Put Consumer First, Try ‘Real World Experiments’ in P2P, eDonkey Chief Says
In P2P disputes, as in Iraq, “winning the war is a lot easier than winning the peace,” MetaMachine CEO Sam Yagan told the P2P Media Summit Thurs. The beleaguered company behind the eDonkey protocol, which has surpassed BitTorrent as the world’s most popular, promised to convert to a “closed” P2P system after reaching settlement with the RIAA post-Grokster (WID Sept 29 p12). But the content and P2P industries risk losing P2P’s huge audience if they don’t experiment with new methods of enticing users, the 29-year-old CEO said in a keynote. Later, the creator of the first ad-supported, licensed P2P network warned his peers against “arrogance” in dealing with open-minded label executives.
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“We seem just as confused [now] as we were in September,” Yagan said, referring to his testimony in Congress where he announced the company was retooling. His creation of Cliffs Notes study-guide competitor Spark Notes, since sold to Barnes & Noble, and a licensed P2P film distribution company, Transmission Films, showed that Yagan had no interest in facilitating piracy, he said. Unlike other firms, MetaMachine designed an entirely new protocol, Overnet, instead of using the popular Gnutella. Before Grokster the company was the most proactive of any P2P firm in approaching labels for licensing, and its own intellectual property was ripped off through open-source competitor eMule, Yagan said: “We've been competing with a freer version of our own free product.”
Though he has “quite a productive relationship” with the labels now, “the real battle is for the hearts and minds of music consumers,” Yagan said. Retooled P2P firm iMesh (WID June 30/05 p5) has little “traction” thus far and speaks as if it wants to convert the behavior of consumers, not the other way around, which is just as ridiculous as Proctor & Gamble designing “self-destructive bottles” for Metamucil: “Consumers are real people who don’t just play along with what we decide.”
The handful of successful P2P clients can do “real world experiments,” given their large user bases, and discover the best ways to offer content and make money for both industries, Yagan said. The dawdling of P2P and content firms may cost them dearly: When users “scatter to these offshore, underground darknets, we'll never have that opportunity again.” With rogue sites like Sweden’s The Pirate Bay still operating, “are we going to keep going to the corners of the earth” to stop infringing P2P? he asked. The industry needs a bold vision but is still in an “awkward period” where no one dares try first, and firms have yet to devise a “one sentence marketing pitch” that will transform P2P’s image, Yagan added.
Be Receptive to ‘Visionaries’ in Labels
Though many label executives are just as hostile to P2P as ever, some P2P players “are guilty of the exact same thing” toward “visionary” executives, said LTD Network Chmn. Allan Klepfisz in a keynote. The company developed the Qtrax service, a free ad-supported, licensed P2P service scheduled to launch in the 4th quarter, and which landed EMI and Virgin label V2 as partners. Some music executives have “seen the light,” and if P2P players behave with arrogance toward them, “we're missing great opportunities,” Klepfisz said. In his first meeting with a forthcoming client, he said his counterpart repeatedly asked how Qtrax was relevant to the label: “Now you have a really marked change.”
Be patient with executives concerned about giving away too much, too early: “We are all in a relative state of ignorance when it comes to new models,” Klepfisz said. It’s taken him 4 years to develop Qtrax and overcome hostility so thick that Klepfisz worried that “people probably wanted to send us to prison.” Smart P2P firms can get a limited window from labels to try new models, if they avoid greed and smugness, he said. The heavy lifting came before the old Napster: Ken Parks, an EMI executive, was chief counsel to Reuters when the media company set off the race to post free content online in 1999, a heavily criticized move, Klepfisz said.
Ad-supported P2P models are also in the “early days,” but “we sense… that there is a pent up demand” among advertisers, given the paucity of legally-certain avenues for advertising in traditional P2P, Klepfisz said. The demographics and patterns of P2P usage should be attractive to any advertiser, he said.