine Signs Artists via Social Networking

New UK indie label MVine is pioneering the simple but innovative idea of signing artists on peer recommendation. Members of MVine’s online community of musicians and fans spot new acts with potential from among the several hundred unsigned acts showcasing on MVine’s virtual venue. Word-of-mouth spreads a buzz about a band and MVine takes it further by signing artists based on audience feedback.

Calum MacColl, MVine Co-Founder, explains the philosophy as “the missing link that musicians have been waiting for. Having identified ‘Generation DIY’ musicians as very net-savvy and proactive, our research showed most musicians would rather make music than market it. They can’t afford to pay for marketing but they want to get signed. For us, establishing a label with a free, dedicated linked community was the obvious solution.

By engaging musicians and fans as the label’s A&R forum, we’re also empowering audiences with a sense of purpose. We believe the opinions of hundreds of people are more likely to identify really special artists than relying on one A&R person.”

The Slides are a perfect example - a hugely exciting new band that MVine’s audience spotted immediately on the label’s virtual venue. MacColl explains, “There was a real buzz from our audience about The Slides, so we listened to their songs, went to see them play live, and promptly offered them a deal. We might have found them without the audience’s involvement, but then again we might not.” The first single, Slow Bullet, is out on 7” red vinyl on 17th April, with their debut album of the same name on May 1st.

MVine has now signed five artists on the basis of peer recommendation. ‘Generation DIY’ musicians still need the support of those who can help them reach their audiences, and while the MySpace phenomena taps partway into this, MVine goes all the way by closing the gap between musicians, audiences, and a label.

Firm Squeezes Films into a Download

Excerpted from Boston Globe Report by Hiawatha Bray

Euclid Discoveries says it has invented a video-compression technology that could spawn a lucrative new market for Hollywood – or a major new crisis.

The firm says its EuclidVision system can compress digital images to make them much smaller than today’s most common compression technologies, MPEG-2 and MPEG-4, which were created by the Motion Picture Experts Group. MPEG-2 is the compression system used on today’s DVD movie disks. MPEG-4 is a next-generation system that can reduce the size of a movie even further.

But EuclidVision promises to squeeze video files more than ever before. Euclid Discoveries Chief Executive Richard Wingard said EuclidVision will let movie companies shrink a video so small that it becomes easy to distribute films over the Internet. He said that his company has filed 15 US patents on its compression system and is in discussions with a number of companies to bring it to market.

That could be good news for Hollywood, which launched new services last week to sell downloadable copies of recent films. Reducing the size of these downloads could boost Internet movie sales. But it could also popularize Internet movie piracy, just as MP3 music compression caused a global boom in illicit music downloads.

EuclidVision uses ‘‘object-based compression,” which identifies individual objects shown in a video, then calculates the optimum level of compression for each of them.

The current generation of EuclidVision is designed for videoconferencing over telephone lines with limited bandwidth. Euclid Discoveries says its scientists compressed a 25-megabyte conference video to just over 8,000 bytes using MPEG-4, but EuclidVision did four times better, shrinking the file to about 1,800 bytes.

Wingard thinks his system will work even better with full-length movies. ‘‘We believe that because it’s object based, the longer the video, the better we’ll do,” he said.

That’s because the compression system can remember objects that appear frequently in the video, such as an actor’s face, and can store such images in memory after reading them from the disk just once. Thus, many objects need to be recorded just once in the digital file, instead of every time they appear in the film.

As a result, Euclid Discoveries says a full-length movie that requires 700 megabytes of storage when compressed using MPEG-4 would use just 50 megabytes when compressed with EuclidVision. At that size, 14 movies could fit on a standard CD-ROM disk. As for video downloading, it would take an hour for someone with a 1.5 megabit-per-second broadband connection to download a 700-megabyte file. But 50 megabytes would take less than five minutes.

Read It? Watched It? Swap It

Excerpted from New York Times Report by Michel Marriott

For Heather Perlmutter, a 41-year-old investment portfolio manager in Manhattan, the website with the whimsical name made perfect sense. Like many Americans, she found herself awash in CDs, DVDs, and VHS tapes that were seldom if ever played anymore. They just took up valuable space in the Upper West Side apartment where she lives with her husband and two young children.

Then a friend of a friend told her about Zunafish (www.zunafish.com), a new website that matches people with discs and tapes to trade — and video games and paperback books, too.

To the delight of her 7-year-old son, Ms. Perlmutter recently used the site to barter her tape of “Fried Green Tomatoes,” the 1991 Kathy Bates drama in which an unhappy housewife befriends an elderly woman in a nursing home, for a tape of Steven Spielberg’s digital dinosaur blockbuster, “Jurassic Park.”

“You feel like you’re getting something special, that you’re getting the better part of the deal,” Ms. Perlmutter said. “Wow, somebody wants your stuff. I guess it’s one man’s trash is another man’s treasure.”

Web Video Innovator – Friend or Foe

Excerpted from Los Angeles Times Report by Dawn Chmielewski

Traffic is burgeoning at YouTube, a site built to exhibit and share homemade productions. But mass-media clips are also getting big play.

In an online world awash with amateur videos of pratfalls and stupid pet tricks, who could help but notice Natalie Portman’s gangsta rap on YouTube?

The Harvard-educated star pulls a hoodie over her pixie haircut and busts into a bleep-filled rhyme about a day in her life, delivered Snoop Dogg-style. The skit — which uses Portman’s clean-cut image as its comedic foil — is the edgy, irresistible stuff that exemplifies the Internet’s emergence as an entertainment medium.

But it didn’t originate on YouTube; it was a sketch from NBC Universal’s “Saturday Night Live.”

Portman’s skit wasn’t a mere technological blip. In recent months, episodes of “The Simpsons,” Jon Stewart’s gay cowboy montage from the Academy Awards ceremony and another “SNL” piece, known as “Lazy Sunday,” have found their way onto YouTube, a Web community created as a place to share and watch original video shorts.

In the four months since it launched, YouTube has become a full-blown Internet tsunami. It streams about 35 million videos a day and attracts an audience of more than 9 million people a month, according to web measurement firm Nielsen/NetRatings.

That makes it more popular than Google, Yahoo, or AOL’s video services. The company plans to eventually convert the traffic to advertising revenue.

YouTube also illustrates the conundrum facing the entertainment industry as it struggles to control the online distribution of its television shows, movies, and other types of content. By all accounts, it acts like a responsible corporate citizen when asked to remove copyrighted works.

That leaves the studios internally conflicted about how to deal with YouTube, with lawyers sending threatening letters alleging infringement even as other executives contemplate how to exploit its ability to reach a young, tech-savvy audience that is growing up in front of a computer screen instead of a TV.

“We look at sites like YouTube and, for that matter, a multitude of other online options as just that — new options that we look to embrace,” said Darcy Antonellis, Warner Bros.’ Senior Vice President of Worldwide Anti-piracy. “We look to embrace it, but not at the expense of infringing copyright.”

Founders Chad Hurley and Steve Chen, alumni of the electronic payment service PayPal, came up with the idea for YouTube after a San Francisco dinner party in January 2005. They wanted to share video of the party with friends but discovered there was no easy way to do it without bumping into limits on e-mail file sizes.

iMesh Adds IM to P2P Service

Excerpted from TG Daily Report by Humphrey Cheung

One of the oldest P2P services, iMesh, is offering instant messaging and an enhanced search function in its upcoming client. iMesh 6.5 will allow users to send messages and share songs with other users. In addition, friends can simultaneously listen to the same songs with the “Listen Together” feature.

Originally launched back in 1999, iMesh has had a checkered past. In the first several years, iMesh faced lawsuits from the RIAA. In addition, there were many complaints that files harbored spyware and viruses.

The company has since cleaned up the files available and now allows users to download these files without fear of the RIAA serving them with a lawsuit.

Version 6 of the service was the first RIAA approved P2P service. iMesh’s website states that the service is “100% clean” and free of viruses, spyware, and adware.

Coming Events of Interest

  • User Generated and Mobile Content – The Producers Guild of America (PGA) New Media Council (NMC) and the Emmy Awards Advanced Media Committee, in cooperation with the New School Department of Media Studies and Film and the Parsons Department of Design and Technology will present this timely discussion and demonstration on April 18th from 7:00-9:00 PM at The New School for Social Research Theresa Lang Center, 55 W. 13th Street, 2nd Floor, between 5th and 6th Avenues in New York, NY.

  • Web Analytics Conference – April 18th in Santa Barbara, CA and May 3rd in London, England. A forum for discussing your most critical issues: Which metrics justify Web projects? How do you spot your most valuable customers? How do you calculate the value of Web intelligence? Senior Web executives, focused academics, software and service vendors, and members of the press working together to identify and address e-metrics issues.

  • LWNW Canada 2006 – April 24th-26th in Toronto, Canada. LinuxWorld & NetworkWorld (LWNW) Canada Conference & Expo 2006 is “Where the IT Industry Meets!” and the number one marketplace for management and IT professionals to interact and learn about the newest applications and solutions and see demonstrations of leading information technology based products, services, across all computer platforms. Exceptional educational programming, dynamic keynotes, case studies, tutorials, and hands-on labs provide valuable information demonstrating real-life applications and solutions.

  • Games & Mobile Forum – April 25th–26th in New York, NY. This year’s topics include: Games & Mobile Innovations from Around the World; The Business of Casual Downloadable Games; Mobile Games: The State of The Industry; Online Games: The State of The Casual Games Industry; Portability & Brands: Strategies for Multi-Platform Content Development & Brand Integration; Advertising in Games; International Games & Mobile; and Brands Going Mobile.

  • First Annual DCIA Conference & Expo – The first-ever global “P2P Media Summit” will cover policy, marketing, and technology issues affecting commercial development of this emerging high-growth industry. June 22nd-23rd at the Intercontinental/HI, Tysons Corner, McLean, VA. Exhibits and demonstrations will feature industry-leading products and services. Alston & Bird’s Aydin Caginalp & Renee Brissette will conduct a special session on corporate value optimization for firms in the distributed computing industry. For sponsor packages and speaker information, please contact Karen Kaplowitz at 888-890-4240 or karen@dcia.info. DCIA Members Music Dish Network and Javien are our media and e-commerce partners respectively. Plan now to attend.

  • Washington Digital Media Conference – June 23rd at the Ritz-Carlton, Tysons Corner, McLean, VA. DCIA Conference & Expo attendees can attend this executive briefing on emerging business, policy, and technology issues & opportunities at half-price. This is a must-attend event for media, entertainment and technology businesses, educational institutions, and government agencies involved in the digital distribution of media. The Washington Post calls the event: “a confab of powerful communicators and content providers in the region.”

Copyright 2008 Distributed Computing Industry Association
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