 So, as everybody knows lately, there has been a ton of talk about cloud music and locker services are a huge part of that conversation. Some exist to clone your music collection and others can be used as basic storage and others let you share files. The latter is where we have the controversy. While there's little doubt that digital lockers can be used unlawfully, many musicians and labels use them every day to collaborate and to efficiently deliver large files to each other. Today we are pleased to hear from Daniel Raymer, Chief Legal Officer of Swiss Secure Data Logistics Provider RapidShare. He will fill us in on their recent manifesto, which calls for all cloud storage providers to do more to protect intellectual property, as well as RapidShare's efforts to work more closely with artists and content owners. To guide us through that conversation is tech reporter extraordinaire Rob Peguerro. Please join us in welcoming them both. Okay, thank you for having me here. As he has already mentioned, I'm with RapidShare, a tech company and tech and music that raises a couple of questions. What does RapidShare has to do with music in the first place? I would like to start my presentation with a little anecdote, an anecdote that turns out to be true, and it's about my mother, and I guess it kind of helps you to understand the significance of the problems we were facing. Fifteen years ago my mom said, hey Daniel, what do you need a cell phone for? Cell phones are for show-offs, for businessmen, and you're a law student and being a law student, you're not a businessman and I hope you're not a show-off, so it's totally useless that you get a cell phone. Ten years ago she said that she's never going to get a laptop because she was an old-fashioned lady and she rather wanted to write her letters with her hands than getting one of these new things, and five years ago she thought that I was totally out of my mind because why the hell would anyone want to have a cell phone that allows you to access the internet wherever you are? It was to her that was totally useless, and tell you what, today she has a laptop, she has one of these here, an iPad as a matter of fact she loves it, and obviously she has a cell phone. So my mom has a pretty bad track record when it comes to predicting the importance of technologies, and I guess there is one more thing that she's wrong about. I had a conversation with her a couple of months ago and she said, okay, you're working for this cloud storage company and I get it, you can store files in the cloud, but I don't really need that, and she's just wrong about that, and five years from now all of us are going to use cloud services each and every day. We use cloud services for our emails, and I guess a lot of people don't even know that IMAP email services are basically emails in the cloud, and this is going to be true for all of our files. In five years from now that's my prediction, I'm in the business, we are all going to store our files on cloud services like Microsoft's guide drive with our Word documents, Apple iCloud, and hopefully RapidShare. So the types of services that we deliver have to do a lot with our everyday lives and your everyday work, especially in five years from now, which is why we are very sensitive to outweigh the different interests here, and not favor one interest such as privacy over the copyright issues. We don't want to completely favor the copyright concerns over the privacy issues, but we really want to outweigh the different interests very carefully, and this is what I'm trying to present here. As a tech company from Switzerland, we are really interested in intellectual property. We have a lot of intellectual property ourselves, and this is why we have long recognized our responsibility to curb copyright infringement, unlike others in the industry, we go to extraordinary lengths to protect artists' intellectual property, and we constantly look to strengthen and updo those services. RapidShare is probably the first company that has started to offer these types of services, and as everyone knows, copyright infringers are really early adapters. They have been the first ones to use the tape recorder 30 years ago for copyright infringement 20 years ago. They were the first ones to purchase CD burners, and today both CD burners and tapes are completely legitimate devices, but back then in the first years, the technologies had kind of a bad reputation. RapidShare was the first company to introduce cloud storage on a large-scale basis to the public, and obviously, since we offered these services so early, we had some problems with pirates going to the RapidShare system to abuse our system for their purposes. Okay, so what do we do? First of all, one-third of our company of the staff is devoted to rooting out suspected copyright violators. Why do we need so many people? A third of the company is quite a lot. The problem is to distinguish the good guys from the bad guys. If we had 20 people just clicking the delete button, that would be a lot, and it would mean that we have to, well, you could probably delete all the fights that we have if 20 people wouldn't do anything other than that, but the real job is to find out who the bad guys are, to investigate those cases, to go on the internet, to go on the bad wearer sites where copyright violation occurs, and to figure out how our service is being used and who the abusers are. We have some technologies to support that job, but still, there's a lot of human labor involved in doing that. Suspected repeat offenders are, of course, kicked out of the system. They get their accounts terminated, all the files deleted, which is heavily effective because a lot of guys have thousands of files that they have transferred over time, and if we delete those files, these guys usually aren't very happy and just go somewhere else and maybe write a couple of bad black blog posts about rapid share or tell other pirates on the internet how bad we are and tell you what we're pretty happy about these types of comments. We have pretty close ties to the movie studios that constantly deliver us with titles of upcoming movies so that we can be vigilant before movies actually coming out and trying to do our part in deleting pre-release versions of upcoming movies. And last but not least, we've developed a new crawling technology that is constantly reading the internet and shady websites trying to figure out information about files that have been published without the copyright owner's permission. This crawling technology is really helpful. I think one of the key strategies to address that problem in the long run is our crawler has a front end, a user face that enables us to search for a particular phrase. So if there's a brand new album coming out, then we can go on our crawler, enter the name of that album, and the crawler is going to give us everything that it has with that name in it, be it the file name or be it a website where this particular phrase is being mentioned in the connection with the rapid share download link. The front end allows us to create Excel's spreadsheets with links that were found on the internet on third party websites. And we can also set like an alarm system where we automatically receive emails with information whenever the crawler finds a particular phrase or title on the internet. Well, the back end, that's the real magic behind it. The crawler constantly reads, saves, and indexes numerous sites. It's a little bit like the Google crawler. It bypasses a lot of countermeasures because obviously the operators of these shady websites try to keep us out. And they do that with a bunch of sophisticated technologies that I really don't want to talk too much about here because probably you guys aren't really the right guys who are interested in that type of technical stuff. But they have some pretty smart technologies to try to keep crawlers out. And I guess our guys are just a little bit smarter than they are and are able to bypass a lot of their countermeasures. Finally, the new thing seems to be that they don't even publish download links anymore, but container files that have rapid share download links in them. But the container files are encrypted. So you don't really get to see the download link anymore. You just download a little piece of software that is then downloading things of rapid share. And we have developed software to read and extract the links that aren't visible to the human eye. The second part of what our technology is doing, it's constantly reading third party websites and tries to figure out what the content is. And that's kind of a complicated job. It's more complicated with music than with movies. And I'll give you an example. I've just been on the internet and I've checked for the iTunes music charts. In the top 10 charts are songs with titles such as diamonds, die young, hey ho, I cry, home, some nights, little things. These are terms where it is extremely tough for a machine to figure out that there is a connection between such generous general terms and music. We can't really delete a file just because there was the word diamonds on a website in connection with a rapid share download link. It could be anything with diamonds. So the machine doesn't really know that it's the song from Rihanna just because the word diamond pops up somewhere in the descriptive text on a website. So the matching algorithm is really smart. It tries to identify a lot of links, but still the human labor is required to figure out the bad files from the good ones because we can't really delete legitimate files accidentally. So there's a new strategy and we believe that this is the next big thing to scare the pirates away. We're going to introduce a daily traffic limit. Every user who's registered with rapid share can access his files as much as he wants to. He can give third parties access to his files, but there's a daily traffic limit for that and that traffic limit is one gigabyte per day for free users and 30 gigabytes per day for paying subscribers. This is still more than enough for everyone with legitimate purposes, but the professional pirate who's uploading a bunch of albums doesn't really want to live with and go with a service that just allows for 10 downloads of an album per day because usually these sites have a lot of traffic. They want to deliver their legal files to a broad audience and not just to 10 people and not even to 300 people. They want to give the pirated content to thousands of people in a short period of time, which is why rapid share should not be a good choice for these pirates in two weeks from now when we're going to implement those limitations. Yeah, that's a quote from our CEO because of our new limit on outbound public traffic that any storage account can generate. There is no longer need to limit download speed to deter infringement. This actually makes our service more interesting to the normal user. You can access your files as fast as you want to and you just have to live with certain limitations that other people other than yourself can't access a lot of your content during one day. Okay, that's it from now. Thank you for your attention and do you have any questions? I'll start. So the big question I have, you've repeatedly changed your system, you've added various limits and restrictions and rules. Are you ever going to see the end of this to such that your service is no longer a target? Basically is it even possible to run a cloud service with public access to shared files that doesn't get taken over for this kind of copyright infringement on a massive and apparently very, very creative scale? Well, I think we constantly want to strive to make our service better in different ways. We want to make a better user experience and we constantly want to get better when it comes to driving pirates away. Is it possible to ever have no pirate at all on our system? I don't know. Very different way. At what point do you consider your job done in terms of we've gotten this down to the minimum we've done the best we can do? I think it's never done and I'm really happy that I'm never going to be unemployed. But yeah, it's a constant learning curve but that goes for everyone and if we want to excel at what we're doing we'll probably have to live with pirates always trying to come back. If we throw them all chances are that we still need people like me and we still need good ideas to make sure that they don't come back. So I was at last night's opening event if you all didn't go you missed some very good music up at the dunes in colombia heights and I mentioned that I've got this panel coming up and there were a couple of people who raised their eyebrows like really? So I know you all want to sort of become away for artists to trade you know master tracks and their full quality online. Do you worry that your name might be kind of damaged goods to them given the sort of history built up? Well we have artists using our service I don't know who was raising his or her eyebrows and you don't have to tell me. Some of you I talk to also at dinner so you can raise your you can ask the question yourself. Okay does anyone want to raise his eyebrows? I I don't know so thank you. You can raise your hand if you prefer it's easier for me to see from up here. Now I'm not concerned that our brand may have bad reputation or something I know that a lot of artists use rapid share I get really positive remarks from artists on a regular basis so if everyone if there's anyone who thinks that we're not trying hard enough feel free to shoot me an email and we can have a discussion about that but I haven't heard anything like that. Are there any judicial or legal developments that have you worried you know Sopa or Pipa obviously would have rolled a bowling ball through your business model along with many other companies? What's on your word list? I wouldn't say that Sopa and Pipa would have undermined our business model because we don't see ourselves as a shady website but still I think it was bad law and on a personal level I'm happy that it didn't come in place but I'm not here to talk about Sopa and Pipa. I have the legal concern that I have is that it's really hard to operate a global service with the certainty that you're complying with law in every country. I really don't know if we comply with Iranian law. I don't know maybe I would get my hand cut off when I go to Iran because they find something on rapid share that they don't like I really don't know. We're active in a lot of countries and laws are different and the one thing that I would like to see is like a minimum standard where everyone in the world agrees that if you comply with that standard you're fine but chances are that we're not going to see that in the very near future. Okay do we have any question? Okay there. I have one specific question it just seems to me I was a little confused with your model you had something about like one gigabyte a day and you had this one particular part where you were talking about the users and it just seems to me that one person is able to create many different user names from one specific user name for a different different profile so Matt Holbert or Delante Smith or whatever can create you know DeSmith 2 or Matt Holbert 5 or something like that and it seems to say one person can share just a lot of different music from that. Is there a way that you're monitoring that as well in terms of just constant sharing? Yeah the thing is that we haven't introduced that this what I've shown to you is just part of a press announcement that went out last week and this system is going to go online in about two weeks from now so we don't really know what the guys that we want to scare away are going to do. We have some assumptions of what might happen of some things that they may do in order to still stay on the reputation system but since it's this is still speculation we're prepared and whatever countermeasures they're trying to take we have some ideas in place to to counter that but I really don't want to talk too much about that because there is a live stream here and I don't really want to explain people what we do so they could prepare for that but if it's registering multiple accounts I can assure you that we're going to keep an eye on that and there are a bunch of different technical approaches to figuring out if one individual has registered numerous accounts in a short time. We had another raised a hand or eyebrow on the right. Yes, hi I'm Bill Rosenblatt from Copyright and Technology. It's very impressive all this technology that you're implementing. My question is what is your motivation for for doing this? Is it is there a an economic motivation for implementing all these measures to curb copyright abuse or is it fear of being sued by copyright owners like movie studios or is it or what is I'm sorry if I seem cynical it's very impressive. What is the motivation? There's no cynicism in music. It's not it's not cynical it's a legitimate question and maybe people start to believe me now when I say that pirates are really bad customers. It's we never want that bad how? From a financial perspective pirates create a lot of traffic. Traffic is expensive and you don't really get any money from them because believe it or not a pirate that doesn't want to spend 99 songs for a song on iTunes is not going to purchase a rapid share account for 4.99. Sure I've made that argument over and over the years again and in the first years I was getting a lot of eyebrows raised eyebrows and people said hey they may not want to buy a rapid share song for instead of paying 99 songs for sense for one song but if they download a lot it makes sense on an economic standpoint and they're right sure some pirates are going to register for a rapid share account because they want to download a lot. Right now it doesn't make sense anymore because downloads are there is no difference in the download speeds but in general pirates don't want to spend money period and if they see any way they can cheat rapid share they're going to cheat rapid share. They're going to buy some download tools that allow them to download for free as much as they want to so it's not an interesting customer base the interesting customer base that we want to have are the ant consumers the guys like my mom who say hey I want to have a provider that I stay with for years I sign up with I pay 499 a month for it and I don't even complain about it because these 499 are well spent they store my files but these types of customers that we want to have don't really like to be mixed up and thrown into a bottle with a bunch of pirates they don't like accidental deletions of their personal files they give us money to store their files and not to and to not accidentally delete it so we really don't want to have piracy on our system but the good reliable customer that stays with us for for years thank you all right I see we've got the uh time's up sign here so you all can harangue both of us uh offline later on yeah all right thank you