Who Pays, Who Doesn't

The European Commission's Digital Competitiveness Report (PDF) is a comprehensive annual resource which looks at everything from broadband penetration to use of social networks and more. One of the chapters in the latest report, published earlier this month, deals specifically with online entertainment.

In this chapter, the EU study reports on the state of the online entertainment industry, revealing factoids like "less than 5% of Europeans have paid for online content in the last three months."

The most interesting results from the report, though, are not the details about who pays, but about who doesn't. Among the non-payers, factors like lower prices would convince about 30% to pay while things like better quality, wider choice, better availability, and others would convince between 15-20%. Yet one figure stands out: only around 20% of online users would pay for online content if all the other free options suddenly disappeared.

Peer-to-Peer File Sharing Not to Blame, Says EU

The impact of this finding didn't escape the notice of the EU researchers, who go on to point out that this seems to mean, contrary to what industry execs say, illegal copying is not to blame:

"...the low percentage of individuals that consider the possible lack of freely available online content as a reason for paying, calls into question the argument put forward by representatives of the content industry that European consumers will in the long term suffer from a lack of commercial availability of high quality content if the current model of audiovisual content distribution, based on illegal copying, is not curved."

Instead, what seems to be happening is that people pay for their internet connection and then gorge themselves on the abundant free content that's available online. Because there's so much out there which costs nothing at all - from web news to streaming video to software applications - internet users tend to balk at the idea of actually having to pull out their wallets to make a purchase. It's the internet itself that has led us down this path to a place where old monetization models simply no longer apply.

What's the Answer?

The report goes on to look at the business models of all sorts of content sites in detail including online news/newspapers, video, movies, music, and online games. While the ways consumers access these different types of content may vary (RSS for reading news, streaming videos, downloading music), the findings are relatively consistent across the board. With only a few exceptions (Apple's iTunes Store, music-based games like Guitar Hero, etc.), many of the current business models are not sustainable.

So what's the answer? There isn't really a good one just yet. Many businesses try "freemium" models which convert power users to paying users. Other sites try sustaining themselves on online ads (which is difficult to do in a down economy). But the best ideas for new business models may very well be the ones that haven't even been thought up yet. The only question is whether or not they'll be discovered in time before more content-producing industries fail.

Image credits - used freely thanks to the Internet and Creative Commons: downloading, flickr user Arenamontanus; I love P2P, flickr user Brocco Lee; p2p logo, flickr user jatop

The first demonstration of the OpenKnowlege system is aimed to enhance the abilities of those seeking health-related information on the web. Instead of solely relying on a doctor to prescribe a course of treatment, people today tend to seek out medical information on their own using the web. Unfortunately, that data is often inaccurate and misleading. What OpenKnowledge intends to do is provide patients with structured information that has been checked for accuracy. To test this system, OpenKnowledge is working with Cancer Research UK on a project related to treatment methods.

2) Emergency Response

When there's an emergency situation, there is often a centralized point that disseminates critical information to people in need. But if that system itself breaks down, people are out of luck. OpenKnowledge aims to decentralize those systems so that a "backup" decentralized network of peers could be put into place. There, people could help each other out when the centralized system failed. This is currently being testing with emergency response authorities in Trentino, Italy.

3) Protemoics Research

Protemoics research (the study of the structure and function of proteins) can also benefit from the OpenKnowledge framework. In this area of science, many researchers worldwide rely on a small number of databases, creating a bottleneck of sorts which stresses the infrastructure of the databases themselves as well as those that maintain them. Researchers also find it hard to share data and results directly with other groups. In addition, the quality of the information in those databases is very mixed.

OpenKnowledge aims to solve all three problems by letting the researchers share data with each other directly, peer-to-peer style. This relieves the burden on the databases while the feedback will continually improve the quality of the data shared. This is currently being tested in an existing proteomics network in Spain called ProteoRed.

So...What Is It Exactly?

Understanding how a system like this works is difficult and the Open Knowledge web site doesn't make the process of comprehension any easier. Even despite the cute, Harry Potter-themed slideshow meant to describe the process, the actual details are hard to grasp. Obviously written by brainy researchers, they can't even call the slideshow a "slideshow," instead referring to it as a "simple pictorial introduction."

Still, if you can wade through the academic speech on the site, what you may find is a creative idea for sharing information. Basically, through open source downloadable code, OpenKnowledge sets up a peer-to-peer network where users can trade in information and data similar to how BitTorrent users trade mp3s and video files.

In the OpenKnowledge system, anyone can easily become a peer or even create their own peer by sharing existing code or writing their own. In order to become an OpenKnowledge user, you simply need to download the OpenKnowledge kernel from here together with some additional components that you might want to use. In addition to users, services, such as WSDL services, can also be made into peers on the OpenKnowledge network.

OpenKnowledge is more of a framework for decentralizing the systems on the web. It's not so much of a consumer-friendly web app than it is a model for information sharing that can help advance areas of science and research. You may not ever use OpenKnowledge yourself on your home computer, but your life may very well be impacted one day by the innovations it made possible.

Formerly known as iSlsk, MewSeek is a native P2P Soulseek client for the iPhone. If you wish you could download free songs legally to your iPhone, then this is just the app you need. MewSeek works over EDGE, Wi-Fi, and a 3G connection. Since being released in the past few hours, this app has already seen over 3000 downloads. According to the developer's site,

"MewSeek is only was released only for experimental and testing purposes. I admit it is not quite stable yet and I also had to disable a few features temporarily until I find better ways to implement them (e.g. the "Downloads" screen, the ability to prevent Wi-Fi from disconnecting when locking the device, and a few others). However, the core and basic features are working as seen in iSlsk."

Basically, it's still a little buggy. To get started you'll need to set up a username and password first. Once that's done, click the connect button and you'll be good to go. MewSeek found just about every song we could think to search for, legal and otherwise. We advise you to use it at your own risk and MewSeek clearly states not to use the app to download songs that you do not have legal rights to.

Could MewSeek Be Worth The Effort?

To listen to anything that you download you'll have to also download PwnPlayer from Cydia. PwnPlayer is a unique alternative to the native iPod player on the iPhone and worth checking out even if you won't use MewSeek. Just remember that these apps are for jailbroken iPhones only.

LimeWire Store

The site claims that they will be adding thousands more tracks per day, but the big question is: from where?

It wasn't that long ago that the RIAA went after LimeWire's P2P service, claiming "LimeWire has sat back and continued to reap profits on the backs of the music community." LimeWire countersued, claiming antitrust violations among other things, claims which the judge in the matter promptly dismissed.

And today, the RIAA case against LimeWire continues (Arista vs. LimeWire). The current status has fact depositions and expert reports as needing to be provided to the court by March 31st, 2008; rebuttal reports are to be provided by April 30th and expert depositions by May 31st. By the looks of it, this case will be ongoing for quite some time.

So where does LimeWire expect to get all the tracks from? It seems highly unlikely that the same industry that is still involved in a hot lawsuit against LimeWire's P2P software is going to hand over rights to songs that will soon be integrated with that very same P2P software.

Even Napster, which re-launched with support of the recording industry offering legit tunes, has yet to pull off a successful online store. As of January 2008, the company was showing a nearly $10 million loss in the most recent quarter, giving it only 18 months to until it will need another cash infusion or go bankrupt. (It's also a bad sign when the CFO resigns, as did Nand Gangwani in Dec. 2007).

So, LimeWire expects to not only do what Napster could not, but do so without the support of the record labels and while being sued? Who are they kidding?

My advice, stick with Amazon for your DRM-free tunes, but if you must sample LimeWire, at least forgo the subscription plan. Something tells me they aren't going to make it.

Verizon just tested P4P with Pando and received performance boosts of 200 percent on average and increases of up to 600 percent in some cases.

What's most remarkable about this story is that Verizon is looking towards working with P2P traffic instead of throttling it like Comcast has been doing lately.

At an upcoming conference in New York, Verizon will present their test results, which show that when an ISP cooperates with file-sharing, they can speed downloads an average of 60 percent.

"This test signifies a turning point in the history of peer-to-peer technology and ISPs," said Robert Levitan, chief executive of Pando Networks Inc. "It will definitely show ISPs that the problem is not peer-to-peer technology, the problem is how you deploy it. It is possible to deploy P2P to their advantage. The Internet is quickly transforming into a media distribution platform, and there are people who say: 'It will break. It's not built to move music and movies and games and software.' New technologies are needed, and this is one of those technologies."

The P4P protocol may even be ready by next month, when NBC begins offering HD downloads of popular TV shows via the Pando software.