Optisoft CEO Wayne Rosso on File-Sharing Frontiers

Touting findings from the Pew Internet and American Life Project and other Internet use researchers, the Recording Industry Association of America (RIAA) has credited its controversial strategy of suing individual file-sharers with cutting the number of illegal trades in half.

Peer-to-peer (P2P) networking providers, meanwhile, point to courtroom affirmations that their services — Kazaa, BearShare, Blubster and others — are not illegal and say file-sharing is alive, well and doing just fine. They also insist they are improving P2P technology to the point that it will be the basis for much more than swapping songs, at the same time making file-sharers themselves as anonymous as possible.

TechNewsWorld talked with Optisoft chief executive officer Wayne Rosso, whose P2P application, Blubster, is among those dreaded and sometimes persecuted by the recording industry. Rosso talked about the RIAA’s aggressive strategy, the alternatives to litigation and the enduring potential of P2P networks.

TechNewsWorld: You’ve been critical of the RIAA campaign, but there is some agreement that it has effectively cut the use of P2P services and illegal trading of copyrighted material. Do you believe it has?

Wayne Rosso: I personally haven’t seen much evidence to support those claims, although my evidence is strictly anecdotal. According to companies like Big Champagne, who somehow monitor P2P traffic, usage is actually up. I think what has happened is that the RIAA has succeeded in making people paranoid about admitting in telephone surveys that they do file share. It’s now like admitting to a stranger that you like porn.

TNW: In your opinion, what could the RIAA and other intellectual-property owners do that would better serve their own interests?

Rosso: That’s very simple. A blanket collective compulsory license is the only logical solution to the issue. And there are many well-conceived and thorough proposals in existence that can be implemented fairly quickly and reasonably. Most notable among these proposals is one authored by Neil Weinstock Netanel of the University of Texas, which was published last fall in the Harvard Journal of Law & Technology, and more recently a proposal put forth by the Electronic Frontier Foundation.

Most reasonable people believe that a collective licensing plan would actually grow the music business and expand their markets, something they apparently would rather avoid in favor of mass litigation. Ultimately, they have to have a little respect for their customers. The truth of the matter is that they treat their customers with contempt since they really don’t know who buys their products. They think that their customers are Wal-Mart, Best Buy and Target.

And that lack of respect for the customer just blows my mind. Americans were raised with the adage “the customer’s always right.” These people are jaded and cynical and have forgotten who really pays their mortgages.

TNW: Do you believe that P2P use and growth is being hampered by the RIAA strategy?

Rosso: No. Actually, this strategy is serving as a catalyst for developers to become even more aggressive in their efforts to build file-sharing clients that are more anonymous, faster and more secure than the current generation. In reality, the RIAA strategy is spurring the growth of P2P.

And when you think about it, they’ve done a great job of marketing our products for us. By suing the P2P operators, they ended up making us bigger and bigger. For people who take themselves so seriously, I find them to be endlessly amusing and entertaining. Oh, and let’s not forget brazen.

TNW: What about the image of companies such as Optisoft and Sharman Networks (maker of Kazaa)? Has the image of these companies been hurt by the RIAA efforts?

Rosso: I really don’t think so. Firstly, Optisoft has not been sued, yet. But I wouldn’t be surprised if that changes on a moment’s notice, as the RIAA isn’t too fond of my outspokenness. They tend to take things very personally, as does most of the record industry, which is rife with insecure, self-important people with very fragile egos.

The RIAA has been repeating the same lies over and over so much that the media begins to blindly repeat them. The RIAA is constantly referring to P2P companies as “illegitimate” or “illegal.” They want to ignore the fact that every judge in the world has declared us legal. And out of sheer laziness the media keeps parroting these statements without regard to their true accuracy.

The RIAA has been conducting an out-and-out smear campaign, and they don’t care who they lie to or what they misrepresent. They want everyone to believe that P2P equals piracy. It doesn’t. No more than coaxial cable or Xerox machines do. In fact, P2P represents their best shot at survival and growth in the digital world. They’re just too stubborn, stupid — or both — to admit it. In any case, they continue to perpetuate a big lie.

TNW: What is your response to the criticisms that even if an actual P2P service or network is not a violation of the law, it enables violations, such as the illegal trading of copyrighted music?

Rosso: Here again, what seems to have been forgotten is that the law clearly states — and has been repeatedly affirmed — that our technology is no different from a VCR, dual cassette machine, CD burner, scanner or photocopier. Those devices are clearly capable of infringing copyrights and commonly are. And let’s not forget that e-mail and instant messaging software are also technologies that enable copyright infringement, yet no one is suing AOL or Yahoo or Microsoft for contributory infringement.

The fact is that anyone who produces a technology that is capable of noncopyright-infringing use is not liable for how people utilize that technology. That’s the law. If any technologies are copyright-infringement enablers, it’s CD burners and easy-to-use ripping software made by companies like Roxio.

Without those two tools, there wouldn’t be the rampant physical piracy that exists — which is far more problematic for the record industry than file sharing — let alone files to be shared. They are the real culprits. And who’s one of the biggest manufacturers of CD burners in the world? Sony.

TNW: What do you see as the biggest opportunity for file-sharing technology in the coming two to three years?

Rosso: I think that when major content owners wake up and realize that P2P technology can save their companies and shareholders billions of dollars, the new marketplace will finally arrive. What content owners don’t understand is that the Internet does not know the difference between music files, video files or image files. It’s all bits and bytes. Data.

They can’t seem to wrap their brains around the concept that they are now in the business of delivering data as quickly and efficiently as possible. P2P technology can provide them with the best form of distribution that they ever imagined. For the first time, content owners will be able to have an ongoing direct relationship with the customer, something they have never had before.

Marketing costs will significantly decrease. Distribution costs will significantly decrease. And customers will have true choice. So, clearly, I feel that content delivery is a big opportunity. Another huge opportunity is in the Voice over Internet Protocol (VoIP) business. Companies are already making real progress in this area as well. It could be an 800-pound gorilla.

TNW: What do you see as the different roles of P2P technology for enterprise users and consumers?

Rosso: When we move into the ultra broadband wireless world where the Internet is ubiquitous, content will have to be transferred efficiently and economically across networks and devices. I see P2P technology being the main distribution driver for content owners. The BBC just announced that they will be using P2P technology to distribute their archives online.

The technology can also benefit retailers. In a world where Apple iTunes is selling 99-cent singles, all of the profit is being eaten up by infrastructure and transaction fees. Clearly, large corporations could save billions on IT costs by migrating from costly LANs to P2P. The military even used P2P technology on the ground in Iraq. Colleges and universities also play a role in the evolution of P2P, as recently illustrated by the Berklee School of Music, which is using P2P technology to put their curriculum online.

Consumers have sent a loud and clear message that P2P is the way that they like to get their content. They are comfortable with it and know how to use it. You’ve got to realize that a whole generation of consumers has grown up with peer-to-peer. I know that it only has been about four years or so, but that’s a lifetime in the marketplace. Certainly a lot longer than the career of your average rock band.

Consumers know the technology and think it’s really cool. And it is. And it’s only going to get better and provide an even richer user experience.

TNW: Which do you see as the most significant market for P2P technology, going forward?

Rosso: Some P2Ps think that they’re in the content business. I don’t. Let’s face it, the only people who make money from content are the content owners. Personally, I think that we’re in the pipe business. I’m providing the back-end technology for people who want to get their content out there.

TNW: What do you think about concerns that heavy P2P use is driving up ISP costs and will lead to different and more expensive rate schemes for users?

Rosso: Not really. ISPs can’t have it both ways. They use P2P to help sell their broadband products and then complain that it sucks up their bandwidth. The bottom line is that people want broadband so that they can have fast downloads. Period. Bandwidth is getting cheaper and cheaper. And ISPs have to work hard to acquire and keep their customers. Churn rates are deadly. So I think that competition will help keep rates reasonable.

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