Thursday, February 24, 2011

How the Digital Content Exchange stops illegal downloading through creating an incentive to register

The DCE would solve the media industry’s illegal download problem through a system of registration, verification and immobilization.  It all starts with registration.  The DCE provides the inducement to get both creators and consumers to register and keep track of who owns what.

In the securities industry today, 99% of all stocks have a registered owner.  But it was not always the case.  As recently as the 1970's it was possible to own an unregistered stock certificate and be able to do most of the things that you would want to do with that stock. Then the digital revolution hit.  The digital revolution gave owners of stocks the opportunity to do a lot more with those stocks. The securities industry did not flub the opportunity that the digital revolution presented. It gradually insisted upon registration and offered “sweeteners” for issuers and owners to register and immobilize each and every share and to make the information contained in their registry available for third-party verification. The Depository Trust Company was formed.

Note that among the sweeteners was prevention of fraud, forgery, counterfeits and "rip-offs" in general.  But also high on the list was that you could do more of what you wanted to do with stocks, whether you were the issuer or the shareholder .. or someone in between.  It was like steroids.

The music industry, on the other hand, when presented with the opportunity of the digital revolution basically flubbed it.  They did not use a registration system. They sold music on an unregistered basis, just like they had done in the pre-digital age.

So, users wanted their music on steroids but the music industry could not, despite their efforts, make that happen. So many users turned to illegal free music, in order to have the flexibility that the digital world seemed to promise.

Until the music industry finds its way over to the DCE**, it will continue to flub it.  This is because the DCE method is the only known way, indeed the only logical way, to handle a fungible commodity, in the digital age, where said commodity is easily counterfeited.

Under the Digital Content Exchange, every new media item sold to a consumer will offer the consumer the opportunity to register his/her ownership of that item (and why not?  It gives you ownership on steroids).  have a registered owner.  The registration "hassle" is no more burdensome than most User ID/password systems already in place for any e-commerce purchase.  Physical items can be presented for registration to the helpful clerk at a cooperating intake center (psssst! Best Buy!! Blockbuster!! Have any retail space you're not using??).  The clerk registers and immobilizes your physical item (just like brokerage houses did to  paper stock certificates of IBM that were turned in during the 1970s).  Past Amazon or iTunes downloads can be registered and immobilized through the intake center, if you wish, or online by establishing your Amazon or iTunes identity and matching you up with the purchases you made utilizing those services.

Once registered and immobilized, the fun begins.  The user can access the music that he or she just registered either from the DCE server, or from any cooperating app's server.  In order to access any piece of music from the cloud, or from a cooperating app, a user will first have to verify that the user either, a) owns the item, or b) is borrowing it (like from the library) or c) has a streaming subscription account that covers that particular song. 
The “sweetener” for the user is greater selection, competitive pricing like a stock exchange, resale ability, the ability to replace a record that is lost or damaged, the ability to share music online and complete cloud access to their media.

The “sweetener” for the music industry should be obvious: the reduction, and eventual end, of piracy.  (Who wants to be a pirate, when you have to use 2005-era apps to play it and you cannot use all the new cloud and mobile apps that go with your music like strawberries go with cream?).

There are a lot of other sweeteners for the music industry (they might ask someone in the securities industry if they have been able to “eke out a living” by selling stocks on a digital exchange).  But is not the end of the blatant incentive to pirate enough incentive to get on board with the Digital Content Exchange?

** 3/19/13 update: the music industry may have gone too far down a dead end road to whistle them back at this point. (We'll see).  There is still time, however, to save the book, movie and games industries.

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