Internet Usage Increases CD Sales By 3x
New Study of the Net’s Impact on CD Sales
Edward W. Felten
Eric Boorstin, a senior at Princeton, just filed his senior thesis, Music Sales in the Age of File Sharing. The thesis includes a clever study of the impact of Internet usage on CD sales. This is a twist on previous studies, which have tried to correlate CD sales to usage of filesharing. The tradeoff here is that although Internet usage is one step removed from filesharing, the data on Internet usage are much more detailed and much more reliable than the data on filesharing usage.
Eric worked from two datasets. The first dataset came from SoundScan, and gave him aggregate sales of CDs, on a week-by-week basis, for many separate metropolitan areas in the U.S. The second dataset came from the U.S. Census Bureau, and contained data on population, income, and Internet usage, broken down by age group and geographic area. The census data came from 1998, 2000, and 2001. Combining these datasets, he ended up with data for CD sales, age group demographics, income, and Internet adoption, at three different points in time, in ninety- nine separate metropolitan areas in the U.S.
Eric took these datasets and did a regression to determine the correlation between Internet adoption rate and CD sales, broken down by age group. He controlled for differences in personal income. (For more methodological details, see the thesis.)
For people in the 15-24 age group, he found a significant negative correlation between Internet adoption and CD sales. For people in all of the age groups older than 25, he found the opposite – a significant positive correlation between Internet adoption and CD sales. Overall, the correlation was significantly positive – metro areas with higher rates of Internet adoption had significantly higher CD sales.
The explanation cannot be that higher income predicts both Internet adoption and CD sales; remember that Eric controlled for differences in income. There must be something about Internet access, other than income, that correlates with CD purchasing. Perhaps it's filesharing; perhaps it's something else; or perhaps it's a combination of both. Overall, each additional Internet user in a metro area correlated with 3.5 additional CDs sold.
There are two caveats to bear in mind in thinking about this study. First, what the study found was correlation, not necessarily causation – it may be that some common factor is causing both Internet usage and CD purchasing. Second, the study measures marginal effects, not average effects. We cannot conclude that every Internet user in a metro area contributes an extra 3.5 CD sales; we can say only that adding one more Internet user would increase sales by that much.
What does it all mean? And how does this connect to previous studies on filesharing? For my answers to those questions, tune in Monday, when I'll unveil my Grand Unified Theory of Filesharing.
http://www.freedom-to-tinker.com/archives/000573.html
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From December
Will DVD Acquittal Mean Tougher Copyright Laws?
Evan Hansen
The acquittal of a Norwegian programmer charged with breaking Hollywood's DVD encryption scheme could lend new urgency to the entertainment industry's efforts to enact tougher global copyright laws.
Norwegian authorities tried Jon Johansen on criminal charges for writing a software tool that can be used to overcome anticopying technology built into most commercial DVDs. On Monday, an appeals court threw out the government's case, agreeing with a lower court that Johansen had done nothing wrong under Norwegian law.
Even before the Norway case was filed, however, entertainment industry lobbyists had been pressing lawmakers in that country and elsewhere to enact tougher copyright laws, modeled on controversial U.S. legislation that makes it easier for authorities to win prison terms for people who crack encryption schemes or distribute cracking tools. If enacted, proposed legislation in Europe, Canada, Australia and Central and South America would soon hand entertainment companies similar weapons against people caught tinkering with anticopying software.
That's raising warning flags from some critics of the U.S. legislation, known as the Digital Millennium Copyright Act (DMCA), who contend the law protects content owners at the expense of consumers and software experimenters. Now, they say, that law is being exported around the globe with little debate.
"It is interesting that the court said Johansen had not broken any law, but the laws are changing," said Robin Gross, executive director of IP Justice, a nonprofit group that opposes the DMCA.
Monday's decision affects only Norway, a small Scandinavian country with a population smaller than that of New York City. Still, it is a notable setback for Hollywood, which had hoped the case would send a strong message of deterrence to potential DVD pirates, given Johansen's hero status in the video underground. The tool he's become famous for, called DeCSS, has been banned by a U.S. federal appeals court, but it's inspired poems, music, T-shirts and art from admirers.
Monday's acquittal was heralded by Hollywood critics as an important blow for consumer rights in the digital age, at a time when the entertainment industry has increasingly relied on technology that seeks to bar people from copying media products. Those measures may curtail not only piracy, but activities that many people assume are legitimate, such as making a backup of a legally purchased disc.
The case had also been taken up as a cause celebre in software circles on a more esoteric principle, with some programmers worried over a growing and potentially dangerous conflict between their right to develop new products and the right of content owners to protect their profits.
Jonathan Band, an attorney in the Washington, D.C., office of Morrison & Foerster, said the Johansen acquittal is important because it highlights some of the shortcomings of the DMCA, which offers few exemptions for legitimate copying of digital material.
"The acquittal is a great development," Band said. "The whole notion of prohibiting acts of circumvention or circumvention devices when it's not directly tied to infringing conduct is the wrong approach. The point is, there may be lawful reasons why someone would want to circumvent a technology."
But others said DMCA-like laws are the entertainment industry's best hope of fending off a new era of digital piracy, in which large-scale piracy operations and ordinary consumers have easy access to tools for making and distributing perfect copies of movies and other media.
Ian Ballon, an intellectual-property attorney in the firm Manatt, Phelps and Phillips, said court cases targeting alleged piracy have generally gone in favor of the content owners to date. But he said the industry is still on the defensive and needs to bolster legal victories with better antipiracy technology.
"By and large, content owners have prevailed in most of the litigation they've brought," Ballon said. "But the place where content owners have been losing is on the Net. Although new technology provides some new opportunities, it has made piracy easier than ever. Court opinions alone have not been able to withstand it. As a result, technology solutions will be required to address the problem of global infringement."
In some ways, the Johansen ruling offers a simple reminder that different countries have different laws, and companies can't rely on protections established in one region to protect them elsewhere.
But the case also points to an aggressive drive in the entertainment industry to win greater global conformity in copyright law, modeled on the DMCA.
Passed in 1998, the DMCA was the first national law to arise from a landmark 1996 agreement, known as the World Intellectual Property Organization (WIPO) Copyright Treaty, to explicitly criminalize tools that "circumvent" encryption schemes and the act of "trafficking" in circumvention tools.
The DMCA has become a legislative template used by U.S. negotiators in trade talks, according to legal experts, where it is used as a bargaining chip with potential trade partners. If countries agree to pass DMCA-like laws as part of a treaty, negotiators may offer better terms for exchanging other goods and services.
The U.S.-based movie and music industries have won some important victories in pushing this agenda.
International copyright experts said that the European Union has begun implementing the treaty in earnest this year, with Germany among the latest states to ratify enabling legislation this summer. Although that's considerably slower than Hollywood studios and record labels had hoped, the process appears on track to have most European countries finish their versions of the law by 2004.
U.S. negotiators are also seeking to extend DMCA-like laws as part of the pending Free Trade Area of the Americas (FTAA) treaty, which would encompass most of North, Central and South America.
As Norway illustrates, however, the process can move slowly, leaving the entertainment industry exposed to weaker copyright rules in regions where DMCA-like laws have not yet been passed.
"There was never any sense that someone would clap their hands and click their heels and have (the treaty implemented) overnight," said Motion Picture Association of America (MPAA) spokesman Rich Taylor. "Over time, more countries are coming on board, and other countries are doing things to increase their vigilance. As long as we can keep that momentum, we'll consider ourselves on the right course."
Such comments aside, the MPAA has begun to show signs of impatience over the pace of WIPO implementation.
Lacking an anticircumvention statute, Norwegian prosecutors pursuing Johansen were forced to rely on an older law prohibiting anyone from breaking into a computer system in order to access data to which they are not entitled, according to IP Justice's Gross. The case was the first time prosecutors had tried to use the law against someone accused of breaking into data that they owned themselves, she said.
In responding to the outcome of the prosecution, the MPAA raised the possibility of a further appeal to the nation's Supreme Court. But any shortcomings in the government's case, the group said, could be addressed by Norway's lawmakers.
"If the present decision is the courts' final word on the matter, we hope that the Norwegian legislature will move quickly to implement the WIPO Copyright Treaty to correct this apparent defect in Norwegian law," the MPAA said in a statement following Johansen's acquittal.
The Johansen verdict is one of several recent antipiracy setbacks for the entertainment industry in courts around the globe.
Last week, a federal appeals court in Washington, D.C., barred the record industry from seeking the names of alleged file swappers from Internet service providers without first getting permission of a judge. The ruling could raise costs and create delays for the industry's recently adopted and controversial legal strategy of suing hundreds of individuals to thwart Internet piracy.
Also last week, the Dutch high court refused an industry request to shut down peer-to-peer software maker Sharman Networks, which distributes the popular Kazaa file swapping client.
In Canada, meanwhile, the copyright office issued a determination that downloading copyrighted works over a peer-to-peer network is legal under that country's laws, although uploading files is not.
Meanwhile, moves to rein in the DMCA have been initiated in the U.S. Congress, where at least two bills have been introduced that would grant exemptions for consumers who crack encryption for certain legitimate purposes--for example, to make a backup copy of a legally purchased DVD. Those familiar with the bills said they stand no practical chance of success, at least in the current political climate.
On the international scene, as well, the entertainment industry has few serious political opponents standing in the way of its DMCA agenda.
Still, there are signs that some U.S. trading partners are growing increasingly reluctant to rubber-stamp IP provisions pushed aggressively by U.S. negotiators in trade-treaty talks.
For example, Brazil has recently raised objections over including intellectual-property discussions in the FTAA treaty, according to Peter Jaszi, a professor of intellectual- property (IP) law at American University Law School in Washington, D.C.
Jaszi said he was not familiar with the specific reasons for Brazil's position on the IP negotiations, which touch on a sweeping range of topics, including high-priority items such as patented AIDS medicine. Regardless of the reasons for the opposition, however, Brazil's objections could delay the ratification of DMCA-like copyright laws in the region for some time.
Deep reservations over U.S.-led IP policy may also be at work.
"There is a good deal of suspicion of the whole IP package the U.S. is pushing in the free trade agreement and also bilateral trade agreements," Jaszi said. "What I think will be borne out is that there is an increasing sense within that community that the U.S. has a very strong protectionist agenda and that may not be in every case the best approach for countries at different stages of development."
Whether that results in organized opposition to DMCA-like laws, however, is unclear at this stage.
"If I'm an African country in a trade negotiation with the U.S., I'm probably more interested in medicine and (in) getting cotton into the U.S market, than (in) dealing with hypothetical copyright restrictions, Jaszi said.
But entertainment executives are also chaffing at ongoing delays in the treaty process that have left Canada and Korea, two well-developed countries with high levels of broadband Internet penetration, without anticircumvention laws.
"The (WIPO) treaty was effectively negotiated a decade ago," said Neil Turkewitz, the Recording Industry Association of America's executive vice president for international issues, "and for a country like Korea, or Canada, to say now that they need to start examining these issues is crazy."
http://news.com.com/2100-1025-5133152.html
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Napster Investors To Face Music
Sue Zeidler
Napster has been reborn as a legal online music service, but the ghost of its former renegade song-swap self is trailing about $17 billion (9.5 billion pounds) of legal baggage.
Next Tuesday, music labels and publishers will face off against Bertelsmann in a federal court in San Francisco over claims the German media company's 2000 investment in Napster kept the file-swapping service operating eight months longer than it would have done otherwise.
The lawsuits claim the extra lease on life promoted wide-scale piracy and cost the music industry $17 billion in lost sales.
The Bertelsmann cases were first filed in New York, while Vivendi Universal's Universal Music and EMI Group Plc also sued venture capital firm Hummer Winblad in Los Angeles, claiming its $15 million investment and installation of a chief executive at Napster in 2000 also promoted piracy.
EMI declined to comment. Universal was unavailable.
All the cases, first filed in 2003, were recently relocated to San Francisco under U.S. District Judge Marilyn Patel, who issued an injunction against Napster in 2000.
That injunction was stayed, and Napster was operating at the time of the Bertelsmann deal in October 2000.
Venture capitalists say a win by publishers and labels could have a chilling effect on investments in start- ups.
"If the recording community is successful, it will make the investment community think twice," said Michael Cohen, an antitrust lawyer with Heller Ehrman White & McAuliffe.
Napster went bankrupt in 2002. Software firm Roxio Inc. bought its name and logo, relaunching it as a pay service last year. Roxio is not named in the latest cases.
Lawyers for Hummer and Bertelsmann said the plaintiffs, unable to get damages from Napster, are misguidedly seeking compensation from others who aimed to make Napster legitimate.
By providing $90 million in 2000, Bertelsmann said it hoped to turn Napster into a licensed service.
The labels and publishers claim Bertelsmann's funding kept Napster going until July 2001, when it shut down because it could not comply with a new order Patel had issued after an appeals court largely upheld her original decision.
"Bertelsmann legitimised this company and totally changed the equation," said Carey Ramos, counsel to songwriters and publishers, adding Bertelsmann's investment inspired others to fund Napster "copycats" like Kazaa and Morpheus.
"Napster created the piracy we've seen in the last four years that continues unabated worldwide," he said.
Hummer and Bertelsmann lawyers say the plaintiffs have a hard case to prove.
Bertelsmann attorney Bruce Rich said the plaintiffs are accusing Bertelsmann of "tertiary infringement," a legal approach he believes will prove difficult to win.
The defendants' lawyers cite a case in which Patel ruled against record producer Matthew Katz, who asserted infringement claims against Napster investors like Hummer.
"If Patel already ruled on the same theory with the same defendants, we see no reason why it should be different now," said Michael Page, Hummer's lawyer.
Ramos disagrees.
"Courts have been holding third parties responsible for copyright infringement for over 100 years," he said. "The facts clearly establish that Bertelsmann actively supported the continuation of infringement on the Napster systems."
http://uk.news.yahoo.com/040421/80/erl4n.html
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Interview: Phil Morle, CTO Sharman Networks
Steven Deare and Danny Allen
It's revolutionised downloading and could lead to a landmark court decision in the clash between peer-to-peer networks and copyright owners. The KaZaA Media Desktop is loved by millions of people the world over, but some influential music industry heavies are determined to see the object of that affection broken.
Amid international headlines and lawsuits, the company behind KaZaA operates quietly off a highway in North Sydney among a suite of modest-sized offices. The business that could change the face of digital copyright is marked only by a door displaying the name of parent company LEF Interactive.
Beyond this door, Phil Morle, Sharman Networks' chief technology officer, sat down with PC World reviews editor Danny Allen and online news journalist Steven Deare to share the latest on KaZaA's future development, the lawsuit wrangle, and why he believes you'll eventually pay to download major labels' artists on KaZaA.
Company background
Give us some background on yourself and your time and involvement with the company.
I've been with the company since day one, since Sharman was formed a couple of years ago. My background is actually not in technology. I was a theatre director for 10 years back in Perth. During my time as a theatre director, I was subsidising my income working in the local business. There was a point about six years ago where I really kind of flipped, and technology became the full-time part of my working life and my artistic endeavours became sort of part time endeavours in my life. I worked for a bunch of companies doing Web development and found myself at Sharman just over two years ago.
You fell into it?
Well, I knew Nikki Hemming prior to it. She asked me to come onboard. Before it I was working with the original owners of KaZaA, making Web sites for them.
What's your daily role?
All technological aspects for Sharman Networks. Which is largely the development of the KaZaA Media Desktop or the KaZaA Web sites, working closely with partners on their software such as the Altnet software and the Bullguard software and so on. And thinking about and developing technology for the future. There's quite a few things we're working on -- some already more than a year into development -- which are long-term things.
Can you tell me a bit about how Sharman works with Brilliant Digital and Altnet? What's the relationship between those companies?
A really close relationship. We have done since we started the company. It's [Altnet] one of the things we knew we were going to do when we formed Sharman and got into this whole business. Altnet have got some very good technology for letting licensed content benefit from peer-to-peer environment and that's what we're here for. Contrary to what is often said about us, we're here to be a part of the solution not a part of the problem and Altnet is something we've perceived to be part of the solution. We work with them extremely closely. You probably know they have a development team in Sydney as well and every day we are speaking to them at a technological level to make sure the technology grows into something that's excellent.
What's the company's vision in terms of the products and services you're eventually trying to create?
I think there's two parts to that. One which is fairly obvious, which is the reason we were formed, which is to be a part of a solution. Something that takes a leap in peer-to-peer which we believe in very strongly and to take those benefits and to deploy them into a consumer arena where everybody can enjoy those benefits by getting some high performance software at a good price. So in the area of media distribution and peer-to-peer, becoming a dominant force in that is something we're consistently innovating on and we'll continue to do so. But even in that regard it's a lot more than music -- it's any kind of multimedia, movies, games, as well as the music.
There is so much more to peer-to-peer technology and what it can accomplish. The antivirus tools inside KaZaA use peer-to-peer functionality -- because of that, it means when major viruses come about the peers effectively distribute the information about the viruses to each other. It means it happens extremely fast, it doesn't fail, the users are protected and they can have that service for free. Normally, as you well know, it's a comparative product. It's centrally served, you've got all the problems of guaranteeing that the definitions are going to be delivered to you and it costs an awful lot of money. That's why people have to pay a regular subscription fee for viruses. We don't have to do that and peer-to-peer just comes into its own in the environment.
Soon we're going to be releasing some software that'll actually let people speak and communicate between each other.
Isn't that Skype?
We're working with Skype. And in the same way that files can be shared between each other and applications doing that can grow to an infinite size, the same thing can happen with this. So the second part of what we're working on is very much multiple applications for peer-to-peer which are much more than music file-sharing, just generally exploring its power in other areas and seeing what we can do.
Is that within KaZaA Media Desktop?
And outside of it as well. We're working on quite a few things experimentally.
The KaZaA software
What's the state of play with the hacked KaZaA Lite?
[Corrects interviewer] KaZaA Plus. Well, you know KaZaA Plus and KaZaA Lite are nothing to do with us?
Well, my biggest concern in my department is that they all in different ways hack the software, and they do it using different means. But generally speaking they change elements of it in a very kind of clunky way. They actually change the binary of the file or just change registry keys to try and tune it for the KaZaA user, for the KaZaA Plus or KaZaA Lite user. But the problem is it potentially damages it for everybody else, they would effectively break the system. Just the act of doing it is a problem, otherwise we would do it. One of the things they do is these download accelerator type tools they have, we would give that to everybody if everybody could have it without being detrimental to each other. But you can't because it'd be detrimental to each other so we don't do it. So we don't like them doing it for that reason.
Then there's the way that they do it. If you actually look at the binary, it's not like looking at source code where you can just see the relationships between things and what they're changing. They're kind of blindly changing a number and saying 'ah it seems to work' and that causes all kinds of problems to us. Then we get thousands of bug reports saying 'KaZaA's not working' and we're saying 'does yours say KaZaA Lite on the top' … and it's not our problem.
What additions and improvements can we expect from KaZaA short term?
We're going to be looking at Skype integration. We're fleshing that out now and looking at all the possibilities but obviously that's going to bring a whole new dimension into KaZaA. The users can kind of interact with each other directly, and phone each other and so on.
One area that we're very keen on is exploding KaZaA out of the KaZaA application into other Internet environments. We're doing a lot of work with a technology called Magnet links, which effectively lets you click a link on a Web site and download that file using peer-to-peer software. Magnet links are an open standard and we've come in behind that standard because it's not a place for a proprietary [technology].
You can't filter KaZaA, is that right?
To our knowledge at this time, you can't. And our knowledge is quite immense on it. We're looking at it in a lot of detail, in particular with the activities we're doing with the DCIA [Distributed Computing Industry Association] and the things that we're thinking of, and just things we're thinking of for the product. We're obviously thinking about filtering in terms of the family filter we have in KaZaA, which does a certain job.
But in terms of what I think you're asking about, which is often called copyright-filtering and that kind of thing, that is a tremendously complex problem and we haven't resolved that problem, in the same way there's no cure for diabetes yet. It's like a big problem and you have to look at it in all its different facets. Even just purely on a technological level we haven't found a way of doing it yet but that doesn't mean we haven't stopped looking at it.
The lawsuit
With all the unlicensed content that circulates around the world via KaZaA every day, why, in your view, is Sharman Networks not liable?
Why are we not liable? Well I think as the lawyers would say of course for a legal conclusion it's not something...(trails off). All I can say is it's not something we do. In the same way that I can also send infringing files using my Outlook client, I can also send them through an instant messaging client, which commonly happens as you probably know. Users use our stuff for multiple things.
But in facilitating that, either directly or indirectly, is the company acting as a good corporate citizen?
That's a very provocative question and I would begin by saying that I don't believe we are facilitating it either directly or indirectly. I mean we've taken a core technology which is a way of sharing files amongst peers and the kind of areas where we're developing the technology and promoting the technology is absolutely all about values. I think if you did a fair comparison between KaZaA Media Desktop and another bit of software like eDonkey or one of the others, we do not promote infringing activity. We're here from day one to move users towards paying. By the same token, we're the biggest distributor on the planet of rights-managed content and users aren't ignoring all those files and doing whatever else they're doing.
Recently, the record industries in Australia and the US have started targeting their lawsuits towards the users that are swapping copyrighted songs. Do you see those lawsuits as more appropriate rather than targeting companies like yours?
I don't think any of it's appropriate. We are a part of an organisation called the DCIA and in those meetings some extremely positive discussions are had, both between us as technology companies, other technology companies, content owners, record labels, other technology companies that have ways of protecting content. You'll see if you go to the DCIA Web site there are multiple models being suggested and they're all being discussed across industries. These are all things which we are seriously looking at and investigating and researching and piloting and trying and talking to people about. I don't think it's a solution at all to sue us, because it costs them a lot of money, it costs us a lot of money and it's going to go on forever. Suing users is clearly problematic, and there's a lot of users out there that they may need to sue.
I heard someone say the other day, we're really at a fork in the road and that is to criminalise or commercialise, and we've just got to hope it's the commercial route that's taken because that's where everybody wins and I think the criminal route everybody loses.
Working with the music industry
As a company that obviously has a commitment to making and sharing music and all sorts of multimedia as widely available as possible, what sort of commitment does Sharman Networks have to the music industry here or abroad?
Enormous. These guys here [in the Sharman offices], work every day with local artists. Honey Palace: through us, there's a small Australian band that became number one in some American state. Well, how were they going to do that without something like KaZaA? We're constantly working with local artists and always looking for opportunities to work with local artists. We're working with Altnet to make it as easy as possible to literally become your own label, or for small labels to automatically use the peer-to-peer technologies to distribute their wares and for a good price. From day one we've been working with emerging artists. You probably know about our relationship with Cornerband in the US which is probably coming on 18 months old now and we've moved an enormous amount of local artists work through that relationship.
So what can you offer an aspiring local artist? Outline your whole package of what Sharman Networks can offer an artist through KaZaA.
Well they would probably go through Altnet. We actually do work here finding local acts and working with them but ultimately refer them on to Altnet. You don't have to sign your life away. It costs you $99 to become listed.
Then they can distribute their music or movie or whatever through the KaZaA Media Desktop and other applications that Altnet is inside. So Altnet is in Grokster, will also be in eDonkey, is also available through Web sites. So you then appear in a number of different ways. In front of three and a half million users at a time through what we call the showcase which is the kind of Web looking pages in the middle of KaZaA. Or you appear in TopSearch which is a preferential search results system which is like buying a Google keyword. You can buy a TopSearch entry and through that your results appear as gold icons and users download them.
Now the other important part of Altnet is they actually protect the files, if that's what the artists want, before they distribute them using Microsoft Digital Rights Management technology
For bands that have had their copyright material infringed, downloaded, what's your stance on whether Sharman Networks should compensate them in some way?
We're here to be a part of the solution, not a part of a problem. I can't simply answer yes or no to your question because it's much more complicated than that. I think there's massive potential there for artists, and for users. I think we will move on from where we are today to find a solution which is something that everyone's happy with. I think we have to.
What offers have you made to record companies in how Sharman might work with them?
We've been offering them the Altnet product for a long time now. Increasingly we get a lot of interest in that and the great thing is that model is proving itself as people are using it. That's clearly one offering to content owners of all kinds and we still think it's an excellent model.
Other ones are much more complicated and are all being discussed through the DCIA because they're really involved. The great thing about the TopSearch one is that it’s something we can offer today. It makes things enormously better than they are today, if not completely resolves the problem, and it's completely within our power to deliver. So we've delivered it, it's there, and we want people to take it.
The other things are more complicated and you'll see a lot of proposals for compulsory licensing schemes. For example, where people will build at the ISP level to pay a kind of levy for music which they get through file-sharing or music that they rip in other means. There's other models where users effectively sell music to each other in a kind of eBay fashion. There are other models where users pay for use effectively, where ISPs kind of toll what people actually do file-share and they're billed for them on the ISP level. And there's many many others.
In saying that I don't understand how Sharman and the record companies could get to that point. What would be the incentive for the record companies to license their work to Sharman when it's already available for free?
Easy, because users will start buying their material instead of trying to find it for free. See the assumption you make there is that you can just find it there, top of the list, know it's a high- quality file, know it's what you wanted. If a user shares out something they shouldn't share out, there's no guarantee of what the quality is, there's no guarantee it's going to show up in your search results at all. If it does show up in your search results, there's no guarantee it's going to show up in the first ten pages of your results. You don't have any guarantees of service, you don't know that it's a high-quality file, you don't know that it hasn't been spoofed, you don't know that it isn't a virus.
People have been going for the Gold Files (Top Search). It's easier. I don't know if you guys agree but on a Google search I rarely go past the first page. I know the top ones are the most relevant, and then in KaZaA there's even more to my decision making, knowing the relationship between files, whether it's high quality. So our position is if Warner Bros is worried about Madonna files being shared out by users, our position is if they licensed the gold versions of those, then that's what users were overwhelmingly presented with, then we believe that users would download those gold ones and they would pay for them. That's our position, but today they don't have that choice.
Spoofing and viruses aside, when you do do a search on say, Madonna, if Madonna comes up as a gold search, you can download that, or you can download a number of the free files and one of those will work. And that's what most users do-
[interrupts] I would challenge you to prove that you know that because I don't think you do know that. I certainly don't know that.
Well every time I've seen it in use, with technical people and non-technical people they've gone ‘I'll download two [free files] and if they don't work I'll delete them’. If you allow in the KaZaA program to sort by kilobyte, in that sense, that also helps filter out some of your argument that you say about the quality [assurance of paid downloads]
[interrupts] I'm not suggesting for one minute that one hundred percent of people are going to go and do the right thing. Let's look at it even more simply and if the price was right, and I knew that what I was downloading was unambiguous and legal to download, I would take it. And I think that's what we think people will do.
As you said before this court battle could go for ages, what sort of finances does the company have to mount that sort of defence?
Well, enough, is the simple answer. Of course that's very frustrating for the people who are suing us because clearly the strategy was that we weren't supposed to last this long, and we have. It's a case which we're confident of winning. We've got enough money and enough user support, and we're in for the long haul.
Sharman's an unusual company in that there hasn't been a day where we weren't being sued [laughs] as far as I can remember at least. So that's how we operate.
So who's financing the company?
The users are financing the company.
So what's the main revenue stream?
Multiple revenue streams. But certainly advertising and content now is an enormous one. It's getting very colourful now because of the content we're putting through, which is the Altnet system.
To finish, obviously there's a clash of cultures between your company and the whole record industry around the world, where in five years do you hope an agreement will lead to in the distribution of music?
We're certainly not colliding with the whole record industry, we're colliding with some of the record industry right now. Some of them are working with us in increasing numbers. I think file- sharing will endure because it must, and because it's better. The more I work with it the more I think that it's silly people relying on centralised services which cost everyone so much money and they fail all the time. I think file-sharing will endure. Whether that's Sharman or not, I don't know. I'm highly confident and I think we're doing tremendously on the case and we're making great software at the same time. And it's my intention to do everything I can to make it a success.
But Sharman aside, Sharman out of the picture, peer-to-peer is so enduring it will be here and in five years time the labels will be distributing their stuff using it.
Note: This transcript has been edited for brevity and clarity.
http://www.linuxworld.com.au/index.p...03;fp;2;fpid;1
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No-show judgment
Pop Star Takes On Ebay Pirate, Wins
Briefless in court
POP STAR Sophie B. Hawkins has taken on the music pirates without her briefs and won.
She took an eBay merchant who was flogging pirated copies of her single "Wilderness" to small claims court and won the grand sum of $346 of your American dollars.
The single was not supposed to be in the shops until next week and it is due to be released by her new label Trumpet Swan Records.
The popular beat artist, who has warbled such classics as "As I Lay Me Down" and "Damn I Wish I Was Your Lover" in the 1990’s, said that she was not after the cash.
She told Reuters that the pirate was just making easy money off something that's her blood and guts.
However Soph, who appears naked on her album cover, seems to have given herself pretty good publicity. She has appeared on a telly show "Celebrity Justice" to tell of the horrors of piracy to potential punters and got herself in all sorts of newspapers and news sites.
But there was no face off with the pirate. He just didn’t turn up to defend himself and she was awarded victory by the beak
http://www.theinquirer.net/?article=15339
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Butterflies May Be Free, But Should Expression Be?
A Review of Lawrence Lessig's Free Culture
Seth Stern
Read Stanford law professor Lawrence Lessig's new book Free Culture and you're likely to agree with his conclusion that he's told a "dark story."
The way Lessig sees it, big bad media companies and their henchmen in Washington are threatening to all but obliterate creative expression. Like some Hollywood mafia family, the conglomerates and their lawyers are using copyright law as a club against well-meaning artists, and extorting music-downloading teenagers out of their last dimes.
After awhile, it's tempting to roll your eyes at all these gloomy pronouncements by an author seemingly striving for the title of the Internet age's Nostradamus.
But dig beneath the proclamations of doom, and you'll find that Free Culture is yet another book well worth reading by one of the nation's most thoughtful cyberlawyers.
Beyond the Internet: Lessig's Larger Point Encompasses Other Technologies, Too
Here, in his third book, Lessig expands beyond the Internet his previous warnings about the threat technology poses to "free culture."
Lessig projects that, in an ideal world, new technologies could allow low-cost access to almost all creative content ever made, much of which no longer has any commercial value anyway. He envisions the building of virtual libraries on the web that would be akin to the wonder of the world built in ancient Alexandria. A world of tinkerers, according to Lessig's vision, could create new content by borrowing from all that's come before.
But Lessig charges that this glorious future is threatened by giant media companies who are stifling creativity in the name of fighting piracy. They're going too far, he argues, by rigidly enforcing copyright laws and limiting what flows into the public domain after its commercial value has shrunk. And the issue isn't limited to the Internet -- it affects virtually all copyrightable material, meaning any fixed expression that the law protects.
Lessig's Argument: Honor a Long American Tradition of Creative Borrowing
As Lessig notes, there is a long tradition of such borrowing. Walt Disney's first cartoon with synchronized sound, "Steamboat Willie," was a rip off of an earlier silent film. Fox was the Napster of its era, fleeing to the West Coast to escape scrutiny for its infringement of patents granted to filmmaking's inventor, Thomas Edison. Indeed, Lessig argues pretty much every innovation in film, records, radio and cable TV since Eastman's Kodak instant camera involved borrowing technologies that preceded them without asking.
Now, you might want to Lessig's tour of Twentieth Century media innovation with a grain of salt. But it's hard to argue with his conclusion: if piracy means using the creative property of others without their permission, then "the history of the content industry is a history of piracy."
Having established this tradition of "borrowing" and its beneficial effect, Lessig asks readers to consider whether the harms of peer-to-peer file sharing like Napster and its progeny really outweigh the benefits. After all, the jury is still out whether file sharing is more likely to eat away at record sales, or to give listeners a way to sample new products they later buy, and provide access to tunes no longer available in stores.
Lessig Isn't Pro-Piracy -- He's Pro-Balancing
Still, Lessig is hardly endorsing all piracy in Free Culture. What he asks for, instead, is greater balance than the "copyright warriors" in the entertainment industry demand. Lessig suggests the balance has been tipped in their favor in two ways: By harsher laws, and longer copyrights, and by better copyright- protecting technologies.
Lessig rejects the notion that intellectual property deserves the same protection as real property, and decries the creeping expansion of copyright protections in recent decades.
Lessig notes that the length of copyrights has tripled in the last 30 years, most recently thanks to an act of Congress named after the late Sonny Bono. And he flagellates himself for his lack of success when he tried convincing the Supreme Court, a few years ago, that such lengthy extensions violated the constitution's Copyright Clause, which that secures exclusive rights to authors only for "limited times." (See Eldred v. Ashcroft for the reasons the Court rejected his argument.)
Yet 98 percent of such copyrighted material is no longer commercially viable, Lessig points out -- why protect what is valueless except to those few who want to borrow from it, and now cannot?
What's more, Lessig notes, technology now makes it easier to catch non-compliers and supplement legal protections with limits built into hardware. Plus, media concentration means the freedom to "cultivate and build on the past" is increasingly held by a few.
Instead, he suggests copyright law should keep the same balance as in the past when new technologies emerged.
Lessig's Book is Accessible to Nonlawyers, But Unfair to Media Companies
Lessig's last book, The Future of Ideas, was at times weighed down by passages on technology that were less than accessible. In contrast, Lessig's Free Culture does a good job of presenting legal battles and the basics of copyright law in laymen's terms. It's a useful primer for non-lawyers, or even lawyers like me who regret not taking intellectual property courses back in law school.
What is less easy to swallow, however, is the unrelenting scorn Lessig heaps on the leading media empires and their Washington lobbyists.
Lessig lays it on particularly thick when discussing the case of Jesse Jordan, a Long Island teenager who gets into trouble his freshmen year of college while building a Google-like search engine of files on his college computer network.
With a quarter of the files music, Jordan's search engine quickly draws the attention of the Recording Industry Association of America (RIAA). Indeed, the RIAA threatened to file a $15 million copyright infringement lawsuit against poor Jordan.
Lessig charges that the RIAA put Jordan to a "mafia-like choice:" pay $250,000 in lawyers' fees, or fork over his $12,000 in savings. Unsurprisingly, the $12,000 was an offer he couldn't refuse: Jordan settled.
Lessig's contempt for the RIAA is perhaps matched only for his dislike for the Motion Picture Association of America (MPAA)'s Jack Valenti, who recently hinted he will finally step down after 38 years as the movie industry's chief lobbyist. Lessig unfairly ascribes the darkest of intentions to every utterance from either of these two powerful interest groups.
After this book, it's hard to imagine Lessig shedding a tear when Valenti vacates his throne or, for that matter, to imagine Lessig earning a spot at the retirement dinner -- not that Lessig would take it if offered.
But even his biggest detractors should probably read this book too.
http://writ.news.findlaw.com/books/r...416_stern.html
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California Votes Against Diebold
Paul Festa
SACRAMENTO, Calif.--California election officials on Thursday recommended banning some Diebold Election Systems voting machines and referred an investigation into the company to the attorney general for possible civil and criminal sanctions.
California's Voting Systems and Procedures Panel unanimously voted to send its recommendations to the secretary of state in a second morning of contentious hearings, during which Diebold's president apologized to the panel and admitted that the company's errors had prevented some Californians from voting.
But panel members said Thursday morning that the company's apologies were insufficient, and they expressed frustration with and distrust of the electronic-voting vendor.
"I'm disgusted by the actions of this company," said panel member Marc Carrel, assistant secretary of state for policy and planning. "And I think we should forward our recommendations to the attorney general, because I can't believe that a lot of the statements made yesterday were accurate."
http://news.com.com/2100-1028-5197870.html
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Investor's Pullout Stirs Doubts About SCO Group
Steve Lohr
The SCO Group received a large dose of cash and a vote of confidence for its anti-Linux campaign last October when BayStar Capital arranged a $50 million investment in the company.
BayStar, a private investment firm in Larkspur, Calif., put $20 million of its own money into SCO, which is based outside of Salt Lake City, and convinced the Royal Bank of Canada to chip in another $30 million. The fact that BayStar made its investment after a referral from Microsoft, a Linux antagonist, only added to the impression of coordinated support for SCO and its strategy.
But BayStar broke ranks last Thursday when it told SCO it wanted its money back, raising questions about the company's future and its ability to wage a lengthy legal attack on Linux. If SCO's legal campaign fades, the advance of Linux as a popular alternative to Microsoft as an operating system for computers used in business could accelerate as the threat of litigation recedes.
In an interview Wednesday, Lawrence R. Goldfarb, managing partner of BayStar, explained why his hedge fund originally invested in SCO and detailed for the first time what he regarded as the wayward corporate behavior on SCO's part that led to the recent split.
Mr. Goldfarb described a company that had become too engaged in publicity and debate with the passionate advocates of the free Linux operating system. SCO's management, he said, was traveling too much and spending too much when it should have been concentrating its efforts and resources on its legal strategy.
"The real issue for us was spending and focus," he explained.
The public statements from Darl McBride, SCO's chief executive, were too frequent and too grand for BayStar's liking.
Linux is an operating system that is distributed free. It is improved and debugged by a worldwide network of programmers, who share the basic source code, in a model of software development known as open source. Linux has become a mainstream operating system for running server computers in data centers, competing with Microsoft's Windows and commercial Unix offerings, like Sun Microsystem's Solaris.
SCO holds rights to Unix, and it asserts that Linux, a variant of Unix, violates its property rights. Others, including I.B.M., contend that SCO's legal rights are less far-reaching and that Linux is not in violation.
In an open letter SCO put on its Web site last December, Mr. McBride took on the advocates of free software like Linux in terms that suggested the stakes in SCO's legal dispute are high indeed.
"There is no middle ground," Mr. McBride wrote. "The future of the global economy hangs in the balance."
BayStar, it seems, would have preferred that managers pragmatically focused on running the business, mostly out of the limelight. The BayStar view was that courts would decide the validity of SCO's intellectual property claims eventually, and that having the company's executives embroiled in a running debate about the role of intellectual property rights was counterproductive.
SCO was becoming a significant distraction for BayStar, a private hedge fund unaccustomed to publicity. BayStar was involved in 64 deals last year in technology, life sciences and media companies, with the average investment being $18 million. And SCO was only one.
Microsoft initially recommended that BayStar take a look at SCO. But there is nothing unusual about that, Mr. Goldfarb said. BayStar often talks to the investment and venture arms of major technology companies like Microsoft, Intel and Cisco. "It was evident that Microsoft had an agenda," Mr. Goldfarb said.
BayStar, he said, then did a lengthy assessment of SCO's intellectual property claims and whether, if the dispute ever came to a jury trial, the lawyer SCO has hired, David Boies, one of the nation's top litigators, could win.
SCO's claims in suits against I.B.M., DaimlerChrysler and others that Linux is essentially an unauthorized version of Unix, which it holds the rights to.
"The issues for us were, first, is the intellectual property claim valid, and if it went to a trial would David Boies win or not?" Mr. Goldfarb explained. "Right, wrong or indifferent, it was our position that we would prevail."
Since its founding in 1998, BayStar has never before sent a letter to a company seeking its money back, as it has with SCO. In the letter last Thursday, BayStar asserted that SCO's behavior violated provisions of the investment agreement and that BayStar's convertible preferred stock be redeemed. In a statement on Friday, SCO said that it did not believe it had breached the provisions of its agreement with BayStar.
"We're unsure what their issues are," Marc Modersitzki, a SCO spokesman, said yesterday. He added that the BayStar letter was "a notification, not a legal action," and that SCO hoped the two sides could settle the matter.
For his part, Mr. Goldfarb said that with reforms in management practices to address BayStar's complaints, it might keep its funds in SCO.
SCO's stock price, which fell 38 cents yesterday to $6.80 a share, has dropped 30 percent since last Thursday, the day BayStar sent its redemption letter. And SCO's stock is down sharply from its high of more than $22 a share reached last October, shortly after the BayStar investment was announced.
http://www.nytimes.com/2004/04/22/technology/22sco.html
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China Agrees to Postpone Wireless Plan, Thwart Piracy
Elizabeth Becker
China agreed on Wednesday to give up a plan to impose its own standard for wireless technology, essentially agreeing to join the rest of the world rather than dividing it up.
The Chinese said they would indefinitely postpone a plan, scheduled to go into effect on June 1, to impose a software encryption standard for wireless computers that American giants like Intel and Microsoft regarded as an unfair trade barrier.
The concession was one of several made by China in a daylong trade meeting held here between senior Chinese and administration officials. But the agenda did not include contentious issues like textile exports, currency controls or labor rights.
For the administration, the successes from the meeting offered an opportunity to respond to critics who have complained that President Bush has failed to protect American industries and American jobs from unfair trading practices, especially by China.
"It is certainly a landmark day - a fruitful day in the relationship between the United States and China," said Donald L. Evans, the commerce secretary, who was co- chairman of the talks with Robert B. Zoellick, the United States trade representative.
Instead of viewing China as a predator stealing jobs and livelihoods, Mr. Evans spoke, instead, of China as a huge, hungry customer of American goods and services.
"Our exports to China are growing faster than exports to any other country in the world," he said.
But Democrats complained that the administration only began addressing China's unfair trading practices because of election year politics and said more needed to be done to help American workers.
Senator John Kerry of Massachusetts, the presumptive Democratic nominee for president, said in a statement that "there are 2.8 million reasons why this White House needs to change its tune when it comes to standing up to China, and they are the 2.8 million manufacturing workers who have lost their jobs since George Bush took office."
The Chinese also agreed in the talks to concede to administration demands to crack down on counterfeiting and piracy of intellectual property rights, to fully open their markets six months ahead of schedule and to sign international treaties protecting intellectual property rights on the Internet.
To try to improve the longstanding problem of piracy and counterfeiting, the Chinese agreed to increase the range of violations of intellectual property rights that are subject to criminal investigations and penalties.
They also agreed to lower the threshold for these sanctions and apply them to the import, export, storage and distribution of pirated and counterfeit products.
Jack Valenti, chairman of the Motion Picture Association, said this plan was commendable and "contains important elements that could lead to improved copyright protection in China."
This was not the first instance where China promised to crack down on piracy under pressure from the United States. Under President Bill Clinton, several prominent agreements were reached to end counterfeiting of tapes, movies and compact discs. But the problem was never resolved and has grown worse in some areas, in part because piracy is carried out on such a large scale that it may be unstoppable, according to analysts.
http://www.nytimes.com/2004/04/22/bu...s/22trade.html
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China Steps Up Internet Control With Video Surveillance In Public Places
SHANGHAI, (AFP) - China has stepped control of the Internet in its largest city Shanghai with the installation of video surveillance equipment and software in public places.
The directive from the Shanghai Culture, Radio, Film and TV Administration was designed to prevent the surfing of banned websites and to stop people under 16 from entering Internet bars, the Shanghai Daily said. Authorities have already installed video cameras in every Internet cafe in the city so officials can keep track of youngsters' movements, the newspaper said. The yet-to-be installed software will force users to input personal identification data to log on, while a supervisory centre will monitor surfing and check whether a cafe was illegally operating at night, it said. Foreigners will have to input their passport number. "The software, which cost seven million yuan (850,000 dollars) to develop, can help supervise more than 110,000 computers at the city's 1,325 Internet bars and spot illegal activities immediately," the paper quoted project director Yu Wenchang as saying. The measures are part of a six- month campaign by municipal authorities, which began this month, to crackdown on Internet bars. Fifty-seven net bars have been punished or shut down in the city so far. There are roughly 70 million Internet users in China, putting the world's most populous nation second behind the United States in terms of people online. The Internet explosion is both a blessing and a curse for the Chinese authorities, who want people to be more tech-savvy without absorbing too many foreign ideas or spreading anti-government messages. Internet users are frequently jailed for posting articles critical of the government.
http://uk.news.yahoo.com/040422/323/erpbe.html
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Ten
Hut!!!
RIAA enlisting?
Downloading Shared Files Threatens Security
Sgt. 1st Class Eric Horton
FORT HUACHUCA, Ariz. (Army News Service, April 22, 2004) – People spend hours in front of their computer screen, downloading music or new movies from the Internet, and not paying a cent, the Army considers such action on government computers to be a security threat.
One program that is used to downloaded files is Peer-to-Peer (P2P) architecture. It is a type of network in which each workstation has the capability to function as both a client and a server. It allows any computer running specific applications to share files and access devices with any other computer running on the same network without the need for a separate server. Most P2P applications allow the user to configure the sharing of specific directories, drives or devices.
In a white paper written by the Army’s Computer Network Operations Intelligence section, unauthorized P2P applications on government systems, “represent a threat to network security.”
“The idea of someone else getting unfettered access to anything of yours without your explicit consent should scare anybody – and that’s exactly what P2P authorizes,” says Zina Justiniano, an intelligence analyst with the U.S. Army Network Enterprise Technology Command’s (NETCOM) Intelligence Division, G2. “P2P is freeware. Freeware, shareware – most of the stuff that you pay nothing for, has a high price. The fact that it’s free says that anybody and their cousin can get it; that means that anybody and their cousin can get to your machine.”
P2P applications are configured to use specific ports to communicate within the file sharing “network,” sometimes sidestepping firewalls. This circumvention creates a compromise and potential vulnerabilities in the network that, in a worse case scenario, can lead to network intrusions, data compromise, or the introduction of illegal material and pornography.
There is also the issue of bandwidth. Since the start of the Global War on Terrorism, the most pressing issue from service members in the field has been the shortage of bandwidth to transmit battlefield intelligence to combatant commanders. The average four-minute song converted into an audio file recorded at 128-bit, can be upwards of 5 megabytes. Full-length video MPEG files can easily reach 1.6 gigabytes. Depending on the connection speed, even a small file may take several minutes to hours to download, using valuable bandwidth.
Unauthorized use of P2P applications account for significant bandwidth consumption. It limits the bandwidth required for official business, and storage capacity on government systems.
While those who monitor the Army networks agree that copyright infringement is a valid issue, they do have other, more important concerns.
There are several known Trojan horses, worms and viruses that use commercial P2P networks to spread and create more opportunities for hackers to attack systems. Trojan horse applications record information and transmit it to an outside source. They can also install “backdoors” on operating systems, transmit credit card numbers and passwords – making these malicious programs a favorite of hackers. Some of the malicious codes allow hackers to snoop for passwords, disables antivirus and firewall software, and links the infected system to P2P networks to send large amounts of information (spam) using vulnerabilities in Windows operating systems.
“If it’s a really good Trojan horse, it will actually run two programs; it will run the program they said they were going to run, so they will not only download it, but they will install it and be very happy that it’s there,” Justiniano said. “Meanwhile in the background, another program is doing malicious damage to the computer by either damaging files or possibly taking files off the computer without your knowledge. If it’s a really nice program that runs well, (the user) will pass that file over to someone else because they really got their money’s worth out of it. People will just keep passing it along.”
Trojan horses are not the cause of all security issues. Oftentimes, “spyware” applications are installed with the users consent; it’s buried in the really long agreement that nobody reads that a user must click, “I Accept,” in order to begin the installation. This is especially true with free-ware applications downloaded from the Internet. According to published reports, a couple of years ago, some P2P applications came packaged with a spyware application that acted as a Trojan horse. This specific program sent information to an online lottery server.
Those are just a couple of reasons the Army doesn’t want its people loading P2P on their systems, and enacted regulations prohibiting loading those applications.
The Army’s regulation on Information Assurance, Army Regulation 25-2, specifically prohibits certain activities; sharing files by means of P2P applications being one of them. There are some, however, who have P2P applications on their Army systems and use them despite the prohibition of such activities.
Over a two-month period at the end of last year, government organizations identified more than 420 suspected P2P sessions on Army systems in more than 30 locations around the globe.
It seems some don’t understand or haven’t read the standard Department of Defense warning that says, “Use of this DOD computer system, authorized or unauthorized, constitutes consent to monitoring.” For those who think, “How are they going to know it’s me? I’m just one person in a network of hundreds of thousands,” don’t be surprised when network access is cut off and the brigade commander is calling.
It is the role of the Theater Network Operations and Security Center, located in Fort Huachuca, Ariz., to monitor and defend its portion of the Army network. This includes identifying potential security risks to the network, and unauthorized P2P applications, which create a considerable risk to those networks.
“People shouldn’t assume they are using P2P applications in secrecy,” said Ronald Stewart, deputy director of the C-TNOSC. “We are able to detect use of P2P, and when we do, we take measures. We can detect and identify systems with P2P software on them; and when we find them, we direct the removal of the software from the system through the command chain.”
Some Soldiers try to work around the Army networks to feed their P2P habits. Lt. Col. Roberto Andujar, director of the C-TNOSC, says using the Terminal Server Access Controller System (TSACS) to dial into the military network is not a work-around, because there are tools in place to identify P2P traffic.
Methods commonly used by commercial industry, such as Internet Protocol (IP) address and port blocking, random monitoring, and configuring routers are some of the methods the C-TNOSC and installations take to prevent P2P access. There are other methods used, but specific examples cannot be discussed.
Commanders who unwittingly allow P2P to run unchecked on their networks are not exempt from liability. Commanders may be held personally liable for any illegal possession, storage, copying, or distribution of copyrighted materials that occurs on their networks. Soldiers, civilian employees and contractors face even tougher penalties.
People using P2P on government computers can to look forward to other possibly harsher punishments depending on the kinds of files the users are sharing.
“Say you have a Soldier downloading music through P2P, in violation of copyright rules,” said Tom King, a legal adviser with NETCOM. “The people who own the copyright can actually sue that Soldier. Then you have the issue that he’s violating a lawful order. Then you have the issue that it’s a misuse of government time and misuse of a government resource. He can be in a world of hurt. Then he’s also exposing the Army network to hacking attacks.”
“Prosecutions are on the rise. Discipline is on the rise. People are taking this stuff more and more seriously all the time,” King said. “People just don’t understand that there’s a price to be paid for this.”
Not understanding seems to be the main reason P2P applications keep showing up on Army computer systems.
“User education is one of the keys,” said Kathy Buonocore, chief of the Regional Computer Emergency Response Team. “Some users don’t know it’s illegal.”
“When I call some commanders and tell them, they say, ‘What’s P2P?’” Andujar said. “Commanders have to be educated and take action.”
Education has to extend down to the organization administrators. Justiniano says those who have administrator privileges on government computer systems are the ones loading the unauthorized programs. To prevent this, system and network administrators should configure systems correctly, so users cannot install unauthorized software.
“There are very few benefits that are not addressed somewhere else, that do not include the risk of P2P software,” Justiniano said, adding that the use of Army Knowledge Online knowledge centers and secure File Transfer Protocol sites are their preferred method of file sharing.
http://www4.army.mil/ocpa/read.php?story_id_key=5878
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Feds Ding AT&T Over Internet Calls
Ben Charny
Federal regulators ruled on Wednesday that AT&T must pay traditional local access charges to complete Internet phone calls, putting the long-distance carrier on the hook for billions of dollars in deferred fees.
Telecommunications companies closely watched the Federal Communications Commission decision for its potential impact on voice over Internet Protocol services. VoIP technology uses high-speed Web connections to carry phone calls, so it promises to bypass the traditional phone system, thus saving carriers and customers substantial fees.
AT&T had argued that it was not required to pay the access fees to local landline companies for completing long-distance calls, when those
calls travel partly over the Internet.
But the FCC disagreed. In a limited decision anticipated months ago, it chose to maintain much of the status quo between long-distance and local carriers for now. The FCC said its ruling affects only calls that begin and end on the public switched telephone network and use Internet Protocol networks in between. The ruling is not expected to impact commercial VoIP providers.
"The carrier has long been obligated to pay access charges for this service, and we unanimously confirm that it still is required to do so," FCC Chairman Michael Powell said in a statement.
The decision, a unanimous one, could prove very expensive for AT&T. Two years ago, the company, the largest U.S. long- distance carrier, stopped paying some of those access fees. AT&T estimates that it pays about $10 billion annually to local phone companies. It was unclear how much it might owe, given Wednesday's ruling, but some analysts said it could run up to several billion dollars.
"The FCC today chose to protect the monopoly revenues of the Bell companies at the expense of consumers everywhere," AT&T said in a statement. "This sends an ominous signal, as the FCC prepares to tackle even more critical questions that will either spur Internet telephony or stifle it in order to favor four monopoly phone companies."
The long-distance carrier said the decision could trigger more regulation of the Internet, which the FCC has previously established as a no-regulation zone. "The Commission took the first steps to regulate the Internet, despite its public statements to the contrary," the carrier said in the same statement.
http://news.com.com/2100-7352-5197204.html
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Tower Records Settles With FTC Over Site Security
Reuters
Tower Records has agreed to settle charges that a flaw in the music chain's Web site exposed customers' personal information to other Internet users, the Federal Trade Commission said Wednesday. Without declaring Tower guilty of any wrongdoing, the settlement bars the unit of bankrupt MTS from misrepresenting the extent to which it maintains and protects customer privacy. The settlement also requires Tower to establish a security program that will be monitored for compliance for 10 years.
The FTC charged that Tower had posted a privacy policy with claims of "state-of-the-art-technology" but had introduced a security flaw in redesigning its site that allowed Web users to access Tower's order-history records and other information such as names, addresses and phone numbers. Tower said the isolated instance that led to the FTC's inquiry did not involve the disclosure of any personal financial information, such as credit card numbers or Social Security numbers. The FTC has reached similar Net security agreements in the past two years with Microsoft, drug maker Eli Lilly, clothing maker Guess and others.
http://news.com.com/2110-7355-5197226.html
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Sony Raises Profit Estimate for Year
Todd Zaun
TOKYO, April 20 - The Sony Corporation on Tuesday raised its estimate of net profit by 60 percent for the fiscal year that just ended, citing favorable currency swings, a lower tax bill in the United States and a strong performance for its movie and finance businesses.
Though the forecast was increased, Sony's earnings would still be down 23.8 percent for the year ended March 31. Sony said that it expected a net profit of 88 billion yen or $813 million.
The new outlook was better than analysts' expectations and the company's earlier forecast of 55 billion yen in net profit for the fiscal year. Sony also raised its forecast for sales for the year ended March 31 to 7.5 trillion yen ($69.2 billion) from its earlier estimate of 7.4 trillion yen. The company had revenue of 7.47 trillion yen in the previous fiscal year.
Improvements in revenue in all of Sony's divisions, including games, electronics and financial services, led Sony to raise its forecast, Tom Yanagi, a company spokesman, said.
The better-than-expected figures are good news for Sony, which is trying to increase earnings and cut costs through a overhaul plan that includes eliminating 20,000 jobs, or about 12 percent of its work force, by 2006.
Sony is trying to raise its operating profit margin, the ratio of operating profit to sales, to 10 percent in 2006 from 2.5 percent last year.
But analysts said Sony still had work to do to restore profitability in its core electronics division.
Sony trimmed its forecast for operating profit for the year ended in March to 99 billion yen from an earlier 100 billion yen.
The new figure was still better than expected after Sony said last month that it would bring forward some revamping charges that it had planned to take over several years.
Sony provided no breakdown for the profit or sales figures, and it was not clear to what extent the improvement came from foreign exchange gains or from real recovery in its business lines. Sony will make a full earnings report for the fiscal year next week.
Analysts and investors are particularly eager to see details on whether profits are improving for Sony's electronic products, like its portable music players and televisions. One goal of Sony's revamping is to cut costs and increase profits in its electronics division, where the company is facing new competition from rivals like Apple, Dell and Hewlett-Packard.
Kazuharu Miura, an electronics industry analyst at the Daiwa Institute of Research, said he was not as positive on Sony "because the reason for the revision was not electronics, but rather movies."
"If the reason for the revision had been improvement in the electronics division, that would have been very positive," he said.
Among the movies Sony made this year was "50 First Dates," through a subsidiary, Columbia Pictures.
Profit margins on products like Sony's Walkman music players and its televisions have fallen sharply in the face of competition from products like Apple Computer's iPod digital music player and Dell's flat-panel televisions, Mr. Miura said.
One way Sony is fighting back is by trying to develop a flexible and powerful chip that will power a variety of devices.
Sony said that it would spend more than $1 billion this year on the chip, which it is developing with I.B.M. and Toshiba.
http://www.nytimes.com/2004/04/21/bu...ss/21sony.html
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Hollywood Enforcer Comes Downunder To Battle Pirates
Steven Deare
The movie industry's chief Internet enforcer visited Australia last week to shore up support for identifying and prosecuting file traders that infringe copyright.
Tom Temple, the Motion Picture Association's (MPA) director of worldwide Internet enforcement, held talks with member film studios, as well as Telstra BigPond and eBay Australia, as part of his visit to Asia-Pacific nations.
eBay Australia's director of trust and safety, Katrina Johnson, said discussions had led the MPA-established Australian Federation Against Copyright Theft (AFACT) to become an eBay Verified Rights Owner. The agreement lets AFACT, setup this year to protect film studios' interests in Australia, request the removal of copyright-infringing auctions with eBay cooperation.
In addition to the sale of pirated movies, online copyright infringement is high on Temple's agenda.
The MPA is currently working on ISP acceptance of a notice and takedown procedure, issued to an ISP when copyright-infringing material is found on its network.
The MPA has had "varying levels of cooperation" with ISPs on takedown notices, Temple said.
"Some ISPs have asked us for messages they can relay on to users, but there are things they could be doing that they're not.
"ISPs are in a very powerful position, so we'll continue to work on a notice and takedown procedure with ISPs," he said.
Like its record association cousin, the MPA has ruled out working with peer-to-peer providers and considers the distribution technology ineffective.
The movie industry was working on its own high-tech distribution service, and would not be dictated to by peer-to-peer providers, according to Temple.
"A peer-to-peer system only works for files that everyone knows the name of. And the only files that everyone knows the names of are Finding Nemo, [and] the Norah Jones songs; popular well-known types.
"These are systems that are designed from the ground-up to distribute copyrighted material, and by way of advertising and other means, bring income.
"Can they [peer-to-peer companies] prove they've done everything they can to protect content? They've done nothing to show that copyright infringment will cease."
Accordingly, the Internet enforcement unit was constantly monitoring peer-to-peer networks, Temple said.
"We try to educate people that peer-to-peer networks are not anonymous. We will continue to take legal action and notify ISPs that copyright violations are occurring on their network and try to bring the consequences to the end user."
The MPA has about 200 people around the world working on identifying online breaches of the MPA's copyright, Temple said.
This includes a 100-staff third-party affiliate vendor which develops a Web spider program.
"[That] searches peer-to-peer networks and Web sites where copyright infringement might be taking place, and where movies are being sold, 24x7, all round the world," Temple said.
The Internet enforcement unit use the Web spider program to set up undercover 'trap' purchases, and send takedown notices to ISPs when copyright infringement has occurred on their networks.
While Temple admitted the MPA could never stop the potential of copyright infringement on peer-to-peer networks, he said they would work to limit the crime.
"If you look through history, of any crime, you can't make it go away. Look at burglary, it still happens. The point is there are consequences."
http://www.pcworld.idg.com.au/index....85;fp;2;fpid;1
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A Near Miss For Mankind Part I
Brickley Paste
Independent musicians: how I envy you. Major Label musicians: better luck next time.
I may be jumping the gun here, but it is my honest opinion that there has never been a better time to be an unaffiliated artist in the music industry. I'd like to be brash and say something bold and flashy like, 'THE MAJOR LABEL MUSIC INDUSTRY WILL BE REDUCED TO RUBBLE BY 2007!!' but the truth is probably a little less revolutionary sounding.
I'd like to believe that file-sharing/'piracy' (a buzzword as misleading and effective as the term 'terrorism') is widespread enough, revampable enough, and socially accepted enough that it will not be reined in and subtly steered into the grip of 'big business' (another buzzword, admittedly).
But one only has to look at a parallel like the history of radio to see where we're headed. Sure initially, all the big-wigs balk and freak out, declare the new format to be apocalyptic to the welfare of the music industry, and manufacture all sorts of statistics to support that rant ... but it only takes a few years of increased revenue for every denim-clad wireless-whatever-toting-Johnny-A&R-Face to reverse discourse (word to Joe Beats) and pledge allegiance to the new format.
Sizeable labels like TVT (Sevendust, Nothingface, and more) and BMG (who defied the RIAA and signed a deal with Napster to utilize it's pay-for-play technology) are making strong efforts to embrace the technology, and the results have been eye-popping for the floundering majors surrounding them.
What's so strange about this debate is that it's actually taking place and being decided on a person-to-person level in the social domain. Call me a cynic, but that sort of thing is unheard of. It is conscientious objection on such a massive scale that it makes the 60's look like a student council meeting. I have no idea if what I just said is true or not.
We have two things to thank for this rare public participation:
1) An actual large-scale public domain in which to argue – hello Internet.
2) A remarkable number of catalysts forcing the issues into every home.
Think about it; since Napster basically began the argument in 1999 (yes, the argument had surfaced in lesser forms when dual cassette decks were introduced on a consumer level in 1975, and then again with VHS/beta recorders in 1984, but both were quickly quelled before most common folk even knew they were issues), we've had the issue approached loudly and from all angles.
It must be a big deal if large corporations are utilizing an appeal to the country's morality (these are the same people that brought us The Swan?). Some of the spotlight-grabbing moments in piracy history are:
· Metallica's bitching: unfortunately, the last people on earth to cut their mullets managed to be heard the loudest and represent musicians as money-hoarding misguided has-beens
· RIAA's hilarious lawsuits against consumers: similar to the Metallica shenanigans, the major labels try to shape the public opinion with weak scare tactics and celebrity testimony.
· The Grey Album/Grey Tuesday: 'copyright infringement' artistic and thorough enough to have people questioning the term itself. This is another arm of the debate – major labels' iron grip on copyrighted material.
· Musicians publish complaints in NY Times, Rolling Stone, and more: Courtney Love, Don Henley, Steve Albini, and others go public with their major label contract gripes.
· Janet Jackson/Howard Stern debacles: though these incidents may seem unrelated, they do in fact play a role.
The FCC's leniency with big business indecency has come under fire, thanks to the ease with which conservative Americans can file a complaint via the Internet. In December 2003, complaints jumped from 351 to 19,920.
So with all this publicity, you'd think everyone would have a good idea of what's going on, right?
Not likely.
We're witnessing the convergence of several small wars that have been bubbling for years, and the Internet is what ties them all together beautifully.
· The Decency War: good ol' young vs. old, genitals vs. bikinis.
· The Consolidation/Deregulation War: is it ok for there to be 2-3 companies in the US, and everything else a subsidiary? Is it ok for Clearchannel to monopolize most of the nation's media outlets (1240 radio stations, 95% market share of all concerts, etc.)? Should limits be placed on broadband companies (namely Comcast) to ensure competitive markets?
· The Copyright War: should producers have to pay exorbitant fees to use slices of music in a collage format?
· The Payola War: will anything ever be done about the fact that major labels purchase airplay, despite it being outlawed long ago?
· The Property/Piracy War: are the limitations to media usage too strict? Will the government do anything about theft on such a massive scale? Is downloading truly costing the industry money?
· The Bad Contract War: Will anything be done about the horrible stipulations of the standard major label contract?
· The Artistic Diversity War: given the horribly similar playlists of today's 'modern rock' radio stations across the country, should something be done to facilitate a broader musical spectrum in media?
What is this really about? This is about a playing field standing on its head for so long that all the pieces scatter, and something has to give ... the field must be levelled.
This is about an industry so bloated with middlemen that the artists they are exploiting can't afford to produce anymore.
This is about the FCC, the sole public watchdog agency, traveling the world on the dime of Viacom and other conglomerates, and utilizing mainly data from private sectors to form it's regulations.
This is about congressmen enjoying campaign donations from the Record Industry to extend copyright laws and encourage deregulation.
This is about reaching a potential limit point for greed (at least, in its current incarnations). And without the Internet, we wouldn't stand a chance at doing anything about it.
These, then, are the problems. I'll discuss their solutions in the next issue.
http://p2pnet.net/story/1276
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Top 10 Free Must-Have Applications Part 2
Bo Coaten
Last week's article listed five of the top 10 free applications for a personal computer.
It should be noted that the applications were numbered by popularity, or lack thereof. In other words, the more popular applications were listed last week.
The top five applications that follow are less popular but just as beneficial and easy to use.
5. SiSoftware Sandra -- This program gives you all the information you need to know about your personal computer and can be very helpful when speaking with technical support.
Sandra (System ANalyzer, Diagnostic and Reporting Assistant) contains benchmarks and can even report your CPU and power supply temperatures.
4. BitTorrent -- BitTorrent is one of the best ideas in terms of file- sharing and file distribution since Napster.
BT creates a network where generally large files are divided into very small sections and then shared among hundreds of people, all downloading from each other simultaneously.
This way the server doesn't do all of the work.
As a downloader, you primarily depend on your peers. Therefore, many Web sites are beginning to host torrent files to save on bandwidth costs and help prevent server overloads.
Shadow's Experimental client is a suggested file.
3. Mozilla Firefox .8 -- Firefox is a fast, efficient and easy-to-use browser.
It supports Java, JavaScript, Shockwave and Flash plug-ins. However, the greatest feature of Firefox is its tabbed browsing.
Tabbed browsing allows multiple pages to be loaded into one Firefox application, rather than numerous new "window" programs like in Internet Explorer, consequently consuming fewer resources than IE.
2. The Gimp 2.0 -- The Gimp 2.0 is an image manipulation program much like Photoshop.
However, The Gimp is both free and open-source. It is also available for all platforms, including Linux, Mac and Windows.
If you have ever wanted to learn about image manipulation but don't want to pay $600 for Photoshop, this is the program for you.
1. Open Office -- Open Office had to be number one.
If you need an office suite but can't afford the $130 student/teacher package of Microsoft Office, this program is for you.
It reads and writes into all supported MS formats.
Open Office also includes the ability to export documents as PDF files.
This is a highly recommend office suite, and since it is free, it is definitely worth checking out.
These 10 programs will help make your computer safe, more efficient and easier to use.
http://www.thedmonline.com/vnews/dis.../4087ba42f2fb2
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The State Of Copyright Activism
Siva Vaidhyanathan
One of the great hopes I had while I researched and wrote Copyrights and copywrongs (New York: New York University Press, 2001), a cultural history of American copyright, during the late 1990s was that copyright debates might puncture the bubble of public consciousness and become important global policy questions. My wish has come true. Since 1998 questions about whether the United States has constructed an equitable or effective copyright system frequently appear on the pages of daily newspapers. Activist movements for both stronger and looser copyright systems have grown in volume and furor. And the U.S. Supreme Court ruled in early 2003 that the foundations of American copyright, as expressed in the Constitution, are barely relevant in an age in which both media companies and clever consumers enjoy unprecedented power over the use of works.
Contents
Introduction
Political success, actual failure
Effects on teaching and scholarship
Opposition emerges and organizes
The brilliance of real copyright
Eldred v. Ashcroft
Building a better system
Conclusion
http://www.firstmonday.org/issues/is...iva/index.html
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Digital Revolutionary: Interview with Leonardo Chiariglione
Sergio Pistoi
The father of MP3 recently established the Digital Media Project, which aims to formulate a new standard for digital audio and video. If things proceed according to plan, the media world will never be the same
A tortuous, vineyard-lined road leads to the secluded house of Leonardo Chiariglione. In this rural village near Turin, Italy, only a few locals are aware that their neighborhood engineer is the mastermind behind the revolution that has brought MP3, DVD and digital television into the lives of millions. An electronics engineer and former vice president of multimedia at the corporate research laboratories of Italian Telecom, Chiariglione is founder and chair of the Moving Picture Experts Group (MPEG), which has established such ubiquitous digital multimedia formats as MP3 and MPEG-2.
Chiariglione would have good reason to rest on his laurels: in 1999 Time Digital ranked him among the top 50 innovators in the digital world, and his résumé lists an impressive series of awards, including an Emmy in 1996. Instead he has just called fellow experts to arms against "the stalemate" that he believes is crippling the development of digital media. Late last year Chiariglione established the Digital Media Project (DMP), a not-for-profit organization of individuals and companies--among them giants BT, Matsushita and Mitsubishi--with the ambitious goal of formulating a new standard for digital audio and video. If things proceed according to plan, the media world will never be the same.
Scientific American.com met Chiariglione at his home (and DMP headquarters) to talk with him about this new endeavor and his vision for the future of digital media. An edited translation of that conversation follows below.
Scientific American.com: Millions of people are using digital audio and video today. Why do you say that the dream of a digital revolution hasn’t happened ?
LC: Everyone expected that these technologies would bring huge benefits to everybody along the value chain. Creators would be given new ways to express themselves, end users would enjoy new kinds of experiences, and industries would find new opportunities for business. Ten years later, this is not happening. I don’t see any industry that is really thriving on digital audio and video--at least not as much as they do in other sectors like consumer electronics or telecommunications. The music industry is the most dramatic example: it is still based on a physical support--the CD--that you buy, bring home and put inside a player like you did before with vinyl records or cassettes. The quality of sound is better, but the overall experience hasn’t really changed. Technologies such as MP3 and the internet have opened the way to revolutionary digital experiences--and also to an unprecedented development of piracy. Record labels are reluctant to adopt any new technology that does not guarantee their copyrights and prefer to stick to their old business models. But if nothing changes, many users will continue to steal music. It’s a stalemate in which everybody loses in the long run: industries miss new opportunities for business, and users will not benefit from future technological advances.
SA: How do you feel about the fact that MP3 is so often associated with music piracy?
LC: The culture of theft that turns around MP3 is detestable, and I’m very disappointed about that. But neither MP3 nor peer-to-peer [the technology behind Napster, by which Internet users share files directly from their computers] are monsters. They are terrific technologies for distributing content with an enormous potential for business, but they are pieces of an uncompleted puzzle. Digital copyright management is the missing piece that we need.
SA: Wasn’t it clear from the beginning that MP3 would be used to distribute music illegally?
LC: When we approved the standard in 1992 no one thought about piracy. PCs were not powerful enough to decode MP3, and internet connections were few and slow. The scenario that most had in mind was that companies would use MP3 to store music in big, powerful servers and broadcast it. It wasn’t until the late ’90s that PCs, the Web and then peer-to-peer created a completely different context. We were probably naïve, but we didn’t expect that it would happen so fast.
SA: A number of online music stores, where you can legally download music for a fee, have started a profitable business. (Apple’s iTunes, the leading online music store, reported in March that it had sold its first 50 millions tracks.) Are they a solution for the future?
LC: I don’t see these systems as a solution in the long run, because they put too many limits on the users. The music is watermarked or encrypted with Digital Right Management [DRM] algorithms and is then decrypted by your player. The problem is that every store has its own proprietary system, which is incompatible with the others. Consequently, you can play music on your PC, but not in your salon CD player or in your wife’s car, for example, because they use different systems. Where is the digital experience if you can’t enjoy your music as easily as you did before with a disc or a cassette? Eventually people will say, "Let’s go back to making MP3 copies. They are illegal but at least I can do what I like with them."
SA: How could you resolve this stalemate?
LC: What we need is a system that guarantees the protection of copyrights but at the same time is completely transparent and universal. With the Digital Media Project [DMP] we are working to develop a format that meets these requirements. The system will be nonproprietary, meaning that any manufacturer will be allowed to incorporate it into its products. It will also be designed to manage digital rights in a flexible way. For example, you could play a specific title until a certain date, or you could buy a subscription allowing you to play anything you want for a given period. People could even swap files on the Internet, as long as they have the right to play them. If DMP becomes the industry standard, you will be able to use music or video files as you do today with MP3 files, but legally. This will open endless opportunities.
SA: Can you build such a system with the current technology ?
LC: We don’t know yet which technologies will be included in the format, since the DMP has just begun and we won’t come out with full technical specifications before two years from now. However, I believe that most of the technology is already there. Formats for the compression of audio and video have attained excellent quality, and some standards, such as MPEG-21, are also designed to program which rights come with your copy [a 15-day license, for instance]. Our approach will be to integrate existing technologies and develop new ones only if we need to.
SA: With a universal platform wouldn’t it be a disaster if the copyright protection were cracked?
LC: I don’t think you can build a crack-proof system. But you can design one in which the algorithms used for copyright protection don’t come as hardware but as software, so that you can update them with an Internet or wireless connection if they are cracked. Also, every manufacturer could choose its own algorithms, as long as they are compatible with the universal standard. However, our purpose is not to fight piracy. We want to create the right conditions so that users can enjoy a full digital experience legally and without the current limitations. I believe that this will remove many of the incentives that exist today for piracy.
SA: What do you envision for the future of digital media?
LC: I believe that there are hundreds of possible applications just waiting to be invented. The real value will be in providing the users with new experiences. When every published music or video is available on the Web you will need tools to catalogue and find these files. With MPEG-7, for example, you can create a simple description of a multimedia file that can be used by search engines. In the future we will have new generations of search engines in which you will directly enter music or video sequences. Software will interpret the content and compare it to millions of files on the Web, much as you do today for Web pages. You will discover new music and movies you didn’t even know existed that have something in common to yours, and you will be able to access any kind of information about your tracks. The cultural impact of that would be immense. I also see a great potential for peer-to-peer. It’s a wonderful system. If it is used to distribute contents legally, it will create new business opportunities.
SA: Are you a music lover?
LC: My preferences are broad, but I wouldn’t say that I am an expert. I confess that my son is my mentor in this field.
http://www.sciam.com/article.cfm?art...m&chanID=sa004
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Music Sales in the Age of File Sharing
Senior Thesis of Eric Boorstin
In this paper I examine the effect of Internet access on compact disc sales. I combine U.S. census data on population characteristics with Nielson SoundScan data on CD sales for 99 metropolitan areas in the years 1998, 2000, and 2001. Controlling for year, income, and the fixed effects within each area, I estimate the relationship between Internet access and CD sales for four age groups. Overall, Internet access has a positive and statistically significant effect on CD sales. For children aged 5 to 14, Internet access has a negative but statistically insignificant effect on CD sales. For youths aged 15 to 24, Internet access has a negative and statistically significant effect on CD sales. And for the adult groups aged 25 to 44 and aged 45 and older, Internet access has a significant positive effect.
My findings suggest that file sharing is not the cause of the recent decline in record sales, and that file sharing decreases the record purchases of younger people while increasing the purchases of older people.
http://www.princeton.edu/~eboorsti/thesis/
Until next week,
-
js.
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