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Splatcat Records

And How Does it Relate To DRM For Music? (and video and books...)

by Todd B. Beals (Open Post)

There is no denying that the arrival of Internet-based music distribution and the instant gratification of on-demand has had a remarkable impact on the global music industry. The ability to digitally deliver CD-quality music online via downloads or streaming has not only resulted in a fundamental shift in the way consumers listen to, organize and acquire music, but has also raised questions about the future delivery, storage and consumption methods of other forms of entertainment content such as movies, television and video games. Moreover, it has highlighted the growing pains that can occur when established and profitable business models are confronted with emerging technological advances. If nobody moves and the moon and the stars align themselves just right - it looks like the music industry has found a potential solution to their worries by reinventing an old idea from the software industry.

I remember the first time I officially heard the term last March at Billboard’s Money and Music Symposium held in NYC. A savvy audience member had posed a question to one of the music industry experts on the panel who had no clue what he was talking about. However, it made perfect sense to me because I was already intimately familiar with Shared Media Licensing’s Weedshare business model. Think of network marketing hitting e-commerce. The word itself has actually been around for quite a few years related to software distribution, but suddenly it seems to be the new media industry buzz word. That’s why I wanted to examine it more closely. Looking from a macro perspective, beyond music only applications, Superdistribution lets digital information/data flow freely, without resistance, and is typically distributed over public channels in an encrypted form.

Throughout the controversial paradigm shift over the newer forms of internet media distribution that are emerging, the constant evolution of technology has spawned multiple DRM solutions, which if you look closely, are slowly transforming internet piracy into profits by addressing the entire distribution and licensing process.

DRM is a set of technologies that content owners can use to protect their copyrights and stay in closer contact with their customers. It is a means of protecting multimedia files by encrypting the files. In most instances, DRM is a proprietary and patentable system that encrypts digital media content and limits access to only those people who have acquired a proper license or key to play the content. Simply stated, DRM is a technology that enables the secure distribution, promotion, and sale of digital media content on the Internet. However, DRM can also be thought of as a system of IT components and services along with corresponding law, policies and business models which strive to distribute and control IP and its associated rights.

According to Jeffrey Hunker, dean of the H. John Heinz III School of Public Policy and Management at Carnegie Mellon University, "DRM has to do, essentially, with how we define and how we protect the information that we want to share on a limited basis over a network. It is the process of securely distributing digital media with a built-in capability to track it. The question of rights management affects anyone who wants to share information but who also wants to be able to control the distribution of that information. This is an example where there are certainly technical issues and technical protocols involved, but it's also a social and a political issue as much as it is a technical issue. DRM is maybe the first good example of a whole set of IT and society challenges that increasingly we are going to have to be dealing with as a country and as a society." Superdistribution is actually a process by which the consumers help increase the distribution and sales of packaged/encrypted files by sharing them with other consumers. According to Brad Cox from Wired Magazine, "Superdistribution actively encourages free distribution of information-age goods via any distribution mechanism imaginable. It invites users to download Superdistribution software (or media) from networks, to give it away to their friends, or to send it as junk mail to people they've never met. Why this generosity? Because the software is actually ‘meterware.’ It has strings attached, whose effect is to decouple revenue collection from the way the software was distributed. Superdistribution software contains embedded instructions that make it useless except on machines that are equipped for this new kind of revenue collection."

Word Spy defines Superdistribution as, "an online retailing scheme that encourages the free and widespread distribution of digital files (e.g., music files) that can only be opened under a restricted set of circumstances. These restrictions include opening the file only on a single computer; opening the file a limited number of times; or allowing the file to be opened only after a payment has been processed."

Ryoichi Mori, head of the Japan Electronics Industry Development Association (JEIDA) is credited with the term in 1989 and has said, "Superdistribution tracks and enforces usage rather than possession and is generally recognized as the best approach to selling digital property (digital versions of text, data, knowledge, pictures, music, videos, etc.) on the Internet." It is based on the observation that electronic objects are fundamentally unable to monitor their own copying but are trivially able to monitor their use. For example, making software - whether it's Microsoft's Word or Mike's string-compare subroutine - count how many times it has been invoked is easy, but making it count how many times it has been copied is much more difficult. So why not build an information-age market economy around this difference? "Superdistribution is a way of distributing programs, using a tamper-resistant module to keep track of usage rights and billing charges it is a way to distribute software (or media files) in which software is made available freely and without restriction, but is protected from modifications and modes of usage not authorized by its vendor. By eliminating the need of software vendors to protect their products against piracy through copy protection and similar measures, Superdistribution promotes unrestricted distribution of software."

To paraphrase Ted Cohen’s comments from EMI at this week’s Jupiter Plug.IN Conference recently held in NYC, "Basically, Superdistribution is a system involving distributed music tracks/digital data that allows consumers to preview material before purchasing. Every ensuing sales commission then gets shared with those that helped to pass the song/data along." That’s the big difference here - the process pays the people that help distribute it. Many experts believe that the entertainment industry is ripe for a new DRM technology that facilitates Superdistribution in order to bring a copyright respecting commerce element to file-sharing networks. The most compelling aspect of this process in regards to music is that it allows files to be legally shared on a P2P network with compensation being paid to the rights holders at each transaction. Now that’s progress!

Connecting the dots even further including tangible physical products, Media Rights Technologies’ website says, "Superdistribution is the inevitable next step in the ever-expanding, trouble-free and interactive process of authorized sharing and duplication of media, whether distributed in fixed or digital form." "Superdistribution is about getting any content anywhere and any time," says Altnet chief executive Kevin Bermeister. For example, if you’re a musical artist, you want P2P users to freely distribute your files to all their friends, but you don’t want their friends to be able to play the files until they’ve obtained your permission to do so, which might involve them signing up to your email list, allowing you to tell them about your upcoming CD, or having them pay you a dollar for the ability to play your music track.

No matter what side of the fence you’re on regarding fair use laws, P2P technology has undeniably forever changed the way music is distributed. This fundamental transformation provides the capability of allowing any artist to record a song in the morning, share/upload it using his favorite P2P client in the afternoon - and then have it distributed to millions before dinner.

Media DRM has naturally evolved out of the old software business model of try-before-you-buy commonly known as share-ware, or trialware. Software DRM encompasses flexible licensing and activation that can also take advantage of the new, unconventional revenue opportunities such as casual sharing and peer-to-peer networking. By utilizing true software DRM, developers can convert casual sharing of software from a revenue drain into an efficient new form of revenue stream. Therefore, companies who use a Superdistribution Sales Channel for the dissemination of software/media can securely leverage the power of personal networking. For example, by adding software activation and/or try-before-you-buy to future software releases, consumers can transform word-of mouth/pass-along referrals and peer-to-peer networks into solid sales opportunities and software revenue builders, not losses. At the end of a set grace period, unlicensed software copies require the user to purchase the software, or they just stop working. It appears that the media industry has learned well from this old model, but doesn’t fully trust it or the gatekeepers would have fully opened up their content vaults.

According to IBM’s Digital Media director of marketing, Scott Burnett, "The philosophy behind our digital rights management technology allows for content to be wrapped and rights to be ascribed to the use of that content as it travels over the Web - not just for music, but for any media type." You can actually turn file-swappers into cyber-salespeople, boost profits and gain information on those new customers as a result. All the files that can be shared in this way actually have a way to be tethered to e-commerce, tethered to a commercial relationship. According to Ranjit Singh, an early pioneer of DRM technology, "I believe we should turn pirates into customers, or at least those who can help us distribute the content. Rather than let them steal it, pay them a commission to simply pass it on. Turn the pirates into customers or into your suppliers and distributors. If you can now track who has material, then you can deputize them, and pay them a commission for distributing stuff for you. It's essentially turning the people who are taking your content into sellers of your content. Turn the pirates into your distributors. With DRM, you know exactly where your content is and where it's being used and how it got there. You also have to pick and choose where you are getting return on investment, limit your first sets of deployment, make it manageable, and don't make it intrusive for the user. Because as soon as you start to put limitations on the user, they will start to dislike the use of these types of systems more and more."

Today, several new technologies claim to assist in the process. According to Hank Risan, CEO of Media Rights, "New technologies like our X1 SeCure Recording Control and the CD/DVD SeCure Products prevent unauthorized copying and distribution of any media, on any platform, and can furthermore be used to propel authorized Superdistribution activities."

At the end of the day, people who don't want to pay for media or software content will always find ways to circumvent DRM systems. However, I believe that those people are actually in the minority and that the majority of people will pay for protected content, as long as the price is reasonable and the delivery mechanism is as effective as the P2P networks have turned out to be. P2P will become the dominant technology for searching and delivering all types of information to consumers and the right to determine technological innovation should not be left in the hands of Hollywood. Superdistribution therefore, is a wonderful opportunity to rebalance the power structure, turning pirates into salesmen and tipping the scales back towards profitability.


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