Counterfeit: A Fresh Way Of Looking at the Phenomenon of 'Illegal Downloading'

The music phenomenon of “file sharing” can profitably be analyzed under the concept of “counterfeiting”.

Let us take the example of a digital download purchased through iTunes by Al. This is a legal purchase. Think of a dollar bill legally pressed by the mint. Now if Al takes that song and copies it for Bob, there are now two “bills” in circulation: one counterfeit and one legal. Note also that the real item loses value because of the higher quantity/availability. There is a reduction in value of all outstanding bills issued, because of the counterfeit.

If Bob puts that same song into his iTunes account or … worse yet … loads it onto his iPod, Apple is helping him “use” his counterfeit item, just like someone went to a bar which advertised “we take counterfeit currency.” This is the case for any player that does not check the ownership of the track, which is all of them because there is no way for them currently to accomplish this task.

Even worse, if Bob (the one with the illegal copy) takes the download and with his favorite music locker service has the cloud service copy the item into the cloud, there are now *three* copies, one legal and two counterfeit.  That locker service has given the illegal user even more power over what he gained illegally.

The music industry’s problem, of trying to stop illegal downloading, is much the same as the U.S. Mint’s problem of stopping counterfeiting of currency. But there is no secret lair to “bust” where the bad guys are sitting at the printing press counterfeiting bills. The printing press, in this case, is billions (potentially) of personal computers worldwide. So, forget about the printing press, you have to fight counterfeiting at the user end, i.e. the bar or restaurant where the counterfeit “bills” are being accepted. (Which is a strategy used by money counterfeiting enforcement also.)

A bar or restaurant might scan every bill and upload it to a central FBI database that checks for counterfeit. Banks do this now with most cash deposits. iTunes, and the other places which accept counterfeit “bills” indiscriminately with real ones, can quite easily check with the Digital Content Exchange to see if the user’s song is counterfeit or not.

It takes less than a second.  But it's not being done. Why?

The answers are legion.  But the bottom line is, music listening services are trying to compete against a system that does nothing to reject counterfeits.   No wonder they're not paying the artist very much. And those who don't trust music listening services to always be there, are keeping an illegal copy on their hard drives, because the companies that maintain music files, and allow them to be played, refused to distinguish between a paid for copy and an illegal copy.

The same problem applies to movies, books and games.

Edited October 22, 2015.

Hype vs. Innovation: Music Startup 'Beyond Oblivion' Highlights the Age-Old Battle

I naturally recoil from hype like “Music Liberation” and gimmicks like a “Countdown to Insurrection” (currently "12 days 14 hours 46 minutes and 17 seconds"). Even the name itself, Beyond Oblivion, is over the top.

It’s natural to be proud of your invention. But anybody hyping that much makes me think immediately the Emperor has no clothes. We have been working on the Digital Content Exchange (boring name isn't it?) for 8 years. That is a good sign that we're on the right track because a problem as big as piracy (a better way to put it: artists not being able to control the use of their creations in digital space) is a big problem that takes a thoughtful solution.

The key thing to recognize is that it is not a legal problem, it is a technological problem. Solved the same way we solve everything else in society since the Cotton Gin (and of course loo-o-o-ng before that): innovation. What has set the industry on the wrong road IMO is too much chasing of hype without innovation. Not having the patience or taking the time to assess new ideas and innovation. The music industry has adopted the same policy for music start-ups that they used for artists in the 1990s and 2000s: look for the buzz, and then sign it to a contract. That may be okay for a pet food website ("How many users do you have? Sold!") but it is not a mature way to go about solving a technological problem of this magnitude.

We don’t need hype, we need a solution. I guess when it comes to solving this problem, we are asking the music industry to go back to 1970s style A&R: listening to demos quietly and thoughtfully and deciding, "Is this the right stuff?".

Newscorp has invested in BO. I hope this time they got it right.

Update 1/4/2012: gone before launch.

(Thanks to James Erik Abels for the news tip. Check James out at tmmnews.com)

Biting the Hand That Fed: 'Mere Changes in Delivery Mode' of Content Are Seldom That

Thinkers such as Chris Anderson, Bob Lefsetz, and Seth Godin, whose ideas I consider indispensable to the debate, often lapse into championing new ways of delivering books, music, and video. But many of the delivery modes suggested change the very essence of what made books, music, and video popular in the first place.

The lack of reflection over jettisoning this essence to open Pandora's Box is understandable. These thinkers understand (correctly) that the current delivery system is broken. But they assume it cannot be fixed. So they are anxious for the industry to get on to something that at least might deliver some music to some people.

The essence we’re talking about is ownership. The empires of books, records and DVDs were built on it. The DCE is, of course, "the fix".

I don't usually put much stock in aphorisms, but when three sayings at once readily apply to a situation, I sit up and take notice

1. Don't bite the hand that feeds

2. Dance with the guy/girl you came to the dance with

3. A bird in the hand is worth two in the bush.

Statement of Purpose

Or, in other words, "Why are we here?"

We have the solution to an extremely vexing problem. In this blog, we would like to begin chronicling our daily efforts to bring the solution to light.

What is the solution?

It's called the Digital Content Exchange. A working prototype is over at Thedce.com. (You can even help us beta test. )

What is the problem?

Piracy, as it is commonly called. Music piracy, from my perspective, is not really too close to the image of men with eye patches, red bandannas and knives clenched between their teeth. It is better-described as the inability of artists to be able to control the use of their creations in digital space. But however you look at it, it is a huge problem, especially in music (and more and more in books and movies.) And, yes, the people who take music without having paid for it are breaking the law.

Our invention creates an unprecedented inducement to users to stop breaking the law (velvet glove) and makes it harder for them to do so (iron glove).

The key thing to recognize is that piracy it is not a legal problem it is a technological problem. The technological solution has not been tried. Or, rather, it has been tried, it works(!), but it is just awaiting the participation of the content-owners. Or Google. Or Apple. (We're not picky). Can we do it without the content-owners, Google or Apple? Yes, we can. It will just be a lot slower.

So, what I would like to do here is chronicle our daily efforts to bring the Content Exchange up to scale. And to comment on the passing parade of wrong-headed measures. This will include naming names of whom we talked to about the DCE and what they said (or if they didn’t call us back!) If they had objections to the DCE, we will discuss those objections. (We love criticism!).

And if we are in the middle of actively talking to someone who is thinking about partnering with us, we will let you know about it here. Why not? Someday, just about everyone will have an Exchange account, just as if someone might have predicted in 1991 that someday everyone would have an email address. Each record label, book publisher, or video producer will have their own account (or "seat" at the exchange). So just because we might be talking to one content-creator this week, it does not mean that we will discriminate against their competitors. It's just that that content-creator, if it joins us, can start making money for itself sooner.

Now, for some links about the Digital Content Exchange to help get you acquainted. Feel free to jump in at the deep end or the shallow end.

Here is a Scribd White Paper we wrote and circulated in May, Toward a Digital Content Exchange for Copyrighted Works.

Feel free to “have at” the website. Note that the website is a completely functional demo of our invention for music (n.b. not books or videos yet). But it is not meant to be the ideal iteration. A significant upgrade will be along soon. (It is worth underscoring that although we want the book, video and music industries to cooperate with us, their contribution is not necessary. Although once we are up and running there is no Earthly reason they would not want to participate. But you, the User, can start now and get your music where you want it and how you want it.)

If you want the quickie "look and feel" and user experience, the following two youtube videos, both 6:10 in length, were produced late summer:

How to Create Your Own Streaming Music Library with the DCE

How To Add Your Vinyl Records, CDs and iTunes Purchases To Your DCE Library .

If you are interested in hearing our solution to the Google Book Case and/or want an analysis of the legal underpinnings of the DCE, take a look at our Amicus Curiae brief here:

Our next white paper is in development and will approach the Content Exchange from the point of view of a registry rather than as a digital media application: How To Institute a System of Voluntary Registration of Music, Video and Book Ownership That Will Stem Piracy.