How to Solve the international Internet Piracy (2004)

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A concept to solve the international problem of internet piracy: VLC Virtual Licence Collection. This concept was offered to the top CEO's of the international music, film, games and software industry 2004 by Riediger Media, Germany.

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How to Solve the international Internet Piracy (2004)

  1. 1. VLC International VIRTUAL LICENCE COLLECTION Ulrich Riediger Founder of VLC International Mr. Alain Lévy c/o EMI Recorded Music 27 Wrights Lane GB-W8 5SW London Great Britain -confidential - Munich, March 10 , 2004 Internet Piracy: An International Problem Needs an International Solution! Dear Mr. Lévy, Violation of rights on the internet concerns millions of authors, composers, formative and performing artists, as well as the software, film, games and music industries. The longer this fact is discussed in public, but no effective measures are taken, the more the internet user’s awareness of illegality is decreasing, turning the everyday violation of rights from just a peccadillo to common law. The download problem and the tremendous economic loss, above all for those companies producing and selling physical picture and sound storage media, cannot be solved by the current restrictive approach by the entertainment indus- tries. On the contrary, these approaches do encourage anarchy on the internet. Even Digital Rights Management (DRM) and Trusted Computing Group (TCG) won’t be able to stop anarchy on the world wide web. The problem of illegal downloads calls for international, cross-industrial and democratic solutions. All responsibles are requested to re-think old models and to open towards forward-looking sources of income. Our premises are: 1. No association, industry, and – thank god no dictatorship either – will ever succeed in affecting the democratic basic structure of the world wide web in favour of their own interests. 2. The internet will always be a platform for anarchic hacker structures undermining the existing interpretation of law. 3. No industry will be seriously interested to put a majority of their potential customers in the industrial nations to prison. ...2 Contact: Ulrich Riediger Nördliche Münchner Str. 2H D-82031 Grünwald/Munich Germany phone: +49-89-6411599 mobile: +49-172-3932701 e-mail: office@vlc -int.com
  2. 2. VLC International VIRTUAL LICENCE COLLECTION Ulrich Riediger Founder of VLC International -2- We are ready to present you a solution. A precondition for our concept is the close cooperation of all industrial sectors affected. We will talk about this concept exclusively with insiders of the indus- try, international top decision makers and copyright owners, who, thanks to their international influence and capital force are able and seriously interested to put this concept into practice with us on a world wide basis. This is the reason why I’m getting in touch today with you and a selected circle of top personali- ties of the industries concerned. Dear Mr. Lévy, we would like to win you and your company EMI Recorded Music, as a shareholder of a new international service society for virtual licence billing: VLC International (Virtual Licence Collection) Above all, VLC International offers an interesting perspective for such compa- nies whose core business still is the production and sales of physical picture and sound storage media. As a first step, VLC International’s task is to work out an internationally ac- ceptable licence solution based on both, already existing models and models that still need to be developed, and to enforce this solution on a national basis. To do so, an international organization is needed which will be founded by VLC International. The VLC concept is based on the idea to legalize P2P / file sharing in the inter- est of all parties involved, it would however be different from already published models (e.g. Blur/Banff Proposal, Fisher, Griffin). As for the legalization, we consider it a precondition to politically enforce on each national level that internet providers bill their users a licence fee according to the volume actually downloaded. The licence fee shall be billed via VLC. VLC will then transfer the licences to the corresponding right owners, according to a distribution key which still has to be determined. This is the only way to solve the endless violation of rights on the internet. Downloads have to be licenced according to their volume. Private users only create large download volumes when downloading picture, software, video, game and music files. The licences that would then be continu- ously generated by internet users, would have to be divided among the indus- tries concerned, according to a key which still has to be determined. ...3 Contact: Ulrich Riediger Nördliche Münchner Str. 2H D-82031 Grünwald/Munich Germany phone: +49-89-6411599 mobile: +49-172-3932701 e-mail: office@vlc -int.com
  3. 3. VLC International VIRTUAL LICENCE COLLECTION Ulrich Riediger Founder of VLC International -3- This procedure offers 1. the industries concerned: sources of income in the region of billions of Euros or Dollars 2. each nation: additional tax income 3. the VLC shareholders: profit sharing due to a VLC service fee which will be kept prior to transferring the licences to the licence holders. Up to now, only internet service providers and mobile phone operators have been participating in the ever increasing download volume of their customers. This is due to the fact that only video, picture and music data create extremely high data transfer. For instance, the download volume of households in Austra- lia alone increased from 595 million MB in the September quarter 2000, to 1,531 million MB in the September quarter 2002, which is an increase of more than 250 %, whereas the number of new internet households increased by only 14 % during the same period of time (Source: Australian Bureau of Statistics). The reality is that internet service providers fight out their competition on the account of the rights owners. They offer faster and faster internet access at lower and lower prices. This must not happen on the account of the copyright and performance protection rights. As soon as the customer not only has to be pay provider fees for his download volume, but also licence fees, the download behaviour will regulate itself automatically. Since up to now, both, the music industry and all other industries, have only considered their own partial interests in the corresponding countries, no super- vising, cross-sectional and worldwide valid agreement has been made. How- ever, since the violation of rights on the internet is a worldwide problem, we, V.L.C. International, offer a global solution. Enclosed you will find the description of our new entrepreneural approach. We would be very glad if you shared our ideas and supported our plans in your own interest and in the interest of all parties involved. Details would have to be worked out together, of course. Please let us know by March 26, 2004 if you are basically interested in a par- ticipation in this project and if you see any possibility to cooperate with us to make VLC International „the Highest Instance for International Internet Licence Billing“. If mankind is able to fly to the moon or even to mars – this project should be one of our easier exercises. What do you think? Yours faithfully, Ulrich Riediger ...3 Contact: Ulrich Riediger Nördliche Münchner Str. 2H D-82031 Grünwald/Munich Germany phone: +49-89-6411599 mobile: +49-172-3932701 e-mail: office@vlc -int.com
  4. 4. VLC International VIRTUAL LICENCE COLLECTION Ulrich Riediger Founder of VLC International -4- This letter goes to (in alphabetical order): Mr. Mitch Bainwol, Chairman & CEO of the Recording Industry Association of America (RIAA), Washington, DC, Mr. Jay Berman, Chairman & CEO of IFPI, London, Mr. Edgar Bronfman jr., Chairman & CEO of Warner Music Interna- tional, New York, NY Mr. Michael D. Eisner, Chairman & CEO of The Walt Disney Co m- pany, Burbank, CA, Mr. James N. Gianopulos, Chairman of the 20th Century Fox Film Corporation, Los Angeles, CA, Mr. Jeffrey Hardee, Vice President of Business Software Alliance (BSA) Asia, Singapore, Mr. Robert W. Holleyman, II., President & CEO of Business Software Alliance (BSA), Washington, DC, Mr. Philippe Kern, Founder and Secretary General of the Independent Music Companies Association (IMPALA) and the European Film Com- panies Alliance (EFCA), Brussels, Ms. Sherry Lansing, Chairman & CEO Motion Picture Group Para- mount Pictures Corporation, Los Angeles, CA, Mr. Jorgen Larsen, Chairman & CEO of Universal Music Interna- tional, London, Mr. Alain Lévy, Chairman & CEO of EMI Recorded Music, London, Mr. Doug Lowenstein, President of Entertainment Software Associa- tion (ESA), Washington, DC, Mr. Michael Lynton, Chairman & CEO of Sony Pictures Entertain- ment, Culver City, CA, Mr. Barry M. Meyer, Chair man & CEO of Warner Bros. Entertain- ment Inc., Burbank, CA, Mr. Rolf Schmidt-Holz, President & CEO of BMG Corporate, New York, NY Ms. Beth Scott, Vice President of Business Software Alliance (BSA) Europe , London, Ms. Stacey Snider, Chairman of Universal Pictures, Universal City, CA, Mr. Howard Stringer, President & CEO of Sony Music Entertainment Intern., New York, NY, Mr. Jack Valenti, President & CEO of Motion Picture Association of America (MPAA), Washington, DC Mr. Alex Yemenidjian, Chairman & CEO of Metro-Goldwyn-Mayer Inc., Los Angeles, CA Contact: Ulrich Riediger Nördliche Münchner Str. 2H D-82031 Grünwald/Munich Germany phone: +49-89-6411599 mobile: +49-172-3932701 e-mail: office@vlc -int.com
  5. 5. VLC International is a division of Riediger Medienprojekte © 2004 Ulrich Riediger All rights reserved This document is strictly confidential! Business Discription VLC International VIRTUAL LICENCE COLLECTION International Service Society for Virtual Licence Billing Contact: Ulrich Riediger • Nördliche Münchner Str. 2H • D-82031 Grünwald/Munich • Germany 1 phone: +49-89-6411599 • mobile: +49-172-3932701 • e-mail: office@vlc-int.com
  6. 6. VLC International is a division of Riediger Medienprojekte © 2004 Ulrich Riediger All rights reserved This document is strictly confidential! “Future chances of the entertainment industry do not lie in insisting on old models or in ignoring technological development. It would be politically unwise and economically damag- ing to criminalize one’s own customers as an answer to long term failures. Thanks to the technical development, a platform can be created granting a worldwide, automated flow of in- come for all parties concerned.“ Ulrich Riediger, Founder of VLC International Contact: Ulrich Riediger • Nördliche Münchner Str. 2H • D-82031 Grünwald/Munich • Germany 2 phone: +49-89-6411599 • mobile: +49-172-3932701 • e-mail: office@vlc-int.com
  7. 7. VLC International is a division of Riediger Medienprojekte © 2004 Ulrich Riediger All rights reserved This document is strictly confidential! 1. The Internet destroys the “Ideal World “ of National Market Leadership As against two decades ago, when the music industry still decided which media to use for music distribution (LP, MC, CD, MiniDisc, etc.), the market today is determined by the speed of the technological change. The internet as the largest democratic communication platform for the world citizen of the 21st century not only offers a free-of-charge, exponential access to knowledge, it also offers the option to compare prizes globally and to place or- ders worldwide. The fact that a citizen in country A has to pay considerably more for the same product than a citizen in country B, is no longer accepted (see Internet pharma- cies/bookstores/ebay). National market leadership is increasingly underminded by the internationality of the Internet. No effort whatsoever aiming at destroying these liberal and democratic informa- tion structures will succeed, neither by political dictatorships, nor by multina- tional companies. On the internet, suppliers of products which can be digitalized and thus do not need to be sold physically in order to reach the customer (e.g. software, music, videos, computer games, pictures, lyrics etc.) are particularly exposed to this anarchic consumers’ behaviour. Experience shows that the destruction of a successful “internet anarchist“ (Nap- ster) will create new ones all the time (KaZaa, WinMX, etc.) Contact: Ulrich Riediger • Nördliche Münchner Str. 2H • D-82031 Grünwald/Munich • Germany 3 phone: +49-89-6411599 • mobile: +49-172-3932701 • e-mail: office@vlc-int.com
  8. 8. VLC International is a division of Riediger Medienprojekte © 2004 Ulrich Riediger All rights reserved This document is strictly confidential! As against this, since the internet boom started about 15 years ago, the enter- tainment industries have not been able to develop common platforms, national or international, for a customer-friendly, virtual approach to sell digital enter- tainment products. One after the other, new markets were taken over by new- comers who earn their money with entertainment products as well (ringtones, internet access, video and CD dispatch, etc.) The reason for the break-up of markets can also be found in old-fashioned ways of thinking and incrusted company structures. For instance, someone who call themselves “record companies“ would limit their sales potential to physical re- cords. If however, the industry would understand themselves as a customer- oriented “music marketing industry“, all marketing instruments would have been used already, including the virtual ones! Contact: Ulrich Riediger • Nördliche Münchner Str. 2H • D-82031 Grünwald/Munich • Germany 4 phone: +49-89-6411599 • mobile: +49-172-3932701 • e-mail: office@vlc-int.com
  9. 9. VLC International is a division of Riediger Medienprojekte © 2004 Ulrich Riediger All rights reserved This document is strictly confidential! 2. „File-Sharing“ is a Mass Phenonmenon „File Sharing“ via Peer-to-Peer Platforms (P2P), i.e the free of charge exchange of digital music, video, software and game files through illegal „swap ex- changes“ on the internet, is no longer accessible to a small minority of PC- owners, but has in fact turned into a mass phenomenon. According to an investi- gation by the New York based consulting firm “NPD-Group”, as much as 64 % of all American households which have a PC with internet connection, do have stored digital music files on their computers. Out of these, two thirds are gener- ated via file sharing. At Kazaa alone, at least 3.2 million people are permanently online around the clock, exchanging hundreds and thousands of illegal files. 56 % of all Americans who have stored digital music files, have stored more than 50 files on their hard drive. 8 % do own more than 1000 digital files. Similar figures do probably apply to all industrial nations. For the entertainment industries – and especially for the music industry – this development is an existential threat. As transfer rates on the internet become faster and faster, mass downloads be- come easier all the time. Contact: Ulrich Riediger • Nördliche Münchner Str. 2H • D-82031 Grünwald/Munich • Germany 5 phone: +49-89-6411599 • mobile: +49-172-3932701 • e-mail: office@vlc-int.com
  10. 10. VLC International is a division of Riediger Medienprojekte © 2004 Ulrich Riediger All rights reserved This document is strictly confidential! 3. The Reaction by the Entertaiment Industries Since file sharing, as a matter of fact, is a violation of national copyright and performance protection rights, entertainment associations react massively and rather desperately. • The Recording Industry Association of America (RIAA) is taking legal ac- tion throughout the nation, calling on internet providers to publish user dates in order to strictly sue violations of their copyright and performance protec- tion rights. • European, Australian and Canadian recording industry associations intend to follow this example. • Corporate Headquarters of the music industries in England and the US lay off leading, longstanding top managers in Germany, since it is obvious that old- fashioned ways of thinking do not agree with new challenges. On the other hand, sound storage media associations are increasingly critizised by politicians and consumer associations, who question their legal claims. • On the occasion of the Consumer Electronics Show, CES, which takes place in Las Vegas, several US politicians critisized the music industry for their wave of claims. Republican congressman Joe Barton demands that the music industries develop business models to suit the new technologies. • One court in San Francisco dismissed a case of the US-film industry against the P2P-exchanges Grokster and Morpheus, thus following the argumenta- tion of the consumer association “Electronic Frontier Foundation” (EFF) . Contact: Ulrich Riediger • Nördliche Münchner Str. 2H • D-82031 Grünwald/Munich • Germany 6 phone: +49-89-6411599 • mobile: +49-172-3932701 • e-mail: office@vlc-int.com
  11. 11. VLC International is a division of Riediger Medienprojekte © 2004 Ulrich Riediger All rights reserved This document is strictly confidential! 4. A Customer Oriented Approach Apparently, it’s time for new ideas. Above all, the entertainment industries most urgently need a solution for their problem. From the point of view of the rights owners, file sharers may easily be „crimi- nalized“. But would and could the entertainment industries seriously put a ma- jority of the world population to prison? Probably not. Apart from the free-of-charge acquisition of digital files, the internet offers a multitude of advantages which have yet not been sufficiently solved by both, distributors and the industries concerned. Let’s have a look at music file sharing from the point of view of a potential buyer: • Fast procurement – no long ways to the shop! (Problem: concentration of the distributors, cocooning) • Fast research – no long searching in the shop! (Problem: orientation aid) • Fast listening option – no long standing in line in the shop / convenience (Problem: individual availability of time) • Individual tracklisting – no title that the customer does not want to have / (Problem: cost-/benefit relation, buyers’ market, substitute products) Contact: Ulrich Riediger • Nördliche Münchner Str. 2H • D-82031 Grünwald/Munich • Germany 7 phone: +49-89-6411599 • mobile: +49-172-3932701 • e-mail: office@vlc-int.com
  12. 12. VLC International is a division of Riediger Medienprojekte © 2004 Ulrich Riediger All rights reserved This document is strictly confidential! 5. Is the End of the „Download-Prohibition“ in Sight? Today, music distribution divides into the following segments (here: sales figures in Germany): 1.Classic, physical distribution (223.7 Mio sound storage media in 2002) subdividing in • 163.3 million sound storage media through classic distributors (73 %) • 33.56 million sound storage media through clubs and mail orders (15 %) • 15.7 million sound storage media through online trading (7 %) 2. Virtual digital distribution (2002) subdividing in • illegal downloads, burned on approx. 259 million blank CDs (estimated by the industrial associations) do exceed the physical sales figures of the origi- nal products. Data files stored on hard drives are not even considered here. • legal downloads from download suppliers liable for costs (n.n.) New suppliers like iTunes from Apple or PhonoNet of the German music indus- try, who announced their market launch in Germany in 2004, will push forward virtual music sales liable for cost, however won’t be able to cut off worldwide internet piracy. Our Thesis: In spite of massive claims by the international music associations and new sources of supply which are liable for cost, arnarchic structures on the internet will continue to exist, violating copyright and performance protection rights and finding ever new ways to make entertainment and software products digitally available free of charge. In future, large consumer groups will continue to use the option of illegal downloads. The industries concerned must take offensive steps now in order to gain the ut- most economic use of what has been their disadvantage up to now. Contact: Ulrich Riediger • Nördliche Münchner Str. 2H • D-82031 Grünwald/Munich • Germany 8 phone: +49-89-6411599 • mobile: +49-172-3932701 • e-mail: office@vlc-int.com
  13. 13. VLC International is a division of Riediger Medienprojekte © 2004 Ulrich Riediger All rights reserved This document is strictly confidential! 6. The Global Problem: Violation of the copyright and performance protection rights does concern mil- lions of authors, composers, formative and performing artists, as well as the software, film, games and music industries. The longer this fact is tolerated and no efficient measures are taken, the more the everyday violation of rights is regarded as a peccadillo and as common law, while the awareness of illegality is decreasing all the time. National exploitation of rights which was common use in the past, is increas- ingly broken up and globalized through the internet. National rights owners of products which can be digitalized will be forced to think globally in the future. Contact: Ulrich Riediger • Nördliche Münchner Str. 2H • D-82031 Grünwald/Munich • Germany 9 phone: +49-89-6411599 • mobile: +49-172-3932701 • e-mail: office@vlc-int.com
  14. 14. VLC International is a division of Riediger Medienprojekte © 2004 Ulrich Riediger All rights reserved This document is strictly confidential! 7. The Global Solution: To compensate for the licence abuse of digital goods like software, lyrics, pic- tures, films, games and music, an internationally coordinated solution is needed. That’s what VLC International stands for. VLC International is planned as an association to act globally for licence billing. VLC International will work out cross-industrial solutions with right owners, which are enforceable politically on a national basis. VLC International understands itself as a mediator, driving force, coordinator and executive organ. Contact: Ulrich Riediger • Nördliche Münchner Str. 2H • D-82031 Grünwald/Munich • Germany 10 phone: +49-89-6411599 • mobile: +49-172-3932701 • e-mail: office@vlc-int.com
  15. 15. VLC International is a division of Riediger Medienprojekte © 2004 Ulrich Riediger All rights reserved This document is strictly confidential! 8. VLC International Develops New Sources of Income Worldwide • VLC International’s mission is to legalize file sharing worldwide and in re- turn, to safeguard the interests of all right owners via the virtual billing sys- tem as planned by VLC. • Through the billing system, a world wide licence market will open to the rights owners, in the region of billions of Euros or Dollars. • The initial idea is, that a private user who downloads no or very few music, video, software or computer files from the internet, has a very small transfer volume. • On the other hand, private users, whose downloading volume of music, video, software or computer files is above average, do have a superpropor- tionally high transfer volume. • Currently, only internet service providers (ISPs) like AOL, T-Online, Tiscali etc. take advantage of the transfer volumes, since they bill their customers according to the MB volume downloaded. • The efforts by the Internet Service Providers to increase both the bandwidths and the downloading speeds of their internet access are above all based on their customers’ motivation to get faster and faster access to picture, music or video files. • By increasing the download speed of huge data volumes, internet service providers thus foster the violation of copyrights and performance protection rights by their customers to their own advantage, on the account of the enter- tainment and software industries. • The entrepreneural aim of VLC is to meet this concern by committing all Internet Service Providers by law to charge a monthly licence fee on the monthly bill, depending on the volume downloaded, and to transfer this li- cence fee to the international affiliate of VLC. • In return, the national VLC affiliate then transfers theses licence fees to the national right owners, following a distribution key that still has to be deter- mined. VLC will keep a service fee flat rate. Contact: Ulrich Riediger • Nördliche Münchner Str. 2H • D-82031 Grünwald/Munich • Germany 11 phone: +49-89-6411599 • mobile: +49-172-3932701 • e-mail: office@vlc-int.com
  16. 16. VLC International is a division of Riediger Medienprojekte © 2004 Ulrich Riediger All rights reserved This document is strictly confidential! 9. The Company „VLC International“ • VLC International shall be founded as an internationally acting service soci- ety for licence billing on the internet. Thanks to a special billing model, this system is especially suitable to let private internet users take over responsi- bility for the volume of their downloads. • VLC themselves will participate in the system through a percentage flat rate which each national affiliate keeps prior to transfering the worldwide col- lected licence fees to the right owners. • This system makes it necessary to create the legal conditions in order to le- galize file sharing on one hand, and to legitimize licence billing through VLC with the internet user on the other hand. This is not possible without the ap- proval by the corresponding right owners, and not without the approval by the national governments. An international cooperation of all parties involved would be necessary. VLC understands themselves as a mediator, driving force and executive organ in order to coordinate the various interests interna- tionally and to find a compromise which is acceptable for all parties. • VLC International’s primary task would be therefore to negotiate the advan- tage of cancelling the “download prohibition“ and to legitimize VLC as an international licence billing society. These negotiations would entail a close cooperation with the leading major and independent music companies, the in- ternational associations, the national collecting societies as well as the inter- national film, video, software and game industries, and national govern- ments. Contact: Ulrich Riediger • Nördliche Münchner Str. 2H • D-82031 Grünwald/Munich • Germany 12 phone: +49-89-6411599 • mobile: +49-172-3932701 • e-mail: office@vlc-int.com
  17. 17. VLC International is a division of Riediger Medienprojekte © 2004 Ulrich Riediger All rights reserved This document is strictly confidential! • Due to the ever decreasing physical sales potentials of products which can be distributed digitally, and the worldwide P2P usage, in a first step the right owners will have to be convinced of the billing potentials which would result from the liberation of the P2P-exchanges. • The second step would then include the national implementation via VLC affiliates, i.e. in the main markets USA, GB, Germany, France and Japan. • In a third step, the step-by-step expansion in the relevant countries is planned. Contact: Ulrich Riediger • Nördliche Münchner Str. 2H • D-82031 Grünwald/Munich • Germany 13 phone: +49-89-6411599 • mobile: +49-172-3932701 • e-mail: office@vlc-int.com
  18. 18. VLC International is a division of Riediger Medienprojekte © 2004 Ulrich Riediger All rights reserved This document is strictly confidential! Contact: Ulrich Riediger • Nördliche Münchner Str. 2H • D-82031 Grünwald/Munich • Germany 14 phone: +49-89-6411599 • mobile: +49-172-3932701 • e-mail: office@vlc-int.com
  19. 19. VLC International is a division of Riediger Medienprojekte © 2004 Ulrich Riediger All rights reserved This document is strictly confidential! How everyone takes advantage of the V.L.C-Model: • The users may freely use their data, in return they have to pay for them. • The rights owners take advantage of the free-of-charge virtual mass multipli- cation of their works, and in addition, they profit from an automatic cash cow, since they allow the user free access and let him or her decide what he or she wants. • Politicians may build up good reputation since they create the frame condi- tions for the legalization of file sharing. • The national locations participate because additional tax is created by the li- cence rates which are billed to the users. • The VLC shareholders take adavantage of the system because they hold shares of a worldwide automated business. Contact: Ulrich Riediger • Nördliche Münchner Str. 2H • D-82031 Grünwald/Munich • Germany 15 phone: +49-89-6411599 • mobile: +49-172-3932701 • e-mail: office@vlc-int.com

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