Privately held Developing a Digital Content Distribution Marketplace Globally positioned Incorporated in Delaware About Node Science Corporation

Physical media is becoming obsolete.

Any piece of creative expression can be represented digitally In many cases the digital representation will be more useful than a physical one. Early Observations

A digital object has no mass. Digital data can always be copied perfectly. Nyquist Theorem. Once injected into a network the potential value of digital content is not limited. Metcalf’s Law. Science of Digital Data

The behavior of digital content and physical content is not the same.

Access and sharing of creative expression is much greater. P2P platforms augment efficiency even further. Digital Content Distribution is Inherently Efficient

Copyright owners identify revenue losses. Barriers to entry of new content increase. Higher risks. Creators of content are faced with a dilemma. Efficiency is not Effectiveness

In Q The RIAA Shutdown Napster

Proactive approach required Embrace and extend Any technical solution must work for both sides Find ways to harness the distribution for copyright holders benefit [Source: Gracenote presentation at Copyright Protection Working Group Meeting March 2004] Lessons from Napster

Napster missed the boat… it thought it was in the music business. The web today is simply an intermediary. Someone is going to make a killing by figuring out how to exploit peer-to-peer networking… When they do, you should pay attention. [extract from Tod Maffin, Top Technology Trends for file_winter_01.pdf] Lessons from Napster: Potential Commercial Strengths

In 2000 Node Science Began Studying The Digital Content Problem

Copyright owners are losing revenue. The digital content marketplace is facing significant deterioration in content diversity and quality. The Problem

It is always possible to create perfect unprotected copies of protected digital content objects. Root Cause

Copyright owners are attempting to solve the problem by using data protection technologies and/or by taking legal action against individuals who distribute digital content in an unauthorized manner. Addressing The Problem: Current Attempts

Consumers follow content, not technology.

Viral distribution - i.e. - guerilla warfare Increasing control increases resistance Rapidly losing war of public opinion DRM Arms Race

“Don't worry about DRM and lock-down computing, says Jim Griffin. Historically they're doomed to fail. (Griffin is former director of Geffen’s technology group).” [By Andrew Orlowski in SanAndrew Orlowski in San FranciscoFrancisco Published Wednesday 11th February :25 GMT] DRM Arms Race

Digital content cannot be protected without the cooperation of consumers.

Maximize Access Protect Access THE GOAL: Profitable Content Satisfy Consumer Value Content Conflict Wrong Assumption! Content value does NOT increase when access is limited The Copyright Owner Paradox

Question Is there a way to maximize both the access to AND value of content? Answer This IS possible by creating value and incentive for online consumers.

Benefit Friends Don’t Share THE GOAL: Benefit to You and Friends Share Objects Benefit Yourself Conflict Wrong Assumption? Is there a way to benefit the online consumer for sharing? The Online Consumer Paradox

Question Is sharing the content you enjoy really bad for copyright owners? Answer Only if they copyright owner does not benefit.

Every time a digital content object is distributed, a transaction must occur.

Equally benefit the suppliers and consumers of goods Provide incentive for accurate reporting on the goods Encourage competition among suppliers of and consumers of the goods Finding Sustainable Markets

CBOE iTunes TM Markets for Intangible Goods Patent Licenses Speed of Transaction Market Mechanisms eBay TM

Balanced fair use rights and copy rights. Copyright owners get paid each time a digital object is consumed. Those that use copyrighted digital content must pay to do so. Those that distribute copyrighted content must also be paid. Principles for a Sustainable Digital Content Marketplace

Atul Deshmane, COO Node Science Corporation Telephone: nodescience.com Contact