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The P2P Debate Rages on in Hollywood

SANTA MONICA, Calif. - P2P -- friend or foe of the entertainment industry? The battle raged on at the Digital Hollywood Conference on Thursday, with plenty of some times rowdy audience participation at a mid-day panel discussion.

After listening to an hour of enthusiastic support for P2P, a visibly frustrated David Bean, consultant to recording artists and former president of jazz label CTI Records, stood up and shared his real feelings on P2P networks with the assembled crowd.

"I'm hearing the exact same thing today that I heard nine years ago: 'We need to monetize.' Well, my company was destroyed by P2P," Bean said. "P2P has been here for nine years unabated. You keep telling us what it's going to do for us. But it's done nothing for the record industry, nothing for musicians."

Moderator Marty Lafferty jumped in and said "there are P2P companies up here (on the podium) who use 100 percent licensed content." An audience member added that the record company he works for was interested to see that the-artist-currently-known-as-Prince has been giving away his CDs for free, and drawing ever-growing numbers of people for his concerts.

Emotions continued to run high at times as new and old media titans clashed during the clumsily titled "Next Generation P2P Music, TV and Film - DRM, Paid for Pass-Along, Ad-Based and Other Legal Distributed Computing Models and the Entertainment Industries." The moderator was Marty Lafferty, CEO, Distributed Computing Industry Association.

Bill Wishon, director of marketing for Kontiki, said that P2P solved the content access problem for consumers, enabling them to get music and movies that they couldn't find at all or in the format of their choice through the traditional music channels. Wishon believes that "legitimate" use of P2P, that is, using P2P as a platform to distribute content with its owner's approval, is growing.

He also pointed out that there's a strong business model in place, people can buy the content they want, subscribe, or P2P can be ad supported.

Panelists also praised P2P for reducing cost of distribution, and suggested that since content is already moving freely between users, the entertainment industry should focus on protecting revenue rather than protecting the content itself. One way to do this would be to insert advertising into the content, and let people freely share the ad-laden files.

One somehow suspects that stuffing digital entertainment files full of ads may not go over as well as the panelists seemed to think, but these folks firmly believe in the power and appeal of advertising based on individual user's interests.

"The future is targeted advertising, not subscriptions," said Michael King, CEO of Abacast. "Force me to look at something that has no value to me and I get irritated."

The bottom-line, said Daniel Leon, head of strategic partnerships at HIRO Media, is that media companies must distribute on P2P -- the economy demands it. "People are canceling cable. Who wants to spend $1k a year? I'm canceling cable right after election. Everyone is going online for entertainment now."

Legal woes

But it's a rough choice for traditional media who have equated P2P with the dark evils of piracy. Do they start swigging rum now with the enemy or continue to ignore the obvious need to change their business model?

"If media companies stop suing people and let go of the idea that they can stop P2P, they might actually be able to focus on monetization. They should think about what the consumers want and try to make them an offer," said Leon.

"It's interesting to ponder what we might be able to innovate if we spent less on lawyers. I spend a huge amount on legal issues," added Limewire's COO Kevin Bradshaw.

Moderator Lafferty then asked panelists "if the RIAA (The Recording Industry Association of America, a trade group that represents the U.S. recording industry) were here, what you advise them to do now?"

"If we could get rid of attorneys we'd have a much better business," said Rightsflow.com's CEO Patrick Sullivan. "No offense to attorneys but we've had them dictating to people at the top and bottom. The current decision makers aren't the right people -- you need to have people who understand technology."

At this point an attorney in audience piped up

"It's not the lawyers who are doing this. Hilary Rosen from RIAA was on a mission," he said. "She sent the lawyers out there. The lawyers did what their clients wanted them to do."

Panelists agreed that rather than using lawyers in an attempt to legally bludgeon consumers into submission, media companies should instead try to understand what is motivating people's behavior online.

"Piracy is either stealing which we believe is wrong or piracy is more like sharing and we're taught that that is good. If people believe they are sharing then we need to be innovative about how to work with that because otherwise you're fighting a losing battle," said Wishon.

"You can't go against the grain of human behavior," added John Jones, senior vice president of programming, artist and label relations for MediaNet Digita. "Sharing is human nature. It cannot be stopped."