###  ![](media/image1.png){width="5.770138888888889in" height="0.5416666666666666in"}![](media/image2.jpeg){width="1.5979166666666667in" height="0.3763888888888889in"} {#section .unnumbered}

### 

### Table of Contents

[Testimony submitted by Les M. Ottolenghi, President INTENT MediaWorks,
LLC
3](#testimony-submitted-by-les-m.-ottolenghi-president-of-intent-mediaworks-llc-to-the-united-states-senate-subcommittee-on-competition-infrastructure-and-foreign-commerce-of-the-senate-committee-on-commerce-science-and-transportation-hearing-for-wednesday-june-23-2004.)

[How P2P Technology is Being Used Today
3](#how-p2p-technology-is-being-used-today)

[Recommended Usage of P2P Technology 4](#proper-p2p-file-swapping-use)

[Distribution Process 5](#distribution-process)

[P2P and Web Marketing 8](#p2p-and-web-marketing)

[The Numbers 9](#the-numbers)

[Potential Benefits and Detriments to Both Consumers & Content Providers
10](#potential-benefits-and-detriments-to-both-consumers-and-content-providers-of-p2p-technology)

[Focus on Legal File Sharing Using P2P
10](#focus-on-legal-file-sharing-using-p2p)

[How will P2P Technology or Substitute Technology Develop in the Future?
12](#how-will-p2p-technology-or-substitute-technology-develop-in-the-future)

[Related Issues 12](#related-issues)

###   {#section-2 .unnumbered}

### 

### Testimony submitted by Les M. Ottolenghi, President of INTENT MediaWorks, LLC to the United States Senate Subcommittee on Competition, Infrastructure, and Foreign Commerce of the Senate Committee on Commerce, Science and Transportation Hearing for Wednesday, June 23, 2004.

I would like to thank the United States Senate Subcommittee on
Competition, Infrastructure and Foreign Competition of the Senate
Committee on Commerce, Science and Transportation, for inviting me to
testify at this hearing regarding the future of peer-to-peer (P2P)
technology. I would also like to thank Senator Gordon Smith of Oregon,
for the honor and the opportunity to present written and oral testimony
before this United States Senate Subcommittee.

The details of my expertise in the matters before the Subcommittee are
included in documents attached to the testimony below. Presently, I
serve as chief executive for INTENT MediaWorks, LLC headquartered in
Atlanta, Georgia; and I also teach as an adjunct professor of business
at the Goizeuta School of Business, Emory University, also located in
Atlanta.

INTENT MediaWorks is a distributor of legal content among users of P2P
software applications. INTENT offers content owners of digital media,
(i.e. music, film, video and written works), the opportunity for wide
distribution through P2P in a safe and secure manner. Typically, clients
of INTENT MediaWorks are independent artists seeking to market, promote
and commercialize their works, directly to Internet consumers. INTENT
also works with large and small businesses wanting to distribute
corporate information at the lowest possible cost. The reasons most
often cited by INTENT MediaWorks clients for utilizing the company's
services are the enormous potential for content exposure and
distribution to consumers, the minimal cost, and the unique efficiency
not available in any other way. The details of the INTENT MediaWorks
distribution of content via P2P systems will be addressed answering the
questions posed in the letter dated June 17, 2004, from the Subcommittee
to the witnesses at this hearing.

### How P2P Technology is Being Used Today

In a broad sense, P2P technology is not a single technology, but a set
of related, evolutionary technologies. Specifically, P2P technologies
are the natural outgrowth of the Internet and commercial efforts to
interlink computer systems for efficient information exchange. Large
digital networks, such as the Internet, when combined with standardized
information exchange technologies, enable computing to occur on a
distributed basis. Distributed computing, as it is commonly referred to
in the technology industry, describes the processes of sharing physical
computing resources between information systems that are not located
within the same facility. Distributed computing has clear and
demonstrable commercial as well as social benefits. Consequently,
distributed computing is being deployed and pursued for further
development by the world's largest U.S. technology companies, including,
but not limited to Microsoft, IBM, Sun MicroSystems, Oracle and Hewlett
Packard. Distributed computing, as manifested in P2P technologies, has
become essential in applications for such institutions as the United
States Army. [^1]

*How is P2P technology being used today?*

There are two broad categories of P2P use with several derived
applications The first category is collaborative computing,, i.e. the
sharing of computer processing resources among systems that are not
necessarily equal in capability, but exist on the same network.
Collaborative computing has been applied to the processing of complex
mathematical and statistical analysis and scientific equations.
Collaborative computing has also been utilized to track international
criminals and find missing persons. [^2]

The second category of P2P use is file sharing as discernible in digital
forms of data, audio files ( both spoken and music) video, film,
multimedia and software applications, transferred between computers for
sharing. P2P file sharing has a long and positive history of use
beginning in 1969 with the establishment of the Internet. From 1969
through the early 1990s, the United States Department of Defense and the
world scientific community have utilized the Internet primarily as a P2P
file swapping system[^3]. The positive uses of P2P file sharing have
been extended to the present day and have become one of the most
beneficial applications of Internet technology.[^4] As in the case of
collaborative computing, legal P2P file sharing is being used to
exchange scientific and medical information in the pursuit of complex
solutions.[^5] Recent P2P use has also been of enormous benefit for
corporations forming virtual work teams and disseminating information to
their field offices.[^6] Despite all these positive aspects, the most
publicized use of P2P file sharing has been negative, namely, the
exchange or swapping and unauthorized use of commercial entertainment in
the form of music video files, and also illicit, explicit sexual
materials. These swapping activities have properly been the focus of
significant efforts by United States enforcement agencies to stop such
P2P uses. It is my sincere wish and opinion that these efforts should be
supported and eventually, will succeed. Unfortunately sincere efforts to
define what constitutes an illegal use of P2P file sharing have become
ensnarled in political power struggles and maneuverings. Certain owners
of commercial entertainment media and certain P2P technology companies
have lost public credibility by staking strong anticompetitive
positions. Some commercial content owners cast P2P technology
unreasonably as *inherently* *illegal*, and present arguments based on
the unrealistic notion that P2P can be "turned off". On the other hand,
some P2P technology companies have neglected to respect the rights of
content owners thus raising doubts whether P2P can be taken seriously as
a proper method of media distribution and therefore proper technology
use.

These are not mere opinions. These statements are sustained by
technological and economic truths married to empirical evidence.
However, there is, in fact, a use of P2P that respects the rights of
content owners along with the commercial and social benefits that P2P
affords society and the markets. As a specific example of recommended
usage of P2P technology, I would like to present the provisioning of
legal, safe and secure commercial entertainment as it's designed to
occur by in the company I represent here, INTENT MediaWorks.

### Proper P2P File Swapping Use

INTENT MediaWorks provides legal, safe and secure means of distribution
of commercial entertainment and corporate materials via P2P
technologies. Our company screens submissions of legal, copyright
protected media in digital form, including music, video, and written
works. We accept all genres of media except adult, illicit or sexually
explicit materials. INTENT MediaWorks has developed technologies that
enable content owners to present their creative works directly to the
users of major P2P software applications while protecting those works
with Digital Rights Management, (DRM), software. To this end, INTENT has
developed a special process that automates the encoding of media into a
digital form and their programming with DRM protection software. A
visual representation of the processes and services INTENT MediaWorks
offers is sketched below.

![](media/image3.jpeg){width="5.989583333333333in"
height="4.634722222222222in"}

### Distribution Process

A narrative description of the business and technical processes of
INTENT MediaWorks is as follows:

1.  Content rights holders sign a non-exclusive distribution agreement
    with INTENT MediaWorks, LLC, (a copy of our agreement is attached).

2.  The content owner or rights holders submit their works to INTENT
    MediaWorks on digital media.

3.  INTENT MediaWorks converts the content into a digital format and
    consequently attaches digital rights management, (DRM), copy
    protection software to the media to prevent the copying and sharing
    without authorization.

4.  INTENT MediaWorks reviews the content to make certain it is not
    illicit, unauthorized, sexually explicit or unacceptable for
    distribution. The content rights holder then examines the media for
    final inspection before distribution.

5.  The content is then provisioned to be hosted on INTENT MediaWorks
    computer servers which seed content into the P2P software programs
    directly and/or provisioned through P2P service providers such as
    Altnet and Trustyfiles.

6.  The content is ready for searching and downloading through any P2P
    search and file exchange management software.

The consumer's way of finding content provisioned by INTENT MediaWorks
is to perform a search and discover an artist by the name, genre of
music or other keyword. Once discovered, the consumer may choose to
preview the content, and then agree to an advertising-based version of
the content for use or purchase a license for use. The consumer
experience is illustrated below.

INTENT MediaWorks offers consumers two ways to legally obtain content.
The first is to opt for a use license that requires the consumer to
accept advertising messages in a written, audio or video form at either
the beginning of a piece of content's play or upon its completion. If a
piece of content is not sponsored, it may be given away by the content
rights holder, who usually requires some sort of registration for the
content by the consumer to whom the content rights holder will send
future marketing messages via electronic mail. Alternatively, the
consumer can opt to purchase a non advertising supported license at a
price determined for sale by the content rights holder.

![](media/image4.jpeg){width="4.052083333333333in"
height="2.1277777777777778in"}

![](media/image5.jpeg){width="4.049305555555556in"
height="2.754166666666667in"}

INTENT MediaWorks neither owns nor gains any rights in the content it
distributes. INTENT MediaWorks does not require an exclusive arrangement
by the content rights holder to distribute with INTENT MediaWorks. All
information gathered about consumers is only made available to the
content rights holder.

Once a consumer is registered for content and has agreed to terms for
its proper use, the consumer may share the content with others, but only
if the next or additional users agree to the licensing terms. The DRM
solutions that protect INTENT MediaWorks clients' content, requires any
new computer user, downloader or consumer wishing to play the media to
register and become authorized.

All authorized users of INTENT MediaWorks' distributed content are
provided a rich media experience which extends beyond the actual content
provisioning and downloading. In particular, any content that INTENT
MediaWorks provides to consumers comes with an information page about
the artist(s) including, text, graphics, images, and video that let the
consumer know more about the content creator. Links to the artist's
website(s) are also included and the consumer is directed to INTENT
MediaWork's [www.offthePeer.com](http://www.OffthePeer.com/) website for
a full listing of INTENT MediaWorks' artists and content from P2P, as
well as electronic commerce.

Reporting of usage and commerce is automated as described above.

![](media/image6.png){width="5.99375in" height="4.863888888888889in"}

Once content is enabled on both the P2P software programs, and the WEB,
it is transferable between both systems, as illustrated below.

![](media/image7.png){width="5.997222222222222in"
height="7.757638888888889in"}

### P2P and Web Marketing

INTENT MediaWorks offers content owners several options to promote and
market their works once the content is available via P2P and the WEB.
Specifically, INTENT MediaWorks offers each of its artists:

a.  websites

b.  weBlogging, (BLOGs)[^7]

c.  Syndication of the artists' web sites and BLOGs to thousands of
    other websites

d.  a calendar of events

e.  filtered & anti-spam compliant email marketing services

f.  guestbook services

g.  a music video

h.  a virtual Web Catalog (which has pages that turn like a book except
    inside of a browser

i.  PeerPorts™ that act like custom Internet TV channels that deliver
    P2P or Web media about a specific artist(s) to the computer desktop
    of consumers

![](media/image8.jpeg){width="3.5527777777777776in"
height="2.5055555555555555in"}![](media/image9.jpeg){width="2.3055555555555554in"
height="2.7083333333333335in"}

### The Numbers

INTENT MediaWorks has a potential reach of an estimated 80 million
consumers globally who are users of P2P software programs. The actual
number of musical artists signed up for distribution with INTENT
MediaWorks since it began commercial operations in February, 2004 is
300, representing over 5,000 individual works. Of the over 5,000 musical
works; approximately 2,500 works are downloaded regularly. INTENT
MediaWorks is presently doubling its number of artists and content on a
monthly basis. Some P2P artists have seen their registered fan base grow
from under one hundred to over 10,000 in a period of 90 days.[^8] Other
musical artists have in fact, signed recording contracts as a result of
their exposure on P2P. [^9]

INTENT MediaWorks market approach for entertainment media is to focus
upon the independent, artist's publisher and producer of musical, video
and written content. INTENT MediaWorks does not pursue content creators
that have an already established, significant market or commercial
position. The P2P use that INTENT MediaWorks pursues is a reflection of
a legal and commercially successful application of the technology.

### Potential Benefits and Detriments to Both Consumers and Content Providers of P2P Technology

In addressing the question of the potential benefits and detriment of
P2P technology to both consumers and content providers it is legitimate
to limit the focus of such an evaluation to the entertainment media uses
of P2P file sharing. The benefits of P2P collaborative computing and
file sharing as applied to the defense of the United States, corporate
enterprise, and scientific as well as medical research are very clear;
yielding better and more efficient solutions for society in all
respects. The detriments of such applications of P2P have never been
quantified nor are they clearly apparent.

Consequently, if consideration is restricted to the effects of P2P file
sharing on the entertainment media industry; it is clear that the
evaluation must primarily address the question of whether the activity
is legal or infringing. It is justified to assume the requirement for
"legality" must be applicable to P2P use. If file sharing infringes on
content owners' rights, that is for example, the swapping of files that
are copy right protected and for which there is no authorization for
duplication, sharing or use, discourages content providers, then there
are no benefits long term or otherwise for either the consumer or the
content provider. File swapping that infringes on content providers
rights is in conflict with the laws of free market enterprise and
capitalism which afford the many freedoms and consequent benefits
enjoyed by the citizens of the United States.

### Focus on Legal File Sharing Using P2P

Legal file sharing of entertainment media has several benefits. Today's
market for widely distributed, commercially viable content is dominated
by a few large media companies with a resulting restriction of the
avenues of diffusion of artistic products: arguments to the contrary are
not supported by any reasonable economic analysis. Moreover, while it
would be inappropriate impossible in the allotted space and time for
either written or oral testimony to describe all of the facts that
support this statement about the market conditions Yet, it must be noted
that even with such a limited breadth of content supply, there is a
great market demand for more and varied content. The very existence of
the vast catalogs of new media both online and offline requires that the
free markets react in the most efficient manner. Consequently, therein
lays the impetus for the emergence of legal P2P file sharing. The
benefits for consumers are [simple macroeconomic tenants associated with
greater supply]{.underline} [in the face of greater market demands;
namely]{.underline}, lower costs, greater selection, higher quality of
service (the ability to download or acquire media instantly) and the
incentive for further development of media, its means of delivery and
use. A summary of the benefits and therefore detriments of both the
legal and illegal uses of P2P file sharing of entertainment media are
summarized in the chart below.[^10] However, the most critical concern
in answering the question of benefits and detriments is the effect that
inhibiting P2P altogether would have. It can be argued with great
certainty that P2P, (and for that matter digital downloads of any kind),
exist in part, as a reaction to the unnatural imbalance in the market
dynamics of media distribution and promotion. For example, several
INTENT MediaWorks artists have been turned away by major media
publishers and distribution companies[^11]. The prohibition of P2P file
sharing would without a doubt deter the economic development of the
proper means for alternative distribution and new media. The consequence
would be the just application of legal and economic forces upon the
remaining channels of distribution to alter their structure and
economics. It is also likely, that P2P is not an application of
technology that can as a practical matter be [banished or
suppressed]{.underline} and therefore would manifest itself in
harder-to-manage forms, as evidenced by some software programs already
in operation.[^12]

![](media/image10.jpeg){width="5.999305555555556in"
height="7.761805555555555in"}

Of course if P2P technology continues to exist there are some clear
benefits from the tremendous advances the technology is likely to make.

### How will P2P Technology or Substitute Technology Develop in the Future?

P2P technology development will likely focus on portability. Given the
predominant use for of P2P in the downloading of media, and even the
business requirements evolving from the corporate community; the ability
to interface P2P software with devices for file management and
extensibility is almost certain. Developments like interfaces from
[AppleiTunes]{.underline} to the iPod and TIVO systems foretell the
coming changes in P2P software technologies. In addition, the porting of
P2P software to devices other than a networked PC is imminent given the
evolution in greater power and connectivity for portable digital
devices. Integration of commercial back-office functions accounting for
legal P2P file sharing is underway utilizing WebServices and XML data
integrations. Finally, any substitute for P2P is likely to emerge only
if serious prohibitions are imposed against file sharing technologies.

### Related Issues

In sum, P2P is here, is an efficient means of transmission of artistic
products, broadening the spectrum of resources available to the artist
for initial presentation of his/her creations. As such it is a valuable
addition to the American cultural wealth and should be welcomed and
protected as are the alternative means of artistic products distribution
available to artists already known and accepted by the American public.
It cannot be construed as a threat to other forms of communication which
do not address or cultivate the need of the initial presentation of
individual artists to the public. It is legally protected by, and
operates according to, the constitutional laws applying to every other
enterprise in its general field. It is a mere expansion of application
of the means and meaning of the original scientific network of
communication. P2P is here, it is useful, it is legitimate, and I dare
say, it should be welcomed and accepted to stay.

Thank you again for the honor and the opportunity to present written and
oral testimony before this United States Senate Subcommittee.

Les Ottolenghi

**Background**

**Les Ottolenghi:** **President, INTENT MediaWorks, LLC**

Mr. Ottolenghi has more than 20 years of experience in executive
management, information technology and marketing with both start-up and
Fortune 500 companies. Prior to co-founding INTENT, Ottolenghi
co-founded and was CEO of AgentWare, Inc.,
[www.agentware.net](http://www.agentware.net/) where he set the
strategic direction of the company and managed all major contract
relationships. Before that Ottolenghi served as vice president of
information technology and electronic commerce for Carlson Wagonlit
Travel where he led a team that custom-designed ground-breaking software
to network more than 5,000 travel agents over the Internet. Ottolenghi
also enjoyed a successful career at Holiday Inn Worldwide, where he led
the launch of the first Internet-based reservations system in the travel
industry. In 1998, Information Week and Microsoft nominated Ottolenghi
for CIO of the Year.

Ottolenghi has served as the chief electronic commerce strategist for
the Greater 15 Nations designated by the United Nations, and has served
on the board of directors for the Berkeley Center for Marketing and
Technology. Ottolenghi earned his Bachelor's degree from Duke University
and his M.B.A. from Emory University\'s Goizueta School of Business,
where he received a Woodruff Fellowship and graduated Beta Gamma Sigma.
He continues his relationship with Emory by serving as an adjunct
professor and writing a book on technology and business strategy.

[^1]: The United States Army distributed recruiting materials via a P2P
    file sharing system, as reported
    http://www.technewsworld.com/story/32305.html

[^2]: Joseph Valacich, Leonard Jessup, Washington State University[,
    Information Systems]{.underline}, 2003; Kenneth C. Laudon and Jane
    Price Laudon, New York University Stern School of Business,
    [Information Systems and the Internet]{.underline}, 2004; The
    Durham, North Carolina Police Department, interview with Captain Jon
    Peter, June 2004.

[^3]: Ibid, Jessup, Valacich, pp.134-168; Efraim Turban, Ephraim McLena,
    James Wetherbe [Information Technology for Strategic
    Advantage,]{.underline} pp.165-283; 2004

[^4]: Ibid

[^5]: <http://www.devhood.com/tutorials/tutorial_details.aspx?tutorial_id=753>;
    <http://dolphin.radiology.uiowa.edu/ge/HPCL/paper12_09.pdf>,
    <http://www.cs.cf.ac.uk/user/I.J.Taylor/DistributedSystems/PPTSlides/P2PComputingLecture.ppt>

[^6]: http://www.bluescope.com/BlueScope.html

    <http://www.ntia.doc.gov/ntiahome/ntiageneral/ipv6/comments/juniper.htm#_Toc69615268>

    <http://www.internetnews.com/ent-news/article.php/10794_3319021_2>

    The benefits include saving millions of dollars in distribution
    costs for disseminating private sector marketing and training
    materials.

[^7]: A blog is basically a journal that is available on the web. The
    activity of updating a blog is \"blogging\" and someone who keeps a
    blog is a \"blogger.\" Blogs are typically updated daily using
    software that allows people with little or no technical background
    to update and maintain the blog. Postings on a blog are almost
    always arranged in chronological order with the most recent
    additions featured most prominently.\
    [www.matisse.net/files/glossary.html](http://www.matisse.net/files/glossary.html)

[^8]: Registered fan base is measured by unique, identifiable fans that
    offer a mailing or electronic email address and request to be
    contacted with marketing information about an artist(s)

[^9]: [[http://www.audiokingdom.com/news/177/]{.underline}](http://www.audiokingdom.com/news/177/)

    [[http://www.audiocourses.com/article337.html]{.underline}](http://www.audiocourses.com/article337.html)

    [[http://www.emediawire.com/releases/2004/4/prweb116996.h]{.underline}](http://www.emediawire.com/releases/2004/4/prweb116996.h)

[^10]: Drawings of Benefits & Detriments for Consumers and Content
    Providers.

[^11]: Al Smith, of BlackSmith Productions, New York, NY, approached all
    the major record companies with a Rhythm & Blues music offering of
    award winning, and critically acclaimed recordings. Mr. Smith's
    music is oriented to provide inspirational messages without
    reference to a specific religion, and excludes all explicit adult
    language or content. Mr. Smith was also unable to gain even an
    informational appointment with the United State's largest
    entertainment venue management company, ClearChannel, even though
    Mr. Smith has over 25,000 registered U.S. fans. Utilizing P2P, Mr.
    Smith reaches his audience who benefits from what they describe as
    "a higher quality of music free of language and messages we find
    offensive." Consequently, without the freedom to use P2P Mr. Smith
    and his audience would not be able to connect.

[^12]: [http://earthstation5.com](http://earthstation5.com/)