1. With the friendly assistance of: 4FriendsOnly.com AG (4FO AG) and Fraunhofer IIS AEMT Potato System and Signed Media Format - an Alternative Approach to Online Music Business Wedelmusic 2003 Leeds, UK, 15th – 17th September 2003 Juergen.Nuetzel@TU-ILMENAU.deRuediger.Grimm@TU-ILMENAU.de

2. 2003/09/15Wedelmusic 2003, Leeds, UK, Juergen.Nuetzel@tu-ilmenau.de 2 At a Glance...  Music a Virtual Goods – a Challenge  Potato System - an Alternative Approach  Paid Downloads  Different Payment Methods  P2P and Potato System  LWDRM® - Light Weighted DRM  Signed Media Format and Potato System  Summary  Virtual Goods Workshop 2004

3. 2003/09/15Wedelmusic 2003, Leeds, UK, Juergen.Nuetzel@tu-ilmenau.de 3 Music a Virtual Good Fred transfers his song (mysong.mp3) to Ginny Ginny consumer Fred a music provider  Virtual goods… … can be digitized … are not bound to any physical media … are normally stored as files on computers … can be transferred via networks (e.g. Internet) … can be copied with almost no costs … need alternative business models mysong.mp3 Is this the only way?

4. 2003/09/15Wedelmusic 2003, Leeds, UK, Juergen.Nuetzel@tu-ilmenau.de 4 The Challenge Digital music maybe copied and transferred frequently without loss and with minimal effort Digital music maybe copied and transferred frequently without loss and with minimal effort And even by the consumer! This is not a problem It is a challenge Ginny Consumer Ginny passes Freds song (mysong.mp3) on to Harry Harry a friend of Ginny mysong.mp3

5. 2003/09/15Wedelmusic 2003, Leeds, UK, Juergen.Nuetzel@tu-ilmenau.de 5 The Potato System  ... brings users and providers back together The user is motivated to pay for a new song, because he receives the re-distribution right for the song (TAN). He can earn money with the song. In the Potato System the paying user is an active part of the distribution network for new and unknown music. The Potato System is a fair music distribution system. It works without copy protection and without DRM. The Potato System provides additional services for the users: e.g. user-matching, fan info, access to a special P2P system And that’s the way it works…

6. 2003/09/15Wedelmusic 2003, Leeds, UK, Juergen.Nuetzel@tu-ilmenau.de 6 Paid Downloads PotatoSystem.com Web-Service… mysong.mp3 1 Fred publishes a sell-link with TAN=31881 Jacket transfers transaction information: old TAN 31881 and Ginny’s login 3 Web-Service answers with a new TAN=37121 4 Jacket delivers the file to Ginny. It adds the new TAN to the file name. mysong4fo37121.mp3 5 6 Ginny clicks the link with TAN=31881 and pays 1.10 Euro for the song 2 6 Ginny wants to hear Fred‘s music Fred music provider Now, Ginny can earn money with Fred’s song. Jacket for PotatoSystem.com Web-Site… …with payment …with provider and user accounts

7. 2003/09/15Wedelmusic 2003, Leeds, UK, Juergen.Nuetzel@tu-ilmenau.de 7 Different Methods to pay How to pay

8. 2003/09/15Wedelmusic 2003, Leeds, UK, Juergen.Nuetzel@tu-ilmenau.de 8 After the Payment  Ginny is now a registered re-distributor: She can publish here own sell-link: http://www...com/process?action=sell&tan=37121 http://www...com/process?action=sell&tan=37121 If her friend Harry visits this link and buys Fred’s song, Ginny receives a commission (e.g. 30%) Harry publishes also his own sell-link. If a user buys Fred’s song via Harry’s link, Ginny (10%) and Harry (30%) receive commission. Or, Ginny transfers via P2P the song with her TAN in the file name (mysong4fo37121.mp3) to Harry. In the P2P system Harry is free to pay.

9. 2003/09/15Wedelmusic 2003, Leeds, UK, Juergen.Nuetzel@tu-ilmenau.de 9 In P2P - Harry is free to pay Ginny offers Fred‘s music 1 mysong4fo37121.mp3 Ginny’s P2P client transfers the song to Harry’s P2P client Harry likes Fred’s music also PotatoSystem.com Web-Service Jacket transfers TAN=37121 and Harry’s login 3 answers with new TAN=39521 and Ginny’s commission 4 6 Harry clicks the link with TAN=37121 in the P2P-Client and pays 1.10 Euro for the song 2 Fred music provider 6 mysong4fo37121.mp3 6 4 new TAN=39521 5 mysong4fo39521.mp3 …with payment Jacket for PotatoSystem.com Web-Site…

10. 2003/09/15Wedelmusic 2003, Leeds, UK, Juergen.Nuetzel@tu-ilmenau.de 10 Community and Matching  Ginny wants to contact people who like the same music Who likes the music I bought from Fred? Who offers music to me I like? For every song Ginny has paid for, the Potato System lists those users who have other matching songs. Potato System also lists those users who are interested in getting this song. PotatoSystem.com Ginny, these users have bought music you are interested in: Draco, Julia and Mario. Contact them! They are on-line. The community functionality matches users who like the same music.

11. 2003/09/15Wedelmusic 2003, Leeds, UK, Juergen.Nuetzel@tu-ilmenau.de 11 P2P for Potato System User  P2P Messenger based on JXTA.org Signed Java Applet

12. 2003/09/15Wedelmusic 2003, Leeds, UK, Juergen.Nuetzel@tu-ilmenau.de 12 LWDRM®  Light Weight Digital Rights Management Basic idea: “Keep honest people honest” Basic idea: “Keep honest people honest” Copying is allowed if the user signs the file Copying is allowed if the user signs the file It prevents large scale copy law violation It prevents large scale copy law violation From the inventors of MP3: Fraunhofer IIS From the inventors of MP3: Fraunhofer IIS www.LWDRM.com www.LWDRM.com www.LWDRM.com Uses the signed media format … Uses the signed media format …

13. 2003/09/15Wedelmusic 2003, Leeds, UK, Juergen.Nuetzel@tu-ilmenau.de 13 Signed Media Format (SMF)  File format based on MPEG-4: Data format compliant to: ISO Media File Format Data format compliant to: ISO Media File Format Coding: MPEG-4 Coding: MPEG-4 Can be played everywhere Can be played everywhere Encrypted using the private key of the user Encrypted using the private key of the user Contains certificate of the user including public key Contains certificate of the user including public key Private key and certificate are provided by some certification authority Private key and certificate are provided by some certification authority Server signed license includes additional information (e.g. price, last buyer, commission …) Server signed license includes additional information (e.g. price, last buyer, commission …)

14. 2003/09/15Wedelmusic 2003, Leeds, UK, Juergen.Nuetzel@tu-ilmenau.de 14 SMF and Potato System “Ginny is the owner and re- distributor of Fred’s song, if you pay 1.10 Euro you become the owner and re- distributor. Ginny Consumer Ginny passes signed song of Fred on to Harry Harry a friend of Ginny  Advantages of SMF in Potato System Every SMF compatible player displays Potato System specific license information: price, last buyer, sell-link … This information is offline available SMF Player remembers Harry to pay for the song … mysong.smf

15. 2003/09/15Wedelmusic 2003, Leeds, UK, Juergen.Nuetzel@tu-ilmenau.de 15 SummarySummary   Advantages for users and producers/artists Music producers support their customers to re- distribute their products. They pay for any re- distributed song a percentage on commission. This allows rapid distribution even of unknown content. Users have the possibility to receive a free copy from other P2P users. If they pay, they get access to users matching this song. It starts with underground rock music from Berlin Signed Media would bring more comfort to the users

16. 2003/09/15Wedelmusic 2003, Leeds, UK, Juergen.Nuetzel@tu-ilmenau.de 16 AnnouncementAnnouncement 2nd International Workshop May 27 - 29 2004 in Ilmenau, Germany Call for Papers: VirtualGoods.TU-ILMENAU.de

17. 2003/09/15Wedelmusic 2003, Leeds, UK, Juergen.Nuetzel@tu-ilmenau.de 17 Thank you Potato System (www.potatosystem.com) is a joint work between 4FriendsOnly.com AG and Fraunhofer IIS AEMT (both Ilmenau)www.potatosystem.com 4FriendsOnly.com Internet Technologies AG AEMT ILMENAU