We bring customers and producers of music back together to a common economic interest Wedelmusic...

We bring customers and producers of music back We bring customers and producers of music back together to a common economic interesttogether to a common economic interest

We bring customers and producers of music back We bring customers and producers of music back together to a common economic interesttogether to a common economic interest

Wedelmusic 2002, Darmstadt, 2002/12/09Wedelmusic 2002, Darmstadt, 2002/12/[email protected]@[email protected]@TU-ILMENAU.de

Wedelmusic 2002, Darmstadt, 2002/12/09Wedelmusic 2002, Darmstadt, 2002/12/[email protected]@[email protected]@TU-ILMENAU.de

Peer-to-Peer Music-Sharing with Profit but Without Copy Protection

Peer-to-Peer Music-Sharing with Profit but Without Copy Protection

4FriendsOnly.com Internet Technologies AG AEMT ILMENAU

2002/12/09 Wedelmusic 2002, Darmstadt, [email protected] 2

At a Glance ...At a Glance ...At a Glance ...At a Glance ...

Virtual GoodsVirtual Goods

Virtual Good „Music“Virtual Good „Music“

Life Cycle and Value of MusicLife Cycle and Value of Music

Status Quo - Conflicting InterestsStatus Quo - Conflicting Interests

The Potato System – Basic IdeaThe Potato System – Basic Idea

Potato MatchPotato Match

SummarySummary

VirtualGoods.TU-ILMENAU.de - WorkshopVirtualGoods.TU-ILMENAU.de - Workshop


Virtual GoodsVirtual GoodsVirtual GoodsVirtual Goods

A product or service is virtual if it is freed from its original medium and bound to a new medium and if it fulfills these two conditions:

(a) human users accept the virtual image of the product (or service) asa real product (or service, resp.);

(b) consumption of the product (or service, resp.) is independent of theproducer, it is solely in the hand of the consumer and can be repeatedby the consumer whenever he decides so (note, however, that repeated use of a product or service may induce costs and has impact on the reality).

What is a Virtual Good? A Definition:


Virtual GoodsVirtual GoodsVirtual GoodsVirtual Goods

Music

Freeing from media (sound waves, record, compact disc) is possible

Digital data on storage media or in the Internet

Easy handling on every stage of production cycle

Modern compression techniques (e.g. MP3, AAC)

Reproduction and distribution with almost no costs

Loss of media = loss of value?


Life Cycle and ValueLife Cycle and ValueLife Cycle and ValueLife Cycle and Value

What is the value of a Virtual Good?

Creation – Production –Creation – Production –Creation – Production –Creation – Production –Value of goods

Practical valueConsumption – Pleasure Consumption – Pleasure Reproduction – Distribution –Reproduction – Distribution –

Producing a lot of copies, the value of goods (expenses of the producer) is almost zero.

The practical value is primarily defined by the consumer. It is not in the virtual good.


Status QuoStatus QuoStatus QuoStatus Quo

Status Quo – Conflicting Interests

Example Napster. Internet users have the interest and possibility to copy and re-distribute virtual goods like music with almost no costs.

Example major labels. Content providers have indeed the interest to distribute, but only for cash and under their full control.

The consequences. Providers hinder the users to re-distribute (Digital Rights Management). Having no user-friendly alternatives users will be criminalized. Prosecution and spying on the users. Intervention in the user‘s sphere (computer).


The Potato SystemThe Potato SystemThe Potato SystemThe Potato System

... brings users and providers back together.

A user may decide to pay for a virtual good. If he does so, he becomes an active part of the distribution network for virtual goods. He gets additional benefits.

No copy protection or other restriction will be imposed on the users! Users are able to – they are encouraged to – re-distribute the files.

Providers and users of digital music, e-books or other virtual goods no longer treat one another as enemies!

Here is how it works…


The basic idea [1]The basic idea [1]The basic idea [1]The basic idea [1]

Fred receives payment

Fred adds TAN=21to file name

Fred offers his music to many users

(e.g. in the web)

Fredmusic provider

Ginnywants to hear Fred‘s music

TAN=21

Fred registers MySong

Ginny p

rese

nts F

red’s

TAN=2

1

befo

re p

aying

TAN=53

Ginny buys a song from musician Fred

MySong.mp3MySong4fo21.mp3 MySong4fo21.mp3

Ginny replacesold TAN

MySong4fo53.mp3

Now Ginny is the officialdistribution partner of Fred.If Ginny re-distributes the song to e.g. Harry, she receives commission(e.g. 25%) as soon asHarry pays also.

PotatoSystem.com


The basic idea [2]The basic idea [2]The basic idea [2]The basic idea [2]

PotatoSystem.com

Ginny passes the music on Harry and others (using P2P)

Fredmusic provider

Ginny likes the music of Fred

Harry

pre

sent

s TAN=5

3

befo

re p

aying

TAN=71

MySong4fo53.mp3 MySong4fo53.mp3

Harry replacesold TAN

MySong4fo71.mp3

Ginny has convinced Harry to pay for the song. Potato System offers aspecial P2P client to enableeasy transfer from Ginny toHarry

Ginny sells Fred’s music to HarryHarry likes Fred’s music

also

Ginny receives commission

Fred receives payment


Community FunctionalityCommunity FunctionalityPotato MatchPotato Match

Community FunctionalityCommunity FunctionalityPotato MatchPotato Match

Ginny wants to contact people who like the same music

Who likes the music I bought from Fred? Who offers music to

me I like?

For every song Ginny has paid for, the Potato System lists those users who have other matching songs. Potato

System also lists those users who are interested in getting this song.

PotatoSystem.com

Ginny, these users have bought music you are interested in:

Joe, Peter, GeorgeConnect them! They are on-line.

The community functionality matches users who like the same music.


SummarySummarySummarySummary

Advantages for users and producers/artists

The main (but very low) value of a virtual good is the possibility to copy and re-distribute it. Users are more interested in getting contact to other users. They even pay for it.

Music producers support their customers to re-distribute their products. They pay for any re-distributed song a percentage on commission. This allows rapid distribution even of unknown content.

Users have the possibility to receive a free copy from other users. If they pay, they get access to users matching this song. They get also access to special fan material and cheaper concert tickets.

The system is not limited to digital music only. Any virtual good, suchas images, videos or software could be managed by the Potato System.


What‘s next?What‘s next?What‘s next?What‘s next?

Call for Papers: VirtualGoods.TU-ILMENAU.de May 22-24 2003 in Ilmenau

Potato System (www.potatosystem.com) is a joint work between 4FriendsOnly.com AG and Fraunhofer IIS AEMT (both Ilmenau)

http://virtualgoods.tu-ilmenau.de/

http://www.potatosystem.com/

We bring customers and producers of music back together to a common economic interest Wedelmusic...

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