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Would you be willing to pay your ISP five bucks a month to be allowed to download as much as you want from torrent sites and other file-sharing hubs? The idea of legalizing P2P through such a flat-rate licensing scheme has been getting more and more […]

noankmediaWould you be willing to pay your ISP five bucks a month to be allowed to download as much as you want from torrent sites and other file-sharing hubs? The idea of legalizing P2P through such a flat-rate licensing scheme has been getting more and more traction within the music industry in recent months. Noank Media CTO Devon Copley believes his company can be an essential part of such a flat-rate model.

Noank, which demonstrated some of its technology at the DCIA’s P2P Media Summit in Los Angeles this week, builds tools that help to measure what kind of files users consume in flat-rate licensing environments. However, there’s something particularly intriguing about Noank’s solution: It works for video as well. Even the most vocal proponents of legal P2P rarely dare to suggest that Hollywood’s movies should be paid for by an ISP fee, but Copley believes such a development is inevitable.

Faced with years of brutal sales declines, the music industry has started to embrace the idea of legalizing P2P file-sharing through an ISP fee. Warner Music hired music industry veteran Jim Griffin last year to create a licensing organization called Choruss that’s currently signing up campuses for flat-rate licensing field tests. The Isle of Man, a small tax haven located between the UK and Ireland, is working on its own flat-rate model. Canadian songwriters recently threw their support behind a flat-rate model, and most major labels seem to be at least open to discussions.

One of the early proponents of an ISP licence was Harvard professor Terry Fisher, who published a book about these kind of alternative compensation models in 2004. But Fisher didn’t just want to write about his ideas, which is why he founded Noank Media as a spin-off of Harvard’s Berkman Center in 2006.

Since then, Noank has been developing a registry for rights holders as well as a client-based reporting technology to track media use. The company did a first test of its technology with the Hong Kong-based ISP Cyberport last year that included both music and video content. Noank is also looking to be part of future music licensing field tests.

Noank’s software essentially counts each and every play on a user’s system, identifying files through both hashing and audio fingerprinting. The client can not only count how often a file is played, but also for how long. Let’s say a user starts watching a video, but decides to skip forward through a dialogue. Noank’s software would know which parts he watched, right down to the minute level. These media usage details are collected on a user’s machine and then periodically uploaded to Noank’s servers — unless the user decides to opt out.

Copley told me when I caught up with him after his keynote that the possibility to opt out is essential to Noank’s approach of data collection. “We had a fair amount of spirited internal debate about whether reporting ought to be voluntary,” he said. One of the main concerns was that voluntary reporting might lead to an undercount, particularly of long-tail content. But in the end, everyone agreed that the privacy of end users should come first. After all, a system like this one would really only work with users willing to participate.

Of course, Hollywood isn’t particularly excited about the prospect of legal file-sharing. “It will take a lot longer for the video industry to buy into it,” Copley admitted. “It may take the dire straits that the music industry is in right now before they are willing to abandon the retail model.”

However, he doesn’t doubt that this time will come, spurred by the increasing amount of bandwidth that users have available to swap files. Initiatives like Choruss may help as well, mused Copley: “If the music industry manages to prove the model and manages to see a resurgence in revenues, then maybe we will see other classes of content jumping on the bandwagon soon.”

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  1. No it would not be a good idea to allow ISP’s this power to charge for content as they are there to provide the pipes only,
    If the ISP’s do not want to invest in the technology to deliver fast speed, low-cost services or innovate their business then they will become just a distant noise.
    The idea of closed walled content ,creates barriers to entry for talent, ideas, and mankind.

    This business model will create the traditional media industry on the web, not a good idea.

  2. I already pay my ISP $40 a month to download videos, music, web pages, etc…. Why would I want to pay them even $1 more?

    Record companies should try and squeeze more money out of consumers by providing more value. $5 fee per subscriber per month is not providing any more value.

    Of all of these fees currently being collected world wide, it would be interesting to know how much is actually going back to the rights holder. It looks like there is another company just muscling into the value chain but providing no more value to the consumer.

    Such a scheme might benefit Rights holders with huge popular libraries as they will take the lions share of the revenue. Small independent holders, who really use the internet for low cost distribution would see next to nothing from this.

    TK

  3. We are coming to a time where technology supplants an industry.

    Unfortunately due to our over bloated government, this industry has the ability to impose its failed business model longer then the others before it were able to.

    If one looks at how technology will reshape the media-distribution system, one can look at the success Trent Reznor and his collaboration project, NIN, has succeeded without having a label or industry to market and distribute his media

    http://vodpod.com/watch/1342866-my-midemnet-presentation-trent-reznor-and-the-formula-for-

    This presentation is the wake up call to the media labels that their time is at an end, and describes the path where individuals will have the freedom to share original content on their own terms and make money the way they want to.

  4. Scott Jensen Sunday, May 10, 2009

    I just don’t see this scheme working. If given a choice between getting something for free or paying for it, guess which wins? Guess which is winning right now?

    There are other business models that can profit from p2p. I proposed one in a white paper (“The P2P Revolution”) in 2003 and it gives away entertainment content for free. Here’s a link to it: http://www.nonesuch.org/p2prevolution.pdf

  5. Maybe they should give the guys at Joost a ring to pick their brain. The invested a couple of million developing a P2P video network that can do much of the same and failed miserably. Maybe they can help!

  6. whoisit1998 Sunday, May 10, 2009

    I think all they are talking about would be a register that the media providers sign up to, and then through the ISP-fee, the proceeeds go to those that have signed up to this register… ISP’s can add this to their standard subscription price, its a win-win for everyone… the consumer would no longer have to worry about ‘pirating’ the isp doesnt have to worry about anything either and the media providers get their royalty fees…

  7. TK, but it could provide a lot more value. An ISP with a flat rate licensing scheme could set up an Audiogalaxy type of service for his customers in no time, without having to worry about any legal consequences …

  8. Devon Copley Monday, May 11, 2009

    John D: clearly you’re right, the industry’s business model has failed. And Scott, it’s hard to disagree that from a consumer’s perspective, free is always better than paid, which is why the business model for content has collapsed. The blanket licensing option starts from the presumption that the retail model has failed. We also presume that creators of content ought to get paid. Those who disagree with this second presumption will undoubtedly disapprove of our model.

    Scott, I checked out your paper, and if I’m not mistaken it proposes advertising as the solution. It’s true that ads, sponsorships, product placements and the like can provide some revenue. But it’s becoming clear that this revenue stream is so meager it doesn’t even support the operations of a distributor — see Spiralfrog, Pandora — much less provide money for creators. And from an experience perspective, do we really want a world where everything is permeated with advertising? Scott, I agree with a lot of the forecasts in your paper, but when you talk about how fiction writers will have to compensate for the loss of retail sales revenue by using product placement in their novels, well, I suspect a lot of fiction readers will agree with me that they don’t want to live in that world.

    To my mind, it comes down to a question of what sort of society we want. Do we want to live in a world where creators of content can’t make money from what they create? We don’t have to. That’s what the blanket licensing option is about.

  9. Scott Jensen Tuesday, May 12, 2009

    Devon, read up on the history of television. The commercial break was a later development. Sponsorships were the norm during TV’s self-described Golden Age. Firestone Theatre being an example. Shifting back to this form of advertising support will be easy. I’m about to become the chief marketing officer for a company that has already greenlighted four free-to-distribute “TV” shows which we’ll put up free on p2p networks. The shows will be entirely financed by the company as their official sponsor. All I believe it will take is a company like the one I’m about work for to show how it is done (again) and the copycats will follow.

    As for your question: do we really want a world where everything is permeated with advertising? Yes, actually we do want it for that is the world we live in. No one drinks a can of “soda”. They drink Coke, Pepsi, RC Cola, A&W Rootbeer, etc. They don’t drive around cars that don’t have the automaker’s logos on them. In fact, nameless or generic-name products on the small and big screen jar people and hurt the suspension of disbelief.

  10. I’d consider $5 a month. However, it would not be $5 a month. It would be $5 for music, $10 for movies, $8 for TV shows, $10 for software, etc. And that’s just the starting price. When have prices ever NOT gone up? Before long, you’d be paying $50 a month for P2P downloading.

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