Seven Key Factors in Competing with “Free” by Brad Hunt President, Digital Media Directions, LLC Digital Hollywood Santa Monica, California October 29, 2008

1) Broad Range of Content Availability When consumers can’t find legal sources of content they want, they will gravitate towards illegal “free” sources.

2) Compelling Content Search & Discovery Web 2.0 services, advanced recommendation engines, & attractive user interface can win over customers.

3) Superior Image & Sound Quality HDTVs and home theaters are making consumers more quality conscious.

4) Reliable, Fast Downloading/Streaming Slow downloads and broken connections will not be tolerated.

5) Reasonable DRM Usage Rules The DRM usage rules should be invisible during the consumer’s normal use of the content.

6) Attractively-Priced Offers, including Free Consumers are price conscious and will watch commercials to get TV content for free. Now a word from our sponsor

7) Selective Enforcement to Deter Piracy Necessary to teach people that there are consequences to illegal behaviors.

7 Key Factors in Competing with “Free” 1)Broad Range of Content Availability 2)Compelling Content Search & Discovery 3)Superior Image & Sound Quality 4)Reliable, Fast Downloading/Streaming 5)Reasonable DRM Usage Rules 6)Attractively-Priced Offers, including Free 7)Selective Enforcement to Deter Piracy