For Some Beta Testers, It's About Buzz, Not Bugs
Juliet Chung
AMANTHA DAVID knew she was on the A-list in late April when she got an early invitation to test Gmail, Google's new free e-mail service. But Ms. David, a 36- year-old Web designer in Bethesda, Md., was not the only one who had heard the buzz about Gmail. She was soon besieged with requests for invitations from would-be testers.
"People were lining up for them," said Ms. David, who estimates that she has passed out 36 invitations through her blog at LiveJournal.com and through
www.gmailswap.com, a Web site where users can trade virtually anything for invitations. "It was like being at school again - it's what all the cool kids had."
Testing of early or "beta" versions of software used to be limited to serious computer users, who devoted hours to working with flawed programs and reporting bugs to developers. Nowadays, though, the tester's focus is often less on improving new software and more on just being among the first to have it. It is a shift that some companies have embraced, selecting testers in ways that seem intended to maximize hype and anticipation.
"There's a lot of cachet associated with being an early adopter," said Nicco Mele, 26, a former Internet strategist for Howard Dean's presidential campaign who runs the Internet consulting firm EchoDitto. "It's similar to how, every time you're in a meeting, everyone wants to show off who's got the coolest new phone."
"It plays into being at the vanguard of a very fast-moving industry," Mr. Mele added.
Gmail is the most prominent recent example of this phenomenon, with demand for test accounts - currently available by invitation from other testers - creating some unusual markets. Gmail invitations have been auctioned on eBay, at one point reaching prices as high as $200, according to some reports. Those with a less mercenary bent have frequented sites like gmail4troops.com and gmail4u.blogspot .com, both of which link those desiring invitations to those possessing a surplus. Gmailswap.com has been particularly popular, with more than 78,000 posting requests for invitations since its creation in mid-May, said Sean Michaels, the site's 22-year-old creator.
Ms. David, who received her invitation from an online acquaintance who works at Google, has filled several requests for swaps. Her bounty includes two batches of homemade cookies, a 14-inch string of tikki lights and even a commitment from a Utah chiropractor to take on a low-income patient.
Part of Gmail's popularity can no doubt be attributed to the popularity of Google itself, and to the invitation-only feature of its trial run. A spokesman declined to say when Google would make the e-mail service more widely available. But it is not the only test version of software whose limited release has met with great demand.
More than three million people registered their e-mail addresses with Napster in hopes of obtaining one of 20,000 randomly allocated tester slots when it rolled out a beta version of its downloadable-music subscription service in 2002, according to information published by the company. The 200,000 available downloads of an upgrade to the Kazaa file-sharing service in 2003 were snapped up in days, according to Sharman Networks, which owns the application.
Would-be testers are flocking to sites like eBay, where early test accounts for Blizzard Entertainment's popular World of Warcraft computer game were recently going for more than $500. They are even trying bribery: Haden Blackman, the LucasArts producer for Star Wars Galaxies, another popular game, says desperate players regularly offer hundreds of dollars for a testing slot.
Experts say the growing interest in obtaining beta software - preshipped, usually flawed releases that companies distribute to test performances under real conditions - is driven partly by the human instinct to carve out and maintain status, particularly as the size of the online community has swelled. Compared with the tiny, intimate online community of the Internet's infancy, today's users comprise a sprawling, anonymous colossus.
In this environment, "beta testing becomes a way that people measure who they are and where they belong," said Sherry Turkle, a professor of the social studies of science and technology at the Massachusetts Institute of Technology.
Clifford Nass, a professor of communications at Stanford University who studies social responses to technology, said this is particularly true for well-educated, affluent people who shy away from flaunting their status. "Having special knowledge of technology is the latest way they demonstrate who they are," he said.
Of course, some people line up to test software for reasons other than status. Adam Swaney, a junior at Purdue University who has beta tested computer games for years, says the adventure of sniffing out bugs rivals the pleasure he takes in playing actual games.
"The major bugs are pretty hard to find, so it's a challenge," said Mr. Swaney, 22, who estimates that he spends three to four hours a day testing World of Warcraft on weekdays and five to six hours a day on weekends.
Early testing also gives him a chance to influence the game's development. Mr. Swaney recalls telling developers that Ironforge, the capital city of the dwarves in this massively multiplayer online role-playing game, felt like a ghost town. In the most recent version of the game, he said, patrolling guards and street vendors lend the capital a pleasant, bustling atmosphere.
Wendy Dunham said she found herself testing Octiv's Volume Logic plug-in for iTunes, which adjusts the volume of audio files, after she took one too many flying leaps off her couch to turn down the volume on her stereo.
"The soundtrack to 'Titanic' has got some really quiet parts and all of a sudden you get to a crescendo, and it can really shock you," said Ms. Dunham, a Web designer from Hopkins, Minn. The plug-in not only evens out the wide variations in volume, she said, "it actually brings out things in the music that you didn't even know were there."
Gmail's organizational threading feature - which groups e-mail sent back and forth as conversations - was a major reason Yanni Loukissas, 27, a graduate student in architecture at M.I.T., sought an invitation from a friend.
"People here prefer to e-mail you rather than cross the hall and come into your office, so it's helpful having that history of exchanges easily at hand," he said.
Still, beta testing is often less about testing and improving software than it is about flaunting status. Savvy companies seem to have seized upon this impulse, turning chances to acquire beta versions into marketing opportunities. It is not unusual for them to reward their most loyal customers with beta slots. In allocating betas for Star Wars Galaxies, for example, LucasArts gives the most active members of the game's community accounts before turning to a random lottery system. Veteran players are likely to be invited as testers, Mr. Blackman said, as are users who post prolifically on the forum.
Blizzard Entertainment has a similar method of distributing testing slots for World of Warcraft, making a handful of accounts available as giveaways at fan sites. Beta testers are added on in phases as server capacity allows, so the speculation that precedes each new round of e-mail to newly selected gamers has the not-unwelcome effect of enhancing the game's appeal.
"Every time, it's kind of like a build-up of anticipation, and then a rush of disappointment when you look and there's nothing in your in-box," said Graydon Larson-Rolf, 17, a high school junior in Pewaukee, Wis., who has waited in vain three times for an invitation to test World of Warcraft. "There's always the worry that I received the e-mail and it didn't show up."
Dr. Nass, who calls beta testing "a marketing thing," said the process had only recently become highly commercialized. What paved the way for this, he said, is that consumers have become accustomed to flawed software, so companies can issue patches and upgrades without angering them.
"There's no reason to carefully distinguish between your beta testers and your non-beta testers," he said. "They're always beta testing, so the recruitment criteria are exactly the criteria for selling: figure out the people who are most likely to buy it."
Using beta releases to stir anticipation before a product's final release is a strategy that Google may well have perfected. Gmail's peer-to-peer invitation feature, an electronic example of the word-of-mouth technique known as viral marketing, has drawn considerable media attention and consumer interest. Given that its performance is reported to be relatively smooth, some question just how much testing is actually occurring.
"Gmail feels like a final release," said Noah Eisenkraft, 21, a graduate student at the University of Pennsylvania who follows the computer industry. "I haven't run into things where it explodes or smoke comes out of the computer. I think it might be much more of a marketing tool than an actual beta test in the traditional sense."
But if some beta versions live by hype and buzz, they die by it as well. As with all status accessories, digital status symbols come stamped with a sell-by date. Gmail accounts were lucky to go for $5 last week on eBay.
"Once everyone has been invited it's no longer cool to be invited," Mr. Loukissas said. "I mean, it works the same way as fashion: once everyone wears a trucker hat, it's over."
http://news.com.com/For+some+beta+testers%2C+it's+about+buzz%2C+not+bugs/2100-1032_3-5279106.html?tag=nefd.top
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Apple's Base Station: No Wires, Lots of Bells and Whistles
David Pogue
IN his weekly "60 Minutes" commentary a couple of years ago, the inimitable Andy Rooney groused about the number of cables in our lives. "Look behind the television set in your living room. It's a rat's nest of electrical cords," he said. "All different - no two the same. If Thomas Edison was so smart, how come he didn't come up with one cord that fits everything?"
Of course, it wouldn't be very hard for Mr. Rooney to answer his own question. To find out why cords are designed to fit only specific connectors, all he'd have to do is plug his headphones into an electrical outlet, just once.
A slightly less painful approach might be for Mr. Rooney to look into Apple, a company with an official corporate disgust for cables. Apple was the first computer company to offer built-in Wi-Fi wireless antennas (also known as 802.11 - or, as Apple more charmingly calls it, AirPort). Apple was also the first company to offer built- in Bluetooth, a short-range wireless technology designed to eliminate the cords between computers, printers and other gadgets. And when a cable can't be eliminated, Apple goes to ridiculous extremes to at least make it good-looking and color-coordinated.
Last week, Apple introduced yet another way to eliminate wires from your life. It introduced the AirPort Express, a $130 something-or-other for both Windows PC's and Macs. There's no single pithy term or phrase for this invention; it has more tricks up its sleeve than David Blaine.
Trick No. 1: the AirPort Express is a wireless base station. That is, if you connect it to a cable modem or D.S.L. box, your wirelessly equipped Mac or Windows PC can get onto the Internet and connect to other machines in the building, at high speed and with no waiting, from anywhere in the house - or at least within about 150 feet of the base station, even through walls.
(Note for geeks: Like all of Apple's current wireless gear, the AirPort Express uses the 802.11g standard - which, in English, means that it works with both modern, superfast 802.11g laptops and the older, more common, slower 802.11b equipment. It also offers both WPA and WEP security, state-of-the-art password-protection systems that prevent desperados hiding in your bushes from getting onto your wireless network without your knowledge.)
If you already have an AirPort wireless network, the Express can act as a wireless bridge that extends its range another 150 feet. That's a handy perk, but it would be even handier and perkier if it worked to extend the range of other base station brands. (Apple won't guarantee that it doesn't work, but it won't guarantee that it will, either.)
The twist here is that the AirPort Express is literally pocket-size. It's a round-cornered white acrylic device that looks for all the world like the power adapter for one of Apple's laptops. In fact, Apple says that the Express is the world's smallest Wi-Fi base station. Asus makes one whose dimensions are slightly smaller, but only if you ignore its external power brick; that's cheating. Apple's device is entirely self-contained. Apple has even eliminated the power cord, instead opting for electrical outlet prongs that rotate cleanly into the body when not plugged in.
Now, you might reasonably wonder why the size of a wireless base station is an advantage. Isn't that an irrelevant characteristic, like a muffler that's available in designer colors? After all, most people just plug into a base station behind the desk and forget about it.
But having your own personal base station means that you can move it from place to place (like home or office) at will; the Express can even store and switch among five different network configurations.
And if you take it with you when traveling, you can sign up for your hotel's $10-a-day high-speed in-room Internet access. Then, instead of remaining shackled to the desk, you can lie on the bed 10 feet away to do your e-mail. (All right, that's not a life-or-death business essential, but you've got to admit that it's cozy.) More practically, your traveling companions can hop online simultaneously, sharing the Internet signal and the $10 fee. (The AirPort Express can handle up to 10 people at once. That's one difference between this model and Apple's standard AirPort base station, which costs $200 and handles up to 50 connections at once.)
Trick No. 2 is called AirTunes. The AirPort Express has, of all things, a sound-output jack that you can connect to a stereo system, self-powered speakers or even a TV. iTunes, Apple's free jukebox software for Mac or Windows, can then wirelessly broadcast your music (like MP3 files and songs you've bought from Apple's iTunes online store) to the sound system from your computer. In fact, if you've bought more than one AirPort Express (in Apple's dreams!) and plugged them into different sets of speakers around the house, you can use a little pop-up menu on the edge of the iTunes window to specify which one you want: Patio, Living Room, Bedroom or whatever.
To pacify the record companies, iTunes encrypts the music before broadcasting it, so that the sneaks in the next apartment can't intercept it. And to pacify audiophiles, the software delivers the music to the speakers at full original quality (as it's stored on your computer). It sounds terrific.
There are, however, some flies in all this ointment. First, you can only send the music to one set of speakers at a time. Rival wireless-stereo gizmos, like RCA's Wireless Lyra, can broadcast simultaneously to several sound systems (if you've bought a receiver for each one).
Second, note that the connection between the AirPort Express and the stereo is not wireless. You have to supply your own cable to connect them. (Apple sells a $40 kit containing two beautiful white Monster cables for connecting to your stereo - one with standard RCA stereo connectors and one with a so-called Toslink, a digital connector capable of carrying five-channel surround sound.) But the point is that the AirPort Express needs a power outlet that's close to your stereo.
Finally, it's a weird and heady experience to use, say, your computer upstairs as the control center for the stereo across the room, complete with playlists and real-time volume control. On the other hand, if you're downstairs with the stereo, you can't pause playback when the phone rings, see the name of the current song, or skip a truly awful song, without having to run upstairs to the computer. (This fine print, of course, applies to most wireless sound systems.)
Trick No. 3: On the bottom of the AirPort Express you'll find, of all things, a U.S.B. connector where you can plug in an inkjet printer, and then every computer on the network can send printouts to it wirelessly. It works like a charm, and offers further proof that Macs and PC's in the same household can all be friends. (This feature requires Mac OS X, Windows 2000 or Windows XP.)
Now, as the usual crowd of Apple-grouches is certain to point out, you could buy each of the Express's features for less money. A regular 802.11g base station costs about $60 at
www.buy.com. If your aim is to extend your existing network's range, you can buy a range extender from Linksys or D-Link for $80. The idea of streaming music from a PC wirelessly to a stereo isn't new, either; Linksys and many others sell wireless media adapters for another $80.
But Apple is the first to combine all of these functions, effortlessly and elegantly, and the fact that the Express comes with supremely simple setup software, looks great and fits in your pocket or laptop carrying case is just Wi-Fi gravy.
Apple reports having 80,000 AirPort Express pre-orders to fill, and stores are reporting at least a three-week wait to get one. Rack up a point for Apple in its mission to dominate the digital music world (and, not incidentally, to infiltrate the homes of Windows PC owners), and rack up one for Andy Rooney and the rest of us in the never- ending battle against household cable infestations.
http://www.nytimes.com/2004/07/22/te...s/22state.html
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Proprietary network
Verizon Seen Introducing Phone Service Via Internet
Ken Belson
Verizon Communications, the nation's biggest telephone company, will announce today that it is introducing Internet-based phone service to customers across the nation, according to executives close to the plan.
Verizon is the latest and largest player to offer the technology, which divides voice calls into packets of data and sends them over high-speed Internet lines. The service can be significantly cheaper than traditional phone calls because sellers of the service do not typically have to pay access charges and other fees related to telephone transmission.
In the last year, the service has been introduced by several phone companies, including AT&T, some cable providers and start-up companies like Vonage.
Most regional Bell companies have been hesitant to offer Internet phone service because it undercuts their main business of connecting calls over copper wires. They have also argued - rightly, many analysts say - that Internet calls are inferior in quality and reliability to traditional phone calls.
Yet the phone companies are under pressure to enter the market because cable providers are starting to package that service with their high-speed data and video services. A company like Vonage, meanwhile, has captured more than 200,000 customers, many of whom have abandoned their traditional phone lines altogether.
Verizon wants to use its size to grab a nationwide consumer audience, including the tens of millions of homes currently without the high-speed Internet connections needed to make the service work.
Two other Bell companies, Qwest Communications and SBC Communications, have already introduced Internet phone plans, but they are focusing mainly on business customers. Qwest has started marketing the service to consumers on a limited basis in Minneapolis, according to Silvia McLachlan, a Qwest spokeswoman, and expects to sell it by the end of the year to consumers in the 14 states where it operates.
Customers who sign up for Verizon's Internet phone service and also subscribe to its high-speed broadband, or D.S.L., service will pay $34.95 a month for unlimited local and long-distance calls within the United States. The cost of the broadband connection is separate. Customers who buy a high-speed connection from another provider will pay $39.95 for the phone service. Verizon will offer $5 discounts for the first six months of service for customers who sign up by Oct. 31. By comparison, unlimited local and long-distance service over traditional lines costs $59.95.
The prices for Verizon's service are similar to those of AT&T, Vonage and other providers.
Verizon hopes that by offering Internet calling, it will entice more customers to sign up for its broadband service, according to an executive.
Verizon and SBC Communications have both announced plans to build high-speed fiber optic networks that connect directly to consumers' homes over the next several years. Internet calls traveling over those networks are expected to be more dependable than calls that travel primarily over the public Internet. But the phone companies have only started to build those fiber networks, which will cost billions of dollars.
For Verizon, Internet phone service represents as much a threat as an opportunity. Traditional voice service has been in decline for years as consumers shift to cellphones and spend more time communicating through e-mail.
Internet calling plans are also typically sold at a flat fee for unlimited calls, a model that runs counter to traditional phone services that charge by the minute for long-distance calls. (Most phone companies, however, are starting to offering many kinds of unlimited calling plans.)
In offering their own Internet plans, analysts said, the Bells are not necessarily expecting to expand their numbers of phone subscribers, but to stem the flow of dollars heading to competitors.
The Bells' services "are reactionary because they are seeing success from other service providers, and they'd rather keep that revenue than let another provider capture it," said Teresa Mastrangelo, an analyst at RHK, a telecommunications consultant. "They face a lot of different pressures."
Those other providers include Time Warner Cable, Cablevision and other cable companies that have spent the last decade building their own fiber networks. Time Warner Cable, for instance, plans to make the service available to customers in all its markets by the end of the year.
In the evolving market, customers may be more likely to sign up for phone service with their cable providers because of the convenience of one-stop shopping and because those companies, in operating their own networks, can better monitor the quality of calls, analysts said.
Verizon will initially route its calls over the public Internet. Within the next six months, the company expects to use more of its own proprietary network.
http://www.nytimes.com/2004/07/22/te...y/22voice.html
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Toshiba to Introduce Quick - Start Multimedia Laptop
Japan's Toshiba Corp. is launching its first multimedia laptop with a much clearer display and quick-start video and TV functions to carve out a position in the promising field, a company official said on Wednesday.
With the ``Qosmio'' line to be unveiled on Thursday, Toshiba seeks to benefit from expected growth in demand for multimedia computers that can play and digitally record TV programs, DVDs and other video and audio materials from the Internet.
The laptop will have a 15-inch LCD screen that is brighter and clearer than other LCD televisions, said Oscar Koenders, Toshiba's head of marketing of computer systems in Europe.
It will also allow users to turn on a built-in analog TV tuner or DVD player within 5 seconds, avoiding a full system start-up that takes up to several minutes on a normal laptop.
``We don't want to replace the living room TV set. We are trying to create a completely different market, just as the iPod did for music,'' said Koenders, referring to Apple Computer Inc.'s widely popular digital music player.
Promising Market
Toshiba, the world's No. 3 laptop maker, also hopes the new features, that also include a new video chip to improve the picture quality and enhanced speakers, will set its notebooks apart in an increasingly brutal market.
The company estimates that by 2008, 4 million notebook computers with integrated video and audio functions will be sold, hoping to grab some 30 percent of the market.
Toshiba will begin shipping the Qosmio laptops within a month in Japan, the United States, Britain, France and Germany. It expects other manufacturers such as Dell Inc. and Hewlett-Packard Co. to introduce their own multimedia notebooks in the next six to nine months.
Toshiba's laptop will cost between 2,200 and 2,500 euros in Europe and $2,500 in the United States.
Koenders said Toshiba makes the LCD display, which has two lamps to light up the monitor instead of the usual one, with a partner, but declined to name the company.
http://www.nytimes.com/reuters/techn...h-toshiba.html
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Will Consumers Tune In To Portable Video?
Richard Shim
Manufacturers are set to release portable digital media players, but there's little expectation they will transform the market overnight in the way that MP3 players such as the iPod changed the music industry.
Portable video players will let consumers download, store and view television shows, movies, music, photos and other digital content on the players' big hard drives and small color screens.
Manufacturers Samsung, Creative Labs and Archos will promote the portability and ease of use, allowing consumers to record a late-night TV show, for example, and watch it on the subway during the morning commute. The device makers see the strong sales of Apple Computer's iPod as an indication of mobile video's potential.
But there are significant potholes on the road to iPod-level success, which may be why two key arbiters of hip portable devices--Apple Computer and Sony Electronics--aren't rushing their own video devices to store shelves.
"Initially, this is an early-adopter product, but down the road, we're hoping, we've set ourselves up for a hit," said James Bernard, product manager of Microsoft's Portable Media Center, the company's upcoming software for video devices. "It's the early adopters that people turn to for (buying) advice.'
In the short term, few services have been created to deliver content, and consumers will have to get used to the idea of carrying video around to watch while waiting in airports or commuting on trains and buses. By contrast, millions of consumers were already accustomed to using music devices such as the Walkman or a portable CD player prior to the emergence of MP3.
"The total demand from people who need to take their video with them is smaller than those who have time in their day to listen to music, which is a more passive activity," said Ross Rubin, an analyst with NPD Techworld. "It's tough to watch video while you're jogging."
Apple Chief Executive Steve Jobs said pretty much the same thing in late April when asked whether video was on the near horizon for the iPod, which recorded sales of 860,000 units in the last quarter alone.
"You can't drive a car when you are watching a movie," he noted. "It's really hard, anyway."
He said music is often a background activity, played while doing something else. For that reason, he said, Apple is focusing on audio.
Sony is also sitting out the initial wave of video devices. The company recently introduced a hard-drive-based portable player, the Vaio Pocket, but it doesn't play video. Instead, the 2.2-inch color screen on the device is meant to display photos and album covers. Sony's reasons for hesitation seem to have less to do with how people will use video devices than with the current lack of content.
"I tend to think it's premature to get into this market in the United States right now, because of a lack of video services," said Mike Abary, Sony Electronics' general manager of Vaio marketing.
Sony's native Japan is another story. That gadget-happy market will soon have a video player Sony has code-named "Opera." It will download video from PCs or televisions. Sony has voiced no plans for a U.S. version.
Getting content delivery services in place won't be as easy as setting up a Web site. Among the most significant obstacles are copyright and piracy. The technology and entertainment industries have yet to develop a copy protection standard to ensure that copyrighted material isn't pirated on a massive scale, though they took a first step last week.
On July 14, several technology companies and movie studios--including IBM, Intel, Warner Bros., Disney, Microsoft, Sony, Panasonic and Toshiba-- announced an alliance that will create a new copy protection standard for DVDs that would provide for some sharing among devices, but the fruits of those labors are probably years away.
While there won't be a wide range of easily deliverable content soon, IDC research analyst Josh Martin notes that some consumers have already collected enough visual content to find the devices useful. Apart from their own digital photos and home video, digital video recorders let many consumers grab their own video content from broadcast television.
"For some early adopters, it's already worth buying these devices, because they have enough digital content from such products as their DVRs," Martin said.
Another problem is making it work for users on the move--and on a screen the size of a credit card.
"There are two obvious sources of video for these devices--TV shows and movies," said Ross Rubin, an analyst with NPD Techworld. "But I don't see consumers having long sessions with these devices."
So service providers will have to be creative to offer video content in a way that is appetizing to potential users.
Sports highlights could be among the first offerings. Earlier this month, Microsoft said content from the Major League Baseball site will be downloadable to devices using Portable Media Center software. Full and condensed games will be available, plus other clips, such as extended highlights and bloopers.
Music videos are another natural fit, Rubin said, considering that the devices can also play standard music files.
Despite the question marks, the players are coming. This month, online retailer Amazon.com began taking orders for devices from Creative Labs and Samsung, which will use Microsoft's Portable Media Center software. Due this summer, the devices will sell for $500, with 20GB hard drives and screens of about 3.5 inches. iRiver, Sanyo and ViewSonic will also make players that will use Portable Media Center. Archos will have a similar product available this month--its AV400 devices, which will be made compatible with Microsoft's software when it's available, according to Archos executives.
Portable Media Center will transfer video from PCs running Windows XP. Using a USB 2.0 connection, a two-hour movie can be downloaded in about three minutes, according to Microsoft's Bernard. Video playback is at the TV standard of 30 frames per second.
Compatible devices will have color displays of 3.5 inches or 3.8 inches, and minimum battery life should allow three hours of video playback or 12 hours of audio. The hard drives will be 20GB or 40GB, storing up to 160 hours of video or 10,000 songs.
Manufacturers will be looking to use the popularity of audio players as a springboard to attract consumers to video, according to analysts. Video-enabled devices may cost more, and the hard drives in early video players won't be as capacious as in some audio players, but consumers will be getting video with their audio.
"Consumers will get less storage for comparably priced devices, but these devices offer protection for the future," Martin said, noting that if video becomes popular, people with these early devices will already be in the game. "The question is, how much of an advantage that is now?"
Another question: Will that advantage be enough to get consumers to embrace something they haven't accepted so far? Portable analog audio devices, such as Sony's Walkman, helped to establish a market for audio players. With video players, consumers will have to be trained nearly from scratch.
Previous generations of portable video products have never enjoyed the success of audio devices, IDC's Martin noted.
"There have been portable video devices, such as DVD players and televisions," he said. "Ultimately, they became products in niche categories."
http://news.com.com/2100-1041-5275675.html
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Which Way for P2P: An Interview with StreamCast CEO Michael Weiss
Jon Newton
Morpheus owner StreamCast Networks has signed a deal with Sovereign Artists and SML under which tracks from the rock band Heart's "Jupiter's Darling" album are being offered on Morpheus in SML's Weed format. Each track is in Microsoft's Windows Media Audio format and comes wrapped with Microsoft's digital-rights management (DRM) technology.
But Sovereign Artists and SML are listed as members of the Distributed Computing Industry Association (DCIA), Sharman Networks' front organization. Sharman -- which owns Kazaa -- and StreamCast have had horns locked for some time. So is this what will bring on the real clash? Has StreamCast crossed into enemy territory? Are Morpheus tracks now to be "DRMd?"
StreamCast Networks CEO Michael Weiss answers these and other questions in an interview with TechNewsWorld.
Jon Newton: You've been one of the most outspoken opponents of Sharman, Kazaa and the DCIA, adamantly refusing to have anything to do with them. In a June 21 newsletter welcoming new member Sovereign, DCIA CEO Marty Lafferty mentions the launch of "Jupiters Darling" and makes a point of stating, "[...] in the peer-to-peer [P2P] distribution channel, Sovereign Artists has concluded agreements with DCIA member Altnet and Streamcast Networks (Morpheus) ..." Aren't you concerned that Lafferty will turn the Sovereign/SML arrangement into an opportunity to continue to imply that StreamCast is firmly alongside the DCIA, if not actually a member.
Weiss: The DCIA will have big problems if they try to imply, infer or state that Morpheus is a member of, or supports, DCIA. StreamCast remains a committed member of P2P United. However, there are mutual interests DCIA and P2P United members do share. For example, the defeat of Orrin Hatch's Inducing Infringement of Copyrights Act [aka the INDUCE Act] and PIRATE Acts are two measures both groups are fighting against. Morpheus isn't against the DCIA, we don't believe the stated DCIA approach represents our best interests -- or those of other P2P United members. It's our belief that for all the good the DCIA is attempting to do, the fact that their financial backers are Sharman, Altnet and Brilliant will always take away from their efforts.
And we think that in many instances, intentional or not, DCIA is confusing the issue of who represents the p2p industry. P2P United doesn't purport to represent the entire P2P industry, but it does represent the interests of the major commercial p2p file-sharing developer and distributor members that conduct business in the United States. It's misleading, at this stage, to state that any one organization represents the entire industry. StreamCast and the other member companies of P2P United formed it to ensure that Congress hears all sides of the issues surrounding the p2p file-search-and-sharing industry and not just the side of the entertainment industries or that of Sharman Networks.
Newton: Each Heart track has Microsoft's DRM. Does that mean you're getting into DRM, or that Morpheus files will suddenly be copy protected, as the entertainment industry likes to call it?
Weiss: P2P technology is content neutral; it supports all file types. If a file is DRM-wrapped to start with, it stays that way. If it isn't, then it's DRM-free. Morpheus isn't in the DRM business. We're here to develop and distribute p2p search- and file-sharing software and are on the verge of introducing the new NEOnet p2p technology to the world this year.
Newton: What about the Weed component?
Weiss: Heart has chosen to use Weed technology to promote and sell their latest album. The mechanism that allows other p2p users to become distributors and get compensated when a purchase is made is intriguing and I think it's worthwhile to see how the users react to such a plan. Just like in technology development, one should never be afraid of experimenting with new business models to see what the future may hold.
In the future, StreamCast hopes to offer other alternatives to content providers, whether there is a payment component, a promotional component or both. P2p users should be able to buy music through, or by using, their favorite p2p applications, and they should also be given the option of financially supporting the artists they like. We'd like to help that along, and earn revenues while we're doing it.
The primary reason Morpheus is in the Heart promotion is to support them and their record label. It's refreshing to see a recording artist and their label looking to the p2p community instead of filing lawsuits against p2p users and/or companies. StreamCast hopes to support other content providers who reach out to the community, as well. As with any new technology, it's usually the independent companies (and artists) that first embrace it. If we can help these independents make inroads to consumers by alternative methods, since traditional methods or radio airplay and in-store promotion aren't readily available to them, then we're happy to do so. I believe very few people in the p2p community are against artists being fairly compensated for their creations, and our Heart promotion represents one way to achieve this.
Also, I think the Heart/Morpheus p2p distribution promotion illustrates another substantial legitimate use of p2p applications and just how valuable certain providers find p2p apps, like Morpheus, to be for their own livelihood. The more content providers embrace p2p companies for promotion, distribution and sales, the better it'll be for everyone.
Newton: With Grokster, the other major p2p application, on the DCIA member list, the apparent appearance of Morpheus might lend weight to unsupported DCIA claims that it represents significant elements of the independent p2p application community. How do you feel about that?
Weiss: Morpheus is NOT a member of DCIA, does not support their platform and does not believe that DCIA represents the interests of the entire p2p industry. We continue to attempt to make this clear to lawmakers, business leaders and the public, though with the DCIA repeatedly incorrectly implying that StreamCast is a member, or that StreamCast is "working with" DCIA, we continue to need to continue to remind the outside world of the reality.
Newton: I understand that companies the DCIA has been able to persuade to use one or more services or technologies pay neither membership fees nor dues, but nonetheless show up as "members" as part of the package. This "members" list enables the DCIA to present itself as a peer-to-peer industry trade group. But with the exception of Sharman associates, Brilliant Digital Entertainment and Altnet, none of the member companies have a presence on the p2p scene. In fact, I've been told some member companies are already having regrets. What's your take on this?
Weiss: Yes, this is a problem that unsuspecting "members" of DCIA are falling into. They don't understand the background or history of DCIA. This isn't to say that DCIA is all bad, but these companies need to understand their actions. I don't know if they're being told the whole story or not -- but they should take their own initiative to research fully what they are getting into. If they don't, then it's difficult to put the blame on DCIA. Marty and his DCIA staff are doing the job that they have been hired to do. Shame on other companies, if they don't conduct the proper due diligence.
P2P United was founded by major independent commercial p2p operators BearShare, Grokster, eDonkey2000 and Morpheus and is the only genuinely reresentative p2p trade and lobbying group.
Newton: One of the complaints sometimes leveled at Morpheus is that it has adware. Will you ever change that?
Weiss: Right now Morpheus earns its money by distributing two other pieces of software, as well as the actual application. It also incorporates a banner ad and three pop-up ads over a 30 minute time span. If we can continue to develop other revenue sources -- such as the sale of digital music files -- to replace them, that would be ideal.
However, unlike Altnet, StreamCast isn't attempting to develop an eCommerce platform that we'll try to force down everyone's throats as being the only method of doing business. That's at the heart of P2P United -- individual companies working together for a common cause, but still maintaining their independent business practices and strategies. We collaborate with each other or with others if it makes sense to do so, but that's totally at our option and through our own independent analysis, not because of any heavy-handed behind-the-scenes maneuvering.
We believe p2p networks (all the networks except dark-nets) do indeed represent the next distribution channel for digital media. That's an exciting proposition and I believe all the commercial companies are looking for ways to create a profitable business from this while providing users with something of value.
This is at the heart of the fights in Congress and in the courts. The incumbent entertainment industry wants to control this new distribution channel. Sharman, Altnet and Brilliant also want to control this distribution channel.
We don't want to control anything but our ability to continue to make and bring technological innovations to market such as content agnostic general communications tools. But Morpheus strives to continue to be a leading contributing participant to the evolution of media distribution.
We expect to offer solutions and if they're viable, we hope they'll succeed and perhaps be adopted by others if there are significant barriers, such as the fear of prohibitive lawsuits.
One thing is certain -- no one has a crystal ball, and it's only through trial and error that viable solutions will be found.
http://www.technewsworld.com/story/35231.html
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ILN News Letter
ITC Denies Petition To Reconsider DMCA Ruling
BNA'S Electronic Commerce & Law Report reports that the U.S. International Trade Commission has denied the Chamberlain Group's bid to have the decision that a rival manufacturer's interoperable garage door openers do not violate the DMCA.
Article at
http://pubs.bna.com/ip/BNA/eip.nsf/is/a0a9e2n5g1
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Reverse Directory Forced To Close
Kate Mackenzie
LAW enforcement agencies that have been using a "reverse white pages" directory found to breach Telstra's copyright will face a more cumbersome and expensive procedure each time they search for details of phone number owners.
Melbourne-based Desktop Marketing Systems (DtMS), publisher of a reverse- white-pages CD-ROM, is winding up after losing a legal battle with Telstra.
DtMS managing director Andre Scibor-Kaminski said he had 156 government law enforcement agencies as customers, including the Federal Police, Customs, and all state police forces.
DtMS had been selling the CD-ROMs since 1993.
The CD-ROM allowed users to search for addresses by phone number, or names and phone numbers by address, at a cost of $1495, with quarterly updates for about $400.
The use of reverse-white-pages directories is heavily regulated, because while they use publicly available information, they can be used to violate privacy, and for marketing purposes.
Telstra argued the DtMS CDs violated its copyright of the White Pages directory, which is compiled and distributed by Telstra subsidiary Sensis.
Mr Scibor-Kaminski argued against this on the grounds that he had manually transferred the white pages listings.
The Federal Court ruled in favour of Telstra in July 2003.
Last week, when Mr Scibor-Kaminski was informed of the costs that were to be awarded against him, he moved to liquidate the company.
Law enforcement agencies can do reverse-white-pages searches through Sensis, but are charged $1 for each search, which must be carried out by phoning Sensis rather than through a CD-ROM.
Law enforcement sources said they were disappointed the DTMS CD-ROM would no longer be available.
"It seemed to work fine, and it's a shame, because they're a little Australian company," said one law enforcement user of the CD.
IT Today has also seen a letter from the Victoria Police information management department saying it would have to cease using the DtMS CDs, and "alternative but more costly products" were available.
A Sensis spokeswoman said unlike the DtMS CD, Sensis provided its service over the phone on a non-profit, cost-recovery basis, to law enforcement agencies, for legitimate purposes.
The Sensis material was more up to date than the DtMS's, she added. "If law agencies are going to go bust someone's door down, they want to be sure it's the right door," Ms White said.
"We will not sell it for marketing purposes or other purposes, legitimate or otherwise."
http://australianit.news.com.au/arti...-15319,00.html
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Group Calls For Copy Protection Rosetta Stone
John Borland
Tired of the confusing mess of copy protection tools that keep some songs and videos from playing on your iPod or Napster player? So is Leonardo Chiariglione. The Italian engineer, who founded the Moving Pictures Experts Group (MPEG), is moving ahead with his new Digital Media Project (DMP), hoping to bridge the gaps between resolutely incompatible copy-proofing technologies from companies like Microsoft, Apple Computer and Sony.
The group has issued a call for standards that would let different portable music and video devices play the same content, without the barriers that keep iPods and Sony players wholly separate today.
"The digital media market is in gridlock, lacking both a moral and technological framework, and a strategy for the future," Thomas Curran, DMP co-founder and former Bertelsmann chief technology officer, said in a speech at the group's meeting in Osaka, Japan, last week. "Standards governing the interoperability of digital rights management technologies are essential."
Chiariglione's group is one of a number that are calling for interoperability--or at least a more peaceful coexistence--between the various types of software locks that tie content to specific devices while preventing copying.
But if well-intentioned, the group's efforts face high hurdles. Digital rights management tools have proven to be a powerful way for companies to lock consumers into their brands, and interoperability would eliminate that advantage for the market leaders.
Apple, for example, has sold more than 100 million songs from its iTunes online music store, all protected with FairPlay digital rights management. Those songs can only be played on digital music players other than Apple's own iPod if they are burned to a CD and ripped back into an unprotected MP3 format.
Those 100 million songs thus represent a strong commercial impetus for iTunes customers to keep buying iPods. Other manufacturers, such as Sony, have the same interest in keeping proprietary rights management formats separated.
DMP has representatives from large companies, including Panasonic, British Telecom, Telecom Italia and the MPEG LA licensing group, but none of the large digital rights management creators are a part of the group.
The latest call for submissions covers portable devices, which the group sees as a first step toward the larger goal of overall digital rights management interoperability. Any company or organization can submit ideas or technology which conforms with the DMP's requirements.
The group also said it would draft a list of proposed legislative principles that it will submit to various international government bodies as they begin making rules on digital copy protection.
http://news.com.com/2100-1027-5276867.html
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House Panel Endorses Tech That Sanitizes DVD Movies
AP
Fledgling technology that helps parents prevent children from watching movie scenes depicting sex, violence or foul language got a boost Wednesday from the House Judiciary Subcommittee.
The panel voted 18-9 in favor of the Family Movie Act, which would assure manufacturers of DVD players and other devices using such technology that they would not be violating copyrights of the Hollywood producers of movies.
The full House still must approve the bill; no similar proposal has yet been introduced in the Senate.
Critics of the bill argued that it is aimed at helping one company, Utah-based ClearPlay Inc., whose technology is used in some DVD players to help parents filter inappropriate material by muting dialogue or skipping scenes. ClearPlay sells filters for hundreds of movies that can be added to such DVD players for $4.95 each month.
The measure's author, Rep. Lamar Smith, R-Texas, said the legislation guarantees that parents will be free to use technology to protect what children watch. He compared skipping objectionable scenes in a movie to skipping paragraphs in a book.
``Parents should have a right to show any movie they want and skip or mute any content they find objectionable,'' Smith said.
Hollywood executives have complained that ClearPlay's technology represents unauthorized editing of their movies. They maintain that ClearPlay should pay them licensing fees for altering their creative efforts.
``You're getting a doctored, reinterpretation of the product,'' said Dan McGinn, a spokesman for the Directors Guild of America, which has sued ClearPlay in federal court in Colorado alleging copyright violations. ``What they have is a new version of the product. It should be licensed.''
Rep. Howard Berman, D-Calif., said the bill ``gives for-profit companies the right to commercially exploit the copyrights of movies without input from creators.''
Berman said he also was concerned that the same technology could be adapted to automatically remove commercials from cable and network television programs.
The bill is House Resolution 4586.
http://www.siliconvalley.com/mld/sil...al/9208152.htm
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England’s BT Blocking Porn
BBC
BT is blocking over 23,000 attempts each day to access child pornography Web sites, the company says, offering a rare glimpse of the extent of demand for such sites.
"We've been taken aback by the number of attempts," said spokesman Giles Deards on Tuesday, adding the rate at which the telecommunications company is stopping access has increased steadily as it continues to fine-tune its filtering software.
The availability of child pornography on the Internet has become one of the biggest areas of cybercrime, but until now the extent of the problem has been the subject of guesswork.
Tuesday's statistics come a month after BT first announced its intention to install an elaborate filter to block entry to child porn sites.
The sites to be barred are compiled by global watchdog The Internet Watch Foundation and vetted by the Home Office.
The company said it was not logging users' details. "It is not within our technological capabilities, nor is it our desire to ... take on the job of policeman," Deards said.
BT said it would make the filtering software available to other Internet service providers (ISPs) at no charge. The offer had attracted interest from rival providers, but no takers so far.
Not Mandatory
BT's move has been widely endorsed by MPs, but there has been no movement to make such filters mandatory.
Indeed the introduction of the filter, known as "Cleanfeed", has attracted controversy. Free speech advocates say such blocking measures should not be enacted by the private sector without the backing of law.
Others point out that while a filter may work for BT, it may not do so for other ISPs with vastly different network infrastructure.
"Before you can look at any sort of technological solution you have to be sure it works with every ISP," said a spokesman for trade body the Internet Services Providers Association UK.
The concern is that without testing first, filtering software could block access to legitimate Web sites, the spokesman added.
BT said it has nearly 3 million broadband and dial-up customers and that the software is capable of blocking access to suspected child porn sites hosted at various points around the world.
http://uk.news.yahoo.com/040720/80/eydv9.html
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China Launches 'People's War' Against Porn
AFP
China has launched a "people's war" against pornography on the Internet, giving websites a deadline until September to rid themselves of indecent content, state media said.
Officials have so far identified 500 websites across China that carry pornographic pictures and film clips, the China Daily reported. Zhou Yongkang, the minister of public security, has vowed to crack down on the activities and severely punish those found guilty of violating the law, according to the paper. President Hu Jintao has gone one step further, saying a "people's war" must be waged against pornography on the Internet. It appears the Chinese have answered their president's call, filing a total of 22,000 complaints on a dedicated government website set up to make it easier for the public to report online wrongdoing. The vast majority of these complaints -- 95 percent -- have been about websites with pornographic content. Hundreds of websites, including the most influential ones, publish "indecent or even pornographic content" to attract users, the Xinhua news agency reported, without giving examples. If they have not erased their pornographic content by September, they will lose their license to publish news stories, Xinhua said. The crackdown on Internet porn reflects two top concerns of the Chinese leadership, about the ethical standards of the young and about the subversive potential of the Internet. Since this spring, Chinese top leaders have called for greater efforts to raise the morals of the nation's adolescents in remarks reminiscent of previous campaigns against "spiritual pollution." At the same time, they have imposed measure after measure to seek to control the Internet, a nearly impossible task with 80 million registered users. State media reported last month that the government had suspended the registration of new Internet cafes, following a three-month sweep in which it closed 16,000 existing ones.
http://uk.news.yahoo.com/040719/323/eya12.html
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U2 May Turn To iTunes Music Store If Faced With Piracy
Bryan Chaffin
According to an article published by UK newspaper the Telegraph, U2 may turn to Apple's iTunes Music Store (iTMS) if a recently stolen copy of their next, unreleased CD turns up on the Internet. In order for the group not to lose sales of their music to months of availability through P2P networks, U2's Bono said the group may turn to the iTMS in order to immediately get the work out in a commercial fashion. A copy of the band's forthcoming work, which isn't supposed to be released on CD until November, was stolen during a photo shoot earlier this month. From the Telegraph:
This might seem a lot of fuss for a missing CD. Ten years ago bands would glibly hand out advance copies of their albums to friends and co- workers. But in the era of peer-to-peer filesharing, U2 are coming to terms with the fact that two years of hard work on a project expected to generate tens of millions in revenue could be made available as a free download on the internet months in advance of its planned November release.
U2's lead singer Bono has proposed a radical solution. "If it is on the internet this week, we will release it immediately as a legal download on iTunes, and get hard copies into the shops by the end of the month," he told me. "It would be a real pity. It would screw up years of work and months of planning, not to mention [expletive deleted] up our holidays. But once it's out, it's out."
There's more in the full story at the Telegraph's Web site, including more background information on how the CD went missing, and issues regarding consolidation in the recording industry. We recommend the article as a very good read.
The Mac Observer Spin:
We've been talking for more than a year about the potential for change that the iTMS offers, but this is a kind of change we hadn't thought about. The idea of combatting piracy by being able to instantly release a CD's worth of music through digital distribution is certainly something that has never, ever been possible before.
On the same note, think for a moment about what Bono said in the interview: "It would screw up years of work and months of planning," should this CD be leaked. The "years of work" represents the writing, recording, and producing effort, but the "months of planning" most likely deals with the process of producing and releasing a CD. "Months of planning" at the level of this kind of project also means "gazillions of dollars," as there are many, many man-hours involved.
It doesn't take months of planning to release anything digitally, and that represents enormous savings for many groups, especially once we make the transition to the day when many works are released only in digital format. That's a fairly significant change in the way business is done today in the music industry.
http://www.macobserver.com/article/2004/07/22.16.shtml
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Michigan Man Gets 11/2 Years For Sale Of Bootlegged Recordings Of Bands
AP
A Michigan man was sentenced to 11/2 years in prison and must pay $120,000 for selling bootlegged recordings of performances by Bob Dylan, Aerosmith, KISS and Bruce Springsteen.
Jeffrey Smittle, 44, of Ceresco, Mich., was sentenced Thursday in Pittsburgh federal court. He pleaded guilty in April to unauthorized trafficking in recordings of live musical performances.
Federal prosecutors said a November 2002 search of Smittle's former home in Canonsburg, a Pittsburgh suburb, turned up more than 11,000 pirated recordings, which they said he sold to music dealers, at record shows and over the Internet.
Federal prosecutors said the case was rare for western Pennsylvania but mirrored efforts nationwide by the recording industry and law enforcement to curtail bootlegged recordings.
The Recording Industry Association of America, the Washington-based trade group that represents the major recording companies, has set up offices with detectives, hired private detectives and worked with law enforcement to crack down on pirated recordings.
The RIAA says the millions of pirated CDs routinely sold coast to coast are costing its members $300 million domestically and $4.2 billion worldwide in lost sales and royalties.
http://www.freep.com/news/statewire/...3_20040715.htm
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Listen to the flip side
New research suggesting that file sharing has no impact upon sales of CDs has, not surprisingly, angered the music industry
Suw Charman
Record year: during the past nine months, CD sales in America have increased by 7%, despite continued growth in file sharing.
As far as the music industry is concerned, the message is clear: file sharing is killing it. "Research clearly illustrates that the illegal use of music on the internet is damaging the entire UK music industry," said Peter Jamieson, the chairman of the BPI (British Phonographic Industry). Even Apple's chief executive, Steve Jobs, agrees. "iTunes really competes with piracy, not the other services," he said at the iTunes Music Store Europe launch last month. "Piracy is the big enemy - the market has shrunk in France and Germany and seen zero growth in the UK."
Yet despite the industry's belief that file sharing is anathema to record sales, a recent study has shown that it may not be so clear cut. "Downloads have an effect on sales that is statistically indistinguishable from zero," the controversial report claims, even going so far as to suggest that for popular albums, "the impact of file sharing on sales is likely to be positive".
The study, by Felix Oberholzer-Gee, Associate Professor in the strategy unit at Harvard Business School, and Koleman Strumpf, Associate Professor in the economics department at the University of North Carolina, analyses sales and download data, and its conclusions contradict the established music industry line.
During the last quarter of 2002, the pair gathered data from two peer-to-peer file sharing servers on the OpenNap network and matched individual downloads to the weekly sales figures of 680 chart albums.
"Our hypothesis was that if downloads are killing music, then albums that are downloaded more intensively should sell less," says Strumpf. But, after adjusting for the effects of popularity, they discovered that file sharing has "no statistically significant effect" on sales.
An economist with a love of music, Strumpf has been interested in file sharing since the Napster trial in 2000, but was not impressed by the evidence presented in court.
"I read through the studies that were used during the trial, and they were really horrible," he says. Many of the surveys concluded, incorrectly according to Strumpf, that people who download more buy less.
"The fact that there's a correlation does not imply that downloading is the root cause of these people buying less. File sharing is done primarily by teenagers and college kids because they have a lot of time on their hands but they don't have a lot of money. If we got rid of file sharing tomorrow, it doesn't necessarily mean these kids would be buying any more music."
Another problem is that asking someone about their illegal activities, particularly in the US where they risk prosecution, is unlikely to result in honest or accurate answers.
But Oberholzer-Gee and Strumpf are not without critics. "We consider it a very flawed study," says Matt Phillips, a BPI spokesperson. Both the BPI and the International Federation for the Phonographic Industries (IFPI) have criticised the study for including the Christmas period when people are buying CDs as gifts.
"It's very straightforward to address these kinds of criticisms," says Strumpf. "We got rid of the Christmas season and just looked at the first half of our data. We still find the same effect."
So, if downloading hasn't caused the slump in sales, what has? There are several factors that could be involved, but the easiest explanation is the popularity of DVDs.
"Over the period 1999 to 2003, DVD prices fell by 25% and the price of players fell in the US from over $1,000 to almost nothing," says Strumpf. "At the same time, CD prices went up by 10%. Combined DVD and VHS tape sales went up by 500m, while CD sales fell by 200m, so a possible explanation is that people were spending on DVDs instead of CDs."
It is clear that more work needs to be done before the market effect of downloading is fully understood, but Strumpf was unsure whether they would be able to conduct further work.
"The problem is getting hold of sales figures. Getting data on file sharing is hard, but it's possible. However, I imagine it's going to be difficult for us to get sales data in the future because of the views of the record industry towards us."
Prior to Oberholzer-Gee and Strumpf's report, there were no empirical studies based on actual file sharing behaviour, and the music industries in the US and the UK have based their policies on, at best, incomplete research. At worst, the surveys and analyses they quote are misleading and inaccurate.
Yet still the RIAA has sued its customers - an action Strumpf calls "one of the stupidest things in the world to do". The BPI has stated it is "prepared to go that route if forced".
Some even question whether the fall in sales the RIAA quotes is real, or a product of a creative redefinition of the word "sale". Even if it is real, there is one final fly in the ointment that can't easily be explained away: during the past nine months, CD sales in America have increased by 7%, despite continued growth in file sharing.
As Strumpf says: "If file sharing is killing record sales, why are records starting to sell better?"
http://www.guardian.co.uk/arts/featu...265972,00.html
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Calif. Allows Auditing of Record Labels
Alex Veiga
Gov. Arnold Schwarzenegger on Friday signed a law giving recording artists more flexibility to audit record companies' finances in search of potentially unpaid royalties.
The law, which goes into effect Jan. 1, allows artists to conduct annual audits and applies to any record companies doing business in California. The law holds down the cost of audits through means such as letting a single auditor work for several artists on the same label simultaneously.
"This is a significant step forward for artists' rights," said Sen. Kevin Murray, the Los Angeles Democrat and former music agent who sponsored the bill. "The ability to audit will keep record companies a little bit more honest."
The law is the culmination of a campaign by some musicians, including Don Henley, to give artists more power to determine whether they are due royalty payments.
Artist royalty rates are typically set around 12 percent to 16 percent of sales. But before any of the royalties reach an artist, they must usually cover promotion, production, packaging and other expenses. In addition, the labels withhold large percentages to cover discounts they offer to retailers as well as reserves for any returned goods.
Up to this point, artists have faced the choice between paying for expensive audits, possibly uncovering less money than the cost of the audit, or not conducting the audits and losing out on royalties.
"You get a limited right to audit in most contracts, but it's not a legitimate right if you can't afford to do it," Murray said.
No one was available Friday after hours at the Recording Industry Association of America, which represents the major record companies.
In May, major recording companies agreed to return nearly $50 million in unclaimed royalties to artists as part of a settlement with New York state Attorney General Eliot Spitzer.
A two-year probe by Spitzer's office found that many artists were not being paid royalties because record companies lost contact with the performers and had stopped making required payments.
http://apnews.excite.com/article/200...D83SA24O0.html
Until next week,
-
js.
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