[JackSpratts]

"If you think you're being watched, you probably are." – Amy Joyce


"I thought we had what we needed without conducting a search. It is not permitted to carry out a search for this type of crime." – Chatrine Rudström


"If this bill is adopted, Congress would be authorizing more warrantless surveillance of Americans than ever before." – Lisa Graves


"Computers are really, really good at saving things, unlike a dumb telephone. If you don't want something to get out, don't put it in any computer form at all." – Richard M. Smith


"Absorbing five exabytes of [video] data would mean sitting in front of a screen for 40,700 years." – Eric Schmidt


"I'm not sacrificing friends, because if a picture, some basic information about their life and a Web page is all my friendship has become, then there was nothing to sacrifice to begin with." – Gabe Henderson


"The fact that Amsterdam has one of the three root servers outside the United States is not lost on local politicians, including the former Dutch Prime Minister Wim Kok, who have come to this room to 'touch the Internet' by placing their palm on the computer's casing." – Lucas van Grinsven






































October 7th, '06






Rallies Protest Limits on Digital Copying

Free-software advocates rallied against certain limits on copying music and films on Tuesday in a global "Day against DRM" (digital rights management), saying consumers are robbed of their fair-use rights as entertainment goes digital and online.

Groups of concerned consumers and technologists handed out leaflets during rush hours and lunch breaks in American and European cities like Boston, Zurich, Paris and London, alongside an Internet campaign to raise awareness.

Some leaflets pictured a silhouette similar to those from the iconic Apple Computer advertising campaign with hands tied together with iPod earpiece cords, symbolizing the limitations of iTunes customers who can play their songs only on iPod music players, unlike compact disks that work on players from any brand.

"This is not aimed against Apple. We're focusing on iPod because it popularizes that DRM is acceptable," said Peter Brown, executive director of the Free Software Foundation (FSF), which initiated the DefectiveByDesign.org campaign.

DRM refers to software and other technologies used to control digital content. It is implemented by technology and media companies in online music stores and in new optical disk formats like Blu-ray DVD.

DRM means that consumers are restricted in making copies of songs, films and documents they purchase legally, which is why its opponents have dubbed it "digital restrictions management."

DRM rules differ among online stores and media carriers, but foundations like FSF and the Electronic Frontier Foundation fear that the rules will become stricter over time.

"Apple's DRM is relatively benign. But Amazon Unbox's user license is very restrictive and Windows Media Player 11 user agreement is incredibly intrusive and restrictive. The restrictions demanded by the media companies can get tougher, because the technology companies are now competing to get access to the media," Brown said.

Apple and media companies have said that absence of a DRM mechanism opens the door to widespread piracy and will threaten the future of legal online sales of digital content.

The European Digital Rights interest group in Brussels, which represents media companies, did not return several calls.

Consumer groups do not stand alone in their criticism.

The British Library last week voiced its concern after it found that of 30 licensing agreements recently offered to the library for use of digital material, 28 were more restrictive than the rights existing under current copyright law.

"Our concern is that, if unchecked, this trend will drastically reduce public access, thus significantly undermining the strength and vitality of our creative and educational sectors," Chief Executive Lynne Brindley said in a statement.

Several industry initiatives have failed to create a common and interoperable DRM system.

Consumer interest groups claim that the entertainment industry should not use DRM at all, despite rampant piracy on file-sharing sites of unprotected songs and movies.

"It's a lie that people will steal if you don't put locks on the stuff. Of course it's illegal to steal. But that's no reason to deny people the right to use content fairly," Brown said, referring to "fair use" of copies for private use.
http://news.com.com/Rallies+protest+...3-6122451.html





Will EU Consumers Choose DRM or Double-Taxation?
Scott M. Fulton, III

Reuters reported this afternoon that the heads of two of the Netherlands' leading corporations worldwide, Nokia and Philips, co-authored a joint letter urging the European Commission to strongly consider renegotiating -- if not striking altogether -- levies collected from consumers from the sale of MP3 players and disc recording media.

These levies were designed to enable consumers to pay their fare share of copyright fees, but electronics companies and consumers groups alike are complaining that since copyright fees are also collected from legal song downloads, consumers are effectively double-taxed.

Consumers can avoid double-taxation, argue European industry groups, if they would be willing to adopt what for them seems the most appropriate alternative: strong digital rights management.

Countries throughout Europe resolved -- or thought they resolved -- the issue of copyright holder compensation decades ago, with the imposition of levies on the sales of recording equipment. Sure, a VCR owner was allowed to record television over the airwaves or through licensed cable, so long as he had paid his levy for the recorder and for the blank tapes.

With minimal adjustment to the various EU member countries' laws since that time, MP3 players are considered recording devices, subject to levies of up to 25 euros, according to an estimate provided to Reuters by long-time Dutch electronics industry attorney Dirk Visser.

With the EU having adopted a central copyright licensing agreement earlier this week, the time has come, argues Nokia executive vice president and general manager for multimedia Anssi Vanjoki, and Philips CEO Rudy Provoost, for member countries to stop double-dipping from consumers' pockets.

In the Netherlands, levies have been collected since 1991 from the sale of recording media. According to the Dutch Foundation for Information Policy Research, the amounts of those levies has generally been determined by a private cooperative called the Foundation for Negotiation of Private Copy Compensation, abbreviated SONT. In an attempt to maintain balance, SONT is comprised of three groups of copyright holders plus three representatives from the recording industry, moderated by the partition of an independent advisor appointed by the Minister of Justice. But the Netherlands does not then collect a separate levy from MP3 players or TiVos.

That distinction belongs to, among other countries, France. There, according to an economic study published last May for the Copyright Levies Reform Alliance (CLRA), a levy contributes as much as 9.09% to the price of the average MP3 player, which may sell for around 100 euros.

Plugging those numbers into an economic model, the study's analysts calculated that about 974,000 more MP3 players could be sold each year without the additional 10 euros levy than with it.

The study then concluded that such an increase in French MP3 player sales -- 18.2% higher than what was actually reported for 2005 -- would have led to additional sales of online music tracks of an additional 1.8 million euros. In all, the study concluded, the digital music market in France was impacted in 2005 by about 158 million euros, in order that the government might collect 53.6 million euros in levies.

Earlier in 2005, SONT proposed a levy be imposed on MP3 players, totaling about 3.28 euros per gigabyte of storage. Such a tax could have added the equivalent of $300 or more to the price of a high-end iPod; since that time, the plan on the table has been dramatically scaled back.

So flying the pro-consumer banner, Philips and Nokia have come out in strong support of drastically scaling back the levy system, arguing it's simply better for the economies of member countries if the levies weren't there. What today's statement appears to omit is that both companies are founding members of the CLRA, along with Apple, Sony, Dell, Intel, and HP, plus four European electronics industry organizations.

One of those organizations, known now as just EICTA, states the working group it assembled that led to the founding of CLRA "promotes viable alternatives to the archaic copyright levy system, namely, Digital Rights Management (DRM) systems."

"The preparatory documents of the [EU] Copyright Act state that TPMs [technological protection measures] should be considered when setting the level of levies to be paid," states a CLRA legal study from earlier this year, "and that if TPMs become more widely used in the future then this may result in a reduction, or elimination of levies. That said, no decision has been made regarding how to implement such considerations in practice and there are no guidelines suggesting how levies should be calculated where DRMs or TPMs are available."

Without explicitly advocating the use of DRM and/or TPM schemes as an alternative measure for protecting the interest of copyright holders, the CLRA's studies effectively did their job: They brought the subject up, and don't think for a moment that EU legislators haven't noticed.

Once again, the man in the spotlight with regard to this aspect of EU copyright reform is Charlie McCreevy, Commissioner for Internal Market and Services. In a speech before Parliament last November, he identified precisely the legal lever that alternates between levies and DRM:

"The 2001 Copyright Directive states that fair compensation must take account of the use of DRM. In practical terms, this should mean that as the use of DRMs increases, the use of levies should decrease. This does, however, not appear to be the case. This effectively means that consumers who use legitimate on-line services to download music against payment, pay twice."

With protests worldwide yesterday to mark the "Day Against DRM," today was not the day either for lawmakers or electronics industry executives to be touting digital rights management as a populist cause. Probably for this reason, today's public call for fairness in taxation from Nokia and Philips appeared "DRM-free."

But the two issues are now intertwined, and perhaps before the end of the year -- when the EC is due to make its recommendations on per-device levies -- consumers may find themselves deciding which necessary evil -- taxes or DRM -- they hate the least.
http://www.betanews.com/article/Will...ion/1160163458





Appeal Court Clears Man Of File Sharing
James Savage

A 29-year-old man from Västerås in central Sweden suspected of sharing files from his computer was today acquitted by Svea Court of Appeal. Last year the man was the first person in Sweden to be convicted of file-sharing, having been charged with making the Swedish film Hip Hip Hora available for download from the internet.

The Court of Appeal decided that it does not have sufficient proof that the film was uploaded from the man's computer. The lack of technical evidence has led the court to acquit the defendant of the charge of breach of copyright.

Västmanland District Court had initially fined the defendant 16,000 kronor. The original court ruling noted the serious consequences that file-sharing has on the film industry. The court eventually elected to fine the man rather than imprison him since the case surrounded a single film and the defendant did not obtain any financial gain by making it available on the internet.

"It is difficult to predict the consequences of this ruling," district prosecutor Chatrine Rudström told news agency TT.

"I thought we had what we needed without conducting a search. It is not permitted to carry out a search for this type of crime", she adds.

A raid on the defendant's home would have meant a thorough examination of the contents of his computer.

This ruling will make it difficult for the film industry and other interest groups to pursue the issue in the courts.

"It is obviously good that the court is careful with its evidence and it is important that the lower courts take note of that. But the judgment doesn't really mean much for file sharing as such. And our basic point is of course that it is absurd that someone should even be tried for making culture available to others," Christian Engström of the Pirate Party told The Local.
http://www.thelocal.se/article.php?ID=5087





Chatterbox
ZachPruckowski

You need evidence to convict someone of filesharing? I thought the big companies just pick a name out of the phone book, and then you're guilty even if you are dead, don't own a computer, can't spell "Limewire" and used to live atop Pike's Peak.
http://yro.slashdot.org/yro/06/10/02/1327239.shtml





Lightning Destroys Evidence in Swedish File Sharing Case
Jan Libbenga

Swedish authorities have dropped the charges they brought against the Karlskrona (Sweden) municipality head of culture, who last year openly admitted to file sharing and encouraged others to follow.

The decision suggests a divine judgement on the thorny issue of file-sharing - his computer was struck by lightning and cannot be examined.

Or at least that is what Ivar Wenster told the police.

"They laughed when I told them," he told Swedish site The Local. According to Wenster his computer completely burnt out this summer. "It was my children's and wife's pc too."

Last year Wenster openly admitted in an article in Blekinge Läns Tidning that he downloads music from the internet without paying for it shortly after the raids on The Pirate Bay, one of the world's largest sources of unauthorised copies of films and music.

"There's a fundamental hypocrisy around these issues," he argued (http://rixstep.com/1/20060605,02.shtml). He also encouraged others with established positions in society to reveal that they're file sharing, in order to make the industry “rethink its position”.

When downloads became illegal in Sweden in July 2005, Wenster immediately reported himself to the police, hoping it would lead to discussion. He risked two years in jail under the new Swedish copyright laws.

Despite the tradegy with his PC, Wenster is determined to keep file sharing on the agenda.
http://www.theregister.co.uk/2006/10..._by_lightning/





Hollywood Says Piracy Has Ripple Effect

Illegal Film Distribution Decreases Sales, Jobs and Tax Revenue, Study Says
Frank Ahrens

Seeking another weapon in its war on piracy, the movie industry hopes to wow lawmakers today with a study that says the economic impact of illegal DVD and Internet film distribution may be as much as three times what was previously estimated.

The movie industry continues to vigorously combat both DVD and Internet piracy of its films domestically and overseas, urging foreign governments to crack down on illegal DVD factories and toughen laws on Internet file-sharing.

Hollywood moviemakers, armed with the new study pointing to piracy as having ripple effects on the U.S. economy, want Washington to recognize the larger problem and address it.

The Institute for Policy Innovation, founded by former Republican congressman Richard K. Armey, is to present the study today at a U.S. Chamber of Commerce conference where NBC Universal chief executive Bob Wright will speak.

The movie industry had previously focused on piracy's impact on lost sales of legal DVDs and online films, estimated at about $6 billion per year, according to a previously released study commissioned by the Motion Picture Association of America, the movie industry lobby.

Lawmakers and federal agencies such as the Justice and State departments have helped Hollywood battle physical piracy -- specifically, counterfeit DVDs. But now the stakes are especially high for entertainment companies as they sell more of their products online in the form of digital songs, movies and other intellectual property.

Internet piracy may be tougher for lawmakers to conceptualize, entertainment companies fear.

The report being released today -- which was largely paid for by Armey's think tank with some funding from NBC Universal and the MPAA -- takes the previous study, conducted by consulting firm L.E.K., and applies a model used by the U.S. Bureau of Economic Analysis to calculate the potential ripple effect of those lost sales, factoring in lost jobs, worker earnings and tax revenue.

Given those facts, the study says, movie piracy causes a total lost output for U.S. industries of $20.5 billion per year, thwarts the creation of about 140,000 jobs and accounts for more than $800 million in lost tax revenue.

"I think it's legitimate to ask whether the L.E.K. numbers are defensible," Tom Giovanetti, president of the Institute for Policy Innovation, wrote in an e-mail. "We think they are at least the best shot that's been taken at the problem. . . . We've stated all of our assumptions and methodology, so I think we've shown pretty decent integrity in this study."

It's important to remember, however, that even though piracy prevents money from reaching the movie industry, those dollars probably stay in the economy, one intellectual property expert said.

"In other words, let's say people are forgoing paying for $6 billion in movies by downloading or consuming illegal goods but end up spending that $6 billion on iPods, computers and HDTV sets on which to watch the movies, which leads to $25 billion in job creation in the computer/software/consumer electronics field," Jason Shultz, staff lawyer at the Electronic Frontier Foundation, wrote in an e-mail.

NBC's Wright hopes the study gets attention on Capitol Hill.

"If any light should go off in Congress, it's that [intellectual property] is the strongest element to this country's economy, even if they can't see it," Wright said in an interview Wednesday. "It would be helpful to us, not that we would wish for it, if you saw the same situation with Boeing and engineering work on a B-1 bomber was distributed on the Internet. There would be hell to pay."

According to the L.E.K. study, 38 percent of all movie piracy occurs on the Internet, with counterfeit DVDs accounting for the rest.

Wright cited the example of Universal Studios' 2003 film "The Hulk," which was pirated on the Internet. Kerry Gonzalez, a 24-year-old insurance underwriter in New Jersey, got an advance copy of the film from a friend at an advertising agency that was creating a campaign for the movie. Gonzalez posted the film on a foreign file-sharing Web site before it was released in studios.

NBC Universal discovered the breach and reported it to law enforcement officials, who tracked down Gonzalez and arrested him. He was convicted of copyright infringement and sentenced to house arrest and probation. He was also forced to pay fines and restitution to NBC Universal.

Wright said he is comfortable being the industry's tough-on-piracy face, whereas some of his competitors might shy away from cracking down on youthful offenders.

"If you're Disney, you probably don't want to be prosecuting," Wright said. "If you're me, you want to have that veil of prosecution out there."

Does that make Wright the movie industry's Mean Uncle Bob?

"I think we can live with that," he said.
http://www.washingtonpost.com/wp-dyn...092801640.html





House Votes to Expand Electronic Spying Powers
Anne Broache

Amid serious misgivings from opponents, the U.S. House of Representatives has approved a bill that would expand the government's electronic spying powers in terrorism investigations.

The Electronic Surveillance Modernization Act passed late Thursday by a 232 to 191 vote, with 177 Democrats voting against it and 18 siding with the Republican majority on the vote. As well as being challenged by most Democrats, the bill had drawn opposition from a handful of Republicans and civil liberties groups.

"House Republicans don't support privacy for terrorists and won't allow them the ability to harm innocent Americans," House Speaker Dennis Hastert (R-Ill.) said in a statement. "Congress has provided a way for our intelligence programs to legally monitor and track terrorist phone calls and communications so we can prevent further terrorist attacks."

Democratic Leader Nancy Pelosi of California countered: "Rather than enshrine in law powers the president has claimed he already holds, we should continue to have judicial review of the president's domestic surveillance program...We do not need to pass this diminishment of our privacy tonight."

The measure still must clear the Senate before becoming law. A Republican leadership aide said her side's companion bill could be called up for a vote before the legislators adjourn this weekend for campaigning ahead of the Nov. 7 election.

Democrats opposed to the measure, however, are expected to block Majority Leader Bill Frist's likely attempt to obtain swift approval by unanimous consent, the aide said.

Under the House's bill, the president would have the authority to authorize electronic surveillance without a court order for up to one year, if it is directed at the communications of foreign powers or their agents. The attorney general would have to certify that the "significant purpose" of the spying is to gather foreign intelligence information, but would not be required to specify "the specific facilities, places, premises, or property" where such an operation would occur, according to the bill.

The president would also have the power to sign off on warrantless eavesdropping for up to 90 days in three instances: after a terrorist attack on the U.S.; after an armed attack on the U.S.; or after submitting in writing that an "imminent threat of attack likely to cause death, serious injury, or substantial economic damage to the United States" exists.

Critics argue that those provisions are overly vague, because the bill never defines what those attacks mean.

However, supporters claim the bill is not without checks on the executive branch's powers. The attorney general would have to make semiannual reports to congressional intelligence committees on any warrantless surveillance. That official would also have to report periodically on what investigators are doing "to minimize the acquisition, retention, and dissemination of nonpublicly available information concerning United States persons" and to list and describe any "significant" violations of that policy.

Opponents, including the Electronic Frontier Foundation and the Center for Democracy and Technology, said in a letter this week (click for PDF) that the version passed by the House contains the worst elements of all the surveillance bills Congress has been considering this year.

Some of the provisions--such as the 90-day windows for warrantless surveillance before and after attacks--are unnecessary, they said. That's because federal wiretapping law already allows the president to begin conducting surveillance before seeking a secret court order for a limited time during emergency situations, they noted.

They also attacked a section that would effectively quash all legal challenges occurring between Sept. 11, 2001, and a point 60 days after the bill's enactment, if those challenges relate to "any alleged communications intelligence program" aimed at staving off terrorist attacks. Some of the opposing groups have already sued the National Security Agency and telephone companies accused of violating the constitutional privacy rights of Americans by aiding the warrantless surveillance program.

"If this bill is adopted," Lisa Graves, ACLU Senior Counsel for Legislative Strategy, said in a statement, "Congress would be authorizing more warrantless surveillance of Americans than ever before."
http://news.com.com/House+votes+to+e...3-6121474.html





Privacy Group Files Suit Against FBI
Dan Caterinicchia

A privacy-advocacy group is suing the U.S. government for records concerning electronic-surveillance tools such as one that appears to be a successor to the FBI's abandoned Carnivore program.

The Electronic Frontier Foundation said it is suing the Department of Justice because the FBI failed to respond in time to its Freedom of Information Act request for records on the DCS-3000 and Red Hook programs.

DCS-3000 is an interception system that the EFF said apparently evolved out of Carnivore, a system later renamed DCS-1000. The FBI developed Carnivore to read e-mails and other online communications among suspected criminals, terrorists and spies, but privacy groups and lawmakers complained it could collect much more than allowed by a warrant.

A Justice Department Inspector General report in March said the FBI had spent about $10 million on DCS-3000 to intercept communications over emerging digital technologies used by wireless carriers before next year's federal deadline for them to deploy their own wiretap capabilities.

The same report said the FBI spent more than $1.5 million to develop Red Hook, "a system to collect voice and data calls and then process and display the intercepted information" before those wiretap capabilities are in place.

The San Francisco-based EFF, which recently opened a Washington office with two attorneys lured from the Electronic Privacy Information Center, filed the lawsuit Tuesday in the U.S. District Court for the District of Columbia.

"The lawsuit is to force the FBI to release information about this to the public," Marcia Hofmann, an EFF staff attorney, said Wednesday. She added that the group would be exploring further legal action in the coming weeks.

The FOIA response deadline is usually 20 working days, unless an agency asks for more time, but the FBI did not do that in this case, Hofmann said.

The FBI declined comment, citing the pending lawsuit.

The FBI performed 13 Internet wiretaps in fiscal 2002 and 2003, but none used Carnivore, according to bureau oversight reports submitted to Congress and obtained last year under a FOIA request by the Washington-based Electronic Privacy Information Center.
The FBI also said then that the part of its budget containing information on the cost to produce Carnivore was classified, but outside experts estimated it to be between $6 million and $15 million.
http://seattlepi.nwsource.com/busine...I_Lawsuit.html





US: AllOfMP3.com "at the Top of the 'Notorious Markets' List"
Nate Anderson

The US wants Russia to know that it's really, truly, absolutely serious like a heart attack about putting an end to AllOfMP3.com. How else to explain the recent raft of references (try saying that three times fast) to the site by the highest trade officials in the US government?

US Trade Representative Susan Schwab yesterday told reporters, "I have a hard time imagining Russia becoming a member of the WTO and having a Web site like that up and running that is so clearly a violation of everyone's intellectual property rights."

Schwab has been making the rounds with this kind of talk. Last week, she told the US Chamber of Commerce (PDF) last week that "at the top of the 'notorious markets' list is Russia's allofmp3.com, the Web's number one pay-per-download music site whose catalog consists of illegal copies of music from U.S. recording artists and other right holders." Schwab told the Chamber that Russia's WTO membership hinges on the fate of AllOfMP3.com.

As we reported earlier, a new Russian IP law has come into force that could put an end to the rogue music download site, but we also noted that action in the Duma to reform the country's Civil Code could undo the provisions of the new law. Schwab made clear that the outcome of the Civil Code changes would also be taken into account—the US really wants this thing shut down.

And early in September, Deputy Trade Representative Karan Bhatia told the National Academy of Recording Arts and Sciences, "At the top of that list is Russia's allofmp3.com, a notorious website that is probably stealing from many people here in this room."

The issue has become a talking point for the US Trade Rep's office, largely because of how much money is involved. Bhatia pointed out that more money is earned by US companies from music sold outside the US than from music sold here, and AllOfMP3.com does not set a great example for the rest of the world to follow.

The US and Russia hope to settle accession talks by the end of October, so the number of AllOfMP3.com's remaining days could be as low as the site's music prices.
http://arstechnica.com/news.ars/post/20061005-7915.html





NYET!

Russian Music Internet Site Refuses to Buckle to US Pressure
Nick Coleman

A Russian Internet site selling Western pop music at knock-down prices says it will continue its methods even though the United States says it is obstructing Russian accession to the World Trade Organisation.

As the troubled WTO negotiations continue, US negotiators have repeatedly returned to one issue: the worldwide music sales of Russian website allofmp3.com, which defended its conduct in an interview with AFP on Friday.

Russia, the only major world economy not in the WTO, hopes to wrap up membership talks with the United States by the end of this month, the trade ministry has said.

Washington is the last major economy not to have assented to Russian membership of the WTO, which Moscow has been trying to join since the early 1990s.

And along with other issues such as access to the financial services market, a particular problem has been Russia's lax protection of intellectual property and the vast quantities of bootlegged music and films found in shops and bazaars across the country.

US Trade Representative Susan Schwab has personally taken aim at allofmp3.com.

Her office has placed the company on a "notorious markets" list and in a speech last month she accused Russian authorities of allowing the website to operate with impunity.

Washington's objections are mainly because the website has found a ready market outside Russia's borders, becoming the second most popular music site among British consumers after US on-line store iTunes, the Kommersant newspaper said Friday.

"The White House's concern is that the site offers Western music to Western consumers.... This isn't the first time that the administration of George Bush has drawn Russian authorities' attention to the issue," Kommersant said.

The site offers music tracks for as little as a third of a dollar and entire albums for two dollars, which compares with 99 US cents per track from iTunes.

Kommersant quoted a defiant representative of the Internet site as saying that complaints by Schwab were actually helping the company.

"Susan Schwab markets us so effectively -- she could already be our press secretary," the unnamed spokesperson said.

The owner of the website, Denis Kvasov, is continuing to battle a lawsuit in a Moscow court by the international music industry body IFPI, Kommersant said.

Contacted by AFP, a spokesman for the website's holding company, MediaServices, denied that it was in violation of Russian law and defended its foreign sales.

Washington is using Russia's WTO aspirations as a lever to help US companies, said the spokesman, Ilya Levitov.

"They're trying to help their companies in the competition with us because our prices are much lower," Levitov said.

He said that Russian law allowed the company to distribute music that it obtains via a Russian society, the Multimedia and Internet Society.

"We're totally in compliance with Russian law.... It's a Russian company owned by Russian people. It's a Russian business," Levitov said.

As for foreign buyers, "we announce on our website to every user that he or she should check the laws of the country in which he lives," Levitov said.

In a bid to allay US concerns, Russia's parliament gave preliminary approval last month to a strict new law on intellectual property rights that Deputy Prime Minister Dmitry Medvedev said would bring Russian in line with Western demands.

But more widely the negotiations may have been hampered by Washington's increasingly tough stance towards Moscow on the issue of Iran's nuclear programme.

In August the United States announced sanctions against two Russian defence companies over their links with Iran, the defence export agency Rosoboronexport and jetmaker Sukhoi.

Kommersant estimated the annual turn-over of allofmp3.com at between 25 million and 30 million dollars (20 million and 23 million euros).
http://news.yahoo.com/s/afp/20061006...ssiauswtotrade





Belgium Rules Sifting of Bank Data Illegal

Prime Minister Says SWIFT Group Wrongly Cooperated With U.S. Anti-Terrorism Effort
John Ward Anderson

A secret U.S. program to monitor millions of international financial transactions for terrorist links violated Belgian and European law and will have to be changed, the Belgian government said Thursday.

The decision, announced by Prime Minister Guy Verhofstadt, came as the country's Data Privacy Commission released a 20-page report finding that the Belgium-based Society for Worldwide Interbank Financial Telecommunication, or SWIFT, had improperly turned over data from millions of global financial transactions to U.S. anti-terrorism investigators.

"It has to be seen as a gross miscalculation by SWIFT that it has, for years, secretly and systematically transferred massive amounts of personal data for surveillance without effective and clear legal basis and independent controls in line with Belgian and European law," the report says.

Leonard H. Schrank, SWIFT's chief executive, said in a telephone interview that the cooperative "believes we complied with everything and respected to the fullest extent possible the privacy law in Belgium. But the trouble is data privacy laws in Europe are quite difficult to follow. They're not drafted for national security issues."

SWIFT said in a statement that it had relinquished data to the U.S. Treasury Department only after it had been "subject to valid and compulsory subpoenas" from U.S. authorities.

The Belgian ruling is the latest in a string of European complaints about how the United States is conducting global operations against terrorism. European governments, politicians, human rights groups and citizens have also criticized the treatment of inmates at the U.S. prison at Guantanamo Bay, Cuba, the operation of secret prisons by the CIA -- including some reportedly in Europe -- and the CIA's extrajudicial transfers of terror suspects.

Europeans tend to support strong efforts against terrorist groups -- many of their countries have terror cells within their borders, and two, Britain and Spain, have suffered major attacks on their transit systems. But many Europeans believe that U.S. policies go too far and fuel radicalism in the Muslim world.

Belgian authorities announced no plans for legal action against SWIFT, which conveys funds among 7,800 banks in 206 countries and territories. Verhofstadt called the anti-terrorist monitoring "an absolute necessity" and said U.S. and European negotiators should find a way to bring it into compliance with European law.

Asked about the Belgian ruling, U.S. Treasury spokeswoman Molly Millerwise said in an e-mail that the department was "mindful of privacy concerns and for that very reason implemented significant safeguards" for what the department calls the Terrorist Finance Tracking Program.

"The U.S. Treasury Department welcomes the suggestion of the Belgian government to engage in greater dialogue at an EU level on how to make the [tracking program] a more cooperative effort. The dialogue is already underway with our European counterparts; such cooperation can only further our common goals," Millerwise said.

Schrank added, "The message today is that there is a recommendation at long last that says, let's get the E.U. and the U.S. sitting down to get a framework for dealing with national intelligence and counterterrorism and the concerns of data privacy. Border security and data privacy are drawn different in every country, and the politicians have to draw the line."

None of the network's banks had made a privacy complaint in connection with the program, he said. "No one that I am aware of has been harmed in any way. . . . Thousands of lives have been saved" as a result of the program, he said. "Let's not forget that."

The Bush administration has called its secret international banking surveillance program a vital tool in uncovering terrorist networks. When newspapers first reported the program's existence in June, President Bush called the disclosure "disgraceful."

The program was begun without congressional or court approval shortly after the attacks of Sept. 11, 2001. With SWIFT's cooperation, U.S. investigators tapped records from the cooperative's banks, a total of millions of transactions, looking for suspicious patterns and links to terrorists.

A SWIFT spokesman said Thursday that "the status of the program is unchanged."

A European Union working group that oversees data protection is investigating SWIFT's transfers of data and is to release its report in November. After a meeting this week in Brussels, the group said it has "immediate concerns about the lack of transparency which has surrounded these arrangements."

Verhofstadt said SWIFT was "in a conflicting situation between American and European laws." But he said the cooperative "made several evaluation mistakes during the executing of the American subpoenas. From the very beginning, SWIFT should have been aware that fundamental European laws should also be respected."

The prime minister added, "Fundamental differences exist between the E.U. and the U.S.A. concerning legislations and the principles governing the treatment of personal data, mainly in the domain of the level of protection, which is higher in Europe. . . .
"SWIFT is also clearly responsible because they made all the crucial decisions regarding data communication" to the U.S. Treasury, "behind the back of its 7,800 clients."

The report faulted SWIFT for not notifying European authorities of the program from its inception.

SWIFT said its "compliance was legal, limited, targeted, protected, audited and overseen." It added, "SWIFT also did its utmost to comply with the European data privacy principles of proportionality, purpose and oversight."

Staff writer Dafna Linzer in New York and researcher Corinne Gavard in Paris contributed to this report.
http://www.washingtonpost.com/wp-dyn...av=hcmoduletmv





Dutch Blackbox Voting Pwned
kdawson

"In a just-published report (PDF, in English, cached here), the Dutch we-don't-trust-voting-computers foundation (Dutch and English) details how it converted a Nedap voting machine, of a type used in Holland and France, to steal a pre-determined percentage of votes and reassign them to another party. The paper describes in great detail how 'anyone, when given brief access to the devices at any time before the election, can gain complete and virtually undetectable control over the election results.' As a funny bonus, responding to an earlier challenge by the manufacturer, the researchers reflashed a voting machine to play chess. The news was on national television (Dutch) last night and is growing into a major scandal. 90% of the votes in the Netherlands are cast on these machines and national elections will be held in a month."
http://it.slashdot.org/it/06/10/05/1310235.shtml





In Amsterdam, Internet Freedom Reigns
Lucas van Grinsven

Amsterdam has the world's busiest Internet exchange, thanks to nuclear physicists and mathematicians who in the 1980s connected their network needs with the academic belief that knowledge needs to be free.

At a time when the neutrality of the Internet is at stake, and Internet service providers (ISPs) are moving to prioritize their premium traffic, the Amsterdam Internet Exchange is a reminder that the Internet was built on the principle of the unrestricted exchange of ideas and information.

The popularity of the AMS-IX. the official name of the exchange, is the result of a liberal foundation which has created a place where ISPs can do business any way they like.

"'Anything goes unless it's forbidden', was our motto from the beginning. We added a few rules later on, but any unnecessary organizing is being prevented," said Rob Blokzijl from Nikhef, the National Institute for Nuclear Physics and High Energy Physics in the Netherlands.

It shares this spirit with the designers of the Internet who decided that all data packets were created equal, and with Tim Berners-Lee who developed the World Wide Web at the Swiss particle physics lab CERN as a universal and neutral platform.

"The public will demand an open Internet," Berners-Lee said in a recent interview with Reuters.

Indeed, the debate over "net neutrality" is one of the biggest issues facing the Web today on both sides of the Atlantic, pitting big cable and phone companies against Internet powerhouses like Google Inc.

At issue is whether broadband providers should be allowed to create "toll booths" that would charge Internet companies to move content along fast broadband lines, a move critics say would restrict the freedom of the Web.

ASM-IX is a not-for profit structure, just how the Internet itself was conceived. The first Web server outside CERN was running at Nikhef, showing that physicists need collaborative networks because expensive machines are elsewhere.

The center does a good job in concealing its significance as a key Internet hub. A few kilometers from the inland sea, it is situated among the meadows and canals of suburban Amsterdam, on the upper floor of a brick-and-concrete building.

"If the polder floods, we'll keep our feet dry. This floor is above sea level," said Blokzijl.

Keeping the room dry is largely symbolic, as it will hardly impact the performance of the Internet. Amsterdam has one of the 13 root servers, but the Web is designed in such a way that even when one of its important exchanges is taken down, traffic automatically finds a detour around the damaged center.

Touch The Internet

The fact that Amsterdam has one of the three root servers outside the United States is not lost on local politicians, including the former Dutch Prime Minister Wim Kok, who have come to this room to "touch the Internet" by placing their palm on the computer's casing. During rush hour, 170 Gigabits of data per second -- the equivalent of over 30 compact disks -- travel through the exchange.

Around 250 Internet providers from around the world are bunched together in AMS-IX. Its closest competitor is the London Internet Exchange LINX.

"More than half of them are large ISPs from abroad. They all come here to get connected to each other. And everyone who puts fiber optic cables in the ground, makes sure their cables surface here," Blokzijl said.

Being close to a root server is a major advantage, because that is where all the world's Web addresses are catalogued. It is where easy-to-remember Web addresses -- for instance: www.reuters.com -- are connected to a string of Internet Protocol numbers which the Internet needs to function.

"One Web page these days can be compiled from dozens of different IP addresses, or even a hundred. Ads, columns, pictures all come different places. If you're close to the root it takes less time to get an answer. If Web pages load slowly, it's because they're waiting for a reply."

Another reason the exchange is a success is that providers can connect their networks directly, so-called peering, to save time and cost. Because so many ISPs are here, the center boasts it is the world's first mobile Internet peering point.

Not all Internet exchanges allow peering.

The birth of AMS-IX is in fact the accidental consequence of Blokzijl's deal -- over a cup of coffee -- to team up with a neighboring center for mathematicians and computer scientists. They bundled their network budgets to buy more network capacity from powerful telecoms monopolies back then.

"It took months to get a line between Amsterdam and Geneva, and we had to coordinate between the local telecoms operators because they wouldn't talk to each other," Blokzijl recalls.

Shortly afterward the first commercial Internet providers started their businesses and connected to the emerging Internet hub in Amsterdam.

"The scale advantaged started when we had four of five ISPs. The rest is history," Blokzijl said.
http://today.reuters.com/news/articl..._%5bFeed%5d-10





Is It Possible To Be Identified By Your 'Clickprint'?
Charles Arthur

Almost certainly - and if you're wondering what a clickprint is, it is "a unique pattern of web surfing behavior based on actions such as the number of pages viewed per session, the number of minutes spent on each page, the time or day of the week the page is visited, and so on." That's the description used by Professor Balaji Padmanabhan, at the Wharton School at the University of Pennsylvania, and Professor Catherine Yang, of the Graduate School of Management at the University of California, Davis.

In a new paper (available from http://tinyurl.com/hj263), they suggest that by observing how people navigate around a site over a number of sessions, an e-commerce company could distinguish between two anonymous surfers. That could have important implications in preventing fraud: if someone signed in with an existing user's logon, but their clickprint differed, that might be an indication that their ID had been stolen.

"Our main finding is that even trivial features in an internet session can distinguish users," Padmanabhan told the Wharton Review. "People do seem to have individual browsing behaviors." The duo found that anywhere from three to 16 sessions are needed to identify an individual's clickprint.

"The paper is really a proof of concept that behavior and minimal information can be used to identify users," says Yang. In one example, they found thatfrom just seven aggregated sessions they could distinguish between two different surfers with a confidence of 86.7%. Given 51 sessions, the confidence level rose to 99.4%.

Clickprints thus join a plethora of data that can be used to identify us while we're online. But while the leak earler this year of half a million users' Google searches from AOL caused widespread outrage, Padmanabhan suggests that "if Amazon or a credit card company that can track everything you do uses clickprints, the perception is different because you expect it".

If clickprints are used as a way to prevent fraud, it's highly unlikely there will be an uproar over privacy, says Padmanabhan. We'll have to see.
http://technology.guardian.co.uk/wee...882014,00.html





British Library Issues Copyright Manifesto
Nate Anderson

The British Library has the Magna Carta, the Lindisfarne Gospels, and Leonardo da Vinci's notebook, but it's still not happy. Why not? Because it has the intellectual property blues.

The Library issued a manifesto today on intellectual property law in the UK and offered six suggestions for cleaning up the current mess, all of which attempt to strike a proper balance between the rights of creators and consumers of content. The Library sees itself as an "honest broker" in the contentious debate over IP laws because it understands both sides of the issue, according to British Library head Lynne Brindley. "As a publisher in its own right, the Library understands the opportunities and threats presented by digital to the publishing industries. As one of the world's great research libraries we are equally mindful of the threat that an overly restrictive, or insufficiently clear, IP framework would pose to future creativity and innovation."

The base on which their platform is built is the claim that "digital is not different." Copyright law should apply equally to both digital and analog works, something already recognized by the World Intellectual Property Organization (WIPO) but not made explicit in UK law. The silence on this matter has led to "some rights holder groups to challenge whether these rights in UK law are applicable to the new digital environment."

The rights in question include things like "fair dealing," the UK version of "fair use" in the US. In both countries, copyright law makes explicit exceptions for several uses of copyrighted material that require no permission from the copyright holder. While these laws are still on the books, they quickly become meaningless when DRM is used to lock down digital content—and cracking the DRM is illegal, even for legitimate uses. The British Library argues that neither DRM nor contracts should be allowed to "exceed the statutory exceptions for fair dealing access." As they point out, DRM can be designed so that it will never expire, potentially locking material behind a digital doorway forever.

Contracts often govern the sale of software or access to databases, and these commonly are more restrictive than copyright law itself. The British Library notes that 28 of 30 randomly-selected database licenses offered to the Library were "found to be more restrictive than rights that currently exist within copyright law."

They are also concerned about the traditional "library privilege" that allows libraries to make copies of copyrighted works for the purpose of preservation or archiving. In the UK, this privilege does not extend to sound recordings and films (whether analog or digital), and the Library worries that many of its older holdings are deteriorating. It recommends that libraries be granted an exception for preservation that applies to all copyrightable works.

The Library also urges the government to think carefully before retroactively extending the copyright term on sound recordings (something currently being considered) and argues that the UK needs a more streamlined way to allow access to "orphan works" and unpublished works.

Overall, the proposals are well-balanced, though parties on both sides of the debate will find bits to dislike. Copyright holders will dislike the restrictions on contracts and DRM, while those in favor of "open access" may be disappointed that the British Library advocates a "life + 70 years" copyright term. Still, it's good to see an institution with the stature of the Library arguing for such a balanced set of proposals, and we hold out hope that the Library of Congress will one day advocate for many of the same proposals on this side of the pond.
http://arstechnica.com/news.ars/post/20060925-7821.html





Kiss Guitarist Turned Down by US Supreme Court
AP

Ex-Kiss guitarist Vinnie Vincent lost a Supreme Court appeal Monday in a dispute over royalties with his former bandmates.

Justices declined to consider lower court rulings dismissing Vincent’s claim that he is owed royalties for his contributions to the heavy metal band’s 1983 album Lick It Up.

Vincent, whose real name is Vincent Cusano, played with Kiss from 1982 to 1984, co-writing "I Love it Loud," "Lick it Up" and other songs.

The case is Cusano v. Klein, 05-1492.
http://www.newstimeslive.com/enter/story.php?id=1016628





Australian Pirate Hunters Double Reward
Chris Jenkins

THE software industry's pirate hunters have doubled the reward on offer to anyone dobbing in illegitimate users of business applications.

The Business Software Association of Australia (BSAA) has announced that there would now be $10,000 reward offered to anyone willing to turn over pirates.

BSAA chairman Jim Macnamara said the organisation had realised that the old $5000 bounty was below international standards, conceding that claiming the reward was not an easy process.

Rather than simply identifying pirates, informants were required to sign affidavits and "be involved in a legal process," Mr Macnamara said. Such proceedings could take some time, he said.

Measures were also taken to ensure that claims of piracy were legitimate, he said. "We do get some misleading complaints at times."

Mr Macnamara said the 31 per cent piracy rate the BSAA claimed for Australia was still too high by world standards.

The Australian Federal Police lacked the resources to effectively enforce Australia's copyright legislation, he said.

Australia had yet to see any criminal cases for software piracy, but had participated in several US-led actions.
http://australianit.news.com.au/articles/0,7204,20517427^27317^^nbv^15306-15319,00.html





San Joses State Relents on Skype
Eric Bangeman

San Jose State University in California made news earlier this week when it banned staff, faculty, and students from using Skype on the campus network. Yesterday, the school relented, ensuring that students will be able to continue making cheap calls over the Internet.

San Jose State had decided to ban the usage of Skype over concerns about security, use of school resources, and bandwidth consumption. A school memo also cited Skype's EULA as another reason for the ban, characterizing it as granting Skype "usage rights" to the school's network. Its decision to ban the application followed the lead of other state-run universities in California such as Cal State-Dominguez Hills and the Univerisity of California-Santa Barbara which had previously banned the application.

On-campus criticism of San Jose State's decision was strong, with professor Steve Sloan rallying colleagues and students to protest the ban, which thwarted plans he had to use Skype for a discussion between his students and some textbook authors. Sloan believes Skype has significant educational value because it "is a pipe into a flat world where easy communications is a strategic advantage and the loss of which is a disadvantage."

Once news of the ban hit eBay's corporate offices—located about 10 miles away from the school—the company responded with a few ideas on how to address the school's concerns. eBay suggested that San Jose State install a proxy server to handle all Skype traffic, a solution the school believes will address its concerns. The other schools that have banned Skype have not yet indicated whether they'll relent and go with the proxy server solution or keep their bans in place.
http://arstechnica.com/news.ars/post/20060929-7866.html





With Venice Project, Skype Founders Test Video Waters
Margaret Kane

The people responsible for Skype and Kazaa are starting up a new venture, an interactive video site that aims to combine video with peer-to-peer networking.

According to an article in BusinessWeek, the venture--called The Venice Project--set up a Web site over the summer and will expand its beta test in November. The founders are hoping to get professional media companies to post content and ads online. Consumers would be able to access the streamed content via a secure P2P network, stopping, pausing and fast-forwarding at will, and sharing playlists with friends.

The project has drawn interest because of its founders, and the P2P angle, but it faces intense competition from everyone from YouTube to MySpace to media companies that have chosen to simply post their own content themselves. Will Venice stay afloat?
http://news.com.com/2061-11199_3-6122909.html





Hackers Claim Zero-Day Flaw in Firefox
Joris Evers

The open-source Firefox Web browser is critically flawed in the way it handles JavaScript, two hackers said Saturday afternoon.

An attacker could commandeer a computer running the browser simply by crafting a Web page that contains some malicious JavaScript code, Mischa Spiegelmock and Andrew Wbeelsoi said in a presentation at the ToorCon hacker conference here. The flaw affects Firefox on Windows, Apple Computer's Mac OS X and Linux, they said.

"Internet Explorer, everybody knows, is not very secure. But Firefox is also fairly insecure," said Spiegelmock, who in everyday life works at blog company SixApart. He detailed the flaw, showing a slide that displayed key parts of the attack code needed to exploit it.

The flaw is specific to Firefox's implementation of JavaScript, a 10-year old scripting language widely used on the Web. In particular, various programming tricks can cause a stack overflow error, Spiegelmock said. The implementation is a "complete mess," he said. "It is impossible to patch."

The JavaScript issue appears to be a real vulnerability, Window Snyder, Mozilla's security chief, said after watching a video of the presentation Saturday night. "What they are describing might be a variation on an old attack," she said. "We're going to do some investigating."

Snyder said she isn't happy with the disclosure and release of an exploit during the presentation. "It looks like they had enough information in their slide for an attacker to reproduce it," she said. "I think it is unfortunate because it puts users at risk, but that seems to be their goal."

At the same time, the presentation probably gives Mozilla enough data to fix the flaw, Snyder said. However, because the flaw appears to be in the part of the browser that deals with JavaScript, addressing it might be tougher than the average patch, she added. "If it is in the JavaScript virtual machine, it is not going to be a quick fix," Snyder said.

The hackers claim they know of about 30 unpatched Firefox flaws. They don't plan to disclose them, instead holding on to the bugs.

Jesse Ruderman, a Mozilla security staffer, attended the presentation and was called up on the stage with the two hackers. He attempted to persuade the presenters to responsibly disclose flaws via Mozilla's bug bounty program instead of using them for malicious purposes such as creating networks of hijacked PCs, called botnets.

"I do hope you guys change your minds and decide to report the holes to us and take away $500 per vulnerability instead of using them for botnets," Ruderman said.

The two hackers laughed off the comment. "It is a double-edged sword, but what we're doing is really for the greater good of the Internet, we're setting up communication networks for black hats," Wbeelsoi said.
http://news.zdnet.com/2100-1009_22-6121608.html





Mac OS X Exploit Emerges After Patch
Ed Oswald

Exploit code for a patched flaw in the Mac OS X operating system was discovered over the weekend, which allows an attacker to gain full system access through flaws in the core of the operating system. Apple provided a fix for the issue in a security update issued last week.

Researchers with Matasano Security, who are credited with discovering the flaw, said the malicious code appeared to be a zero-day exploit and may have been available on the Internet before Apple released its patch. Tuesday's news also highlights attackers' increasing focus on Mac OS X.

Whereas in the past, attacks have primarily been focused on Microsoft Windows, the increasing popularity of Apple has caused some hackers to re-focus their attention. Moreover, the Cupertino company's boasts that its operating system is "virus-free" may give cybercriminals extra impetus to attempt to hack Macs.

It should be noted that, on its own, the Mac OS X exploit does nothing malicious, only showing the attacker that they can gain the necessary user rights. Once the attacker has those rights, he or she can perform any action they want.

At the most risk are those with computers containing multiple user accounts, or those who use remote access features, Matasano said. Additionally, a user must be logged into their computer in order for an attacker to take advantage of the flaw.
http://www.betanews.com/article/Mac_...tch/1159893722





Sony Troubles Grow With Battery Recalls
Yuri Kageyama

Sony urged a dozen laptop computer makers Friday to recall more of its batteries that could overheat, the latest headache for the electronics company struggling to regain its luster as the world's premier electronics brand.

With two new recalls announced Friday, the number of lithium-ion batteries that are being replaced now stands at about 7 million worldwide, Sony spokesman Takashi Uehara said. He refused to estimate how much it would cost the company.

Toshiba Corp. and Fujitsu Ltd. were the latest to tell customers to return batteries. A day earlier, IBM Corp. and Lenovo Group announced a recall of 526,000 batteries. Last month, it was Apple Computer Inc. and Dell Inc.

Dell, the world's largest personal computer maker, also said Friday it is increasing the size of its recall by 100,000, to 4.2 million, after it received more information from Sony. Dell first announced its record-setting recall in August.

Apple followed days later, calling back 1.8 million Sony batteries used in Mac laptops.

Toshiba is recalling 830,000 Sony laptop batteries in its Dynabook, Qosmio, Satellite Portege and Tecra models. Fujitsu later said it was recalling an undisclosed number used in 19 of its laptop models worldwide. Both companies said more details would be released later.

Uehara said neither Toshiba nor Fujitsu have reported injuries or damage involving the battery problem, and Sony's recall request Friday was to "reassure customers and remove their concerns about accidents."

Sony has said the batteries could catch fire in rare cases when microscopic metal particles come into contact with other parts of the battery cell, leading to a short circuit. Typically a battery pack will shut down when there is a short circuit, but on occasion, the battery could catch fire.

David Yang, another Sony spokesman, said the battery cells in the recalled parts were made using an earlier-generation manufacturing process. Laptop makers, however, may have used those batteries in current or older models on the market.

The laptops being recalled by Dell, for instance, were sold between April 2004 through July 2006.

Yang said Sony's current manufacturing process has since added more safeguards to "greatly reduce" the number of loose particles that cause the batteries to short-circuit or overheat.

"It cannot be completely eliminated but we've taken steps to greatly reduce it," he said.

Sony said the battery cells in question were also placed in other electronics, such as portable DVD players and camcorders, but Sony has not received any reports of problems with those products.

U.S. Consumer Product Safety Commission spokeswoman Julie Vallese said notebook computers are more vulnerable because their microprocessors and intense user demands generate a lot of heat.

Sony is working with the agency to further pinpoint the production lines, manufacturing plants and electronics makers behind the affected battery cells. Vallese said the number of recalled batteries can be expected to rise as Sony steps up its investigation.

"Hopefully, it will all be spelled out at once, instead of having a battery recall announced every few weeks," Vallese said. "Sony is working to put out what it knows in one announcement later."

Vallese said there were about 50 incidents of burning batteries reported in the past five years during which tens of millions of notebook computers were sold in the U.S.

"While the risk of smoking or fire with these batteries is a real risk, the risk is low," said Vallese. "We don't want to give the notion that notebook computers are unsafe to use."

The recalls should not set a wave of panic, she said.

Friday's announcements marked the first time Japanese laptop makers were caught up in Sony's massive global battery recall.

It's a major embarrassment for the Japanese electronics and entertainment powerhouse, which is in the midst of a major overhaul of its operations involving closures of plants and divisions and job losses.

While Sony said it was still trying to assess the extent of the damage and additional spending for the battery problem, the Japanese newspaper Asahi said that an initially estimated cost of 30 billion yen ($254.2 million) could balloon to twice as much.

Sony shares closed 0.83 percent lower at 4,780 yen ($40.51) on the Tokyo Stock Exchange on Friday.
http://hosted.ap.org/dynamic/stories...09-29-18-33-39





Hitachi to Recall Laptop Battery Packs
Carl Freire

Japan's Hitachi Ltd. said Friday that it plans to recall about 16,000 laptop battery packs made by Sony Corp., a company spokesman said, the latest in a massive global recall of the batteries that can overheat and catch fire.

The battery packs were installed in the company's Flora 210W and Flora Se210 laptop personal computers for the Japanese market, Hitachi spokesman Masahiro Takahashi said.

Hitachi has not received any reports of problems with the batteries, the company said in a statement. It said it is undertaking the recall "for its customers' peace of mind."

Almost every major laptop maker has told customers to return Sony-made lithium-ion batteries, which can overheat and catch fire.

The largest recalls have been issued by Dell Inc., with 4.2 million batteries affected, and Apple Computer Inc., with 1.8 million batteries. Sony expects costs of at least $170 million related to the Dell and Apple recalls.

According to Sony, the batteries can short-circuit because shards of metal were left in their cells during production in Japan. Dell's recall came after six instances of overheating or fire involving Dell systems with Sony-made batteries.

Sony's battery woes have been one of many headaches for a company struggling to regain its reputation for high quality.

Sony has been trying to overhaul its electronics operations under Welsh-born Howard Stringer, the first foreigner to head the company, and has found success in its flat-panel television and digital camera operations.

But a delay in the launch of its much-anticipated PlayStation 3 video game console and weakness against rival Apple's iPod in portable music players has cast doubts on whether the maker of the legendary Walkman can regain its former glory.
http://hosted.ap.org/dynamic/stories...10-06-04-15-57





Sony BMG Appeals the Annulment of its European Merger
Nate Anderson

Sony BMG has appealed the annulment of its previously-approved European merger to the European Court of Justice. Instead of sending the merger decision back to the European Commission, the case will remain in the legal system, where it will no doubt take many months to be decided.

The saga began several years ago when Sony and BMG wanted to merge their music operations. The European Commission looked into the matter, decided it would not unduly affect competition, and approved it. Sony BMG thought all was well, as the merger also passed muster in North America.

They were wrong. IMPALA, a European association of independent music labels, tried to reverse the market consolidation that the merger brought about. They filed a complaint with the EU's Court of First Instance. In an unprecedented move, the court overturned the decision and told the Commission to take another hard look at the merger, which by this point had already happened.

Now, seeking to forestall the Commission from reopening the debate, Sony BMG has appealed the Court of First Instance's decision to the highest court in Europe, the Court of Justice (is there any other kind?). The company wants to avoid splitting itself back into two pieces and hopes the Court of Justice will rule that this isn't necessary and that the original Commission decision was proper. If the Court of Justice does not do so, Sony BMG is out of options, though there is no guarantee that a new Commission investigation would return a different result.
http://arstechnica.com/news.ars/post/20061005-7917.html





Analyst Sees 'Modest Success' for Zune
Barbara Ortutay

Microsoft Corp. will likely lose money on its new music player, Zune, against Apple Computer Inc.'s "industry-leading iPod profitability," an American Technology Research analyst said Friday.

Analyst Shaw Wu said a perhaps unintended side effect of the software company's entry into the portable music player market will be competition with its own licensing partners - even putting smaller ones out of business.

On Thursday, Microsoft said the 30 gigabyte Zune, designed to compete with the runaway success of the iPod, will ship Nov. 14 and list at $249.99, about the same as a 30-gigabyte iPod at $249.

Wu said Microsoft was caught off-guard by Apple's aggressive pricing and was forced to match the price to stay competitive. Microsoft not pricing lower, he added, shows Apple's "underappreciated scale and supply chain strength," where Microsoft will lose money - probably about $50 per Zune.

While people often focus on Apple's product innovation, marketing and brand name, the company is also well-run, from the operational standpoint, Wu said.

Apple's supply chain - from the procurement of components to manufacturing and distribution - is profitable and efficient, he added - much more so than five or 10 years ago when Dell was known as the model of efficiency.

Wu said while it remains to be seen whether the Zune, with its similar pricing, bulkier form and "inferior battery life," will take share from Apple and its loyal customers, it will likely at least see modest success thanks to Microsoft's vast resources and strong brand name.

This success, however, may be at the expense of Windows "partners," especially companies like Sony, Samsung, Toshiba and Creative Technology Ltd., and others that sell hard drive-based players.

Microsoft licenses Windows to the companies so their music players can run Microsoft's Media Player software. While the company also licenses Windows to PC makers such as Hewlett Packard and Lenovo, it does not make computers, so it's not in direct competition with them.

But the company's entry into the portable music player market, Wu said, will likely lead to a "civil war" with its own partners. As the market now stands, customers either buy iPods or something else, regardless of brand name. For now, the non-iPod market is very fragmented, with 15 to 20 players. Some of those, especially smaller ones such as iRiver or France's Archos, will probably exit the market - like Dell and RealNetworks did - or go out of business.

"Ironically, it will hurt them more than it will hurt Apple," Wu said.

He reiterated a "Buy" rating and a $91 target price on Apple.

Apple shares rose 3 cents to $77.04 in afternoon trading on the Nasdaq, while Microsoft lost 3 cents at $27.37.
http://hosted.ap.org/dynamic/stories...09-29-13-54-03





Best Buy Preps Music Service for Launch
Eric Bangeman

Best Buy has decided to dip its toes in the online music pond. Using RealNetwork's Rhapsody music subscription service, Rhapsody DNA, and SanDisk's Sansa e200R Rhapsody digital music player, the new Best Buy-branded service will be launched on October 15.
The new music service enters an already crowded field, one that is about to become even more competitive with the launch of Microsoft's Zune music player and music service next month. Best Buy hopes to entice users to try its new music service out by offering buyers two months of free music from its music store. Once the trial period is over, users will have to pay $14.99 per month for continued access to the catalog. As is typical with other services, individual downloads cost 99¢ each.

As far as technical details go, Best Buy's new service is going to be identical to Rhapsody's current offering of WMA-protected audio files with the additional features provided by Rhapsody DNA. Rhapsody DNA is based on Real's Helix DRM and gives users the ability to access their content across different types of devices, and provides what RealNetworks describes as an "end-to-end music experience" similar to the closed ecosystem approach that Apple uses and Microsoft will be using with the Zune.

The SanDisk Sansa player available will be the same flash-based e200R Rhapsody players available from RealNetworks with capacities of 2GB, 4GB, and 8GB with prices starting at $139.99 for the low-end model and $249.99 for the 8GB model.

What makes Best Buy's move particularly interesting is that it is the largest consumer electronics chain in the US and a significant source of sales for the iPod. It's also going to be one of the avenues for Microsoft to get the word out about its new Zune brand, as well as selling Zune players and accessories. Now Zune is going to be competing for floor space—and perhaps more importantly, the attention of Best Buy's blue-clad sales army—with the retail chain's own music service and preferred digital music player.

Like any other entrant to the digital music scene, Best Buy will have an uphill battle ahead of it. However, partnering with RealNetworks and using Rhapsody DNA gives it the ability to offer consumers a one-stop shop for hardware, software, and music. That's a step in the right direction, but there's a much larger gap Best Buy will have to close in order for its new service to be successful.
http://arstechnica.com/news.ars/post/20061005-7911.html





Apple Says Jobs Knew of Options
Laurie J. Flynn

Apple Computer said on Wednesday that an internal review had found that Steven P. Jobs, the chief executive, knew that the company was backdating some stock options granted to employees to inflate their value.

The company said Mr. Jobs did not knowingly receive any backdated options and had not benefited from the practice, and that he did not understand its accounting implications. A company spokesman, Steve Dowling, said it was possible that there had been “irregularities” with some options granted to Mr. Jobs, but he declined to elaborate.

Apple, riding high on the popularity of its iPod music player, repeated that it would most likely need to restate past financial statements, but said it had not yet determined the amount or for which periods.

“I apologize to Apple’s shareholders and employees for these problems, which happened on my watch,” Mr. Jobs said in a statement. “They are completely out of character for Apple.” Mr. Jobs said the company was working to resolve the remaining issues quickly.

Apple revealed in June that it had discovered irregularities related to stock options awarded between 1997 and 2001.

By doing so, it joined more than 100 companies, including Microsoft, that have announced investigations into their options practices.

At the time, Apple said it was examining a grant made to Mr. Jobs that may have been improper. Mr. Dowling would not discuss the specifics of that grant on Wednesday.

Apple also announced that Fred D. Anderson, an Apple director who was chief financial officer from 1996 to 2004, the period when the questionable grants were made, had resigned from the board, and said he had told the company that “he believes it is in Apple’s best interests” that he leave.

Mr. Anderson is now managing director of Elevation Partners, a high-profile private equity company he helped found after leaving Apple.

Roger McNamee, Elevation’s chief executive, said in an e-mailed statement that he had confidence in Mr. Anderson, whom he considered to have “uncompromising character,” and that he would remain part of the company.

Apple’s statement said the financial investigation “raised serious concerns” about the activities of two other former Apple officers, but did not name them. The company said it would share details with the Securities and Exchange Commission.

Apple said the investigation found no misconduct by anyone on the company’s current management team. Mr. Dowling said the company was not required to discuss Mr. Jobs’s role in the options grants, but was doing so in the interest of full disclosure. He said Mr. Jobs was not available for an interview.

Apple shares fell 66 cents, or 0.9 percent, in after-hours trading, after rising $1.30 in regular trading to close at $75.38.

Charles R. Wolf, an analyst with Needham & Company, said that investors were likely to respond favorably in the long term, and that he did not expect Apple’s restatement of earnings to be significant or to hurt its future performance.

“The major risk in the backdating of options was that somehow Steve Jobs was actively involved,” Mr. Wolf said. “The announcement today eliminated that possibility.”

Mr. Wolf said it was within reason that Mr. Jobs would not have paid attention to the backdating, particularly given that it was common and legal. “I don’t think he’d know an asset from a liability,” Mr. Wolf said of Mr. Jobs. “That’s not his game.”

One unusually large grant to Mr. Jobs had been under scrutiny. Apple disclosed on Jan. 19, 2000, that he had received options to buy 10 million shares, effective Jan. 12. Those options carried a strike price of $87.19, the stock’s lowest closing price in the two months up to that date; by Jan. 19, the stock had risen to $106.56.

The options later became worthless as Apple’s stock price declined. Mr. Jobs canceled most of his options in 2003 and was given restricted stock instead.

A week after Apple disclosed its investigation, two shareholder lawsuits filed in California charged current and former Apple executives and directors with manipulating stock grants. Those suits are still pending.

Apple said on Wednesday that stock option grants made on 15 dates between 1997 and 2002 appeared to have grant dates that preceded the approval of those grants. The company said the last one came in January 2002. Mr. Dowling said that the 15 dates represented 6 percent of all stock grants during the period.

At the time of the options grants, it was not uncommon for companies to disclose stock option awards days or weeks after a grant was made. But the Sarbanes-Oxley Act of 2002, which addresses corporate accountability, now requires companies to report option grants within two days.

Apple reported the findings after a special committee of outside directors, lawyers and accountants completed a three-month investigation, examining more than 650,000 documents.
http://www.nytimes.com/2006/10/05/te...05options.html





Apple C.E.O. Apologizes for Stock Practices
AP

Ignorance can be bliss, but it's not a tight defense, lawyers say. When Apple Computer Inc. disclosed Wednesday its internal investigation had uncovered some stock-option backdating, the company said CEO Steve Jobs was aware of the practice but unaware of its accounting implications. The probe also did not find any misconduct by Jobs or other current officers, the company said.

Many details remain unknown, but the acknowledgment did help appease Wall Street worries that Jobs, the legendary and charismatic leader of Apple, would somehow lose his position over a stock-option imbroglio that has ensnared more than 100 other companies nationwide.

In a blend of semantics and general legal analysis, however, securities experts say Jobs could still face some kind of penalty over the situation.

''Ignorance is usually not a good defense,'' said Jeffrey Siegel, a veteran securities lawyer and partner at Blank Rome LLC in New York. ''Executives are expected to understand the laws applicable to their companies and the rules of their required disclosures.''

The practice of backdating occurs when a stock option's exercise price is set at a point lower than the prevailing market price, which can inflate the recipient's award.

The manipulation itself isn't necessarily illegal, but securities laws require companies to properly disclose the practice in its accounting and settle any charges that may result.

If a company doesn't properly deduct the compensation-related expenses, profits could be exaggerated and taxes could be underpaid.

Siegel and other lawyers say it doesn't appear that any criminal charges would result since prosecutors have to prove intent to commit fraud and Apple's disclosure did not suggest that was the case here.

''Jobs' claim that he was 'unaware of the accounting implications' ... suggests that he may have made a good faith mistake in understanding the significance of the backdated options,'' said Scott Meyers, head of the litigation practice at Levenfeld Pearlstein LLC in Chicago.

But even with an ''inadvertent'' mistake, civil repercussions could occur, Siegel said. They could range from a ruling prohibiting the executive or company from committing further violations to monetary fines.

But it will all depend on the facts -- of which no one yet has a clear picture.

In any case, Apple faces more scrutiny.

Apple, which initiated its own stock options probe in June, has been voluntarily providing information to the Securities and Exchange Commission. It also announced the resignation of its former chief financial officer, Fred Anderson, from the board of directors. And it said its investigation raised ''serious concerns'' over the accounting actions of two unnamed former officers.

Citing an unnamed source, the Wall Street Journal reported Thursday that federal prosecutors have begun to investigate Apple, and that Apple lawyers met with prosecutors and securities regulators earlier this week.

SEC spokesman John Heine would not confirm or deny whether the agency has launched an investigation. The spokesman for the U.S. Attorney's Office in the Northern District of California, which created a stock-options task force in July, did not return a phone call to comment.

Apple spokesman Steve Dowling declined to confirm or deny whether authorities were investigating the matter, but said that ''Apple continues to proactively inform the SEC of its findings.''
http://www.nytimes.com/aponline/busi...k-Options.html





Government Keeps Control of Web Domain Group ICANN

The U.S. Commerce Department said on Friday it would retain oversight for three more years of the company that manages Internet domain names, renewing an agreement that was scheduled to expire this weekend.

The government said it signed a new agreement with the Internet Corporation for Assigned Names and Numbers (ICANN), which controls addresses such as ".com" and country domain names such as ".cn" for China.

The U.S. government has previously said it plans to eventually turn over complete control of ICANN, a nonprofit group, to the private sector. The new agreement calls for a review in 2008 of ICANN's progress toward becoming more accountable, the Commerce Department said.

"We are committed to working with ICANN to ensure that they have the established transparency and accountability mechanisms necessary to be a stable, lasting and independent institution," said John Kneur, acting assistant secretary for communications.

The current three-year agreement between the U.S. government and ICANN was scheduled to expire on September 30.

ICANN officials said they were pleased with the plan.

"This is a major step forward for the Internet community," said Paul Levins, an ICANN vice president. "This is about the U.S. government saying that ICANN should be very clearly put on a path toward autonomy."

For example, under the new agreement, ICANN will no longer have to file reports with the Commerce Department every six months, Levins said.

"We as an organization will no longer have our work prescribed by the Department of Commerce," he said, adding it was a key step in weaning ICANN from U.S. government oversight.

The Commerce Department said it consulted with more than 700 companies, trade groups, foreign governments and individuals before deciding to renew the agreement.

Some critics say the U.S. government has too much control over ICANN, which has evolved into a crucial engine for global commerce, communications and culture.

The government posted its new three-year agreement on the Internet at www.ntia.doc.gov.
http://today.reuters.com/news/articl...chnologyNews-1





Youths no Longer Predominant at MySpace
Anick Jesdanun

It's not all youths on MySpace. Half of the site's users are 35 or older, according to comScore Media Metrix's analysis of its U.S. Internet traffic measurements. Only 30 percent are under 25 despite a common belief that the site is mostly populated with kids and young adults.

Just a year ago, teens under 18 made up about 25 percent of MySpace, the popular online hangout run by News Corp. That's now down to 12 percent in the comScore analysis released Thursday.

By contrast, the 35-54 group at MySpace grew to 41 percent in August, from 32 percent a year earlier.

"This analysis confirms that the appeal of social-networking sites is far broader," said Jack Flanagan, executive vice president for comScore, adding that the data suggest that social networking is becoming mainstream.

Sites such as MySpace encourage their users to stay in touch by offering tools such as message boards, photo sharing and personal profile pages. Members can expand their networks by adding other users as friends and, in turn, connecting with their friends.

The study was based on comScore's regular panels for measuring Internet audiences, rather than MySpace's registration information, where users often lie about their age.

ComScore also reported that MySpace had 56 million unique U.S. visitors in August, much less than the 100 million-plus registered users MySpace has worldwide. The company has said about 10 percent of its users are abroad. A better explanation for the gap is the fact that many people have multiple profiles, each counted separately by MySpace but not by comScore.

Facebook, meanwhile, had 15 million unique visitors, Xanga 8 million and Friendster 1 million, according to comScore.

Of the four social-networking services studied, Xanga skews youngest, with 20 percent of its users under 18 (though MySpace and Facebook both had more under-18 users overall given its larger size). Facebook, which started as a hangout for college campuses, had the biggest share among those 18 to 24. Friendster and MySpace had high appeal among the 25 and up.

Flanagan said the analysis shows each site occupying a slightly different niche, allowing all to coexist rather than compete.

"MySpace.com has the broadest appeal across age ranges, Facebook.com has created a niche among the college crowd, Friendster.com attracts a higher percentage of adults, and Xanga.com is most popular among younger teens," he said in a statement.

The numbers, however, do not reflect Facebook's recent relaxation of eligibility requirements. Before, users generally had to be part of a college or high school network, although some companies and organizations were later added. Starting last month, a user only needs a valid e-mail address.
http://hosted.ap.org/dynamic/stories...10-05-23-47-11





Some Youth Rethink Online Communications
Martha Irvine

For some, it would be unthinkable - certain social suicide. But Gabe Henderson is finding freedom in a recent decision: He canceled his MySpace account.

No longer enthralled with the world of social networking, the 26-year-old graduate student pulled the plug after realizing that a lot of the online friends he accumulated were really just acquaintances. He's also phasing out his profile on Facebook, a popular social networking site that, like others, allows users to create profiles, swap message and share photos - all with the goal of expanding their circle of online friends.

"The superficial emptiness clouded the excitement I had once felt," Henderson wrote in a column in the student newspaper at Iowa State University, where he studies history. "It seems we have lost, to some degree, that special depth that true friendship entails."

Across campus, journalism professor Michael Bugeja - long an advocate of face-to-face communication - read Henderson's column and saw it as a "ray of hope." It's one of a few signs, he says, that some members of the tech generation are starting to see the value of quality face time.

As the novelty of their wired lives wears off, they're also are getting more sophisticated about the way they use such tools as social networking and text and instant messaging - not just constantly using them because they're there.

"I think we're at the very beginning of them reaching a saturation point," says Bugeja, director of Iowa State's journalism school and author of "Interpersonal Divide: The Search for Community in a Technological Age."

Though he's not anti-technology, Bugeja often lectures students about "interpersonal intelligence" - knowing when, where and for what purpose technology is most appropriate.

He points out the students he's seen walking across campus, holding hands with significant others while talking on cell phones to someone else. He's also observed them in coffee shops, surrounded by people, but staring instead at a computer screen.

"True friends," he tells them, "need to learn when to stop blogging and go across campus to help a friend."

In the meantime, he says, many professors have begun setting their own limits, banning students from surfing the Internet during lectures.

Of course, these forms of communication continue to dominate. In the October issue of the journal Pediatrics, for instance, researchers at Stanford University released findings from an ongoing study of students at an upper-middle income high school in the San Francisco area. One written survey found that the large majority of students were members of at least one social networking site - 81 percent of them on MySpace. They also found that 89 percent of those students had cell phones, most of them with text and Web surfing capabilities.

They are more wired than ever - but they're also getting warier.

Increasingly, they've had to deal with online bullies, who are posting anything from unflattering photos to online threats.

Privacy issues also are hitting home, most recently when students discovered that personal updates on their Facebook pages were being automatically forwarded to contacts they didn't necessarily want to have the information. Facebook was forced to let users turn off the data stream after they rebelled.

Increasingly, young people also are realizing that things they post on their profiles can come back to haunt them when applying for school or jobs.

"Maybe everything we thought was so great wasn't as great as we thought," says Tina Wells, the 20-something CEO of Buzz Marketing, a New York-based firm with young advisers all over the world.

She is among those who wonder if, sometimes, simple face-to-face communication might work better.

In many instances, says 27-year-old Veronica Gross, it does.

"By and large, I would say most of my very geeky social circle prefers face-to-face interaction to mere Internet communication," says Gross, an avid online gamer who is also a doctoral student studying neuroscience at Boston University.

She sees faceless communication as a supplement to everyday interactions, not a replacement. This sentiment also was the conclusion of a study done by the Pew Internet & American Life Project. The study, released earlier this year, found that Internet users tend to have a larger network of close and significant contacts - a median of 37 compared with 30 for nonusers.

Indeed, Steve Miller, a sophomore at Rollins College in Winter Park, Fla., says social networking can be an "extremely effective" way to publicize events to large groups - and even to help build a sense of community on campus.

He joined Facebook as a way to meet people before he started school, but also quickly learned that it had limitations, too.

"I discovered, after meeting many of these (online) friends, that a good Facebook profile could make even the most boring person somewhat interesting," says Miller, who's 19 and now a sophomore.

He's also not always thrilled with text messaging via cell phones, which can be a quick way to say "have a good day" or to coordinate a plan to meet up at a noisy concert.

"Text messaging has become the easy way out," Miller says.

He's had friends cancel a night out with a text message to avoid having to explain. He's also seen some people ask for dates via text to escape the humiliation of hearing a "no" on the phone or in person.

"Our generation needs to get over this fear of confrontation and rejection," he says.

The focus, he and others say, needs to be on quality communication, in all formats.

Back in Iowa, Henderson is enjoying spending more face-to-face time with his friends and less with his computer. He says his decision to quit MySpace and Facebook was a good one.

"I'm not sacrificing friends," he says, "because if a picture, some basic information about their life and a Web page is all my friendship has become, then there was nothing to sacrifice to begin with."
http://hosted.ap.org/dynamic/stories...10-06-11-50-11





Rumble at MySpace
Andrew Ross Sorkin

A battle is brewing over last year’s sale of MySpace, a deal that is widely seen as the marquee transaction of the Web’s second wave. The contenders may seem comically mismatched — MySpace’s founder is squaring off with media titan News Corporation — but the dispute has begun to attract a lot of attention.

It was already known that Brad Greenspan is suing the site’s former parent company, Intermix, and others over last year’s deal to sell itself for $580 million. Mr. Greenspan, who was at one time Intermix’s C.E.O., contends the sale negotiations were rigged to produce a low-ball price for MySpace, a popular Web site that allows users to create personal pages and link to others’ pages.

Since the deal closed, MySpace has continued to flourish, and one analyst recently suggested that it could be worth as much as $15 billion in a few years’ time. This huge increase in value has caused many people to rave about the deal-making prowess of News Corporation chairman Rupert Murdoch.

On Thursday, however, Mr. Greenspan stunned the Web community by releasing exceprts from internal e-mails and legal depositions that he says support his claim that the transaction was “one of the largest M&A scandals in history.” Among other things, the materials posted to Mr. Greenspan’s Web site, FreeMySpace.com, quote emails sent shortly before the sale agreement from Intermix’s then-C.E.O. saying, “I am looking forward to supporting the 20B dream.” This, according to Mr. Greenspan, suggests that Intermix knew MySpace would be worth far more than its sale price in the near future.

Mr. Greenspan also calls for a federal investigation and an unwinding of the sale, alleging that Intermix hid key revenue data from shareholders in order to facilitate a deal with News Corporation.

There is some irony in Mr. Greenspan’s charge that investors got fleeced in last year’s transaction. At the time, some analysts said Mr. Murdoch had grossly overpaid for MySpace, citing an amorphous business model and the unpredictability of its “coolness factor.”

In addition, some analysts say MySpace may have News Corporation to thank for much of its now-lofty valuation. “If MySpace had stayed independent it wouldn’t be worth as much as now,” Laura Martin, an analyst at Soleil Securities, told Bloomberg News. “[News Corp. subsidiary] Fox created the value.”

Meanwhile, emailed comments touting $20 billion valuations could simply be examples of pre-deal boasting. More interesting, perhaps, are snippets posted to FreeMySpace.com about Viacom’s ultimately failed attempts to broker its own deal with MySpace and details about how the investment bankers for the various parties handled the negotiations.

A major element of Mr. Greenspan’s argument is that Intermix’s management sought a quick deal with News Corporation, rather than soliciting rival offers, in part because Intermix was being investigated by New York Attorney General Eliot Spitzer at the time for installing software onto home computers unbeknownst to users.

The MySpace deal has reverberated through the Web and media communities, inspiring envy at many of News Corporation’s rivals. In fact, Viacom’s failure to win MySpace was one of the reason that Tom Freston was recently forced out as Viacom’s chief executive.

In a response sent to BusinessWeek, however, News Corp. dismisses Mr. Greenspan’s latest report as “sour grapes”:

“It’s unfortunate that Mr. Greenspan continues to issue press releases complaining about a deal that many industry experts initially believed was a risk for News Corp. to take. We’ve strategically built this business since the acquisition and are just now beginning to realize real financial value. This is simply a case of sour grapes making for loud complaints.”

BusinessWeek points out that Mr. Greenspan is not the only one targeting Intermix in court. Shareholders are participating in at least two separate lawsuits alleging everything from violations of proxy statements to an unfair sales process that prevented other companies from bidding for MySpace.

In addition, one lawyer apparently not involved in the case suggested to BusinessWeek that post-deal lawsuits such as these are not to be taken lightly. “It’s very hard to get this type of lawsuit dismissed, to prevent them from going to trial,” he told BusinessWeek.
http://dealbook.blogs.nytimes.com/?p=8083





YouTube’s Video Poker
Saul Hansell

Chad Hurley effects a calm, almost detached demeanor, even as the Web site he runs, YouTube.com, has provoked a frenzy of consternation among executives of record labels, TV networks and movie studios. For millions of Internet users, the site that opened to the public less than a year ago provides a daily fix of odd and interesting video clips, from White House speeches to frat house pranks.

YouTube has also become a vast repository of video taken without permission from television shows and movies, not to mention home movies constructed — with nary a cent paid in royalties — from commercial music and imagery.

Mr. Hurley was surrounded by curious media executives at Allen & Company’s annual Sun Valley mogulfest in July. They wondered: friend or foe? Is he earnestly working to make YouTube and its exuberant users conform to the existing standards of copyright law and contractual obligations? Or is he cynically flouting the law to enable YouTube to grow rapidly, calculating that he will be able to cut a more advantageous deal later, or perhaps sell the company to someone else who will be able to sort through the mess of liabilities?

In an interview this week, Mr. Hurley, not surprisingly, portrayed himself as mainly trying to improve the site for its users while working to find arrangements that will satisfy Hollywood.

“There’s going to be bumps along the way, but we’re trying to make an effort to make the new model work for everyone,” he said. “We’ve been developing features and working on the problem. I don’t think we have been just sitting back and just buying fancy furniture.”

YouTube has started to attract mainstream advertisers and the site has become financially stable, Mr. Hurley said, despite the huge cost of showing more than 100 million video clips a day. Potentially most significant, Mr. Hurley pointed to a deal signed recently with Warner Music that he hopes will be a model for dealing with Hollywood and record companies from now on. YouTube is developing technology that will identify Warner music used in a video that is uploaded. When the site plays those videos, it will share some of its advertising revenue with Warner and others with copyrighted material that is used.

Moreover, Mr. Hurley says, there is much more to YouTube than piracy. And professionals are creating programs specifically for YouTube: the recent series of clips posted under the name Lonelygirl15, for example, showed an actress pretending to be a disaffected teenager.

Others are not so sure. Doug Morris, the chief executive of the Universal Music Group, said at an investor conference recently that YouTube and MySpace, the social networking site, “are copyright infringers and owe us tens of millions of dollars.”

And Mark Cuban, who founded Broadcast.com, an early Internet video site that was bought by Yahoo, argued on his blog that YouTube did not have a viable business other than piracy.

“It is absolutely reminiscent of Napster,” Mr. Cuban said in an interview. “It’s nice that they say ‘it’s different this time,’ but it’s not.”

Mr. Cuban argues that the deal with Warner is unworkable because it is too complex, with so many parties with potential claims on videos.

Alex Zubillaga, Warner’s executive vice president for digital strategy, said in an interview that these problems could be solved. “This is a framework that allows us to monetize our assets while we unleash the creativity of the user,” he said.

Warner, he said, is reaching out to other major media companies to negotiate how royalties from YouTube will be split in cases where more than one song or video program is included on one clip.

Still, Mr. Zubillaga said, dealing with YouTube “is not the typical situation we run into every day” because the company has not thought through many of the issues raised by its business. “Part of what we are doing is working with them to figure out what their business model can be,” he said.

Now 29, Mr. Hurley was a graphic designer at PayPal, the money transfer system. After it was acquired by eBay, he and Steve Chen, a former PayPal engineer, were looking for a new company to start. They decided to make a site that would help users exchange video files, much as many sites had been created to hold photographs.

Mr. Hurley found a backer in Roelof Botha, the former chief financial officer of PayPal and now a partner with Sequoia Capital, the powerful Silicon Valley venture capital firm that had backed Yahoo, Google and others. Sequoia is betting so heavily on YouTube that it has provided all of the company’s financing so far, rather than bringing in other firms, as is common.

This was hardly a unique idea. There are several hundred video sharing sites. But YouTube took off quickly. Its technology was simple and easy to use. In addition, it tapped into the rapid growth of MySpace. YouTube developed a system that would allow anyone to insert a video directly onto a Web page. MySpace users leapt on this technology to show videos to their friends, and in turn they spread the YouTube logo throughout MySpace.

Last year, MySpace provided some 20 percent of the visitors to YouTube. That proportion has fallen sharply, in part because MySpace now offers its own video storage system. In the meantime, YouTube has established itself as the best place to look for videos, especially from professional programs.

YouTube gained a lot of notoriety as the place where users traded copies of “Lazy Sunday,” a sketch that appeared on “Saturday Night Live” and became a cult hit. And much of the activity on the site is watching clips from “The Daily Show,” “The Colbert Report” and other broadcast programs.

YouTube is relying on the Digital Millennium Copyright Act, which in general does not require Internet companies to screen material they store in advance. Rather, the law says Web sites must remove content when a copyright holder informs them of a violation.

But there are many who wonder how safe YouTube’s position is. The Supreme Court ruled in the MGM v. Grokster case that music file sharing systems could be held liable for inducing users to violate copyrights. That said, many other mainstream sites, like MySpace and Yahoo, also post videos without trying to screen out copyrighted material. (Most do scan for pornography, though.)

Yet even Hollywood executives interested in finding a way to work with YouTube are perplexed about how to go about it. They are happy to use YouTube as a free place to distribute movie trailers and TV clips, but users prefer the very best bits of hit shows.

“The yin and yang of working with YouTube is you want to use them as a way to promote our programs but we don’t want to give away the store,” said John Miller, the chief marketing officer of NBC Universal television. NBC has bought advertising on YouTube and uploaded clips promoting shows like “The Office.” And it has also actively demanded that the site take down clips from “Saturday Night Live.”

Mr. Hurley hopes to be able to solve this concern by offering studios a share of ad revenue as it has for Warner Music. But for now YouTube does not have much advertising revenue. It displays graphical banner ads on some pages and text ads on its search pages. But Mr. Hurley rejects inserting commercials in front of video segments, an increasingly common advertising format.

Peter Levinsohn, the president of Fox Digital Media, the News Corporation unit that looks after Internet distribution of movies and television programs, said that YouTube’s advertising revenue, typically measured in cost per 1,000 views, or cpm, appeared to be low.

“If they get a relatively low cpm, and give us the majority, there won’t be enough left for them to sustain themselves,” he said.

Mr. Hurley responds simply that the company is developing new, more engaging advertising formats that will lure people to watch commercials that interest them. And he argues that YouTube’s bargaining power with Hollywood will increase along with its popularity.

“We have the most content and we have the largest audience,” he said. “When people are making the decision to put a piece of content online they really do truly want to get it in front of the largest audience.”
http://www.nytimes.com/2006/09/30/business/30tube.html





Google Is Said to Set Sights on YouTube
Andrew Ross Sorkin and Peter Edmonston

YouTube, the popular video-sharing Web site that has yet to celebrate its first anniversary or its first profit, is quickly becoming the must-have prize for media and technology giants.

Google is in discussions to acquire YouTube for $1.6 billion, people involved in the talks said yesterday. While the talks are in the early stages, and may fall apart, the size of Google’s offer may push YouTube closer to a deal. Other companies have also expressed interest and could swoop in with a higher offer.

Microsoft, Yahoo, Viacom and the News Corporation, among others, have all visited YouTube’s headquarters in San Mateo, Calif., in recent months to inquire about buying the company.

The frenzied hunt to acquire the next hot Internet property — MySpace last year and now YouTube — has become reminiscent of the first Internet boom, as companies bid up prices of sites whose ability to generate profits is the subject of much debate.

A deal for YouTube would be the crowning moment for a property that emerged as a cultural phenomenon almost immediately after it officially began last December. Its site, which delivers more than 100 million video clips a day, allows users to share a broad array of offerings from news clips to home movies to spoofs — sometimes funny but often simply crude — created by ordinary users.

Almost single-handedly, YouTube has both popularized the sharing of videos and empowered would-be movie makers around the world. The site is also facing possible legal challenges over the unauthorized posting and sharing of videos. Yet a number of media companies would prefer to embrace YouTube as a partner, rather than treat it as a pariah, as was the case with Napster.

If YouTube agrees to a deal, it would be a sudden change of heart. Chad Hurley, a founder of the company, has said that he prefers to stay independent. “We’re not even thinking about being acquired or going public,” he said in a meeting with New York Times editors and reporters last month.

A spokesman for Google declined to comment. A spokeswoman for YouTube did not return calls for comment.

YouTube’s meteoric rise has made it one of the most closely watched of the new generation of Internet companies created since the technology bust of 2000 and the fallow period that followed. The millions of people that visit YouTube each day make it a valuable property, though it has yet to turn a profit.

Rumors of YouTube’s talks with Google first appeared yesterday on TechCrunch, a Web site about Internet start-ups.

The $1.6 billion price tag, while seemingly rich for so young a company, makes sense, research analysts said.

“That’s expensive but not unreasonable,” said Charlene Li, an analyst with Forrester Research. Ms. Li estimated that the company has about 50 million users worldwide, which works out to a purchase price of about $32 a user.

The deal would make sense from the perspective of both companies, Ms. Li and others said.

“Google Video has not gotten any traction,” Ms. Li said.

Despite Google’s broad reach as an Internet search service and its well-known brand name, Google Video has only a 10 percent market share, according to Hitwise, which monitors Web traffic. YouTube has a 46 percent share, and MySpace has 23 percent.

“YouTube figured out what Google and Yahoo and Microsoft and all the others in the marketplace didn’t,” she said. “It’s not about the video. It’s about creating a community around the video.”

A link-up with Google might also carry benefits for YouTube as it tries to clear up its legal picture. Google and its lawyers are already addressing similar questions involving copyrighted works on the Internet and working on technology to deal with them.
“Who is in a better position to develop that technology,” Ms. Li wrote in a blog entry posted yesterday. “Sixty burnt-out people at YouTube or the legendary technical minds at Google?”

Mr. Hurley and Steve Chen started YouTube after the two struggled to share videos of a dinner party in January 2005. In a sense, YouTube is the classic Silicon Valley start-up. The pair, working out of a garage and still in their 20’s, went on to secure $3.5 million in venture capital from Sequoia Capital, one of the two venture firms that invested in Google when it was a small, relatively anonymous company.

The recent takeover frenzy is being fueled in part by the News Corporation’s acquisition of MySpace, a social networking site immensely popular among teenagers. The company, controlled by Rupert Murdoch, bought MySpace last year for $580 million in cash, and it is now worth as much as $2 billion by some analysts’ estimates.

Sumner M. Redstone, the chairman of Viacom, recently called losing MySpace to Mr. Murdoch “humiliating.” He also said that one reason he fired Tom Freston as Viacom’s chief executive last month was because he failed to secure that deal and did not move fast enough to push Viacom’s Internet activities.

Yahoo, meanwhile, is in negotiations to buy Facebook, a social networking site originally aimed at college students, for more than $1 billion, according to people involved in those talks.

But while media moguls are fascinated by YouTube, they also harbor deep concerns.

The site’s mix of videos includes many clips from television shows and movies, often posted without a thought to who might own the copyright. As a result, there are widespread concerns that YouTube may eventually draw a hailstorm of lawsuits — especially if the company becomes part of a deep-pocketed acquirer.

Doug Morris, the chief executive of the Universal Music Group, recently called YouTube and MySpace “copyright infringers” and said that the sites “owe us tens of millions of dollars.”

Mark Cuban, who founded Broadcast.com, an early Internet video site that was bought by Yahoo, has suggested that YouTube is essentially a business based on piracy.

Some in the industry have even compared YouTube to Napster, which, before it adopted its current subscription-based model, was a hugely popular free music-swapping service. Lawsuits from the recording industry forced the original Napster to shut down, and it eventually filed for bankruptcy protection.

YouTube says it is different from Napster because it removes content when a copyright holder informs the company of a violation. It points to the Digital Millennium Copyright Act, which in general does not require Internet companies to screen material in advance.

Despite these legal uncertainties, YouTube holds obvious appeal for any potential acquirer. Buying YouTube would instantly vault Google to the lead in the business of online video, which is drawing increased interest from advertisers. Its own fledgling offering, Google Video, remains a relatively small player.

At $1.6 billion, YouTube would be Google’s most expensive acquisition. In fact, it would cost nearly as much as Google’s total acquisitions budget since 2001, according to a recent estimate from Citigroup. Google’s largest investment to date was its $1 billion equity investment in Time Warner’s AOL subsidiary, which was part of a multiyear advertising deal.

Google had cash and marketable securities of about $9.8 billion as of June 30, and its market capitalization stands at about $129 billion.

Gary Rivlin and Saul Hansell contributed reporting.
http://www.nytimes.com/2006/10/07/te...rtner=homepage





Swedish Video Site Trounces YouTube
Louis Roper

A Swedish web site where members of the public can upload their own video clips claims to be more popular than the much-hyped YouTube - at least in Scandinavia.

Traffic figures released this week show that Bubblare.se has up to 30 times more viewers for Scandinavian film clips than the American market leader, YouTube.

"This shows what we've thought all along - that local beats global," said Bubblare's managing director Oskar Kalmaru in a press statement.

"What's funny in Shanghai isn't necessarily funny in Borås."

Bubblare was launched in July and operates along the same lines as YouTube. The only difference is the language.

"Because we only show Scandinavian clips, the recognition factor much higher," said Kalmaru, adding that it is easier to find Swedish clips on Bubblare than on YouTube.

According to Bubblare's own figures, the Moderate Party's internet campaign, Mahogany Mats, was watched 35,000 on the site, compared to just 400 times on YouTube.

One of the most popular clips is the Soviet national anthem - with Swedish text. That has been viewed 51,000 times on Bubblare and only 8,000 times on YouTube.

The goal for Bubblare, Oskar Kalmaru told business site N24, is to be one of Sweden's 30 most popular web sites within a year.

"It's a goal I'm convinced we can reach," he said.
http://www.thelocal.se/article.php?ID=5075





Anti-U.S. Attack Videos Spread on the Internet
Edward Wyatt

Videos showing insurgent attacks against American troops in Iraq, long available in Baghdad shops and on Jihadist Web sites, have steadily migrated in recent months to popular Internet video-sharing sites, including YouTube and Google Video.

Many of the videos, showing sniper attacks against Americans and roadside bombs exploding under American military vehicles, have been posted not by insurgents or their official supporters but apparently by Internet users in the United States and other countries, who have passed along videos found elsewhere.

Among the scenes being viewed daily by thousands of users of the sites are sniper attacks in which Americans are felled by snipers as a camera records the action and of armored Humvees or other military vehicles being hit by roadside bombs.

In some videos, the troops do not appear to have been seriously injured; in one, titled “Sniper Hit” and posted on YouTube by a user named 69souljah, a serviceman is knocked down by a shot but then gets up to seek cover. Other videos, however, show soldiers bleeding on the ground, vehicles exploding and troops being loaded onto medical evacuation helicopters.

At a time when the Bush administration has restricted photographs of the coffins of military personnel returning to the United States and the Pentagon keeps close tabs on videotapes of combat operations taken by the news media, the videos give average Americans a level of access to combat scenes rarely available before, if ever.

Their availability has also produced some backlash. In recent weeks, YouTube has removed dozens of the videos from its archives and suspended the accounts of some users who have posted them, a reaction, it said, to complaints from other users.

More than four dozen videos of combat in Iraq viewed by The New York Times have been removed in recent days, many after The Times began inquiries.

But many others remain, some labeled in Arabic, making them difficult for American users to search for. In addition, new videos, often with the same material that had been deleted elsewhere, are added daily.

Russell K. Terry, a Vietnam veteran who founded the Iraq War Veterans Organization, said he had mixed feelings about the videos.

“It’s unfortunate there’s no way to stop it,” Mr. Terry said, even though “this is what these guys are over there fighting for: freedom of speech.”

One YouTube user, who would not identify himself other than by his account name, facez0fdeath, and his location, in Britain, said by e-mail that he posted a video of a sniper attack “because I felt it was information the U.K. news was unwilling to tell.”

“I was physically sickened upon seeing it,” he said, adding, “I am wholly opposed to any form of censorship.”

The video he posted, which had been viewed more than 33,000 times, was removed earlier this week.

Another YouTube user, who said he was a 19-year-old in Istanbul and who posted more than 40 videos of Iraq violence, said via e-mail that “anti-war feelings and Muslim beliefs (the religion of peace) motivates me.”

Neal O. Newbill, a freshman at the University of Memphis who viewed some of the YouTube videos and posted comments on them, said in an interview that he was enraged by the recorded chants of “Allahu Akbar,” Arabic for “God is great,” that follow some of the sniper attacks.

But Mr. Newbill added that he was awed by the size of the blasts from the improvised explosive devices, or I.E.D.’s, used against American vehicles. A son, nephew and grandson of American veterans, Mr. Newbill said he had sought out the videos, searching on YouTube for “I.E.D.,” “because I like watching stuff blow up.”

The Web sites also contain a growing number of video clips taken by American soldiers. One shows the view from the back of a truck containing several members of a platoon, whose vehicle then hits an I.E.D. and is turned on its side. A few videos also show American servicemen or private security guards firing at attackers, and one shows an American rocket-propelled grenade hitting a building from which insurgents are firing.

A spokesman for United States Central Command, which oversees troops in Iraq, said the military was aware of the use of common Internet sites by both insurgent groups and American military personnel.

“Centcom is aware we are facing an adaptive enemy that uses the Internet as a force multiplier and as a means of connectivity,” Maj. Matt McLaughlin, the spokesman, said by e-mail.

While posting of Web logs, pictures and videos by American troops is subject to military regulations, Major McLauglin said, “Al Qaeda uses the Internet and media to foster the perception that they are more capable than they are.”

Some of the videos are obvious propaganda, with Arabic subtitles and accompanying music, while others simply have scenes without sound or graphics. They appear to be real, though the results of attacks are not always clear.

One frequently posted video shows individual photographs of several hundred American soldiers allegedly killed by a Baghdad sniper referred to as Juba. But a television news report from the German weekly Der Spiegel that also has been posted on the video sites shows an interview with one American soldier whom the insurgent group claimed to have killed but whose protective vest stopped the sniper’s bullet.

Geoffrey D. W. Wawro, director of the Center for the Study of Military History at the University of North Texas and a former instructor at the United States Naval War College, said the erosion of the command structure of terrorist and insurgent groups had led them to increase their reliance on the Internet and videos to gain recruits.

American troops, too, have always sent snapshots home from the front, Mr. Wawro said, and digital pictures and video are simply a new incarnation of that.

“This is how the new generation does things,” he said.

“It results in a continued trivialization of combat and its effects,” Mr. Wawro added, “but no one feels completely comfortable saying, Don’t do it.”

YouTube does feel comfortable saying so, however, as does Google Video. Both have user guidelines that prohibit the posting of videos with graphic violence, a measure that spokeswomen for each service said was violated by many of the Iraq videos.

Julie Supan, senior director of marketing for YouTube, said the company removed videos after they were flagged by users as having inappropriate content and were reviewed by the video service.

In an e-mail message, Ms. Supan said that among the videos removed were those that “display graphic depictions of violence in addition to any war footage (U.S. or other) displayed with intent to shock or disgust, or graphic war footage with implied death (of U.S. troops or otherwise).”

David Gelles and Omar Fekeiki contributed reporting from Berkeley, Calif.
http://www.nytimes.com/2006/10/06/te...wfSH+qGcpI0pCg





The Fast and the Furious: Tokyo Drift (HD DVD)

HD Bonus Content Review
Peter M. Bracke

Here is where 'The Fast and the Furious: Tokyo Drift' sets itself apart from all next-gen releases that have come before (and that includes you, too, Blu-ray). In a bid for high-def supremacy, Universal is seeking to expand the boundaries of the "In-Movie Experience" we're already familiar with. Though technically "interactive," IME is really just a pre-edited video commentary with two modes -- on or off -- and the few titles so far that have included the feature (such as 'The Bourne Supremacy,' 'Constantine' and 'Terminator 3') don't really let you "customize" the experience in any appreciable way. But 'Tokyo Drift' attempts to change all that, bringing true on-the-fly, user-controlled supplements to a pre-recorded video format.

Which makes my job as a reviewer now next to impossible. I'm not sure exactly how to "review" an experience that, for the first time on an optical disc format, does not exist in the linear sense. Unlike an audio commentary, or a featurette, or a bunch of deleted scenes, there is not necessarily a "start" and "stop" time to these extras. No beginning, middle and end. It is almost like a new paradigm shift in how we consume supplemental material, or, to make a bad analogy, like customizing a hot rod to your own tastes, then driving it around the track of your choosing. Weird, I know. But once you get the hang of it, rather tantalizing.

Let me try to explain the technobabble side of things. For 'Tokyo Drift,' Universal has utilized the HD DVD's format's enhanced (and until now largely untapped) iHD authoring environment. It allows for a variety of pre-encoded material (video, audio, text overlays, etc.) to be stored and accessed separately or together, as well as in real-time and on-the-fly, by users during playback. Multiple audio streams can be encoded on a disc and "mixed live" by the player for integrated supplemental audio content, picture-in-picture video streams can be displayed simultaneously, and even graphic overlays can be "mapped" to specific objects on the screen. If it sounds futuristic, it is, and 'Tokyo Drift' is only the beginning of the possibilities. (Note that because HDi is a mandatory part of the HD DVD spec, all players bearing the logo must play it -- so no worries about firmware upgrades and the like here. If you have a real HD DVD player, it should play any title with HDi without hiccups.)

As far as the real-world experience goes, Universal has dubbed the user interface on 'Tokyo Drift' "U-Control." There are on-screen instructions to guide you, but anytime throughout the movie, you can just switch on the features you want to watch via the remote. For example, if you are watching the film and decide that during a certain scene you want to see the director's commentary as a picture-in-picture video stream, just make sure you are in U-Control mode and activate the feature -- then turn it off when you're finished. Same with the multitude of other U-Control goodies on 'Tokyo Drift.' In addition to a full-length video chat with director Justin Lin, other U-Control material includes making-of documentary footage on the film's car racing scenes, storyboards and other conceptual art, the ability to "customize" a vehicle and actually have it "drive" it in a scene from the movie (you gotta check this one out to really get an appreciation for it), and perhaps most unique of all, the "GPS mapping" function, which will give you various stats on the cars in the film. And this information is also dynamic -- for example, you can track a car's "damage estimates" as the film progresses, and it is all generated on the fly by the player.

If this sounds a bit confusing, in some ways it can be. However, I will say first that U-Control is indeed very easy to use. But at the same time, the concept is admittedly intimidating. For me, it requires a huge shift in how I perceive supplemental content. I'm used to sitting back and having extras fed to me, whether as a full-length documentary or in easily-digestible bits. With U-Control, it is all in your hands, and requires a great deal more decision-making on behalf of the user. Perhaps for the videogame generation, this is nothing new. But for an old fogey like me, who actually remembers what a Laserdisc is and still plays Pac-Man, it is like learning to ride a bike for the first time.

Certainly, I'm fascinated to see what the reaction will be to 'Tokyo Drift.' It allows for more customization than ever before to the user experience, but also feels like the opening of the door. As the HD DVD format also supports internet connectivity, it is not hard to imagine how all of this could be developed on future releases. Additional content could be made accessible via the web, or extras merged with e-commerce, or a host of other applications. But will all of this ultimately be too much for those who just want to watch the movie and maybe a few extras? I suspect that the younger generation -- especially gamers -- will warm to it easy. Older, more linear-minded users may have more trouble with it. In any case, I'm excited to see what's next...
http://hddvd.highdefdigest.com/fasta....html#Section6





Chatterbox

One Area They'll Never Be Interactive In
noidentity

I can guarantee you DVDs and successors will never give interactivity where it's most wanted: being able to put the disc in the player and press ONE button ONCE and have it immediately start playing the ACTUAL MOVIE. No way. To get that feature, you have to break the law and copy the DVD.
http://slashdot.org/articles/06/09/29/2234252.shtml





A Ladies’ Man Everyone Fights Over
Lola Ogunnaike

THIS time six years ago, Flavor Flav, the flamboyant clock-wearing member of the groundbreaking rap group Public Enemy, was living in a low-rent apartment near Yankee Stadium in the Bronx. He was scalping baseball tickets for extra cash, battling a long addiction to drugs and racking up arrests for driving without a license.

These days life is looking a lot brighter.

His reality series, “Flavor of Love,” a ghetto-fabulous spoof of the dating series “The Bachelor,” has been a colossal hit for VH1. The show’s first-season finale in March drew nearly six million viewers, making it the highest-rated show in the cable channel’s history. More than three million people tuned in to watch the second-season premiere early August.

No one seems to be enjoying the success more than Flav, as he is known to one and all.

“I’m the king of VH1,” he crowed over a surf-and-turf dinner at a soul food restaurant in downtown Los Angeles. “Your man Flavor Flav is doing his thiiiiing.”

That thing has made the show as polarizing as it is popular. On blogs and at the office, on message boards and in op-ed columns, viewers are both riveted and repelled by “Flavor of Love.”

Fans of the show call it a harmless guilty pleasure, and its star a lovable and unlikely Romeo. Critics have accused the show of trafficking in racial stereotypes and have called Flav everything from a sellout to a modern-day Stepin Fetchit.

“Anytime we mention ‘Flavor of Love’ on our show, the phone lines start blowing up,” said Donnell Rawlings, a New York morning radio personality on the popular hip-hop radio station Power 105.1. “Good or bad, our listeners love talking about Flav. They can’t get enough of it. You’ve got beauties and you’ve got the beast, and it’s become one of those shows you must watch every week.”

On “Flavor of Love,” 20 contestants vie for the rap star’s affection while living with him in a mansion in Encino. Instead of roses, they are given oversize clocks when they’re invited to stay at the end of each show, and the winner is awarded a personalized gold dental grille, a jeweled ornament for the teeth.

The women, who tend to look like castoffs from a bad rap video, dress provocatively (the shorter the skirt, the lower the neckline, the better their chances), engage in raunchy make-out sessions with Flav and, when given the opportunity, profess their undying devotion.

“You could be across the room and I can feel you,” Krazy, the rare white face on the show, said in a recent episode. (Flav, whose real name is William Drayton, has trouble remembering the contestants’ real names, so he gives them nicknames like Deelishis, Toastee and Bootz.) “My heart is so big and I’m such a compassionate person and I see the same thing in you.” Krazy then broke into song. “I will be with you forever,” she crooned — off key.

Occasionally, the women even trade blows. This season’s premiere began with two women brawling over a bed and ended with one contestant defecating on the floor as she raced to the bathroom after a meal that didn’t agree with her. To Michael Hirschorn, the executive vice president for original programming at VH1, the reasons millions of viewers tune in every Sunday night are clear. “The accidental appeal of the show was the play between ‘Are these women for real or not? Are these women there for him or are they there because any fame is completely intoxicating?’ ” he said. “Instead of covering that part of the show up, we decided to make it integral.”

Asked whether the show was exploiting racial stereotypes, Mr. Hirschorn, who is white, said he didn’t think so. “I would also say I’m not in the position to make that judgment.” But, he pointed out, “the show is disproportionately popular among black viewers, and the comedy is very inclusive.”

Not all are amused, however. Nicole Young, a fashion designer in Manhattan who is black, said the defecation scene in this season’s premiere turned her off the show for good. Late last week, during a heated dinner argument with friends about the series, she pronounced it “absolutely hideous,” and proceeded to denounce Flav and his paramours. “In a day and age when it’s still really hard for people of color to find reasonable representations on television,” she said, “that show is a huge smack in the face and a step backwards.”

In an interview on a sports blog, thebiglead.com, Jason Whitlock, a sports columnist for The Kansas City Star, said, “It’s about time we as black people quit letting Flavor Flav and the rest of these clowns bojangle for dollars.”

In an editorial last month, DeWayne Wickham of USA Today wrote: “On one level, his buffoonery is laughable. But more often than not, it makes my skin crawl to know that as Lincoln Perry (who played Stepin Fetchit) and Johnny Lee (who was TV’s Algonquin J. Calhoun) did, Drayton has to assume such a shallow black role to find stardom in Hollywood.”

Nelson George, the cultural critic and author of “Hip Hop America,” said one reason the show has struck such a nerve has less to do with stereotypes and more to do with the fact that Flavor Flav is not exactly a sex symbol. “If he didn’t have gold fronts and didn’t wear a clock and if looked like Jamie Foxx, there wouldn’t be as much controversy,” he contended. He added that black viewers can be overly sensitive about how blacks are portrayed on television: “Black people tend to think that every image that is projected in the media is somehow a judgment on their reality. And that’s just not the case.”

“It is what it is,” he said. “Just another reality freak show.”

Flav, 47, did not seem ruffled by criticism. “Right now anybody that has negative things to say to Flavor Flav, it’s O.K.,” he said, “because that’s not going to stop me from being Flav. I get power from the negative.”

Although not conventionally attractive (he bears more than a passing resemblance to a California Raisin character), off camera, Flav appears to be a warmhearted man, one who is possessed with a manic energy that makes him mesmerizing to watch. Dressed for dinner in baggy jeans, a red rayon shirt, matching patent leather sneakers and a baseball cap, he was all jittery movements and smiles, doling out hugs, handshakes and autographs to anyone who approached.

“A lot of people favor Flavor because I have good karma,” he said. A giant cream-colored clock hung around his neck (he has close to 100 of his signature accessories), and his nom de rap was engraved on a gold dental grill, which he removed as if it were a retainer when it was time to eat. He also carried an assortment of more than 50 keys. “These are the keys to my future,” he said, cackling loudly.

His over-the-top shtick is not new. As the resident court jester in Public Enemy, Flavor Flav, with his trademark phrase, “Yeeeaahhh Boooooyyy,” provided levity to counterbalance the group’s strident, often political messages. “He was the bit of comic relief in a group that at its best could be inspirational and at its worst be didactic,” said Danyel Smith, the editor in chief of Vibe magazine.

Flavor Flav joined Public Enemy while in college and became its mascot. The group quickly became known for hits like “Fight the Power,” used on the soundtrack of Spike Lee’s “Do The Right Thing,” and for politically conscious albums like “It Takes a Nation of Millions to Hold Us Back” and “Fear of a Black Planet.”

At the group’s height of fame, Flav began using drugs. He spent the 1990’s in and out of rehab, and in 2002 he spent a few months on Rikers Island for failing to pay traffic fines.

Upon release, eager for a new beginning, he moved to Los Angeles. Mark Cronin and Cris Abrego, creators of the VH1 series “The Surreal Life,” which brought together has-beens from various fields, were casting their third season. Flav met with the producers and made an instant impression. “He was ricocheting off the walls, saying his name 700 times,” Mr. Cronin said. “We knew he’d be perfect for television.”

The first day of filming, Flav showed up in Viking horns. His tempestuous relationship with a castmate, Brigitte Nielsen, an ex of Sylvester Stallone, made him and the series stand out.

Their bizarre affair led to a spinoff reality series, “Strange Love.” But alas, it was not meant to be: The couple parted ways, leading to Chapter 3 in Flav’s reality-series career, “Flavor of Love.” Although the star found love again last season with Nicole Alexander, a former basketball player he nicknamed Hoopz, the brief union ended after the cameras stopped recording. “All of a sudden, Hoopz got too busy,” he said, “and I couldn’t get in touch with her.”

Flav now claims there is no need for a third installment of his reality series because he has found love on the show with one of the contestants, but obviously cannot reveal who it is.

Mr. Cronin said he and his partner are working on a spinoff of “Flavor of Love,” which will feature 20 men vying for the affections of one woman. This doesn’t mean VH1 viewers have seen the last of Flav. Ideas for a nighttime talk show, an animated series and another reality show, where he acts as a Cyrano de Bergerac dispensing dating advice, are being batted around. He also plans to release a self-titled independent album on Halloween.

As for those who insist that he has traded a piece of his soul for fame, “Sometimes a lot of people misunderstand me,” Flav said, his wide grin disappearing. “But that’s okay, because I know one day they will understand me. Either they will like me or they will K.I.M., keep it moving.”
http://www.nytimes.com/2006/10/01/fashion/01flav.html





David Lynch Returns: Expect Moody Conditions, With Surreal Gusts
By Dennis Lim

TO hear him tell it, David Lynch has spent the last five years killing the thing he loves, for fear that it will kill him first.

“The sky’s the limit with digital,” he said in a recent conversation, his voice approaching foghorn pitch. “Film is like a dinosaur in a tar pit. People might be sick to hear that because they love film, just like they loved magnetic tape. And I love film. I love it!”

He contorted his face into an expression that suggested pain more than love. “It’s so beautiful,” he said. But “I would die if I had to work like that again.”

Not one for understatement or half measures, Mr. Lynch takes a giant leap into the post-celluloid future with the three-hour “Inland Empire,” his first feature since “Mulholland Drive” in 2001, his 10th overall and the first to be shot on the humble medium of digital video. The movie had its premiere last month at the Venice Film Festival, where Mr. Lynch, who turned 60 in January, was awarded a Golden Lion for career achievement. It will have its first North American showings at the New York Film Festival on Oct. 8 and 9.

On this clear Los Angeles morning, his first at home after three weeks in Europe, Mr. Lynch was knocking back a huge cappuccino in his favorite corner of his painting studio, a scatter of stale cigarette butts on the cement floor around his Aeron chair.

“It’s actually cleaner that I thought it would be,” he said, looking around. The sunlit atelier is perched atop one of the three sleek concrete structures that make up his compound in the Hollywood Hills. He lives in one building; another is the office of his production company, Asymmetrical. This one, the hub of creative activity, served first as a location for his 1997 film “Lost Highway” and was later converted into a production facility with a recording and editing studio and a screening room. (Mr. Lynch’s chair, off limits to anyone else, can be identified by the sizable ashtray on the armrest.)

The moods and objects throughout inevitably bring to mind that most resonant of eponymous adjectives: Lynchian. Corridors and stairwells are minimally lighted. One room has the signature red curtains. Propped against one wall is an Abstract Expressionist canvas by Mr. Lynch, a brown expanse with a violent splotch of blue and the inscription “Bob loves Sally until she is blue in the face.” A photograph of the Maharishi Mahesh Yogi, the Transcendental Meditation guru, sits on a conference table, sunlight illuminating a single cobweb that hangs from its gold frame.

Lately Mr. Lynch has emerged as a keen proponent of Transcendental Meditation, which he said he has practiced twice a day since 1973 without missing a session. Last year he established the David Lynch Foundation for Consciousness-Based Education and World Peace with the goal of raising $7 billion to create “universities of peace.” He also went on a campus tour, promoting the benefits of “diving within” with the help of a meditating assistant hooked up to an electroencephalograph.

His other consuming passion of recent years has been the Internet. Mr. Lynch grasped the potential of streaming media earlier and took to it with greater enthusiasm than filmmakers half his age. His sprawling Web site, davidlynch.com, begun in 2001, carries merchandise (mugs, photos, alarming ring tones) and subscriber-only content (original music, experimental vignettes, the animated series “Dumbland”). On the home page he delivers the daily weather report for Los Angeles direct to Webcam.

As it turns out, some of Mr. Lynch’s online experiments found their way into “Inland Empire,” which, despite his claims for the speed of direct video, took three years to make. It was shot in fits and starts and, for the longest time, on his own dime and without a unifying vision. At the outset, “I never saw any whole, W-H-O-L-E,” he said. “I saw plenty of holes, H-O-L-E-S. But I didn’t really worry. I would get an idea for a scene and shoot it, get another idea and shoot that. I didn’t know how they would relate.”

Only after the project was well under way did he contact the French studio Canal Plus, which financed the transformation of “Mulholland Drive” from a rejected television pilot into a feature film. Canal Plus signed on to “Inland Empire” even though, Mr. Lynch said, “I told them two things: ‘I don’t know what I’m doing, and I’m shooting on D.V.’ ”

Eventually the grand design revealed itself. In interviews Mr. Lynch has repeatedly advanced a poetic, democratic notion of ideas as independent of the artist, waiting to be plucked from the ether, or, in his preferred analogy, reeled in: he’s working on a book about the creative process titled “Catching the Big Fish.” With “Mulholland Drive,” he said the eureka moment came while he was meditating. With “Eraserhead,” his indelible debut in 1977, inspiration came while reading the Bible. (He declined to specify the passage.) There was no equivalent lightning bolt on “Inland Empire,” but in due course “something started to talk to me,” he said. “It was as if it was talking to me all along but I didn’t know it.”

A thoroughly instinctual filmmaker, Mr. Lynch could never be accused of overthinking things. Or of overtalking them. In discussions of his work he reverts to affable stonewalling tactics, deflecting detailed or analytical probes with a knowing vagueness.
The vertiginous “Inland Empire” is sure to provoke questions about meaning, literal and metaphoric. Still without a United States distributor, this may be his most avant-garde offering since “Eraserhead.” In tone and structure the film resembles the cosmic free fall of the mind-warping final act in “Mulholland Drive.”

“Inland Empire” refers on one level to the landlocked region east of Los Angeles but also evokes the vast, murky kingdom of the unconscious. Like “Lost Highway” and “Mulholland Drive,” the new movie is hard-wired into its protagonist’s disintegrating psyche, a condition that somehow prompts convulsive dislocations in time and space.

Laura Dern, who worked with Mr. Lynch on “Blue Velvet” and “Wild at Heart,” plays an actress who lands a coveted role, only to learn that the movie, a remake, may be cursed: the original was aborted when both leads were murdered. Actor becomes character. Fiction infects reality. The various narrative strands — plagued by déjà vu, doppelgängers and the menacing ambient drone of Mr. Lynch’s sound design — start to unravel. Shuttling between California and Poland, the movie folds in a Baltic radio play, a Greek chorus of skimpily dressed young women and a ghostly sitcom featuring a rabbit-headed cast and an arbitrary laugh track.

Asked to elaborate on some of the film’s themes, Mr. Lynch was illuminating, if not always in expected ways. On his apparent conception of the self as fragmentary, he said: “The big self is mondo stable. But the small self — we’re blowing about like dry leaves in the wind.” Regarding the essential elusiveness of time, he declared, “It’s going backward and forward, and it’s slippery.”

He brought up wormholes, invoked the theories of the quantum physicist (and fellow meditator) John Hagelin and recounted a moment of déjà vu that overcame him while making “The Elephant Man.” “There was a feeling of a past thing and it’s holding, and the next instant I slipped forward” — he made a sound somewhere between a slurp and a whoosh — “and I see this future.”

A nightmare vision of the dream factory, “Inland Empire” belongs to the lineage of Hollywood bloody valentines that runs from “Sunset Boulevard” to “Mulholland Drive.” In one scene a character, stabbed in the gut with a screwdriver, runs down Hollywood Boulevard, leaving a gory trail on the Walk of Fame. Like “Mulholland Drive,” the film is at once a tribute to actors, especially those chewed up and spit out by the industry, and a study of the metaphysics of their craft.

Acting, Mr. Lynch suggests, is a kind of out-of-body experience. Like Naomi Watts in “Mulholland,” Ms. Dern summons an almost frightening intensity in a performance that requires her to inhabit three (if not more) overlapping parts, lapsing in and out of a Southern drawl.

“I thought of it as playing a broken or dismantled person, with these other people leaking out of her brain,” Ms. Dern said in a telephone interview. She said she held as a mental touchstone Catherine Deneuve’s portrait of psychosis in Roman Polanski’s “Repulsion” and noted that the stop-start shoot had its advantages: “It’s unbelievably freeing. You’re not sure where you’re going or even where you’ve come from. You can only be in the moment.”

One of the pluses of video was that the moment could be extended. Despite the overall lack of continuity, the lightweight camera and longer takes allowed for more freedom in individual scenes. “When you don’t have to stop and spend two hours relighting, you’re just able to boogie together,” Mr. Lynch said.

The genesis of “Inland Empire” was a 14-page monologue he wrote for Ms. Dern. They shot it once, in a 70-minute take, on a set built in his painting studio. The scene is carved up and strewn throughout the film but remains its dark heart.

Watching “Inland Empire,” which makes little attempt to temper the harshness of video, it’s hard not to miss the tactile richness of Mr. Lynch’s celluloid images. Instead of a state-of-the-art high-definition camera, he used the Sony PD-150, a common midrange model.

“Everybody says, ‘But the quality, David, it’s not so good,’ and that’s true,” Mr. Lynch said. “But it’s a different quality. It reminds me of early 35-millimeter film. You see different things. It talks to you differently.”

Mary Sweeney, Mr. Lynch’s longtime producer (and ex-wife), called the new film a return to the obsessive experimentation of “Eraserhead,” which he also shot piecemeal over several years. “David got very excited about the ways the new technology could liberate him,” she said. “I think it took him back to a pure and fearless way of working.”

Mr. Lynch also stressed the importance of fearlessness. “Fear is like a tourniquet on the big tube of creative flow,” he said. And thanks to meditation, “negative things decrease,” he added. “You get more ideas. You catch them at a deeper level.”

The dissonance between this upbeat philosophy and the abysmal terror of his films is not lost on him. “You can understand depression much more when you’re not depressed,” he said. “You go to this ocean of knowingness. That’s what you use.”

His body of work may be, short of Hitchcock’s, the most psychoanalyzed in film history, but Mr. Lynch once forswore psychotherapy, fearing it might inhibit his creativity. Most things, as he sees it, are best left uninterrogated.

“As soon as you put things in words, no one ever sees the film the same way,” he said at one point, when the line of questioning turned too specific. “And that’s what I hate, you know. Talking — it’s real dangerous.”
http://www.nytimes.com/2006/10/01/movies/01lim.html





George Lucas Tilts at Studio Tentpoles

'Star' man sees shrinking pic biz
David S. Cohen

George Lucas has a message for studios that are cutting their slates and shifting toward big-budget tentpoles and franchises: You've got it all wrong.

The creator of "Star Wars," which stamped the template for the franchise-tentpole film, says many small films and Web distribution are the future.

And in case anyone doubts he means it, Lucasfilm is getting out of the movie biz.

"We don't want to make movies. We're about to get into television. As far as Lucasfilm is concerned, we've moved away from the feature film thing because it's too expensive and it's too risky.

"I think the secret to the future is quantity," Lucas said.

He spoke to Daily Variety after the groundbreaking ceremony for the renamed School of Cinematic Arts at USC.

He gave $175 million -- $100 million toward the endowment, $75 million for buildings -- to his alma mater. But he said that kind of money is too much to put into a film.

Spending $100 million on production costs and another $100 million on P&A makes no sense, he said.

"For that same $200 million, I can make 50-60 two-hour movies. That's 120 hours as opposed to two hours. In the future market, that's where it's going to land, because it's going to be all pay-per-view and downloadable.

"You've got to really have a brand. You've got to have a site that has enough material on it to attract people."

He said he's even discussed the subject with Pixar's Steve Jobs and John Lasseter.

"If you don't do very many movies, and you're really lucky, and you really know what you're doing, you can get away with it. But you know at some point you're going to lose a game."

Lucas said he believes Americans are abandoning the moviegoing habit for good.

"I don't think anything's going to be a habit anymore. I think people are going to be drawn to a certain medium in their leisure time and they're going to do it because there is a desire to do it at that particular moment in time. Everything is going to be a matter of choice. I think that's going to be a huge revolution in the industry."

That doesn't mean Lucasfilm is diving into online distribution, though. "Having had a lot of experience in this area, we're not rushing in," he said. "We're trying to find out exactly where the monetization is coming from. We're not interested in jumping down a rat hole until such time as it finally figures itself out."

Nor is Lucasfilm's exit from features instant or absolute. "Indiana Jones 4" is still in development. "Steve (Spielberg) and I are still working away, trying to come up with something we're happy with. Hopefully, in a short time, we will come to an agreement. Or something," Lucas said, without a great deal of enthusiasm.

Lucasfilm also is working on "Red Tails," a film about the Tuskegee airmen of WWII.

"I've been working on that for about 15 years," he said, adding that he's also been working on "Indy 4" for 15 years.

And Lucas Animation does plan to start making feature films -- eventually.

"Right now we're doing television, which looks great. I'm very, very happy with it," he said of his toon division. "And out of doing the animation, we're getting the skill set and the people and putting the studio in place so we can do a feature. But it's probably going to be another year before we have the people and the systems in place to do a feature film."

Lucas admitted the big-budget strategy has done well for him in the past, but said, "We're not going to do the $200 million investments."

He calls himself "semi-retired" but reiterated his plans to direct "small movies, esoteric in nature," after his other projects are launched. He expects to serve as exec producer on the two features and the TV shows, including a live-action "Star Wars" skein.

At the USC groundbreaking, Lucas was honored amid cannon shots of confetti and fanfares from the USC Marching Band for his gift, the largest in the school's history.

Other bizzers in attendance included Lucas pals Robert Zemeckis and Spielberg.

Lucas said the gift is intended to set an example for the rest of the entertainment industry, as well as other universities.

"In a lot of industries, the people in the industry give a lot of money to the schools that produce the people who are their employees," he said, pointing to the auto industry as an example. "The film industry doesn't seem to be too enthusiastic about that idea. I'd love to see the industry do more.

"As self-interest, it's good to have the best trained people working for you. And the best trained people come from film school.

"The world of moving images hasn't had a lot of respect (in academia)," said Lucas. "But it's the major form of communication in the 21st century."

This $175 million, he said, is meant to "put other universities on notice that this is an important discipline that needs to be fostered."
http://www.variety.com/VR1117951284.html





And if You Liked the Movie, a Netflix Contest May Reward You Handsomely
Katie Hafner

Netflix, the popular online movie rental service, is planning to award $1 million to the first person who can improve the accuracy of movie recommendations based on personal preferences.

To win the prize, which is to be announced today, a contestant will have to devise a system that is more accurate than the company’s current recommendation system by at least 10 percent. And to improve the quality of research, Netflix is making available to the public 100 million of its customers’ movie ratings, a database the company says is the largest of its kind ever released.

Recommendation systems, also known as collaborative filtering systems, try to predict whether a customer will like a movie, book or piece of music by comparing his or her past preferences to those of other people with similar tastes. Such systems will look at, say, the last 10 books, movies or songs a customer has rated highly and try to extrapolate an 11th.

Computer scientists say that after years of steady progress in this field, there has been a slowdown — which is what Netflix executives say prompted them to offer the problem to a wide audience for solution.

“If we knew how to do it, we’d have already done it,” said Reed Hastings, chief executive of Netflix, based in Los Gatos, Calif. “And we’re pretty darn good at this now. We’ve been doing it a long time.”

Nobody with the company will be eligible to compete, Netflix said, so that it does not appear that the contest favors insiders.

James Bennett, the vice president for recommendation systems, said the company had taken great pains to preserve the anonymity of the 100 million movie ratings it was making available to researchers, even consulting with privacy experts to make sure that the ratings could not be traced to individual Netflix customers.

“The data set is the big deal here,” Mr. Bennett said.

Netflix has already used its data set to test the accuracy of its existing recommendation system, so it will be able to gauge the accuracy of each entrant’s set of predictions, executives said.

Mr. Hastings said he thought it was important to make the ratings database widely available. “Unless you work at Microsoft research or Yahoo research or for Jim Bennett here at Netflix, you won’t have access to a large data set,” he said. “The beauty of the Netflix prize is you can be a mathematician in Romania or a statistician in Taiwan, and you could be the winner.”

John Riedl, a professor of computer science at the University of Minnesota and a pioneer in the field of collaborative filtering, said that Netflix and Amazon now had the most advanced recommendation systems.

“Most of the easy stuff has been squeezed out already,” he said, adding that it had become increasingly difficult to make substantial progress in predicting accuracy.

“Any time you start working on any of these scientific or engineering problems, there’s a period of dramatic improvement,” Professor Riedl said. “It slows down because in a sense you’re competing with 15 years of really smart people banging away at the problem.”

Until now, researchers who have been working to improve recommendation systems have been relying on a much smaller database, a set of one million ratings generated by a Web site called MovieLens, Professor Riedl said. “Having a big data set would be really, really useful,” he said.

Francisco Martin, the chief executive of Mystrands.com, a company in Corvallis, Ore., that is developing a recommendation engine based on what people listen to on iTunes, agreed, saying, “With ratings-based systems, you need to rate everything you see in order to get reasonably accurate recommendations.”

Cash prizes in other difficult technical areas have been offered in recent years. In 2004, there was the $10 million Ansari X Prize for a reusable spacecraft. The Defense Advanced Research Projects Agency is again running a contest involving robotic vehicles with the first prize $2 million. And NASA is offering prize money ranging from $200,000 to more than $5 million for building equipment including lunar excavators and solar sails — large mirror-based equipment intended to collect solar power and conserve rocket fuel.

Mr. Hastings said the Netflix prize was different from some others in that it required a minimal financial investment to compete. “This will be one of the largest truly open prizes that’s ever been done,” he said. “All you need is a PC and some great insight.” He said Netflix would publish a detailed description of the winning approach.

If no one wins within a year, Netflix will award $50,000 to whoever makes the most progress above a 1 percent improvement, and will award the same amount each year until someone wins the grand prize.

Professor Riedl noted that a big improvement in Netflix’s recommendation system would be a boon to the company’s business. “It could result in a significant rise in sales if the recommendations do a better job of helping people find movies they want to see,” he said.
http://www.nytimes.com/2006/10/02/te...02netflix.html





Is Th-Th-That All, Folks?
Laura M. Holson

Mike Hernandez has had it with the new offerings of animated movies.

Other than “Cars,” the summer hit from Pixar Animation Studios, he would rather watch the re-released animated classic “The Little Mermaid” with his 4-year-old daughter, Alicea.

“They had a good message,” Mr. Hernandez said of “Cars” and “The Little Mermaid” after attending a recent matinee of “The Little Mermaid” at the El Capitan movie theater here. Of other, newer films, he said, “I don’t pay too much attention.”

With more than a dozen computer-animated movies being readied for release by next summer, Hollywood is facing viewer fatigue worthy of Sleeping Beauty. Analysts and industry executives have long warned of a coming glut of computer-animated movies. That time has come.

Now, with so many movies for audiences to choose from, some are failing to meet expectations or are flopping outright.

This summer’s “The Wild,” from the Walt Disney Company, proved anything but for moviegoers, bringing in only $37 million at the domestic box office. The bigger disappointment was “The Ant Bully,” produced by the actor Tom Hanks and distributed by Warner Brothers Entertainment. That movie’s powerful ant wizard could muster only enough magic to garner $27 million.

By contrast, the debut of “Open Season,” the tale of a defiant grizzly bear and feisty mule deer who battle hunters, brought in $23 million over the weekend for Sony Pictures Entertainment, putting it in first place. But only the coming weeks will tell whether it will be widely embraced by moviegoers.

Over the last five years, almost every major film studio has sought to make or acquire the type of movies pioneered by Pixar, which was recently acquired by Disney. At the same time, independently financed animators have ratcheted up production.

But while animation continues to be popular with families, audiences complain it is suffering from too much sameness, with movie plots and characters looking increasingly alike.

Computer animation is not the novelty it was when introduced a decade ago. Now even actors are animation-savvy. Aside from Mr. Hanks, the popular actor Will Smith has plans to produce an animated film in India. With all the choices, moviegoers are being forced to sift through an increasingly crowded marketplace where quality and brand-name recognition will ultimately reign supreme.

“I think audiences are saying, ‘I’ve seen a lot of computer animation and it’s not so special anymore,’ ” said Julia Pistor, an executive producer of the recent “Barnyard,” which was a modest performer, bringing in $69 million domestically. “In that case it’s a lot harder for a movie to break through.”

Both Pixar and its main rival, DreamWorks Animation, continue to dominate the animation genre because their brands are widely known and highly regarded. But even those studios are feeling the pinch.

Though “Cars,” from Pixar, was a hit last summer, bringing in $243 million domestically, it failed to live up to prerelease expectations. The stock price of DreamWorks Animation is down about 40 percent since it traded near a high of $42 in November 2004, as analysts and investors remain concerned about unpredictable movie profits. Shares closed at $24.57 yesterday.

Box-office figures show how central Disney and DreamWorks are to the animation business. (Executives there declined to comment for this article.) Nielsen EDI, a box-office tracking service, said that 2004 was a banner year for animation, with domestic box-office receipts of $1.2 billion. That success was largely a result of the release of “Shrek 2” and “Shark Tale,” both from DreamWorks, as well as “The Incredibles” from Pixar.

In 2005, the domestic box office fell by half, to $640 million. Then Pixar did not release a feature film that year, and DreamWorks’ “Wallace and Gromit: The Curse of the Were-Rabbit” was a flop.

Through mid-September 2006, the domestic box office for animated films was $928 million. But there also has been a rise in the number of films — filmmakers plan to release 17 animated movies in 2006, compared with 11 in 2005.

If there is a shakeout and fewer animated movies are made, animators without a brand name or those who do not produce high-quality movies will probably be hurt most.

“There are a lot of movies out there,” said John H. Williams, a producer of “Shrek” and chief executive of Vanguard Animation. “The question is, ‘Who are the people who are going to be getting the funding?’ ”

The main criticism of animated movies within the industry and among consumers is that they are beginning to look alike. And the recent crop looks a lot like a zoo.

Natalie Ward, 13, who was out shopping with her grandmother, Bonnie Ward, in Hollywood recently, was unimpressed with the latest offerings. “There are so many movies with animals,” she said, pursing lips tinged blue by the icy neon drink in her hand. “The ones about cows are too, like, I don’t know — boring.”

Next month, Warner Brothers will distribute “Happy Feet,” featuring tap-dancing penguins. Rats are a favorite, too. Coming from DreamWorks is “Flushed Away,” the story of a high-class rat flushed down a toilet into London’s sewers, while “Ratatouille” from Pixar features a rat living in a fancy French restaurant.

These movies come on the heels of a menagerie of talking animal films, including “Over the Hedge” (raccoon, turtle, skunk), “Barnyard” (cows, mule, hen) and “The Wild” (lion, wildebeest, koala bear). Even “The Ant Bully” looked like a reworking of previous insect-themed movies like “A Bug’s Life” and “Antz,” both released in 1998.

“I think we need to branch out and find a wider breadth of stories to tell,” said Gary Ross, the director of “Pleasantville” and “Seabiscuit,” who is producing the animated film “The Tale of Despereaux,” based on a best-selling book that features a rat, a servant girl and a mouse who cross paths. “We just have to find a diversity of narratives.”

Still, it is no wonder that Hollywood is flush with fuzzy creatures. A few years ago “animated films were the most profitable,” said Mr. Williams. That was particularly true because they were nearly guaranteed to be best sellers on DVD. But making animated movies is expensive — some cost upward of $150 million — and that makes it especially risky to bore consumers.

John Davis, the writer and director of “The Ant Bully” did not return calls seeking comment. But studio executives have said that even with its reasonable budget of about $45 million, it is questionable whether “The Ant Bully” will make a profit. That sent shivers through the animation industry, whose members wondered how a film backed by Mr. Hanks and starring Julia Roberts could have performed so poorly.

Many here suggest that animation will go the way of independent film companies, many of which were either acquired by major studios or have been forced to hawk their films project by project. Already several animation companies are shopping new movies, but studio executives are being cautious. “There are all these people saying we are going to be the next Pixar,” said Ms. Pistor. “We say, ‘Who is your John Lasseter?’ ”

By all accounts, DreamWorks and Pixar should be in a good spot to weather the uncertainty. Pixar is now part of Disney, having been acquired earlier this year for $7.4 billion. The timing of that sale looks especially smart for Pixar, given the recent jitters about the genre.

DreamWorks, meanwhile, is still publicly traded and is unlikely to be sold anytime soon, analysts say. In a recent interview, Viacom’s chairman, Sumner M. Redstone, said he was not interested in acquiring DreamWorks Animation, which is run by Jeffrey Katzenberg. (Mr. Katzenberg co-founded DreamWorks SKG, the company from which the animation unit was spun off, with the director Steven Spielberg and the billionaire David Geffen.)

DreamWorks recently had a creative tussle with a partner, Aardman Animation, the British producer of two movies released by DreamWorks, “Wallace and Gromit” and the coming “Flushed Away.” While “Wallace and Gromit” was critically acclaimed, American audiences did not like it and the movie brought in only $56 million at the domestic box office.

Aardman executives chafed at the creative control DreamWorks tried to exert, particularly with “Flushed Away,” according to people apprised of the situation who asked not to be identified because of the sensitive nature of the relationship.

As a result, the two companies have decided to split and Aardman is expected to begin looking for a new distributor in the United States, said the people. Aardman executives did not return phone calls seeking comment. A DreamWorks spokesman said the studio had no immediate plans to make movies with Aardman after “Flushed Away.”

But in addition to getting along with its partners, DreamWorks must also manage Wall Street. One reason DreamWorks’ stock is trading at a low price is that analysts are concerned that a DreamWorks investor, Paul G. Allen, will activate his option to sell shares to the public. Such a move, which many analysts say could be announced before the end of the year, could further drive down the stock price. An alternative for DreamWorks is to sell a stake to another investor to pay off Mr. Allen, said analysts.

Asked by analysts last month if Mr. Allen had activated that option, DreamWorks’ newly appointed president, Lewis Coleman, said DreamWorks did not have to disclose that information, but had 90 days to respond to Mr. Allen.

“In our view, these comments are vague and cryptic enough to suggest that certainly the answer could be yes,” a Prudential Equity Group analyst, Katherine Styponias, wrote in a report last month.

DreamWorks’ financial machinations mean little to Bonnie Ward, Natalie Ward’s grandmother — unless the studio stops making interesting movies. She said she enjoyed “Over the Hedge,” even if the movie’s humor was sometimes a little grown-up.

“They aren’t all perfect,” she said of the new fare. “But it is something for me to do with my little grandchildren.”
http://www.nytimes.com/2006/10/03/bu...animation.html





More Charming Disney Innocence

White River, Ontario is the home of Winnie the Pooh. No, really. Yes, the bear. Yes, there was a real one. Yes. No, I'm not drunk. I know it's a cartoon. Yes, I know. Look, I don't even drink. No. Really. Anyway ... When the town tried to erect a statue of the real bear that the cartoon bear was modeled after in 1990, the 75th anniversary of the book that AA Milne wrote (that clearer? Sheesh!), Disney sent a nasty letter threatening a law suit if they even thought about trying to put the statue up because they owned the the copyright to Pooh. No, the cartoon one. No you can't copyright a real one, and he was dead by then. Bears don't live to be 75, you goof. Anyway, after lots of bad publicity, Disney backed down for once in it's miserable, money grubbing life and White River was able to put up it's Pooh. It reminds me of a certain web site who looks into things I put up, writes about them, then sends me Email telling me I'm in copyright violation of them because they now have an article up about my subject and topic and took all my information for it.
http://www.anomalies-unlimited.com/Disney/Disbits.html





Weekend Box Office

Sep. 29 - Oct. 1, 2006, in millions

1 Open Season
$23.6

2 The Guardian
$18.0

3 Jackass number two
$14.6

4 School for Scoundrels
$8.6

5 Jet Li's Fearless
$5.0

6 Gridiron Gang
$4.6

7 The Illusionist
$2.7

8 Flyboys
$2.4

9 The Black Dahlia
$2.1

10 Little Miss Sunshine
$2.0





Pull HD Signals From the Air and Record Them
John Biggs



While most of us have yet to figure out how to watch “Lost” in high definition, some out there are already eager to record HD video on their PC’s and laptops. For that crowd, there is the Pinnacle PCTV HD Pro Stick, a device that can receive high-definition video over the air or from a digital cable box.

The Pro Stick is a small adapter, about the size of a thumb drive, that plugs into a U.S.B. port and comes with a remote control. You can connect a digital cable line to it to receive 1080i video — the highest resolution available from most broadcasters right now — or use a standard cable line or antenna to pick up programs broadcast by the major networks.

The Pro Stick includes PC software that turns your Windows computer into an HD digital video recorder. (The company says Macintosh support is on the way.) It can also save video directly to a DVD, an iPod or a Sony PSP.

The device costs $129 and will be available in stores and online later this month. Pinnacle warns that you may not be able to pick up HD broadcasts in a moving vehicle, in case you were tempted to channel-surf in a car or a 747. JOHN BIGGS
http://www.nytimes.com/2006/10/05/te...ref=technology





Musical Robot Composes, Performs And Teaches
Matthew Abshire

A professor of musical technology at Georgia Tech, Gil Weinberg, enlisted the support of graduate student Scott Driscoll to create Haile -- the first truly robotic musician. In this way, he became a sort of Geppetto creating his musical Pinocchio.

"Computers have been playing music for 50 years," Driscoll said. "But we wanted to create something that didn't just play back what it heard, but play off it, too."

Think of Haile (pronounced Hi-lee) as a robotic partner in the percussion form of dueling banjos. Although it has numerous musical algorithms programmed into it, Haile's basic function is to "listen" to what musicians are playing and play along with them. (Watch as Haile keeps the beat -- 5:11)

If the musicians change the beat or rhythm, Haile is right there with them.

"With Haile there are two levels of musical knowledge .... The basic level is to teach it to learn to identify music, to imitate," Weinberg said.

"The higher level is stability of rhythm, to be able to distinguish between similar rhythms. In essence, Haile has the ability to recognize if a rhythm is more chaotic or stable, and can adjust its playing accordingly."

This isn't Weinberg's first foray into music technology. At the Massachusetts Institute of Technology, he developed electronic software that allowed anyone to manipulate musical forms quickly and easily.

Haile is the next, complicated step in Weinberg's path.

"I ultimately wanted to explore acoustics," he said as he explained why he felt constrained by his earlier creations. "None of my previous work had the physical or visual cues of the acoustic world. This led me towards the creation of Haile."

There have been technological creations of various instruments, including Web sites lemurbots.org and ensemblerobot.org that boast several robotic creations that play programmed pieces.

However, attempts to develop a machine that could produce music independent of programmable pieces hadn't been realized. Either the machine was too predictable, or its sound was too electronic.

Weinberg believes Haile is the solution to these problems.

The robotic drummer is not only programmed with specific pieces but also with an understanding of countless pitches, rhythms and patterns, which are used during performances. Like a concert drum solo, Haile never quite plays the same thing twice, but plays off the creations of those performing around it.

"We created Haile as a sort of perceptual accompaniment for a player," Weinberg said.

Heather Elliott-Famularo, who helped organize SIGGRAPH 2006, where Haile performed in front of a Boston, Massachusetts, audience, marvels at the experience Haile brings to the musical world.

"Knowing that Haile is 'hearing' the music and responding to the tone, pitch and amplitude of the beat when creating its own drum response is quite moving," she said.

But before audiences notice Haile's talents, they'll first see its sleek design. At first glance, people may assume the creature from the film "Alien" turned into wood and found a rhythm. But this design is not by accident. Weinberg and Driscoll coordinated with various computer and architectural departments to engineer a memorable robot.

"One of the things that is wonderful about the piece is that Haile, the robot, is visually beautiful, made from layered, polished hardwood," Elliott-Famularo said. "It doesn't have the metallic robot feel."

The inventors said they didn't necessarily want the robot to look like a human, but wanted it to look humanoid. They decided it would have a head, a body, arms and legs and would be able to move in a way that simulated human qualities -- all for the purpose of simulating a connection and relationship between Haile and other performers.

"The first version of Haile had only one hand and nothing else," Weinberg said with a chuckle. "There was no connection between the player and the robot. It felt like you were just playing with a device."

When Weinberg and Driscoll talk, it sounds almost as if they are talking about a new musician they discovered in obscurity, instead of one they created out of wood and metal. But it takes only a brief performance to see why they insist on its "humanness."
After a few seconds of professor and graduate student tapping out rhythms on their drums, Haile jumps in. It's a beatbox paradise -- and surely a device every DJ would want -- as rhythms are repeated, revised and reversed.

But Weinberg and his graduate students aren't the only ones who appreciate Haile's talents. The robot has its own world tour, premiering in Israel and conducting shows in Germany, Paris and Boston. There are even videos of the robot online at user-posted video sites.

Despite the fame, Haile's creators feel they have more to accomplish with the robot, going so far as to tweak and modify it between every performance.

When questions arise over the possibility of two Hailes playing off one another, Weinberg just laughs.

"We have only focused on human/robot interaction, and we feel the area has not yet fully been explored," he said. "But it would be interesting to see how two robots inspire each other in music."
http://www.cnn.com/2006/TECH/10/03/m...bot/index.html





‘Chorus Line’ Returns, as Do Regrets
Campbell Robertson

On a snowy Saturday night in January 1974, after their curtain calls, 19 of Broadway’s best dancers gathered at the Nickolaus Exercise Center on East 23rd Street. They all sat in a circle on the floor. A tape recorder was turned on.

For the next 12 hours they spoke about their lives, telling stories of divorce, child abuse and the plight of the professional dancer. These tales, shaped by the choreographer Michael Bennett, would become the foundation of “A Chorus Line,” one of the most successful musicals of all time.

The dancers who told their stories that night sold them to Mr. Bennett for $1 each. And though Mr. Bennett later arranged for them to receive royalties from the show — at times up to $10,000 a year — they have always questioned whether they have been fairly compensated and acknowledged.

Now a revival of “A Chorus Line,” which opens at the Schoenfeld Theater in Manhattan on Thursday night, has reopened some of these old wounds, particularly after the dancers realized they would receive no money from this latest production because of those agreements.

The revival is being produced by the executor of the Bennett estate, John Breglio, who is also one of Mr. Bennett’s heirs. A longtime theatrical lawyer, Mr. Breglio said he had no authority to renegotiate an agreement Mr. Bennett made with the dancers three decades ago.

“I only know what Michael intended by the words on that document, which are crystal clear,” he said. “I’m bound to uphold the terms that Michael agreed to.”

The legality of the arrangements is not an issue. “At one point, when we were young and stupid, we kind of signed our lives away, and they exploited that,” said Wayne Cilento, who played the role of Mike in the original production. But reflecting the feelings of some of the other dancers, he added, “We were the authors of the show, and we should have been paid accordingly.”

The question of authorship on any collaboration can be tricky. There is no doubt that the dancers provided most of the stories, and in some cases large chunks of their words show up verbatim in the show. There is also no doubt that it was primarily Mr. Bennett who took 20 hours of interviews and had the vision to shape them into a groundbreaking musical.

“There never would have been ‘A Chorus Line’ without Michael,” said Kelly Bishop, who told her story in the character of Sheila, “but there never would have been ‘A Chorus Line’ without us, either.”

In the end, the tapes, which contain almost all the raw material of “A Chorus Line,” remain the most comprehensive record of the musical’s inception. Locked in a safe deposit box for much of the last 32 years, they had been heard by a few people until Mr. Breglio recently permitted a reporter to listen.

The tapes begin with that session in January 1974. Mr. Bennett, at the time a 30-year-old virtuoso choreographer, starts by saying he has been toying with an idea for a show called “A Chorus Line.”

He then describes his plan for the evening. “I really want to talk about us, where we came from, why we’re dancers, what the alternatives are, why we think we’re in this business.”

“I don’t know whether anything will come of this,” he adds. “We’ll just talk.”

The dancers respond, one by one, to questions, much as in the musical itself, which takes place at an audition. The answers get longer and more personal as hours go by. Twelve of the 16 surviving attendees of that first taped session were interviewed for this article, and most said that while another gathering and one-on-one meetings worked similarly, that first night was the most intense.

Included on the tapes are recordings of scriptwriting sessions. Mr. Bennett can be heard portraying each dancer in turn, reading the transcripts of their life stories, while Nicholas Dante, a young dancer, prompts him with questions. James Kirkwood, a novelist and playwright, would eventually get writing credits with Mr. Dante on the book; Marvin Hamlisch and Ed Kleban would write the music and lyrics.

Later that spring, Mr. Bennett called the dancers for auditions, at which some first discovered that they had to compete against others to play themselves. Not all of them made it. Mr. Bennett began staging the first of two workshops of “A Chorus Line” at the New York Shakespeare Festival, now the Public Theater, in August 1974.

At a rehearsal break during the first workshop, the performers were handed release contracts, under which they would give Mr. Bennett rights to use all the interviews in exchange for $1. The document stated that real names could not be used in connection with the stories without consent.

“I knew it was wrong,” said Priscilla Lopez, who told her own story in the character of Diana Morales. “But I thought, ‘If I don’t sign this, I’m not going to be a part of it.’ ”

Immediately, some felt they had made a mistake. Andy Bew, who was at the taping sessions but not involved with the show after that, recalled being contacted by a representative of Mr. Bennett, who asked him to sign. Calls from the other dancers quickly followed.

“I remember getting calls: ‘Don’t sign! Don’t sign!’ ” he said. “I think they were concerned that they weren’t really going to be taken care of.”

In the end, everyone signed the releases. Some were afraid of what would happen if they did not; some revered Mr. Bennett so much that they would do anything he asked. “People were falling in love with Michael,” said Donna McKechnie, who played the central role of Cassie and would later be briefly married to Mr. Bennett.

Tony Stevens, who along with Mr. Bennett and another dancer, Michon Peacock, organized the first taping session, said that the willingness to sign also came out of the dancer mentality. “When you ask an actor to do something, their first response is to ask ‘Why?’ ” he said. Dancers, on the other hand, do not ask questions; they just perform.

After the production moved to Broadway in 1975, Mr. Bennett asked his lawyers to draw up a new arrangement that divided the 37 dancers and actors involved with “A Chorus Line” into three groups. Group A artists had given their stories at the original tape sessions and/or were part of both workshops; Group B had participated only in the tape sessions; Group C included those in the show who had not been with it from the early stages.

This new agreement split among them a half-percent of the production’s weekly box office gross revenues, as well as a similar portion of the income from subsidiary rights; it gave the 19 dancers in the A Group double the shares of everyone else. In all, Mr. Bennett gave the 37 dancers roughly a tenth of his own royalties from the original production and around a third of the rights income he was entitled to as the show’s conceiver, director and choreographer. He also received a share of profits and rights income as a producer.

This kind of agreement was new because the extensive workshop process was new; a similar, but less generous agreement that was hammered out for Mr. Bennett’s next musical, “Ballroom,” has become standard on Broadway.

For a few dancers in the taped sessions, like Steve Boockvor, this arrangement was a gift: “None of them left with a charmed life, none of them came in with a charmed life,” he said of the other dancers. “It was all Michael.” If Mr. Bennett manipulated them at times, he added, “well, he created a masterpiece.” Mr. Boockvor, the inspiration for Al, did not make it through auditions.

The show won nine Tony Awards and the Pulitzer Prize for drama. When it closed on Broadway in 1990, it had drawn gross revenues of more than $280 million worldwide. But the careers of many of the dancers did not take off after “Chorus Line.”

Some became choreographers or teachers. Cameron Mason, the original Mark, moved back to his hometown, Phoenix, and started a housecleaning service. Sammy Williams, who won a Tony for his performance as Paul, left show business for more than a decade to work as a floral designer.

Mr. Bennett died of an AIDS-related illness in 1987. His will bequeathed the tapes to Mr. Breglio and to Bob Avian, who was a co-choreographer of the original production and is directing this revival. The will stated that if the actual tapes were used for commercial projects (a documentary, for example), half of those profits would be divided among the people interviewed on them. Mr. Breglio and Mr. Avian would split the other half.

Beneficiaries of the estate, which was reported to be worth $25 million, included Mr. Bennett’s brother, Frank Di Figlia; Mr. Avian and Mr. Breglio; Gene Pruit, a friend; Robin Wagner, the set designer of “A Chorus Line”; and an AIDS research foundation.

When the dancers heard there would be a revival, most assumed they would receive royalty payments, with several recalling that Mr. Bennett once told them that the A and B groups would have a piece of any “Chorus Line” production in the world.

But they were puzzled by a letter Mr. Breglio sent last autumn asking permission to use their real names on any future projects that would entail publication of the tapes themselves. E-mail messages and phone calls went back and forth among the dancers, some of whom had not been in contact for years.

“We’re basically advising one another to hold off,” said Ms. Bishop, who has recently been working as a featured character on the television show “Gilmore Girls.”

In the end, only three people gave their consent, including Mr. Boockvor and his wife, Denise Pence.

The original dancers began examining the release form and the agreement, some for the first time. When they consulted lawyers, they discovered that the royalty agreement covered the original production and that show’s subsidiary rights. According to the terms of that document, the 2006 revival fits neither category.

Mr. Breglio said the only way the arrangement could be changed would be if all of the interest holders in the Bennett estate agreed to have the interviewees’ royalties taken out of their shares.

The original dancers are continuing to meet with lawyers, but acknowledge that they are in a tough place.

Like almost all the other dancers, Ms. Lopez, who went on to act in television shows, films and, occasionally, other Broadway musicals, said she loved her experience in “A Chorus Line” and, with the exception of the 1974 contract, would not trade any of it. But, she added, “There’s a part of me that says, ‘I’ve had enough.’ ”
http://www.nytimes.com/ref/theater/0... tner=homepage





Mod Chip Seller Hit With Million-Dollar Damages
Eric Bangeman

Mod chip seller Divineo and two other defendants are on the hook for over $9 million in damages after a federal court judge found that they had violated the DMCA by selling mod chips for consoles. The defendants were accused by Sony of trafficking in mod chips as well as the application HDLoader, which allows owners of the PlayStation 2 console to rip and store PS2 games on a hard drive attached to the system.

Divineo is a company based in France that sells parts, accessories, and until recently, mod chips for the Xbox, Xbox 360, PSOne, PS2, GameCube, and other systems.

Although gamers like HDLoader because it allows them to quickly and conveniently access their entire game collections from a hard drive, Sony hates it because of the potential for piracy. HDLoader turns your PS2 into a game jukebox, as Ben said in his review, but the fact that it is also a portable jukebox that can be connected to any system troubles Sony and the Entertainment Software Association immensely.

Mod chips fall under the broad umbrella of the DMCA because they have to circumvent the copy-protection measures used by the consoles in order to operate. Despite the fact that they can indeed be used to get around a console's DRM and play pirated games, mod chips have other, less-nefarious uses, such as playing homebrew and import titles.

"Mod chips and HDLoaders are key elements in facilitating video game piracy because they allow people to play illegally copied games on illegally modified video game consoles," said Ric Hirsch, Senior Vice President of Intellectual Property Enforcement for the ESA. "This Court order is very important because it recognizes the significant damage that mod chips and HDLoaders cause the entertainment software industry and delivers the clear message that trafficking in circumvention devices that enable game piracy will result in heavy penalties."

Divineo's web site is still up and running, and a careful search of the site will reveal that it is still selling mod chips. We left a message at their corporate office looking for comment, but had not received a return call prior to running this story.
http://arstechnica.com/news.ars/post/20061005-7913.html





Candle Companies Clash Over Competing Claims
AP

A century-old Syracuse candle company is smoldering over what it says is an attempt by a New Hampshire competitor to cut into its business.

Lawyers for Marklin Candle Design in Contoocook, N.H., last month sent a letter to Syracuse-based Cathedral Candle Co. demanding that it stop manufacturing "Artisan Wax Advent Candles" with bands of color or gilding around the bottom by Sept. 15.

Marklin's lawyers said the New Hampshire company has used the colored band as its "trade dress," or most identifying feature, since at least 1993. That company has been in business about 20 years.

Other companies that make similar candles are treading on Marklin's turf and causing public "confusion and deception," the company's lawyers said.

Cathedral has ignored the deadline Marklin's lawyers set, said Lou Steigerwald, Cathedral president.

Instead, the company filed a complaint in Syracuse asking a U.S. District Court judge to resolve the dispute and allow them to continue making the candles.

"We make millions and millions of candles a year and have been making them since 1897," Steigerwald said.

Over the years, Cathedral candles have been lighted in the Vatican, presented to popes and Mother Teresa and used at the Academy Awards and in productions of "The Phantom of the Opera," Steigerwald said.

Steigerwald said Cathedral has been making candles with colored bottom bands for decades and other companies across the country have as well.

Banded candles in churches started centuries ago with a German custom to tie colored ribbons around the bottom of tapers in churches, Steigerwald said.
http://hosted.ap.org/dynamic/stories...EAST&TEMPLATE=





Agency Agrees to Review Human Stem Cell Patents
Andrew Pollack

The United States Patent and Trademark Office has agreed to re-examine the validity of fundamental patents on human embryonic stem cells granted to a scientist at the University of Wisconsin.

The decision, disclosed on the agency’s Web site, could lead to a narrowing or even a rescission of the three patents, which some scientists and consumer groups say are hindering research into a fledgling field that holds great medical promise.

The request for re-examination was filed in July by the Foundation for Taxpayer and Consumer Rights, a California consumer group, and the Public Patent Foundation, a New York organization advocating patent reform.

The patents are based on work by a University of Wisconsin scientist, James A. Thomson, who was the first to isolate human embryonic stem cells. The stem cells have the potential to turn into any type of tissue in the body and could one day lead to treatments for numerous diseases.

In their request for a re-examination, the consumer group and the Public Patent Foundation said Dr. Thomson’s work did not deserve patents because three scientific papers by others and one previous patent had already laid out how to derive embryonic stem cells in various animals including mice, pigs and sheep.

The patent office said the references cited in the petition raised substantial new questions about the patentability of the Wisconsin work.

Re-examinations brought about by a third party, as this one was, result in all the patent claims being canceled 12 percent of the time, said Brigid Quinn, a spokeswoman for the patent office. In another 59 percent of cases, smaller changes are made. Ms. Quinn said the patent office receives 400 to 500 requests for re-examinations each year and grants 90 percent of them.

The Wisconsin Alumni Research Foundation, or WARF, a patent licensing organization affiliated with the university, provides academic researchers with free licenses and charges them $500 for cells. Companies are charged $75,000 to $400,000, depending on their size and the terms of the license. One company, the Geron Corporation, has exclusive commercial rights to heart, nerve and pancreatic cells derived from the embryonic stem cells.

The California consumer group and some scientists say these conditions have slowed research and caused some of it to be moved offshore, since the patents apply only in the United States.

Last week, Gov. James E. Doyle of Wisconsin announced an agreement with WARF under which companies sponsoring stem cell research at academic or nonprofit research institutes in Wisconsin would get free licenses to the patents for such work. His office said that would give Wisconsin “a significant competitive advantage” over other states.

Elizabeth L. R. Donley, special counsel to WARF, said in a statement yesterday that the patents do not impede research and that the foundation had given free licenses and cells to 324 research groups. She said she was confident the validity of the patents would be affirmed.

“We believe this is a politically and financially motivated challenge, to which we will respond in the appropriate legal forum, which is the United States Patent and Trademark Office,” she said.

It could take years, however, for the patent office to finish its re-examination.

Daniel B. Ravicher, executive director of the Public Patent Foundation, said the fact that the patents are undergoing re-examination will make it harder for WARF to charge high fees. “Now WARF has lost a lot of the credibility and leverage that these patents give them,” he said.
http://www.nytimes.com/2006/10/04/bu.../04patent.html





H.P. Read Messages of Reporter
Miguel Helft

Hewlett-Packard’s effort to plug news leaks included monitoring at least one employee’s instant-messaging exchanges with a reporter, according to documents provided to Congressional investigators.

The documents also provide other new details of the operation, including the company’s payments for the services of investigators, and they shed light on a feud that simmered for months between Patricia C. Dunn, the chairwoman, and Thomas J. Perkins, a board member who resigned in protest over the inquiry.

They are included in the voluminous files made available to lawmakers in preparation for the House subcommittee hearing held Thursday on the Hewlett-Packard case.

In a March 2 e-mail message, Kevin T. Hunsaker, the senior lawyer in charge of the investigation, asked Fred Adler, the company’s information security investigator, to “do some monitoring on incoming and outgoing calls to Pui-Wing Tam,” a reporter at The Wall Street Journal, “and keep a really close eye on her I.M. traffic with Moeller,” Mr. Hunsaker wrote, presumably referring to Michael Moeller of Hewlett-Packard’s media relations team.

An e-mail message sent by Mr. Adler some two weeks earlier appears to celebrate what was a new investigative tool for the team. “New monitoring system that captures AOL Instant Messaging is now up and running and deployed on Moeller’s computer,” Mr. Adler wrote to Mr. Hunsaker and others on the investigative team. “It instantly began to pay results.”

The rest of the message shows the text of close to 70 instant-messaging exchanges between Ms. Tam and Mr. Moeller, mostly discussing the company’s earnings in what appears a fairly routine exchange between a reporter and a company spokesman.

Experts say it is not clear whether the monitoring of an employee’s instant messages would raise any new legal issues for Hewlett-Packard or those involved.

If the employee is using the company’s service as an Internet service provider, “then the company can monitor lawfully anything that the person sends or receives,” said Clifford S. Fishman, a professor of law at Catholic University of America in Washington. But if the employee is using a third-party communications system, “it is less clear whether the company can monitor that.”

As far as the monitoring of calls referred to in the message, the form was not specified. Hewlett-Packard has acknowledged that its operation included inspection of company phone records as well as acquiring private phone records through subterfuge, in a practice known as pretexting. But it has said no wiretapping was involved.

“I was aware that the company was monitoring instant messaging,” Mr. Moeller said on Friday night, adding that Ms. Dunn and Mark V. Hurd, the chief executive, had both already apologized to him for the operation’s scrutiny of him. Mr. Moeller was previously identified as a target of the pretexting efforts, along with board members and journalists, including Ms. Tam.

A spokesman for The Wall Street Journal declined to comment.

The documents also give an account of a daylong tracking of the activities of Mr. Moeller during a technology conference in Los Angeles, including reports on overheard snippets of his conversations.

Other documents provided to Congressional investigators revealed that Hewlett-Packard was billed a total of $325,641.65 for various services related to the leak investigation’s second phase from January to April. That included $83,597.42 for surveillance, which was described as “Multiple Surv. And Sting Activity Palo Alto, Piedmont, SF, LA, CA & Denver CO.” A parenthetical note clarifies that the surveillance included “trash re-con of all areas.”

Background investigations on several board members and their relatives, as well as reporters for The Wall Street Journal and the online service CNet, did not come cheap. The bill was $66,688. There were also background checks on employees of Hewlett-Packard’s media relations department, costing $6,435.

And locating, identifying, charting and cataloguing records of interested parties — the part of the investigation that apparently included pretexting — cost $44,875.

Invoices from the Action Research Group, the Florida company that is reported to have arranged the pretexting, are also among the more than 100 documents obtained by Congressional investigators. Many of them run in the vicinity of $100, but a 2005 invoice for call records of Carleton S. Fiorina, around the time of her dismissal as chairwoman and chief executive, shows a price tag of $500.

The invoices conclude with the line “Thank you for using our services!!!”, all in capital letters, followed by a black-and-white rendition of Hello Kitty, a popular Japanese cartoon character.

The documents also illuminate the bitter conflict that developed over months between Ms. Dunn and Mr. Perkins, whose attacks on Ms. Dunn have been well publicized. They include an outburst at the board meeting in May, when Mr. Perkins resigned. But the animosity, according to Ms. Dunn, who resigned as chairwoman last week, had been building up earlier.

“I did not share details of my interactions with Tom during the year prior to his resignation,” Ms. Dunn wrote to other Hewlett-Packard board members in an Aug. 17 e-mail message. “Tom’s behavior to me in our one-on-one interactions was often so over the top that the simple facts would have seemed like exaggeration. I won’t indulge in a chronology of the intimidation, pressure, rudeness and criticism that Tom directed at me, but will simply say that I have never had remotely similar experiences with anyone.”

The investigation subcommittee of the House Energy and Commerce Committee, which held Thursday’s hearing, continued its examination of pretexting on Friday with a hearing at which representatives of six cellular carriers testified. The officials said they thought pretexting should be against the law, but did not specifically endorse a pending bill approved by the House committee.

The committee’s chairman, Representative Joe Barton, Republican of Texas, said Friday that the long-stalled legislation might come up for a House vote soon.

Two of the carriers have also initiated legal action against detective agencies identified as having played a role in pretexting in the Hewlett-Packard case.

On Friday, Cingular Wireless filed a lawsuit against CAS Agency Inc. of Carrollton, Ga., and Charles Kelly, the company’s registered agent. Cingular contends that CAS illegally obtained the telephone records of Dawn Kawamoto, a reporter for the online technology news service CNet, as part of the Hewlett-Packard operation.

The lawsuit, filed in United States District Court in Atlanta, also names 100 “John Doe” defendants and 100 unidentified companies that Cingular says conspired with CAS Agency.

The move came one day after Verizon Wireless filed a similar lawsuit against unidentified individuals for illegally obtaining phone records of its customers in the Hewlett-Packard effort.
http://www.nytimes.com/2006/09/30/te...QUfryUnMnYrNBA





Report Shows H.P. Sought Expert to Help Find Leak
Damon Darlin

Hewlett-Packard sought the advice of a well-known intelligence specialist, Brian Jenkins of the RAND Corporation, on how to find the source of a boardroom leak, according to a report compiled by H.P.’s law firm and provided to a House subcommittee.

Mr. Jenkins, formerly a top investigator with Kroll, the nation’s largest detective agency and a firm used by many large corporations, advised H.P. to use pretexting to obtain private telephone records, according to the report by the law firm, Wilson Sonsini Goodrich & Rosati.

Pretexting is a practice of using questionable methods to obtain private phone records.

Mr. Jenkins, a senior adviser to the president of RAND, has not responded to repeated requests since Friday for an interview. He is acknowledged as a specialist on terrorism and counterinsurgency.

The law firm’s report did not contain an interview with Mr. Jenkins, and not all the information the lawyers obtained in the interviews has proved to be accurate.

At the time, Hewlett-Packard was paying Mr. Jenkins as a consultant on crisis management and security matters. He had helped H.P. plan responses for significant events like a pandemic caused by the bird flu.

According to the report by the law firm, which was requested by H.P. in August to investigate the methods used to spy on directors, “Jenkins specifically recommended that they conduct pretexting to get information if they had not already done so.”

The report said that the company’s general counsel, Ann O. Baskins, called Mr. Jenkins on Jan. 30. Kevin Hunsaker, a senior counsel working for Ms. Baskins, also told the lawyers at Wilson Sonsini that he spoke with Mr. Jenkins. The lawyer’s report said that Ms. Baskins told Patricia C. Dunn, the company’s chairwoman at the time, that “Jenkins agreed with their techniques.”

Some assertions made by Ms. Baskins that are found in the report have been contradicted by other documents. A telephone call late Monday to Ms. Baskins’ lawyers was not returned.

The same investigation by Hewlett-Packard’s law firm into the company’s spying did not find that the company’s chief executive had any early knowledge of the pretexting used by its detectives.

Mark V. Hurd, the chief executive and now, also the chairman, told lawyers with Wilson Sonsini in late August that he had not heard the term pretexting during the investigation of board leaks.

According to the report, Mr. Hurd did recall hearing at a meeting on July 22, 2005, that phone record information was obtained off the Web. He told the lawyers that he “remembered thinking that must be a Web site with such information.”

Mr. Hurd’s statements were included in the report, which the company provided to Congressional investigators. The document was among those members of a House subcommittee had before them when they questioned Mr. Hurd last week.

His statement in the report is consistent with other statements he has made about his knowledge of the investigation. In a news conference in September and again before the House subcommittee investigating pretexting, Mr. Hurd said he briefly attended the meeting on July 22, 2005, in which the investigation of a leak from the boardroom was discussed.

Mr. Hurd told the company’s outside law firm that he “recalled thinking at one point that the people at the meeting did not know what they were talking about — that they had theories with ‘nothing behind them.’ ” The law firm’s report also said Mr. Hurd recalled “being under whelmed by the details.”

He left the meeting early to catch a flight back to Ohio, where his home was at the time. Mr. Hurd, who was hired by Hewlett-Packard at the end of March 2005 was moving his family to California.

The earliest mention of pretexting by a top company executive came in a meeting on June 15, 2005, according to company documents. Handwritten notes of the meeting with private investigators reveal that Ms. Baskins, the general counsel, knew about the use of pretexting. Ms. Dunn, the company’s chairwoman who had ordered the investigation, attended that meeting.

Those same methods were then used in a second phase of the investigation in January. In that phase, the leak investigation was turned over to Mr. Hunsaker, who continued using the detective agency that Ms. Dunn and Ms. Baskins used initially.

Ms. Dunn resigned from the board, but she testified before Congress that she did not recall the June 15 meeting. Ms. Baskins resigned last week and then refused to testify before Congress, invoking her Fifth Amendment right against self-incrimination. Mr. Hunsaker refused to resign and was fired. He also refused to testify and also invoked the Fifth Amendment.

The Wilson Sonsini report is notable for the attempts by the firm’s lawyers, Bahram Seyedin-Noor and Bryan Ketroser, to establish when particular company executives had knowledge of pretexting. The method may not be illegal, but the company has acknowledged that it is unethical and should not have been used.

The Wilson Sonsini lawyers were particularly interested in the use of Social Security numbers in the efforts to obtain phone records, but they uncovered no evidence that the company had provided them to private detectives.

The report also shed light on the legal opinion the company sought to verify the legality of using pretexting to obtain phone records.

The Wilson Sonsini report found that H.P. lawyers relied on a legal opinion prepared by a law clerk, not a lawyer, at a firm associated with Ronald DeLia, the private detective the company had hired to find the source of the leaks.
http://www.nytimes.com/2006/10/03/te...03hewlett.html





Ex-chairwoman Among 5 Charged in Hewlett Case
Damon Darlin

Hewlett-Packard’s former chairwoman was among five people charged with felonies on Wednesday in connection with the illegal gathering of phone records of board members, journalists and others.

The charges, filed by the California attorney general’s office, are the first stemming from an effort by the company to trace press leaks from its board. The operation ended last spring, but it came to light a month ago in disclosures from a disgruntled former director.

The case has rocked the company, forcing out the chairwoman, Patricia C. Dunn, along with the general counsel, a second director and two other senior officials. A House subcommittee held hearings on the case last week, and federal prosecutors have also been considering charges.

It was Ms. Dunn who authorized the operation and put it into the hands of outside investigators. Those charged with her Wednesday included the company lawyer who supervised one phase of the operation and three detectives.

The charges stem from the use of pretexting, a form of deception, to obtain private calling records from phone company employees.

“We plan to aggressively prosecute this case,” Bill Lockyer, the state’s attorney general, said at a news conference in Sacramento. “However, the investigation into this matter remains active and still incomplete.”

The general counsel, Ann O. Baskins, who resigned hours before the House hearing last week, was not among those charged Wednesday. Nor was Mark V. Hurd, the chief executive, who has overseen a period of resurgence that has buoyed the company’s stock even in the face of the recent upheaval.

“There is no evidence that Mark Hurd engaged in wrongdoing,” Mr. Lockyer said Wednesday.

Concerns over leaks from the board predated the ouster of Carleton S. Fiorina as chairwoman and chief executive in early 2005. In a memoir to be published next week, Ms. Fiorina says that she ordered an initial leak investigation shortly before her departure. [Page C1.]

The charges against Ms. Dunn, who is expected to appear in court within 24 hours, come as she battles advanced ovarian cancer. “I truly hope Ms. Dunn wins her fight against this disease,” Mr. Lockyer said. “However, her illness has no impact on her culpability.”

A criminal complaint filed Wednesday in San Jose, Calif., accuses all the defendants of four charges: using false pretenses to obtain confidential information from a public utility, unauthorized access of computer data, identity theft and conspiracy to commit each of those crimes.

The maximum penalty for the identity theft charge is a $1,000 fine and a year in jail. Fraudulent access to information from a public utility carries a possible one-year prison or jail term. Illegal access to computer data carries a maximum punishment of $10,000 and a three-year prison term.

Arrest warrants were issued for the five, who include Kevin T. Hunsaker, a former senior lawyer at Hewlett-Packard; Ronald L. DeLia, a Boston-area private detective; Joseph DePante, owner of Action Research Group, an information broker in Melbourne, Fla.; and Bryan Wagner of Littleton, Colo., who is said to have obtained private phone records while working for Mr. DePante.

An investigation was begun by Ms. Dunn in 2005 — involving leaks that were apparent in news articles just before and after Ms. Fiorina’s ouster — but it ended inconclusively that year. A second phase began in January 2006, after news reports about a senior management meeting indicated further leaks, and the effort was turned over to Mr. Hunsaker for supervision.

Ms. Dunn resigned from the board last month under pressure because of the methods used. Mr. Hunsaker, a senior counsel and director of ethics, was fired after he refused to resign, his lawyer said.

Robert M. Morgester, deputy attorney general for the state’s special crimes unit, wrote in a supporting document to the charges filed Wednesday that “both Dunn and Hunsaker were aware that the records were to be obtained by fraud or deceit.” He said Mr. Hunsaker provided continuous guidance to Mr. DeLia on which records to obtain.

The criminal complaint notes that the pretexting in the case involved 24 different individuals’ home, office, cellphone and fax numbers. Mr. Morgester wrote that Action Research processed 33 months of calls and retrieved information on 590 landline, cell and toll-free calls.

The complaint states that in April 2005, Ms. Dunn gave Mr. DeLia the home, office and cellphone numbers for company directors. In June 2005, Mr. DeLia told Ms. Dunn and Ms. Baskins, the general counsel, that telephone records were obtained “by ruse” from a telecommunications carrier.

On Jan. 30, 2006, Anthony R. Gentilucci, a company investigator, told Mr. Hunsaker by e-mail that telephone records were obtained surreptitiously and “on the edge” legally.

The next day, Mr. Hunsaker gave Mr. Gentilucci, Mr. DeLia and others the home, office and cellular phone numbers of all of the company’s directors and senior vice presidents.

In addition to getting phone records directly from customer service representatives, the operation also involved access to records kept online. State investigators said that they were able to find Mr. Wagner by tracking a cookie left on Mr. Wagner’s computer when he used it to gain access to online records at AT&T. A cookie is a piece of computer code that identifies what computer has visited a particular Web site.

Although the operation for gathering of phone records stretched across the country and back again, the state claims jurisdiction in the case because the detectives were paid by Hewlett-Packard, which is based in Palo Alto, Calif., and the planning was done there as well.

Ms. Dunn’s lawyer, James J. Brosnahan of Morrison & Foerster in San Francisco, said in a statement: “These charges are being brought against the wrong person at the wrong time and for the wrong reasons. They are the culmination of a well-financed and highly orchestrated disinformation campaign.”

The charges are yet another blow for Ms. Dunn. On Tuesday, a representative said Ms. Dunn was to begin six months of chemotherapy on Friday for recurrent advanced ovarian cancer. A friend said that she had Stage 4 ovarian cancer. She has survived breast cancer and melanoma, a skin cancer.

Stage 4, in which the cancer has spread beyond the abdomen to other parts of the body, is the most advanced, and only 29 percent of women with that stage are still alive after five years. The disease is so dangerous because it often has no symptoms until it has become advanced and has started spreading inside the abdomen.

Ms. Baskins, who was Mr. Hunsaker’s boss and was involved in both the 2005 and 2006 phases of the investigation, may have escaped charges because she never passed on any phone numbers to a pretexter.

Her lawyer, Cristina C. Arguedas, with the firm of Arguedas, Cassman & Headley of Berkeley, Calif., said, “Ann Baskins did nothing that could possibly warrant a charge being filed against her.”

Other criminal defense lawyers said prosecutors might have a difficult time proving intent. To do so, they would have to show that the defendants had some appreciation of the wrongfulness of their actions.

“It can be a squishy concept,” said Matthew J. Jacobs, a former federal prosecutor and a partner in the Silicon Valley law firm of McDermott Will & Emery.

Getting a legal opinion and taking steps to establish the legality of an action can show a lack of criminal intent. Ms. Baskins repeatedly asked for verification that the methods the investigators used were legal.

The question of intent could also be raised for those charged, Mr. Hunsaker and Ms. Dunn in particular, several defense lawyers said. Ms. Dunn, who is not a lawyer, relied on the lawyers’ advice. The documents provided by the company show Mr. Hunsaker asked for legal opinions and did his own research to verify that what was done was considered legal.

In one set of e-mail exchanges between Mr. Hunsaker and Mr. Gentilucci, the company’s manager of global investigations, Mr. Hunsaker raises the question of legality. Mr. Gentilucci replied, “I think it is on the edge, but above board.” Mr. Hunsaker’s response was, “I shouldn’t have asked.”

Mr. Hunsaker’s lawyer, Michael Pancer, a prominent San Diego defense attorney, said in a recent interview that his client meant that he should not have asked because he knew that Mr. Gentilucci would have checked on the legality of the method.

Lawyers for Ms. Dunn and Mr. DeLia did not respond to requests for comment.

Mr. Wagner said he had been advised not to comment on the charges against him. He said, however, “If I would have known it was this high-profile, I wouldn’t have done it.”

Mr. DePante’s lawyer, Richard J. Preira of Miami Beach, Fla., said that “his conduct is not illegal” and that his client was a scapegoat. He also said, “the prosecutors are trying to fit a square peg in a round hole.”

Indeed, other defense lawyers and legal scholars not involved in the case said it would not be an easy one for the attorney general despite the mountain of documents provided by the company. The problem is that California had no law against the specific act of pretexting. So the prosecutors have to stitch together a set of laws to charge the defendants.

Defense lawyers are likely to try to exploit the weak seams. Take, for instance, the law that makes it a crime to use electronic media to take information owned by a public utility. The first problem, said Robert Weisberg, a Stanford University law professor, is whether a phone company can be considered a public utility anymore. The identity theft law makes it a crime to steal something of value — credit, goods, services, or medical information — Mr. Weisberg notes, but a defense lawyer could argue that phone records have no monetary value.

California made pretexting a crime, but the law, signed on Saturday by Gov. Arnold Schwarzenegger, does not go into effect until Jan. 1. It would not apply to any of the pretexting in the Hewlett-Packard case. Under that law, the penalty for a violation would be $2,500 and up to a year in county jail. Repeated violations would result in a $10,000 fine and a year in jail.

Reporting was contributed by Matt Richtel in San Jose, Calif.; Jonathan D. Glater in Sacramento; and Denise Grady and Miguel Helft in New York.
http://www.nytimes.com/2006/10/05/te...rtner=homepage





Ex-Chief of H.P. Pursued Leaks, Too
John Markoff

The former Hewlett-Packard chief executive Carleton S. Fiorina, once the most prominent female executive in the United States, ordered the first of a series of leak investigations into contacts by board members with journalists in January 2005, she says in a long-anticipated memoir.

Ms. Fiorina was hired as chief executive in 1999 and led the company through a merger battle that family members of the company’s founders and some directors bitterly resisted. She was fired in February 2005 when the resulting company failed to meet business goals.

Her book, “Tough Choices” (Portfolio Hardcover), which is embargoed for release on Tuesday and has been made available to reviewers only if they sign a nondisclosure agreement, was purchased at a bookstore yesterday by a reporter for The New York Times.

In it, Ms. Fiorina reveals a good deal of resentment over her firing. She writes that after the board’s final meeting on her fate, all but two members refused to confront her. And she indicates that she had little respect for some Hewlett-Packard directors, whom she described as amateurish and immature.

The timing of the book is coincidental to last month’s disclosures of two leak investigations that took place after Ms. Fiorina’s departure. She has not commented on the boardroom spying scandal that has rocked the company and resulted in felony charges and firings.

It was known that the company was concerned about boardroom leaks even before Ms. Fiorina’s departure, but it was not known that she had authorized the initial investigation.

That investigation, Ms. Fiorina writes, was conducted directly by the company’s outside legal counsel, Larry W. Sonsini, after an article in The Wall Street Journal detailed an impending corporate reorganization.

The book makes no mention of questionable investigative methods like pretexting, which involves pretending to be someone else to obtain information from telephone company employees. Nor does the book say whether Ms. Fiorina directed Mr. Sonsini to spy on any individual reporter or director.

She writes that Mr. Sonsini personally interviewed every board member. He reported back to Ms. Fiorina that Thomas J. Perkins, the prominent Silicon Valley venture capitalist who had previously served on the Hewlett-Packard board and would soon rejoin it, had been a source for the article.

Mr. Sonsini told her that Mr. Perkins had been “honest enough to admit that he’d spoken to the press.”

Ms. Fiorina added, however, that she was deeply suspicious of another board member, George A. Keyworth II, also known as Jay, because of his behavior at a board meeting and during a related board conference call.

More than a year later, Mr. Keyworth acknowledged that he was a source for a reporter’s article. That acknowledgment came after the company conducted two secret investigations into the activities of its board members, using private investigators who in turn made targets of the telephone records of nine reporters, including this reporter.

Mr. Keyworth’s lawyer, Reginald J. Brown, denied last night that Mr. Keyworth was the source of the news article that provoked the first leak investigation.

The former board chairwoman, Patricia C. Dunn, was not involved in the decision to begin the initial investigation, Ms. Fiorina wrote, because she was on vacation in Bali and was not aware of the events that led to the first leak.

The California attorney general brought a felony complaint against Ms. Dunn yesterday for her involvement in the two subsequent leak investigations.

The account of the initial leak investigation, which appears in the final chapter of the book, notes that in late January, Mr. Sonsini reported the results of his inquiry during a board telephone conference call.

“Although I appreciated Tom’s candor,” Ms. Fiorina wrote in referring to Mr. Perkins, “I was deeply disturbed when no one else spoke up. As the call progressed, all but one board member asked questions or made comments.”

That board member was Mr. Keyworth.

Mr. Sonsini’s report also described the board as “dysfunctional.”

“Some board members’ behavior was amateurish and immature,” she wrote. “Some didn’t do their homework. Some had fixed opinions on certain topics and no opinion at all on others. Some members were bored and distracted during important agenda items like leadership development or corporate social responsibility.”

Ms. Fiorina asserts that when the Hewlett-Packard board began to turn against her leadership, she was blindsided.

“I was mystified by the board’s recent behavior,” she wrote. “I was suspicious of Jay’s heated denial when the leak first occurred and then his complete silence on our last call.”

The incident that would help lead to her firing was a visit paid to her by three Hewlett-Packard directors — Richard A. Hackborn, Ms. Dunn and Mr. Keyworth — two days before a board meeting in January 2005.

The three told her that they spoke on behalf of the entire board. They directed her to execute a far-reaching reorganization to convince Wall Street analysts that the company was moving to respond to inadequate financial growth and a lagging stock price.

Ms. Fiorina said that at the meeting she believed that she was having a discussion with the board members and that they could not unilaterally order her to take the actions they were demanding.

She wrote that she resisted their orders and argued that the company should continue with an existing 2005 strategic plan.

She described an especially intense and angry confrontation with Mr. Keyworth, who pressed her on immediately renominating Mr. Perkins to the board.

Earlier in the book, Ms. Fiorina writes about other conflicts with Mr. Keyworth. She describes how he proposed at times that Hewlett-Packard acquire a range of companies including A.M.D., Apple, TiVo and Veritas, and his impatience with her when she disagreed with his logic.

She uses a portion of the book to defend her strategy and management in her five and a half years at Hewlett-Packard, making clear that she felt its subsequent resurgence had stemmed from changes on her watch.

She also notes that in 2005, after her departure, the American economy recovered and the company went on to deliver over 20 percent growth in earnings per share.

She concludes her memoir by writing that 2005 was the payoff year she “had been expecting.”

“H.P. performed magnificently and delivered the plan,” she said, and “the company’s 2005 results finally demonstrated that H.P. had indeed been transformed.”

She added a personal note: “Life isn’t always fair, and I was playing in the big leagues. Yet I realized I had no regrets.”

Ms. Fiorina describes being asked to leave what would be a final February meeting in Chicago while board members discussed her fate. She reveals particular bitterness about her firing.

The book’s opening paragraph states bluntly: “In the end, the board did not have the courage to face me. They did not thank me and they did not say goodbye. They did not explain their decision or their reasoning. They did not seek my opinion or my involvement in any aspect of the transition.”

After being asked to wait for three hours, none of the board members remained in the room when she returned to it, she wrote. She was greeted by Ms. Dunn, the new board chairwoman and the head of the board’s governance committee, who asked her to announce publicly that the decision to step down had been her own. Ms. Fiorina wrote that she refused.

Robert Anderson, a deputy in the California attorney general’s office, would not comment yesterday when asked if Ms. Fiorina was under investigation.
http://www.nytimes.com/2006/10/05/te...gy/05leak.html





H.P., Red-Faced but Still Selling
Damon Darlin

WHAT if the initials H.P. — as in Hewlett-Packard — enter the lexicon in the same manner that Google has? Google, of course, has become much more than a corporate name. It now doubles as a catch-all term for online search that has resulted in nifty little verbs like “Googled,” “Googles” and “Googling.”

If H.P. undergoes the same sort of metamorphosis and becomes shorthand for illicit snooping, you might be telling your friends that a stalking ex-boyfriend is “so H.P.” or that your office mate, who snoops through the stuff on your desk and listens a little too closely to your calls, has “gone H.P.”

But the prospect of children hurtling the epithet “H.P.’er” at parents who monitor their Web surfing is just one of the minor worries for Hewlett-Packard, which, as the world’s largest technology company, has its brand name on millions of computers, printers, ink cartridges and corporate data servers. Revelations that the company’s detectives and lawyers planned and supervised an extensive investigation of some of its directors, journalists who covered the company, a few employees and others has blemished its reputation.

The question is whether the scandal will more seriously damage one of the most storied names in corporate America. Mark V. Hurd, the chairman and chief executive, is the person shouldering the responsibility for managing the scandal’s fallout and, for the time being, it appears that he has guided Hewlett-Packard through the crisis with the same skill he has been using to turn around this once-stumbling technology giant.

By many measures, the company so far has escaped any serious damage. Its stock, about the only visible barometer of public perception other than retail sales and late-night talk-show jokes, is as strong as it was before the spying operation was revealed in early September. The stock closed on Friday at $36.69, close to its 52-week high of $37.25, almost unchanged during a month of unrelenting reports of detectives obtaining personal phone records, rooting through garbage, following directors and journalists — spying on one while at Disneyland — and planning to infiltrate newsrooms with spies masquerading as janitors or clerks.

Nor would it seem that the outlandish plots concocted by the company’s Clouseaus have convinced customers that a Dell notebook or a Sun server makes more sense these days. Kurt Francis, a Century 21 real estate agent in Escondido, Calif., said that Hewlett-Packard’s woes did not change his view of the company and that it would not affect his willingness to buy H.P. products.

“H.P. is a lot bigger than one or two people,” said Mr. Francis, who uses an H.P. financial calculator, an H.P. notebook computer and even an H.P. personal digital assistant. “It’s very sad what’s happened, but it will blow over — the average consumer is going to forget this in two months.”

H.P. certainly does not appear to be paralyzed by the imbroglio. Last Thursday evening, the same day that Mr. Hurd testified before a Congressional subcommittee examining his company’s investigative methods, the company’s personal computer division announced the acquisition of Voodoo Computers, a maker of high-powered computers for hard-core gamers.

Ravi Sood, a co-founder of Voodoo, said the spying scandal did not make him or his fellow founder — and brother — Rahul Sood, waver in selling their operations to H.P. “It makes a statement that we closed the deal during this thing,” he said. “Business goes on.”

Rahul Sood, Voodoo’s president, said that one reason he wanted to sell the company to Hewlett-Packard was his high regard for Mr. Hurd. He said Hewlett-Packard executives flirted with Voodoo in the past about a merger, but that nothing had happened. When Rahul Sood sent an e-mail message directly to Mr. Hurd in July 2005 outlining the rationale for a merger, “he moved mountains,” Mr. Sood said. (He gave another reason for wanting to link with H.P.: “Getting a ticket into H.P. Labs would be like Charlie getting a ticket to Willy Wonka’s chocolate factory.”)

Reassuring customers about the sale, Mr. Sood wrote on his blog that Mr. Hurd “is quick to make business decisions, but understated when it comes to ‘glory.’ ” He recounted how Mr. Hurd has said that he did not want his photograph hanging in the lobby of the company headquarters near those of the company founders William R. Hewlett and David Packard.

Mr. Hurd’s decision not to memorialize himself next to the famous founders is often cited by Hewlett-Packard and others as an example of his modesty. It is also no accident that the anecdote offers a contrast between Mr. Hurd and his predecessor as chief executive, Carleton S. Fiorina, who made sure that her picture was hung in the corporate lobby next to the founders.

Even so, analysts and others believe that Mr. Hurd’s modesty has been an important factor in the company’s comeback. When asked in a recent interview to comment on his critics’ contention that Ms. Fiorina deserves the credit for the company’s turnaround, he did not disparage her strategy. Instead, he said that her efforts “just needed a bit of crystallization.”

Mr. Hurd’s modest demeanor came into play again at the Congressional hearing on Thursday when he deployed it to defuse anger about privacy invasions by company-hired detectives, all of whom refused to testify and invoked their Fifth Amendment right against self incrimination.

Mr. Hurd took a big risk by volunteering to appear at the Congressional inquiry — any missteps at the hearing could haunt him personally, professionally and legally — but his advisers said he figured that owning up to well-publicized mistakes was a better path to follow than hiding. He also asked to appear alone at the witness table, something that the company’s crisis consultants counseled against because it meant that he would probably be hit with more questions.

“It was Mark’s decision; he’s taken the position that he needs to take responsibility for what went wrong,” said Michael J. Holston, a lawyer with Morgan, Lewis & Bockius, which is representing the company before the various state and federal investigators. “He concluded that he didn’t have anything to hide so he got up there and answered all their questions.”

Mr. Hurd also was not represented by a personal lawyer, a point he made sure that members of Congress — and the throng of reporters covering the event — noted.

As it turned out, Mr. Hurd never encountered a fusillade of hostile questions from the committee. Congressional ire was aimed, instead, at Patricia C. Dunn, who as Hewlett-Packard’s chairwoman had instigated the investigation and tracked its details, according to documents given to investigators. (Ms. Dunn recently resigned from the board, and Mr. Hurd assumed her duties.) But Ms. Dunn did not accept any responsibility for the company’s actions and repeatedly said she could not recall or could not remember meetings, e-mail messages and memos related to H.P.’s wide-ranging snooping. Some members of Congress were less than impressed by her.

“It showed that she was not credible,” said Representative Edward Whitfield, the Kentucky Republican who is chairman of the House subcommittee.

Yet Mr. Hurd was fuzzy on the details, too, raising the classic questions that arise in any scandal, corporate or political: What did he know and when did he know it? Despite the lingering ambiguity surrounding Mr. Hurd’s role in H.P.’s snooping, his name appears on only eight of some 20,000 pages of documents that the company has turned over to Congress, the California attorney general, and the United States Attorney’s Office so far, , according to people who have examined most of those documents.

One of the stronger pieces of evidence that linked Mr. Hurd to the spying project was a March 10 draft report of the operations that Hewlett-Packard’s investigators prepared for certain company executives. Mr. Hurd acknowledged receiving the report, but said he never read it. “It was not my finest hour, Mr. Chairman,” he replied to Mr. Whitfield’s questions about how he could have missed references to such things as surveillance, obtaining a reporter’s cellphone records and installing tracer software on a reporter’s computer.

Those references appear on the third and fourth pages of the 18-page report. While the reference to the legality of obtaining cellphone records was noted only in a footnote, a reference in the text of the report to a “covert intelligence gathering operation” would seem harder to miss. Mr. Hurd testified that he did not approve the use of the tracer software, which covertly pinpoints the Internet address of anyone who opens the document online. He said he had not ruled out the future use of such software in possible criminal investigations of fraud or theft perpetrated against the company. But according to people close to him, Mr. Hurd has forbidden its use on reporters.

For all of the apparent goodwill surrounding him, Mr. Hurd still has some tricky issues to juggle. Potential criminal charges still loom against H.P. and three employees who were deeply involved in the spying operations. As is always the case in corporate investigations, they may end up implicating their bosses as legal pressures mount. The three employees are Ann O. Baskins, the company’s former general counsel (whose office was only several feet from Mr. Hurd’s); Anthony R. Gentilucci, the company’s manager of global investigations, who resigned; and Kevin T. Hunsaker, a senior counsel who reported to Ms. Baskins and led the investigation, who refused to resign and was fired.

Even with those employees — and Ms. Dunn — out of the company, it is still possible that William Lockyer, the California attorney general, could bring felony or misdemeanor charges against Hewlett-Packard. And it may be harder for Mr. Hurd to charm Mr. Lockyer than it was for him to charm members of Congress. Mr. Holston, the company’s lawyer, said H.P. continued to supply documents to authorities. “We don’t think a crime was committed,” he said. “But we understand their argument and want to talk it through.”

Mr. Hurd faces another challenge. The spy operation has led to the removal of three board members. Finding replacements will be a distraction. But it is also an opportunity to rebuild a board with members who are not at one another’s throats, according to analysts.

“They’ve bled a ton of blood,” said Robert Enderle, an analyst at Enderle Group, a technology market research firm in San Jose, Calif., who said the board needed people with a better understanding of the Internet and younger consumers. “It would be good to have someone on the board who understands consumer electronics — and not the way it was 10 or 20 years ago.”

HOWEVER the scandal shakes out, one thing is clear: H.P. is now widely linked in the public mind with the invasion of privacy, and that perception strikes at the core of the company’s identity and its marketing mojo.

“Privacy is a core H.P. value,” said Scott Taylor, the company’s chief privacy officer, in a Congressional hearing last June. “We firmly believe that our ability to succeed in the marketplace depends on earning and keeping our customer’s trust.”

Anyone who has an H.P. computer may have noticed the messages that pop up from time to time on the screen that are sent directly from the company. They were perceived before as innocuous, maybe bothersome. But now they may serve to remind customers of the spying episode, which Mr. Hurd described as a “breakdown at multiple levels.”

In other words, whenever one of those Hewlett Packard pop-ups appear on users’ computer screens, they may feel that they are being “H.P.’ed.”

Laurie J. Flynn contributed reporting for this article.
http://www.nytimes.com/2006/10/01/bu...ey/01hurd.html





Understanding Transparency, The Hard Way
Ed Cone

On the Internet, nobody knows you're a dog. So goes the old joke about uncertain online identities.

But people will damn sure find out if you are a private eye snooping online for the now-former chairwoman of Hewlett-Packard, or a now-former United States Congressman kinking out via IM with teenage pages.

We live in an age of transparency. Apparently Patricia Dunn and Mark Foley didn't get the memo: Things don't stay hidden on the web.

Morals, ethics, and legalities aside, how could these powerful people make themselves so vulnerable to getting busted? My teenage son seems to understand more about covering his tracks online than the folks running our government and our largest companies.

Dunn's undoing involved, among other things, a tracking cookie left on the computer of private investigator Bryan Wagner as he had his way with online phone records at AT&T, according to this morning's New York Times. Dunn and Wagner are among the five people connected to the HP pretexting case charged yesterday with felonies by the State of California.

Foley may have thought his IMs were disappearing into the ether as soon as they cleared his computer screen. Instead, the messages were saved, and his career was ruined, and the House leadership is left to fight for survival.

We talk a lot a about transparency as a virtue in the age of the web, and hold it up as a marketing technique and a better way to run an enterprise. Sun's blogging CEO, Jonathan Schwartz, is lobbying the SEC to allow more financial information to be disclosed online. Corporations are using all manner of web-techs to speak more directly to stakeholders.

But transparency needs to be understood as more than a slogan or a strategy. It's a reality. It can be imposed on you by the Internet, whether you want to be transparent or not.

Businesses need to maintain some degree of control over information, but HP's board seems to have completely ignored the culture of transparency in favor of the culture of the leak-obsessed Nixon White House. Or, perhaps, the culture of an offshore phishing and pharming operation, judging from the charges, which include, as the NYT reports, "using false pretenses to obtain confidential information from a public utility, unauthorized access of computer data, identity theft and conspiracy to commit each of those crimes."

On the Internet, nobody knows you're a dog, but everyone knows when you're busted.
http://blog.eweek.com/blogs/knowital.../05/13635.aspx





IM Conversations Can Linger For Years
Anick Jesdanun

Instant-messaging conversations, though quick, aren't always fleeting.

Rep. Mark Foley's salacious chats with teenage pages emerged along with e-mails last week, as the Florida Republican abruptly resigned. ABC News, which broke the story, has said former pages were the source of the revelations about IMs from 2003.

Most likely, the pages who corresponded with Foley either manually saved messages or used IM software with built-in logging capabilities, allowing time-stamped chat sessions to be kept indefinitely on one's computer. The programs vary in whether the features are initially on or off and how well they notify users.

"Computers are really, really good at saving things, unlike a dumb telephone," said Richard M. Smith, an Internet security and privacy consultant at Boston Software Forensics. "If you don't want something to get out, don't put it in any computer form at all."

Chat programs from Yahoo Inc. and Microsoft Corp. are among those with logging capabilities. Microsoft's installs with the "off" button initially selected, while Yahoo's automatically records chats but clears them when a user signs off (users can choose to turn it off or record forever).

AOL Instant Messenger, the most popular IM service in the United States, doesn't offer logging in its current consumer versions but does in its business-oriented AIM Pro software. AOL's service also can be accessed by Trillian and other third-party software with built-in logging.

Computer-indexing programs such as Google Desktop also have options to retain chats on a personal computer. Some computers also may have keystroke-recording programs secretly installed by a boss or a spouse.

In some cases, the services themselves retain chats.

Google Inc. offers users the ability to store such conversations online, so they can be accessed just like e-mail. You need a password to see conversations, although Google and other service providers typically disclose such information to law enforcement when issued a subpoena or court order.

Time Warner Inc.'s AOL, Yahoo and Microsoft all say they do not retain chat sessions at all. Once a message is sent, it should exist only on the sender's and recipient's computer.

The Foley investigation comes as Attorney General Alberto Gonzales seeks a federal law requiring that Internet providers preserve customer records, asserting that prosecutors need them to fight child pornography. However, Justice officials have said that any proposal would not call for the content of IM and other communications to be preserved.

Some employers have software in place to record traffic through their networks, and some business-grade IM systems have centralized logging.

Conversations may also remain on Foley's home or work computers, even if he did not have automated logging. Some computers temporarily store their memory's contents on the disk drive, but the data could take awhile to get overwritten, said Kristin Nimsger, vice president of legal technologies with Kroll Inc.'s Kroll Ontrack.

"Delete does not mean delete, and a hard drive by its very function is going to retain all sorts of information about a person's computer that they may not be aware of," she said.

The Justice Department has ordered House officials to preserve all records in the case.

The tougher part may be proving the messages' authenticity, particularly when the evidence comes from the recipients. Logs are generally plain text files that can be easily altered.

Mark Rasch, a former Justice Department computer crimes prosecutor, said prosecutors must also prove that Foley was on the other end, not someone else using his IM account.

"We've got to prove that the instant-messaging session occurred and that Foley's hands ... (were) on his keyboard," Rasch said.
http://hosted.ap.org/dynamic/stories...10-05-16-33-38