A new ecosystem for copyright-protected media

What the Digital Content Exchange (patent pending app. no. 10591416, priority date March 4, 2004) provides is a new ecosystem for copyrighted works.  Copyright cannot sustain life under the current ecosystem.   Apple's  "Scan & Match" iCloud and Amazon's Cloud Player are recent examples of attempts to "strip-mine" copyright resources and are very bad for the envronment that copyrighted works need to thrive.  (Unfortunately, the record companies, with their craving of up-front cash, are the boss of this strip-mine.)

An entirely new ecosystem is needed.  This goes beyond a business model, beyond just another new "app".  But it will work with all business models, with all apps.  A subscription service like Spotify needs a proper ecosystem just as much as a digital download service does, just as a radio station like Pandora does.

You can see an example of how this ecosystem works for music here.  But it also works for books and video, too.

If you are interested in giving this new ecosystem a chance to show what it can do, be part of the solution in any of the following ways:
a)  Explore!  Get in touch with us.  Ask questions.  We love questions. We love challenges!  And we need your input to make the ecosystem work better.
b)  if you personally are involved with music, books, or video, no matter where you are in the supply chain, cooperate with the DCE.  Share your registrations on a voluntary "opt-in" basis.  If you are the copyright  owner, share metadata about a work that you have created (among other reasons, so we can pay you!).
c)  If you are a cloud provider, please, do not allow counterfeit songs to be stored and accessed in your cloud.  Allow the DCE to verify a clean cloud for you.
d) invest in the future of the DCE ecosystem.  The sooner we can provide this new environment, the sooner artists can reassert that control over their works in digital space that is their moral right ... and things will start to look a lot brighter. 
e) become a beta tester at www.thedce.com
f) help us "scale up" by registering your library (i.e. your media collection) with the DCE.  And consider immobilizing it in the DCE "cloud" (which, until one of the big cloud companies start verifying, is the only clean cloud and therefore the only cloud that allows you to trade, sell, or lend your library.) 

And I would like to issue a challenge to anyone who is concerned about the copyright ecosystem:  The next time you are thinking about shipping a used CD or video using, e.g., Amazon or eBay ... don't!  The new owner may "rip it and ship it".  This just introduces new counterfeits into the environment.  Instead, ship it to the DCE and let your CD live in the DCE ecosystem.  Your CD will be verified, immobilized and registered in your name.  When you go to sell it to another user, the Exchange will assure a "one-for-one" exchange.  No "freebies"!!

Toward Copyright Sustainability: The DCE and the Digital Green Movement

A critic of the Digital Content Exchange recently told us “the urgency you mention will not be shared with any of the stakeholders you mention”. **

A critic probably once said the same thing to the environmental movement of the 1960s.  The DCE and Jim Yates are basically playing the same role as the Green Movement:

1. Preaching sustainability on behalf of the future.
2. Recommending a change in the way business is done which is a) difficult to implement, b) seems too costly,  and c) comes from people “outside the industry” who "don't understand how their business works" and who should, therefore, "mind their own business".
3. Saying that people have to clean up their messes (but offering a clean-up technology to do it).

It is 1968 all over again, and the “denial lobby”, aided and abetted by average people who want to continue to throw trash out the car window on the highway (people today who want free downloads), will rule for a while.  But we trust that people will eventually have their consciousness raised to the need for copyright sustainability.  Creativity itself, (nurtured by copyright ... or what else?), is at stake.

It took the green movement twenty years before anyone took them seriously when they said that "going green can actually be profitable".  And, like the green movement, we know that a digital content exchange will instantly make all the media industries more profitable, once the DCE is brought to scale.

But for right now, when Jim Yates is talking to the record industry, he might as well be Barry Commoner in 1967 talking to ExxonMobil!



**The stakeholders we most frequently mention here are the record labels, the music publishers, the artists, the tech giants (Google, Apple, Microsoft, HP), NetFlix, the MPAA, Blockbuster, the Universities under the Higher Education Opportunity Act, and public libraries.

Why I follow maverick internet inventor Jim Yates, and why you should too.

I follow Jim Yates, and here is why you should too:

1. He is an inventor who has already been very successful solving one digital age problem and is now gifting his time and energies into solving another problem that should concern all of us: that artists have lost any meaningful control of their creations because of digitization.
2. He has invented a method which monetizes a User’s valid media collection (music, video and books) and demonetizes illegal downloads by making them not forward compatible.
3. His method for dealing with illegal downloads is totally "opt in" and does no harm to either the user (who may continue to use his illegal files the same as he always has) or to any record company that may want to continue to allow access to free music for promotional or other purposes.
4. His invention works without the need for licensing ... from the record companies or anyone else.  (Though record companies can benefit greatly by becoming a User).
5. The method Jim Yates uses is exciting, and therefore fun to follow, because it has never been tried.  And all other methods that promised to “stop” illegal file sharing have been dismal failures.
6. When the peer-to-peer file sharing problem arose in the early 2000s, he began working on a solution and has both written a patent application and developed a web-based media cloud portal.
7. His background put him in a unique position to work on this problem.   In his last position, he solved the financial industry’s problem of counterfeit securities and was midwife to that industry’s complete conversion to digitization.  
8. He has twin degrees from Washington University, in both engineering and business.
9. His career has had a twin path: working in the securities industry with the New York Stock Exchange and in computer engineering.  
10. He is not from the record industry.  Or the home video industry.  Or book publishing.  If these industries had solutions from within, don't you think they would have found at least one by now? After all, they are the parties that supposedly have the financial incentive to fix the problem.
11. The earlier company he founded, Bridge Data, is now owned by Thomson Reuters.  Many of the features that are now taken for granted in financial information and securities trading were invented by him and implemented under his management of Bridge.
12. I have been using Jim’s  application in beta test for years and I am personally excited about it.  It really works!  I say that as a true record freak.  (If you have ooTunes, check out my DJ set, streamed right out of my immobilized and verified cloud on the DCE.  Simply do an ooTunes search for “Emmett”).

Don't Call Scan & Match an Amnesty: Call It Amnesty and Abolition

People have been saying that Apple's announced Scan & Match represents an amnesty to illegal downloaders  (see 1.6 million hits for scan & match amnesty)

Make no mistake:  it's not just an amnesty, it's an abolition.   It's not just what this does to past pirates.  That's a minor footnote.  It is the incentive it creates for tomorrow. 

It now behooves anyone who was buying music on June 6th to immediately STOP DOING SO, get it for free somewhere* then store it in Jobs' cloud and thereby get your music at a 99.993% discount (yes, i did the math).

The record industry is basically inviting you to do that.  Look at the statement from Frances Moore, president of the IFPI, the largest-in-the-world representative body of the four major labels:

IFPI’s chief executive, Frances Moore, told me via email that iTunes Match was “good news for music consumers and for the legitimate digital music business. It is the latest example of music companies embracing new technology, licensing new services that respect copyright and responding to the new ways consumers want to access and enjoy music.”

That's right.  She just said that a new service that even an Apple spokeswoman admits ignores copyright, respects copyright.  Brave new world.  And that "new way consumers want to access and enjoy music".  What can she mean other than getting it for free and paying a nominal amount to access it from a cloud?

In the end, what is a user to conclude but that if you pay your $24.99, your downloads are "all licensed up."?

* p2p, bit torrent, Google docs, email, rapidshare, intitle search, zip drive from a dorm-mate ... whatever ... Who knows?  Why not just develop a Limewire app for iPhone and cut to the chase?

6/21/2011 Update: Gracenote has disclosed how Apple's iTunes Match service will work when it launches alongside iCloud in the fall.  According to SAI:  "iTunes Match will not, as previously speculated, use any kind of customized new and more secure fingerprinting technology to determine what songs you have in your music library.  If you have a 128 kbps version of a song you pirated, iTunes Match will feed your Apple devices a 256 kbps version of the track.  One more thing to note: you'll be able to upload any music iTunes Match can't find to Apple server's for listening on your Apple devices."

Let's just say that (in honor of the opening of Wimbeldon) with this news it is no longer "advantage, Pirates" but pretty much "game, set, match".

Cui bono? Who gets the $150 million check that Steve Jobs wrote on Monday?

There are estimates that the record industry's take of the first year's Apple Scan & Match income will be $75-150 million.  Yet the advance that Apple paid is in the neighborhood of $100-150 million reportedly.


That sum was presumably paid on Monday at the latest.  (If you're Steve Jobs, you don't bring something to the annual developer's conference unless it is locked down.)  This is for something that won't even launch until Fall.  That is a very healthy advance.  That's at least a year, and maybe two years of advanced income.  Plus the four months of money use until Fall, plus assuming a 90-day accounting period, that's as much as 2 years and seven months of an advance on the last-dollar earned.    It also means a guarantee of one to two years of projected income, the risk of user uptake on this new product (which has two competitors whose names you may have heard of), being solely on Apple.


Conversely, this is why Google is out of the running: they wouldn't pay the advance: "The size of the advance payments have been a major hold-up for Google." (NY Post)

We have been saying here on this blog for over two months now: it is becoming all about the quarterly earnings report.  Long-term values, interests, commitments or principles, be damned.


So I guess if the money came on Monday at the latest, the artists should start seeing the "Scan & Match Income Share" line on their royalty statements in about 90 days, right?

I have requested, through private email to the IFPI's Frances Moore, who is doing the official crowing about this deal for the record labels, that the major labels explain how this money will be accounted to the artists. No word yet.  Unfortunately, no other entertainment lawyer is likely to ask, or request an actual audit, because it is unexplored terrain and his/her artist's share of the expected gain over audit and litigation would be reckoned to be less than the cost of the audit/litigation. So this is very tempting income for the record labels.  Income that they can pretty much account any old way they want.  Is it settlement income?  Miscellaneous services income for assisting with the scan and match capability?  Your guess is as good as mine.  It is not a royalty, we know that: otherwise the indie labels would be in on it.  Instead, as Hypebot eloquently puts it, the indie labels are getting "Zero.  Zip. Nothing" from Apple.

I wish I could say that Scan & Match was "The Record Industry on Drugs".  But alas, they know exactly what they are doing.  

iCloud and Piracy: Initial reaction from around the world.

What others are saying:

My Digital Life:  "iCloud probably will become the biggest pirated music hosting service."  

British rights lawyer Michael Speck, who ran the music industry's court case against file-sharing network Kazaa: "no better than the old p2p pirates" and
"If you can store all your pirate content you won't need to buy content will you?"

MSN Money:   "Apple's new music laundering service".

Australia-based lawyer for the Jimi Hendrix estate, Ken Philp said iTunes Match provided a means for people to "launder" pirated music.

Syfy: "pirate friendly".


David Pakman, a venture capitalist and former eMusic chief executive, speculating that the money will only come in at around $75 to $150 million for labels to split,  "Not small potatoes – they'll take it," he says, "but it doesn't change their business in a fundamental way."   [Ed. Note: The DCE does change their business, in a fundamental way.]

Sydney Morning Herald, "Apple iCloud 'legitimises' music pirates."

Nick O'Byrne, general manager of the Australian Independent Record Labels Association, "Why buy at 'full price' when you can pirate as many songs as you like and absolve yourself of guilt by paying $25 a year?"


[Ed:  Once again, the American entertainment industry (lawyers, managers, business managers, trade groups, publishers, "independent" labels, record stores, distributors) is to be found where they'll always be found: hiding in the tall grass.  (-: ]

Immobilized music in iCloud: The next logical step

If you bought a song, and it is immobilized in the iCloud, and Apple has the technology to make sure that all the music you properly own is synchronized to all your iDevices, then why are you not able to sell a digital download that you paid fair and square for, or lend it like a library?  Sell it ... "poof", it's not on your iDevice.  Lend it ...  and it's not on your iDevice for the length of the borrow period.

 

Jobs and Labels Reduce Price of Songs from 99 cents to 99-thousandths of a cent

Steve Jobs and the major-label record industry just reduced the price of music from 99 cents per song to 99 thousandths of a cent per song.
 

The new icloud service will take 25,000 of your songs that you pirated and store them in Apple’s new iCloud for $24.99 per year. What's the catch? Nothing, according to Tunecore’s Jeff Price. And you do not even have to upload them, it will simply match them for you.

... oh, and that includes a free upgrade from your low bit-rate mp3 to 256kbps.  And did I mention you won’t have to store it? Nor remember where you put it?  And have access to it all over the world?

No word on whether the record industry will be stepping up enforcement and prosecution against those who download illegally tomorrow, now that the "Fence Stolen Goods Here” sign has gone up on Apple’s shop window.  But if I were the defense lawyer of such person, my defense would be “entrapment!”. (Update: One Day after record industry approves of counterfeits for the iCloud, industry rep says it is "stepping back from 3-strike cutoffs".)

I am sorry. I am being a little bit deceptive here.  The price is 99 thousandths of a cent per year.  I know that might be a deal-breaker for you.

99 thousandths of a cent!  Just think of that, artists, next time you sit down to record another tune.  

Update 6/7/2011: Confirming the obvious, an Apple spokeswoman said the company would not know if a person's songs were pirated, only if they matched songs in iTunes.

How DCE-assisted Verification 'Cleans the Cloud'