[JackSpratts]

The Media

Your Daily Paper, Courtesy of a Sponsor
Jacques Steinberg and Tom Torok

Marie Kurth does not subscribe to The Denver Post, but that did not stop the paper from being tossed haphazardly in front of her century-old red-brick home each Sunday beginning in October.

"It was everywhere. It was on the walk, it was on the public walk, in the yard, and that I don't care for," said Ms. Kurth, who is 81 and lives in northwest Denver.

After six weeks of unwelcome deliveries, Ms. Kurth said, she called the Denver Newspaper Agency, which manages The Post and The Rocky Mountain News, to put a stop to the papers.

Ms. Kurth's experience is hardly unique. On an average Sunday, more than 100,000 copies of The Post - more than 1 of every 8 printed - are delivered to homes in Colorado that did not request or pay for them.

Across the country each week, more than 1.6 million people who are not on newspaper subscriber rolls are being delivered copies that did not cost them a cent - but they are still being classified as paying customers, an analysis by The New York Times has found. The papers, which are typically paid for by advertisers, are delivered by small and large dailies across the country, including The Miami Herald, The Wall Street Journal, The San Jose Mercury News and The Boston Globe.

The unsolicited deliveries were made possible by rule changes the newspaper industry approved three years ago. The new rules allowed so-called third-party sales - which the industry once shunned - to be counted as part of a newspaper's total circulation. Without them, many newspapers would be losing circulation at a far higher rate. In the industry as a whole, circulation has been falling for a decade or more.

Maintaining the appearance of healthy circulation has been critical to newspapers at a time when the industry is losing advertisers to other media, like the Web and television. Because paid circulation determines in large part what publishers can charge for advertising - the lifeblood of an estimated $58 billion industry - any deep sustained losses threaten to erode the already shaken confidence of marketers and investors.

To determine just how much third-party sales contribute to newspaper circulation, The Times analyzed circulation data that 669 newspapers provided to the Audit Bureau of Circulations, a nonprofit oversight body operated by publishers and advertisers. To gauge circulation on the day when it is typically highest, The Times analyzed figures for Sundays, but also included weekday figures for two major papers that do not publish on the weekends - USA Today, which is owned by The Gannett Company, and The Wall Street Journal, owned by Dow Jones & Company.

The Times's analysis found that the combined average paid circulation for all those papers for the six- month period that ended March 2004 fell by fewer than 125,000 copies a day, or 0.2 percent, compared with the six-month reporting period that ended March 2002. But had third-party sales been excluded from those figures, as they were before 2001, the average paid circulation of those papers would have fallen 986,000, nearly 2 percent, over the two-year period, to 55,443,650. (The drop would have been even steeper had The Times's tally also excluded "newspaper in education" programs. Those programs seek to build readership among the young and are often paid for by third parties; for the most part, results in that category have long been counted under audit bureau rules.)

In recent months, advertisers and some newspaper analysts have been critical of the industry's increasing reliance on papers paid for by others - regardless of whether the practice is blessed by audit bureau rules.

"When we know there is someone reaching in their pocket and paying for a newspaper, we feel there is a greater likelihood they're going to read that newspaper and thus be exposed to our advertising," said Matthew Spahn, director for media planning at Sears, which spends more than $200 million a year on newspaper advertising. "When they haven't reached in their pocket, the concern is, 'Are they going to read it?' "

"Suddenly, we start to lose the visibility to who we're talking to," he said. "That's what worries me."

The increased scrutiny of circulation practices has come after the acknowledgment by four daily papers - Newsday and the Spanish-language daily Hoy, which are properties of The Tribune Company; The Chicago Sun-Times, a unit of Hollinger International; and The Dallas Morning News, which is owned by the Belo Corporation - that they violated audit bureau rules by routinely overstating their circulation figures by tens of thousands of copies a day. (The four papers were not included in The Times's analysis.)

The overstatements of the four papers did not for the most part involve third-party programs. Instead, those papers have acknowledged attempts to deceive advertisers. In the case of The Sun-Times, for example, the efforts included paying some distributors not to return some unsold copies and creating a charitable foundation to buy papers to distribute to schools. Nonetheless, some other newspapers have taken aggressive steps to ensure that their circulation figures, while allowed by the rules, can withstand a higher level of scrutiny.

Papers including The Los Angeles Times, which is also owned by Tribune, have recently pledged to limit third-party circulation. And publishers and advertisers agreed at the annual audit bureau conference in November to explore tightening one aspect of the rules on sponsored copies. Yet as a whole, the industry is committed to finding ways to expand the distribution of such papers.

"Publishers are accepting free publications as credible because of the demand they see from the public," said John P. Murray, vice president for circulation marketing at the Newspaper Association of America, the industry trade group.

The uninvited papers are not just landing in driveways from Chico, Calif., to Providence, R.I. Many are being distributed in unlikely venues like the cardiac care ward at a hospital outside Roanoke, Va.

Early on a recent morning at the Lewis-Gale Medical Center in Salem, Va., for example, a newsboy's cry of "Get your newspaper!" - in this case, uttered by a 65-year-old hospital volunteer - echoed down the corridors, as Ben McCoy delivered free copies of The Roanoke Times to patients. The papers contained $5 coupons redeemable at the pharmacy at a Kroger grocery store, which had paid cash for them, according to the newspaper's executives.

While some papers were left at the foots of beds of people too ill to respond, others were snapped up by patients like Thomas DeBusk Jr., 80, whose bright white hair and deep tan belied the fact that he had been in the hospital three times over the last few months for heart problems.

"I check the obituaries each morning to see if I'm in there," Mr. DeBusk said.

The morning treat for these patients came about because of a compromise struck in 2001 between newspaper publishers and advertisers on the audit bureau board. The newspaper companies won the right to expand the definition of what constitutes a "paid" paper. In exchange, they agreed to a demand by advertisers that circulation statements provide a breakdown of circulation in the third-party category.

William Dean Singleton, vice chairman and chief executive of MediaNews Group, which owns more than four dozen daily papers and a 50 percent stake in the agency that helps manage The Denver Post, said he had only reluctantly supported the compromise, but he has since emerged as one of the most aggressive practitioners.

"Once this became the rule," Mr. Singleton said, "we took the position, 'Hey, it's the rule and we're going to use it.' "

According to figures submitted to the audit bureau by the Denver Newspaper Agency (Mr. Singleton is chairman of the agency), the Sunday circulation of The Post would have fallen about 12 percent, or more than 90,500 copies, from 2002 to 2004, had the publisher not been able to include free papers delivered to homes. When those copies were included, the paper's circulation fell by fewer than 12,000 copies, or less than 2 percent, to 783,274.

To advertisers like Mr. Spahn who worry whether such sales may be overused, Mr. Singleton has a ready retort: any advertiser can learn of the paper's use of third-party sales by reading the first page of a publisher's statement filed to the audit bureau.

MediaNews is hardly alone in its use of such programs.

Among the biggest gains in third-party paid circulation were those recorded over the last two years at The Boston Globe, which is owned by The New York Times Company.

The number of papers delivered on an average Sunday by The Globe in that category rose to 30,220, or 4.4 percent of its circulation in 2004, from 916, or 0.1 percent, in 2002, according to The Times's analysis. Nearly all were delivered to people's homes. Even with the inclusion of those copies, the paper's overall Sunday circulation still fell, to 687,000 earlier this year from 705,000 in 2002.

Alfred S. Larkin Jr., a senior vice president of The Globe, said in a statement that while such sales represented "a small percentage of our total distribution," they nonetheless constituted "an effective way for advertisers to reach new customers and for us to build future readers."

(At The Times, sponsored copies represented less than 1 percent of paid circulation on Sundays earlier last year. During the week, copies distributed to elementary and secondary schools, many of them paid by the institutions or by foundations and allowed under the old rules, represented 4.6 percent of the paper's circulation.)

At Knight Ridder, three major papers that posted modest gains in circulation in the spring of 2004 as compared with the spring of 2002 - The San Jose Mercury News, The Miami Herald and The Philadelphia Inquirer - would have registered sizable losses without the use of third-party sponsorship.

Polk Laffoon IV, the chain's vice president for corporate relations, said the rule change coincided with an internal push to increase overall circulation of its biggest papers, no matter the category.

"Even if we could only grow it a little, or at least hold it steady, at least by making the effort to grow circulation we would not experience the glacial loss that had been occurring in prior years," he said. Some financial analysts, however, have begun to question the value of such growth.

"If you just look at circulation as being flat to down slightly, I think that understates the struggle newspapers are having with circulation," said Paul Ginocchio, senior publishing analyst at Deutsche Bank, who has issued two reports last year under the heading "Circulation Uncensored."

At best, advertisers and newspaper companies say, such programs enable an advertiser to sponsor and promote the distribution of copies to tens of thousands of people who might not otherwise get a paper.

For example, American Furniture Warehouse, which has nine stores in the Denver area, sponsored the delivery last year of 30,000 papers - in eight-week subscriptions - to homes concentrated near a new store.

"Even if 10 percent of the people who get that paper look at the paper, it benefits you," said Andrew Zuppa, marketing director for the chain.

But Mr. Zuppa said the company had agreed to pay for those papers only after the newspaper had raised the subject. Under audit bureau rules, advertisers who sponsor such copies must pay at least 25 percent of the regular price, or provide goods and services of an equivalent value.

But how the costs are allocated can be difficult to retrace, in part because ad rates can vary depending in part on how much an individual company spends. While the Denver Newspaper Agency described this particular sale as "a cash transaction," Mr. Zuppa said that description was "not exactly accurate."

Regardless, Mr. Zuppa said the cost of the papers represented a "very small component" of the more than $1 million the company spent in The Post and The News this past year. "You spend a large amount of money, you ask for things, you get them," he said. "They want to do some things, it's in the mix, it's fine."

Increasingly, media buyers have been demanding they be given the option to withhold inserts from free papers to lower their spending.

"Third-party distribution is not targeted at the most attractive advertising prospect," said Bob Shamberg, chief executive of Newspaper Services of America, which placed $1.7 billion in ads in newspapers over the last year on behalf of Home Depot, Sears and BMW, among others. "It is in effect targeted at where the newspaper can generate distribution." But some advertisers, like small businesses, have neither the power to set their own terms nor the savvy to know how many papers are distributed on a given Sunday.

Mike Wuestner, manager of White Fence Farm, a restaurant and gift shop west of Denver that placed full-color ads in The Denver Post in recent months, said he was surprised to learn how much of the paper's circulation was paid for by others.

"You think you're reaching 800,000 people requesting the paper," he said. "Actually, 100,000 are not requesting it.

"How many of those people are even looking at it?"
http://www.nytimes.com/2005/01/10/bu...aper.html?8dpc

For additional information and an in-depth look at present circulation issues at the Washington Post, please visit the December 11th issue of this magazine. – Jack.


Report: Craigslist Costing Newspapers Millions
Steven Musil

Free community Web site Craigslist has cost San Francisco Bay Area newspapers up to $65 million in employment advertising revenue, according to a report released Monday.

Craigslist, which generates more than 1 billion page-views each month, also has cost the newspapers millions more in merchandise and real estate advertising, and has damaged other traditional classified advertising businesses, according to a report published by Classified Intelligence.

"Craigslist has created an extremely important and valuable marketplace, and perfectly illustrates the changing nature of the classified advertising industry," Peter M. Zollman, founding principal of Classified Intelligence, said in a statement.

Craigslist, launched in 1995, is a bare-bones classifieds site for people looking for almost anything, such as apartments, dates or baseball tickets, in 45 cities. The site has since created a flourishing network of online buyers and sellers while maintaining a simple look and feel free from banner ads.

Local search advertising revenue is expected to reach $502 million in 2004, up from $408 million last year, according to market researcher Jupiter Research. That number is expected to hit $824 million by 2008.

Classified advertising represents a $28 billion to $30 billion business in the United States, including $16 billion in daily newspapers, and an estimated $100 billion business internationally.

Online auction giant eBay took a 25 percent stake in Craigslist in August. eBay also announced recently that it would buy online apartment rental service Rent.com for $415 million.
http://news.com.com/Report+Craigslis...3-5505076.html


Conservative TV Host Says U.S. Paid Him to Back Policy On Air
David D. Kirkpatrick

Armstrong Williams, a prominent conservative commentator who was a protégé of Senator Strom Thurmond and Justice Clarence Thomas of the Supreme Court, acknowledged yesterday that he was paid $240,000 by the Department of Education to promote its initiatives on his syndicated television program and to other African-Americans in the news media.

The disclosure of the payment set off a storm of criticism from Democrats over the Bush administration's spending to promote its policies to the public. According to a copy of the contract provided by the department yesterday, Mr. Williams, who also runs a small public relations firm and until yesterday wrote a syndicated newspaper column, was required to broadcast two one-minute advertisements in which Education Secretary Rod Paige extolled the merits of its national standards program, No Child Left Behind.

But the arrangement, which started in late 2003 and was first reported yesterday by USA Today, also stipulated that a public relations firm hired by the department would "arrange for Mr. Williams to regularly comment on N.C.L.B. during the course of his broadcasts," that "Secretary Paige and other department officials shall have the option of appearing from time to time as studio guests," and that "Mr. Williams shall utilize his long-term working relationships with 'America's Black Forum' " - an African-American news program - "to encourage the producers to periodically address the No Child Left Behind Act."

Mr. Williams, 45, apologized yesterday for blurring his roles as an independent commentator and a paid promoter. "This is a great lesson to me," he told Paul Begala of CNN, who himself has an off-air job as a paid Democratic political consultant but discloses both roles.

Mr. Williams declined to blame the department for his woes. "I can easily sit here and criticize the administration," he said. "But I got my own problems today, and that is what I am trying to deal with."

The disclosure about the arrangement coincides with a decision by the Government Accountability Office that the administration had violated a law against unauthorized federal propaganda by distributing television news segments that promoted drug enforcement policies without identifying their origin. More than 300 news programs reaching more than 22 million households broadcast the segments. The accountability office made a similar ruling in May about news segments promoting Medicare policies, and the Drug Enforcement Agency stopped distributing the segments then.

In a statement, the Department of Education said yesterday that the deal was an appropriate part of its efforts to explain its policy to "minority parents." The statement said: "The contract paid to provide the straightforward distribution of information about the department's mission and N.C.L.B. - a permissible use of taxpayer funds."

John Gibbons, a spokesman for the department, said Mr. Williams was the only broadcaster or journalist paid to promote the policy. Mr. Williams and department officials said the department's payments to its public relations contractor, Ketchum, ran to $1 million.

House Democrats including the minority leader, Nancy Pelosi, and Representative George Miller, senior minority member of the Education and Workforce Committee, both of California, released a letter to the president suggesting "a deliberate pattern of behavior by your administration to deceive the public and the media in an effort to further your policy objectives" and urging disclosure of "all past and ongoing efforts to engage in covert propaganda."

Questioned about the arrangement, Scott McClellan, a spokesman for the president, referred reporters to the Department of Education.

In an interview, Mr. Miller called the release of the news segments and the payments to Mr. Williams part of "a very dangerous practice that deceives the public" by concealing the role of taxpayer dollars in promoting partisan policies. "Are they funding propaganda?" he asked. "Are they funding money to their friends?"

But public relations executives said that the government distribution of prepared news segments without on-air disclosures of their origin was a bipartisan practice that predated the Bush administration.

"The Clinton administration was probably even more active than the Bush administration" in distributing news segments promoting its policies, said Laurence Moskowitz, chairman and chief executive of Medialink, a major producer of promotional news segments. After the Government Accountability Office decision last spring, he said, his firm began advising government clients to disclose each tape's nature in its script.

The arrangement with Mr. Williams "is stupid, it is unseemly, and it is tacky," said Jonah Goldberg, a contributing editor at the conservative National Review.

The National Association of Black Journalists criticized the administration and Mr. Williams alike yesterday, calling on newspapers that use his column and television stations that use his commentary to "drop him immediately."

"I thought we in the media were supposed to be watchdogs, not lapdogs," Bryan Monroe, an official of the black journalists' group and an assistant vice president at Knight Ridder, said in the statement.

In an interview, Mr. Williams said his mistake was thinking like a businessman, without worrying enough about journalistic ethics. He began his career in politics as an aide to Mr. Thurmond of South Carolina. He entered the media business, he said, only after he became known for publicly defending Justice Thomas, his former boss at the Equal Employment Opportunity Commission, during his stormy confirmation hearings.

After that, he said, he continued to operate a small public relations firm, Graham Williams, with his business partner Stedman Graham, who eventually became known as the partner of Oprah Winfrey and left the business. Aside from the Department of Education, Mr. Williams said, his clients were all private businesses. With about five employees, he said, his company's revenue runs to about $300,000 a year at most, and last year ended in a loss.

But then he also began writing his newspaper column, syndicated by Tribune Media Services, which dropped him yesterday. He said about 50 papers ran the column. He also began broadcasting a syndicated conservative talk radio show that eventually faded away. And more recently he began a syndicated conservative television show, "The Right Side," and another series for a fledgling African-American cable channel, TV One.

Mr. Armstrong said his news show ran on cable channels including Dr. Jerry Falwell's Liberty Television, Sky Angel television, the Christian Television Network and a handful of local stations. Yesterday, Mr. Williams was counting the lessons learned. "I have realized, you know what? I am part of this media elite club, and I have to be more responsible."
http://www.nytimes.com/2005/01/08/na...education.html


Porn Business Driving DVD Technology
Ben Berkowitz

As goes pornography, so goes technology. The concept may seem odd, but history has proven the adult entertainment industry to be one of the key drivers of any new technology in home entertainment. Pornography customers have been some of the first to buy home video machines, DVD players and subscribe to high-speed Internet.

One of the next big issues in which pornographers could play a deciding role is the future of high-definition DVDs.

The multi-billion-dollar industry releases about 11,000 titles on DVD each year, giving it tremendous power to sway the battle between two groups of studios and technology companies competing to set standards for the next generation.

"It's sort of like the buzz around the campfire," said Peter Warren, DVD editor at industry bible Adult Video News.

One side of the divide is a standard called Blu-ray backed by consumer electronics heavyweights like Sony Corp. (6758.T: Quote, Profile, Research) , Philips Electronics (PHG.AS: Quote, Profile, Research) and Thomson (TMS.PA: Quote, Profile, Research) and movie studios Fox and Disney. Blu-ray offers storage up to 50 gigabytes, enough for nine hours of high-definition content.

On the other side of the fight is HD-DVD, which has much the same structure as current DVDs and, backers say, is cheaper and easier to manufacture as a result. Supporters of the disc format and its 30 gigabyte capacity include companies like NEC (6701.T: Quote, Profile, Research) , Toshiba Corp. (6502.T: Quote, Profile, Research) and Warner Home Video.

Adult film producers want the higher quality picture as well as extra space for creative expression -- like giving viewers choice of camera angles.

Pornographers weighed in on the coming battle last week at the industry's Adult Entertainment Expo, which ran parallel with the largest U.S. technology fair, the Consumer Electronics Show, and had many of the same technologies -- sometimes a generation ahead.

Sentiment about the format rivalry varies, depending largely on the size of porn producer.

Smaller outfits seem to prefer HD-DVD for its lower cost, while larger outfits tend toward Blu-ray for the capacity.

"We're kind of riding it out a little further to see where the trend goes," said Jackie Ramos, an executive in the DVD division at leading porn producer Wicked Pictures. But if he had to choose, Ramos said, "Blu-ray technology sounds pretty attractive."

Paul Hesky, chief operating officer of Multimedia Pictures Inc., one of the smaller groups, disagreed.

"Most of the DVD manufacturers in my business do not want the Blu-ray format because it requires new capital investment," he said, adding, "I know for sure one format or the other will be out (on the market) by this time next year."

Others say they want to see what consumers prefer.

Adult Video News's Warren said HD-DVD production would be a "fraction of a fraction of the price" of Blu-ray, but that the latter format could not be dismissed.

"Blu-ray is going to be very expensive for anyone to do but it is going to be a player," he said.

Blu-ray supporters, however, argue that the increased costs of its processes are negligible.

Hollywood has begun lining up on both sides of the battle as they have watched the growth of DVDs slow. They will want a new standard in place soon, to accelerate again.

Many are watching the porn industry to see what happens.

"That whole business has driven technology adoption of several platforms," said one major studio executive. "A better, more intense experience is a good thing for porn."
http://www.reuters.com/newsArticle.j...toryID=7280938


Murdoch Buys Rest of Fox Shares in $6 Billion Deal
Andrew Ross Sorkin and Geraldine Fabrikant

Rupert Murdoch, consolidating his global media empire in the United States, will buy out the shareholders of his Fox properties for about $6 billion, executives of his company, the News Corporation, announced this morning.

The deal would solidify Mr. Murdoch's control over some of the nation's most valuable media assets like the Fox broadcast network and the DirecTV satellite service and help simplify the complicated structure of the News Corporation, whose far-flung operations include newspapers, television, film and satellite assets around the globe.

It also puts Mr. Murdoch in a better position to leverage his full ownership of the Fox Entertainment Group for future deals.

News Corporation executives announced that holders of Fox Class A stock will receive 1.9 News Corporation shares for every share exchanged. The company's chief financial officer, David DeVoe, valued the offer at $33.54 - a 7.4 percent premium over Friday's closing price of Fox shares, which was $31.22.

Fox stock traded higher this morning, opening at $34.18.

The transaction, which the board of News Corporation approvedSunday night, would also make Mr. Murdoch's company an even more formidable media power in the United States. Mr. Murdoch, who gave up his Australian citizenship 19 years ago to become a United States citizen, recently reincorporated News Corporation in the United States and shifted its primary stock listing to the New York Stock Exchange from the Australian exchange.

"The move underscores the simplification process: Mr. Murdoch's drive to make News Corporation a simpler and more shareholder-friendly U.S. company," said Mario Gabelli, chief investment officer of Gabelli Asset Management, whose fund owns shares of both News Corporation and Fox Entertainment.

In a conference call with stock analysts this morning, Mr. DeVoe cited that desire for consolidation as the prime motive behind the announcement, which he called "a milestone in the simplification of the News Corporation's capital structure."

He said the decision to spin Fox Entertainment off as a separate stock had been a way to tap into the United States investment market while News Corporation was incorporated overseas. Now that the News Corporation itself was listed here, that logic no longer applied, he said.

Mr. DeVoe said the consolidation would also allow for about $3 million to $7 million in savings from reducing expenses associated with the filings required for public companies.

The move to bring Fox Entertainment back inside the fold of News Corporation also gives Mr. Murdoch more flexibility to wield his deal-making muscle in the United States, where he used to have to rely on the often faltering stock price of his Fox subsidiary as leverage for deals.

"This makes it easier for News Corp. to do deals. It simplifies the structure and gives it full control over the deal making process," said Harold L. Vogel, an entertainment analyst.

The timing of the transaction raises questions about the status of Mr. Murdoch's feud with John C. Malone, the chairman of Liberty Media, who raised his company's investment in the News Corporation to 17 percent in November behind the back of Mr. Murdoch, who owns a 30 percent voting stake.

Only a week later, News Corporation introduced a plan to thwart would-be hostile bidders and keep Mr. Murdoch in control of the company, which he plans to turn over to his sons: Lachlan, now deputy chief operating officer, and James, chief executive of British Sky Broadcasting, Mr. Murdoch's satellite TV company in Britain.

"The timing is confusing because we had expected Mr. Murdoch to complete a transaction with Mr. Malone before buying in Fox," said Richard Greenfield, a media analyst at Fulcrum Global Partners.

Mr. DeVoe denied today that the move was related to any possible deal with Liberty.

Several analysts today questioned the price offered to Fox shareholders, which they said appeared low. Mr. DeVoe defended the price, saying that the closing price on Friday represented the stock's 52-week high. The News Corporation offer represents a 16.9 percent premium in comparison to Fox's six-month average, he said.
http://www.nytimes.com/2005/01/10/bu...n er=homepage


Case Accepts Blame For AOL-Time Warner Debacle
Jim Hu

Steve Case is not ashamed of taking the fall for the merger of America Online and Time Warner, perhaps one of the greatest failed deals in corporate history.

Two days after the fifth anniversary of the deal, a visibly graying Case, former chairman of what was then AOL Time Warner, provided a candid perspective into the factors that prompted the merger and some of the general reasons it failed. You can blame it on the billions of dollars in market value evaporating during the bust, or management's stubbornness in promising more than it could deliver, or doing all the wrong things at the wrong time.

From Case's view, the blame starts with him.

"In retrospect, I probably wasn't the right guy to be the chairman of a company with 90,000 employees," Case said during an event at the Computer History Museum. "In retrospect, none of us were the right guys."

Indeed, for Case and Gerald Levin, then-CEO of Time Warner, the architects of the deal, grand visions of an Internet- charged media behemoth faded into the bland realities of turf wars and cutthroat politics. Case learned Time Warner's notorious culture of fiefdoms the hard way, as multibillion-dollar businesses bristled at the idea of working with their new AOL masters.

Case added that much of the merger's failed vision stemmed from a failure in "timing and execution." When the stock market began to collapse in 2000, the ripple effect did not reach AOL Time Warner (the company has since dropped the "AOL") until late 2001. After an embarrassing retraction of its financial forecast and a toppling stock price, Levin was shown the door, Chief Operating Officer Bob Pittman was ousted, and Case resigned as chairman in January 2003.

"For some reason--some was cultural, some was the stock going down--people got mad," he said. "The merger was my idea. If you wanted to be mad at somebody, I was the one to be mad at."

Still, Case's reasoning for the deal made sense: AOL needed Time Warner for its cable division.

While AOL was the undisputed champion of dial-up Internet access when the deal was inked in 2000, the greater threat posed by broadband loomed in the distance. Cable companies and local phone giants were the main purveyors of high-speed Internet access, leaving outside players such as AOL unable to upgrade its customers while keeping its access business profitable.

Now in 2005, AOL has watched its dial-up subscriber base plummet by nearly 4 million since 2002. Most of these customers left for broadband services provided by their cable or phone company, and Time Warner Cable decided to stick with its own Road Runner ISP rather than market AOL.

Time Warner "provided an unparalleled array of assets for AOL to transition to broadband," he said.

Out of the spotlight for two years and counting, Case has set his sights in other pastures. While still a member of Time Warner's board of directors, Case said he's turning his back on tech and the Internet for now, and focusing on new ventures. He's interested in health care, especially preventative medicine and wellness, and is dabbling in real estate. He's working on philanthropic issues and spending a lot of time in Hawaii where he grew up.

Case wants to continue investing his time and money in "disruptive" businesses, but he remained mum on his plans.

"I don't particularly miss it," he said about the technology business. "I feel live I've been there, done that and I'm interested in new things."
http://news.com.com/Case+accepts+bla...3-5534519.html

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For Wireless, the Beginnings of a Breakout
Seth Schiesel

EVER since cellphones rang their way into the American mainstream in the late 1990's, consumers have heard snippets about a technology called 3G, so-called third- generation wireless systems that are supposed to do everything short of mix the perfect martini.

As with Bigfoot and the Loch Ness monster, the intermittent sightings of 3G have made it difficult to cull the reality from the hype. Since at least 1997, wireless carriers and manufacturers have generally delivered the same song and dance: a test demonstration here, perhaps a disappointing service there, and promises always capped by the same refrain: "Next year."

Finally, next year is now.

The services are far from perfect and some of the coverage is spotty, but the nation's major wireless carriers are beginning to offer practical high-speed data services that may redefine just what a phone is capable of.

For consumers, that means video clips on demand, television, streaming music, satellite navigation and high-quality games, as well as the ability to record and send short movies. For business users, that means high-speed Internet access from a phone or a laptop without looking around for a Wi-Fi hot spot.

For now, the leader in offering true 3G services is Verizon Wireless. The company has been building its new network for years, and announced last week that it would begin selling consumer services on that network on Feb. 1 in more than 30 metropolitan areas covering more than 70 million people. But other major carriers are building 3G networks as well, or enhancing second-generation networks in innovative ways. And new handsets are being introduced that can handle the new services.

"After years of hype and promises, the wireless industry is finally getting to the point where using these advanced services is a pleasurable experience rather than a horror show," said Roger Entner, director for wireless services at the Yankee Group, a technology research firm in Boston. "They are putting together the right networks and the right devices with the right services to make these applications attractive to consumers."

So what does 3G really mean? In one sense it is merely another bit of technospeak. In the late 1990's and the early part of this decade an inferiority complex swept the American wireless industry, which felt that European and Japanese carriers were far ahead of them in deploying advanced networks, which came to be called 3G.

As Michael K. Powell, chairman of the Federal Communications Commission, said while touring the floor of the Consumer Electronics Show last week in Las Vegas: "I'm tired of calling it 3G. To me, 3G stood for a particular European iteration. We should be focusing instead on the actual services available to consumers, not labels."

The fears of inferiority were largely unfounded. Those new, advanced services overseas largely turned out to be text messaging and downloadable ring tones, services that United States carriers have been able to offer over their second-generation networks for a few years now. (Some people in the industry refer to those networks as 2.5G, further clouding the hazy terminology that began with cellular's first generation in the 1980's.)

As many consumers now understand, there are two major competing cellphone technologies: the global system for mobile, or GSM, and code division multiple access, or CDMA. Cingular (which recently acquired AT&T Wireless) and T-Mobile use GSM. Verizon Wireless and Sprint use CDMA. (Nextel uses what amounts to its own proprietary system, developed with Motorola.)

Each of the major standards, GSM and CDMA, has its own set of technical tiers that allows the network to transmit larger amounts of data. For GSM carriers, the current second-generation data service is known as Edge. The CDMA counterpart is known as 1xRTT.

Cingular, Sprint and Verizon cover most of the country with their second-generation networks, and T-Mobile is working to expand its own Edge system. These technologies, whether GSM- or CDMA-based, can deliver data roughly two or three times as fast as a standard 56-kilobit dial-up modem, and are what have allowed the carriers to offer the new services of the past few years, like downloadable ring tones, text and rudimentary picture messaging and downloadable games of middling quality.

Now, carriers are beginning to squeeze more and better services out of their second-generation networks while also beginning to deploy the vaunted third-generation systems.

While second-generation networks might deliver about 150 kilobits of data per second, Verizon's new system, which uses a third-generation CDMA add-on called EV- DO, delivers 300 kilobits or more of digital information. Users will have to purchase a new handset that is EV-DO compatible, but then they will be able to pay $15 a month for a new service called VCAST, which will include more than 300 daily video clips from channels and shows like CNN, NBC, ESPN and "Sesame Street." The new network also supports other services, like high-resolution games, that will be priced individually.

For business customers who may not be interested in Bert and Ernie's latest shenanigans, the attraction is in "smart" phones that include a personal digital assistant and in laptop cards that function like Wi-Fi cards but without the need for a hot spot; instead, the card communicates with the cellular network just like a phone. When the user travels beyond the area where 3G service is available, the card kicks down to a lower speed supported by the second-generation system.

By the end of this year, Verizon hopes to offer its 3G services in areas that include about half of the country's population.

"The introduction of broadband to the wireless consumer is no less important than the arrival of broadband in the wired Internet world; we will have hundreds of video updates available every single day," John Stratton, Verizon Wireless's chief marketing officer, said.

"For the business customer, especially the laptop guy, it's all about speed and ubiquity," Mr. Stratton added. "I think this really puts a hurt on the entire Wi-Fi concept for the business user."

But while Verizon has the glitziest new system, other carriers are squeezing interesting services out of their existing second-generation networks. Nextel, for instance, is focusing on helping business customers tie their wireless handsets into their corporate applications and is also offering innovative Global Positioning System satellite navigation services from within a standard-size Motorola handset.

Cingular, meanwhile, is building out its third-generation system, called UMTS, for universal mobile telecommunications system, and seems to be keeping many of its major new services under wraps until that network becomes available in most big cities next year. Like Verizon, Cingular is also marketing wireless data cards to business users that circumvent traditional Wi-Fi hot spots.

Some of the most impressive achievements are coming from Sprint. The company is not expected to unveil details about its EV-DO network until later this year, but it is managing to deliver nonstop streaming music (think of the cellphone as commercial-free radio) and good-quality video clips over its second-generation system. Since August, Sprint has allowed users to tune in to a variety of television channels, including the Discovery Channel and CNBC. The video frame rates on the TV channels are slow, but the audio is generally smooth.

"What Sprint has done is technically perhaps even more difficult than what Verizon is doing," said Mr. Entner of the Yankee Group. "It's like a Nascar race where one of the cars is actually a Volkswagen Beetle under the hood; it's an amazing accomplishment. That said, they are being run down by a real muscle car in Verizon."

John C. Burris, Sprint's director for wireless data services, pointed out that in years past carriers and manufacturers focused on trying to shoehorn a PC into a phone, rather than developing applications that respect the hand-held device on its own merits. It is that shift in emphasis, Mr. Burris predicted, that will continue to drive the emergence of advanced wireless services.

"One of the things everyone was talking about a few years ago was, 'Ooh, you'll be able to browse the Web on your phone,' " he said. "But that scenario didn't really work for a lot of people because you had to click and wait, and on the small screen it wasn't really ideal.

"Instead of clicking and waiting and then reading a story about, say, the tsunami, now you can just click and you're running a video clip from CNN with full-motion video. That's the kind of approach that we think will really appeal to people and that will continue to evolve."
http://www.nytimes.com/2005/01/13/te...ts/13cell.html


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Comcast To Offer Web-Based Phone Service
AP

Comcast Corp., the nation's largest cable television company, plans to challenge local phone companies by offering Internet-based phone service in 20 markets this year, company officials said.

The Philadelphia-based company plans to offer its Digital Voice technology to all of its markets by 2006. Company officials said they expect to be serving about 20 percent of phone customers in those markets within five years.

"Our initial focus is on getting it right and successfully introducing the service," Comcast chief executive officer Brian Roberts said. "We've already worked out the kinks, and are going to take a very patient approach."

The service costs $39.95 a month for existing Comcast broadband customers for unlimited local and domestic calls. It also includes caller ID, voice mail and call waiting.

Rian J. Wren, the general manager of Comcast Voice Services, said he expects Digital Voice to make a profit within two years.

Some competitors are offering similar services at cheaper prices. For example, Edison, N.J.-based Vonage Holdings Co. is offering unlimited local and domestic long-distance calls for $24.99 a month, or $14.95 for 500 minutes of calls per month.

And traditional phone company Verizon Communications Inc. offered a service called Voice Wing in the Philadelphia area for $34.95 a month, with a discount of $10 a month for one year to customers who currently use its DSL service for high-speed Internet connections via phone lines.

Wren acknowledged that his company will have significant competition, but noted that Comcast is offering some features that its competitors aren't. For example, Verizon and Vonage don't promise that the phone service will work during a power failure, but Comcast provides a 16-hour battery backup.
http://www.mercurynews.com/mld/mercu...0608188.htm?1c


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Speed Traps
Wendy M. Grossman

A FRIEND of mine was complaining recently about the speed traps in her US state and their essential unfairness.

"But," I said eventually, "couldn't people avoid getting the tickets by, you know, not speeding?"

Yes, she agreed, they could. But – and she went into a catalogue of unfair practices. Sudden drops in the speed limit in unexpected and illogical locations, with the signs barely visible. Irrational speed limits. Towns that derived most of their revenues from speeding tickets and the court costs her state requires convicted motorists to pay. Unethical stuff that goes way beyond the usual understanding of a speed trap as a police car lying in hiding behind a big, ol' flyover bridge.

So I guess it's harder not to speed than I thought.

I was reminded of this conversation when I read the stories about the Trojans hidden in Windows Media Player files, along with a few alleging that the Trojans might be the work of anti-piracy company Overpeer. Why Overpeer? Articles like this one claim that the company is responsible for seeding the P2P networks with spoofed files to frustrate would-be downloaders in search of copyrighted content. The company's own Web site is, to say the least, uncommunicative about any details of what its products do.

One of the madder legislative proposals of the last few years was to allow righstholders (hey! that's all of us!) to hack into networks looking for unauthorized copies. Well, OK, this is why people call them "Congresscritters": money talks and legislation wanders down a horn behind it. (Mondegreen: "God moves in mysterious ways/He wanders down a horn"). We all knew it was wrong.

Just as we all know there's something damn well wrong with putting Trojans in DRM-wrapped video or music files, whoever does it, so that when they go online, ostensibly to check their licenses are valid, they instead surreptitiously download and install spyware, adware, or some other kind of nastyware. Though I'm grateful this vulnerability has emerged while DRM is still young, before too many people have gotten into the habit of using it. So among the more emotionally charged objections to DRM – it interferes with fair use rights, it hands over way too much control to rightsowners and software developers at the expense of the public – there is a serious, important practical objection. It can be dangerous in terms of security. Just the way the fake danger trumpeted in text-only hoax virus messages became a real one when email software began decoding attachments automatically, today's DRM design vulnerability has allowed what have been safe files to be turned into potentially dangerous ones.

"But," I hear you cry, "couldn't you avoid all this by just not downloading files from peer-to-peer networks?" Not really. P2P networks generally don't specialize in distributed DRM-wrapped files but open ones. Some P2P networks make available hashes so you can check the integrity of the file you're downloading. There are, as they say, ways. In a world where P2P networks are awash in fake files, for-pay services can use the claim that they provide better safety and reliability as a selling point, like driving on a toll road.

There is a legitimate public interest in ensuring that drivers proceed safely, and most people support speed limits and some level of enforcement thereof, even though probably every driver out there has gone above the limit sometime. There is similarly some acceptable level of police effort to catch speeders: few would oppose arresting someone going 200 miles an hour in a school zone. The line between the questionable behavior described above, or, many people feel, UK speed cameras and the reasonable stuff, such as watching danger spots and stopping , isn't always easy to draw. But it probably goes somewhere around the the point where someone starts lying about what's a safe speed (by posting obviously unreasonable limits) solely to create the conditions for entrapping motorists.

Similarly, there is a legitimate public interest in allowing creators and artists – who these days are often *not* the rightsholders – a temporary monopoly on controlling and profiting from their work so they can afford to go on creating. There is, in my view, also a legitimate public interest in allowing access to those works; many net.wars columns have defended file-sharing. There are certainly behaviors few would argue should be legal: I have no hesitation in describing a commercial bootleg DVD operation as piracy, and would do the same for a commercial file-sharing network that charged consumers and refused to pay artists. I would not buy such a service.

If we grant, as the present system does, that third parties may buy or lease the artists' rights, then it follows that there must be some level of enforcement of those rights that's reasonable. We know today's lawsuits and harassment aren't it, and we know, with a reaction much like the "yuck factor" they talk about in setting public policy on such scientific advances as human cloning, that actions that would be unacceptable if they were performed by hackers instead of rightsholders also aren't it. If DRM adds a whole new level of vulnerability to today's computers and networks it will have to be scrapped as an enforcement method, just as you wouldn't put speed bumps in the middle of the interstate.
http://www.theinquirer.net/?article=20718


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Samsung Develops Eight-Die Multi-Chip Tech

Samsung's new multi-chip (MCP) offers a combined capacity of 3.2 gigabits in a package only 1.4mm thick, the company says, promising a new generation of cell phones and mobile devices that can offer more services and faster Internet surfing.

Samsung said the new MCP solution offered a combined capacity of 3.2 gigabits in a package only 1.4mm thick, promising a new generation of cell phones and mobile devices offering more services and faster Internet surfing.

"The new eight-chip MCP is an extremely compact, high-capacity solution that is likely to trigger development of new next-generation mobile applications," Samsung said in a statement.

"It will provide much greater functionality in cell phones and other smart mobile devices, from movie videos to games as well as faster Internet access."

Samsung said the new MCP offered all the memory chips available for mobile products in a single 11mm x 14mm x 1.4mm package.

Earlier today, Samsung said it will invest 603.8 bln won in a 13th memory chip production line to encourage broader use of 90-nano chip technology and support the development of next-generation 80-nano technology.
http://www.newsfactor.com/hardware/s...egory=hardware


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DVRs Forcing Ad Agencies Into Changing Their Messages
Judy Artunian

Now that digital video recorders are letting TV viewers zip past commercials, many in the advertising community can't help but wonder what will become of the traditional 30-second advertisements that long have been the cornerstone of TV ad campaigns.

The digital video recorders, or DVRs, operate much like VCRs sans the tape, with hard drives that store broadcasts and cable TV programs. The ability to record programs and easily find them to watch later has significantly changed the viewing habits of DVR owners, who spend only 41 percent of their TV time watching live broadcasts, according to a report release in September by Forrester Research in Cambridge, Mass.

DVRs can be found in about 7 percent of U.S. households, but that number could jump to more than 10 percent in the next year, said Zain Raj, chief marketing officer for advertising agency Euro RSCG Worldwide in Chicago.

"When the penetration gets beyond 10 [percent] to 11 percent, that's when we'll start getting enough critical mass where there will be a change in behavior. That's when we'll stop watching TV in a traditional manner," he said.

Forrester Research estimates that 41 percent of U.S. households will have a DVR by 2009. Nine out of 10 DVR owners report that they always or usually skip commercials when they watch programs recorded on their DVR, according to the results of recent survey by MPG, a New York.-based media-planning and buying group affiliated with Euro RSCG.

Meanwhile, TiVo, the Alviso, Calif.-based DVR service provider that popularized DVRs, reports that its subscribers tend to skip about 75 percent of commercials in programs they have recorded.

Despite these numbers and the prospect of services like digital video-on-demand and broadband video also diverting viewers' attention, TV is expected to remain a powerful medium for advertisers. But if large chunks of the TV audience ignore the 30-second commercial, many are beginning to worry that its days are numbered.

Some ad executives say that the 30-second ad will endure but will become just one element of a varied ad campaign.

"For TV in the future, ad campaigns will need to consist of 30s and a bunch of shorter and maybe longer-form ads," said Tim Hanlon, senior vice president/director for emerging contacts at Chicago-based Starcom MediaVest Group, a media services agency.

Advertising spots as brief as 15 seconds will run with short snippets of video that are offered by Comedy Central and other cable channels via video-on-demand services. Video-on-demand lets consumers view movies and TV programs stored on network servers at their own convenience.
Interactive ads under review

Ads as long as 3 minutes also could become more common. Raj describes them as similar to infomercials but with production values comparable to a high-quality short film. Although these ads won't necessarily be more costly to produce than their 30-second counterpart, they could cost more to air, especially if an advertiser wants to run them during prime time.

Such advertisers as BMW and Disney are producing longer-form ads specifically for DVR users who subscribe to TiVo. These productions, known as showcases, often are interactive. A recent 7-minute commercial for DisneyWorld, for example, included an invitation to consumers to request a free travel planner by clicking on their TiVo remote-control device.

"With interactivity, every ad essentially becomes a direct-response ad," said Kimber Sterling, TiVo's director of advertising and research sales

Sterling said the ads are purely opt-in, meaning that viewers can choose whether they want to view the commercial. Sterling said that 5 percent to 20 percent of the TiVo audience typically opts-in during a one-week campaign.

Viewers on a learning curve

And that could increase as TV viewers get more comfortable with interactive TV.

"Consumers are not used to using the remote for some of these actions on the TV," said Ann M. Mack, interactive editor at Adweek, an industry trade journal in New York.

Whether or not TV commercials are interactive, some advertising executives wonder if TV ads will need to dial back their entertainment quotient once DVRs become more commonplace.

"Right now, over half of the advertising run in this country is basically entertainment without any sales messages. When DVRs come in, that kind of advertising is going to die," said Raj. "Consumers zap things that have no value to them. They're not looking for entertainment in 30-second increments."

While advertisers tweak the form and content of their TV spots, they are also re-evaluating their media choices. Cable networks such as the Golf Channel and the Food Network may draw smaller ratings than broadcast TV networks, but marketers say they can be a better media buy for advertisers looking to reach niche markets.

"People are personalizing how they watch TV. That gives us a gigantic opportunity. Instead of generic messages across 100 different channels, we can create messages that are more relevant to a particular channel," said Hanlon.

The trend toward personalization ultimately could change the way TV advertising time is bought and sold.

As more people watch TV according to their own schedule rather than the schedule set by the TV networks, it could force the networks to alter their practice of selling advertising time within predetermined program schedules.

Changes happening fast

And some say that the biggest challenge facing the TV and advertising communities is accepting that today's audiences are embracing technologies that threaten to drastically alter the way they watch.

"A lot of the traditional TV stakeholders get tied up in knots when we talk about technology changing TV," said Hanlon. "They aren't in a rush to change the way things are. But they can't ignore the fact that the consumer has far more say in the matter than they do."
http://www.chicagotribune.com/techno...ck=1&cset=true


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The Trek Report: Beam Me Up, Beam Me Down

Is Paramount Trying to Silence Early Enterprise Reviews?
KJB

It hasn't been much of a secret that Enterprise feeds a day early to networks that run the series in Canada and that a number of fans who own satellite dishes have been able to view that feed. Until fairly recently, most television series that were produced by US studios and were also purchased for broadcast in Canada had early feeds like this. That was before the entertainment industry's latest scapegoat for everything from bad box office returns for bad movies to sliding ratings for mediocre television series: Internet peer-to-peer file sharing.

As a direct result of these "clean feeds" (the episodes fed to Canada have no commercials or network logos on them, hence the "clean" designation) showing up before broadcast on peer-to-peer services, most studios have taken steps to secure their signals. Most have just changed their transmission method to digital formats that require special and very expensive receivers. Warner Bros. Television was so annoyed at episodes of Smallville showing up early that they even took the extra step of encrypting the digital feed. The studio that has resisted the trend has been Paramount and its parent company, Viacom. Most feeds from Viacom are still analog and can be freely viewed by anyone with a large satellite dish.

Viacom's attitudes may be changing. Word from inside the facility that uplinks Viacom's programming have hinted at some displeasure from executives over some feeds that have been noticed by the general public. While Enterprise hasn't been mentioned specifically, it is Viacom's highest profile feed with many sites, including this one, providing reviews or even detailed plot information before the episode has been broadcast. Other sites have even offered the episodes for download in advance of UPN's Friday night broadcast which may account for Enterprise's strange disappearance from the satellite feeds this week. While many of Viacom's other programs seem to be feeding normally, Enterprise is nowhere to be found. A call to Viacom requesting a comment for this story wasn't returned by our publish time.

If Paramount / Viacom is choosing now to try and limit Enterprise's coverage, they picked a strange time to do it. Reaction to the episodes this season have been generally good with a number of television critics that had been critical of the series in the past finding themselves interested in the new stories and overall tone of the series since Manny Coto took over most of the production. A campaign to save the series and secure a fifth season renewal has been underway for some time and has been gaining momentum on the strength of the two 3-part story arcs so far this season. Even the ratings have shown a little sign of improvement and while the numbers are still low for a Star Trek series, Enterprise is still the best thing UPN has ever put on the Friday night schedule.

If the reasoning by Viacom is that encrypting the feed will somehow translate to a ratings jump on UPN, they would be well advised to not hold their breath. There has never been a successful link made to low ratings and file sharing and some of the most popular series on television are also the most traded files, effectively torpedoing that little bit of faulty logic.

Just in case anyone has the idea that I'm whining because I might not get to see Enterprise sans commercials, consider this: since I've moved to HD and our local UPN affiliate has finally begun broadcasting Trek in high definition, I'd much prefer to see the UPN broadcast, even if I have to sit through ads. Why would that be, you ask? Let's see, 16:9 widescreen with Dolby 5.1 audio vs. letterboxed standard video with regular stereo. Not even a close call on that one, gang. Anyone who has had the chance to see any of this season in HD will know what I'm talking about. And for those of you who haven't made the switch yet, let me slip in a plug for my new column, The Bleeding Edge, where we'll be examining inexpensive ways to make the jump to HD without mortgaging the family farm next week. As for the ads, there are some ads that are more clever than the programs they appear during and are worth the time to watch, provided you can stop yourself from reacting to the subtle brainwashing that's taking place during the 30- to 120-second time span they occupy.

So here's hoping that this week was just a glitch and that we'll be able to review next week's episode in advance. If not, Enterprise reviews will still appear in this column, just not until after the episode has aired or until UPN starts parting with screeners again.
http://filmforce.ign.com/articles/57...html?fromint=1


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What's Wrong With A Little File Sharing Among Friends?
Helene Newberg

Piracy is not what it used to be. No longer do pirates linger in the South Seas. Now, they work from their home computers.

Perhaps a son or daughter does it on the home or college computer. Perhaps it's a coworker after hours. What are they up to when no one is looking?

Engaging in criminal activity, according to some; taking advantage of the apparent natural resource that is the Internet, with all the privileges and easy digital pickings that come through a connection, say others. Electronic piracy headlines can be found nearly every week, from the software, music, or movie industry perspective.

Curtailing digital piracy will take an understanding of the technical, legal, and social aspects of the problem. "Is human nature going to change on either side? It is human nature to be greedy and want every nickel that's coming to them. The music industry executive thinks every downloader belongs in jail. On the other hand, the downloaders are using the Internet, which has always been a free means of information flow," said Jack Rochester, who in his new book, written with John Gantz, explores the intersection of intellectual property, copyright history and law, digital content, and the free-flow of information the Internet enables.

But who is piracy hurting? "Pirates of the Digital Millennium" gives some hard numbers, along with a little copyright history, law review, technology overview, and ethical landscaping. The book offers some suggestions for the entertainment and software industries, but more importantly simply raises questions that put the economic and ethical issues in high definition.

Are downloads harmless giveaways that prime a market? Are downloads copyright-violating losses in the billions of dollars? What about pirated first-run movies? What about compact disks selling for a fraction of the street price of the full-blown business applications contained thereon? Who is getting hurt?

After his collaborator and friend Gantz finished a project for Microsoft researching worldwide piracy, Rochester went to Taiwan for a few weeks to research the issue.

"It really was a big and interesting problem. I actually bought a CD with seven Adobe programs on it from a couple of kids working from a card table on a street corner. That convinced me that there's a whole lot of stuff going on," he said.

"I've always been interested in ethics," he said. In writing for high school and college students, his work has included thought about behaving ethically in front of the computer. "I introduced the idea of the Computer Hacker Hall of Fame: instead of punishing kids who are so savvy about technology, give them scholarships," he suggested.

The first known copyright violation involved not a printing press or copy machine but a rogue monk, copying by hand, 1448 years ago. Since then, government, the publishing industry, content generators, lawyers, hardware manufacturers, and consumers have all had a stake in the ultimate balance of fair use, copyright, cost, and profit.

With hardware (and software) making it easier to make digital copies, and the Internet making it easier to spread files far and wide, it's clear that business-as-usual better quickly adjust to a new usual. Among proposals offered in the book, the entertainment industry can come up with value-adds that would make purchasing legitimate copies of electronic work worthwhile.

"The software industry could buy up the entertainment industry and set up better distribution. They could set up a database where you could buy files like the iTunes store model, or, alternately, add a fee of anywhere between $1-5 to everyone's Internet provider bill. Let everyone download for free. The additional revenue would be dispersed to the copyright holders, it's easy enough to track who is downloading what," he said.

IDC estimates say that reducing software piracy worldwide by 10 percent over four years would put $400 billion back into economic growth. Hidden in the cost of piracy are lost jobs, tax revenues, GDP growth and local economy productivity when unauthorized, and unsupported, software fails; competition with unauthorized software drives the price of legitimate software down, compromising the ability of smaller, or newer, tech companies to stay afloat. And that's not factoring in the lost entertainment revenues.

"We did not end up at the same place as where we started when writing this book. Neither one of us was as adamant in our positions at the end. John was a downloader, I was 'Don't do it, don't do it.' We both came to have an intense dislike for the way the entertainment industry is handling the issue - so much is about greed, it's really disgusting. Basically on the other hand, the genie is out of the bottle on the Internet downloading - there's no way it's going to stop," he said.

"Our whole position is a nonjudgmental one. We just want people to think about it, to make a conscious decision. To get the issue on each reader's radar screen, we want them to think about the consequences. I want them to think, Wait a minute, before I wasn't really thinking about that,'" he said.

"Pirates of the Digital Millennium" is available from the publisher, www.ft-ph.com and from other online booksellers.
http://www2.townonline.com/lexington...ticleid=162851