A proposed solution. (Score 1)

Here is a letter I sent to the IETF last night.
It provides a revenue stream for copyright holders
online across filesharing networks, but includes a
revenue for software providers -- including Open Source Software.

Greetings,

I would like float a suggestion for creating a sustainable
model for file sharing that permits copyrighted information (music,
literature, artworks, etc) to be shared among users whilst supporting
payments to the copyright holders.

As you probably are aware, organizations such the RIAA and
the MPAA are currently on the warpath to shut down file sharing
networks (such a napster, gnutella, etc), and replace them with a
new system that will probably only favor its own members. I find
this possibility quite alarming as it wont address the needs of the
community, or strike a fair balance with independent performers.

My own main motivation for engaging this issue is sheer
terror. I am terrified that draconian, freedom destroying laws such
as the SSSCA will be imposed upon Americans, and through the WTO, on
the rest of the world*. I am also terrified of the companies involved,
who have openly threatened the community with its insistence on
imposing copyright protection technologies that remove a users
basic rights.

Lastly, I would never forgive myself if I sat on my
hands and did not act on this idea.

In a nutshell, what I would suggest is the creation of a
payment service that is independent of any software company, that
tracks sales of copyrighted works across file sharing networks.
This payment service would have to be a Public Utility, and would
need to be accountable to the global community. It would also need
to be completely open and transparent. No shady back room deals.
The payment service must also permit the free sharing of public
data. In this instance, the file sharing software would default
back to its normal (read: current) mode of operation.

Now here's the catch. You could not simply 'impose' such a
solution on users and file sharing software providers. They would
simply reject it. So rather than imposing, why not offer an incentive
to support the payment service by reserving a portion of the sale
to the parties involved. In my view, the main parties involved are:

1) The copyright holder.
2) The software provider.
3) The user(s) who provide storage space for the content.
4) The payment service (it could not be done for free).

To draw the analogy to a classical retail model, the user(s)
provide the 'shelf space' where the goods are advertised. The software
acts as the conduit to conduct the transfer, and lastly, of course, the
copyright holder provides the content.

Now consider a case for a (simplified) classical transaction.

In the classical model, the retailer buys the quantity of goods from
the copyright holder. The goods are transported to the premises by the
courier service and the cost of transport is added to the price. Finally,
the retailer adds her own margin to the product, and places in on her
store shelves. Joe Public comes in and buys the goods at the advertised
price.

Now consider a case for a current Napster transaction:

First the user downloads the goods from another user. The user then
places the content in the outgoing directory. Another user comes
along and downloads the content from that directory.

Now what is missing in the napster transaction as compared to the
classical model is the exchange of money. There is a reason for this.
There is no incentive or framework to support payment and the supplier
(and the software provider) get nothing from the transaction. Thus
currently, the copyright holder gets nothing as well.

Not only is this illegal, it is an unworkable situation.
If permitted to follow through to its ultimate destination, artists
will avoid the internet, or worse, go broke and receive no reward
for their efforts. A cultural wasteland would evolve where people
no longer want to be artists or musicians, because there will be no
future in it. A grim future indeed.

Now compare this with a future situation where the
infrastructure has been supplied and incentive has been reserved
for the participants. The incentive is payment for participation.

First the user downloads the content using payment aware software.
The software contacts the payment service and announces the
transaction. The cost of the transaction is deducted from their
account (or barred in the case of insufficient funds). The transaction
is raised at the payment service, and relevant details are sent back
to the user. The user then downloads the content from the serving
machine(s) which is also using payment aware software. The user receives
the content and the transfer details are sent back to the payment
service and the transaction is completed. At the payment service,
the servers correlate who was involved in the transaction, divides
up the payment between:

1) The Artist (85%)
2) The software provider (5% - 2.5% each if different client/server software is used)
3) The user(s)** who supplied the content (5%).
4) The payment service (5%).

The percentage figures are not cost calculated as yet
since I haven't designed the boiler plate yet and estimated costs.
However, I think it would be important to make the cuts equal so
that arguments of who gets a bigger slice are eliminated. This way,
there is no argument about who gets the biggest slice, the Artists
must for a very important reason. Distributing content over the
internet as opposed to classical methods is far more cost effective.
Distributed file sharing services are extremely efficient at
disseminating data. Thus the costs of delivering goods is very cheap,
thus more transactions can be handled in a small amount of time.

However, the biggest question is does this survive the
incentive litmus test?

Q1. Would the file sharing software writers be inclined to add
support for this?

A1. I would like to think so. Considering they haven't received
a brass razzoo on their software, suddenly having a stable income
stream would be a boon to them. This also includes Open Source
projects who have been devoid of a reasonable business model since
the beginning. It would create a very different outlook on the entire
software field. However, I would like to add that Open Source projects
would probably still get ripped off with unscrupulous web masters and
admins rewriting their own accounts into the software at the expense
of the project. However, most Open Source supporters would probably
do the right thing and let them have their dough.

Q2. Would the users want to use this?

A2. Again I would like to think so. If you dangle the offer of
getting paid to run a piece of software on your computer to share
files around, I would be inclined to say yes. This would be the murky
part though, some would rather abuse than use. However, considering
the lively hood of the software supplier would be counting on their
co-operation, Joe Public might not get a choice in this regard.
Open source software users might be a different story, but I will
cover this another time.

However, I do believe most normal people are honest, and
really would like to support their favorite artist. Mostly since
they know that if they don't, their artists will stop performing.
As for myself, I would be preferentially using this system to
supply my own music needs in future. I don't mind paying for music
when I know that the majority of the money goes straight to the
artist.

Q3. Would the artists support this?

A3. I would say so. Since this would be an open system, any
artists who has produced original work would be welcome, with no
need for them to hand over the copyright on their work. Likewise
authors, painters, graphic designers, etc. The payment service
could also act as a 'conduit' between users who wish to publish
an artists work, and the artists themselves. Once placed in contact
with each other, the payment service can step back and allow
each party to negotiate directly.

Q4. Would the publishing houses support this?

A4. It really doesn't matter what the publishers think. Its
the artists themselves who create the content, not the publishers.
I dare say that initially, they would reject this idea out of hand,
which is why I wouldn't be bothered telling them about it. However,
when they finally figure out this would probably be the only way to
be paid reliably for their content, they would probably come around
in the long run.

Anyways, that's the skinny. All comments and criticisms welcome.
I am sending this info to your group since I consider you people to be
the best qualified to judge and comment on this concept. Considering
that you all value your freedom, as I value my freedom.

I have lots more stuff on this, but that's enough for an
introduction...

BTW, don't laugh, but I have tentitively called this the
'MilleniPay' system, for want of a better name.

Of course, this document is copyright Michael H. Voase (c) 2001.
Released to you under the terms of the GNU public license version 2 or
optionally any later version.

All rights are reserved to prevent more unscrupulous individuals
thieving it and turning it into a money printing machine.

Cheers Mik.

* In my own country, for example, the US has imposed sanctions on
the importation of lambs from Australia. For the Australian government
to ever get these sanctions lifted, we would need to join a 'free'
trading block. The conditions of which, as you guessed, are adopting
US style laws such as the DMCA and probably the UCITA as well.

** Some file sharing software uses 'multipoint' download to speed
the process up. It would need to be supported, and adds an extra
layer of complexity, but considering the speed of computers these
days, I still think its possible. My own suggestion for splitting
the payment is based on percentage of file supplied. If one user
supplies 25% of the content, they receive 25% of the 5% cut with
the rest going to the other users involved.