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The Open Music Model is an economic and technological framework for the recording industry proposed in 2003, which suggests that the only viable system for distributing music online is through a DRM-free peer-to-peer file sharing system. It is based on earlier research conducted at the Massachusetts Institute of Technology. The model proposed five necessary and sufficient fundamental requirements for a viable commercial peer-to-peer music distribution network:
Open File Sharing: users must be free to share files on their hard drives with each other.
Open File Formats: content must be distributed in MP3 and other formats with NO digital rights management protection.
Open Membership: content owners must able to freely register to receive compensation.
Open Payment: users must be able to access the system using either credit cards or access cards purchasable anonymously in cash from retail stores.
Open Competition: there must be multiple such systems which can tie into each other’s file sharing databases. It must not be a monopoly through legal design.
It was the first model to argue for a $5 per month all-you-can-download subscription fee, a pricing model later introduced by Yahoo! Music in 2005. The research behind the model showed that $5 per month was the optimal price point to maximize user participation as well as revenue.
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