Music On The Internet Keith Hill — Strategy

Music On The Internet Keith Hill - Strategy & Development Manager New Technology Division

Presentation Summary • About MCPS, PRS and the New Technology Division • The Requirements for the Management & Protection of Rights in Electronic Commerce • IMPRIMATUR Project • Music. Trial. com

Introducing The New Technology Division. . . • Unique Research & Development team • Established in October ‘ 97 • Identifies ‘technology’ threats and opportunities to music rights holders

Introducing The New Technology Division. . . • Three streams of research…. – New delivery mechanisms, including electronic and physical media – Evaluating new licensing schemes to support these delivery mechanisms – Requirements for rights management and protection

Requirements for Rights Management & Protection • Develop an ECMS (Electronic Copyright Management System) • New standards for communicating information – ISWC (International Standard Work Code) – Interested Parties – Metadata (information about information) – Searching & identifying digital content

Requirements for Rights Management & Protection • Automated transactions – licensing – royalty payments (electronic payment) – monitoring & tracking of use • Management & Protection of Digital Content – Embedded rights information – Watermarking and encryption – Certification

Intellectual Multimedia Property Rights Model And Terminology for Universal Reference

Background • European Commission funded research project • Part of the DGIII ESPRIT 1 programme 1 European Strategic Programme in Information Technologies • 3 years’ duration, starting December 1995 • Follows CITED project (Copyright in Transmitted Electronic Documents)

Background • Widely regarded as the pioneer for stategic thinking on IPR-related issues • Conducts high-profile consensus building and information gathering exercises • Stimulated considerable interest in its business modelling and prototype development

Project Contributors PARTNERS ASSOC. PARTNERS ALCS (project leaders) CISAC (with MCPS/PRS) IFPI EUSIDIC (Assoc. of European Bertelsmann British Library Tagish Digi. Cash University of Florence (Dept. of Information Users & Providers) IMA (Interactive Multimedia Association) TELES Gmb. H (ISDN solutions) Telia AB, Multimedia Division (Sweden) Electrical Engineering) Imperial College, London University of Amsterdam (Institute for Information Law)

Objectives To devise and recommend processes to protect and trade all types of intellectual property so that rights are respected while the needs of individual users are met.

• • Processes Creation identification Content Protection Digital payment systems Monitoring & tracking of usage Licensing transactions Legal acquisition and privacy Integrated ECMS (Electronic Copyright Management Systems)

Methodology Gather information on the impact of multimedia IPRs in four core sectors: Business, Technology, Standards and Legal by: • Consensus building from SIGs • IMPRIMATUR-staged Fora & Workshops • Integration with other projects (CIS, MPEG-4, and other EC Projects)

Consensus Fora • Nov 96, London Forum on Privacy, Liability and Consumer Rights • May 97, Stockholm Forum on IPR business models and recommendations for ECMS functionality • Oct 97, Amsterdam Forum on Rights and Exceptions • July 98, London Contracts, Copyright and the Internet • Nov 98, Munich Forum on Standardisation Processes

Intellectual Multimedia Property Rights Model And Terminology for Universal Reference

Why A Business Model? • • Present complex business scenarios Represent multi-dimensional layers Separates ‘Actors’ and their ‘Roles’ A tool to map ‘physical’ and ‘virtual’ environments

Constructing The Business Model • • Define the different roles (or entities) Attributes Relationships Transactions

Business Model Roles à Creator à Creation Provider à Unique Number Issuer à Rights Holder à IPR Database à Media Distributor à Purchaser à Bank à Certification Authority à Monitoring Service Provider

Business Model Attributes • The Bank must support electronic payment transactions • International standard numbering conventions can be embedded into digital creations to manage identification • One ‘actor’ can play one or more roles • The model provides the flexibility to manage licensing transactions between different roles

Business Model Transactions • • Distribution of Digital Creations Allocation of unique numbers to Creations Electronic payments Licensing transactions Reporting IPR information Certification keys Monitoring usage

The Demonstrator Trials • Designed to demonstrate the trading of multimedia creations • Supported by an ECMS architecture • Secure environment for e-commerce • Opportunity to ‘prototype’ online licensing transactions • Current Trials examine literary works, photographic images and music

INTRODUCING THE IMPRIMATUR MUSIC TRIAL LIQUID AUDIO

About Liquid Audio • A leading company specialising in online music distribution • Founded in May ‘ 96 • Over $8 million in Venture Financing • Experienced team of audio, music and software professionals • Exclusive Dolby licence

Purpose of the Music Trial • Focus on the operational processes required to licence musical works in a digital trading environment • Evaluate automated licence application processing and responses • Develop an application and approval procedure which is entirely Web compliant

Systems Architecture for the Trial • Based on the IMPRIMATUR Business Model design • MCPS/PRS support the The Unique Number Issuer, IPR Database and Licensing Database • Creation Provider, Media Distributor, Purchaser and Certification Authority components to be substituted with Liquid Audio’s software

Liquifier: Publish to Server

Liquid Music. Server TM • Storage of audio and Browse Listen Purchase • • media data ‘Virtual’ music shop Security, copyright and copy protection ‘Real Time Protocol’ based streaming Internet music system Monitoring usage

Liquid Music. Player. TM • Web compliant client for browsing sound and images • Enables preview and purchase of recordings • State-of-the-art data compression and streaming technology • Encryption for anti-copy protection

Liquid Audio Music-On-Demand System Liquifier Internet Mastering & Encoding Liquid Music. Player CD PC, Mac Listen Purchase Make CDs Liquid Registration Centre Register Music. Players Manage Certificates Generate Public/Private Keys Music File Encryption Music File Decryption CD Recorder Dolby® Digital Watermarking Anti. Piracy Anti-copy PC, Mac Liquid Music. Server Preview (Stream) Purchase (Download) Unix (Sun, SGI), NT Database Connectivity Internet Commerce Copyright Licensing & Encryption Personal Watermarking Anti. Piracy

Licensing Musical Works in the Trial • Small number of sound recordings (50) provided for the purpose of the trial • Recordings of works selected which are owned 100% worldwide by MCPS and PRS members • Clearing both performing and mechanical rights licences • Makes no assumptions about future terms, conditions and royalties

Opportunities • Evaluate the business and systems of a leading online music distribution company • Assess the viability for conducting ‘near time’ licensing • Assess scaleability of licensing systems required to match volume of transactions • Research requirements to provide collective rights management in a digital trading environment