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.

Thursday, February 17, 2011

Aspirin, Duct Tape, WD-40 and the DCE

            I often feel like an 1890’s salesman of aspirin.  Or a 1940’s salesman for duct tape.  Or a 1950’s salesman for WD-40. 

            I can see myself knocking on doors and hearing people say,

            “What is it, pain reliever?” “I’ve got Dr. Good’s.”

            “What is it?  Tape??”  “I’ve got all kinds of tape.”

            “What is it, lubricant?”  “What’s wrong with oil??”

.... and getting the door slammed on my foot!

            Eventually, though, people realized that there was something key about aspirin . . . that it could fight headaches as well as muscle soreness, prevent strokes and be used topically for cold sores.  To this day, aspirin is being looked at to fight cataracts, cancer . . . you name it.

            Duct tape and WD-40, as any homeowner knows, are similarly key.  You do not buy these items for one purpose alone.  Problems arise in the home, and you apply duct tape or WD-40.  And because WD-40 and duct tape have the right principle they usually work. 

            The DCE principle: 

·                     Fights piracy;
·                     Allows libraries to be better libraries;
·                     Allows people to enjoy their video and music collections more;
·                     Allows people to share mix-tapes;
·                     Allows content owners to cut out the middle man and keep more money for themselves;
·                     Allows radio stations to reduce the cost of music;
·                     Allows colleges and universities to comply with the Higher Education Opportunity Act without throttling legitimate research;
·                     Reduces the cost of text books for students;
·                     Brings online all of the knowledge contained in all of the books of the world and makes it searchable.
·                     Saves space;
·                     Is environmentally friendly

. . . to name just a few.  But you try selling all of that.  We get told all of the time, “people do not want that,” “they are happy with their [fill in the blank],” etc.  Like they said about products like duct tape in the 1940s.  And sometimes to add insult to injury, people look at you like you are a wacky professor.  I am sure that the aspirin, WD-40 and duct tape guys got that "look" quite often, too. 

            Decades transpired before aspirin, duct tape and WD-40 were welcomed into peoples' homes en masse.  The DCE was created by a patent filing March 4, 2004.  So since it has only been seven years, we are doing pretty well in that comparison. 

            We probably do not even know half the uses to which the DCE will be put some day.  Because the DCE correctly analyzes the problem that arose for content owners at the beginning of the digital age, it is a solution that will continue to reap additional solutions to those who apply it creatively. 

            Unlike duct tape, however, our solution, in order to be scaled up, requires cooperation among some (but by no means all) of the folks who create, sell or play media.  Right now, these folks would rather fight among themselves. 

Wednesday, February 16, 2011

On the eve of the 'British Grammies', organizer says "Illegal downloading is suffocating the music industry"

David Joseph, Chairman and CEO of Universal Music UK, wrote an op-ed today in The Telegraph entitled "Illegal downloading is suffocating the music industry."

The culprit, says Joseph, is the "delay in implementing legislation to tackle the problem that was passed nearly 12 months ago."   Twelve months is a long time.  One might infer that either the sanctions in place have not proven to be tough enough or even after 12 months the implementers (whoever they are) are having trouble finding a way to devise sanctions that are consonant with Britain's values. What will the next twelve months bring?  Fileageddon??

Or perhaps there is another source of the suffocation altogether.  That source is the estimated multi-billions of illegally downloaded songs already out there.

Even if you stopped illegal downloading cold tomorrow you would still have to deal with the billions of counterfeit copies that flooded onto people's computers, mobiles and "cloud solutions" when the dike was open.

Rather than go for more draconian sanctions .. why not at least experiment with the Digital Content Exchange?  If you had the DCE in place, enforcement (Draconian or otherwise) would be less a priority.  Why prioritize ISP enforcement when illegal downloaders could basically "knock themselves out" only to find the uses for their ill-gotten gains to be paltry and few.

Joseph has chosen a good word ... "suffocating".  That is what is happening.  Counterfeits are a silent killer.  Just like they would be to an economy where people were allowed to create dollar bills at will.  But unless you deal with the 15 years of counterfeits in music, the air passage will not be significantly reopened.

Monday, February 14, 2011

Ripping your books to save space

And, finally .... Tablet computers and e-readers do a lot of things. But in Japan they are now being used to clear space. Japan is the world's biggest market for paper books and it's also home to some of the world's tiniest apartments.  Well, according to Bloomberg, dozens of companies there are racing to convert paper books into e-books ... because people want to read of course.  And so they will have a little extra room in a country where the average living space per person is 398 square feet.

Yes ... people are going to want to have their books "ripped" to save space.  And for other reasons too: convenience, searchability, etc., etc., the list goes on. But when people have their books ripped, guess what?  This will make them easy to share.  If the sharing involves a copyrighted work (and most works are) that will be an illegal, unauthorized counterfeit.  

Is the book industry ready for the onslaught of these counterfeits?  Do they want their own digital sales to start eroding like music and movie sales??

The DCE is the only known mechanism for acting as traffic-cop/monetizing-mechanism for this onslaught.  If the music industry had adopted our method 15 years ago, it would not be vending its own music directly without necessarily needing any help from Steve Jobs.   And it would not be in dire straits.

Will the book publishing industry learn from this folly or not?  They will eventually.  It is just a question of whether they will lose millions of dollars first before they figure it out.

Monday, February 7, 2011

Free Music Streaming Services Don't Seem To 'Ad' Up; What To Do?

"In another sign the economics for purely-free music streamers don’t add up, says it will now require a monthly subscription for access to its music via mobile and home entertainment devices."

1)       What is up against.  Last FM, now that it has become a pay service, will have to compete against the billions of free illegal downloads that users have on their computers.

Since counterfeits erode the demand for all legal alternatives, free or paid, should be a good “music industry citizen” and help itself at the same time.  They would do this by exchanging user registration information with the DCE.

2)       Q: Will the new business model work? A:  Who knows?  The DCE is “agnostic” to business models and accepts all licensed music services as exchange members for the greater goal of fighting counterfeits.   Although we don’t know what “won’t work,” we do know what “does work” : content creators will see significant amounts of monetization from cooperating with the Digital Content Exchange.  The DCE’s cloud-based server is already functional (in beta test) to play a playlist for the user made up of songs that are either owned or borrowed by that user.  Every time the owned item is loaned or sold, there is a transaction fee which contains a royalty.  A purchase or a loan can happen many times over in the life of a single, registered CD or digital download.  Remember the copyright in a piece of music is “life of the author, plus 70 years.”  Currently CDs are being sold at used stores many times over with no royalty and digital downloads are being shared with other users with no royalty plus flooding the market with more counterfeits, further denting demand. Will Charge For Music On Mobile And Other Gadgets

Thursday, February 3, 2011

Where have all the music pirates gone? Gone to apps, everyone.

Remember the LA riots of 1995? The VCR was big then. Close-circuit cameras showed looters breaking into electronics stores and taking VCRs out, one under each arm. Once everyone had a VCR for every room in the house, the looting of VCRs stopped.  And after the busted windows were repaired, the demand for VCRs, legally or illegally gained, went way down because everybody in that immediate area already had two or three in their house. What is the only thing that could've sparked new VCR sales in that area immediately? It would have been if somehow all the VCRs that were stolen could not play. 

The DCE is a method for making sure that the illegally gotten gains of music (and movie- and book-) “file-sharing” do not play.  Instead of being used on every nifty player or app that a developer can dream up.

Music consumers may be getting filled up on music, legal or illegal, for a while.  The music industry cannot do anything about that ... except begin implementing a voluntary registry system for music ownership.  This will control the billions of illegal downloads since the dawn of the internet, which continue to be enjoyed, dimming the demand for everything from used record stores to the iTunes store to subscription services like Spotify. 

The plum for users? Digital access to your music anywhere in the world and the ability to trade, sell and lend your music for fun or profit (to name just two plums).