INTERVIEW: Music does not hook up with money very often these days. In fact, they’re not even dating. Piracy, both personal and corporate, affects the creators of music in many ways, none of them good. But there is a glimmer of hope that is currently hiding as close as your mobile phone.
A company called DataRevenue.Org is looking to monetize the use of copyrighted material when it is transferred from one mobile user to another. The following is an interview with the organization’s founder, Max Davis.
John Scott G: Define the concept of data revenue. That’s with a lowercase “d” and “r.”
Max Davis: Basically, data revenue is what wireless carriers charge for sending and receiving two types of messages. First, text messages, commonly called SMS for “short message service.” And second, multimedia messages, or MMS. The wireless carriers transmit SMS and MMS via their data infrastructure and charge users a fee based on the size and number of the messages.
JSG: And what is DataRevenue .Org, the organization?
MD: DataRevenue .Org is a newly formed professional association of rightsholders who believe there should be a statutory rate established for multimedia messaging. We see this as a natural application of existing copyright laws. It is simply taking the current “delivery of a phonorecord” and applying it to the delivery of multimedia via data infrastructures. In particular, mobile2mobile multimedia.
JSG: Is this just for musicians and songwriters?
MD: It’s for anyone who holds a copyright on any multimedia intellectual property, but it may be of most interest in music right now. We believe that sending or sharing music, videos or images via mobile2mobile would constitute a comparable “delivery of a phonorecord” or actually the “delivery of copyrighted materials.”
JSG: People are already being charged for this, correct?
MD: Absolutely. The wireless carriers are already charging everyone for this, but it’s our belief they are in violation of existing copyright laws by not giving the rightsholders a fair share of the pie. The goal is to establish laws specific to data. We believe that will create a new and lucrative revenue stream for the creative community.
JSG: What’s the size of the market where DataRevenue .Org would be working?
MD: There are more than 280 million mobile phone users in the USA already. Of those 280 million, approximately 80 million are able to send and receive multimedia data products. But these numbers are growing every minute.
JSG: Any estimate of the current charges for mobile2mobile multimedia file transfers?
MD: Yes. Right now wireless carriers are charging an average of $1.99 per megabyte of usage per user for MMS.
JSG: They charge the sender and the receiver of the data?
JSG: What were the first steps you took in terms of government legislation?
MD: We currently have Petitions for Rulemaking in front of the Library of Congress’ Copyright Royalty Board and the FCC.
JSG: And both the CRB and the Federal Communications Commission have accepted the Petitions?
MD: Well, the good news is they have not rejected the Petitions. Usually that happens within 30-45 days of submission. Our petitions were submitted in October 2008, almost 6 months ago. We have received a communication from the CRB asking for clarification of some statutory issues. We clarified those back in November of 2008. And, we are now communicating with the proper office within the FCC, the Bureau Chiefs office of the Wireless Telecommunications Bureau, (WTB). As you can probably imagine, dealing with large government agencies calls for a special resolve as it’s easy to get lost in the shuffle. Our research shows the key to this is knowing the existing rules and regulations well enough to show how the new rules would naturally and reasonably apply to a new technology or service.
JSG: Is this the right time for your proposal, or would it be better to wait?
MD: This is exactly the right time. There are benefits to being first. We believe data is in its very early stages and this would be the best time to establish a statutory rate. The way the process works, we will need as much support as possible from the creative community to see this through.
JSG: What kind of support? If a musician, songwriter, or music publisher is reading this, what can they do to help gain this new revenue stream?
MD: I would point anyone within the creative community to our website, http://www.datarevenue.org. They will get a very comprehensive overview of what this movement is all about and hopefully support the movement by joining us. After all, data represents a measurable and secure form of multimedia delivery. This would provide the very things missing from Internet delivery that should have been established when the Internet was very young. There was a missed opportunity then; let’s not have another missed opportunity now.
JSG: Anyone can join now?
MD: Anyone can join now and begin data optimizing their music or products to be ready for what we see as explosive growth of mobile2mobile communication and data transfer.
JSG: What does it cost to join?
MD: An Associate Membership is $49 per year. Keep in mind DataRevenue .Org is a newly formed non-profit Professional Association so your membership may come off your taxes as a business expense.
JSG: Would you say that DataRevenue .Org would be somewhat similar to the Harry Fox Agency?
MD: Spoken like a music publisher! Yes, basically you can consider DataRevenue .Org as “the Harry Fox of data.” Harry Fox is the premier entity collecting and licensing mechanical rights on behalf of its member publishers. “Data optimization” is a new form of multimedia that is separate and distinct from a phonorecord and even digital delivery such as an mp3. At DataRevenue .Org, we only deal with data optimized products and we’ve developed a method of accountability and data revenue distribution that is distinct in the world as far as I know.
JSG: What makes it different?
MD: Well, we have more than one way to monitor, collect and distribute data revenue on behalf of our members. One way is through tracking software that sorts the metadata. The other is a more social and participatory method involving our learning institutions.
JSG: What are your learning institutions?
MD: By that I mean we have a system and method that would bring most types of learning institutions into the loop. Colleges, universities, high schools, middle schools, and maybe even elementary schools. I prefer this method as it will give those learning institutions a new revenue stream as well.
JSG: Why did you start the organization?
MD: It was the development of mobile content that caused me to start thinking about these things. I am the founder of Luvdarts LLC which has already developed and is currently distributing mobile2mobile data optimized products.
JSG: What is Luvdarts?
MD: It’s a firm that sells or provides free downloads for mobile2mobile use. Sending a Luvdart is like sending an animated greeting card with music. Or an animated Mother’s Day card with music. Or you can even mix your own multimedia message with a more businesslike appearance and use it to announce a new product launch, or welcome everyone to a trade show. There are personal and professional uses.
JSG: Anyone can use them?
MD: They can be used on any 3G-compatible phone on most 3G networks, plus the data optimization is forward compatible with 4G on up. You save them to your computer and install them on your phone as needed. We started distributing free product about a year ago on mobile sites like mywaves .com and more recently myxer .com, funformobile .com, digipie .com and of course luvdarts .com.
JSG: And this somehow lead you to DataRevenue .Org?
MD: In a roundabout way. At first, Luvdarts was just a fun creative venture. Well, fun but also a lot of work. We bootstrapped this startup company with our own money and sweat equity from our small staff. But it was exciting and the products are very entertaining, so I say it was fun. But during the course of Luvdarts’ first year, we were promised by a major wireless carrier we could sell product directly from their multimedia messaging category. This is known as being “on deck” with a carrier. But when the time came the carrier reneged and backed out of all they promised and offered us an expedited “shortcode” as an option.
JSG: That is a Common Short Code, or CSC?
MD: Right. It’s the inter-carrier connection for your mobile application.
JSG: Like when ESPN asks you to vote on who will win a sporting event and they say “for UCLA, text 54321, or for USC, text 12345.”
MD: That’s right. The problem is that this wouldn’t have involved much support from the carrier and it would have cost us money we didn’t have. So even though to this day Luvdarts is still one of the most subscribed products in the mobile community, that company couldn’t stand by their word. This pissed me off and I began to think about the data revenue our product would have generated for them and how they were really missing that opportunity because our products are ideal for sharing. Then it hit me. Since our products are data optimized to go mobile2mobile, why do we need to be an “on deck” content provider anyway?
JSG: Plus, you decided to follow the money.
MD: Certainly did. After all, why do the wireless carriers get to charge people for sending and receiving our copyrighted materials without sharing the revenue with us? Everyone who owns the copyright to a song, an image, or any intellectual property should be asking the same thing. But we’re concentrating on music and video first.
JSG: So when they backed out of the deal, an entirely new form of revenue generation for the creative community was conceived?
MD: Yes, a cause was born. After extensive sifting through the United States Code relating to copyright law and other exciting reading on the irs.gov sites, we came to the conclusion that in the case of mobile2mobile multimedia content, the wireless industry was basically and probably unwittingly committing copyright infringement.
JSG: That has large legal ramifications.
MD: Sure, but think about it: Even when you take a mobile video or picture with your camera phone, the law says it becomes copyrighted material the moment it is in fixed form. So now you send it to your mom or friend, and they like it so they also send it to their friends. Guess what, the wireless industry just charged for those actions and didn’t pay you, the rights holder, diddly squat. At DataRevenue .Org there is a distinct category for the event just depicted and as an associate member you would have been paid for those actions.
JSG: So the rallying cry might be “Give us our fair share of the pie.”
MD: Right. Or even “Hey, we own the rights to that, not you!”
JSG: What are your goals for this year?
MD: Primarily, we want to develop the DataRevenue .Org organization. Our commercial products and projects are still moving forward, but I wonder about pushing them so hard when there is no one there to collect our money. We believe the future is about the transfer of content mobile2mobile, consumer2consumer or business2consumer and that now is the time to move on monetizing this.
JSG: What are the roadblocks to making this happen?
MD: Unfortunately, the industry leaders are still somewhat asleep at the wheel. Imagine the industry growth potential if someone with vision would have rallied the creative community to put a statutory rate on all multimedia downloads from the Internet back in 1992. Millions of dollars would have gone to the creators of multimedia!
JSG: Could that have happened?
MD: I think it could have been simple. Remember, back then, the industry had more clout than Internet Service Providers like Yahoo and AOL. I think it is of utmost importance to the creative community to help get this rulemaking done now. So my main goal is to try my best to galvanize this movement at every opportunity.
JSG: Looking a bit further forward, what is the five-year plan for DataRevenue .Org?
MD: I would like to see our Charter Members at the leadership level filled within the next 6 months. Associate Members may come from all walks of life and it would not be unreasonable to double the number of Associate Members every 12 months. In five years we will have shown this new revenue stream to be a valuable asset to the creative community. This will be increasingly apparent as the wireless carriers build out their networks. That will allow the delivery of even richer mobile2mobile content.
JSG: What do you say to those who are skeptical of your business plan?
MD: I would ask everyone in the creative community this question: Can you really afford to sit back and watch technology evolve and take away the growth of your livelihood? You create because you have a passion to do so, but that passion can be negated or destroyed if someone else makes money from your work. Go ahead and be a skeptic, but the rest of us are working to ensure that creators are paid for their work. Write your Congressperson and ask them to consider establishing a “per megabyte royalty to compensate content producers and publishers.” Then consider joining DataRevenue .Org and help make this thing happen.
Full disclosure by the author of this article/interview: I have accepted an invitation to serve as a charter member of the organization.