I have been "streaming" Beatles for a long time… legally

When I play my ripped George Harrison CD through my iPhone 

This is what every major automaker calls "streaming".

E-Book Subscription Services Clearly Sucking Wind

According to an article in today's Wall Street Journal, now that Oyster is exiting the e-book subscription business, that leaves only Amazon and Scribd in that space.  And the latter is facing some self-admitted "growing pains" and was removing some romance titles as part of its monthly service.

What these services fail to realize is that they're selling fungible digital commodities.  You can sell them as a subscription model, but the one-for-one relationship between copy and user must be maintained.  For this you need a registration system.  And  immobilization. And verification.

And then with the Digital Content Exchange, you have at least one method of making money off the whole process.

But without fixing the ecosystem, these models are going nowhere.  Amazon sells other things, and can bankroll what must be losses in this area in exchange for extending its brand (it's cheaper than advertising).  And oh by the way the book publishers and authors aren't happy either.  Maybe there's something rotten in Denmark??

Facebook Nixes Streaming, "Wants to Create Something Unique"

"... Facebook wants to create something unique"? they should cloud-store your music ... 
See my comment:

Response to LA Times "Stealing Music" story.

http://www.latimes.com/business/la-et-ct-state-of-stealing-music-20150620-story.html#vf-2285900001610

Once again IFPI/Music Watch acts like the number of ppl who use sites "offering copyright infringing music" is a one-for-one indicator of the problem.  It ignores the songs that have been already downloaded and continue to be used.  The Digital Content Exchange properly terms this The Counterfeit Problem.  There are probably thousands of counterfeits per user since mp3s have been around for almost 20 years now.  Yes, the DCE has had conversations with the IFPI and they dont get it ... or choose not to get it. So they keep carping about interdicting "sites offering copyright infringing music" which is seldom a solution but always a threat to the Internet.  Yet they won't use their position as umbrella to the worldwide recording industry to do anything cooperatively about counterfeits that would help increase the value of music without any takedown requests or heavy-handed moves.

On the Apollo 1201 Project and Eradication of DRM (response to Thor Benson)

Thor Benson makes two important points: DRM needs to be eliminated and ownership needs to be reestablished as a viable option.

Instead of thinking in terms of preventing duplication of a digital file from occurring (what DRM tries to do), we need to think in terms of making the illegal copy’s value pale in comparison to the legal copy. To achieve this goal innovators need to work simultaneously on both reducing the value of the illegal copy and increasing the value of the legal copy (the digital goods value margin.)

(WARNING: My cohorts and I believe we have the best method for shrinking the digital goods value margin. There may be others. But what follows is, on Super Bowl Sunday, something of a commercial. What is for certain, regardless of who has the best method, is that this is the area in which anyone attempting to eradicate DRM in a decade needs to focus: the digital goods value margin. )

The Digital Content Exchange (www.TheDCE.com; US Pat App. 10591416, priority date 3/4/2004) facilitates the shrinking of the digital goods value margin by setting up an Exchange upon which owners of media voluntarily register the copies they own. Whether the purported owner is in fact a true owner is verified rather painlessly by the DCE method.

On top of these voluntary (and verified) registrations, the DCE adds a digital storage locker so that owners can access their media. The DCE can also receive registration information from the parties that vend digital content, which information will ease the process of registration and verification from the owner-end.

In addition to providing user/owners everywhere access for streaming or downloading of their media, the DCE also serves as a database which has a wide potential subscriber base: e.g., third-party websites who wish to verify that their users truly own the content to which they are providing access, and agents that wish to verify that their author is receiving their due royalties.

Speaking of royalties (and who doesn’t want to speak of them?), the DCE is offering a royalty to all authors and their licensees (we will use the Copyright Act terms copy, author and licensee or rightsholder in order to cover books, music and videos.) Because it is designed as a commodities exchange, the DCE offers users a wide array of different transactions, indeed as wide an array as would be seen on any stock exchange, an array which easily covers what content providers do, what online sellers do, what online music stations do, what streaming services do, what used media stores do, what libraries do … and everything in between. With each transaction there is a potential fee and a division of that fee on a royalty basis.

It is important to note that the problem that gave rise to the bad solution of DRM was unleashed in the 1980s when the record industry, sensing windfall profits, rushed headlong into selling a new product (CDs) in the same old way that they had sold the old product (vinyl and cassettes). That problem has never been addressed, (DRM addressing only a symptom but not the underlying problem). Instead, the problem has been ignored, with everyone just hoping, with blind fideism, that some new revenue stream will make everybody forget that there is a problem and just be happy with the money they are making. Hence, the freefall that the music industry, for example, has been in ever since then. (But the problem has never been solved for videos, books, and games either, industries which are showing the same strain of sales influenza as the music business).

One of the things that is blocking any increase in the value of legal ownership, and therefore causing digital downloads/ownership not only not to be adopted but actually decrease over time is the First Sale Doctrine. This doctrine, nothing more than a bogeyman, nonetheless needs to be addressed.

The content industry has a reflexive “no digital first sale doctrine” position because, truth is, they hated the physical first sale too. But, in the old days of physical media, the industry had to yield to the demands of basic human freedom. But the situation in the digital realm is the same as the situation in the physical realm: human freedom demands the right to own, which we lawyers know is the right to dispose. If you can’t dispose, the incentive to own goes way down. No wonder sales of CDs, books, and DVDs … and their digital accompaniments … are at all-time lows.

In opposing digital first sale, the industry may be killing the golden goose. Because ways can be invented to handle transfers of digital goods, if the industry would relax their position on first sale so as to give inventors an incentive to invent. Even without any incentive (or even encouragement, gulp) provided by the content industries, we at the Digital Content Exchange have invented one way. When a media item is sold it is removed from the storage locker of User A and is then accessible from the storage locker of User B. Every app that User A uses will know that this transaction has occurred immediately by subscribing to the DCE database which allows instantaneous ownership checks. How does this provide User A with any ill-gotten gain? And ill-gotten gain is at the heart of Copyright law, not technical access and transfer rules (the dizzying variety of which Thor’s article does a good job of dissecting for our horror).

Our invention might not be the best way. We encourage others to try. But were pretty sure were in the right arena, though. The problem is insufficient benefits of owners/Insufficient prevention of counterfeits.

Readers may flinch at the word “counterfeits”. But it is important to see that the problem is not in fact one of “piracy” (which, if anything refers to the process of getting “on board” a piece of media and taking control of it) but rather one of counterfeit, .. i.e. media downloads which have not been authorized being given “full faith and credit” simply as a result of the insouciance of authors and their licensees. Because even if DRM were taken off of all future media releases, there would still be a billion items or so out there with DRM limitations owned by owners. And owners would be expecting full access to those items. But they would be counterfeits, and no respectable app should honor them any more than a five-star restaurant should accept a bogus $100 bill or the NYSE should accept a bogus share of a stock.

The solution is to go around the DRM system and adopt a registration system where each owner can login and see all the content that she either owns or is currently borrowing … and any app she is using can do the same on her behalf.

It is also important to note on the ownership issue, that ownership exists whether people like it or not. It’s just illegal ownership. All of the big six digital music lockers, for example, assume that you own any download that is presented to them for storage (and playback). Failure to set up a robust legal ownership system is folly, because it just allows the illegal ownership system to thrive more.

In the music field, some would simply prefer to hope to divert users of illegal content by the growing-big of Spotify or Netflix. Spotify increases the value of the legal copy but does nothing to address reducing the value of the illegal copy. In addition, Spotify is limited in its ability to increase the value of the legal copy because it does not provide ownership. To own is obviously better than to rent. Especially when the rental charge has no fixed contractual limits (What if Spotify or Netflix someday charge $99/month ? You will wish you purchased a few downloads.).

When Spotify was launched, among its benefits that were touted by its supporters was that it would reduce “piracy”. And surely it has to some extent. But it was only after subscriber numbers climbed to significant levels, that the anti-piracy effect was felt. Similarly it cannot be an objection to the DCE that it will not reduce piracy significantly. It will reduce it, but only upon significant levels of adoption, just like Spotify and any other app. Industry analysts and futurists alike need to give the DCE a chance to build up its users, just like it did Spotify and Netflix.

But a beginning has to be made. And this is where the Apollo 1201 program can help give us traction. Because there is a “model” out there which says, “Stop whining, just go out and solve somebody’s pain point, get a couple million users and get funded.” The problem is, we don’t solve a user’s pain point, as much as solve an industry-wide design problem which unfortunately will take cooperation among competing parties, if it is going to be fixed within this decade rather than within this century. But as Thor (and Cory) have pointed out, the resultant DRM problem is also a societal problem. And a couple of nods from the USPTO and U.S. Copyright Office would help as well. This problem should get everyone’s urgent attention. Even Google’s, Apple’s and Amazon’s (even though they risk market-share by the democratizing effect of an Exchange that is open to all, the long-term health of the system they labor in should be paramount.)

We believe any serious attempt to eradicate DRM in a decade should include promotion of the DCE as a trusted third-party solution to the digital goods value margin problem.  

Censored from Billboard.com?: Discussion of a Solution

Currently this comment is not being let through over at :

https://edit.billboard.com/articles/business/6450640/sony-google-apple-lawsuit-pre-1972#comment-1818226398

Here is the workaround: they cannot charge anybody sound recording royalties (or royalties of any kind) for playing your own music back to yourself. Or music you borrow, say from a library. thedce.com already does this. It's the cloud from which you stream your own music, and other people's music that you borrow. Organized on playlists of your choosing, (or other people's choosing).

US Public libraries have been streaming content to borrowers for the better part of a decade without a peep from anybody that a royalty is owed.

Radio stations are a 20th-century idea, as are the royalties occasioned by them ... doesnt matter that they are coming at you digitally in the 21st century. 21st century ... increasingly... you (and your friends) program your own radio station.

Much Ado About Bit Torrent

1. The key to making bit torrent irrelevant is to make the counterfeits that they "mint" less-useful.
2.  Unlike a counterfeit dollar bill, which is a physical thing, with a digital item you can NEVER tell which is counterfeit and which is real. They are identical.  This is why DRM never works ... at least not for long.
3. There is no need to interfere with Bit Torrent, which does in fact have legitimate uses.  Stopping people through legal action is messy anyway.  What we should do with a problem like Bit Torrent is what we've always done: obviate the problem through innovation and cooperation among those negatively affected.
4.  What is needed, then, is an invention of some kind that deals with the digital file on the redemption end of the business: i.e. when you go to use it for its intended purpose (i.e. watch, listen, read, play).
5. This type of invention is not likely to come from the tech industry, or from the entertainment industry. This type of invention is likely to come from people who already have experience dealing with fungible digital commodities and the problems they cause.
6. The people who have experience dealing with fungible digital commodities and the problems they cause, are mostly found in the securities industry, which has the most at stake (dollar-wise) from allowing counterfeits to be redeemed.
7. The Digital Content Exchange is an invention created, prototyped and implemented  (Beta: thedce.com) by former securities industry experts in the Design of Exchanges.

(The Digital Content Exchange in Seven Steps.)

What happens when music purchases are a small fraction of their current numbers?

.... asks Billboard magazine.

The DCE comment:

The author is quite right to note this trend, which shows no signs of abating.  The problem? 
Look no further than the weak definition of "Permanent Digital Downloads (PDDs)" contained in CFR 385.2 ("means a digital phonorecord delivery that is distributed in the form of a download that may be retained and played on a permanent basis.") and by Harry Fox Agency ("A download that can be retained and played permanently, like songs downloaded to your PC or phone").



What does a purchaser get when he purchases?  Not much. What does "permanently" mean anyway?  Is it any more permanent than an illegal download?  Not at all.  They both are given the same "full faith and credit".  

What is needed is to devise a way that ownership can be given value again.  The Digital Content Exchange is one way.

All this focus on "streaming" is misplaced or at least a misnomer.  What Spotify, Youtube, Netflix and Pandora really are is "renting".  You are renting a universe of songs for a month. They could be gone next month. Or the rent could be raised to $50 a month (beyond your budget). Owning is the only sure way to guarantee access to a movie, book, game or video that you really like and would want to play again.  But the industry is offering no alternative for those who want to own.  In music, there is no fluctuating marketplace, just $.99 or free from Bit-torrent or a "streaming" service. Digital Rights Management was and is a bad idea.  So because of that, the entire content industry gives up on finding a good idea??

Pssst.. wanna rebuy a movie?

These Are the Films That Expired from Netflix Last Week

Where We've Been/Dialogue on Billboard.com

Although we have been busy practicing law, raising a family, etc. the Chronicle of a Solution continues unabated. The content industries (movies, music, books and games) are no closer to a solution than they were when we last posted. We had a meeting with Neal Harmon recently who obviously "gets it".  

We have also been active on various comboxes and message boards. A notable one of which is a recent exchange on billboard.com, reproduced below.   The dialogue started around the article about industrial-rock pioneer Trent Reznor, who has been hired by Apple to do... well, er, something.   

• 1)Emmett McAuliffe • 2 days ago

"Ownership is waning. Everybody is comfortable with the cloud -- your documents, who knows where they are? They are there when you need them. That idea that I've got my records on the shelf doesn't feel as important even to me as it used to. I just think we haven't quite hit the right formula yet."

• Trent is confusing ownership with location. I own my stuff in the cloud, too. I better, anyway, or we have a problem... No, I dont care "where it is", but I do own it.

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2) Laz Laz • 2 days ago

This is one of the best interviews I've read, props to the interviewer. Some really excellent questions, and TR really comes across as a smart guy. He's an artist who's been on the cutting edge of the writing/ packaging/releasing music for decades, it's interesting to see what happens next - combining the weight of Apple and the expertise of Reznor...

Emmett McAuliffe  Laz Laz • 2 days ago

Have to disagree. Being on the cutting edge of writing/ packaging/releasing music has nothing to do with coming up with something unique to solve the technical/design/business problem

Laz Laz  Emmett McAuliffe • 16 hours ago

I don't get that. I didn't say TR would be the guy to 'run' the business. But there's very few people with MORE knowledge about what works and doesn't work in the music industry. If anyone can come up with how to transform the music industry, TR is a good bet.

Emmett McAuliffe  Laz Laz • 15 hours ago

I get that. Maybe we disagree about what the problem is, then. It is not a problem of what "works or does not work in the music industry", like a problem of which genre, which sound, which album cover, which marketing campaign.
What we have is a technical problem. It is a problem that was unleashed in the 1980s when the record industry rushed headlong into selling a new product (CDs) in the same old way that they had sold the old product (vinyl and cassettes). That problem has never been addressed. Instead, the problem has been ignored, with everyone just hoping, with blind fideism, that some new revenue stream will make everybody forget that there is a problem and just be happy with the money they are making. Hence, the freefall that the music industry has been in ever since then. (Incidentally, it has never been solved for videos, books, and games either).
If you keep turning to "music guys" (e.g., Jimmy Iovine, Dr. Dre, Trent Reznor), the problem is never going to get fixed. Like any other problem that you want fixed, you have to turn to innovators, i.e inventors. We are actually a very innovative country (the USA). There has hardly been a problem we have not been able to solve. But you have to actually turn to the people to fix it, or it is not going to get done. The music industry has never had to do that in its entire history. (Sure, scientists have brought them new technologies, and they have employed them. But they have never had a technical problem before that has cratered the industry like this one).
What about Google, Apple and Amazon, you say? Aren't they innovators?? Yeah, sure. And they could fix it if they wanted to. But it is not their problem, it is the content industries' problem. Why should they fix the content industries' problem? The chances of it conflicting with one of their business models are too high (e.g. the venerable "Opt-out" rather than "opt-in" at Google.)

Funny

Precursor to Freemium?

On June 28, 1915, the Brooklyn Tip-Tops of the Federal (baseball) League hosted the Chicago Whales in a contest at which all would be admitted for free.  Brooklyn owner Robert B Ward had a substantial bakery in New York.  Perhaps he figured that more fans would see his outfield ads for bread and so forth.  Of course we know what happened to the Brooklyn Tip Tops and the whole Federal League.

Wagons Circling: APM Marketplace Tech Report Rings Our Bell Twice This Week

In the past week, Marketplace Tech Report from American Public Media has been picking up on some themes that have been voiced on Chronicle of a Solution, and nowhere else.  First, on October 13, 2011,   Max Dawson, professor of radio, TV and film at Northwestern University, in critiquing Ultraviolet (the new digital rights authentication and cloud-based licensing system introduced by some major motion picture studios), said:

"Its success will largely depend on two factors. If this requires you to ditch your entire media collection you got through iTunes, the consumer will reject it. The other thing is compelling content; neither "Green Lantern" or "Horrible Bosses" falls into that category. As much as I'd like to see studios be able to achieve success, I'm not too sure this is the right solution."

These problems cited by Professor Dawson are problems we've highlighted here.  And of course are problems that only the DCE can fix.    


First, you do not have "to  ditch your entire media collection" with the DCE's patent-pending backward-compatibility method.   In fact, the DCE is somewhat counting on your not ditching your old media collection.  We want the vinyl records, VHS tapes, everything that was legally issued.  All of those past issues have some value.  We would not want those legacy media items to be off-exchange any more so than a stockbroker would want your grandmother to keep her old shares of IBM in a coffee can under the sink. *


Second, we have long said, going back to our US patent application, our original white paper and our Google book case Amicus brief,  that we are the only answer to the problem of selection.  We even solve the ultimate problem of lack of selection, the orphan works problem.  Videos which are registered at the request of the buyer and then immobilized in the cloud, become a modern  Alexandrine Library (with music and books included of course).  Next, our method of verification enables this library to be loaned digitally.  Finally, in contrast to the limited offerings for sale at Ultraviolet, the DCE creates a market of upwards of every movie ever commercially released, to the extent that there is at least one DCE user who is willing to part with a movie they own for the right price, (in the securities industry, this is called an offer).     


And then today, again on the radio, discussing "the Cloud":

Of course, "cloud" is a woefully inaccurate name for what's going on here. It's not up in the sky, floating, ethereal. We're talking about real computers owned by someone else, stored somewhere else ....  [Security expert Cristofer] Hoff says don't think of it like meteorology, "It's kind of like a bank. You give them stuff that matters to you, you expect that they'll take good care of it."

~Marketplace Tech Report from American Public Media, October 21, 2011

We at the Digital Content Exchange have been making this comparison for a long time.  The comparison is contained in the very header of this blog.  Our white papers and slide decks always make reference to banking or securities. And we have been a virtual Paul Revere on counterfeit media.     


The question for you if you are in the media or tech industry becomes this: "Now that you recognize that there is a banking-like quality to a cloud, are you so sure that your media executives/developers know everything there is to know about handling fungible bank-like commodities that have value?  Or do you want to bring in someone who has worked with these types of digital assets all his life?  Is there nothing you can learn from the securities industry, which is well-recognized as having learned how to handle and move fungible commodities and prevent forgeries?".  


*The backward compatibility feature of the DCE solves "the legacy problem".  Note that the legacy problem has been successfully overcome by the securities industry. Shares of stock were voluntarily turned in for registration and immobilized so that the shareholder could do more with them, more efficiently. Registration was preferred by users because the advantages of the new technology outweighed the old user preferences (including the illicit user preference of being able to use forgeries in place of authentic).  The addition of physical items to a board of exchange is no big deal . It has been done with physical shares of stock and is done at the bank every day when you turn in cash. The DCE grants access to people's music through cloud storage. Just like a bank or a stock brokerage gives its customers access to their accounts on the internet.

Worldwide multi-million dollar fencing operation for illegal music sets up shop today

iCloud launches today. The iCloud is an example of content owners (the big 4 music labels) encouraging people to illegally download material. (Yes, you read that sentence right).  This is because there is no verification of legal ownership in the iCloud.

As of today, we become the sole voice on the Internet for the proposition that the cloud should not be a massive fencing operation for illegally obtained stuff.

Why media streaming apps need to be licensing-free to survive

Recent analysis has it that Spotify is incurring "gargantuan" losses, $68 million in four years.  And this is even with paying artists bupkus.  And it is all being blamed on licenses with content providers which are crippling Spotify and, according to some prognosticators, bent on killing it.

This highlights another superiority of the digital content exchange. We don't need no stinking licenses! If you understand the Amazon cloud player, if you understand Google music beta, you understand the DCE. We put stuff that you own in the cloud and serve it back to you. (And let you sell it to other users and let you lend it to friends or strangers just like a library would do, i.e., on a one for one basis ... no copies!). 

But unlike Amazon and Google we make sure you really own it. So, whether it is a video, a book, or a piece of music, we are providing a basic service to a user, are doing it on an ethical basis, and doing it better than anyone else because we are the only ones that have the securities industry background (where they really know how to handle and move fungible commodities and prevent forgeries).

That being said ("we don't need your license"), we invite content owners to participate. It is very easy in this system to pay royalties to people that want to cooperate in helping us scale up and keep to scale long-term. Nonetheless, just like IBM cannot prevent IBM stockholders from trading their shares of IBM, no one can stop a user from doing what he or she paid for when he became an owner of a media item.

Once everything that you've ever bought in books music and video is placed on the exchange, immobilized in the cloud, it becomes the lingua franca of your media collection. Content owners can then come in and authorize as many units of new material as they want, and charge what they want and get nearly 100% of what you, the buyer, pay them.

Moral of the story: Spotify and its ilk have overpaid for licenses in an attempt to get to scale.  In helping Apple get to scale, the Big 4 have given a license which rewards anybody who grabs free music by "matching" the counterfeit in the cloud.  You, the user, will bring the DCE to scale, piece by piece by joining the DCE. The more the DCE acquires scale, the more it will thwart the usability of counterfeits and the more it will provide buyers who will, in turn, provide  struggling artists, authors and filmmakers (who get to keep nearly 100% of all buying and borrowing fees) with a steady income.

Pandora catalog vs. Spotify's: Small, Smaller, Smallest

Pandora has 800,000 songs available from 80,000 artists. How many artists do you know (and like!) that have only recorded 10 songs in their career to this point? That has to be a woefully incomplete catalogue.

I first noticed this about Pandora when it kept trying to serve me the same song from the newly-released Keep an Eye on the Sky … the Big Star box set. They would only play one track from the 120 or so on the set. I smelled a screwed-up major-label licensing restriction, and I think I'm right.


Spotify, oth, reports 15 million songs. A lot better, right? Still, I and other people have noticed huge holes in its catalog.  And that's a self-reported number, as opposed to Pandora's which is a public company and therefore has the SEC looking over its shoulder.

Upshot: Pandora as a radio station is doing basically the same thing FM radio did in the 80s: A&R'ing music for you based on what it thinks you'll like (plus what they can affordably license). Somebody else is still making unholy choices for you, just like the old days of FM. You're only getting the tip of the iceberg in this "algorithm".

http://en.wikipedia.org/wiki/Spotify
http://techcrunch.com/2011/02/11/pandora-files-to-go-public/

The Digital Media Ecosystem and the Restoration of the Viability of Individual Copyrights

Contra Lefsetz on Netflix

"They could go back to buying DVDs, but that's still a bad deal compared to Netflix."

 ~Bob Lefsetz

You go over to a buddy's house. he tells you, "Let's watch [X title]." Do you care if it's rented or "bought"? Of course not.  Does the fact that its rented give you a better "experience"?  Of course not. If you owned that video for 24 hours and sold it back to a completely fluid used market, would it make a difference to you?  Of course not. A long as that video was there when you wanted to watch it.  

Transfer of ownership via cloud immobilization is easy to do.  It's what they do in the financial world with stocks and digital banking. It just hasn't been tried.  Because influential critics like Lefsetz think "renting" and "streaming" are something magic.  The magic, instead, is in the way the Internet allows us to account for which users have rights to content, and which users don't.

Lefsetz is making a fundamental error. He is confusing modes of delivery with types of ownership.  A user doesn't care whether a video is owned or rented.  He just cares, "Am I watching this when I want it?".  When a record store was on every corner of every city block, did people care that it was "bought" rather than "rented"?  Of course not.  It was called "access".  You bought a loaf of bread.  You bought a Beatles record next door to the bakery.  You were listening to the music then and there, when it was hot.  That's all you cared about.

You can own a DVD and stream it and then sell it back to the pool if you think you'll never want to watch it again.  But if you want to watch it again, it's better to own it.  It's your choice.  But: do you think the Internet is not up to dealing with a market where everybody owns a DVD for a length of time determined by them and then resells it by a click of a button? Or lends it to a friend?  Or lends it to a stranger?   Have you not heard of "cloud computing"?   When you put stuff up in a cloud it is immobilized.  It's one-for-one.  There is no need to "rent".  Ownership changes hands within an instant.

Rental itself was born in a physical era.  Yes, we can accommodate rental on a digital exchange basis, but it is not a magical talisman.  In order to rent a copy to its customers, Netflix owns copies.  Netflix is simply a library, no different from the one in your neighborhood.  It buys stuff.  It lends it out.  Streaming is just one of several ways to distribute the content to the borrower.  The point is that we need to account for each copy and keep track of who is a Verified Accessor of that copy so that the person who is the Verified Accessor can have his or her access switched on when they go to the cloud to stream it.  When the Netflix movie is returned to Netflix then Netflix is the verified accessor until the next time it is rented out.

All of this is possible through an Exchange.  We have one patent-pending, and an embodiment in beta-test right now.  It's called the Digital Content Exchange. Once the Digital Content Exchange is up and running, it will have a log of everyone who can watch The Kings Speech, from the cloud, at that moment.  That "right to watch" could be by virtue of ownership (digital download or physically-verified DVD), renting (Netflix) or borrowing (New York Public Library).  If you own you can also download to as many devices as you like.  If you are renting or borrowing, you can only stream (the Library and Netflix don't want you making copies of stuff you borrow, and the DCE will abide that rule). It's that simple.

And now, Lefsetz:

For those who say people will never rent music, remember people rented videotapes, bought DVDs, rented DVDs and now stream movies. Don't tell me what the people want, they don't know. Furthermore, what made streaming so appealing was two breakthroughs, Netflix-compatibility in television hardware and the iPad. Yes, imagine if the music industry had enabled tech innovation instead of thwarting it, maybe it would have been prepared for the future.

In case you've been under a rock, yesterday Netflix split streaming from renting, instead of one low price you got a whopping increase if you still wanted both. People are complaining, but as stated above, what is their alternative? They could go back to buying DVDs, but that's still a bad deal compared to Netflix. As for renting, where you gonna do it? The video shop has evaporated and yes, we've got coin-operated rental machines, but inventory is limited and you've got to leave your house.

So I'm laughing. It's the cheapskates revolting.

But they've got an alternative, streaming.

 

Unfortunately, the movie business is leading.

The music business could have killed the CD, could have driven people to subscription, but afraid of the future and wedded to the past it refused to do so to its detriment. We'll see what happens now.

Carnegie's 19th century 'Cloud Storage System': a parable

Everybody knows Andrew Carnegie was a great philanthropist of libraries in the 19th century. But let us enter a fantasy world for a minute in which Carnegie sets up libraries which are made up almost entirely of books that were illegally copied.  

So now there are millions upon millions of counterfeit books stocking the shelves of newly-built libraries in towns large and small across America, Canada, Great Britain and Ireland ... and even in Belgrade. If this had really happened, is there any doubt that Andrew Carnegie would not be thought of today as a great philanthropist? Would there be any way to describe the Carnegie lbrary legacy as anything other than an unmitigated disaster for copyright and for authors?  Would it have made any difference in our estimation of Mr. Carnegie that he didn't actually create the unlawful copies himself nor was he sure that all 100% of the volumes in his library were counterfeit ?  

Why, then, is there hesitation to call Google Music Beta, Amazon cloud player and iCloud, as presently constituted without verification, an unmitigated disaster for copyright and for authors? Is this a “speaking truth to power issue”?

The dream of the buzz app with the adorable name saving copyright for all mankind (Subtitle: A long-term solution for a short-term thinking world)

"If your method is so great, why haven't I heard about you?".  

Answer:  I am not sure. Since the web is a new phenomenon, there is really nothing in history to compare it to.   What is the "way it's supposed to be done" when it comes to a problem this huge?  Tens of billions of counterfeit songs competing with paid.  Retailers like HMV at death's door.   This is unprecedented.  

Do you really think some "buzz app", with an adorable name, is going to come along and everybody's going to love it so much that they stop using their counterfeits and start paying for content all the sudden?

No.  We've got to exercise our brain muscles to find a solution.  Just like "The Revolution Will Not Be Televised",  "The Answer May Not Fit on a Bumper Sticker."

The investors in the web right now seem not to be focused on real solutions but rather on following the crowd of users.  FOMA is a big factor driving investment (Fear Of Missing Out).  (Query: Is there anything that Groupon does that somebody else cannot possibly do?)

The other problem is that the Digital Content Exchange is a new ecosystem for copyrights that helps everybody.  The stakeholders in digital media do not seem interested in doing something that helps *everybody*, they want to do something that helps only themselves.  

An exchange is defined as “a system that allows competitors to compete fairly and creates efficiency”.  Guess what?  If you are a giant stakeholder, and you have a competitive advantage, you don't want something that could potentially rearrange the competitive deck-chairs even if you are on the Titanic (like the record companies). 

And then there is short-term thinking.  As Lefsetz said this week in his column "They Should All Pay": "if you don’t think there’s short term thinking at America’s corporations read The Wall Street Journal, it’s all about quarterly profits.  Long term is almost irrelevant.  But it’s all that’s relevant if you’re a (musical) act."

So we are trying to sell a long-term solution to people for whom the long term is “almost irrelevant”. And the people for whom a long-term solution is all that's relevant by-and-large don't understand our solution because it's a smidgen on the technical side and .. after all ...  they're artists, not tech innovators.  So it is not really surprising that the Exchange is still in beta.

For the record, we've had high-level discussions with Google, the RIAA, the IFPI, the Federal IP Task Force, Apple (investment people only, not tech people).  Everyone who has bothered to understand our system has admitted, tacitly or expressly, that this ecosystem will work.  They just don't want to be the ones to bring it up to scale.  Fortunately, a lot less effort is needed now in order to bring it up to scale than a few years ago, because many of the key components that we have been recommending for the past 8 years have recently been put in place (e.g. registration, cloud storage and immobilization). 

 

A formidable DCE could be put together right now, simply with all the registration info, digital purchase info, and digital master files that already exist. If everybody who has possession of this info shared it with the Exchange.   

I'm telling you ... Users would LOVE it too.  It would be like they died and went to (cloud) heaven.  It would be the most user-centric media experience ever. But if we have to build an exchange, new user by new user, immobilized track by immobilized track  … it is going to take a while.  What can you do, from where you sit in the industry, to help get this idea out there so it can get to scale more quickly??  Or so that the idea can be just discussed?  Who in your circle needs to know about this??  Be a part of history ... Hit them up, now!