On May 20 Kazaa initiated a major commercial experiment. Backed by technology from Kevin Bermeister's Brilliant Digital, Kazaa users gained access to secured content through an Altnet index thanks to Digital Rights Management. Speaking with ZDNet Australia Bermeister explained how the technology could enable the monetisation of content passed over P2P networks.

Q: In this initial phase what kind of content will be available through the Altnet index?

A: At this stage we have a number of content providers including EMI and the games publisher Infograms, we are looking at software applications, games and music, as well as literally hundreds of other files provided by clients.

We anticipate growing that base slowly in the course of the next few weeks. Our interests are not in flooding lots of results in front of Kazaa users, but really finding out what Kazaa users are willing to pay for and what they are willing to procure, what relationship they will have with the content they download from us.

How are you going to access payment from Kazaa users, are they going to pay per use? How are you going to send that money back to the provider?

Because the content always originates from an original content source, the content at that source is secured by Digital Rights Management (DRM) technology, which provides a set of rules around which content is provided. The DRM rules are always set by the content owners. Those rules may be - you get the content 30 days for free, you get a one-time free play, you get an ad associated with the content, or you get three days free then we ask for a paid subscription or a payment per use. There's a myriad of models available which content owners can choose from.

We are promoting a couple of models which we believe will work in these initial phases, one of which is a micropayment model. In the course of the next six weeks or so, we hope to begin testing a micropayment model -- technology that we will roll out to users around the content that is being distributed. Our vision of a micropayment model is the little green button that pops up on the screen and says "25 cents please", and your action is either to accept it or not. If you do accept then 25 cents is deducted from a prepaid account which has been established by you via a number of methods, one being the purchase of a digital cash card in convenience stores.

We are particularly interested in digital cash cards which are telephone card enabled, or dual purpose cards, where they are prepaid telephone cards and acting as prepaid digital cash cards.

Are the cards already available? What about in Australia?

They are already available in the US and in many countries around the world. I don't have particular knowledge of Australia, but if they are not available in Australia they can be enabled to become digital cash cards with within a very short period of time. So the telephone card provider becomes a member of Altnet's micropayment system, and thereafter Altnet micropayments are enabled for all of its cards.

Will Kazaa users be able to access the content before buying the card, to see what is being made available?

For the most part there will be free use associated with the content initially, and then the content owners will ask users to pay for it, or have some other method of monetising and commercialising that content.

All of Altnet's content provided on Kazaa will be distinguishable from content provided on Kazaa by other users. When Kazaa users make a selection of what content they want to download, they will be informed of what they might be expected to pay for it eventually. But in most cases they will be able to test it first.

Altnet is essentially a common carrier virtual server network, and in essence that means that content providers transporting content via Altnet do not need to deal with intermediaries in the licensing process. Content owners in this case are licensing end users directly, and intermediaries like Kazaa or Web sites like Yahoo who ulitise the Altnet database are really marketing partners of the content company, as opposed to a licensing partner of the content company.

That is a subtle but important legal clarification for content owners.

Has it been difficult to find content providers to partner with you on this?

It still is a hard sell, everybody is still going through the earliest of educating content owners what Altnet is and what it brings to them. I think that we will prove the model in the course of the next three months, at that point in time it will become much easier for content owners to understand exactly what Altnet brings to them.

So we're taking this pretty slowly, and we are really looking for solutions for both content owners and Kazaa users, such that Kazaa users are happy to be receiving and participating in content that originates from an original content owner.

That is an important issue for us, are Kazaa users actually going to be responding.

Will users be willing to pay for content, given that the P2P networks have grown based on free content thus far?

We think there are several reasons why users will adopt content that comes via Altnet, essentially users are looking for content that comes from a credible source. We believe that users are fundamentally honest. It is just that there are no payment systems or payment mechanisms that are easy, intuitive, and reasonably priced for content of the type provided over P2P networks.

At this stage in order to find the content in the first place, the users have to find the libraries or locations. The hoops that they have to jump through in order to get content at different sites, makes it very inconvenient, there are also a couple of additional issues that will help users here.

Number one is that the micropayment solution is a secure and anonymous payment system. We don't know who you are as a user, we care who you are as a satisfied purchaser, but don't care who you are as an individual. This is a payment mechanism that protects privacy, that enables people to utilise cash in very small increments down to pennies. As long as it remains intuitive and well executed we believe it will prevail.

Surely you will need to collect information on your users if some of the content providers intend to rely on an advertising model - they will want to know who they are advertising to won't they?

Advertising is an area that has been grossly overlooked by the music industry. An example is the deal Jaguar reached with Sting. What we are proposing is that the music creators can turn around to advertisers and organise advertising for music they are distributing on the Internet. In Jaguar's case they would be more than happy to spend more money going out to Sting's audience, because they have already determined that his listeners represent the Jaguar demographic. Music is a natural shift, it really sorts out the demographic. Britney Spears users are not Jaguar buyers, but they are consumers of other types of products, and we think that artists can really benefit by that.

In terms of a road map, where to from here for Altnet?

We are going out in the next two weeks with the launch and the software, we then test products within that timeframe, we then focus on increasing the content for all our users. Around the late July timeframe we intend to launch the Altnet resource network, which is an end user offer. It is Altnet inviting end users to opt in to a very large-scale network where their resources are being aggregated through an application which would be downloaded after they opt in. That program will really help to create a large-scale distributive processing storage and bandwidth network.

Our intentions there are to begin to essentially run a "resource for rent" business, where the resource provided by end users is essentially provided to content distribution companies and enterprise partners who are seeking large-scale distributive computing solutions. The benefit to end users is a compensation program, which is run by Altnet and provided by Altnet rewards partner program. Which include free vacation time, travel and accommodation for the most active resources on the network, and for the least active resources on the network there would be free digital downloads, CDs t-shirts and things like that. We have a range of rewards program that will be implemented.

Distributive computing and paid online content are very different businesses, are there any plans to split the company's operations further?

We actually have three businesses. There is the traditional advertising business, there is the research product, and there is the distributive resource product. They are three different businesses and different technologies, all of which are breaking ground and evolving the Web model as we know it.

Hopefully we are able to develop these models and demonstrate that P2P is the worthy business tool that I believe that it is. This is a technology that has never had a corporate response because it has always been a grass roots technology.

We are certainly in different streams of business but I don't see a split in the company, not at this point in time, we have our work cut out for us, we are much more focussed in building the revenue stream.

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