[pp.int.general] Fwd: [G-POPAI] More P2P Services Try To Convert To Licensed-Content Models

[Felipe Sanches]

---------- Forwarded message ----------
From: Pablo Ortellado <pablo at riseup.net>
Date: Mon, Jul 27, 2009 at 12:48 PM
Subject: [G-POPAI] More P2P Services Try To Convert To Licensed-Content
Models
To: gpopai at lists.riseup.net


More P2P Services Try To Convert To Licensed-Content Models

  It's a familiar pattern: After amassing a huge
user base by providing unauthorized access to copy-
righted material, an illicit online service tries to get
back in the good graces of the recording industry,
only to fall off the radar screen of its once-avid fans.
  The experiences of Napster, iMesh and eDonkey
have demonstrated how tough it is for brands built
on the promise of free music to convert themselves
into moneymaking businesses. Now the Pirate Bay,
Kazaa and LimeWire are attempting to navigate a
successful transition to legitimacy, reaching out to
labels to remake themselves as fully licensed en-
tertainment services.
  "Just because you joined the club doesn't mean
you get to make money," says Mike McGuire, a
media analyst at the Gartner Group. "You have to
create your own branded experience. It's all about
how you execute on that and create a compelling
alternative to the services out there. Not just the
free [peer-to-peer] networks, but all the legitimate
networks . . . That's going to be tough."
  More than half of active P2P users cite free music
as the primary reason they use file-sharing serv-
ices, according to Gartner data. Other reasons in-
clude the ability to access content not otherwise
available on licensed services. And when a P2P site
shuts down or tries to go legit, users tend to mi-
grate to the next replacement--from Napster to
Kazaa, Kazaa to LimeWire and so on.
 But Wayne Rosso, the former Grokster and Mash-
boxx CEO who's now advising Sweden's Global
Gaming Factory in its efforts to make the Pirate
Bay legitimate, says any new music service faces
challenges these days.
 "It's extremely difficult no matter who you are,"
he says. "Let's face it: You're in a market with two
competitors--Apple and free. To make a dent, you
have to come up with something that's really novel."
 Global Gaming plans to charge users an unde-
termined monthly fee that will let them download
music. But it would give them the option of lower-
ing that fee if they let Pirate Bay use their comput-
ers for online data storage and Internet bandwidth
optimization services it plans to sell. The company
would use the combined computing power of Pi-
rate Bay users to provide virtual lockers for clients
interested in backing up files online, help route In-
ternet traffic for easier and faster media transmis-
sion and other services. The more computing
resources users volunteer for these services, the
less they would pay in monthly fees.
  "It's a bank shot," Rosso says. "There's a lot
of moving parts to it. However, it has the poten-
tial to be huge." Rosso didn't provide a specific
timetable for Global Gaming's plans.
  Kazaa, meanwhile, is counting on an inno-
vative billing system to put it over the top. The
company has launched a $20-per-month stream-
ing-only subscription service in the United
States that allows users to add their monthly
payments to the mobile phone bill of participat-
ing carriers--including AT&T, Sprint and T-
Mobile--rather than provide a credit card. The
company also plans to add Internet service
providers to its list of partners.
  Although the service is pricier and less flex-
ible than other subscription plans on the mar-
ket, Kazaa CEO Kevin Bermeister says that 18
months of testing various models with 10,000
trial users suggests the offer will succeed.
  "We think people will pay as long as the abil-
ity to pay was as convenient as the ability to steal
music," he says. "The price of course is high,
[but] the convenience of the billing platform is
enabling us to get to the higher price point."
  Leading P2P network LimeWire, which still
faces copyright infringement suits from the ma-
jors, also intends to embrace a licensed-content
model, according to CEO George Searle.
  The first step toward this goal was the com-
pany's launch last year of the LimeWire Store,
with content from CD Baby, the Orchard, IRIS
Distribution and Nettwerk Music Group, among
others. The store offers a la carte sales and an
eMusic-like subscription model. The next step
is to replace the P2P service with a standard ad-
supported service and an optional subscription
tier, sharing revenue with licensing labels.
  "Quickly forcing conversion to a paid serv-
ice doesn't work," Searle says. "In order to re-
claim P2P users, it's critically important to
preserve the core user experience. A quick tran-
sition to a service that might be label-friendly,
but devoid of consumer appeal, is going to fail."
  --Antony Bruno, Denver


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