EXCLUSIVE INTERVIEW

‘We Didn’t Want to See the Future’: Q&A With Ex-Sony Lawyer Steve Gordon

In 1999 at a Sony Music corporate meeting, the room was filled with Sony executives and attorneys from across the globe. At one point, one of the Sony attorneys gave a presentation on two music services. One was the Sony music service and the other was a tiny, fledgling service.

The Sony service required users to go through multiple layers of Web sites in order to get to the songs they wanted. And even then, there were severe restrictions on the use of those songs.

Then the Sony attorney demonstrated the other service. She typed in the name of a Beatles song, “Hey Jude.” Not only did the the Beatles version appear, but so did other versions created by multiple artists.

And — it was free.

And by the way, the name of that service was Napster.


Podcast: Listen to the entire interview (25:45 minutes).


New Digital Age

Steve Gordon was one of the Sony executives present at that meeting.

Gordon is the author of The Future of the Music Business: How to Succeed With the New Digital Technologies, a book that lays out the rules for independent artists and entrepreneurs to distribute music digitally.

Almost 10 years later, the music industry is still reeling from the “Napsterization” of its business model.

In an interview with the ECT News Network, Gordon provides his insight into the impact of Napster and other digital technologies on the music industry.

According to Gordon, the music industry has already gone over the cliff, revenue has steadily declined over the last decade and the only remaining question is: How hard will the industry finally land when it does hit bottom?

Gordon also offers key insights into how independent artists especially have an opportunity with digital distribution. Using digital technology, he says, they can produce and distribute fairly cheaply and keep most of the profits for themselves.

Here are some excerpts of the interview:

E-Commerce Times: In a nutshell, could you briefly talk about Napster and the music industry and what really happened?

Steve Gordon:

I remember when Napster came out very well because we had a business affairs conference in New York at the time, and for the first time, all the lawyers from Sony — where I was still an executive — from all over the world attended this conference, and for the first time, they addressed digital music. The discussion on digital was led by a litigator, for reasons that will become clear in a second.

What happened was she showed us what Sony was doing with digital, and then she showed us Napster. What Sony was doing with digital in 1999 was offering two Mariah Carey singles for sale, and you had to go to the Sony Music Web site, then to Columbia Records’ Web site, and then inside Columbia Records, which was owned by Sony, you’d find Mariah Carey’s Web site — and then inside that Web site, you’d find these two singles for sale, and they were both around (US)$3. For $3, you could listen to each song on your desktop, but you couldn’t download it to your computer, you couldn’t share it with your friends, and you certainly couldn’t press a CD, or burn a CD.

Then she showed us Napster, and the glowing skull came up — it’s still around now, but in legal form. And she asked for a song from the audience, and somebody requested “Hey Jude.” She put it in the browser, and not only did the Beatles version come up, but every other artist who ever recorded the song — there were around dozens of versions, and they were all downloadable, they were all freely shareable with your friends, and they could all be burned to a CD, and they were all free.

ECT: Amazing difference between what Sony was doing and what Napster had done.

SG:

Then, we all got the impression that we were in trouble. And then it got worse — she requested another song and somebody came up with an obscure song from the ’50s, and again, dozens of different versions came up and they were all downloadable, burnable, shareable and free. So, we knew that we had a problem. So what did the record companies do, including Sony? Well, there were some that argued that we should make a deal with Shawn Fanning or create a Web site of our own to compete.

And we chose not to do this — we chose to sue Napster instead of creating an alternative and instead of licensing Shawn Fanning, which he requested that we do. He wanted to negotiate and pay us. But the business model in 1999 was so successful that we couldn’t get off of that approach — which was to sell records like no tomorrow and hope that a few would sell incredible numbers, which happened.

ECT: What you’re saying is that the cash cow was so great that you couldn’t see the future coming at that point?

SG:

Well, we didn’t want to see the future. Let’s give you a concrete example: For less than $1 million we could create a Mariah Carey CD, compared to Hollywood, where their blockbuster movies cost $25 to $50 million, even then. And if we sold 5 million units, which we often did of artists like Mariah or Pearl Jam, or Bruce Springsteen, Bob Dylan, Billy Joel, we could make $10 wholesale for every record. If you sold 5 million, that’s a hell of a lot of money.

ECT: That’s $50 million.

SG:

And only with an investment of about a million. So the record companies, all five of them — the majors at the time — they resisted the change that they saw in Napster, because they were making so much money the old-fashioned way. So they sued Napster, and they sued it out of existence. It took two years, but they were successful.

However, while they were suing Napster, other peer-to-peer systems were growing, like Kazaa, created by other teenage technologists. And in fact they were faster, easier to use than Napster, and offered more music because they allowed people to share directly with each other instead of through a central database. So while the record companies were resisting the growth of digital and trying to shut down peer-to-peer, the world was going in a different direction. In fact, the world of the fans and the major consumers of recorded music was going in a different direction.

Podcast: Listen to the entire interview (25:45 minutes).

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EXCLUSIVE INTERVIEW

Cryptocurrency Custody Concerns: Who Holds the Digital Storage Keys?

cryptocurrency wallet

Got Crypto? Make sure you own and have access to it in a secure digital stronghold.

Having self-custody of your crypto keys and managing your digital assets can help stave off digital bankruptcy or loss through theft, warns cryptocurrency storage provider CompoSecure.

Cryptocurrency is an increasingly familiar term since Bitcoin emerged in 2009. Since then, numerous cryptocurrencies have joined the digital asset marketplace and, despite the recent decline in valuations, the cryptocurrency market value has skyrocketed.

Market watchers valued the global cryptocurrency market size at $1.49 billion in 2020. Some project it will reach $4.94 billion by 2030, rising at a compound annual growth rate (CAGR) of 12.8 percent from 2021 to 2030.

The cryptocurrency market represents the start of a new phase of technology-driven markets that can potentially challenge traditional market strategies, longstanding practices in business organizations, and determined regulatory perspectives, according to Vantage Market Research.

Control of Crypto

Cryptocurrencies have the innovative potential to allow people access to a global payment system in which participation is barred only by access to technology. It could replace traditional standards based on having a bank account or a credit history.

However, buying and selling crypto coins and using digital currency to pay for products in the physical world is not the same as opening a bank account and depositing a paycheck. An announcement by Coinbase may have dislodged the elephant in the crypto storage room.

Coinbase is an app that lets people buy and sell various cryptocurrencies — Bitcoin, Ethereum, Litecoin, and many others — and lets users convert one cryptocurrency to another. Users can also send and receive cryptocurrency to and from other people.

In its 10-Q filing last month Coinbase disclosed that it would have the right to hold crypto assets of its retail users as property of the bankruptcy estate, if the company were to file for bankruptcy.

So, what about crypto providers and digital storage centers that hold your crypto funds?

That disclosure is driving awareness and highlighting the importance of self-custody, according to Adam Lowe, chief innovation officer of CompoSecure and creator of Arculus.

“As cryptocurrency is becoming more mainstream, many people are jumping in feet first and not properly researching and educating themselves. It’s important users know how their cryptocurrency works, who owns it, and what control they have with their digital assets,” Lowe told the E-Commerce Times.

Crypto Cold Storage Solution

CompoSecure is a pioneer in the premium payment cards industry. The company also developed and provides an emergent cryptocurrency and digital asset storage and security solution it calls Arculus.

The new cold storage wallet solution approach for securing crypto uses the name of the ancient Roman god. Arculus was considered to be the guardian of safes and strongboxes the Romans relied upon to ensure the protection of their cherished possessions.

The company applies that same nomenclature today. Arculus is the contemporary incarnation of this vigilant deity, ensuring the safe, strong security of critical digital assets and identity.

Think of this storage solution as a token, much like the physical device some people rely on to keep their computers under lock and key. For crypto, ownership is directly linked to the owner’s private key.

For example, if you purchase crypto through an exchange and leave it there, you are trusting the exchange to give you your digital assets when you ask. But since they keep ownership of the private keys, the exchange has full control to comply or not comply, Lowe cautioned.

“This is why self-custody wallets are important. By storing your private keys in a self-custodied wallet, such as a hardware wallet, only you have full ownership and control of your cryptocurrency and other digital assets. As we say, your keys, your crypto,” he explained.

Fuss-Free Ownership and Access

Dealing with digital assets is not the same as walking into to your local bank. Crypto security works much differently. When a traditional bank is insured by the Federal Deposit Insurance Corporation (FDIC), if the bank is robbed, defaults, or goes bankrupt, deposits are protected up to at least $250,000 per depositor.

Not so with cryptocurrencies. Those digital assets belong in an unregulated asset class that does not have the safeguards of traditional fiat currency. Crypto is currently not subject to FDIC protection, noted Lowe.

“As of now, if your cryptocurrency is hacked, it is gone. This is the main reason why properly securing and protecting your digital assets offline is important,” he advised.

No holistic regulations governing cryptocurrency exist. That is why cryptocurrency is a highly volatile asset.

“The Biden administration is discussing U.S. regulations. While we expect to see movement in that direction, it could be a while until widely accepted regulations are in place,” he added.

Holding the Right Card

CompoSecure’s recently launched storage hardware wallet enables consumers to have self-custody and manage all their digital assets in one offline place. This approach gives ownership of the crypto keys only to the user.

Arculus Wallet NFT support
Arculus Wallet product capabilities now include NFT support. (Image Credit: Business Wire)

The company’s innovative solution is the Arculus Key Card which uses a CC EAL6+ secure element to encrypt and store your digital keys. It is not connected to anything. If you lose it or it gets stolen, no one else can use it.

When a crypto owner makes a transaction in the Arculus Wallet App, it requires the user to tap the key card to his or her mobile device. This is an important security step in the three-factor authentication that Arculus uses to keep crypto keys safe and secure.

The card communicates with the wallet app to authorize a tap-to-transact secure near-field communication (NFC). It involves no Bluetooth, no Wi-Fi, no USB, and no cords.

CompoSecure on Tuesday announced the same approach for non-fungible token (NFT) support.

Cashing In on Crypto

Dealing with cryptocurrency issues can become much like a rabbit hole. The more your dig, the further into a financial abyss you fall. To ease the transition into crypto banking, we asked Adam Lowe to shine a light on the subject.

E-Commerce Times: Do crypto platforms provide digital protections?

Adam Lowe: Some cryptocurrency platforms do provide types of cyber or crime insurance, but like most insurance policies there are limitations and loopholes.

So, must consumers understand about the basic guidelines for digital asset ownership and who owns the keys to the crypto?

Lowe: The most important thing to understand is who owns your keys owns your cryptocurrency. Consumers need to educate themselves on custodial versus non-custodial assets.

Additionally, utilizing exchanges or hot wallets that use a continuous internet connection keeps the door open to threats of hacking and theft.

It is also vital to utilize multifactor authentication (MFA). Three-factor authentication is extremely valuable because it ideally looks at something you are such as a biometric, which can be a fingerprint or facial recognition. It requires something you know, such as a personal identification number or PIN.

Lastly, it needs something you have, such as our Arculus Key Card. This added step of security is crucial to ensure only you have access to your assets.

How does self-custody work?

Lowe: That means you own your private keys. The keys are what grant access to full control of someone’s digital assets instead of trusting a third party to be the custodian and arbiter of your digital assets.

Utilizing a hardware wallet, such as Arculus, will provide self-custody as only you can access your private keys and manage your digital assets.

What makes this method different from other custody arrangements with crypto brokers?

Lowe: Crypto brokers and centralized exchanges are third-party custodians. They have control and access to your private keys to purchase, move, and invest your digital assets accordingly. Non-custodial agreements hand over the keys and limit the layers of protection to the end-user.

How can self-custody protect consumers from online hackers and retain their digital assets even if they go bankrupt?

Lowe: With self-custody, no one can access your digital assets without your consent. This provides the necessary level of protection from hacks.

When it comes to an individual user going bankrupt, cryptocurrency is not considered income but rather property. Bankruptcy law is complex and very fact-specific, so I cannot give you guidance on what could happen to cryptocurrency in a user’s bankruptcy.

Is crypto investing for everyone or just those who can afford to lose?

Lowe: Cryptocurrency is currently being adopted at a faster rate than the internet. It is becoming mainstream. For some, it is their first investment venture. But like any investment, there is a risk of loss. As long as people understand the lack of regulations and high volatility, they can invest according to their level of comfort.

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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EXCLUSIVE INTERVIEW

The Business Case for Clean Data and Governance Planning

Do you know if your company’s data is clean and well managed? Why does that matter anyway?

Without a working governance plan, you might not have a company to worry about — data-wise.

Data governance is a collection of practices and processes establishing the rules, policies, and procedures that ensure data accuracy, quality, reliability, and security. It ensures the formal management of data assets within an organization.

Everyone in business understands the need to have and use clean data. But ensuring that it is clean and usable is a big challenge, according to David Kolinek, vice president of product management at Ataccama.

That challenge is even greater when business users must rely on scarce technical resources. Often, no one person oversees data governance, or that individual lacks a complete understanding of how the data will be used and how to clean it.

This is where Ataccama comes into play. The company’s mission provides a solution that even people without technical knowledge, such as SQL skills, can use to find the data they need, evaluate its quality, understand how to fix any issues, and determine whether that data will serve their purposes.

“With Ataccama, business users don’t need to involve IT to manage, access, and clean their data,” Kolinek told TechNewsWorld.

Keeping Users in Mind

Ataccama was founded in 2007 and basically bootstrapped.

It started as a part of Adastra, a consulting company, which is still in business today. However, Ataccama’s was focused on software rather than consulting. So management spun off that operation as a product company that addresses data quality issues.

Ataccama started with a basic approach — an engine that performed basic data cleansing and transformation. But this still required an expert user because of the user-provided configuration.

“So, we added a visual presentation for the steps that enable data transformation and things like cleansing. This made it a low-code platform since the users were able to do the majority of the work just by using the application user interface. But it was still a thick-client platform,” Kolinek explained.

The current version, however, is designed with a non-technical user in mind. The software includes a thin client, a focus on automation, and an easy-to-use interface.

“But what really stands out is the user experience, which is built off the seamless integration we were able to achieve with the 13th version of our engine. It delivers robust performance that’s tuned to perfection,” he offered.

Digging Deeper Into Data Management Issues

I asked Kolinek to discuss the data governance and quality issues further. Here is our conversation.

TechNewsWorld: How does Ataccama’s concept of centralizing or consolidating data management differ from other cloud systems such as Microsoft, Salesforce, AWS, and Google Cloud?

David Kolinek: We are platform agnostic and do not target one specific technology. Microsoft and AWS have their own native solutions that work well, but only within their own infrastructure. Our portfolio is wide open so it can serve all the use cases that must be covered across any infrastructure.

Further, we have data processing capabilities that not all cloud providers possess. Metadata is useful for automated processing, generating more metadata, which in turn can be used for additional analytics.

We developed both of these technologies in-house so we can provide native integration. As a result, we can deliver a superior user experience and a whole lot of automation.

How is this concept different from the notion of standardization of data?

David Kolinek
David Kolinek
VP of Product Management,
Ataccama

Kolinek: Standardization is just one of many things we do. Usually, standardization can be easily automated, the same way we can automate cleansing or data enrichment. We also provide manual data correction when solving some issues, like a missing social security number.

We cannot generate the SSN, but we could come up with a date of birth from other information. So, standardization is not different. It is a subset of things that improve quality. But for us, it is not only about data standardization. It is about having good quality data so information can be properly leveraged.

How does Ataccama’s data management platform benefit users?

Kolinek: The user experience is really our biggest benefit, and the platform is ideal for handling multiple personas. Companies need to enable both business users and IT people when it comes to data management. That requires a solution for business and IT to collaborate.

Another enormous benefit of our platform is the strong synergy between data processing and metadata management it provides.

The majority of other data management vendors cover only one of these areas. We also use machine learning and a rules-based approach and validation/standardization, which, again, are often not both supported by other vendors.

Also, because we are technology agnostic, users can connect to many different technologies from the same platform. With edge processing, for instance, you can configure something once in Ataccama ONE, and the platform will translate it for different platforms.

Does Ataccama’s platform lock-in users the way proprietary software often does?

Kolinek: We developed all the core components of the platform ourselves. They are tightly integrated together. There has been a huge wave of acquisitions lately in this space, with big vendors buying smaller ones to fill in gaps. In some cases, you are not really buying and managing one platform, but many.

With Ataccama, you can purchase just one module, like data quality/standardization, and later expand to others, such as master data management (MDM). It all works together seamlessly. Just activate our modules as you need them. This makes it easy for customers to start small and expand when the time is right.

Why is a unified data platform so important in this process?

Kolinek: The biggest benefit of a unified platform is that companies are not looking for a point solution to solve just a single problem, like data standardization. It is all interconnected.

For instance, to standardize you must validate the quality of the data, and for that, you must first find and catalog it. If you have an issue, even though it may look like a discrete problem, it more than likely involves many other aspects of data management.

The beauty of a unified platform is that in most use cases, you have one solution with native integration, and you can start using other modules.

What role do AI and ML play today in data governance, data quality, and master data management? How is it changing the process?

Kolinek: Machine learning enables customers to be more proactive. Previously, you would identify and report an issue. Someone would have to investigate what went awry and see if there was something wrong with the data. Then you would create a rule for data quality to prevent a recurrence. That is all reactive and is based on something breaking down, being found, reported, and then fixed.

Again, ML lets you be proactive. You give it training data instead of rules. The platform then detects differences in patterns and identifies anomalies to alert you before you even realized there was an issue. This is not possible with a rules-based approach, and it is much easier to scale if you have huge amounts of data sources. The more data you have, the better the training and its accuracy will be.

Other than cost savings, what benefits can enterprises gain through consolidating their data repositories? For instance, does it improve security, CX outcomes, etc.?

Kolinek: It does improve security and mitigates potential future leaks. For example, we had customers who were storing data that no one was using. In many cases, they did not even know the data existed! Now, they are not only unifying their technology stack, but they can also see all the stored data.

Onboarding new people onto the platform is also much easier with consolidated data. The more transparent the environment, the sooner people can use it and start gaining value.

It is not so much about saving money as it is about leveraging all your data to generate a competitive advantage and generate additional revenue. It provides data scientists with the means to build things that will advance the business.

What are the steps in adopting a data management platform?

Kolinek: Begin with the initial analysis. Focus on the biggest issues the company wants to tackle and select the platform modules to address them. Defining goals is key at this stage. What KPIs do you want to target? What level of ID do you want to achieve? These are questions you need to ask.

Next, you need a champion to advance execution and identify the main stakeholders who could drive the initiative. That requires extensive communications among different stakeholders, so it is vital to have someone focused on educating others about the benefits and helping teams onboard the system. Then comes the implementation phase where you address the key issues identified in the analysis, followed by rollout.

Finally, think about the next set of issues that need to be addressed, and if needed, enable additional modules in the platform to achieve those goals. The worst thing to do is purchase a tool and provide it, but offer no service, education, or support. This will ensure that adoption will be low. Education, support, and service are very important for the adoption phase.

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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