Behind The Scenes: Record Label Demands Of Amazon

I asked the inventor, Jim Yates, for his comments on the reports of the very interesting but very confused negotiations going on behind the scenes between Amazon and the record labels.  Since Jim is the inventor, and the discussion is getting very technical, I have decided not to put my own gloss on it and just let Jim's reaction speak for itself:

Emmett,
As you probably know, the link (...) is for a Michael Robertson article detailing the Amazon talks with the labels.  I find no indication of any source for this information so I wonder how he came to know about it in such detail.  Also it needs to be known that he is on Google's payroll as well as being the owner of MP3Tunes (which is disclosed).  I note that the Warner Music (which is for sale you recall) position is the most interesting, "...What WMG would like to see happen is that a central locker authority would administer all locker assignments. ...".  Well, there is a good idea.  But then they go on to demand all sorts of payments, which Amazon and everyone else knows are not required or reasonable.  Btw, the use of the embedded sales information in the MP3 file is not much different than DRM and pretty useless without independent confirmation.  But if you get the independent confirmation from the source you did not need the embedded information except as a path to the source which could be obtained elsewhere.  The major use would be to track things like gifts which would require a test for uniqueness.  So the bottom line is that it can be helpful but it is not a complete solution.
We know the only complete solution.  These others are just wobbling along the trail to finding it.
Along that trail appears to be catchmedia.com.  We can discuss that at length elsewhere.
It should be noted that all this discussion is about playing media that is 'owned' in some way.  Nothing at all about transactions, proper one to one sharing. 
Also should be noted that, if Michael Robertson's information is correct then RIAA and IFPI are out of the loop or talking to different or the wrong people and/or do not have a clue as to what we have been talking to them about.  I think we should confront them with the article and our explanation of how we solve the reasonable issues (not the demands for media taxes).
Jim

I cannot resist adding one comment.  It is to Michael Robertson's final line:

With the record labels wide reaching demands it’s difficult to see how Amazon, or any company, could arrive at a workable license for personal cloud music.

Indeed, it is difficult to see.   And it won't happen until the labels and Amazon humble themselves to consider that the solution comes from outside of both their industries: it comes from financial-industry wisdom. 

Share Your Cloud Music Password? Share Your Online Banking Password??

One of the worries expressed by commentators concerning the Apple Cloud Player is that another form of illegal file sharing will be possible, wherein a user can share his username and password with someone else, who would then have access to all that user's songs, a la Napster.

This worry is easily solved by the Digital Content Exchange.  Because the DCE, in addition to being a cloud server, is also a board of exchange whereby your owned music is sold and loaned for a fee, a person would no more give someone his password to his cloud account than he would his bank account.

Amazon's Craig Pape agrees with us. Well, sort of.

A story published in the Irish Independent today quotes Craig Pape, director of music at Amazon, and the company’s point man for the Amazon Cloud Drive and Player:

"We’re trying to make purchased music more valuable. And we think that’s good for everybody.”

This is the first time I've seen in print the statement that has been a golden rule for us here at the DCE since the beginning (2003): that new apps and wonderful ways of accessing music digitally, like the new Cloud Player, add value to downloads.

The problem is of course that you are also adding value to illegal songs as well as legal ones. How do you determine which are which? That is where the digital content exchange comes in.

(As for why Craig Pape and his company probably don’t implement DCE verification, or call us back, see here.)

So it cannot be "good for everybody" to give counterfeit equal value to purchased.  If you do that, counterfeit will win every time...

How Media Companies Could Cooperate To Solve the 'Piracy' Problem: And Why They Don't Do It

[Update 8/10/11: Wal-Mart Shuttering Its MP3 Download Store.  Guess what? Retailers need to exchange info of who's bought what. Apple should not be allowed to thwart other retailers by throwing up impediments to "iPod and iPhone integration". ~ Ed]

It is impossible for Web companies to tell whether a song was bought legally or downloaded illegally.

                                       --"Amazon Introduces a Digital Locker," New York Times, 3/29/11

This is true.  No web company can do that.

But it is possible for Web companies to tell whether a user bought a song legally.  (And that is not a play on words.  Read the two sentences carefully)

The method that allows for “red sentence No. 2” is called a Digital Content Exchange.

Every user who bought a song legally should have the right to download or stream that song from whatsoever Web company is willing to store it for him.  But that ownership has to be verified by the DCE.

Prove to the DCE that you bought a song legally and you will have that ability.  iTunes purchases, Amazon purchases, CDs, vinyls … the lot.  And no record company has the right to charge that Web company for the privilege of streaming back to a user something he proved he owns.  And that he hasn’t sold.

This method involves verification, registration and immobilization.  These three techniques are utilized a million times a day in worldwide digital stock transactions. The method will work for media too (which, after all, is just another kind of digitized fungible commodity). 

The Exchange only needs to be scaled up.  But media companies would have to cooperate to make that happen.  The definition of an exchange is a network of cooperative interactions that allows competitors to compete efficiently. 

Any Web company in the world could join the Exchange right now (in beta test).  As soon as they joined, they would begin seeing the profitability.  Their users would profit immensely (an exchange always profits all parties). 
 
Right now, there is no Web company with a sufficient dog in the hunt to make it worth it to them to cooperate.  Not Sony Music, Not Google, not Amazon, not Apple, not Netflix, not Hollywood. Right now they have a competitive advantage.  Short-term thinking says, “Don’t surrender that competitive advantage.  You may upset the apple cart.” 

But no cooperation means no exchange.  No exchange means no solution.  No solution means continued chaos.