[JackSpratts]

Big Music's Climate of Terror and the Media Response
Jon Newton

The recording industry has worked hard to create this climate of terror, and it's the industry's explicit agenda to want people to be dissuaded from sharing files out of fear of the consequences that will result if they're discovered.

The CRIA, Canada's version of the RIAA, recently suffered an ignominious and embarrassing defeat when it failed to convince a Canadian federal court that online file- sharing is illegal and is "devastating" the multibillion-dollar music industry.

Having fallen flat on its face, the Canadian Recording Industry Association now is trying to pull itself up by its bootlaces by claiming "a significant majority of Canadians disagreed with the recent Federal Court decision which suggested that it is not illegal to upload music files on the Internet." The emphasis is mine.

However, when he ruled against the CRIA, Justice Konrad von Finckenstein didn't "suggest" anything. He stated, clearly and unequivocally, that putting digital music files into a computer directory that might be shared remotely by someone else isn't copyright infringement under Canadian law.

Considering that, unlike people in the United States, Canadians can share music freely online without fear of being savaged by the Big Five record labels, the CRIA finding is hard to fathom, even bearing in mind that it comes from a study commissioned by the CRIA itself.

It's particularly puzzling stacked against another report from America's Pew Internet & American Life Project , which found that the number of people who share music through P2P networks actually has increased from an estimated 18 million to 23 million since its November-December 2003 survey.

It becomes even more confusing when you take into account a different Pew report that states the following:

In terms of their careers, more artists say free music downloading online has helped them than hurt them. Fully 83% of those in the survey say they provide free samples or previews of their music online. And strong pluralities say free downloading has a payoff for them. For instance, 35% of them say free downloading has helped their careers and only 5% say it has hurt.

Some 30% say free downloading has helped increase attendance at their concerts, 21% say it has helped them sell CDs or other merchandise; and 19% say it has helped them gain radio playing time for their music. Only fractions of them cite any negative impact of downloading on those aspects of their work.

What Do You Believe?

"Our focus is on the world's most popular 'download' communities, file-sharing networks," said Eric Garland of Big Champagne, a company that tracks and reports on P2P downloads in an anonymous fashion. "These are the download 'sites' (actually networks) first made famous by Napster and now including clients like LimeWire, BearShare, Kazaa , Morpheus and hundreds of others."

While the music industry is reporting that its sue-'em-all campaign is dramatically reducing the number of file sharers, and while Apple (Nasdaq: AAPL) is boasting people downloaded 50 million files from its iTunes Music Store in its first year, Big Champagne is reporting that, at a conservative estimate, 4 million people are online at any given moment happily swapping 1 billion files every month, at the very least.

"We want to be the 'just the facts, ma'am' company," said Garland. "It's an increasingly critical component. You can't begin to sort out the business and address the problems until you understand the state of things. Behind closed doors, when the focus is on strategy, it's imperative that you have good data, even if it's not what you want to hear. We're often told by pros from all sides of the music industry that we deliver a lot of bad news. But we take it as a compliment, because that means we're telling the whole story."

Wayne Rosso, Blubster's CEO and the man who used to run Grokster, makes no secret of it. "I always look to Big Champagne's figures," he said, as do significant numbers of people on the other side of the fence -- those who run the Big Five record labels.

So, how reliable are the reports and surveys, especially if their focus is online file sharing?

Whether the reports appear to be for or against a particular issue, if there's an apparent slant in a given direction, it's almost certainly down to the media reporting it, said Garland, guaranteeing there's no bias on the part of the researchers and collators who put the reports together.

Where Does That Leave Us?

Despite the fact that the odds of being sued by the RIAA for sharing music online are similar to those of winning the lottery, Big Music has succeeded admirably in creating an aura of distinct terror around uploading, downloading and sharing digital music files. And it's this aura that means you can't believe surveys or reports centering on the way music is distributed online -- unless they're based on straight data analysis derived from data taken directly from a physical source.

Surveyors investigating, for example, alcohol abuse or recreational drugs expect the people they're surveying to be somewhat less than forthright. Now add P2P file-swapping to the list of dodgy subjects.

"It's very difficult to get reliable information on topics like music file-sharing," Garland told me. "And it's particularly challenging in a climate of aggressive litigation, proposed legislation and what the RIAA calls 'education.' It's difficult to extract good data from respondents on these things."

Every time we turn on the TV or open a newspaper, we're reading about ISPs being compelled to identify their clients in connection with copyright infringement prosecutions. "It doesn't take a great stretch of the imagination to think: 'Here I am in my home, and these researchers have called me on my home phone, so they know who I am and where I live,'" Garland continued.

"And even assuming researchers' best efforts to maintain my privacy, and given that they have no interest in identifying me, nonetheless, I may well imagine they could be compelled -- just like an ISP -- to identify me in conjunction with a civil litigation or, real horror of horrors, a criminal one," he said.

A Climate of Terror

The recording industry has worked hard to create this climate of terror, and it's the industry's explicit agenda to want people to be dissuaded from sharing files out of fear of the consequences that will result if they're discovered.

"But respondents are in no danger from researchers," said Garland. "The critical difference between an ISP and a market research firm is: We researchers take great care to make sure we're not in possession of anything that could identify someone. So when a market researcher calls you when you're in the middle of dinner, that typically is the result of random digit dialing, which actually ensures that although this company has phoned you at home, they're not actually in possession of your home number or of other identifying marks."

However, even given that someone answering questions for a market researcher isn't afraid of suddenly ending up on the RIAA's sue-'em-all list, the majority will still be less than truthful in their responses, said Garland. That's because, in addition to creating the climate of fear, the music industry also has given file-sharing an aspect of being somehow unwholesome -- of being tainted.

Predictable Media Response

"It's not unlike getting someone to disclose information about behaviors that are considered offensive or about recreational drug abuse," he stated. "People are uncomfortable discussing these kinds of things, and they're just as uncomfortable talking about file-sharing with a stranger."

There's no such thing as bad PR for file-sharing, and the music industry knows this, Garland added. But against that, he also points out that every time it comes up, it simply introduces the concept to more and more casual users.

In the meantime, the surveys are "of tremendous importance to the handful of people who can really be unduly influenced by the information in the surveys -- I'm talking about legislators and executives in the industry."

Nonetheless, everyone -- legislators included -- should "employ a healthy dose of skepticism to any reporting of any kind -- the media included. Satisfy yourself with the methodology and the agenda of whoever's reporting the information," said Garland. "We're all pressed for time, but it never hurts to have that little voice of doubt in the back of your mind."

Given that respondents -- for file-sharing, at least -- seem to be so unreliable, what's the point of doing a survey in the first place? Could it be that the companies that commission them are well aware that although, at the end of the day, the studies have no real value, they'll generate very predictable media responses and that's what they're really after?
http://www.technewsworld.com/story/c...ary/33736.html
http://p2pnet.net/story/1422


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Finnish ISP Selects Sandvine
Press Release

KUOPIO, Finland -- KPY Networks today announced that it has selected Sandvine Peer-To-Peer Policy Management to enhance the online experience for its Internet customers.

The popularity and resilience of peer-to-peer (P2P) file-sharing applications continues to challenge European service providers. P2P applications generate more than 70% of all residential Internet traffic in Finland, causing increased network costs and threatening to degrade the overall broadband experience for KPY's subscribers.

The 12,000 broadband subscriber ISP had witnessed a sharp spike in network costs resulting from P2P traffic and was looking for a transparent and subscriber- friendly way to address it. Results from live trials were immediate and achieved by adding Sandvine Peer-To-Peer Policy Management organically to KPY's existing network infrastructure.

"Sandvine's approach has allowed us to create traffic policies that minimise the cost of supporting file sharing traffic on our network whilst maintaining the best possible online experience for our subscribers," said Timo Hopponen, Data Network Manager for KPY Networks. "We were looking for a solution that would help us maximise our existing infrastructure investments and prepare us to stay ahead of changes in this rapidly-evolving technology environment. Sandvine Peer-To-Peer Policy Management meets our needs perfectly."
http://www.boardwatch.com/document.asp?doc_id=52629


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Another strange survey from Ipsos-Ried, in this case strange because filesharing is legal in Canada – Jack.

Canadian Downloaders Backing Off, Study Says
Chris Lackner

Legal pressure from the recording industry has taken its toll on the number of people downloading music in Canada, according to a new study by Ipsos-Reid.

The number of Canadian adults with an Internet connection who have downloaded at least one music file has fallen to 32 per cent from an all-time high of 47 per cent in June 2002.

While approximately 5.7 million Canadians have downloaded free digital music, the study reports that 1.8 million have stopped the practice.

But Canada's recording industry, still reeling from a major legal setback, dismissed the survey's results as "unscientific" and said they fail to paint an "adequate picture" of the situation.

"We don't see too many signs of the trend diminishing," said Brian Robertson, president of the Canadian Recording Industry Association. "There are still 120 million downloads a month from illegal sites and sources."

The Ipsos-Reid study used a sample of 1,000 Canadian adults, but Mr. Robertson said it ignored the primary downloading demographic.

"Younger people are the highest active file sharers ... we need to see a more scientific sampling than this one in order to have any kind of positive reaction," he said.

Mr. Robertson also said that people are prone to lying when questioned about file sharing because they are afraid of its consequences.

In March, the Federal Court of Canada denied a CRIA request that would have forced Canadian Internet Service Providers — such as Rogers Cable and Sympatico — to turn over confidential customer information that could help the CRIA sue individuals for copyright infringement.

With his ruling, Justice Konrad von Finckenstein went much further than simply denying CRIA's request. He stated that placing a music file on a shared directory falls short of distribution, and does not infringe upon Canadian copyright laws.

The CRIA filed an appeal of the ruling in April.

While 21 per cent of those surveyed say that the fear of "legal ramifications" led them to stop downloading, the poll was conducted before the Federal Court's ruling.

Mr. Robertson said he fears the decision may have inspired some people to download without fear of legal action or criminal charges.

But Ipsos-Reid vice-president Chris Ferneyhough said the survey marks an important shift in the mind-set of Canadian adults, who use the Internet at one of the highest rates in the world.

When accounting for the results, he said lawsuits in the United States against individual file sharers have resonated in Canada. The uncertain future of Canadian copyright law has also given people reservations.

"Before the cases in the United States, music file sharing was a grey zone ... no one could say whether it was conclusively illegal, and those with access to the technology took advantage of it.

"But because the recording industry's battles have received so much media attention, people are more [cautious]. Even with the Canadian court ruling, people still worry that the laws could be rewritten."

Companies such as Puretracks — which charge Canadians to download music — should be encouraged by the study, Mr. Ferneyhough said. Among those Canadians who said they have downloaded music files, 15 per cent say they have used a paid downloading service at least once. A majority of those surveyed — 56 per cent — also said they would prefer downloading music from a legitimate on-line company than buying a CD from a record store.

"People may be asking themselves whether it's worth paying thousands of dollars in fines in order to download 10 songs," Mr. Ferneyhough said.
http://www.globeandmail.com/servlet/...ry/Technology/


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Proposed Copyright Changes Could Hit Downloaders
From Canadian Press

The practice of downloading songs for free could change if the federal government adopts recommendations tabled today by a Heritage committee. Among the nine recommendations is one urging the government to sign two World Intellectual Property Organization treaties. The treaties would strengthen copyright law for online property, as well as clarify the definition of distribution via peer-to-peer networks such as Kazaa, WinMX, eMule and iMesh.

Provisions in the treaty, which has been signed by 44 countries including the U.S., would allow music creators to use anti-copying devices that limit the number of copies made from one CD. The treaties also make it illegal to sell software that hacks through protected or locked files such as copy control technology used by EMI Canada on new CDs.

In addition, the committee urged changes to the Copyright Act to make Internet service providers subject to liability for copyrighted material. Currently ISPs tell their customers on a voluntary notice that someone's claiming copyright infringement against them. That was the case in December when the recording industry filed lawsuits against 29 Jane and John Does.

"It was clear to us that that wasn't enough of an option to protect copyright holders," explained MP Sarmite Bulte, chair of the Standing Committee on Canadian Heritage. "If anything, it seems to be an excuse to say `Well I gave them notice so I'm not responsible for anything else.' "

The Canadian recording industry, which has been pushing for the government to ratify the treaties since 1997, was overjoyed with Wednesday's report. "It's like a spring wind blowing away the smog of seven years of disappointments," said Brian Robertson, president, Canadian Recording Industry Association. "It's the first real support and action we've seen for something that should have been done five or six years ago."

Since the start of Napster in 1998, the association has been trying to put an end to the practice of downloading songs. It recently lost its attempt in Federal Court to force ISPs to identify people who put large amounts of files in shared folders for the rest of the world to access for free.

Robertson, whose organization represents 95 per cent of the sound recordings that are manufactured and sold in Canada, said if the recommendations were all enacted it would allow the industry to control illegal activity through the courts. "It's a cornerstone for the future of the music industry," he said.

CRIA said Wednesday that during a five-week stretch beginning March 30, more than half a million unauthorized attempts were made to download a new Tragically Hip song, Vaccination Scar. It said less than 1,000 copies were purchased legally online from places like Puretracks.com.

If the committee gets all its wishes, attaining music from the Internet without payment will become trickier by the end of the year. It set a Nov. 15 deadline for government although it wasn't clear how a federal election would affect the introduction of new copyright laws. The committee has been meeting since last October to study the Copyright Act. Other issues discussed included the use of Internet material for educational purposes and technology-enhanced learning.

Heritage Minister Helene Chalifour Scherrer intends to have the department prepare legislation to be introduced in the fall, her communications director Marc Roy said Wednesday.
http://www.thestar.com/NASApp/cs/Con...d=968332188492


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Illegally Downloading Music Just Isn’t (Tragically) Hip
ChartAttack.com Staff

In the wake of a recent national survey which showed that the majority of Canadians believe recording artists and songwriters have a right to copyright protection and that uploading music files on the Internet should be illegal, our boys from Kingston are wondering just what the hell happened.

The Tragically Hip launched "Vaccination Scar," their first single off of the forthcoming album In Between Evolution, at the second game of the Toronto-Ottawa playoff series. It was simultaneously released to radio stations across the country and made available for legal download at Puretracks.com for 99 cents. However, according to Universal Music Canada, during a five-week stretch from March 30 to May 7, there were more than half a million attempts to illegally download the latest Hip single.

"The peer-to-peer system is public. You go online and you ask for something, it’s fairly easy to intercept the request," says Graham Henderson, senior vice-president of business affairs and e-commerce at Universal Music Canada. "We have a network of servers that monitor Internet traffic. We monitor networks like Fasttrack, Kazaa, Glockster, iMesh, Gnutela, Morpheus, Limewire, Bearshare, Donkey… you name it. We tally the total number of illegal copies of a given title that’s shared on the networks. We do this constantly, it’s repeated over and over and over again every day, and the survey is extremely reliable in terms of the numbers."

Henderson assured ChartAttack that, yes, there were more than 500,000 Hip fans out there searching for this new single.

With promotional copies floating around and insufficient copyright protection, the carefully constructed release of the single could not guarantee the elimination of illegal copies available for download.

"Somebody gets it, somebody rips it to their hard drive, dumps it into Kazaa, then they go onto the Internet and start offering it, and it spreads like a virus through the whole system," Henderson says. "That’s much more common among teenagers, they rarely buy anything, so they’re just stealing and burning amongst one another — and that’s how it spreads."

Aside from the statistics Universal Music Canada has come up with for the single, in that same time span they claim that there were also 2.2 million requests for The Hip’s catalogue music.

"That means it’s fans of the Hip — their own fans are doing this," Henderson says with a hint of disgust. "And the CDs that they could be buying? They’re all mid-price. Every damn one of them is mid or budget and available for under 10 bucks in any store in this country. Now, you tell me that’s overpriced."

And to those of you who think that The Hip are already well off enough without your hard earned cash, "Oh come on," Henderson retorts. "The guys live in Kingston, they’re not on MTV Cribs."

In Between Evolution will be available Tuesday June 29, and though "Vaccination Scar" is currently the #1 downloaded track from Puretracks.com, the band are still not pleased with their fans downloading the track for free.

"To me it’s an ethical question," Hip bassist Gord Sinclair said in a statement. "If you hear something you like, go out and support the artist."

Unsurprisingly, Henderson agreed.

"At the end of the day it’s like, ‘Will you guys start playing fair?’ I mean, some sharing, OK, but this? Everyone knows this is wrong. This is really, badly wrong."

Shame on you all.

- David Missio

http://connect.247media.ads.link4ads...ype=t;uniq=666


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Tragically Hip's Money Troubles
p2pnet.net News

Canada's Tragically Hip have decided file sharing is bad for their wallets.

The group (with absolutely NO help from their label, Universal Music, or the CRIA) point out that during March 30 to May 7 there were more than half a million 'unauthorized' attempts to download their new single, Vaccination Scar.

Tragically Hip is one of the biggest selling Canadian bands ever, with all that implies

"The grim economic reality aside, it shows how widespread the practice of downloading has become," says the band's Gord Sinclair.

But Hey! "Don't get me wrong," he says. "Anything that gets people into music is okay with me, but at some point people have to recognize their role in the creative process. To me it's an ethical question."

In the same puff piece, Jann Arden (?) "reacted to the news", saying,

"Downloading music from the Internet is ironically the hope, and alarmingly the impending decay and

destruction, of the music industry. Unless these downloads are monitored and artists are compensated for their work, there will be NO work to download. None of us, as writers and performers, can afford to keep making the music that has always, and will always, make the world a little easier to swallow in troubled times.

"We cannot play if we are not paid."

There you go.

No pay, no play.

In other words, the musical arts depend absolutely on the dollar. Or franc. Or pfennig. Or whatever.

No way.

The Barenaked Ladies' Ed Robertson also wades in with, "I'm totally fine with people downloading music, as long as they steal everything that they want. If you want pants, go steal them. If you need gas in your car, you should steal it, because you can. As long as people are consistent I don't have a problem. As long as they see themselves as thieves in general then I don't mind if they steal everything that they like. But it irks me that it's only okay to steal music."

And to cap it off Brian Robertson, the president of the CRIA (Canadian Recording Industry Association of America), says grimly:

"It underlines, again, the vulnerability of our artists, creators and producers to the lawlessness of the Internet in Canada and the need for federal politicians and bureaucrats to move far more expeditiously than they have in the past to update Canada's woefully inadequate Copyright Act."

But while Robertson & Co are singing the blues, in terms of their careers, "more artists say free music downloading online has helped them than hurt them," says a Pew report here.

"Fully 83% of those in the survey say they provide free samples or previews of their music online. And strong pluralities say free downloading has a payoff for them. For instance, 35% of them say free downloading has helped their careers and only 5% say it has hurt. Some 30% say free downloading has helped increase attendance at their concerts, 21% say it has helped them sell CDs or other merchandise; and 19% say it has helped them gain radio playing time for their music. Only fractions of them cite any negative impact of downloading on those aspects of their work.

"Some 60% of people surveyed say they don't think the RIAA's (Recording Industry Association of America) suits against online music swappers will benefit musicians and songwriters. Those who earn the majority of their income from music are more inclined than 'starving musicians' to back the RIAA, but even those very committed musicians don't believe the RIAA campaign will help them. Some 42% of those who earn most of their income from their music do not think the RIAA legal efforts will help them, while 35% think those legal challenges will ultimately benefit them."

And Oh Yeh - wasn't Universal Music one of the labels that, following a two-year investigation by New York state Attorney General Eliot Spitzer's office, was ordered to return $50 million to musicians they've had under contract.

Spitzer's office found many artists and writers weren't being paid royalties because record companies "had failed to maintain contact with the performers and had stopped making required payments".

Finally, the CRIA (and, hence, its owners, the Big Five record labels) recently suffered an embarrassing defeat when it failed to convince a Canadian federal court that online file sharing is illegal and is "devastating" the multi-billion dollar music industry.
http://p2pnet.net/story/1434


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The Mashin' of the Christ
p2pnet.net News:- Horror or horrors!

"This April a hacker broke through Negativland's UMN mainframe firewall and stole the final version of Negativland's top-sacred for-internal-use-only 'Mashin' of the Christ' video project," it says on the site here.

Do these wicked, wicked p2p thieves no know (or is it know no?) bounds?

"Negativland prayed that their in-house project would not make it into the hands of the unsuspecting public, but we all know how hard it can be to stop those 'peer to peer' criminals from illegally sharing the property of others."

OK. So what's gone missing?

No less than the "The Mashin' of the Christ".

Yep.

Negativland decrypted, downloaded and mashed up the most violent religious film ever made along with over 27 other Hollywood portrayals of Jesus to create their own vision of the last moments of Christ's life... all in four minutes and 14 seconds as its top-secret-not-for-viewing video response to the number one film in America.

Friends and lawyers who've seen it strongly advised against a public release occuring. Ever.

But you know how it is with these dastardly file-stealers. What can you do? The RIAA, IFPI, MPAA,

BPI, IBP, BIP, SPCA, AA and others have for years been selflesssly ....

But we digress.

Anyhow, you probably won't want to know any more about this, so don't bother to go to Negativland to find out whether or not full-screen, DVD quality PC/MAC mpeg2s, high quality DivXs and medium sized mpeg4s are available for on several p2p networks including Soulseek, Suprnova and BitTorrent, and you probably won't want to use BitTorrent, or anything like that.
http://p2pnet.net/story/1433


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Sharman Continues File-Sharing Evidence Fight
Abby Dinham

Sharman Networks and the Music Industry Piracy Investigation (MIPI) will be back in the Australian Federal court later this week for yet another legal contest over access to evidence that was confiscated in raids last February.

MIPI, which is investigating the allegations of music copyright infringement against Sharman Networks, today claimed the software company was in defiance of court orders handed down last February giving it access to the evidence.

Sharman Networks, the owner and distributor of the peer-to-peer file sharing program Kazaa, was ordered to schedule times to allow MIPI to see the evidence.

Sharman has until Friday to produce a schedule of times giving MIPI access to the evidence; however, the investigation company's general manager, Michael Speck, claims the software provider will not meet the deadline.

"The last time we were in court his honour said that we must have access to the material by the 14 May, and they have not obliged us with access," said Speck.

Speck claims Sharman Networks will apply for a review of the access terms on Friday. However, he opined that the court would be "unlikely to be sympathetic to [Sharman's] appeal" if it missed the Friday deadline.

MIPI seized the evidence from the premises of Sharman Network's and a number of associated companies in accordance with an Anton Piller order it secured from the federal court on 6 February. The documents were taken to support MIPI's claim that Sharman is liable for copyright infringements carried out by users of its file-sharing program, Kazaa.

Sharman has lobbied the court on several occasions to have the evidence made inadmissible; Speck today opined that the company's latest actions show the evidence must not be favourable to their case.

"We can't see any other reason why they are so vigorously avoiding giving us access to any of the material," said Speck. "This shows an absurd desperation to keep the evidence from us."
http://news.zdnet.co.uk/business/leg...9154433,00.htm


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Kazaa Fails To Meet Court Evidence Deadline
Abby Dinham

Sharman Networks and the Music Industry Piracy Investigation (MIPI) will be back in the Australian Federal court later this week for yet another legal contest over access to evidence that was confiscated in raids last February.

MIPI, which is investigating the allegations of music copyright infringement against Sharman Networks, today claimed the software company was in defiance of court orders handed down last February giving it access to the evidence.

Sharman Networks, the owner and distributor of the peer-to-peer file sharing program Kazaa, was ordered to schedule times to allow MIPI to see the evidence.

Sharman has until Friday to produce a schedule of times giving MIPI access to the evidence however the investigation company's general manager, Michael Speck, claims the software provider will not meet the deadline.

"The last time we were in court his honour said that we must have access to the material by the 14 May, and they have not obliged us with access," said Speck.

Speck claims Sharman Networks will apply for a review of the access terms on Friday. However, he opined that the court would be "unlikely to be sympathetic to [Sharman's] appeal" if it missed the Friday deadline.

MIPI seized the evidence from the premises of Sharman Network's and a number of associated companies in accordance with an Anton Piller order it secured from the federal court on 6 February. The documents were taken to support MIPI's claim that Sharman is liable for copyright infringements carried out by users of its file sharing program, Kazaa.

Sharman has lobbied the court on several occasions to have the evidence made inadmissible; Speck today opined that the company's latest actions show the evidence must not be favourable to their case.

"We can't see any other reason why they are so vigorously avoiding giving us access to any of the material," said Speck. "This shows an absurd desperation to keep the evidence from us."
http://networks.silicon.com/webwatch...9120620,00.htm


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Inside The Kazaa Raid
Garth Montgomery and Dan Warne

An APC investigation

The Australian music industry says it’s about to blow the lid on the complex web of companies behind Kazaa. Garth Montgomery and Dan Warne investigate.

Legal action equals business as usual for Kazaa owner Sharman Networks, but even CEO Nikki Hemming was surprised when Australian music piracy investigators burst through the doors of Kazaa’s Cremorne offices in NSW armed with a court-sanctioned search warrant.

Organised under a cloak of absolute secrecy, the controversial “Anton Piller order” granted by the Federal Court gave lawyers and forensic analysts for the Australian Recording Industry Association (ARIA) legal authority to gather evidence from the Kazaa premises without police being present, including the right to make binary copies of hard drives. An Anton Piller order is granted when a judge is persuaded that there are reasonable grounds evidence may be destroyed if advance notice is given.

The music industry’s aim was to create a digital “snapshot” of the entire system in operation at one moment in time. Music Industry Piracy Investigations (MIPI) general manager Michael Speck told APC his aim was to prove in court that Sharman Networks could control and manipulate the network, debunking its claim of simply being a neutral technology provider.

Hemming didn’t stick around for the duration of the raid. She fled through a side door of the building, escaping in a silver Porsche Boxster with “SHARE” number plates to her luxury home in Castle Cove. When she arrived, forensic analysts were already at her house, analysing hard drives of servers found inside. She was told to make herself comfortable in the front yard.

The raid was conducted simultaneously at Telstra, iHug/iiNet, University of Queensland, University of NSW, bandwidth wholesaler NTT Australia, Altnet (the rights-managed content distribution company partnered with Kazaa), and Akamai, the worldwide content mirroring network with high profile clients like Apple Computer and Microsoft. All were subjected to the Anton Piller order so the music industry could capture a digital snapshot of the Kazaa system.

Investigators also searched the homes of Sharman Network’s CTO Phil Morle, and Brilliant Digital Entertainment and Altnet’s CEO Kevin Burmeister as they sought to gather evidence on the involvement of these individuals in the operation of the Kazaa network.

Sharman Networks was outraged that the music industry was granted the right to search its headquarters, those of its business partners and the homes of its senior executives. It argued that music industry lawyers had deceived the Federal Court’s Justice Wilcox by not giving him all the facts, including that Kazaa had been given a clean bill of health in Dutch courts. That ruling was based on the Sony Betamax precedent, which ruled that makers of VCRs were not responsible for their use by pirates.

Perhaps it was Justice Wilcox’s irritation at being accused of being duped, or simply that Kazaa’s claims weren’t relevant in the Australian jurisdiction, but the court rejected the motion to dismiss the Anton Piller order out of hand.

Sharman was equally enraged that media, acting on anonymous tip-offs, were on-site at Kazaa’s offices to witness the raid. “They wrote to MIPI’s lawyers about its media activity and MIPI’s lawyers were equally interested in the catering arrangements for journalists at the raid,” Speck said. “Curiously, the issue went away.”

A former Detective Sergeant in the NSW Police Service, Speck said he is approaching the Kazaa investigation using the same methods he’d apply to a police investigation, and wouldn’t exclude using undercover surveillance, informants and covert operations to deconstruct the complex structure of the organisation.

While he has suspicions as to who is behind the money backing Kazaa (“they can afford to send a QC and seven lawyers to court”), Speck won’t be drawn. The company is incorporated in Vanuatu, where simply asking who owns a company constitutes a criminal offence. Hemming claims this is for “tax efficiencies”, but the music industry argues that the company is set up to deliberately obfuscate its legal ownership structure in order to avoid prosecution.

The music industry is also suspicious of Altnet’s involvement with Sharman Networks. Altnet, which sells pornography, computer games and music via the Kazaa network, was added as a defendant to the Australian legal action following the raids. In a US securities filing, Altnet admitted it had the right to negotiate deals on behalf of Sharman Networks, a fact that the industry alleges is a suspiciously cosy arrangement, raising questions about Altnet’s true influence within the tangled web of companies surrounding Kazaa.

Under attack

The case against Kazaa marks a milestone in the recording industry’s attempts to stop music piracy on the Internet. For the first time, the Australian labels have a very real chance of putting a dent in global piracy by arguing before the court that since Kazaa is headquartered and operating in Australia, it is liable for any copyright infringement, if proven, on Australian soil.

The industry alleges that Kazaa facilitates the distribution of 260 million pirated tracks a month. “You only have to multiply that by BigPond Music’s price of $1.89 per track to realise this is the biggest [alleged] copyright infringement in history,” Speck pointed out.

Hemming argues that the music industry actually benefits from Kazaa: “The vast majority of the third-party research that’s been done indicates that sampling product means more sales for those products. . . it’s a vital part of the promotional mix in our view.”

Ironically, while Kazaa is allegedly used mainly for copyright infringement (Altnet CEO Kevin Burmeister admits there are only about 5,000 legally rights-managed files available), Sharman Networks has been ruthless in protecting its trademark and copyright. When K-Lite (a spyware- free version of the Kazaa Media Desktop software) became popular, Kazaa sent cease and desist notices to search engines in an bid to prevent Net users from finding K-Lite. “We have a business to run,” Sharman’s Nikki Hemming argued. Sharman does not receive banner ad revenues when K-Lite software is used to access its network.

While Sharman doesn’t profit directly from the alleged piracy that occurs on its network, it has created a media empire that would make Rupert Murdoch lime green with envy. Effectively Kazaa has done what every media owner dreams about — it has built a huge worldwide audience of consumers which can be sliced, diced and delivered to advertisers. It sells information collected from its bundled spyware to marketers, along with ad space in the Kazaa Media Desktop, which is precisely targeted at particular groups of users (see “But you agreed to it”, page 26). Hemming has no problem with this. “Our advertisers keep us in business and 70-plus million users are telling us they’re okay with that relationship.”

Speck sees a more sinister side. “Kazaa stores more information about each of its users than any government in the world holds on citizens,” he claimed, hinting that the Kazaa trial will be a bonanza of revelations that will stun its users.

ISPs are also accused of profiting from Kazaa. Internode’s Simon Hackett told APC that the “gang of four” ISPs (Telstra, Optus, OzEmail and AAPT/Connect) benefit financially when P2P programs are used.

He said that if an Internode customer downloaded a file from a Telstra customer, for example, Internode would have to pay Telstra for that data. But Telstra customers could download all they liked from Internode, and Telstra wouldn’t have to pay Internode a cent. Software like Kazaa made large-scale file sharing within a local region so easy for customers it became an enticing business opportunity for unscrupulous ISPs.

With one study showing that just 0.8% of Kazaa’s total files represent 80% of downloads, ISPs also stand to gain huge reductions in international traffic bills by caching the most popular allegedly pirate content for Kazaa users.

The developer of Kazaa’s peer-to-peer networking technology, Netherlands-based Joltid, calls this technology PeerCache, and MIPI is determined to find out which Australian ISPs are using it.

Psychological warfare

While Kazaa is under attack from the American music industry’s armada of lawyers, the war on Australian turf has become psychological. Six death threats have been levelled at music piracy investigator Michael Speck and ARIA CEO Stephen Peach since action commenced against Sharman Networks.

“The threats were made by phone, and the caller referenced very specific personal details,” Speck revealed. “We anticipated [the death threats] — and got them — at certain points in the litigation. The caller leaves no doubt that the threats are directly related to the action against Kazaa.” The threats have been referred to police.

No link has been made to anyone associated with Kazaa, BDE or their related companies, nor is any suggested, but MIPI’s take-no-prisoners approach has clearly provoked unprecedented fury among Kazaa’s users.

Altnet’s Kevin Burmeister told the other side of the story about the raid on his home: “There were five people that I would never under any circumstances let into my home, and it was a complete search of the entire house. They went through my kitchen drawers and my bedroom cupboards. . . they weren’t just taking digital copies of disks; it was a complete invasion of privacy. I was extremely angry about it.”

Anger spilled over to allegations of assault during execution of the federal court order at Altnet’s parent company, Brilliant Digital Entertainment, in Surry Hills, NSW. A court appointed solicitor from Blake, Dawson, Waldren made a formal complaint of assault at Randwick police station following the BDE raid.

The unstoppable revolution

Hemming and Burmeister are convinced that P2P distribution is an unstoppable force. Both genuinely believe the music industry will eventually back off its legal offensive because of the efforts Kazaa is making. “Sharman bought the Kazaa software with the express purpose of creating a marketplace for promotion and sale of legitimate, licensed creative work,” waxed a press release.

Hemming expertly diverted questioning about unauthorised copyright content away to the topic of how a musician could bundle a video clip and concert tickets with their songs via Kazaa. “The tours and the live events are one of the highest yield incomes for the artist themselves,” she told APC. “I imagine that a lot of them are thinking about the creative ways that the intimacy of peer- to-peer can bring them right to the consumer’s front-door.”

But the company is slippery when it comes to the technicalities of why it can’t stop unauthorised distribution of copyrighted works. Each file traded on Kazaa has a unique digital fingerprint in the form of an MD5 hash — a mathematical signature produced by running an algorithm across the contents of a file.

This signature allows Kazaa to identify how many users are sharing the same file so that it can be downloaded from many places at once with complete integrity.

If Kazaa were really trying to become a legitimate service, an obvious first step would be to block the MD5 hashes for known pirated files, argues the music industry.

It’s hard to fault that argument, but Kazaa’s chief technical officer Phil Morle told APC it wasn’t possible. “Using filtering to block copyrighted content in a P2P context is often cited by the record industry as a panacea to the Internet piracy issue,” he said. “We have investigated this and have yet to see any technology that can effectively filter copyrighted files through decentralised P2P.

“In fact, a federal judge in the US found that ‘filtering’ software for copyrighted files is simply not effective. This is another case of the record industry oversimplifying the technology to suit their argument.”

Despite the legal onslaught against Kazaa, Altnet’s Burmeister argued that the bundled Altnet software is playing an important part in giving independent artists a chance to get exposure on a world scale. “We can enable artist Web sites by distributing content for them on Altnet, and they enable their Web sites to be able to sell their content via us without having to set up payment gateways and so on,” he said.

But in an American SEC filing, Altnet admitted the future of its business relied entirely on the survival of the Kazaa network. Since Altnet is the only component of Kazaa that distributes digitally rights-managed files, the statement seems to acknowledge the music industry’s argument that Kazaa’s ongoing success is predicated on its current popularity.

Burmeister said he was continuing to try to get the big five record companies to agree to license their music for distribution via Altnet in the US, with no success.

However, while Burmeister may have been trying hard in the US, that doesn’t excuse Kazaa’s lack of interest in copyright on Australian turf, according to the industry. The executives of all five major Australian music labels have signed affidavits under penalty of perjury stating that none has ever been approached by Altnet or Kazaa to obtain music licences in the Australian region.

“Apple has to approach every music company in every country individually for its iTunes Music Store,” said Speck. “So does everybody else — including Kazaa.”

Hemming is convinced Kazaa is being boycotted by the recording industry. “We are not being treated on an even and fair basis in having licences made available to us… There is a universal boycott at the moment by the industry.”

A tangled web

Sharman Networks is legally based in Vanuatu, but Speck is adamant that it doesn’t make any difference. “The Kazaa system is operated out of Australia,” he said, pointing to a locally registered trademark for Kazaa. “Their end-user agreement even says it is governed under the laws of New South Wales. So, everyone from Kazakhstan to Karratha is governed by a NSW- based contract, and yet Sharman still argues it just has an ‘ephemeral’ presence in Australia.”

Speck is confident that the courts won’t accept that the distributed nature of Kazaa’s P2P system reduces the liability on one central company.

Sharman is working hard to avoid being caught with the digital goods at home: when it was sued in the US, it created a new, almost identically named company in Vanuatu. This raised questions about the exact location of the company’s assets and whether the current US case is against a worthless shell company.

Kazaa hasn’t been so lucky in the Australian case: both companies are named in the lawsuit and industry sources hint that more defendants will be added when the evidence from the Anton Piller order is eventually released and presented to the court.

The music industry’s central argument is that Kazaa’s Media Desktop software is deliberately designed to put legal liability back on users. While Napster ran central file servers indexing files being shared by users, proving its legal liability and leading to its ultimate demise, Kazaa turns individual users on its network into file list servers for other users — if a user’s PC and Net connection are fast enough, they become a “supernode”.

MIPI alleges that this is a concerted effort to operate what it claims to be an illicit enterprise with the legal liability defrayed to users.

The future of P2P

While Kazaa may go down in flames at the hands of the Australian music industry, some analysts believe the music industry is wasting its time. A plethora of other technologies, such as Gnutella and BitTorrent, are far less vulnerable to legal attack than Kazaa because of more distributed architectures with no involvement by a central company.

P2P will continue to proliferate because of a lack of good legitimate alternatives, said Altnet’s Burmeister. “To me, Napster started because it was convenient. People could get everything they wanted in one search box. They didn’t have to go to PressPlay for Sony and Universal’s music, and MusicNet for Warner and EMI’s music.

“The fact that the copyright industries have been unable to arrange their affairs quickly enough to deal with the market and changes that technology has enabled, is the reason why the users in the marketplace have decided to do what they’re doing,” he added.

Unfortunately for Burmeister, the final victor in the race to establish a market for legal music downloads is unlikely to be Kazaa or Altnet. The music industry has lawyered up and appears to be digging in for the long haul after billions of dollars worth of its content was allegedly stolen via the Kazaa network.

From a music industry perspective, it’s also easy to understand why Burmeister’s argument doesn’t wash. P2P is a hard business-case to make when high-quality, tightly-controlled server- client download services such as BigPond Music are being established in Australia and offer a far more clear-cut revenue stream and rights management capability.

Perhaps P2P will continue to flourish simply because users like downloading free music, software and movies from other users, rather than giving their money to corporate giants like Telstra.

Burmeister’s defence relies on a simple philosophy: “I don’t need a legitimate excuse for it,” he said. “To me it’s not about a legitimate excuse, it’s about defining a problem and fixing it.”

Hemming shares a similar view: “It’s the attitude of not waiting for all the lights to go green before starting the journey.”
http://www.apcmag.com/apc/v3.nsf/0/4...256E77001DD222

Submitted by fantom.


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Congress Mulls Revisions To DMCA
Declan McCullagh

Congress has taken a step toward revising the Digital Millennium Copyright Act, which has attracted extensive criticism over the past six years.

A House of Representatives subcommittee convened Wednesday for the first hearing devoted to a proposal to defang the DMCA, a 1998 law that broadly restricts bypassing copy-protection technologies used in DVDs, a few music CDs and some software programs.

Called the Digital Media Consumers' Rights Act, the amendments are backed by librarians, liberal consumer groups and some technology firms. But they're bitterly opposed by the entertainment industry, including Hollywood, major record labels and the Business Software Alliance.

"It legalizes hacking," Jack Valenti, head of the Motion Picture Association of America, said of the proposed changes. "It allows you to make a copy or many copies. And the 1000th copy of a DVD, Mr. Chairman, is as pure and pristine as the original. You strip away all the protective clothing of that DVD and leave it naked and alone."

Section 1201 of the DMCA drew fire after it was used to outlaw a utility permitting Linux users to watch their own DVDs, as well as threaten security researchers with lawsuits. Programmer Dmitry Skylarov was charged under the DMCA for writing a program that let owners of Adobe e-books export them to Portable Document Format (PDF) files.

The proposed amendments, sponsored by Rick Boucher, D-Va, and John Doolittle, R-Calif., would permit circumvention for "fair use" purposes. Selling pirated DVDs and other forms of copyright infringement would remain illegal.

"Without a change in the existing law, individuals will be less willing to purchase digital media if their use of the media within the home is severely circumscribed," Boucher said. "In addition, manufacturers of equipment and software which enable circumvention for legitimate purposes will be reluctant to introduce the products into the market."

It's unclear what the prospects are for the Boucher-Doolittle bill. It has a mere 15 co-sponsors in the House and no Senate version exists. What's more, the consumer protection subcommittee that convened Wednesday's hearing does not have jurisdiction over copyright law, making it unlikely the bill will be forwarded to the House floor this year.

Even some members of the subcommittee took a dim view of the proposal. "Theft is theft and property is property," said Rep. Butch Otter, R-Idaho.
http://news.com.com/2100-1025-5211674.html


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Arrest of Winny Author 'Overkill'
John P. Mello Jr.

"If all the person did was write software that was generally useful, then it's mindboggling that they would hold the software developer liable for a tool that's similar to many other tools on the Internet," Greg Bildson, COO of P2P software maker LimeWire in New York City, told TechNewsWorld.

The arrest this week of the Japanese author of a popular online file-sharing program appears to be an extreme reaction, at least by American standards, to his alleged abetting of copyright infringers, according to a patent attorney in Chicago.

In what's been reported as the first arrest of a software developer for helping others to violate copyright law, police pinched Isamu Kaneko, 33, a teaching assistant at the University of Tokyo and the author of Winny, a peer-to-peer (P2P) file-sharing program that's been downloaded by anywhere from 250,000 to 1 million people, most of them in Japan.

If convicted of criminal charges leveled against him by the police, Kaneko faces up to three years of jail time or a fine of up to 3 million yen (US$27,000).

Arrest Overkill

"From a criminal penalty standpoint, this is overkill in my view," James Muraff of law firm Wallenstein Wagner & Rockey told TechNewsWorld. "It's pretty stiff compared to U.S. law."

He explained that in the United States, there are no criminal penalties for authoring software that may be used for copyright infringement. Such authors, however, could become targets of civil actions for contributing to copyright infringement.

"In the Japanese situation, you've got criminal penalties against someone who created software that allows other people to directly infringe -- a contributory infringement situation that, in my view, doesn't warrant a criminal penalty," he argued.

Mindboggling Development

Whether or not P2P software can be legally tagged in the United States as a contributor to copyright infringement is still up in the air, according to Muraff. "No final decisions have taken place, but some initial decisions favor the recording industry," he said.

According to the P2P industry, any contribution its software makes to copyright infringement is outweighed by its legitimate purposes -- a line of reasoning successfully used to introduce the VCR into American markets.

"If all the person did was write software that was generally useful, then it's mindboggling that they would hold the software developer liable for a tool that's similar to many other tools on the Internet," Greg Bildson, COO of P2P software maker LimeWire in New York City, told TechNewsWorld.

Stifle Innovation

"If the Japanese law allows that, then they really are going to stifle competition," Bildson added. "They're going to stifle innovation in this kind of distributed computing area."

When making their arrest of Kaneko, police reportedly cited the author's cavalier attitude toward copyright law as evidence of his intent to encourage infringements.

Police quoted Kaneko as saying: "I am doubtful about the current ways businesses control digital content. It's wrong that big business uses the police to crack down on violations and maintain the status quo. The only way to destroy that system is to continue to spread ways to violate copyright laws."

Target of Destruction

Kaneko isn't the only one concerned about the lengths to which copyright holders will go to preserve their intellectual property.

"These guys have so much money and they're spending so much money in lobbying that it's difficult to protect anybody's rights," Wayne Rosso, CEO of P2P software maker Optisoft of Madrid, Spain, told TechNewsWorld.

"The content industry will use any means that they have to destroy P2P," he added.

Anonymity

An aspect that has added to the popularity of Kaneko's Winny program is its purported ability to keep its network users' identities anonymous. That feature is apparently imperfect, as two men using Winny were arrested last November for illegally sharing movies and video games on the network.

Users of P2P systems shouldn't look to anonymity for comfort from the prying eyes of copyright enforcers, cautioned LimeWire's Bildson.

Most anonymity schemes require a third-party intermediary to launder user identities, he explained. "Any of those intermediaries could theoretically have their computers searched and identities discovered that way."
http://www.technewsworld.com/story/33774.html


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Uncertain Future of File Sharing

Chat -Sam Yagan, President of eDonkey

File-sharing networks like eDonkey and Morpheus are undeniably popular, with millions of members using them to exchange music, video and software. But they also are beleaguered by the entertainment industry's claim that they are havens for rampant copyright infringement. Now some U.S. senators say they might be conduits for child pornography.

Sam Yagan, president of eDonkey, discussed file-sharing's uncertain future with washingtonpost.com reporter David McGuire on Thursday, May 13 at Noon ET. A transcript follows.

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.

________________________________________________

David McGuire: Hello Sam, thanks for joining us. I understand that eDonkey is now one of the largest peer-to-peer networks on the Internet. Could you describe your global operations? Also, eDonkey is a U.S. company. How has your growing customer based changed your relationship with regulators and lawmakers? Are you participating in the debates over copyright infringement and the spyware?

Sam Yagan: David: Thanks so much for having me; I am looking forward to chatting with you and your readers. Over the course of the past year, we have indeed become one of the largest (if not the largest) peer-to-peer (p2p) networks in the world. In particular, we believe that eDonkey is the largest in Europe and in Asia. As for our global operations: eDonkey is proud to be an American company, incorporated in the state of New York. We have a small office in downtown Manhattan.

Our relationship with regulators and lawmakers, as well as our participation in the debate over copyright infringement and spyware, is primarily done through the industry trade group P2P United, which we co-founded and on which I am a director. We have a very active presence in Washington and are very interested in working with the various stakeholders to reach agreement on the many controversial issues facing our industry.

_______________________

Alexandria, Va.: What vulnerabilities does Overnet address that were inherent in the eDonkey2000 server?

Sam Yagan: Overnet is designed to scale to many millions of simultaneous users. eDonkey servers and most other p2p applications have a limited search radius -- this means that when you search for a file you are not searching the entire network! Instead you are only searching a very limited part of the network. Overnet overcomes this and allows you to search across all the current users of the network in a very efficient manner.

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Arlington, Va.: So what's the breakdown between illegally copied music and movie files shared on eDonkey? Do you think the movie industry faces the same threats from piracy as the music industry and will it respond in the same way?

Sam Yagan: eDonkey users share many types of files on the network. In particular many independent artists use the network as a free distribution mechanism and a great way to build a fan base. We have done extensive promotions for such bands as Bishop Allen, for example.

I hope that the movie industry will learn from the experiences of the music industry and will be much more constructive in their approach to P2P. The recording industry decided to take a highly litigious approach to this new technology, which historically has not been the most effective way to deal with technological breakthroughs. I hope the movie industry will see P2P as a business opportunity and work with us to make a win-win-win for everyone, including consumers.

_______________________

Redmond, Wash.: How are you responding to the growing clamor over spyware? Doesn't your company make the lion's share of its money by placing spy- and adware on peoples' computers? How would federal anti-spyware legislation effect your operations?

Sam Yagan: The spyware issue is a critical one facing not only our company or the P2P industry, but software distributors more generally. First and foremost: we do not distribute any spyware with our application. We take great care not to harm our users in any way.

Adware is a different issue, and I hope our users understand that. We allow users to download and use our software completely free of charge (though many of our users do purchase the ad-free version). However, we do incur significant development costs in creating and improving our software. We've got to make the rent payments every month, and ad revenue is one channel that allows us to do so without requiring payment from our users.

We would support narrowly crafted legislation protecting users from spyware that violates their privacy.

_______________________

David McGuire: I'm not sure our readers know what "overnet" is. Can you describe it, and how it differs from other popular networks like gnutella (used by Morpheus and Lime Wire) and fast-track (Kazaa, Grokster)?

Sam Yagan: The eDonkey network is a completely distributed way to share and download any type of file. It uses Overnet technology to search all of the peers in the network. It has very a sophisticated transfer mechanism that allows users to reliably download very large files very efficiently and quickly. Downloads are taken from many users simultaneously thus insuring the fastest transfer possible.

In terms of how it differs from our competitors -- our competitive advantage is on the quality of our technology. We offer more robust searching and faster downloads -- the two most important aspects of a good P2P product.

_______________________

Los Angeles: You said you hope the movie industry will see P2P as a business opportunity and work with you to make a win-win-win for everyone, including consumers. Let me get this straight - your users would win by getting content they didn't pay for, you win from adware and advertising, how do the people in the movie industry win?

Sam Yagan: Great question. First, I look back throughout the last half century and I look at the various technological breakthroughs that were supposed to bring financial ruin to copyright holders. In particular, I am thinking of photocopiers and vcrs -- though there are many others.

The movie and television industries decried VCRs and predicted that no one would go to movie theaters and that revenues would fall precipitously. In fact, what happened? More people became movie fans. The average number of movies watched per person increased. And on many releases, the copyright holders make more money in the rental/purchase market than on the theatrical release.

P2P offers many of the same opportunities. There is no reason why people won't watch more movies or listen to more songs as a result of having an incremental, convenient distribution channel.

_______________________

Fairfax Station, Va: How can the government regulate e-sharing networks on the basis of porn any more than they can regulate newsstands? They are both basically the same thing -- places for people to exchange information, albeit a certain percentage of it being completely vile smut. And I should say, the same types of folks decrying these sharing networks are probably the ones downloading all the crap. Cynical? Perhaps.

Sam Yagan: You raise an interesting analogy. Two points that I think are often overlooked, however:

1. Pornography represents a small portion of the content shared on P2P networks, just like it represents a small portion of the magazines sold in newsstands.

2. P2P represents only a tiny fraction of all pornography distributed on the Internet.

For the smut that is completely vile (and illegal) we, through P2P United, are working with government to figure out how we can be helpful in preventing distribution of illicit material.

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Fairfax, Va.: The Internet these days is swarming with worms and viruses. What steps do you take to minimize infections of your users?

Sam Yagan: The best thing we can do is to help educate our users on protection and prevention. The three best things you can do to prevent worms and viruses are

1. Having a good personal firewall

2. Having a good virus scanner

3. Keeping your operating system up to date

Running our software does not increase the risk of viruses or worms as long as you always scan any file that you download with eDonkey.

As a good tie-in to the earlier question about adware, on several occassions in the past we have entered into distribution partnerships with anti-virus software providers such as Bullguard. Several million copies of Bullguard software were distributed to our users with the eDonkey software.

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Mountain Lake Park, Maryland: With Apple Itunes and others raising the price of albums it will only be a matter of time till consumers rebel at the cost. These prices will be the same as what you pay for a cd. The answer is clear. The music industry is not learning from their past mistakes. I predict that the music industry will end up in another slump and the reason is because they still do not get it. Your thoughts?

Sam Yagan: I hope the music industry will recognize the many advantages of online distribution. In particular, users seem to value the ability to purchase on a per-song basis rather than by album. More over, the music industry saves a lot of money in distribution costs when it distributes electronically. As a result, there's no reason to think that prices will get anywhere near the current CD prices. It is clear that the recording industry has to find a stable equilibrium where they are making money without charging so much that users won't purchase the product -- but this not unique to that industry. Any business has to face the challenge of setting prices optimally.

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Glitter Gulch, S.D.: Hello Mr. Yagan. I am curious as to the origin of what sounds like patently insipid names for these file-sharing services. E-Donkey? Why did the person who started this firm name it that? What on earth is a "Blubster?" What is the general thought process here in coming up with these names? Are they based on Nitrous Oxide or am I getting too old to understand the p2p demographic? Many thanks and good luck.

Sam Yagan: Well, I think you've got a couple forces at play here. First, many of these P2P names are simply following the lead of other Internet companies with crazy "memorable" names. We definitely think eDonkey is pretty memorable.

However, like many other companies we tried to be a little clever in our name. The "eDonkey" concept is one of an electronic "beast of burden" -- the perfect way transport lots and lots of data.

I can't speak for the others, of course, so I can't rule out Nitrous Oxide in those situations.

_______________________

Los Angeles, CA: Will e-donkey begin promoting authorized content to its users that artists and copyright owners can derive revenue from in a similar way to Kazaa?

Sam Yagan: We have begun to do this in a variety of ways. First, as I mentioned earlier, we've worked with quite a few independent bands to distribute their copyrighted works to our users. We're also beginning to partner with some film schools to allow students a venue to share their work with others.

We have also distributed computer games and other software that users can download and use for free during a trial period, at the end of which they can purchase the product.

In the long run, copyright owners will be using P2P much more widely to distribute their content. It's virtually a no-brainer: it has cost advantages, offers instant gratification, and can reach millions of users instantly.

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Christmas Bend, Montana: Hello. What is eDonkey's revenue model? Do you make money off of advertising? On a larger front, is it possible to make a lot of money in this area?

Sam Yagan: We've been so focused on revolutionizing the technology that we have not broken much new ground on the revenue side. We have three primary forms of revenue:

1. Users who purchase our ad-free Professional version

2. Banner ads placed in the client

3. Software that we bundle with our download

In the long-run, we hope to add a fourth: distribution of copyrighted material. As I said earlier, we've only scratched the surface here, and it is not yet a major component. In the future, though, we hope that this will become our largest revenue stream.


_______________________

Los Angeles, CA: What do you think about other P2P applications like Morpheus, that allow users to search multiple networks?

Sam Yagan: We think this will become more and more common. We have just implemented a plugin system that allows anyone to make a plugin for eDonkey that downloads from any network. So our next version will also include the ability to download from other network:, bittorrent, gnutella and others.

It would be nice if Morpheus wasn't using our logo, though!

_______________________

Snakefoot, Wyo.: I get the impression that your cohorts in the file-sharing trade are probably desperately trying to strike a deal to get taken seriously by the music industry (as a legitimate business source, NOT a piracy haven) before their successful online outposts like iTunes blow you guys out of the water. What's the status of those negotiations?

Sam Yagan: Sadly, there are no really negotiations currently ongoing, though I would not describe us as desperate. Obviously (as you point out), the music industry is in the driver's seat and they have to be willing to come to the table before we can have those negotiations.

They have tried an aggressive litigation strategy and the courts pretty consistently rule in favor of the P2P companies. Of course, they have then taken the strategy of suing their own customers.

I think it is up to the recording industry to decide when it is more effective to engage the industry and its customers rather. In terms of "desperation" -- I think the recording industry has a lot more to gain from coming to the table than any other party.

_______________________

Burke, Va.: What's your argument for being a good corporate citizen? I saw an interview with the chief technology officer of Sharman Networks, who said Kazaa, when compared to edonkey, does not promote infringing activity. He added that kazaa from day one has been designed to move users towards paying.

Sam Yagan: It seems to me that Kazaa is much more geared toward infringing activity. eDonkey is simply a tool to share and download files, it almost exactly the same way that an FTP client is a tool to download files. Everything in our system is kept very generic. In no way do we encourage you to share files you don't have the right to.

Look, we're geared toward having our users pay too. I'd love to get all three million downloads we get per month to be of the paid variety. That's something that has to come from the customers, though.

_______________________

Anonymous: What is the current threshold for drawing attention to oneself, in terms of numbers of files being shared, and the likelihood of getting sued by RIAA or some other entertainment industry entity?

Sam Yagan: This is of course 100% up to the RIAA or the entity suing its customers. As far as I know (and you could do a quick web search to confirm or disconfirm) the recent law suits have targeted people sharing around 1,000 or more files.

This is in no way a strict rule, simply what I recall reading in the press accounts of the lawsuits.

_______________________

David McGuire: Unfortunately, we're out of time. I'd like to thank Sam Yagan for taking the time to join us today and our audience for asking so many thoughtful questions.
http://www.washingtonpost.com/wp-dyn...2004May12.html


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House Panel OKs Identity-Theft Bill
Lisa Friedman

Registering an Internet domain name under a false identity while committing a copyright felony could bring an additional seven-year prison sentence under legislation passed Wednesday by the House Judiciary Committee.

The panel also approved two bills co-sponsored by Rep. Adam Schiff, D-Pasadena. One cracks down on identity theft, and the other creates criminal and civil penalties for falsely reporting a chemical, biological or nuclear threat.

The Fraudulent Online Identity Sanctions Act, sponsored by Reps. Howard Berman, D-Van Nuys, and Lamar Smith, R-Texas, is aimed at nabbing copyright infringers.

The bill is supported by the Motion Picture Association of America. It increases to seven years the prison time for anyone who provides false or misleading contact information to a domain registrar, and then uses that online location to infringe on a trademark or copyright.

Opponents, which include the Electronic Freedom Foundation and the American Civil Liberties Union, say the bill shackles Internet users' right to privacy.

The Identity Theft Penalty Enhancement Act, which Schiff introduced with Rep. John Carter, R-Texas, increases the sentences for identity-theft convictions by about two years. It also creates a separate crime of "aggravated identity theft" for anyone who uses another person's identity to commit certain felonies.

The Senate passed similar legislation by Sen. Dianne Feinstein last year.

The Anti-Hoax Terrorism Act, which Smith introduced and to which Schiff is one of several original co-sponsors, makes perpetrators of terrorism hoaxes subject to at least five years in prison in addition to liability in a civil action and liability for reimbursing any costs connected to the false alarm.

The legislation came in response to false anthrax alarms and other hoaxes after the Sept. 11, 2001, attacks. Currently it is a felony to perpetrate a hoax like falsely claiming there is a bomb on an airplane, and it also is a felony to communicate in interstate commerce threatening harm to another. The law, however, does not address hoaxes related to biological, chemical or nuclear dangers.

The bills now go to the House floor for consideration.
http://www.dailynews.com/Stories/0,1...44559,00.html#


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Napster Gags University Over RIAA's Student Tax
Ashlee Vance

Napster moved into damage control mode today after a university gave some idea as to how much a RIAA music tax will add to student costs.

Ohio University has put up a survey site to see if students are willing to pay $3 per month for the Napster music service. The $3 figure is the first concrete number given by any school indicating how much Napster and its RIAA bully force are looking to muscle out of students. Ohio University believes it will need 5,000 students to pay the $3 fee to make Napster a break-even proposition for the school. Napster has demanded that Ohio University stay silent about the price before anyone catches wind of the cost.

"Napster called us today and said we should not publicize the details or discuss our contract," said Sean O'Malley, spokesman Communication Network Services at OU. "The price was an idea they had suggested early on."

So far, Napster has refused to provide exact details as to how much Penn State University and the University of Rochester are "paying" for the company's service at their schools. Napster bills the public $10 per month for its service, but both Penn State and Rochester have admitted to getting steep discounts.

Napster and the RIAA have billed Penn State and Rochester as "models" to follow, if schools hope to avoid lawsuits by offering a legal music downloading service. The model concept, however, is a tough sell given the secrecy being employed by Napster. Universities across the country would end up shelling out hundreds of millions of dollars if they paid full price for Napster.

OU is taking the commendable step of not making Napster mandatory. It's simply trying to see if enough students are willing to pay $3 to make the service worthwhile."We just need to be careful not to lose money on it," O'Malley said. "Our state is having major budget issues, and we are a state-funded university." OU students have yet to face lawsuits from the RIAA, and peer-to-peer services are not really posing a problem to network bandwidth, O'Malley said. Still, the school hoped to be "proactive" with copyright protection.

On the plus side, Napster users at the school would be able to download as much music as they like for $3 per month - Windows users only, of course. Sadly, the DRM restrictions with Napster run high. Users can only make 3 copies of a song before the files become unplayable. In addition, students must pay 99 cents per song to move the file from their computer onto a CD or music playing device.

Students would also only be able to download songs while they are on the school network. Once they leave school their music disappears. Has renting culture ever been more fun?
http://www.theregister.co.uk/2004/05/12/ou_napster_tax/


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THE ROAD LESS TRAVELED: File Swappers Find Security in Waste
Erin Sherbert and Dan Goodin

Over the past two decades, the popularity of gated communities has soared as suburban dwellers sought refuge from criminals, speeding cars and next-door neighbors who stored junky boats and RVs in the side yard. That phenomenon is spreading to file sharing.

Worried about the recording industry's monitoring of Kazaa and other larger peer-to-peer networks, many file sharers are turning to Waste, a program that lets them securely swap music and videos in groups of small, trusted members

The software verifies a person's identity using what's called public key cryptography, the same technology spies and government spooks have relied on for years. It also wraps instant messages and downloads in a cryptographic envelope, making it practically impossible for outsiders to eavesdrop or figure out what kind of files are being transmitted.

Similar to the walls and guard houses in the upscale gated communities all over the U.S., Waste's security features appeal to file sharers who worry they might be the next to be sued for copyright infringement.

"I like it because of the security," said Kurt Makiewicz, a college student in Michigan. With Waste, "it's hard for people to see what you are transferring."

Waste also makes packets -- the bite-sized parcels data files are broken up into when they travel over the Net -- a uniform size, preventing universities and Internet service providers from detecting users who are trading music.

The software, created by the same wunderkind-cum-rebel that spawned the Winamp jukebox and the Gnutella peer-to-peer program, is the latest evolution in file swapping. The Recording Industry Association of America, once content suing only the networks that made music downloading possible, set it sites on individuals in September. To date it has sued thousands of people it accuses of illegally making copyrighted songs available online.

The legal assault has pushed people who once swapped music in open bazaars into exclusive private communities.

"I like the idea of encryption and private networks," said a 44-year-old user from Melbourne, Australia, who goes by the nick name Multi.
Users tend to be a low-profile gang that's selective about who they admit to their file-sharing lair, known as a mesh in Waste parlance. Often members know each other from previous networks such as Napster or Morpheus. Others meet on Web sites that let them exchange the cryptographic keys needed to connect to a network.

Another draw of Waste: the ability for to create clubs where members share the same obscure interest.

As a fan of decade-old Saturday morning cartoons, Nate, a Waste user from Washington who didn't want to give his last name, said it was hard to find animation files on larger networks and when he did they were often incomplete.

But on his Waste mesh, Nate says, he's been able to find copies of rare Spiderman shows. Users on the larger networks either don't have the same kind if hard-to-find cartoons, or they don't stay online long enough for others to download the large files.

"Waste is more reliable," he says.

Waste is the brain child of Justin Frankel, creator of the Winamp program for playing music on PCs. Winamp, installed more than 320 million times in the past seven years, impressed America Online enough that in 1999 it paid a reported $100 million for Frankel's company, San Francisco-based Nullsoft.

A year later, Frankel ran into trouble with his new employer when he released Gnutella, a program for sharing files. Unlike Napster, which the recording industry was in the process of shutting down, Gnutella didn't rely on a central server, making it far less vulnerable to legal challenges. AOL, now owned by Time Warner, responded by pulling Gnutella off Nullsoft's Web site.

Last May Frankel incurred Time Warner's wrath again when he posted Waste to his Web site. The company ordered that the software be pulled a day later, but by then other Web sites were offering the wares. Today programmers from organizations such as Sourceforge, a group that collaborates on open source projects, is busy creating updates.

So far programmers at Sourceforge are fixing bugs and adding minor enhancements, such as color-coding nick names so each one is more distinctive. Eventually, they plan to make Waste easier to use for the average non-technical person and to reengineer the program to work with larger numbers of users. They'd also like to see Waste code translated so it will run well on Macintosh and Linux computers. Right now it only runs on Windows machines.

Waste becomes sluggish once a mesh grows much beyond 50 people, a much bigger limitation than programs like Kazaa, which tend to coral its millions of users into groups of 350 or so. As a result, members usually pull down most of the content they want within a couple weeks, then the group either dies or morphs into a place where members socialize via Waste's instant messaging feature.

Waste's members-only character presents challenges that don't exist with larger networks. Whereas Kazaa welcomes anyone and randomly groups members together, Waste requires that a user be invited to a mesh. Once someone becomes a member there's no way of banishing the person.

"If this is a private party and we're having fun, how do we make sure we start inviting the right people?" said a 47 year old Waste user from Western Connecticut who goes by the pseudonym Jack Spratts. "If you let someone in who's bad for your health, you can not get rid of them."

Though many file swappers say they feel safer using Waste, the fear of getting caught in the web of copyright infringement lawsuits still lingers. The program, they say, is too quick to reveal users' IP addresses, the unique numerical listings the RIAA uses to go after suspected file sharers.

Spratts has woken up some mornings to find that his mesh of a handful of members he has known for months is suddenly populated with dozens of users he's never heard of, threatening the sense of security that came with being in a small community of people he knew. His only alternative was to leave the mesh and start a new one.

"That is a problem that has not been solved, and it's destroyed more meshes than anything else," said Spratts, who belongs to about 14 groups at the moment. Groups are usually organized by users' particular interests, be they an affection for 1970s punk rock, left-leaning politics or film noir.

"Waste was invented to provide a level of security that was unheard of the peer-to-peer file sharing," Spratts said. "It's its greatest strength and its greatest weakness, because it can lead to anarchy."
http://mjuice.com/is3_f1_waste.html

















Until next week,

- js.














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