October 9, 2006
Volume 15, Issue 2
Welcome PeerApp
Please warmly welcome PeerApp to the Platform Group. We look forward to providing valuable services to this newest DCIA Member and supporting its contributions to commercial development of the distributed computing industry.
Founded in 2004, PeerApp is focused on developing and providing peer-to-peer (P2P) based bandwidth solutions to help Internet service providers (ISPs) enhance network efficiency, reduce P2P bandwidth costs, enhance subscriber quality-of-experience, and offer new services.
PeerApp products and solutions are suitable for all ISPs providing broadband, DSL, or cable service. PeerApp solutions are designed to help ISPs to efficiently manage their networks in compliance with applicable laws.
The company is headquartered in Newton, MA with research and development operations in Tel Aviv, Israel.
P2P traffic now consumes some 70 percent of bandwidth and promises to increase with the entertainment industry embracing P2P for content distribution, and the increasing popularity of personal audio and video players.
PeerApp’s P2P technology cuts bandwidth use nearly in half by localizing popular movies, music, and other entertainment content. With P2P traffic taken off the transit line network and last mile upstream, efficiency is significantly improved.
The ISPs get more bandwidth capacity without higher network costs. This means ISPs can offer more value-added service to retain and attract subscribers, increase competitiveness, meet future needs, and improve profitability.
In early 2006, following extensive testing and evaluation in Asia and the South America, PeerApp launched its UltraBand 2000™ in the US. Over the past year, ISPs in Asia and the South America reduced their overall bandwidth cost by over 50 percent and substantially increased their customer satisfaction, following deployment of UltraBand 2000™.
UltraBand 2000™ is a finalist in the 2006 InfoVision Awards for broadband innovation. PeerApp’s Vice President of Business Development Frank Childs will be a principal speaker at the upcoming P2P MEDIA SUMMIT LA on October 23rd.
Javien Powers MySpace Music Sales
DCIA Member Javien Digital Payment Solutions announced this week that its services have been selected by SNOCAP to power online sales for the company’s digital music services. Javien’s technology provides an e-commerce solution with broad functionality to sell music tracks for artist stores, including the recently announced partnership with MySpace.
"Javien’s technology delivers our clients’ customers flexibility in how they buy and sell their digital content," said Leslie Poole, Chief Executive Officer at Javien. "Retailers and artists can offer content through subscription, pay-per-view or, pay-per-download. And they can offer end-users a host of payment options including PayPal, credit/debit cards, ACH, and other alternative payment types."
As an ASP solution, Javien’s technology offers a variety of components that enhance the core, transactional e-commerce engine for timely, efficient implementation.
"Javien offers extensive flexibility and features to handle payment processing in all SNOCAP-driven digital commerce," said Karin Visnick, SNOCAP’s VP of Product Management. "In the rapidly developing digital music marketplace, it is imperative that we have a solution that provides our customers with payment options adaptable to any type of environment."
Through a web interface, Javien’s customers get a merchandising solution that allows them to administer their digital product catalog, manage customer information and communications, and get a variety of sales reports. Its platform integrates with the payment gateways, processors, and a variety of third-party providers, securely storing customer data to meet PCI compliance rules. Javien’s micro-payment aggregation engine saves costs associated with payment processing fees.
Report from CEO Marty Lafferty
 Congratulations to Ned and Tinzar Sherman for an exceptionally well-produced and well-attended Digital Music Forum West 2006.
We are especially grateful to participants in "The Evolution of Peer-to-Peer and Music" panel for a very stimulating session.
DCIA Member panelists included Chip Venters, CEO, Digital Containers; Joey Patuleia, VP, Artist Relations, INTENT MediaWorks; Daniel Harris, CEO, MediaPass Network; and John Desmond, VP, MediaSentry Services, SafeNet.
Eric Garland, CEO of BigChampagne, the DCIA’s official industry data resource, also participated. Michael Weiss, CEO of StreamCast Networks, developer and distributor of Morpheus also spoke on this panel.
Eric began by stating that BigChampagne taught the world that P2P is not a "pirate website," and helped to define the real challenges presented by this emerging technology. He observed, regarding an earlier panelist’s questioning of P2P’s relevancy, that major entertainment firms are now ready to focus more on the carrot than the stick, recognizing the reality that demand evidenced by P2P usage growth is not subsiding. He envisioned that, as the social networking phenomenon continues to grow, specific communities-of-interest will get smaller as they become more numerous – as well as more personally relevant to their respective users.
Michael opened by ironically noting that Morpheus’ contributions have unintentionally included establishing legal precedents. He went on to demonstrate the unique appeal of P2P in the context of today’s social networking phenomenon, where sharing content is part of an online community experience that helps users in emotionally powerful ways define themselves and meet others. Unfortunately, he said he anticipates continuing legal activities for StreamCast in the immediate future before being able to achieve a settlement with the entertainment industry that will permit moving beyond the current ongoing conflict.
Daniel started by explaining how MediaPass Network encourages content rights-holders to leverage P2P as a platform. From a technologist’s perspective, P2P presents unique challenges as a mass-marketing vehicle; but from an artist’s perspective, P2P is a way to push millions of downloads per week without incurring bandwidth costs. He acknowledged that there is also the challenge of re-branding P2P as an enabler of highly efficient, extremely scalable content distribution businesses, rather than a technology that has been associated with copyright infringement.
Joey updated attendees on INTENT MediaWorks’ recent marketplace advancement, with the company now delivering ten-million licensed-content P2P downloads per month, 15% of which are paid (as differentiated from promotional), and sharply increasing month-over-month. He said P2P is fostering an entrepreneurial renaissance, empowering rights holders to distribute many ancillary materials with music tracks to more totally immerse fans in a relationship experience. He extolled the expanding capabilities of P2P-based services that enable artists to reach their fans more directly and in larger numbers than ever before.
John offered a series of charts based on SafeNet’s data collection showing P2P’s continued steady growth amidst market-share shifts to an average concurrent user base of 12 million. He overlaid instances of landmark legal decisions on the P2P usage growth timeline, demonstrating that such events have not impacted consumer behavior, and underscoring the importance of learning how to monetize P2P traffic. He noted that major labels are showing a greater willingness to experiment with new artists whom they are working to bring along than with established names. He expressed the view that the P2P branding issue will resolve itself as P2P becomes an integral part of Microsoft’s next generation Vista operating system.
Chip began by outlining Digital Containers’ patented technology designed to monetize content through super-distribution, making note of the fact that P2P is the most efficient means possible for redistributing any type of content. He expressed the view that consumers are not hung-up on the P2P branding issue and basically just want to access content as quickly as possible on the most attractive terms available, in which case P2P is best positioned to win versus competing distribution technologies. P2P inevitably will become the de facto way most content distribution takes place in the future.
In response to audience questions, panelists explained that P2P usage exposes consumers to no greater risks than general use of the Internet, citing recent studies and workshop findings. P2P-based streaming can also be more efficient than non-P2P-based streaming. Ad-supported P2P, where most content continues to be free to users, seems to hold the greatest promise for successful conversion of user bases to licensed business models, at least initially. And P2P will be the way that the long-tail marketing trend, which allows for monetizing content among smaller-and-smaller niche audiences, also achieves its greatest potential.
DCIA Member speakers and moderators at Digital Music Forum included Brent Muhle, General Manager, Nettwerk Music Group; and Aydin Caginalp, Partner, Media and E-Commerce Group, Alston & Bird. Attending Members included CacheLogic and Javien.
To more thoroughly explore P2P file-sharing, plan now to attend the DCIA’s first-ever P2P MEDIA SUMMIT LA.
The P2P MEDIA SUMMIT LA is a must-attend event for content creators and rights holders, P2P application developers and distributors, solutions providers and service-and-support companies interested in profiting from the realization of the file-sharing marketplace to its fullest potential.
The Conference will be held Monday October 23rd and the Exposition Tuesday through Thursday October 24th-26th in conjunction with Digital Hollywood Fall.
Your registration for the full Conference & Exposition includes admission to DHF and represents up to a $200 savings over regular rates for these events individually.
The Conference – at the Doubletree Guest Suites Santa Monica – presents leaders of this rapidly emerging high-growth industry from around the world.
Don’t miss the first-ever P2P MEDIA SUMMIT LA. Please click here to register, or call 410-476-7965. Share wisely, and take care.
P2P Industry Networks for Legitimacy
Excerpted from TechWeb Report by Laurie Sullivan
Despite legal victories by record labels and their trade associations, the growth of P2P networks continues unabated. BitTorrent and versions of eDonkey remain destinations where people can trade files and get music and video content for free.
The Distributed Computing Industry Association (DCIA), an industry group trying to change the perception of P2P networks, rallied attendees this week at the Digital Music Forum West 2006.
The DCIA has a charter to help companies find the business models to commercialize P2P networks, said Marty Lafferty, DCIA CEO, during a panel discussion on P2P. P2P gives musicians a marketing tool and strong promotional platform. Executives said artists can put a hot track on the Internet and push millions of downloads in one week.
The numbers of users and daily downloads on P2P sites are staggering. For example, "The Open Door" album by Evanescence was downloaded on BitTorrent 25,000 times in one day.
"We estimate there are 6 million users on BitTorrent at any one time, triple from about a year ago," said John Desmond, Vice President of MediaSentry Services at SafeNet, which provides encryption technologies to protect intellectual property. "You’re also seeing a shift to open source and that would explain the rise in BitTorrent."
eDonkey was shut down, but the network lives on and continues to grow because there are so many variations of the client, such as eMule, said Michael Weiss, CEO at StreamCast Networks, the parent company of file-sharing network Morpheus.
The average consumer doesn’t know about BitTorrent, eMule, and others, or how they work, which is good news for the recording and movie industry, experts said. Lucky, too, for those in the space who are trying to clean up P2P’s image, others agreed.
Companies need to re-script the message by collectively pooling resources and making it a priority, Daniel Harris, President of MediaPass Network, said in an interview.
"That will come with the next generation of profitable businesses using P2P technology," he said. "The networks can distribute music securely. It’s called permission-based digital rights management (DRM)."
Rights holders have the ability to put the files on the network and distribute them securely. Harris said not all in the music industry are taking advantage of the distribution model out of fear, lack of control, and being unfamiliar with available tools to protect content.
The industry needs to work toward establishing a certification or permission-based authentication system for approved file sharing that can be interoperable with many platforms. Services also need to provide free content, but give copyright holders a way to subsidize content distribution with advertising to get paid.
But the challenge remains with people continuing to distribute infringing works on P2P networks connected by the millions of computers running client applications.
And there’s a good possibility file sharing could return to favor. According to a Business Week article, Skype co-founders Janus Friis and Niklas Zennstrom are preparing to unveil their latest venture in beta, a video website known as the Venice Project that combines professionally produced TV and video with the interactive tools on the web.
Consumers will have an option to access streamed content through a secure P2P network, sharing playlists with friends.
Friis and Zennstrom are known for once alienating music labels by creating the Kazaa file-sharing platform prior to founding Skype. The platform aced many lawsuits from the recording industry, which called Kazaa a tool for intellectual property infringement.
That’s the stigma the DCIA will attempt to change.
Skype Founders in Venice Project
Excerpted from MediaPost Report
DCIA Member Skype Co-Founders Janus Friis and Niklas Zennstrom are trying their hand at online video, working together on a new software application that combines professionally produced TV and video with the Internet.
Called the "Venice Project," the software connects with the web and opens a full-screen window that displays near high-definition-quality video images. This is more than just TV. If you toggle your mouse, a variety of tools appear while the video is playing. DVD-like controls appear at the bottom. On the left is a list of preset channels to choose from.
Zennstrom and Friis have a history of developing disruptive technologies. They are the Co-Founders of the P2P file-sharing program Kazaa, distributed by fellow DCIA Member Sharman Networks, as well as Skype, the web’s leading voice over Internet protocol (VoIP) application.
Skype sold to eBay for $2.6 billion. Like Skype, the Venice Project is designed to work within the intellectual property rights system, not against it.
It’s built on P2P technology, but it’s not a file-sharing system. The infrastructure is made up of user PCs – each with same software installed, rather than using central servers to store and distribute files. Users also don’t download files; they stream them, which makes it much more difficult for users to distribute unlicensed copies of the content they’re watching.
Zennstrom and Friis are entering a crowded field. Just this week, News Corp. said it would make TV shows available to users on MySpace. YouTube, Grouper, Video Egg, Revver, and the video sites of the major web portals could all be considered rivals. Click here for Business Week’s analysis.
P2P Execs Reflect on Relevancy
Excerpted from Digital Media Wire Report by Scott Goldberg
From Digital Music Forum West 2006: Amanda Marks, EVP of Universal Music’s eLabs, set off an alarm among the P2P executives in attendance with her suggestion that P2P has become irrelevant. Not surprisingly, they disagreed.
"What that really means," said Eric Garland, CEO of BigChampagne, "is, ‘We’re going to take P2P off the agenda. We’ve knocked out a lot of household names in legal battles, and now we’ve got to focus on creating a lot of growth, because we’re probably not going to thwart people’s desire to pass stuff around on the Internet.’" The sense that the labels are hiding their anxiety by dismissing P2P companies as a threat was shared by others. All of the panelists agreed the playing field has changed, perhaps unfavorably, if you’re one of the major labels.
Joey Patuleia, VP of Artist Relations with INTENT MediaWorks, said, "Very quickly, new artists are figuring out they don’t need labels." One of the ideas behind social networking and P2P, as it relates to the artists who use it as a professional vehicle, is that anyone is empowered to promote themselves and their brand, to meet new people, and to spread their music on their own. The label is less necessary as a path to success.
The panel’s moderator, Marty Lafferty, CEO of the DCIA, finished the discussion by asking the panelists where they saw P2P going in the near and distant future. Daniel Harris, the CEO of MediaPass Network, answered, "P2P is associated with copyright infringement, and that needs to change." The re-branding of P2P as a legitimate technology tool will be one of the major hurdles.
Mr. Garland predicted that P2P is headed for smaller communities where the user finds more people with more similar tastes than they currently do. "The evolution is in lockstep with all of these other popular communities. All of these phenomena grow as the groups shrink. The people you are interacting with will become more and more like you. It will be smaller groups, and larger phenomena."
More discussions on the relevance, importance, and future of P2P are sure to be discussed at the P2P MEDIA SUMMIT LA in Santa Monica, CA on October 23rd.
From Piracy to Profit
Excerpted from Billboard Report by Brian Garrity
After twelve months of frustration, fresh signs of promise are emerging from the P2P space.
iMesh relaunched the BearShare brand under its copyright-friendly technology platform in August. DCIA Member Sharman Networks is working on launching a post-RIAA-settlement Kazaa. And BitTorrent is making inroads with the film industry, inking a first-of-its-kind movie download deal with Warner Bros. Home Video in May.
Label licensing deals with ad-supported downloading services – such as QTRAX distributed by DCIA Member LTDnetwork – are also on the rise with services to launch by year’s end.
"We’re excited to get some of the legal issues behind us and clarify the rules of the game," EMI VP of Business Development Ken Parks says of licensed P2P. "Now we can focus on building legitimate business models."
Billboard breaks down the players targeting the P2P space.
KAZAA
Ownership: Sharman Networks
Management: Nikki Hemming, CEO
Business model: After settling with the entertainment industry in July for more than $100 million, Kazaa is in the midst of transitioning its user base to a commercial service. At the height of its popularity the file-sharing network reportedly claimed as many as 4 million users worldwide.
Beginning July 27th, new Kazaa users began downloading software with a filtering technology that weeds out copyrighted works from major labels and film studios. Still to be seen is what form Kazaa will take, and how quickly Sharman Networks can get an offering up and running.
Hemming says the company will look to pursue multiple offerings, including a possible subscription service. The company is in negotiations with major labels and publishers about content licenses.
RIAA Chairman & CEO Mitch Bainwol says, "We’re hopeful that as Kazaa moves into a legitimate model that it’s successful. We’re now in a partnership."
QTRAX
Ownership: Brilliant Technologies
Management: Allan Klepfisz, President & CEO
Business model: NY-based QTRAX intends to offer a free sampling tier and premium subscription service when it launches later this year. The ad-financed free tier will allow users to download licensed tracks at no charge; the PC-tethered files can be played back five times using Microsoft’s Windows Media Player.
To play a track more than five times, users upgrade to QTRAX’s subscription service.
The company is looking to create ways to extend the time in which users can interact with the content for free, rewarding more plays based for time spent on the service or for referring music to friends.
Users of QTRAX won’t have to watch ads when they download files. Instead the company plans to generate advertising through paid search, banners, and contextual advertising.
Klepfisz says he ultimately wants as few restrictions on the content as possible so it mirrors much of the P2P experience. "The closer the model is to current behavior, the more chance there is for success," he says.
Damaka Launches P2P Desktop Sharing
Damaka, a fast-growing communication and collaboration software company, has introduced P2P desktop sharing. This feature allows users to see the desktop of their friends, family, and business associates after downloading the Damaka software for free from the company website. Desktop sharing is a new feature added to Damaka’s existing product offering which includes voice, video, DialOut, IM, and file transfer.
Damaka is the first company in the world to offer SIP-based, P2P desktop sharing, along with multi-party video-conferencing, IM conference chats, and 8-party voice-calls. The company founders noted that their vision is to create an interconnected world where all aspects of communication, from a simple phone call to a powerful collaboration session can take place in a virtual environment seamlessly.
According to Siva Ravikumar, Damaka CEO, "Damaka has already tackled the unified communication space. Our goal now is to be the cutting-edge provider of P2P collaboration. Desktop sharing is just the beginning of a suite of collaboration tools we plan to launch. Our goal is to create a connection revolution where you will not have to fly to another city again for your meetings."
The Damaka free consumer version offers P2P desktop sharing in view mode only. The enterprise and operator version will include an upgrade where one user can give desktop control to another user within his or her P2P network.
P2P TV Streams Live US Channels on Internet
Excerpted from PC Magazine Report by Mark Hachman
Fans of the Oakland Athletics baseball team were in a quandary this week: due to Major League Baseball’s (MLB) scheduling preference for East Coast teams, games featuring the A’s were shown during work hours, in the mornings and afternoons on the West Coast.
Since the games weren’t available anywhere else, they turned to the Internet and P2P TV.
What fans on the Athletics Nation blog discovered was TVU Player, an application that uses consumer "broadcasters" to pipe the channel they’re watching over the Internet.
TVU is the latest incarnation of P2P technology, which first entered the public consciousness with applications like Napster, Kazaa, and BitTorrent. The technology appears to use a central server, but also relies on the clients viewing the stream to redistribute it to other PCs.
At press time, the TVU application was streaming live feeds of local ABC, CBS, and NBC programming, plus additional cable channels such as CNN, Cartoon Network, and TV Land.
Until recently, the application also streamed for-pay channel HBO Asia, according to postings in the site’s user forum, and currently streams other channels including a Chinese movie channel with American movies subtitled in Chinese. A partner site, Viidoo.com, also hosts a static program guide with broadcast times in GMT.
TVU Player is hosted by TVU Networks, a company in Shanghai, where programs like TVants and others were created to allow consumers to play Asian television over the Internet and tune into World Cup soccer games over the summer.
TVU Player appears to be the only one hosting major US broadcast networks, however. Other sites, such as ChannelKing.com, do not require special software but show a mix of niche channels.
Coming Attraction: YouTube’s Business Model
Excerpted from Knowledge@Wharton Report
A deal between YouTube and Warner Music Group (WMG) to share music videos and revenue could usher in an era where the interests of content copyright holders and freebie-loving consumers align. The outcome will be determined by how the revenue between copyright holders and distributors like YouTube gets shared.
YouTube, the largest video-sharing site on the web, and Warner Music Group announced a deal to distribute WMG’s music video catalog on YouTube. The catalog includes music videos, behind-the-scenes footage, artist interviews, and other special content. In addition, YouTube’s bevy of amateur video producers can use WMG’s music library as soundtracks for the content they upload.
As for copyright management, YouTube plans to build a content identification and royalty reporting system to identify video content – such as the most recent Madonna video – and divvy out payments to artists. The system, to be launched by the end of the year, will allow WMG to authorize rights to YouTube users. Advertising revenue will be shared between WMG and YouTube.
YouTube CEO Chad Hurley says the deal "is paving the way for media companies to harness the vast potential of user-generated content on YouTube." For his part, WMG CEO Edgar Bronfman, Jr. – who headed Vivendi Universal when recording companies sued the original Napster music file-sharing service and shut it down in 2000 (Napster has since relaunched as a licensed music subscription service) – said the partnership will "enable artists to reach consumers in new ways, and ensure that copyright holders and artists are fairly compensated."
Wharton Marketing Professor Peter Fader says YouTube’s latest partnership (it also has a promotional deal with NBC) is "the single biggest business development deal in the history of digital media. This changes everything, and people will look back at it as a turning point."
However, other business models that borrow from a wide range of industries – including broadcast TV and radio – may form, says Fader. While Fader says more details need to emerge about the YouTube/WMG partnership, he outlined why the deal is significant.
First, it’s symbolic. Bronfman is taking a totally different approach with YouTube than he has in the past. Bronfman was among the largest detractors of Napster when he was at Vivendi Universal. "Now he’s on the other side and leading the way with a proactive stance," says Fader.
Second, it’s a big shift. The fact that WMG gave YouTube access to its entire catalog means media companies are coming around to the idea that digital distribution and user-generated content can add value. Third, YouTube is creating a system to distribute revenue to copyright holders. "With this system it’s likely that everyone else follows suit," says Fader.
"This deal gets YouTube out from under the sword and provides a revenue stream that lines up with what people want to do with the content," says Wharton Senior Director of Information Technology Kendall Whitehouse. "The trick with the WMG deal is teasing out the details. But the main attraction is that YouTube and WMG are coming up with a model that rides on top of what people are doing anyway."
According to Fader, YouTube has the opportunity to find multiple business models even as it pays royalties to content providers. Among the possibilities: A radio-like model where YouTube pays royalties for content and relies on advertising, or keyword advertising linked to video categories and e-commerce referrals where YouTube points consumers to places to buy music and videos. Fader also wouldn’t rule out a subscription-based model for YouTube. A pay-per-view model, say 50 cents for popular home video, could emerge.
"YouTube hasn’t tipped its hand much, but I hope they are contemplating many models and experimenting with more than one," says Fader.
Consumer Protection in the Next Tech-Ade
Excerpted from Online Spin Report By Dave Morgan
Our industry is maturing and we need to be more involved in public policy issues that can impact our futures; and consumers are increasingly aware of privacy issues and much more concerned about what is being done with their user data.
Against this backdrop, it is great news that next month the Federal Trade Commission (FTC) will be holding hearings on Protecting Consumers in the Next Tech-ade.
Basically, the FTC wants to better understand how technological and business developments will shape the consumers’ core online experiences.
Our industry is becoming more and more consumer-centric. Today, consumers have the tools and the growing sophistication to drive digital media and advertising. To them, it is all about "me." Add consumers to a robust and growing online ad business and a free-for-all marketplace with lots of opportunity for abuse of consumers’ rights and data, and you can be sure of one thing: regulations and regulatory bodies will be part of it. Our industry needs to grow up. Participating in the public policy process is part of the "growing up" of any and every industry.
Whether you are for or against government oversight, you cannot deny that it will be a big part of our business in the years to come, and will be needed to protect consumers from some of the practices and bad apples that we will certainly see.
Given that reality, we should applaud the fact that the primary consumer regulatory body in the US, the FTC, is taking proactive steps to learn about what we do, how we do it, and what we think that future might look like. They want to listen. We should be prepared to talk, and we should be prepared to listen as well.
The Commission can tell us a lot about what consumer protection means and how we as an industry can best ensure it with our own practices. We can make each others’ lives in the future much, much easier if we talk and listen more today.
Everyone that cares about this industry should find ways to get involved in this process, to have their voices and opinions heard. Go to the FTC website.
Find out how to submit your own views of the future. Keep up on the hearings and their progress. Check in with your trade organization and see if it is involved. Take an interest in the Commission’s findings and reports. The FTC is taking steps that will shape not only consumers’ future, but yours as well. It is a good time to pay attention and get involved. You will certainly be living with the consequences later.
Wright: Economy under Attack
Excerpted from Hollywood Reporter Report by Brooks Boliek
In a call to arms for American industry, NBC Universal Chairman & CEO Bob Wright urged the nation’s political and business leaders to attack copyright infringement with a vigor nearing that of the war on terror.
In a speech Friday titled "A Time of Reckoning" before the US Chamber of Commerce, Wright said the threat infringement poses to the country’s economic security was nearly equivalent to the threat terrorism poses to the nation’s physical security.
"Five years ago we learned, tragically, that our physical security is under attack," he told the audience at the chamber’s symposium on counterfeiting and copyright infringement. "Since then, we’ve been a nation at war, with immense resources mobilized to fight a difficult struggle against an elusive enemy. Today, I want to suggest that the second pillar, our economic security, is also being challenged."
Wright warned that the problems the entertainment industry faces because of copyright infringement will soon hit other economic sectors.
"At risk is every sector of the economy where creativity, innovation, and invention drive the creation of economic value and high-wage jobs," Wright said. "If we do not step up our efforts to protect the foundation of future economic growth, our nation and our children have a bleak future. This issue needs to be moved up on the agenda of every business leader, every trade organization, and every Congressional office."
To prove his point, Wright released a study claiming that motion picture infringement has a broader impact on the nation’s economy than previously thought. The study by the Institute for Policy Innovation claims that economic costs of motion picture infringement alone are $20.5 billion when the ripple effect of the problem is calculated. Steven Siwek, the study’s author, said related costs go beyond paying the actors, producers, and grips to include the salaries for ticket-takers at the movie theater, attorneys’ fees paid by the studios, and catering costs. The study didn’t include things like the salaries of trade journalists who cover the industry.
Infringement not only takes money out of the economy but increases the federal deficit as it costs $837 billion in lost tax dollars, $5.5 billion in lost wages, and costs 141,030 jobs.
Wright appealed to the assembled business leaders and politicians for their help in battling the bootleg scourge.
He also pushed Internet service providers (ISPs) and consumer electronics makers to enlist in the anti-piracy crusade, arguing that they have as much to lose as the copyright industries.
Wright pushed ISPs to take on a more proactive role in the war on copyright infringement, saying that they need to begin actively filtering content for unlicensed copyrighted works that are being transported on their networks.
ISPs have traditionally resisted that idea. In the fight that led up to passage of the Digital Millennium Copyright Act (DMCA) in 1998, the ISPs won a critical legislative victory that holds them blameless for copyright infringement when they act as a "pure conduit."
Because big network companies like Verizon are getting into the content business, making deals with companies like Wright’s to transmit high-value programming, they may be more willing to take an active role, Wright suggested." The reality is, they’re going to have to accept some level of responsibility," he told reporters.
Wright said services like YouTube were flirting with copyright infringement, but he hoped that would get worked out, too. "It has a little bit of the Grokster kind of an appearance and feel. They know it, and we know it. Sooner or later, it’ll all get ironed out."
NBC Universal executives said the company and YouTube were in negotiations over ways to prevent copyrighted material from being abused on the service and said the company has been responsive in taking down infringing material when discovered.
DCINFO Editor Note: At press time, Google is reportedly in negotiations to acquire YouTube for $1.6 billion.
Coming Events of Interest
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Shop.org Annual Summit – October 10th-12th in New York, NY. The premier gathering of Internet and multi-channel retail leaders. eMarketer CEO Geoff Ramsey will moderate a discussion of "Internet Video and User-Generated Video."
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Webcasts, Downloads & Ring-Tones – October 11th in San Francisco, CA. The National Association of Record Industry Professionals (NARIP) presents an overview of the legal and practical aspects of the NEW recording industry Whether you are an artist, manager, lawyer, record executive, or producer this music business overview is essential to understanding new income streams such as digital downloading, webcasting royalties, mobile music deals, video games and certain types of branding.
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P2P MEDIA SUMMIT LA – October 23rd-26th in Santa Monica, CA. The Fall DCIA Conference & Exposition will cover policy, marketing, and technology issues affecting commercial development of this emerging high-growth industry. Exhibits and demonstrations will feature industry-leading products and services. For sponsor packages and speaker information, please contact Karen Kaplowitz at 888-890-4240 or karen@dcia.info. Plan now to attend.
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Digital Hollywood Fall – October 24th-26th at Loews Santa Monica Beach Hotel in Los Angeles, CA. The preeminent digital media and entertainment conference in the country. This year featuring more than 70 different sessions and over 450 speakers. The DCIA will moderate "Track I: Next Generation P2P Music and Film - DRM, Paid for Pass-Along and Other Legal Distributed Computing Models and the Entertainment Industries."
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Digital Hollywood Europe in London – November 29th - December 1st at ExCeL London, The Docklands. The DCIA will moderate two P2P panels featuring Ingjerd Jevnaker, Marketing Manager, RawFlow; Daniel Harris, Founder, Kendra Initiative; Bruce Benson, Senior Managing Director, FTI Consulting; Les Ottolenghi, Founder & CEO, INTENT MediaWorks; Chip Venters, CEO, Digital Containers; Daniel Klaus, CEO, Music Nation; Jonathan Friend, CTO, Friend Media Technology Systems (FMTS); Xavier Casanova, CEO, Perenety; Tom Meredith, CEO, P2P Cash; and Phil Morle, Director of Technology, Sharman Networks.
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