October 27, 2006
Conferences
Noank Media: Round 2
Paul Hoffert from the Noank Media project responded to my blog post about Noank Media yesterday. Thanks very much for your time Paul, but I have to take issue with a number of your responses. I'll take then point by point:
1. Cost of running the project:
I generally don't have much to say here -- its hard to respond without a much more detailed plan of what this system is going to cost to put together. But, if you are going to get $375M from the Chinese to run this project that would be an unprecedented success. And, one should also note that $375M is a lot of money in the US. Its an unimaginably large amount of money in China. I still have a hard time believing that a poor country like China is going to fork over this much money to a US startup company. But hey, you guys seem to have this wrapped up!
The examples you use and the personal history that you have are not relevant to Noank service because of the different scales of the businesses.
Well, if my thoughts on the matter are not relevant, who on your team does have this experience? So far all the people I am aware of are academics who don't look like they are steeped in industry experience.
2. Fraud & artist authentication
You said:
For example, if you disable the copy protection on a DRM system, you generally save money - cost of downloading, streaming, etc. In the Noank system, your service provider still pays on your behalf so you don't save any money.
That's not the fraud I was thinking of. Could you please address this thought below?
This project is going to be handing out money to artists. And wherever there is money to be had, fraudsters abound. What is to prevent crooks from creating phony bands and then gaming the usage counting system to ring up big bucks for their phony band? How will they know that a person coming to collect money for Britney Spears is in fact her and not a crook?
How do you plan to prevent this from happening? You are going to be handing out $319M+ per year and many crooks are going to line up to collect their unfair share. What do you do about this?
3. Usage tracking
You said:
The Noank counting system is unique. We count usage by ALL players. Players can be time-based, such as iTunes, Windows Media, open source, our own Noank player, or your own favorite. They can be Microsoft Word, Acrobat Reader, Photoshop, or any other application program. The Noank client reports consumption of all content within our catalog on Windows, Mac, Unix, or recent cell phone devices.
This is nothing but empty hand-waving, I'm sorry. If you were to hire me to implement this system, I would have to politely tell you that this is impossible. I could not code such a thing and I have over a decade of client application programming experience. Please do elaborate on how you're going to do this. If you've solved this I assume that you've already filed for some patents, right? What are your patent application numbers? I'd like to look up these exciting details -- this is got to be amazing stuff you're working on!
4. Requirement to have "Everyone on board"
Professor Fisher corectly notes that the Noank system needs all key stakeholders be "on board". That means content owners, service providers, and end-users. Our experience so far has been that content owners "get" the Noank business model immediately and are keen to participate, particularly since we start with a big pot of royalties to distribute to them.
For the record, can you please state which ISPs and content providers you have signed up? At the policy summit Dr. Fisher mentioned a number of Chinese record labels and Hong Kong based ISPs. I would guess that Hong Kong being a former British colony (less than a decade ago, mind you) that there are plenty of students that are going to listen to more than just Chinese folk/pop music. A friend of mine who lived in Hong Kong and went to school there said that there is a lot of influence from Britain and Australia. That means that unless you sign up British and Australian labels you're going to offer only a partial solution to Chinese students. A partial solution for $25 / 1% of tuition, which is a lot of money for Chinese students, is not going to get everyone on board. I personally would be quite miffed about being forced to pay for a partial solution. But this being Communist China, students don't have much say.
I also have the feeling that the Chinese are playing along in an effort to placate western copyright holders due to the copyright pressures that WIPO and the likes are bringing. I can see how in Communist China a solution like this can be rammed down the throats of students without regard to the actual merit of the solution or the benefits it brings its students. Afterall, the Chinese are well known for how much they love and respect their students. I'd be really surprised if you get this same traction outside of China as well.
But as you say you are gaining traction -- maybe I'm smoking crack. Its been known to happen before.
Technorati Tags: file-sharing, innovation, university
Posted by Mayhem at October 27, 2006 11:50 AM
1. You note, "Well, if my thoughts on the matter are not relevant, who on your team does have this experience?" I can assure you that your thoughts on the matter are relevant and also helpful. However, Terry Fisher and I have been focusing on wholesale implementations (at the ISP level) of content delivery, which scale complely differently than retail services such as iMusic, Rhapsody, or emusic. They don't require the hundreds of millions of dollars of advertising to get a small fraction of end-users to a Website. In our view this an economic waste that we prefer to dis-intermediate - give the money to content owners and lower the price to end-users instead.
My experience in wholesale licensing of intellectual properties goes back more than two decades, as a director of performing rights societies such as BMI Canada and the SOCAN Foundation. In the 1990s I directed CulTech Research Centre, where I raised more than $100 million to implement content trials with licenses from major and independent record companies, wrote dozens of papers and several books about it, and formed consortia of telecom and entertainment companies, governments, service providers, and rights holders who worked together to find the most efficient manner of delivering online content. Terry Fisher's immense contributions to understanding and designing new copyright and business frameworks are acknowledged by the most important commercial companies and the New York Times, in addition to academics. Henry Vehovec, our COO, marketed the first personal computers for IBM and has taken companies from startup to IPO with net worth of a billion or so.
2. Fraud part 2
"How will [you] know that a person coming to collect money for Britney Spears is in fact her and not a crook?"
This serious issue is dealt with every day by rights societies such as Harry Fox, BMI, and ASCAP in the US. While not perfect, the systems that they have evolved over the years have proven to be exellent in preventing the sort of fraud you describe. Retail services, which frequently treat copyright owners and their socities as the "enemy", may not have the best business mindsets to embrace wholesale implementation practices.
3. Usage Tracking
"If you were to hire me to implement this system, I would have to politely tell you that this is impossible."
I won't take the obvious pot shot (you owe me). Our tracking system is operational now and we are scaling it for large numbers of users.
4. For the record, can you please state which ISPs and content providers you have signed up?
Public disclosures will be made at appropriate times and places. I expect there are many blog readers who are chomping at the bit to know.
poli
I actually viewed this as a good thing until reading your reply. You bring out some strong point.
Particularly point number 2. It just seems too easy for people to abuse.
Very interesting read, other points were intriguing as well, but the first point made me think... $375M from China, this project must be a huge one, must be a certain hit when they are splashing out a serious amount of money(close to half a billion) I cant agree the "poor country like China" part, USA is 12 billion in debt and most of the loan-money is from China, so... cant agree with they being poor, but certainly nobody gives their money away for no reason, so this $375M must be a heavy calculated move.(interesting too see how it goes)
David Sims - Promoting Renewable Energy
David, USA has actually an unusual dept system. They basically give more money away than they receive. Its not as black and white. Yes they are in dept but that´s because other countries haven´t payed up and they are supporting other countries and can´t back up of their aid package deals because it would ruin millions of lives. So most of the world just lets US be in dept as it is not really that serious. Money will be made soon enough.
I´m sure multinational companies who see potential are willing through fund with the support of the Chinese government.
