P2P gets profitable
Monday, November 22nd, 2004 -- By ETAs predicted in my paper written in 2002 “Stardom, Peer-to-peer and the Socially Optimal Distribution of Music”, P2P could be potentially integrated in a business strategy for the music industry, and bring in profit.
A lot of news stories below:
Weed is offering some way (based on DRM implemented by Microsoft) for people to sample music before they want to buy. Here is a story from Wired News.
Here is a Rollingstone article showing how the industry is shift gears, and if you read my 2002 article, you will see how my idea gets integrated in the new trend.
OutKast, Britney, Destiny’s Child to be offered through new P2P service
Two pioneers of file-sharing — Napster’s Shawn Fanning and Grokster’s Wayne Rosso — are quietly working with the major labels to find ways of making peer-to-peer sites profitable.
Mashboxx, a new P2P site started by Rosso, is expected to launch early next year and incorporate new technology developed by Fanning. Called Snocap, it allows users to share music freely but with a catch: When you attempt to trade a protected song, Snocap will swap it with an authorized file — likely a low-quality version of the song or one that lets you listen just a few times. Mashboxx will then provide the option of buying a CD-quality file of the track with a click of the mouse.
Sony BMG is the first major label to embrace the technology, though others are expected to follow. According to a source familiar with negotiations between Sony BMG, Mashboxx and Snocap, the label will offer most of its catalog — which includes music by Bruce Springsteen, Destiny’s Child, OutKast, Britney Spears, Modest Mouse and Bob Dylan — through the service.
It would mark a new era in the relationship between labels and file-sharing sites — a relationship previously “characterized by fear, anger and a desire to take revenge,” according to Josh Bernoff, an Internet analyst at Forrester Research. The Recording Industry Association of America has long held the position that unauthorized use of P2P technology is the major reason for the decline in music-industry revenues in the past three years. Sony BMG CEO Andrew Lack quipped to the New York Times in September 2003 that “P2P stands for piracy to pornography.” But record-label sources say that since taking over Sony early that same year, Lack has been fascinated with the possibility of using P2P as a new way to distribute music.
Mashboxx is actively seeking deals with other labels, though none have yet signed on. Mashboxx users will still be able to freely trade songs from labels that decline to work with Mashboxx, as well as share bootleg recordings the labels don’t sell.
But some observers suggest that P2P users will likely migrate to other sites where Snocap does not operate. “If people want to get legitimate music, there are a huge number of legitimate distribution services they can get it from,” says Bernoff. “If they want to steal music using P2P, then they aren’t interested in paying for it. I can’t figure out who is supposed to use a service like this.”
BILL WERDE
(Posted Nov 22, 2004)
According to a 9th circuit ruling, any derivative music work should get copyright clearance for every note included in the piece before it can be legally published. This creates a huge problem for hip-hop musicians who constantly borrow from previous works. Getting permissions for each and every note could be so cumbersome and ruin the whole hip-hop culture, so a better pricing mechanism is needed for clearing the rights among musicians. Harmonics seems to be a good starting point to study, there is an interesting connection between harmonics and the traditional hedonic model in econometrics. When I have time, I will have a look at this problem, and hopefully, this can evolve into something helpful for the music industry. I will add a few links belows for future research. 