Mediadefender Moves into P2P Marketing

You’re trying to download the latest Madonna album, only to find the pop queen calling you…a thief? Welcome to the odd and oftentimes annoying war against piracy. The entertainment industry has been hiring companies to pollute P2P networks with phony files for years, and now some of these very same companies are going into marketing. Instead of sabotaging file transfers, they offer their own media for download, and instead of corrupted files, suddenly it’s all about branding.
Santa Monica, Calif.-based Mediadefender has been at the center of this shift. The subsidiary of ARTISTdirect is known and hated in the file-sharing world for its anti-piracy work, but has recently gotten a lot of press for an upcoming campaign involving ad-supported MP3 downloads. Mediadefender has been experimenting with P2P marketing for a number of years now, and they’ve learned a few lessons along the way. VP Jonathan Lee agreed to share some of them with me.
Mediadefender has thousands servers in co-location facilities around the globe; the decision to put them to use for marketing has been brewing for some time, Lee tells me. With such an abundance of resources, he notes, “What else can you do with it?”
Distributing actual content was an obvious idea, but for the longest time the entertainment industry wasn’t ready to utilize P2P. Companies felt they would undermine their position in legal conflicts if they distributed their own files through these networks. But all of this changed when the Supreme Court ruled against Grokster in the summer of 2005. “After the ruling those gloves came off,” says Lee.
And with that, the learning curve began. “We’re throwing things at the wall and see what sticks,” he explains. Early attempts to do advertising on P2P networks involved what Lee describes as a “bait and switch”. Files were mislabeled in order to get people to watch ads or load Web pages. “Obviously there are tremendous problems with that,” he acknowledges. Most brands just don’t like to frustrate their customers –- except, of course, porn companies, which still use this technique heavily to spam P2P networks.
Another strategy involved sending people to iTunes and similar download stores to make them buy legitimate copies of the content they were looking for with Limewire and other clients. “That really hasn’t worked so well,” admits Lee. Same goes for the idea of mixing ads with search results in order to get people to buy concert tickets and ring tones. He believes that people are just too suspicious to click on anything that remotely looks like an ad in a P2P network, which is why they tend to ignore them.
So what does work? “Things you can’t buy online,” says Lee. It turns out that P2P is actually really good for branding. Mediadefender had a lot of success with a campaign for a soft drink maker that offered people videos they actually wanted to watch. Music works well, and so does goofy stuff. Funny commercials –- the stuff that people re-post on YouTube and then forward to their friends — are a big hit on P2P networks as well.
Does this mean people should just abandon their annoying anti-piracy tactics and instead post some goofy clips on P2P networks? “You are already dealing with your anti-piracy issues if you are doing promotion,” admits Lee. He doesn’t think that the anti-piracy part of his work will go away anytime soon, though.
In fact, Mediadefender is still making most of its money by polluting P2P networks with spoof files, which is why the company will remain be one of the most hated enterprises in the file-sharing world for the foreseeable future. Jonathan Lee doesn’t seem to mind, and he doesn’t think it impacts their marketing business at all. Successful P2P marketing campaigns always looks very viral, he tells me, and the focus really isn’t on his company. “If it is good content, then it’s gonna carry itself.“

TorrentSpy begins weeding out copyright content

TorrentSpy, the torrent-file search engine accused by Hollywood of aiding copyright violators, plans to remove links from its search results to pirated content using a new filtering system.

FileRights is an automated filtering system created by some of TorrentSpy's founders. The technology uses "hash" values to automatically remove links to infringing works from search engines that subscribe to the service.

In an interview, Rothken acknowledged that using hash marks to identify copyright content is not foolproof. If a file is altered then the system may not recognize it.

Filtering doesn't necessarily mean an end to the hostilities between Hollywood and the torrent search engines. In 2001, file-sharing system, Napster, launched a filtering system that failed to thwart illegal file sharing enough to satisfy the music industry or the courts.

FileRights works like most video filters. Copyright owners handover information about their films or TV shows and the system detects any files containing unauthorized copies. Links to those files are automatically removed.

Any copyright owner, Web site or search engine is welcome to subscribe to the service for free, according to the company's statement. According to Rothken, one of TorrentSpy's competitors, IsoHunt, has agreed to use the filtering system as well.

SafeNet Launches Piracy-Monitoring Service

SafeNet Launches MediaSentry Business Intelligence Service for Audience Measurement and Piracy Monitoring on Global Peer-to-Peer Networks
World's First Service to Offer Content Owners and Digital Promotion Companies Direct Measurement Capabilities on Industry's Most Prolific File-Sharing Networks

Digital Hollywood Spring, Santa Monica, Calif.,– June 11, 2007 - SafeNet Inc., a global leader in information security, announced the launch of its MediaSentry Business Intelligence (BI) services portfolio which features world's first direct measurement of user activity across the most heavily trafficked peer-to-peer (P2P) networks globally.

The BI Direct Measurement service represents a significant opportunity for content owners and online advertisers to achieve an unprecedented level of visibility into P2P networks that have historically proven difficult to measure and understand.

By leveraging a combination of SafeNet's proven techniques for identifying and tracking content online and the unique analysis tools and reporting capabilities offered with BI Direct Measurement, customers will now be able to monitor, track, and understand user behavior and consumption on global P2P networks.

This insight into global consumer demand across one of the world's largest bases of content seekers can be used by content owners and online advertisers alike to understand emerging markets and measure consumer response to new distribution techniques, marketing initiatives and advertising campaigns.

"As the media industry identifies and begins to embrace a variety of new and innovative methods for turning next-generation consumers into captive audiences there is a desire to dedicate a larger portion of overall investment to online channels," said Analyst, Digital Media Practice, Frost & Sullivan, Zippy Aima. "Success reaching these new and evolving consumer segments requires a comprehensive and accurate understanding of what is truly happening on peer-to-peer networks. Until now, this type of data has been minimal at best."

Unlike other measurement services which employ a traditional sampling approach whereby data is captured in snapshots over specific time intervals, BI Direct Measurement continually captures all download activity for a chosen piece of digital content in real-time. Thus, visibility into how and when content is propagating globally across networks increases exponentially.

According to Vice-President, Global Outsourcing, SafeNet Infotech, Deepak Prasad, "Valuable download metrics including total quantity of files available, time of day, geography, version, download duration and success rates enable content owners to further assess consumer interest and content demand as well as quantify the impact of digital piracy."

"With more than 12 million users at any given time, peer-to-peer networks represent a tremendous business opportunity," said Vice President, MediaSentry Services, SafeNet, John Desmond. "Our goal is to provide the insight customers need to effectively protect their most valued digital assets while also finding ways to turn these growing communities into lucrative marketing, advertising, and distribution channels. BI Direct Measurement delivers this insight thus enabling our customers to develop forward-thinking distribution strategies which offer consumers attractive and compelling alternatives to pirated materials online."

About MediaSentry Business Intelligence Direct Measurement

The combination of SafeNet's global footprint and technical expertise in investigation services resulted in the development of the World's most powerful and accurate measurements available for assessing file-sharing activity. From this, content owners gain significant visibility into consumer demand and file-sharing patterns on one of the fastest growing distribution channels today – peer-to-peer networks. The portfolio of MediaSentry Business Intelligence solutions provides content owners with the essential tools and information they need to:

• Quantify the scope and financial impact of digital piracy
• Monitor leaks and first releases of premium content online
• Track piracy propagation throughout the content's lifecycle
• Understand user behavior and assess global trends on file-sharing networks
• Evaluate the effectiveness of specific anti-piracy campaigns and initiatives
• Perform drill down data analysis by country, title and network
• Make informed decisions around future distribution strategies

Jamendo goes Platinum! 1.5 million albums downloaded

Jamendo, the P2P music-sharing site, reports that they have distributed, freely and legally, nearly 1.5 million albums; 1 million through BitTorrent alone. Jamendo supports other P2P protocols including Kazaa and eMule/Donkey.

Jamendo promotes themselves as a free and legal place for artists to distribute their songs. As Jamendo operates under the Creative Commons license, they’ve provided a way for artists to broaden their reach while retaining full ownership of their content.

RIAA launches piracy payment website

Designed to tackle illegal P2P activity by university students

The Recording Industry Association of America (RIAA) has launched a website to collect payments from those accused of music piracy.

P2Plawsuits.com is designed to cut back on the number of lawsuits filed by the RIAA, which it says will reduce the legal cost to those found guilty of downloading music illegally.
The RIAA has already sent 400 pre-litigation settlement letters to 13 universities and has asked them to forward those letters to the appropriate network users.

"Under this new approach, a student, or other network user, can settle the record company claims against him or her at a discounted rate before a lawsuit is ever filed," the RIAA said.
Mitch Bainwol, chief executive of the RIAA, claimed that the theft of music remains unacceptably high and undermines the industry's ability to invest in new music.

"This is especially the case on college campuses, despite innovative business models like the Ruckus offer of free legal music to any college student," he said.

"Our work with college administrators has yielded real progress, and we are grateful for the help of those who have worked closely with us.

"At the same time, we recognise that the nature of online music theft is changing, and we need to adjust our strategies accordingly."

The RIAA stated that it will now target Ares and Gnutella-based peer-to-peer networks such as LimeWire, which are gaining in popularity.

ASCAP Lawsuit Seeks To Classify Music Downloads As ‘Public Performance’

A federal court in New York will decide the question of whether downloading a song constitutes a “public performance” of a composition in response to a lawsuit brought by music publisher ASCAP against AOL, RealNetworks, Yahoo and others. The performing rights organization filed a cross-motion in the United States District Court for the Southern District of New York and was met by friend of the court briefs by a flurry of concerned parties, according to BillboardBiz, which listed the RIAA, BMI, the National Music Publishers’ Association, the Digital Media Association, the Cellular Telecommunication and Internet Association.

Until now, most digital services like Apple, AOL and others have only paid royalties for “reproducing” the recorded compositions that were downloaded. Most digital services have paid public performance royalties to ASCAP, BMI or SESAC only for streaming, all of which has been governed by a non-binding agreement was made some years ago since copyright law was unclear on the subject and digital services were at a nascent stage.

Now, ASCAP and others want clarification of copyright law, especially since television broadcasts, which often include music, are increasingly being offered as downloads. The performing rights organization claims that there should be a performance royalty. DiMA, whose brief was supported by NARM, the Entertainment Merchants Association, the Consumers’ Electronics Association, is fighting ASCAP’s suit. Jonathan Potter, DiMA’s executive director, said in a statement: “For a decade ASCAP and BMI have successfully preyed on less-confident or underfinanced companies that were willing to pay double-dip royalties. Now, however, we are confident that a judge will finally end this travesty.”

BitTorrent: Fast, but DRM a Downer

Playing with BitTorrent’s new content portal this week was interesting. The site looks great, it’s easy to navigate, and while the library of available content is certainly large, it’s not exhaustive. The downloading experience is first rate, even if there isn’t a large swarm of peers — their pipes can definitely seed torrents at high speed, as contributor Janko Roettgers found in his review for the P2P Blog. Users aren’t even locked into a particular client, as I used my favorite, Azureus, with no problems.

The price point on the content isn’t too egregious — short form content like television shows sell for the same $1.99 you can find them for at the iTunes store. Movie rentals are $3.99, and some movies can also be purchased for $9.99. The rentals are maybe a dollar more than I’m used to paying at the local video store, and the flat rate for movies seems a tad unrealistic for some of the older titles. As a cynic, I’d have to agree with Rafe Needleman that those oldies appear to be available for the sake of boosting the overall number of offerings.

So what are the downsides? There are a number of them, and they almost all have to do with the digital rights management.

First of all, because the store uses Windows Media DRM, you can’t play back content on a Macintosh — even with the Flip4Mac plugin for QuickTime. It also means that you can’t play it on any number of media players for Windows, such as my personal favorite, VLC. You are stuck with using Media Player.

Secondly, because the authentication has to make a call back to the server to verify your rights, you won’t be able to start playback of downloaded content if you’re online. For instance, you might download a movie while waiting at the airport for some entertainment during the flight. But if you don’t make sure to confirm your license before you get on the plane, you’ll have to wait until you land and can get back online.

Thirdly, the actual authentication process is, to put it bluntly, a pain in the ass. Maybe I’m just naive and inexperienced with buying content for Media Player, but the first movie I rented required a full 10 minutes of waiting for the player to contact the server, entering my BitTorrent account login information, and then clicking through menu after menu. Though once the movie did finally start, the quality is very good.

If I was a regular user of the service, at some point I imagine I would want to do something with my content that’s strictly verboten — like burning a purchased movie to a DVD to clear space on my hard drive, or loading the movie onto a video iPod to watch during an evening commute for instance. In that case, I would start looking for ways to strip the DRM — which, after about a little over an hour of searching Google, downloading an application and following some instructions from copyfighter forums, is easy enough to do. So easy that I felt obligated to contact BitTorrent and let them know about it.

Honestly, I feel for BitTorrent. They deserve to turn their expertise into a viable business. But as long as the studios and labels demand DRM, and Microsoft keeps promising them that it will work, BitTorrent will never be able to compete with unauthorized downloads. I will remain a staunch proponent of the BitTorrent protocol as an efficient means for distributing large amounts of data — but as Napster proved years earlier, no good media distribution technology goes unpunished by content providers.

Roo Group To Buy P2P Distribution Firm Wurld Media

Roo Group, the OTC-traded online video aggregator, distributor and tech providers, which recently got investment from News Corp, has signed an LOI to buy Wurld Media, the P2P distributor and operator of Peer Impact legal P2P service. The deal is expected to close in three months.

The deal terms: $10 million, to be paid in cash and ROO common stock at $4.39 per share. ROO will immediately advance $1.5 million to Wurld Media, and on the closing of the acquisition, ROO will pay $6.5 million dollars in stock or cash and will issue an additional $2 million in stock upon the achievement of milestones.

Established in 1999, NY-based Wurld Media specializes in the P2P distribution of music, movies, games and TV shows, but didn’t really gain much traction in the consumer market..its Peer Impact service has content from 20th Century Fox, WB, Universal, Sony, Warner, EMI, Atari, Activision, and others. These content providers are planned to continue post-deal.

Fair Use Amendment Introduced to the DMCA

There's been a big chill in the United States when it comes to technological progress that skirts the boundaries of copyright law. P2P and file-sharing developers know this all too well, as such development, with the exception of BitTorrent, has come to a virtual standstill. Thanks to the DMCA (Digital Millennium Copyright Act), the right of consumers to make backups of rightfully owned entertainment has become stifled.

For example, if a consumer wishes to make a backup copy of a legally purchased DVD, such a venture would not be possible (well, legally) because the DMCA prohibits individuals from circumventing copyright protection devices. 321 Studios, the company that created DVD X Copy, learned this lesson the hard way, and was sued into oblivion. Their software utilized a decrypting engine called DeCSS to make perfect backup copies, which is a classic example of breaching the DMCA.

More recently, there's been a steaming fair rights debate with the arrival of high definition video. Currently, there's virtually no way to make backup copies of one's high definition video collection, unless a - gasp - VCR is used. This lack of fair use support was one of the motivating factors behind the circumvention of AACS, the device used to "protect" high definition movies. In reaction to this stringent copy protection, Muslix64, the individual who pioneered the defeat of high definition protection, told Slyck.com, "I'm just an upset customer. My efforts can be called "fair use enforcement!"

There are also a few pioneers in the United States House of Representatives attempting to amend the DMCA in favor of the consumer. The Bill, named Freedom and Innovation Revitalizing U.S. Entrepreneurship Act of 2007 (H.R. 1201), or Fair Use Act for short, was introduced today by U.S. Representatives Rick Boucher (D-VA) and John Doolittle (R-CA.)

"The fair use doctrine is threatened today as never before. Historically, the nation's copyright laws have reflected a carefully calibrated balance between the rights of copyright owners and the rights of the users of copyrighted material. The Digital Millennium Copyright Act dramatically tilted the copyright balance toward complete copyright protection at the expense of the public's right to fair use," Boucher said. "The FAIR USE Act will assure that consumers who purchase digital media can enjoy a broad range of uses of the media for their own convenience in a way which does not infringe the copyright in the work," Boucher explained.

The Bill details several rights it hopes to give back to consumers, educators, and software/hardware designers. In an effort to pacify concerns of the entertainment industry (and to give the Bill a snowball's chance), the Bill does not contain "fair use defense to the act of circumvention." In other words, it doesn't establish a blanket safe harbor provision to all acts of circumvention.

Instead, the fair use provisions are narrow. The Bill seeks to amend the DMCA's circumvention provision by adding the following paragraph:"(F) The prohibition contained in subparagraph (A) shall not apply to a person by reason of that person’s engaging in a non-infringing use of any of the 6 classes of copyrighted works set forth in the determination of the 2 Librarian of Congress in Docket No. RM 2005-11, as published as a final rule by the Copyright Office, Library of 4 Congress, effective November 27, 2006..."If you read paragraph "A" of section 12-01 of the DMCA, it's fairly clear that no circumvention means no circumvention. "No person shall circumvent a technological measure that effectively controls access to a work protected under this title."

This Bill would effectively negate the burden of paragraph "A" if the circumvention is within the scope of the six classes of copyrighted works referenced above. There is no mention of DVD or optical disc circumvention and the exemptions are very narrow - and antiquated - in scope. The only circumvention provisions related to DVDs allow for “…consumers to circumvent a lock on a DVD or other audiovisual work in order to skip past commercials at the beginning of it or to bypass personally objectionable content…”, but not backup the work.

The reasons for the such narrow provisions stem from previous attempts by Representatives Boucher and Doolittle to introduce much more aggressive fair use amendments. However because these previous attempts had a much wider circumvention scope, they were swiftly curtailed by the entertainment industry.

More relevantly, the Bill will also empower librarians to 'ensure that they can circumvent a digital lock to preserve or secure a copy of a work or replace a copy that is damaged, deteriorating, lost, or stolen."

Perhaps most welcome to software and hardware designers is the provision to codify the Sony Corp. v. Universal City Studios, Inc. ruling, otherwise known as the Betamax decision. “Subsection (b) would immunize these and other hardware companies, as well as entrepreneurs, from copyright infringement liability based on the design, manufacture or distribution of hardware devices (or components of those devices ) that are capable of a substantial, commercially significant non-infringing use.”

Additionally, the Bill seeks to limit "availability of statutory damages against individuals and firms who may be found to have engaged in contributory infringement, inducement of infringement, vicarious liability or other indirect infringement." In other words, the next time someone considers the creation of a new P2P network, they won’t have to worry so much about a potential $30 million judgment.

The Bill is a positive step forward, yet even if it were passed, it would not help those looking to make backup copies of their DVD collection. Like the DRM issue currently facing the authorized online music stores, this attempt is a small step forward in the effort to unlock the grip of the entertainment industry.

BitTorrent’s big day

BitTorrent, the San Francisco start-up that has long been considered a renegade by the movie industry, opened up a new movie store today with full backing by Hollywood studios.

The move is significant because the company’s founder, Bram Cohen created the Bittorrent protocol, a popular file-sharing program that used peoples’ computers to distribute movies across the Internet for free, and it became one of the most popular tools for pirates.

However, his company, also called BitTorrent, now aims to legalize the distribution process, and make money from it — after having put controls on the peer-to-peer technology, and augmenting its performance so that it can distribute niche content as well.

We already reported today’s announcement was coming. But now we have details:
Four major studios and about three dozen other publishers of video, games and software have lined up to endorse the new offering. They include 20th Century Fox, Lions Gate, MTV Networks, Paramount Pictures, Warner Bros. Home Entertainment and BitTorrent’s newest partner, Metro-Goldwyn-Mayer Studios, Inc.

It comes at a time when studios are signing deals with other companies too, including one between Viacom and rival start-up, Joost. The deals are likely to put pressure on Google’s YouTube. YouTube has dragged its heels on implementing a filtering technology to placate concerns studios have about pirated movies show up there. Reports emerged that YouTube will soon implement such technology, but the latest word is that there are “technical” difficulties. Meanwhile, YouTube’s popularity continues to surge. It has overtaken the combined traffic of all television network Web site, at 0.6 percent of all Internet traffic (compared to 0.5 percent enjoyed by 56 television cable and broadcast network sites), according to Hitwise.

BitTorrent’s digital media store promises to have about 3,000 new and classic movies. Go to the site now, and you’ll see everything from movies like “Little Miss Sunshine” to TV programming like “24″. New movies will sell for $3.99, classics will be $2.99, and tv shows, music videos and PC games will be priced at $1.99.

The content will play in Microsoft’s Windows Media Player 11 and be protected by Microsoft’s Digital Rights Management platform that will prevent the content from playing in more than one computer or to be shared elsewhere. It won’t be playable on an Apple computer or on an iPod. To watch the movies on TV, you’ll need Netgear’s Digital Entertainer and a high-definition television set.

Software Exploited by Pirates Goes to Work for Hollywood

By BRAD STONE, NewYorkTimes

SAN FRANCISCO, Feb. 25 — Hollywood studios are going into business with one of their biggest tormentors: the peer-to-peer pioneer BitTorrent.

On Monday, the company, whose technology unleashed a wave of illegal file-sharing on the Internet, plans to unveil the BitTorrent Entertainment Network on its Web site, BitTorrent.com. The digital media store will offer around 3,000 new and classic movies and thousands more television shows, as well as a thousand PC games and music videos each, all legally available for purchase.

The programming comes from studios, including Twentieth Century Fox, Paramount and Warner Brothers, that previously announced their intention to work with BitTorrent. There is also a new partner: the 83-year-old Metro-Goldwyn-Mayer, which will take part by making 100 films available on the site from its 4,000-movie library. "Somebody once said you have to embrace your enemy,” said Doug Lee, executive vice president of MGM’s new-media division. “We like the idea that they have millions of users worldwide. That is potentially fertile, legitimate ground for us.”

The BitTorrent store will work slightly differently than rival digital media offerings like the iTunes Store of Apple and the Xbox Live service of Microsoft. BitTorrent will commingle free downloads of users’ own video uploads with sales of professional fare. And while it will sell digital copies of shows like “24” and “Bones” for $1.99 an episode, it will only rent movies. Once the films are on the PC, they expire within 30 days of their purchase or 24 hours after the buyer begins to watch them.

New releases like “Superman Returns” cost $3.99, while classics like “Reservoir Dogs” cost $2.99. The studio’s content plays in Microsoft’s Windows Media Player 11. It is secured by Microsoft’s antipiracy software, which blocks users from watching rented movies on more than one PC or sending them to others over the Internet.

Ashwin Navin, BitTorrent’s co-founder and chief operating officer, said the company had secured the right to permit users to buy outright digital copies of films, but the studios wanted to charge prices that would be too high for most consumers. “We don’t think the current prices are a smart thing to show any user,” he said. “We want to allocate services with very digestible price points.”

BitTorrent, which is based in San Francisco and has 45 employees, will face significant challenges as it tries to carve out some space in the emerging digital downloading landscape. Apple is the largest presence among the legitimate Internet media stores. ITunes, which has sold more than a billion dollars worth of digital music, sells movies from Walt Disney and Paramount and programs from all the major TV networks.

Other entrants in the nascent field include Walmart.com, MovieLink.com (owned by four of the studios) and Amazon Unbox, which recently announced a way for TiVo users to download movies to their television instead of watching them on smaller PC screens.
Michael McGuire, a vice president at the research firm Gartner, said BitTorrent and its rivals all face the same challenge: “They must get consumers to look at this as a better and more reliable way to watch a movie than renting a DVD.”

There is also the illegal economy in pirated video content, whose size dwarfs that of the legal online media stores. The Motion Picture Association of America has said that a million movies are illegally acquired every day using BitTorrent technology. The software is open source, so versions of it, as well as Web sites offering pirated movies, are maintained by companies not affiliated with BitTorrent.

Bram Cohen, BitTorrent’s co-founder and chief executive and the inventor of the technology, said the new store would offer a compelling alternative to the illegal ecosystem. “I think what consumers want is a good experience,” he said, “and the first part of that is making the content they want available legitimately.”

But he added that the antipiracy software that will protect files in the new store, which the studios insist on including, will make the experience more cumbersome for users. “We are not happy with the user interface implications” of digital rights management, or D.R.M., Mr. Cohen said. “It’s an unfortunate thing. We would really like to strip it all away.”

BitTorrent’s store will have some advantages over legal rivals’. Its peer-to-peer technology introduced by Mr. Cohen in 2001 works by taking pieces of large files from nearby computer users who have that file, permitting speedy downloads.

In a test of the new BitTorrent store, downloading the film “X-Men 3” took two hours with a broadband Internet connection. Downloading the same movie from Walmart.com took three hours. And BitTorrent downloads should theoretically become faster as more people sign up, since digital copies will originate from nearby computers whose owners have bought the movie, instead of from a central server.

The company, which has received close to $30 million in venture capital, ultimately wants to use its media store to demonstrate how the underlying technology is effective at moving large files around the Internet. The it wants to sell the technology to other media stores and to the studios themselves.

The studios hope the new BitTorrent will put a dent in the illegal trading of their content. Thomas Lesinski, president of Paramount Pictures Digital Entertainment, said he hoped the store would win over young people accustomed to free fare. “We look at this as a first step in the peer-to-peer world, to try to steer people toward legitimate content,” he said.

BitTorrent executives say they are not able to prevent illegal downloads in the larger file-sharing world. But they cite internal studies that say 34 percent of BitTorrent users would pay for content if a comprehensive, legal service was available.

That group clearly does not include Aaron, a 36-year-old San Francisco programmer who does not want his full name used because he and his wife regularly use BitTorrent to download songs, movies and TV shows illegally.

After testing a prelaunch version of the legal BitTorrent store, he said it would not persuade him to abandon the limitless selection of content and freedom he enjoys on free BitTorrent sites.
“The sad thing is, it’s not about the money,” he said. “I’m not interested in renting a movie. I want to own it. I want total portability. I want to give a copy to my brother. Digital convergence is supposed to make things like this easier, but D.R.M. is making them harder.”

Zudeo to Re-launch with New Name

Azureus beat Bram Cohen’s Bittorrent venture1 to the punch when they soft-launched a Torrent-powered content platform in December. Zudeo.com features film trailers next to semi-professional HD content and has since seen 1 million visitors. All these folks will soon have to learn a new moniker, because Azureus is about to pull a Venice Project on us.

I met with Azureus CEO Gilles BianRosa this week, and he revealed that the platform won’t be called Zudeo anymore once it officially launches with commercial content in March. “It has a really cool name that I can’t reveal right now.” he told me with a smirk. BianRosa did however share some details about pricing, protocol enhancements and the reasons why they don’t want to be another YouTube.

Azureus has been making announcements about new content deals every few weeks now, with the BBC and Starz being some of the bigger names. Altogether they have about 20 deals in place. The company concentrated on TV studios as opposed to Hollywood because of availability and pricing issues. BianRosa told me that he doesn’t want to sell movie downloads that can be bought on DVD for less at Wal-Mart, but concentrate on inexpensive, yet hard to find shows. “We will have Starbucks coffee type pricing for all of our content,” he said.

All of the for-sale content, that is. The rebranded Zudeo.com will still feature lots of free promotional and user-generated content. Azureus wants to give serious bedroom producers an opportunity to distribute longer movies with a better resolution than YouTube-like sites. The platform will offer topical channels to promote and organize content, which is supposed to make it more attractive to commercial content owners and advertisers as well. “Clearly we don’t see ourselves as the next YouTube,” says BianRosa.

BianRosa wants to offer independent producers revenue sharing at some point - a process that he compares more to eBay than to catalogue licensing. Publishers eventually will be able to choose for each work whether they want to distribute it for free, for sale or have it be advertising-supported. DRM will also be optional.

Obviously the mere existence of DRM will outrage many traditional P2P users – some of which have been Azureus’ most loyal base. The client has been downloaded around 140 million times because of its multi-platform, open source approach, and BianRosa wants to keep it that way. The company is working on some progressive streaming enhancements of the BitTorrent protocol that will only be available to Azureus users initially, but he hopes to eventually get other vendors on board for this as well.

Of course all of this might not be enough to appease the most critical voices in the P2P community. BianRosa shrugs this off as something inevitable: “We’ll get bad press on Slashdot because it’s not geek enough, but I’m not too worried about that.”

Suretone taps P2P

Suretone Records is tapping P2P networks to distribute clips of music videos from artists such as Weezer, and taking a decidedly different approach by dropping any insistence of DRM technology.

However, the videos won't be complete. The video clips are positioned more as "teasers" to generate interest and awareness of the video clips, which fans can download and view for free. They will then be redirected to the label's Web site if they want to view the full video -- where Suretone will stream music videos for free along with advertising.

ArtistDirect's MediaDefender unit will take on the task of distributing the videos on the various P2P networks, and will have a dedicated channel on its own site.

La SGAE insiste en que los proveedores de red paguen derechos de autor

LíderDigital.com, 19/02/2007

El director de los Servicios Jurídicos de la SGAE, Pablo Hernández, afirmó que las descargas de películas a través de Internet constituyen "piratería", ya que esta transacción no cuenta con la autorización del autor.

Hernández, que intervino en el I Encuentro de Creadores Audiovisuales que se ha celebrado en Córdoba, explicó que en las descargas en la Red no interviene ningún "soporte físico", por lo que se trata de "tráfico electrónico".

Así, dijo que esta práctica, que se realiza a través de programas de intercambio de archivos entre particulares (P2P), es distinta de las copias privadas en soportes como el CD o el DVD, que sí están autorizadas y pagan un canon por derechos de autor.

Según Hernández, "el 80% de las descargas que se hacen en Internet son de contenidos protegidos", por lo que, para regular esta "nueva realidad", sería necesaria una modificación de la Ley de Comercio Electrónico, que es a su vez una trasposición de una directiva europea.

Afirmó que las descargas son una práctica ilícita tanto por parte de quien las saca a la Red como de quien las recibe (pese a los argumentos de quienes opinan lo contrario), si bien reconoció que "perseguir a los particulares que se bajan películas en sus hogares es imposible". Hasta la fecha, en España sólo ha habido 'advertencias' a los usuarios.

En este sentido, Hernández abogó por que sean los operadores de telecomunicación los que asuman el pago por los derechos de autor de los contenidos que explotan a través de la banda ancha, una aspiración que ya se puso sobre la mesa hace cuatro años, aunque de momento nunca ha prosperado.

A su juicio, son estas empresas "las que se están beneficiando por las películas y los productos explotados a través de nuevos espacios de explotación y almacenamiento" como Internet y el disco duro de los ordenadores, señalaba "ElMundo.es".

Zudeo’s Legal P2P Hit 1m Uniques in January

The new “all legal” P2P service from Azeurus called Zudeo announced this morning that they saw more than 1 million unique visitors last month in the service’s first full month online. The announcement provides great evidence that P2P is a viable avenue for legal distribution of online video.

We covered the company’s content deal with the BBC in December and the company said at launch that its goal was to offer content from 20 major TV and film studios. Parent company Azureus reports more than 140 million downloads in 100 countries of its BitTorrent platform in 100 countries. The company has raised $12 million in funding from Redpoint Ventures and BV Capital.

Today’s Zudeo announcement will provide an interesting reference point for the eventual launch of Joost. Both companies will bring offer online distribution of commercially produced, high quality video content and may compete for eyeballs with low-quality user generated content.

E-mail warnings deter Canadians from illegal file sharing

Thursday, February 15, 2007
CBC News

The entertainment and software industries have found an effective tool to deter some Canadians from downloading TV programs, movies, music and software. And it doesn't involve going to court.

A number of industry groups, mostly based in the United States, are relying on e-mail to get the message out that peer-to-peer file sharing is illegal. Thousands of the e-mails are being sent to Canadian users each month under a program known as "notice and notice."
Major Canadian internet service providers including Rogers, Bell and Telus have voluntarily agreed to distribute the notices to their customers on behalf of the industry associations. Telus forwards an average of 4,000 notices every month.

Stephen Harrington received a notice late last year after downloading a computer game from a bit torrent file-sharing site. (Bit torrent sites are used to share larger files, such as movies.)
Harrington wanted to play the game with his friends, liked it, and purchased it a few days later.
"Actually, I almost deleted it. But I read through and was quite surprised. But I was initially concerned," Harrington said.

The entertainment industry has long expressed frustration with Canada, and its unwillingness to modernize copyright laws.
"Canada's copyright laws regarding uploading and downloading are unclear, and that does present a number of challenges in curbing internet piracy," said Neil MacBride, a vice-president with the Business Software Alliance, a Washington D.C.-based industry association that fights software piracy.

The Business Software Alliance sent out about 60,000 "notice and notice" e-mails to Canadian internet users in 2006. "They've been most effective," MacBride said.

'Stop this infringing activity'

"If you're somebody who's [downloading] and you receive word that you're essentially using somebody else's property without their permission, it seems to have the desired effect — namely, people take it seriously and alter their behaviour accordingly."

The notices contain terse legal language: "This unauthorized copying and distribution constitutes copyright infringement under applicable national laws and international treaties. We urge you to take immediate action to stop this infringing activity and inform us of the results of your actions," reads one of the e-mails, sent by NBC Universal to Canadian internet users who were suspected of downloading a NBC television show.

Canadian users are tracked by IP address when content is downloaded from the internet.
"It doesn't have any significant legal weight in the sense that it doesn't mean they're facing a lawsuit immediately or even the claims of infringement have been proven," said leading internet law expert Michael Geist of the University of Ottawa.

But Geist said the "notice and notice" program has been successful in scaring people to stop downloading.
"I think they've proven surprisingly effective and in fact indications are that when subscribers receive these, a significant proportion will take down the offending content if, in fact, it is infringing," he said.

Harrington says he has not downloaded material using peer-to-peer sites since he received his e-mail notice, forwarded by his ISP, Rogers Communications. But he is concerned about privacy: What information are the ISPs passing along to the industry groups?
"The ISPs are the only ones who know what individuals are doing what, so they're trying to push that thin blue line and get to individual privacy that way," he said.

No privacy issues, ISPs say

Both Rogers and Telus maintain they do not pass any personal information, such as user name or address, to any of the groups initiating the notice e-mails.

"We protect the rights of our customers and the privacy of our customers and the information about our customers quite vigorously and we do not pass the information about our customers on to third parties," said Michael Lee, chief strategy officer for Rogers Communications.
The notice program in effect in Canada is essentially a tool to alert users that they are downloading what the industry groups see as copyrighted material. Even though tens of thousands of e-mails have been distributed over the last few years, no one has been prosecuted for copyright violation as a result of the notices.

"Notice and notice" differs from the "notice and take-down" program that's in place in the United States. There, when an industry group notices an alleged copyright violation, an e-mail similar to the ones being sent to Canadian users is forwarded to the American ISP. In most cases, the ISPs are forced to immediately take down the content or face penalties.
"I think notice-in-notice is a great alternative that really respects privacy and free speech much more than notice and take-down," said Ren Bucholz of the internet advocacy group Electronic Frontier Foundation.

Study: P2P effect on legal music sales "not statistically distinguishable from zero"

A new study in the Journal of Political Economy by Felix Oberholzer-Gee and Koleman Strumpf has found that illegal music downloads have had no noticeable effects on the sale of music, contrary to the claims of the recording industry.

Entitled "The Effect of File Sharing on Record Sales: An Empirical Analysis," the study matched an extensive sample of music downloads to American music sales data in order to search for causality between illicit downloading and album sales. Analyzing data from the final four months of 2002, the researchers estimated that P2P affected no more than 0.7% of sales in that timeframe.

The study compared the logs of two OpenNAP P2P servers with sales data from Nielsen SoundScan, tracking the effects of 1.75 million songs downloads on 680 different albums sold during that same period. The study then took a surprising twist. Popular music will often have both high downloads and high sales figures, so what the researchers wanted was a way to test for effects on albums sales when file-sharing activity was increased on account of something other than US song popularity. Does the occasionally increased availability of music from Germany affect US sales?

The study looked at time periods when German students were on holiday after demonstrating that P2P use increases at these times. German users collectively are the #2 P2P suppliers, providing "about one out of every six U.S. downloads," according to the study. Yet the effects on American sales were not large enough to be statistically significant. Using this and several other methods, the study's authors could find no meaningful causality. The availability and even increased downloads of music on P2P networks did not correlate to a negative effect on music sales.

"Using detailed records of transfers of digital music files, we find that file sharing has had no statistically significant effect on purchases of the average album in our sample," the study reports. "Even our most negative point estimate implies that a one-standard-deviation increase in file sharing reduces an album's weekly sales by a mere 368 copies, an effect that is too small to be statistically distinguishable from zero."

The study reports that 803 million CDs were sold in 2002, which was a decrease of about 80 million from the previous year. The RIAA has blamed the majority of the decrease on piracy, and has maintained that argument in recent years as music sales have faltered. Yet according to the study, the impact from file sharing could not have been more than 6 million albums total in 2002, leaving 74 million unsold CDs without an excuse for sitting on shelves.

So what's the problem with music? The study echoes many of the observations you've read here at Ars. First, because the recording industry focuses on units shipped rather than sold, the decline can be attributed in part to reduced inventory. Gone are the days when Best Buy and others wanted a ton of unsold stock sitting around, so they order less CDs. The study also highlighted the growth in DVD sales during that same period as a possible explanation for why customers weren't opening their wallets: they were busy buying DVDs.

European Music Execs Dissatisfied With DRM

European music executives believe dropping digital rights management (DRM) restrictions from digital music would drive song sales, according to a new Jupiter Research survey. Major record labels, however, remain unconvinced.

Hackers have been attacking DRM for years, quite successfully for the most part. Just this week, they cracked the Blu-ray Disc protection codes. But recently industry leaders have joined them, calling for an end to DRM, at least for music. Last week, Apple CEO Steve Jobs challenged record labels to offer music for sale without DRM, noting that "DRMs haven't worked, and may never work, to halt music piracy."

Last year at the Music 2.0 conference in Los Angeles, Yahoo Music chief Dave Goldberg said much the same thing. He reiterated his opposition to DRM this week in an article published by Silicon Valley Watcher. (Coincidentally, he resigned today.) Other tech executives have added their voices to the call to unlock digital music.

Jupiter's European Music Executive Survey, 2007 reveals that most of the music industry respondents -- a group composed of employees of major and independent record labels, industry and rights groups, digital stories, and services and technology providers -- feel the same way.

Among the executives surveyed, 62% agreed that dropping DRM would drive adoption of digital music and 54% said that DRM was overly restrictive. Presented with the statement "DRM is essential for online music," 56% of respondents disagreed.

Only 11% of those surveyed believe that DRM-free music would threaten revenues.
While consumers tend to resent DRM because it forces restrictions on upon them and treats them as criminals, Jupiter's report says that much of the music industry's dissatisfaction with the technology comes from dissatisfaction with Apple's dominance of the digital music download market.

It's worth noting that Apple's FairPlay DRM is far more effective at preventing competitors from making devices that interoperate with the iPod and iTunes -- thanks to the Digital Millennium Copyright Act -- than it is in preventing iTunes customers from copying songs they've bought online.

In the music market at least, DRM's days may be numbered. British music company EMI has been experimenting with distributing unprotected digital downloads and is reportedly reviewing its position on content protection technology for CDs.

James McQuivey, principal analyst at Forrester Research, predicts that 2007 will be the year that one of the major music companies breaks ranks and gives up on DRM. Once that happens, he says, the rest will feel they have to follow.

When that day arrives, it may not be the end of the world. "There's no evidence that a DRM-free world is more injurious than the one in which we already live," says McQuivey. "There's no evidence it's going to suddenly ignite a new firestorm of piracy and anarchy."

RIAA Offers ISPs Pre-Lawsuit Settlement Option

The RIAA has now extended a new deal to ISPs, one that would allow subscribers to quickly resolve lawsuits. A copy of a letter to a specific access provider, obtained Digital Music News, offers ISPs the ability to extend pre-lawsuit discounts to targeted subscribers. "An early notification will give your customer the opportunity to settle any claims before a suit is filed against them at a reduced rate (discounts of $1000 or more)," the letter states. The early settlement offer would allow the RIAA to avoid a John Doe lawsuit, a complicated process that allows ISPs to initially protect the identity of its accused users. In order to qualify for the program, ISPs must agree to keep user logs for 180 days. "This timeframe is necessary to allow sufficient time to pursue the Doe lawsuit and subpoena if settlement discussions are not fruitful."

In the letter, the RIAA also raises a number of procedural problems. The list includes misidentified users, and the dissemination of incorrect contact information by ISPs themselves. Meanwhile, the overture received a strong rebuke from the Electronic Frontier Foundation, a longtime enemy of the organization. "Before the RIAA has even verified that the user is correctly identified, it wants ISPs to send along a note saying the user might be sued and can already settle potential claims," said EFF attorney Cindy Cohn. "At the same time, the RIAA scolds ISPs for giving information to their customers that could help provide sound legal counsel."

RIAA ISP Letter (PDF)

Azureus Expands Zudeo

There's a tale of two BitTorrents emerging in the online distribution community. On one side is the BitTorrent, Inc. camp and the other is Azureus. Although outwardly very different, the two are both aiming to become successful distribution points for authorized media.Azurues' platform mechanism is an application called Zudeo, released in December of 2006.

It's had a successful introduction so far, with non-copyrighted content being so far the most popular content. The application, based on Azureus 3.0, has an extensive catalog of various trailers, clips, creative commons and home brew material - with an emphasis on high definition content. The community is also encouraged to distribute home brew material for distribution via BitTorrent.Not to be outdone, BitTorrent, Inc. has ramped up its authorized distribution platform as well. Like Azureus, it has an extensive catalog of material. However, it includes a considerable amount of mainstream media, thanks to its position as a movie-industry friendly distribution avenue.

Yet this doesn't mean Azureus is being left out in the cold - quite the opposite. What Azureus lacks in movie-industry interaction it makes up for in sheer popularity. Some estimates place this client at the zenith of the BitTorrent food chain, and it appears that eager distribution companies are ready to take the online plunge.

In a press release announced today, Starz Media has agreed to release a "broad range" of media via Zudeo. Keeping with the Zudeo tradition, the content will be released in high definition video. This is the second major distributor to employ the Azureus platform after the BBC signed up late last year.

“Through this partnership with Azureus, we hope to reach the millions of genre fans online and build upon the avid audience interested in our video titles and series,” said Marc DeBevoise, senior vice president, business development and strategy, Starz Media. “We’re excited about Azureus’ high resolution format and its potential."

Although very different from BitTorrent, Inc., there are some similarities. According to Starz Media, the content released on Zudeo will be released in the Windows Media DRM environment. In addition, GeoFiltering will be applied and enforced by identifying the billing zip code and IP address. So the content won't be free, at least not now.