Mypods and Boomsticks
Did anyone see last week's episode of the Simpsons? Haven't been watching that show as regularly as I used to, but happened to flick past it Sunday night and caught the part where Lisa gets her own "Mypod" (from the "Mapple" store). She loves her new Mypod, that is until she receives her first bill from the Mytunes store for $14,000 for the 14,000 songs she's downloaded. Seems even Matt Groening and The Simpsons agree that the retail model just doesn't work anymore. Everyone knows how absurd it is for someone who pays a couple of hundred bucks for an iPod to spend thousands or tens of thousands of dollars to fill it legally. Are the majors listening? No. At least not yet. But at Noank Media Inc. we've been saying this for years. And we've developed (and patented) what we believe is the future model of digital media distribution.
A brief history: The company was founded in 2006 at Harvard by William "Terry" Fisher, director of the Berkman Center for Internet and Society (the same "think tank" from which Wikipedia, podcasting, and Creative Commons emerged). Noank was a natural offshoot of his book "Promises to Keep," which examined the current crisis in the entertainment industry and proposed various ways in which it could be solved. Noank's co-founder is Paul Hoffert, former director of the CulTech Research Centre at York University in Toronto, now a composer, researcher, technologist, and media industry executive.
In brief, here's how the system we developed works: Noank sells blanket licenses to ISPs (university, consumer broadband, and mobile) in exchange for providing licensed content to the ISPs who provide it in turn to their subscribers. We then distribute 85% of the revenue to content owners, based on the popularity of their content. We count file usage using what I believe is the most sophisticated counting technology (patents applied for) out there right now: Our system counts not only downloads, but plays, copies, burns to CD, plays on mobile devices, and even partial plays. So we can tell a content owner that users are listening to only the first 30 seconds of their song, or watching only the last half hour of their movie, etc. Our statistics are gathered in the aggregate, while protecting individual users' privacy, and are available at all times to content providers via a secure web interface.
Our model is based on two premises: 1) Users are going to continue file sharing without compunction, and instead of antagonizing them, we need to embrace and find a way to monetize their behavior. Thus we've developed a "turbo-charged" P2P system, which uses
super-peering and hierarchical caching at the network level to both enhance the user experience, and reduce bandwidth costs for ISPs. 2) Users hate so-called "digital rights management." So our system is completely DRM free, and instead we use a fingerprinting technology to identify and count file use. Furthermore, we are format agnostic, and don't insist on any particular format for our files.
Noank CEO Paul Hoffert spoke on Canada's BNN TV network recently and said "the key to the business is that unlike what everybody else is trying to do which is to take the old model of having a retail business where you sell CDs or songs one at a time, the new model is to have a tethered, DRM'd, retail systems for online media delivery. By contrast, Noank offers an wholesale business. And it's economically, fundamentally, more efficient."
Last month, I was in the UK keynoting at a music industry think tank session, and was frankly disheartened to see that most of the industry is still thinking in terms of the old model -- closed, DRM-based, retail, tethered. By contrast, the Noank system is open, DRM-free, wholesale, format-agnostic, and even player-agnostic. This is clearly the way of the future. And even Lisa Simpson knows it.
