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The Propagate Concept

The Problem

All of the various purveyors of digital media are fighting losing battles against "piracy" (unauthorized redistribution) because of the ease with which digital (and other) products may be copied. Perhaps the fastest sinking ship is recorded music, where compressed single tracks can now be conveniently and anonymously moved through the Internet.

We can now hear shrill voices calling for government to create and enforce all manner of overkill rules, including mandates for certain hardware features and prohibitions on others. It's so bad that in some ways, it is already illegal to copy your own work. We at Propagate Ltd prefer lateral thinking side-stepping the whole problem rather than knee-jerk tyranny that stifles technology.

If You Can't Beat'em, Can You Join'em?

What would happen if, rather than combating this force, we harnessed it? What if content creators released certain rights to digitally copy their works and convert them between different data formats? All those "copying" machines out there would become legitimate manufacturing capacity driving profits instead of undermining them. All those "pirates" would be transformed into talent scouts, promoters, and retailers.

The trick is, how do we harness this herd of cats to work for (and pay) content creators rather than cheating them?

The Propagate Ltd.™ Solution

If content creators can extract an adequate price from their adoring public, then they shouldn't worry about how many copies "propagate" around the world. In fact, propagation would grow most artists' reputations, increasing demand for future offerings, thereby working in their favor.

So we're down to looking for a way to extract that up-front payment from the public to compensate creators for the release of certain carefully circumscribed digital copying rights.

We know that as soon as the first unprotected disk leaks out, the genie will be out of the proverbial bottle. Therefore, a key premise here is that real control is physical control of the original data. Physical control means holding the first master hostage until a firm price has been negotiated and real money has been collected on a virtual barrel head.

This creates a situation analogous to a copyright holder negotiating with a distributor to sell worldwide distribution rights, except that in this case, the distributor is an as yet unknown collection of individuals rather than a single corporation.

The next trick is to figure out how to efficiently gather interested members of the public and negotiate a one-to-many transaction that will satisfy both sides. Enter the Internet...

An Auction with a Twist (or Two)

Here's where Propagate Ltd comes in. We bring content providers and interested buyers together, and we facilitate otherwise unweildy multilateral negotiations. In essence, we act as a broker, collecting a modest fee.

The core of our business is a unique form of auction. In its basic form, it is like a Dutch auction. Many units will be sold at one price to many bidders who offered at or above that price. A key difference is that Propagate Ltd doesn't predetermine exactly how many units will be sold. Instead, by analyzing the bids as a demand curve, we pick the price that will maximize gross profit (total revenue less direct costs). The number of units to be sold follows from that price.

However, the yield from the auction must be enough to satisfy the seller. Each seller specifies a "reserve yield" and target date for each offering. If the projected yield meets or exceeds the target by the target date, then the auction concludes. Cash moves, and individually numbered masters are manufactured and shipped to successful bidders. If targets are not met, then the seller may extend the auction, reduce the reserve, or (after the target date) cancel and withdraw.

What's not Being Sold

Business is not about imposing an arbitrary moral code of conduct upon a population; it's about making money. Therefore, the Propagate™ concept acquiesces (for a price) to digital hardware's obvious ability to copy and fans' determination to do so.

Consequently, when one gets a "propagating" disk (or file therefrom), one may copy it, sell the copies, burn selected individual tracks into new collections, and compress tracks into other file formats to be transmitted freely over the Internet. What's more, anyone acquiring a copy automatically has the same rights. The rights have been released to the public domain; they are not attached to the media.

However, other aspects of copyright remain protected. Rights to words, music, arrangement etc. are reserved. Acquiring a CD or MP3 does not entitle one to perform its music live and charge admission. Nor may one incorporate it or selected tracks in a movie, TV show or advertisement without going through normal royalty channels. Similarly, propagating software may not be reverse-engineered for fun and profit unless expressly permitted.

The Propagate Ltd™ registration agreement and associated contracts spell out the details in legalese for those who need more clarity.

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