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WHITE PAPER: TOWARDS THE CREATION OF A DIGITAL CONTENTEXCHANGEI. Executive Summary
. The Digital Content Exchange (DCE) is a patent-pending(US Pat. 10591416, priority date March 4, 2004)
 
method for facilitating an exchange of copyright-protected digital media in a commercial transaction. It is also a method for storageand enjoyment of media through on-line “cloud” access. The secure DCE on-line environmentverifies ownership of the digital item and rules out piracy
before
the item may be accessed by theuser from his cloud or, indeed, before it may be transferred from one user to another. The DCEenables authors of media (including, but not limited to: books, music and video content) tobecome their own direct distributors of the digital item. It allows consumers who buy books,music and videos to aggregate their collections and, therefore, provide a marketplace morepowerful than Amazon, eBay, Netflix, RedBox, and the New York Public Library.The DCE is owned by The Media Exchange Company, Inc. and includes the know-howof the inventor, who developed the invention based on a lifetime of experience in efforts of justthis sort, including as founder of Bridge Data (now part of Thomson Reuters). The book, musicor CD item is carried on a fully-transparent board of exchange similar to stocks.The DCE has a working application that has been successfully beta-tested at theDCE.com and is fully functioning (in music media items only) among a small group of stores,users and record-labels. Any interested party wishing to become a beta-tester may apply there todo so. Inasmuch as the DCE is at the heart of the businesses of Google, Apple and all mediacontent providers, its value speaks for itself.
II. Target Market
. In order to understand the value proposition in the DCE, onefirst has to fully understand the value proposition for the target market. The target market can beroughly divided up into five groupings:1.
 
Those who buy media (or who presently download media illegally).2.
 
Those who create media or distribute it.3.
 
Academic institutions that provide internet access for research purposes but in sodoing are required by Federal law to prevent their servers from being used forillegal downloading.4.
 
Institutions that lend media such as libraries, video rental stores and kiosks.5.
 
Entities that have a commercial interest in web behavior or consumer electronicssuch as Google and Apple.
III. Solving the fifteen-year old problem of how to monetize digital media
. Sincethe advent of the internet, the Music, Book, and Video (“media”) industries have been grapplingwith the problem of how to make money through on-line distribution and to simultaneously stemillegal file sharing. The results have been decidedly mixed. This is because the industries havenot been employing the DCE principle (see below) and its proprietary implementation.
 
 
As many industry critics have observed, the key is to give consumers of media an on-lineexperience that is completely devoted to allowing them to do everything they might desire withthe media item, and everything they
can
do now thanks to digital technology. Failing to affordlegal ways to do things that digital technology allows has been shown to induce illegal activity.
iTunes
is a more user-centric experience, but still comes with some unnecessaryrestrictions via the iTunes User Agreement, burn limits, computer transfer limits, the requirementof downloading and using iTunes rather than having direct access to the download on the hard-drive. Further, popular confusion concerning whether a buyer really owns an iTunes downloadrather than rents it has resulted in trading site eBay forbidding the trading of iTunes downloads.This is counterproductive and makes as much economic sense as prohibiting a trade of a share of Proctor & Gamble. Of course, there are concerns that the seller will not rid himself of the songonce sold. Nevertheless, this is where the DCE’s method of immobilization and verificationenters the fray in order to abate those concerns.
YouTube
has brought the user an “about them” experience in that YouTube is very easyto use and its catalog is deep. However, YouTube has the following problems:1.
 
YouTube’s legality is fraught with gray areas.2.
 
There are incongruous “performance” royalty costs.3.
 
It does not allow ownership or collecting (YouTube videos can be “here today,gone tomorrow” unless illegally downloaded and stored).4.
 
It is hampered by per-video size limits.5.
 
It is not a music site although it is often improperly used as a free “digital jukebox”.6.
 
It of course does nothing to address the problem of digital books.
IV. The DCE Principle
. The DCE is built around the user and this is why it cansucceed while so many other well-funded ventures have failed.1.
 
The DCE creates
analogs
in the digital realm for every benefit the userenjoyed in the physical realm.2.
 
It enables users who choose to own music to have cloud access to all their mediapurchases, whether it is an item they have owned since the 1960’s or is an itempurchased instantaneously through the Exchange.3.
 
It provides users who choose to
borrow
a media item instead of 
buying
it (andadding it to their collection) a method of borrowing without needing to go to abrick and mortar library, nor worrying about returning the item or paying latefees.4.
 
DCE members who would like to sell, trade or lend their media are enabled tomake money from doing so. It is true “file sharing” and is no different than
 
 
lending a physical CD, video or book to a neighbor because the lender is not ableto access it while the borrower is enjoying it.5.
 
The media made available to the user for borrowing or purchase is the widestpossible selection because it represents all the media owned by all the users in theworld, whether “orphaned” or in print, obscure or popular, long tail or broad tail.The user will never experience “not available” or “out of stock”. Everything willbe available, although items that are rare or valuable may be priced high.6.
 
There is no fee to join the DCE. There is no monthly subscription “big decision”.The user will just have to pay a small fee per transaction to the extent he buys orborrows.7.
 
The DCE principle affords new ways of looking at old problems. Please note thatall the applications and nuances of the DCE principle have yet to be fullydeveloped. The ingenuity of developers will be important to the properimplementation of the Exchange across broad platforms. (Applications of theDCE principle marked
tentative
in this document are examples of applicationsthat are still in development).
V. Advantages for Copyright Owners
. Even though the DCE was built around theuser experience, there are at least two important advantages built-in for the benefit of copyrightowners.1.
 
The DCE allows copyright owners the ability to vend media items on theExchange
only on an “opt-in” basis
(unlike the Google Book Settlement). Thus,the DCE always respects the rightsholder’s right to decide when, where and if new copies of the media item are to be sold.2.
 
Presently there is no system for accounting to copyright holders when a mediaitem is resold at a used store or loaned through a retail store or library. The DCE,by tracking these transactions, can provide rightsholders a new source of income.
VI. The value to Google
.1.
 
As a search company, Google can only benefit from being the provider of thefulcrum
through which all media is searched for and transacted 
.2.
 
Google can partake in a transaction fee for each transaction.3.
 
Google is involved in mass digitization and the DCE is a digitization project.Therefore, Google and the DCE are natural partners. With books, the digitizationeffort is especially valuable for Google. Once books are digitized, Goggle canprovide web searching “on steroids”. However, one of two conditions must occurin order for unfettered full-text searching to be legal. The first possibility is forcopyright holders to have “opted in” to full text searching. The second possibilityis for Google to facilitate the borrowing of a copy of the book from a verifiedowner (because then it is the lawful owner of the book who is allowing the search
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