Let it flow
Superdistribution takes advantage of the Internet and consumers’ propensity for low-friction commerce.
Lindsay Moir, RightsMarket

Most rightsholders won't accept the honor system, leaving encryption and metering. When there's a high likelihood of the digital content being hacked, however, encryption provides little value.

This is where the music industry finds itself today. Music has already been liberated. It exists in unencrypted digital form at music stores. All one has to do is buy a CD, convert it to MP3, and upload it. Shutting down Napster won't stop this. The industry would have to shut down record stores.

And even if encryption did protect content, the economics just don't add up. Due to their complex nature, DRM systems will inevitably have technical problems. How can you sell a song for $2.50 and then generate a $40 support call when the user can't decrypt it?

So what's the answer for the music industry? We believe it will be metering, based on a concept called superdistribution, as outlined by Dr Brad Cox in Superdistribution: Objects and the Electronic Frontier (1991, Addison-Wesley, ISBN: 0201502089). Superdistribution is the only technology we know of that takes advantage of the Internet and consumers' propensity for low-friction commerce.

Superdistribution with metering works for any digital content that has any of the following characteristics: high propensity to hack, large revenue loss from even one successful hacking attempt, low price, and availability in unencrypted digital form from other sources.

Very soon, we expect the music and other content industries to conduct a concerted lobbying effort to establish a tariff (read tax) on the use of digital content. We think this effort will succeed because economies that reward the creation of intellectual property tend to be wealthier than those that don't and because governments are looking for politically acceptable ways to tax the Internet.

For music, our guess is the tariff will be about $3/month. As you listen, identifying information (probably a watermark) will be sent to a server that counts your usage anonymously (anonymity is a requirement). Your $3 will then be split up among the rightsholders for all of the music you're enjoying.

The government will take a cut, Your Internet provider will take a cut, and the majority of the revenue (70 to 80 percent) will flow to the rightsholder. If the metering fails (for whatever reason) no support call takes place, and the user still hears the music. Instead of enemies, programs like Gnutella and Napster become distribution mechanisms.

There's a precedent for this plan today in radio's royalty system. The music industry should immediately look into innovative uses of metering. Encryption could still be used in special cases, such as the early release of new content, to induce non-paying consumers into becoming paying subscribers.

Author information

Lindsay Moir is the president of RightsMarket.