Transcript Unleashing the Power of Digital Goods Enabling New Business Models for the Music Industry Dimitri do B.

Unleashing the Power of
Digital Goods
Enabling New Business Models
for the Music Industry
Dimitri do B. DeFigueiredo
Sept 16, 2003
Motivation
• CD sales are down over 30% from 1999;
music industry claims it is due to piracy.
• 261 people sued by RIAA last week for
copyright infringement.
• It is estimated over 40 million Americans
have illegally downloaded songs.
All due to Technological Advances!
Facts about the Music
Industry
• Same model as 40 years ago.
-despite very large number of P2P users
• 5 firms: BMG, EMI, Sony,
Universal and Warner have 80% of
global market
• Very uneven distribution of Sales
and Wealth.
• Very inefficient: 25k/30k new
releases sold less than 1000
copies (2002).
• Artists get less than 20% of
revenues
Motivation
To provide the technological tools to
enable business models that:
– work with the Internet;
– do not require Digital Rights Management,
Watermarking or other copyright enforcement
technologies;
– give artists a larger slice of the cake;
– provide better diversity.
Outline
• Related work & Economic considerations
• Non-Traditional business models:
• Street Performer Protocol
• Distributed Patronage
• Mechanisms required and in place
• MagicThanks
• Future Research Directions
The Problem…
• Information goods have become:
– Non-rival
– Non-excludable
Information goods can be analyzed as
Public Goods!
• Underproduction × Underconsumption
Related Work
• Social Welfare Considerations.
• Private Provision of Public Goods CAN be
done efficiently [Bagnoli 92].
• Incentive: copies have lower values than
originals [Mussa 78].
– (Musical Twist: other sources of income)
Related Work
• Social welfare [Belleflamme 02][Yoon 02]
• Profit Maximization under excludability
[Varian 94]
• Competition Strategies: Label × P2P
[Duchene 01]
• Concentration of Wealth [Adler 85]
Non-Traditional Business
Models
• Who is going to fund it?
– 3rd party sponsors
– consumers
• criterion: non-excludability
– Efficiently avoids underconsumption
1. Street Performer Protocol
2. Distributed Patronage
The Street Performer
Protocol
• Description:
– Producer announces goods, price & deadline.
– Patrons contribute any amount.
– If target price not reached, money is returned.
– If target price is reached, good is produced
and everyone (contributors or otherwise) can
use it.
The Street Performer
Protocol
$5
$0.30
$20
$23
$7
Total
Raised
$55.30!
For $50!
by
11/26/03
The Street Performer
Protocol
• Advantages:
– Potentially huge profit! (due to price discrimination)
– Efficient under complete information
(no under production/consumption trade-off)
– No copyright enforcement costs
• Disadvantages:
– Producer must estimate total willingness to pay
– Consumers pay BEFORE getting the goods
(investors)
– Need for credible threat if target not reached and
certainty of production otherwise
– It is NOT rational to contribute. It is better to free ride.
The Street Performer
Protocol
• Variations:
– Rational SPP [Harisson]
– Wall SPP [Rasch 01]
– Others:
• Timed variation
• Producer commits to secret amount.
• Etc.
• Blender success story [Neus 02]
Distributed Patronage
• Similar to Shareware
• Contributions for other reasons, altruism.
• Advantages:
– Consumption efficient
– No copyright enforcement costs
– Producer does not need to have a good estimate of the value of
goods.
– Contributors provide money AFTER using goods.
• Disadvantages:
– Agents bound to provide less money
(musical twist helps us here: extra publicity, middlemen
inefficiency)
Mechanisms
• Can we use the non-traditional business models?
Not Really.
• What is required?
At least: Distribution, promotion, payment systems.
• No clear-cut solutions, e.g.:
– Funding artists directly
– Funding artists through songs
Promotion gives Record Labels huge bargaining power!
Some P2P “Servents”
Screenshots of Grokster, BearShare
and Xolox
Mechanisms for SPP
• Public commitment to target amount and
date.
• Money collection and return.
• Credible threat of not releasing good
• Making it rational to contribute.
– Giving more information to users.
Mechanisms for Distributed
Patronage
• Micropayments (if funding through songs)
[Micali Rivest 02], [Jarecki Odlyzko 97], etc.
– Requirement: large number of small valued
(revocable) donations.
• Billboard refinement (public verifiable anonymous
aggregation)
• Payment Agent
Available Mechanisms
•
•
•
•
•
•
•
•
Peer-to-Peer Networks
Creative Commons licenses
ID3v2 tags in MP3 files
ISRC
Freedb.org, musicbrainz.org
Gracenote.com’s “DigitalTopTen”
Openculture.org
Others…
MagicThanks
• Goal:
– Provide link between author and content
• shareware
– Anyone can find (and maybe transfer funds to)
contact address.
• Characteristics:
– Does not prevent, only detects fraud.
– Does not require certifying authority for digital content
– Works with present infrastructure:
• Time stamping, e-mail certification, Paypal.
– Implemented by a client that is similar to a P2P client
MagicThanks – Publishing
•
•
•
•
•
•
Artist gets e-mail address and
secure e-mail certificate.
“I:
Alice
with contact address:
Converts contents into MP3 file.
[email protected]
hereby claim sole
authorship of the
Hashes (content, title, identity and
Certificate
contact address)
song, lyrics, musical composition and
Claim
arrangement in the
enclosing file and
Produces and signs claim
which ||I license
for
use||according
Timestamp
h = MD5( Alice || [email protected]
My First
Soul
content ) to:
Creative Commons
license 45
Contents
Obtains timestamp
The contents of my work, its title, my
identity and my contact address
Embeds everything at the
together hash to:
beginning of the MP3 file using a
ID3v2 tag.
h = 0xAFAE345344534563ED78DE5E
under the MD5 cryptographic hash
function.”
MagicThanks: Downloading
and Contributing
• Downloads: same as in P2P
networks, but contact
address should also be
returned from a query.
• Contributing:
– Get e-mail address from claim
– Obtain signature from secure
e-mail certificate
– Verify signature on claim
– Recalculate hash
– Use Paypal to send money to
that address.
Secure e-mail
Certificate
Claim
(signed and containing
hash of contents)
Timestamp (on claim)
Contents
(the song itself)
MagicThanks: asserting
authenticity
•
Key Idea:
Asserting Authenticity implies helping to detect fraud.
•
•
•
System is able to differentiate claims based on time
Only works on narrow queries, broad queries do not assert authenticity.
Defrauder’s profit increases with risk of detection
(smaller number of replicas and “hiding title” decreases profit)
•
Possible criterion for deciding between narrow and broad queries is the number of
files with similar names or tags.
Probabilistic line of action preferred due to the continuous nature of possible user
intent.
•
•
•
•
Hash should contain author’s own identity to prevent attacks on the time stamping
service.
Defrauder cannot claim his secret key has been compromised as a line of defense, if
the key is compromised after the timestamp is obtained.
Original claim binds author to a specific licensing agreement and prevents future
changes.
MagicThanks: Limitations
• Cannot prevent fraud, only detect it and
provide evidence of its occurrence.
• Assumes digitally signed fake claims must
be produced by defrauder.
• Need to tie key that signed claim to “real
world identity”
(e-mail certification may not be enough)
• Hijacking threat of initial deployment
• Revocation must be further addressed.
Future Research
• Extending RSPP to eliminate Free-riding
completely (possible?)
• Implementation of MagicThanks enabled P2P
Client.
• Describing Payment System for the Distributed
Patronage Model
• Proposing a Publicly Verifiable Aggregation
System for the Street Performer Protocol
• Proposing an Electronic Donations Billboard
Questions?
Thank you!
available at: http://www.cs.ucdavis.edu/~defigued