[JackSpratts]

Running a Hatchery for Replicant Hackers
Jennifer 8. Lee

At 26, Phil Yuen's identity lay somewhere between Dilbert and a Microserf. His office, on the first floor of Building 16 on the Microsoft campus in Redmond, Wash., did not have a window. Not to worry. "I could see the window from my manager's office," he said.

Mr. Yuen was a midlevel manager who wrote specifications for enterprise project management software — giant computerized flow charts. "I drew boxes and lines to help other people draw boxes and lines," he said.

Then one night last spring, he was sitting in his apartment, surfing the Web. He went to Slashdot.org ("news for nerds") and saw an article that Paul Graham, the essayist and guiding light of computer programmers, was establishing a start-up company, later called Y Combinator, which would be giving seed money to hackers to start businesses. The word "hacker" is not derogatory in the computer world, but it is someone who is creative and resourceful with code.

"It's like Rob De Niro wants to start an acting school," Mr. Yuen said. "Do you want to join it? You get to work with him every week, you might even get a small little movie deal out of it at the end."

Mr. Graham, a 41-year-old dimple-cheeked entrepreneur who sold his company, Viaweb, to Yahoo in 1998, had developed a large following for his lucid and contrary essays in a geek community more comfortable expressing itself through programming code than coherent paragraphs. Among his essays, "How to Start a Startup" is a siren call, resonating with Gen Y programmers pondering quarter-life crises and with college students too inexperienced to be jaded.

After the establishment of Y Combinator, more than 200 teams, with two to four people a team, applied in just a few days for eight slots announced by the new company, which operates in Mountain View, Calif., and Cambridge, Mass.

After being accepted, Mr. Yuen and his team established two start-ups in the last seven months: one he gave up on; the other, called TextPayMe, is a service that sends cash payments to an online account through text messaging — akin to PayPal but using a cellphone.

Last month, Mr. Yuen was in Mountain View, in the heart of Silicon Valley, demonstrating his product to venture capitalists and other tech entrepreneurs. At a Y Combinator dinner, he asked Evan Williams, a co-founder of Blogger, who was a guest speaker at the event, for his cellphone number and then sent him $2 using TextPayMe. (Mr. Yuen, incidentally, has now accumulated a trove of cellphone numbers of Silicon Valley heavyweights and offers from three venture capital firms.) Mr. Williams, intrigued, mentioned he had the same idea earlier that day while brainstorming with friends. "It's something in the air," he said.

That night, at the dinner, Mr. Williams addressed a room full of refugees from Oracle, AOL, Microsoft and Accenture. "I think this is so cool what you guys are doing," said Mr. Williams, who sold his company to Google in 2003. "I would love to be part of something like this. I'm so jealous."

If it is possible to systematize the archetypal two guys in a garage (and they are generally guys), the year-old Y Combinator wants to do it. The company's formula is to throw smart people together and provide them $6,000 in seed money per person to cover the initial costs of the company, cookie-cutter legal paperwork and an extensive network of business contacts.

In return, Mr. Graham and his partners — Jessica Livingston, Trevor Blackwell and Robert Morris — collectively own 1.2 to 12 percent of the company, with an average of 6 percent. The company holds two boot camps a year for about eight groups each session, a summer one in Cambridge and a winter one in Mountain View. Y Combinator is not so much an incubator as a hatchery for baby companies, and as with all things spawned in bulk, some will die, some will flourish and some will eke by.

"Y Combinator comes down to two kids in a room with two computers and ramen noodles for a summer," said Chris Sacca, a principal of new business development at Google and a speaker at Y Combinator's one-day start-up school conference in October at Harvard. "It takes ambitious geeks and puts them in a situation with no distraction and expects audacious outcomes from them. The reason we like it is that that is what Google is." Indeed, Google has made acquisition overtures to one of the companies that was formed during the summer session, which the founders turned down.

Mr. Graham got the idea for starting Y Combinator after giving a talk to student entrepreneurs at Harvard, where he received his Ph.D. in computer science. He told them to look for seed money from rich people they knew, preferably ones who had made their wealth from technology. "Then I said, 'Not me,' and they all looked kind of downcast and then I felt like a jerk," he said. Then, on reflection, Mr. Graham thought, why shouldn't he try to support young hackers?

The goal for Y Combinator's young entrepreneurs is twofold: to make something people want (which is the company's motto); and to stretch their financing long enough for additional investment or to get acquired. For instance, Mr. Graham's former company, Viaweb, which made software to build commercial Web sites, was bought by Yahoo and reborn as store.yahoo .com. One Y Combinator business created last summer, a company that uses cellphones for social networking, got financing from a venture capital firm. Two other Y Combinator companies, a calendar Web site called Kiko.com and a news site, Reddit.com, received additional angel financing.

Y Combinator relies on certain premises: that open-source software and falling hardware prices means that tech start-ups are cheap to finance; that large companies are no longer at the forefront of innovation; and that mature technology companies find it cheaper to buy than to build.

The company takes its name from an obscure mathematical term, describing a function that generates other functions. Y Combinator is a company that creates other companies — a sly reference that would elicit a smile from a very narrow set of people, but luckily the same set that the company is trying to appeal to. It is the philosophical triumph of the passionate computer hacker over the uptight M.B.A.

"Paul is telling us, 'If you are having a good time, and you are building something that other people want, then the money is not going to be a problem,' " said Beau Hartshorne, 24, whose vision for a company he is calling Pixoh will allow people to resize and crop their photos within a Web browser.

Mr. Graham is more focused on creating cool products — that is, coding as art — than developing revenue models and protecting intellectual property. Thus, Y Combinator may not be as good at teaching participants how to build self-sustaining companies than it is preparing them to sell, or flip, their businesses. For Silicon Valley corporate war chests, acquisitions are often made for technical talent as well as product, which generally has to be rebuilt if it is kept at all. The whispered acquisition rate for companies is about $1 million to $2 million per technical employee.

"It's a way for recruiting for Yahoo where you don't have the risk and uncertainty of knowing if they can actually do something," said Joel Spolsky, a technology entrepreneur in New York City who also has a wide readership on the Internet.

"The danger is that you will run out of money before a buyer shows up," said Peter Rip, a managing director of Leapfrog Ventures, a venture capital fund in Menlo Park, Calif. "We are seeing a lot of guys being attracted to the ease with which they can start a company, but starting is really only the first step."

From a financial standpoint, the Y Combinator investments are small in a world where valuations are measured in millions of dollars, if not billions. "In the traditional venture capital model, $6,000 isn't enough to pay your corporate lawyer fees for your first financing," said Mr. Sacca of Google.

"It's not just about the money," said Jeff Mellen, 24, who quit Oracle with three of his friends to build an operating system that works within a Web browser.

Y Combinator provides the validation that young techies should keep pursuing their dreams. "I could get the same amount of money from my parents, but that wouldn't tell me if my business plan or idea was a good one," Mr. Mellen said. "That tells me my parents love me."
http://www.nytimes.com/2006/02/21/bu...=1&oref=slogin





Muslim Hackers Hit 3,000 Danish Web Sites
Shaun Waterman

Muslim hackers angered by the publication of cartoons of the Prophet Mohammed have defaced nearly 3,000 Danish Web sites over the past month in the biggest politically motivated cyber attack long-time observers have ever seen.

Experts say that the world-wide protests over a Danish newspaper's decision to publish the caricatures, an act offensive to Muslims who regard any depiction of the Prophet Mohammed as blasphemous, may prove to be something of a coming-of-age moment for the emerging movement of Internet mujahideen -- Islamic extremists committed to waging a cyber Jihad on the Web.

"They see this as a huge opportunity," Stephen Ulph told United Press International.

Ulph, a terrorism analyst with the Jamestown Foundation who monitors web forums and chat rooms used by Islamic hackers, said, "You can feel the excitement (among their users)... There's a sense that they can make a real difference (on this issue)."

Roberto Preatoni, founder and administrator of Zone-H.org, which tracks Web graffiti artists, says his site has monitored 2,817 defacements of sites in the .dk domain since Jan. 21, when the cartoon controversy first boiled over into world-wide street demonstrations and riots.

"That is at least 10 times, maybe more like 20 times, the number of attacks (in that domain) we would expect in such a time frame," he told UPI, adding that thousands of other Web sites in Europe and Israel had also been defaced.

Several technology journals reported that the target sites were mostly owned by small organizations without advanced security.

"This is the biggest, most intense assault" he had ever seen, Preatoni said, eclipsing the hacker attacks that accompanied the row over a U.S. spy plane forced down in China in 2001 and the invasion of Iraq in 2003.

He said the phenomenon represented "the emergence of the digital Ummah," -- the Islamic theological term for the worldwide community of Muslim believers.

Preatoni said the graffiti messages varied, but their political character was obvious from their wording.

Some of the defacements supported peaceful protests like the global boycott of Danish goods called by Muslim leaders following the decision of the government there to support the publication of the caricatures.

Others, like one by a group calling itself the Internet Islamic Brigades, included pictures of the July 2005 suicide bombings in London, and the threat "I will bomb myself in Denmark very soon, as my brothers in Islam did in U.K (the United Kingdom)."

The tactics of the cyber jihadists are as various as their messages, Ulph said, citing efforts he had seen to influence the outcome of an online poll by a German news site; a coordinated 24 hour long attack on the Jyllands- Posten and other Danish sites; and a failed call for an "international day of embassy burning" on Feb. 13.

"This is the new front line," of the global jihad movement, he said.

Ulph said one of the striking features of the Danish assault was how well-organized it was. He called it the "most recent demonstration of the efficiency, coordination and ingenuity of the Internet mujahideen."

He said the cartoon issue was "a perfect focus" for jihadists, because it had motivated the Islamic masses, and given the extremists a popular cause to "use ... as a recruiting tool."

The recruitment question highlights the gap between committed extremists for whom the Web is simply another front on which jihad must be waged, and the broader community of Muslims active online.

Preatoni said that the large majority of those doing the defacements -- he estimated as many as 90 percent -- were existing hackers and Web graffiti artists, who would have been defacing other Web sites anyway.

"They are using this issue to give sense to what would otherwise be a senseless activity," he said.

He said Muslims represented an increasing proportion of hackers, crackers and other Web vandals, as the availability of the Internet spread in the Islamic world.

The number of hackers and defacers active in Turkey, for example, "has just exploded over the past year," he said, adding that one of the most prolific defacers in the world last year was a 45-year-old Turkish man using the name Iskorpitx.

Iskorpitx defaced nearly 50,000 sites in the past 18 months, he said.

But the other 10 percent involved in the Danish attacks were either retired or reformed Web vandals who had returned to the fray to join the cartoon protests; or else completely unknown newcomers.

"I've seen a lot of completely new names," in the past month, he said.

Preatoni said that some of the newcomers were "people who clearly had the technical capabilities all along" but had not previously been motivated. Ulph pointed out that extremist chat rooms and bulletin boards often had entire libraries of software and training materials for novice hackers.

The Danish cartoon issue, he said, offered the cyber jihadists the opportunity to reach out to those sympathizers who had not previously been actively involved -- the so-called armchair mujahideen. "Everyone can get involved," he said, and the chat rooms offered advice on how to remain anonymous online and hide the origins of cyber attacks.

Preatoni warned that, though defacement was relatively easy and simple to fix, "defacing takes absolutely the same skills as hacking," and that "most of the time (Web vandals) have access to the servers," meaning that they could do much more significant damage if they chose.

"It is just a matter of time," he said.
http://www.upi.com/SecurityTerrorism...2-023534-1827r





Browser Bugs, A Year-Around Bite
Stefanie Olsen

Sure, we know that Web browsers aren't the safest applications for protecting our PCs against viruses, spyware and other technological malfeasance. But at a U.C. Berkeley research talk given Thursday, an assistant professor of computer science illuminated the problem in numbers.

For people who use Microsoft's Internet Explorer to browse the Web, the picture wasn't good. In 2004, IE was "unsafe" a total of 358 days of the year, meaning that the browser contained a publicly known, remotely exploitable hole for which there was no patch available. That means IE was "safe" only seven days, or 2 percent of the year, according to David Wagner, an assistant professor and well-known cryptography researcher. Wagner's team compiled the data from Scanit and Secunia.

Also, it would take 463 days to install all of the known IE patches to make the browser secure in 2004, according to Wagner's summary data. Thirty-four of IE's bugs were without patches.

In contrast, Opera was "safe" 300 days, or 82 percent of 2004. None of the bugs for Opera's browser went without a patch and it would take 93 days total to fix them.

Firefox scored best. It was "safe" 339 days, or 93 percent of the year. Only two of its bugs went without a patch and it would take 43 days to install its fixes, according to the data summary.

As Wagner said: "Security bugs are rampant." So batten down the hatches.
http://news.com.com/2061-10789_3-604...2604&subj=news





Too Many New Gadgets, Too Much Information at Risk
David S. Joachim

It is the corporate version of keeping up with the Joneses: every day, it seems, someone arrives at the office with a shiny new gadget that combines a cellphone with all sorts of features you used to find only on your computer. They can get e-mail messages, surf the Web, manage contact lists and calendars, and even create Word and Excel documents that can run on a conventional PC.

These smart phones and hand-held computers are so powerful that many office workers now travel without their laptops. Why bother with a clunky box that takes several minutes to start up and connect to a network, when you have a device that is always online and can access information on demand?

At first, owners and operators of small businesses may see benefits to this trend. After all, workers are paying for their own little devices in the name of convenience. But, it turns out, they are also giving their technology departments a big headache.

That is because these devices represent a sizable security risk. For one, they are configured to hop from Wi-Fi to cellular networks easily, exposing them to deliberate thievery of data. But a bigger threat, analysts say, is that small things are easier to lose, raising the prospect that confidential business files will get in the wrong hands.

Pocket-size devices are misplaced all the time — travelers left 85,000 cellphones and 21,000 hand-held computers in Chicago taxis during a six-month period last year, according to a survey by Pointsec Mobile Technologies, a maker of security software. And as these devices become capable of storing larger volumes of data, some experts are concerned about the increasing vulnerability of those files.

Analysts say that workers are too caught up with buying the latest gadgets, forgetting that their data is far more valuable than the device it runs on.

That is why some companies, realizing the potential for damage, are getting ahead on mobile security by actually buying small gadgets for their employees, albeit with security strings attached. Seitlin, a small insurance brokerage based in Miami, illustrates the point.

The firm decided to buy Palm Treo cellphone-organizers for about 30 of its 250 employees. The company could then dictate what data was stored on the devices, and it could install software to monitor them from afar and even lock them over the air if they fell into the wrong hands, said Ed Whipple, the company's vice president for sales and technology.

Seitlin sales agents, rather than carry client records on their Treos, must use a Web site to access claims histories and other private information. These files can be viewed but not stored on the devices through an online service called Nexsure from XDimensional Technologies. If an agent on the road is offline and needs information about a client, he calls the office for it, Mr. Whipple said.

If an employee reports that his cellphone is stolen, Mr. Whipple can send a text message to the device, which locks it and asks for a security code, using software called Butler. If the security code is not entered immediately, the memory on the device is wiped clean.

The catch is that the Treo must be turned on and transmitting over a wireless or cellular network for Butler to work. For this reason, some companies set up their devices to store all data on a removable SD memory card, which scrambles the data and renders it useless if the card is removed.

Seitlin also uses software from Intellisync that allows Treos to act like BlackBerry devices and automatically send e-mail messages without the user having to manually download them. This also allows the devices to stay synchronized with a server in the office.

"That's the beautiful thing," Mr. Whipple said. "If I drop my Treo in the water tomorrow, I can go out and buy another one," and the technology department can rebuild the software on a new one to look just like the old one, including all his personal contacts and calendars. This can be done in minutes over the air.

John Pescatore, a security analyst at Gartner, a market research company, said that forcing all users to synchronize their data to a single server over the air has another benefit over letting them use their office PC's for backing up data: it creates a log of all information moving to and from the devices. Monitoring software can be set up to search through the data exchanges to make sure no confidential data passes to unauthorized devices, he said.

Mr. Pescatore expects this year to be a turning point for mobile security, in the same way that personal firewalls and antivirus software on PC's gained importance early in the decade because of viruses like I Love You and Melissa. "The market doesn't demand security until something bad happens," he said.

Of course, security breaches get the most attention when they happen at big companies. But as hardware and software prices have dropped in recent years, small businesses are catching up to larger ones in terms of technology — and vulnerability.

By the end of the year, smart phones with so much storage and processing power will represent about half of all cellphones in the United States, compared with about 30 percent today, Mr. Pescatore said. The proliferation could get people in the habit of sending one another executable files like games, which can carry viruses.

More than that, the success of devices that use Microsoft's mobile operating system will mean a decline in the diversity of software, Mr. Pescatore added. Just as Microsoft's domination in PC's made it attractive for programmers to write viruses for Windows, the same could happen to hand-held devices.

In computing, as in nature, diversity is the great inoculator.
http://www.nytimes.com/2006/02/21/bu...=1&oref=slogin





Behind the Music: How a Sony-BMG Feud Went Public
Jeff Leeds

Crowding into the Roosevelt Hotel on the evening of the Grammy telecast almost two weeks ago, the elegantly dressed executives from Sony BMG Music Entertainment had plenty to celebrate.

The soul singer John Legend, one of the company's newest stars, had snagged three trophies, including the coveted prize for best new artist; Kelly Clarkson, the former "American Idol" winner, scored a surprise two awards of her own.

But for the company's chief executive, Andrew Lack, the awards and congratulatory cheers that night may have seemed a little late. Barely 24 hours after the party, the music company's co-owners, Sony and Bertelsmann, announced a management shift that unseated Mr. Lack as chief executive, the result of a revolt sparked by executives from the Bertelsmann side.

Mr. Lack, 58, was named the venture's nonexecutive chairman, swapping titles with Rolf Schmidt-Holtz of Bertelsmann and ceding virtually all his authority over its daily operations.

It was a striking moment in the career of Mr. Lack, a longtime television news executive brought in to re-engineer Sony's flagging music unit in early 2003.

Mr. Lack, who had most recently been president of NBC, was chosen by Sir Howard Stringer, then Sony's top official in the United States and now chief executive of the Japanese electronics maker. The party line was that an outsider like Mr. Lack, unencumbered by music-business customs or deep personal ties, had an edge in redefining the company — even the industry.

But in the end, critics now contend, Mr. Lack turned out to be his own worst enemy.

While taking on industry convention, he failed to shore up relationships with critical players inside and outside Sony BMG and on its board, undermining his base of support.

One result is that there is new doubt about the ability of outsiders to pull the ailing music industry out of its tailspin.

"It's the subtleties of this business that can kill you," said Jay L. Cooper, a longtime Los Angeles music attorney. "I've seen some of the best and the brightest come into this business and be destroyed by it because they don't understand."

Further, Mr. Cooper said, "If you don't have the confidence and the respect of the people that are working for you, you've got a real problem."

Of course, Mr. Schmidt-Holtz, the incoming chief executive, is still regarded as a relative neophyte as well: he ran Bertelsmann's BMG unit for three years before it merged with Sony Music, but before that spent much of his career in television and magazines. Mr. Schmidt-Holtz must now try to prove not only that he can compete again in the unforgiving music arena, but than he can hold together the uneasy alliance between the venture's corporate parents.

Mr. Lack, who declined to comment for this article, departs the job as the company comes off a strong fiscal quarter and is poised to release a string of big titles. He is expected in his new role to remain active in steering the music giant's public policy initiatives and in guiding a Sony BMG film unit he created, which is planning a feature called "Reggaeton" this spring.

"I think he's going to make his presence known" in the new role, said Wayne Rosso, the former president of Grokster, the developer of an unauthorized file-sharing service. Mr. Lack broke from his industry rivals to forge an alliance with Mr. Rosso in devising a new, legal music service.

"I don't see him as a victim. I think he's going to be happier not having to baby-sit a lot of egos," Mr. Rosso said. "The music industry is firmly entrenched in its habits, and it's a very parochial, self-preserving industry."

It is also an industry that viewed the blustery, theatrical Mr. Lack warily almost from the start. But he impressed insiders by striking the merger deal with BMG in 2003, about nine months after he started at Sony Music.

The venture, overseen by a board split between the parent companies, altered the balance of power in the $30 billion global music business, shrinking the field of major competitors to four from five.

With revenue between $4 billion and $5 billion, it ranked as the world's second-biggest music company, rivaling the industry leader, the Universal Music Group, a unit of Vivendi Universal. The combined company's stars included Bob Dylan, Jennifer Lopez, Alicia Keys and Britney Spears.

It also provided a financial cushion. Mr. Lack and his team presided over an estimated $400 million in cost cuts, which included cutting 2,000 people from the payroll. Sony BMG's sheer scale promised to give Mr. Lack more muscle to establish new standards in the industry, which has been desperately trying to reinvent itself in the era of file-swapping, CD-burning and iPods. But it also gave birth to an in-house rivalry — and not the friendly kind — between Sony's labels and BMG's.

From early on, Mr. Lack had particular trouble winning the trust of BMG executives; some complained privately that he seemed slow to extend contracts to the unit's label officials in important territories. "He would never have allowed that to happen to Tom Brokaw," one person close to Bertelsmann said, referring to Mr. Lack's job at NBC.

Others complained that Mr. Lack seemed unsure how to handle certain sticky issues. He landed in the middle of a volatile personnel affair when he was held accountable for an increasingly tense pay negotiation with BMG's top United States executives, the legendary hit-maker Clive Davis and his chief deputy, Charles Goldstuck.

Since Sony and Bertelsmann created the venture, the two executives had been waiting to settle a question about how the company would calculate a hefty payout still due them in connection with the 2002 sale of their venture, J Records, to BMG. After unsuccessfully prodding Mr. Lack to resolve the matter, the two men wrote a letter to the Sony BMG board expressing frustration at the standoff.

Executives in the corporate suite were becoming frustrated with Mr. Lack, too. In July, Michael Smellie, a low-key BMG veteran who had been appointed Sony BMG's chief operating officer, had become so exasperated at Mr. Lack's leadership approach that he decided to quit, according to people close to him. In announcing his exit, he cited a desire to spend more time with his family in Australia.

Mr. Smellie, who had been one of the chief architects of the companies' complex integration, felt marginalized, according to people in whom he confided. He was largely limited to overseeing operations outside the United States, and while he initially backed Mr. Lack's appointment as chief executive, he lost faith that Mr. Lack could create a real culture for the merged company.

"The venture presented lots of opportunities, and a number of these were squandered because relationships were not as well managed as they might've been," Mr. Smellie said last week.

His exit, in particular, elicited deep concern among Bertelsmann executives, in part because it upset the venture's delicate balance of power. Mr. Smellie had been the most senior corporate executive from BMG. After word of his impending departure spread, he spoke with the head of Bertelsmann, Gunter Thielen, about his reservations about Mr. Lack, according to people briefed on the discussions.

The company's performance at the time appeared unsteady. Sony BMG posted two consecutive quarters of losses, its results burdened with revamping charges. For the first half of the year, Sony BMG's share of sales of new releases in the United States dropped to about 26 percent, off sharply from roughly 33 percent when the two companies combined, according to Nielsen SoundScan data. Much of the falloff at the time was attributable to the BMG labels, facing tough comparisons from the year before.

Mr. Lack's supporters have denied that Bertelsmann was dissatisfied with any aspect of his performance, and note that for the three months ended Dec. 31, the venture delivered $178 million in net income, roughly eight times its results from the year-earlier period.

Contributing to the results was a $121 million decline in revamping charges. Rather than losing confidence in Mr. Lack, they suggest that the German media conglomerate moved to destabilize him because it feared Mr. Smellie's exit would reduce its power in the venture.

Mr. Lack had certainly come to loom large in his first two and a half years in the business. He emerged as a blunt, ombudsman-like executive, sharply contrasting with rivals who were gleefully trumpeting the prospects for the budding digital market.

Last year he predicted that Sony BMG would not see a significant sales increase until 2008 (though a source close to him said he was now more optimistic). He said the company had "too many lawyers and accountants," while the relatively low percentage of people assigned to dig for talent was "appalling."

Even some critics found him refreshingly candid. Indeed, one curiosity of the internal discontent with Mr. Lack was that many of his critics agreed with his positions, for example, that the company should do more to use its music videos and other visual content to generate new revenue. Many also supported his stance that Apple Computer's iTunes music service should sell songs for a range of prices instead of its flat rate of 99 cents a song.

Being right, however, did not translate into respect.

And beneath the surface, some executives who worked with Mr. Lack even before the merger found his style less than inspiring.

"It was very difficult for him to approach any situation without assuming that whatever the 'record guys' were doing was wrong," said Rick Dobbis, who was president of Sony Music's international arm before being squeezed out in the merger, and is now a manager and industry consultant. "It was difficult to believe that you would get support for your ideas."

At the same time, Mr. Lack managed to alienate a number of longtime insiders by keeping them at arm's length — including Allen Grubman, the powerful New York attorney who represents a bevy of top Sony BMG executives and artists, according to people who have discussed the matter with him.

"I think Andrew went out of his way to sort of buffer himself from us," said Jill Berliner, a Los Angeles entertainment lawyer who represents such Sony BMG artists as the Foo Fighters and the Offspring. "If that was supposed to be intimidating, it had the opposite effect. We weren't impressed."

Mr. Lack's supporters say that he is coming under fire from old-school executives who were simply resistant to change. Moreover, they say he is being unfairly attacked by artists' attorneys whom he tried to block from winning wasteful or potentially unprofitable contracts.

But critics say one of his biggest missteps was the handling of a $100 million-plus new deal for Bruce Springsteen, who had spent his career on Sony Music's Columbia label. The hefty contract required the approval of the venture's governing board, but critics say Mr. Lack presented the agreement to the panel as a fait accompli.

Mr. Lack's supporters insist that Mr. Springsteen was aware that the deal still required the board's sign-off, and that the deal will ultimately pay off for the label. Indeed, they suggest that Mr. Lack would have faced even heavier fire if he had allowed one of the company's most respected stars to depart his longtime home for a rival label, and eventually, to take his catalog of master recordings with him.

Even so, the affair damaged Mr. Lack's standing among the board members. Mr. Thielen soon informed Mr. Stringer of Sony that Bertelsmann wanted to remove Mr. Lack from his post.

To industry observers who had seen outsiders come and go before, that came as little surprise.

"Our business is not that big," said Ms. Berliner, the attorney. "If you're going to be successful, you get to know everybody, so you can channel relationships in ways that make sense. And I kind of felt like Andrew never got told that."
http://www.nytimes.com/2006/02/20/bu...pc&oref=slogin





A B-Movie Becomes a Blockbuster
David Carr

HOLLYWOOD is filled with intrigue that has nothing to do with who will win the best-actor Oscar next month. The selection process that currently has the A-List lighting up BlackBerrys and cellphones is emanating from a grand jury in Los Angeles that is looking into secretive business conducted by Anthony Pellicano, a high- profile private investigator.

The case, which could ultimately threaten the reputation and even the freedom of some of the entertainment industry's most prominent figures, also serves as a reminder that even though the studios are now just one more adjunct of large media companies, Hollywood has always been a wide-open town that lives by its own rules.

If you put all the elements of the Pellicano story in a movie pitch, they would laugh you out of the bungalow. A Hollywood private detective with wise-guy connections, Mr. Pellicano cleans up messes for the powerful, engaging in pervasive surveillance along the way. A reporter, Anita M. Busch, who has written for both The New York Times and The Los Angeles Times, gets a little too close on a story about one of his clients, and he dispatches a small-time hood to blow up her car, according to a search warrant. The operative decides that the fireworks are too dicey and instead leaves behind a shattered windshield, a note that stays "Stop" and a dead fish in a tin tray. (And a rose, don't forget about the rose.)

It gets better. Federal authorities traced the attempt to terrorize the reporter back to Mr. Pellicano. On a November day in 2002, his office was raided, and in the safe investigators found $200,000, plastic explosives and two grenades. Eight days later, they go back and find the real dynamite: transcripts, tapes and computer files of phone conversations, many involving the most powerful people in the entertainment business.

At this point, according to Marvin Rudnick, a former federal prosecutor and one of Ms. Busch's attorneys, "the B-movie turns into a blockbuster."

ON Feb. 6, Mr. Pellicano and his cadre of alleged co-conspirators were indicted on 110 counts of racketeering and conspiracy. On Wednesday, Terry N. Christensen, a respected member of the Los Angeles bar, was indicted on wiretapping and conspiracy charges in connection with the divorce case of Kirk Kerkorian, the billionaire investor. At one time or another, Mr. Christensen has also represented Paramount Pictures, the Walt Disney Company, MGM/UA and Sony Pictures Entertainment.

Many recognizable names have been questioned, among them Bert Fields, whose client list includes some of the city's better-known names, including Michael S. Ovitz, the once-powerful talent agent, and Brad Grey, now the chairman of Paramount. People who were in litigation against both men were subjected to background checks and wiretapping, according to the indictment, but neither has been implicated in any criminal activity. Still, with the indictment of Mr. Christensen, no one knows which way the marble will roll next.

Mr. Rudnick said that far-reaching issues were being raised.

"When you look at these cases, you have to ask yourself, 'Is there a protection racket in Los Angeles?' " he said. "And I think you are seeing evidence that there is right now, that people are using extra-legal means to neutralize antagonists in legal proceedings. The integrity of the courts has been called into question."

There are legal implications beyond civil matters like divorce and business disputes. Mr. Pellicano has done work on behalf of law enforcement in the past, and those cases would be opened anew if it were found that he violated the law in the conduct of his business. And given that federal investigators are in receipt of an uncertain number of recorded conversations, all those being questioned have to answer knowing that they may face federal perjury charges if they are less than forthcoming.

The last time there was even close to this kind of tension held in common in Los Angeles, Heidi Fleiss was under investigation for running a prostitution ring. Her black book contained many A-List names, but in the end none of the big boys ended up getting hurt. They may not be so lucky this time around.

"There is a great deal of schadenfreude going around among the lawyers who are not targets, I'm sure," said Eric Weissmann, an entertainment lawyer, who has no knowledge of anyone's guilt or innocence. "I think the problem is far more endemic than the lawyers or investigators. You have clients who want to win at all costs, and they are not necessarily interested in the Marquis of Queensbury rules of engagement. There is an enormous pressure to win."

If the case has legs, it could become a concern for the giant New York media companies that now own the movie business. While Time Warner, Viacom and Sony wrestle with balance sheets and the nuances of Sarbanes-Oxley, much of the old-school charm of Hollywood has stayed in place, with power brokers madly suing and swearing oaths against each other, all the while serially marrying and divorcing.

Going back to the days of moguls like Mayer and Wasserman, Hollywood sprang up to escape the scrutiny of the government and corporate overseers. Now, what had been a sideshow threatens to pull back the blankets on an underbelly of the business that never went away, even after the studios became another item in corporate quarterly reports.

A New York-based media executive who declined to comment on the record because his company had no involvement in the matter, said that the Christensen indictment "makes you wonder about the scope of the investigation."

No one, not even a new generation of corporate overseers, has ever been able to teach Hollywood manners. As one of the executives in "Indecent Exposure," David McClintick's 1982 account of the Begelman scandal at Columbia, said, "the new Hollywood is very much like the old Hollywood."
http://www.nytimes.com/2006/02/20/bu...=1&oref=slogin





Two Plead Not Guilty in Sleuth Case
Allison Hope Weiner

The Hollywood entertainment lawyer Terry N. Christensen pleaded not guilty to wiretapping and conspiracy charges at an arraignment in federal court here.

Mr. Christensen, who was indicted on Feb. 15, was the first high-profile show business figure to be charged in connection with the widening investigation of the celebrity private eye Anthony Pellicano.

The charges against Mr. Christensen stemmed from his handling of a 002 legal dispute for his longtime client Kirk Kerkorian over paternity and child support issues with his ex-wife, Lisa Bonder Kerkorian. In the indictment, federal authorities charged that Mr. Christensen paid Mr. Pellicano at least $100,000 to tap Ms. Kerkorian's phone, and talked repeatedly with him about her conversations with lawyers and friends.

Separately, a former telephone company employee, Joann Wiggan, pleaded not guilty. In all, 13 people have been charged in connection with Mr. Pellicano's activities. Mr. Pellicano was indicted earlier this month on conspiracy and wiretapping charges, and has already served time on weapons charges related to the investigation.

The indictment of Mr. Christensen cited conversations he is said to have had with Mr. Pellicano in which the former detective relayed details of Ms. Kerkorian's phone calls.

In one conversation, on April 22, 2002, Mr. Pellicano allegedly told Mr. Christensen of a conversation between Ms. Kirkorian and her lawyers in which they discussed their reactions to a previous court hearing. The indictment also mentions another recorded conversation, on May 3, 2002, in which Mr. Pellicano told Mr. Christensen about Ms. Kerkorian's discussion of settlement expectations with her lawyers. And on or about May 14, 2002, the indictment says, Mr. Christensen told Mr. Pellicano to "wrap up" the illegal wiretap.

A lawyer for Mr. Christensen, Terree Bowers, said, "Terry Christensen's actions were legal, justified and necessary, and the same actions any reasonable lawyer would take if his friend and a young child faced death threats and serious injury."

The government declined to comment.
http://www.nytimes.com/2006/02/22/mo...=1&oref=slogin





Peer-To-Peer Is An Identity Risk
Chung Kang-hyun, Kim Ho-jung

How easy is it to steal other people's private information on the Web? The JoongAng Ilbo conducted several tests with the help of a former hacker who is now a network security professional. It discovered that, armed with a simple data-tracing program, just about anyone with bad intentions could find hundreds of online documents containing lists of individuals' private information.

The test was performed after a recent massive case in which hackers used such information to create accounts for the online role-playing games "Lineage" and "Lineage 2." As of yesterday, the online game operator NCSoft Corp. said almost 60,000 people had called to shut down falsely-created accounts.

Information including resident registration numbers, phone numbers, addresses, academic backgrounds and family relationships can be found by typing in search words in peer-to-peer file-sharing programs.
Such programs are often used to share music and other data, and make available online all the contents of designated folders on a user's computer. If, by accident, a user designates his "My secret personal data" folder for sharing, it will be available to any other user running the same program.

Tests on three of those programs turned up more than 500 documents containing personal information in a matter of minutes. The information came from a range of sources ― insurance company correspondence, home shopping invoices, elementary school alumni lists and resumes. Resumes proved to be the most revealing of all documents, since almost all contained photographs of the individual. Credit card numbers, bank account numbers and PIN numbers could also be found through simple one-word searches.

Based on information it found on the Web, the Joong-Ang Ilbo made phone calls to 20 people, none of whom knew that their private information was available online.

Choi Hee-won, a researcher at the Korea Information Security Agency, advised individual users of peer-to-peer programs to be very cautious in designating which files or folders in their computer they shared with others. "Companies must continuously enforce their security policies, such as the use of firewalls, because hackers are always developing new techniques," he added.

Meanwhile, the Information Ministry announced yesterday plans to revise private information protection provisions in the communications laws, which will include measures forcing companies to discard personal data when a former customer severs his ties with the company. It said it would present a revised bill to the National Assembly in the first half of this year.
http://joongangdaily.joins.com/20060...090409041.html





Experts Debate File-Sharing Suits
D. Clark Denison

Sharing music for free is popular, easy and fun. It also violates many U.S. copyright laws. But literally millions of copyrighted files are shared every day, and only an unlucky few are actually held responsible for the crime.

It would seem that technology has indeed outpaced the law in today’s digital world.

This timely dilemma was held up for formal debate Friday as part of Pitt’s sixth annual Computer Science Day.

Working with the William Pitt Debating Union, the department of computer science invited two seasoned veterans from both sides of the issue.

Geoffrey L. Beauchamp — a Philadelphia lawyer and the Pennsylvania state counsel for the Recording Industry Association of America — teamed up with Pitt junior Melina Forte.

Charles Lee Mudd Jr. — a Chicago attorney experienced in representing defendants in RIAA suits — paired with Tony DiMattio.

Forte and DiMattio are members of the William Pitt Debating Union.

The main question: Should lawsuits against individual peer-to-peer users be sharply curtailed?

The debate began with opening statements from DiMattio in the affirmative and Forte in opposition.

While DiMattio conceded that “the law of the Wild West should [not] prevail on the Internet,” he argued that the RIAA’s lawsuits are “ineffective, alienating to the consumer public and they fail to account for individual circumstances.”

Citing increases in illegal downloads despite the RIAA’s legal actions, the affirmative side focused its point on arguing that the lawsuits do not serve as a deterrent to illegal file-sharers.

DiMattio went on to explain that the proceeds from RIAA lawsuits do not go to the artists whose work has been shared, but instead are used simply “to fund more lawsuits.”

Forte and Beauchamp centered their opposition on the two main goals of this type of litigation — to compensate the injured party and to serve as a deterrent to potential offenders.

“The lawsuits are successfully achieving both factors,” Forte said.

Forte also argued against exceptions to copyright laws.

“If we justify one theft of intellectual property,” she said, “who knows how many more exceptions will come.”

Addressing the harshness of the RIAA’s penalties, Forte cited billion-dollar costs incurred yearly by the recording industry because of Internet piracy.

According to the opposition, stiff fines are needed and are the only way to deter people from breaking the law.

“Like every other crime, a punishment is needed that will act as a deterrent,” Forte said. “Lawsuits are that deterrent.”

The expert speakers echoed these sentiments on both sides, but their statements reflected a greater specificity gained from their professional experiences.

While file sharing does violate the copyright law in most cases, Mudd argued that institutions like the RIAA need to shift their thinking about the issue to focus on “an equitable dispensation of justice,” as well as “explore viable alternatives [to lawsuits].”

“The entertainment industry is on the wrong side of technology and the wrong side of law. They always have been,” Mudd said.

Mudd cited the now historic debate that ensued when Sony introduced the BetaMax recordable videocassette. The entertainment industry sought unsuccessfully to ban the BetaMax because consumers could use the technology to make illegal copies of protected material.

“There are clearly non-infringing uses of peer-to-peer file sharing,” Mudd said, “and there are clearly benefits to peer-to-peer file sharing.”

Mudd also shared several cases he has been involved with where the circumstances were clearly extenuating.

In one instance a woman inherited a laptop from her deceased brother that was set up to share files, and, though she was unaware of the illegal sharing, she received “no sympathy” from the RIAA and was sued for the “flat fee” of $3,750.

“We have to address mitigating circumstances,” Mudd said. “It’s the way our justice system has been developed.”

Beauchamp’s arguments sought to justify the lawsuits as the only way to punish a crime that amounts to stealing.

“Consider it as if you were a shopkeeper in a bad neighborhood and your grocery store was beset by shoplifters,” Beauchamp said. “Instead of calling the police, your neighbors came to you and said, ‘Don’t call the police...you might want to change your business model.’”

The grocery store is the music industry and the bad neighborhood is the Internet, Beauchamp said.

Beauchamp thinks optimistically that there will come a day when advancements in software allow for easy, legal file sharing.

He added, however, “That day is not here.”

Until then, “The shopkeeper must call upon the courts and the police to protect his property,” Beauchamp said.

Beauchamp cited the rising popularity of legal downloading sites like iTunes and the widespread knowledge of the illegality of file sharing as proof that the lawsuits are working.

At the end of the debate, the floor was opened to questions from students, and it became clear that the arguments presented had not quieted the concerns of everyone who heard them.

Questions of new technologies that share files completely anonymously across networks provoked defiant applause from the room. New issues were spawned regarding Internet privacy rights and how they relate to the tracking of users who may share files illegally.

This issue was far from settled in a single day’s debate, but both sides called the event a success.

Mudd observed that the only way for matters like this to move forward is for people to “learn about the issue and the arguments involved.”
http://www.pittnews.com/vnews/displa.../43fac59c605c8





Yahoo!Mail Bans Allah And Dirty Harry Handles
John Oates

Yahoo! is banning the use of allah in email names - even if the letters are included within another name.

This was uncovered by Reg reader Ed Callahan whose mother Linda Callahan was trying to sign up for a Verizon email address. She could not get it to accept her surname.

Enquiries to Verizon revealed that a partnership with Yahoo! was to blame. Yahoo! will not accept any identies which include the letters "allah".

Nor will Yahoo! accept yahoo, osama or binladen. But it will accept god, messiah, jesus, jehova, buddah, satan and both priest and pedophile.

Ed Callahan told us: "On one level this is just silliness. But we have a war on terrorism and it's migrating to be a war on Muslims - this just shows the confusion there is between the two and how pervasive this is."

The Callahans are still waiting to hear back from Yahoo!

A spokesman for Yahoo! UK said: "This sounds like a glitch. But we will get back to Ed and Lindy Callahan with a full answer as soon as possible." .

More from the blogosphere here. (http://quickwired.com/kallahar/stories/2005-Yahoo/ yahoo.php)

Famous *allah*s: Dirty Harry Callahan, Lord Jim Calla(g)han (ex-British PM), errr...that's all...
http://www.theregister.co.uk/2006/02...ets_religious/





Money for Nothing

Hundreds of new sites are trading on web users' ignorance by selling inadequate or unnecessary technical support for free software
Danny Bradbury

Austelle describes herself as "a frequent internet user" who checks her email daily, participates in forums, and has multiple online accounts. But that did not stop her falling for a new loophole by which sites provide software that's available free elsewhere - and charge for "support" that may be limited or even nonexistent.

Austelle paid a website $33.90 for the Limewire peer-to-peer (P2P) client - which is available free from sites such as limewire.com. She found the fee-charging site after searching for file downloads in a search engine. "As soon as I joined, like within 10 minutes, I realised that I had been had, and that Limewire is a free download and is so easy to use that hardly anyone ever needs any assistance."

Austelle was the victim of a new breed of websites making money off free software. While companies such as Red Hat have for years charged money to distribute and support free software (particularly Linux), they clearly add value through support and CD distribution. But some of these new sites charge "membership fees" either to provide a downloadable version of the software copied from a legitimate website, or to redirect browsers to the site they should have gone to in the first place. Clearly, they capitalise on the ignorance of net newbies.

Most of these websites work similarly. Searching for free software titles such as "Skype" in search engines produces sponsored links that draw the novice user's eye away from the main search results. The websites behind the links charge users a membership fee to download the software. Internet forums and blogs are littered with postings from angry users who did not realise they could get the software free elsewhere, or who claim that the support was cursory at best.

Some sites make it clear that the software is available free elsewhere, and that users are paying for technical support. Not so with www.freedownloadhq.com. "I tried to find out who to contact," recalls fashion designer Shabazz Torres, who found the site through a Google search. "I replied to an email they sent confirming my payment, but there was no one I could contact to get a refund."

Support for customers

FreeDownloadHq.com is registered to XTreme Software Ltd, a company with an English address, but the resident at that address is a formation agent who registers companies on behalf of accountancy firms. He told us that XTreme Software was registered by David Shullick, of Xtreme Innovations in Florida. Shullick wouldn't speak to us but in a written response, the company said: "We do charge ... because we provide tutorials as well as full technical support on all the programs we offer access to." However, investigators for security software firm SiteAdvisor were unable to find any support.

Other players appear more legitimate at first glance. Sites such as Download-It-Free.com explain in their FAQ that the software is available free elsewhere. Nevertheless, a callcentre operative gave a slightly different story when we asked why we shouldn't download software such as BitTorrent's P2P client from BitTorrent for free. "Most of those sites, they won't charge you a one-time fee, but they'll charge you every time you want to download a file. We offer a one-time fee and then you get BitTorrent and the other programs free." BitTorrent does not charge for downloads, meaning the company running the call centre for Download-It-Free.com, Montreal-based Market Engines Inc, run by Daniel Assouline and Michael Dadoun, misled us.

Dadoun was once employed by well-respected Nortel Networks, a major Canadian telco, as senior manager of mergers and acquisitions.

Market Engines is involved with hundreds of websites, including FreeMP3Lover.com, Mp3MusicAccess.com and eMuleCenter.com. Many of these sites are part of an affiliation network operated by Cash Engines, a division of Market Engines. Affiliate networks link merchants with third-party websites that advertise links to the merchants' goods and services, driving traffic to them and receiving payments in return.

Many of these merchant sites claim to be owned and operated by MP3 Networks Ltd, a company listed in Malta. The company, which also has an address in the Caribbean, was set up in July 2004, five months before Market Engines started business. Its director and major shareholder is Charles Assouline. We attempted several times to contact MP3 Networks Ltd on its Maltese number, which was never answered.

Dadoun found his callcentre staff's comments "very concerning" as he did with complaints posted to several internet forums by customers who felt they'd been fooled. "If that's the way they feel, they can get a refund. That's why we're here," he said. We emailed him details of the comments and agreed to speak again at a prearranged time, but he failed to return calls.

Ten dollar bill

Creating an account on a site supported by Market Engines cost us $27, including an optional (but pre-selected) $10 anti-spyware download. The site gave us access to various P2P clients including Limewire, WarezP2P, Exeem, and 360Share. Support staff refused when we asked for help to get a soundcard working, saying they could only support the P2P software. A list of interactive demos also failed to load. We obtained a refund under the company's seven-day money-back guarantee, but the firm retained a $10 "processing fee". The fee was mentioned in terms and conditions during customer registration, but only if the customer opened a popup window.

The Centre for Democracy and Technology (CDT) works to promote democratic values and constitutional liberties online. It is mostly concerned with websites that explicitly advertise their downloading software as totally legal, says in-house lawyer David Sohn. "They will often say these services are 100% legal, which creates the false impression that anything you do with these services is legal, and consumers might well believe that to be the case because they have paid a fee," he says. But pursuing companies through the courts can be too expensive for small software firms.

The CDT prompted the US Federal Trade Commission to take action against two such websites last year. "Often we can threaten those sites that we'll turn them over to the FTC and they will stop the bad practices, but they pop up somewhere else," Sohn complains.

Market Engines' merchant, MP3 Networks Ltd, is more guarded about the legality of its files. After paying for membership we were directed to a "stay legal" file that included information copied from the Electronic Frontier Foundation's site, along with a link to a page, which did not exist, explaining how to turn off file sharing. When asked how to tell which online files were legal to download, support staff directed us to the website of the Recording Industry Association of America.

Sponsored links promoting software download sites such as those supported by Download-It-Free.com are still appearing on search engines such as Google. Enter "P2P" and one of the sponsored links will display terms such as - "All Legal," "No Download Fees" and "Find P2Ps". This infuriates industry commentators. "It's funny that Google has this 'do no evil' policy but they're allowing lots of consumers to follow these links," said the chief technical officer of one P2P client company.

Customer service

"We do respond to customer complaints. If there is an area where a customer or advertiser or the owner of a product can start a dialogue with us, then we will take action," says Google UK ad sales manager Richard Gregory, although he adds that "they're not doing anything illegal, they're probably just not providing the best consumer experience in the world."

BitTorrent's president and chief operating officer Ashwin Navin says that the company has complained repeatedly to Google, but the search engine maintains its relaxed stance towards these revenue-generating Adwords users. On the other hand, Google doubtless faces the same problem litigators do: there are too many sites to tackle. Unlike the bloggers at http://blog.siteadvisor.com, we could not get FreeDownloadHq.com to appear as a sponsored Google ad, suggesting the company has now filtered it out.

While other such websites still appear on search engines, P2P software producers such as Jonathan Milson are suffering, thanks to users who do not understand who they are paying for support. "A lot of people will contact us and say 'I bought your product and I'm not getting the service I requested'," complains Milson, a representative of the team behind the Shareaza client.

So what is the precise legal position regarding these websites? "We'd prefer it if the guy disappeared," says David Turner, GPL (General Public License) compliance manager at the Free Software Foundation. "But we're not sure there's much we can do."

In some cases, the distribution of free software for a fee seems clearly legitimate. L3 Publishing, a company selling copies of the GIMP open source photo-editing software on eBay, was quick to respond to our queries. "Yes! The source code and binaries are included on the media as per the terms of the GPL. Also, the CD is plainly labelled as powered by the GNU Image Manipulation Program," said the company." Nevertheless, like sites charging for free downloads, L3's auction generated lengthy online debates over ethics.

It is harder to assess the legality of many download sites, especially those that lie to potential customers, but if nothing else they are ethically dubious. Posing as a potential merchant, BitTorrent's lawyer was sent an email in November by an affiliate network promoter pointing to a guide on his website. "Another key component of sales in this niche is finding the newbies [sic] user. More savvy users only ask for a refund or, worse, chargeback the subscription," said the guide, now deleted. "New users are generally those who type in 'Google' in Google or 'Yahoo' into Yahoo. Finding a reliable pool of these folks is the game."

And for internet users, not being one of these folks is priority one. "Go and visit a related forum for a few minutes first to see what others are saying," warns Austelle, who eventually managed to get a refund. "Enter your doubts into the search engine: 'xyz membership a scam?' or something."

When charging for free software, the product being traded is not the software itself, and often not even the service, but user ignorance. The market in naivety remains profitable, and the supply is unlimited. For many, that will clearly remain an attractive business model for a long time to come.
http://technology.guardian.co.uk/wee...715254,00.html





On the road again

Wi-Fi to Go: The Hot Spot in a Box
David Pogue

YOU know what would be so cool? A portable Wi-Fi hot spot. Whenever you wanted Internet access, you wouldn't have to hunt for a wireless coffee shop or pay $24 a night to your hotel.

Instead, you'd travel with a little box. Plug it into a power outlet — or even your car's cigarette lighter — and boom, you and everyone within 200 feet could get onto the Internet at high speed, without wires.

Actually, such boxes exist. They come from companies like Kyocera, Junxion and Top Global, and they're every bit as awesome as they sound. (Unfortunately, the category is so new that it has no agreed-upon name. "Portable hot spot" is descriptive but unwieldy. "Cellular gateway" is a bit cryptic. Kyocera's term, "mobile router," may be as good as any.)

Before you start thinking that you've died and gone to Internet heaven, however, you should know that these boxes don't work alone. Each requires the insertion of a PC laptop card provided by a cellular carrier like Verizon, Sprint or Cingular. The card provides the Internet connection, courtesy of those companies' 3G ("third generation") high-speed cellular data networks. The box just rebroadcasts that connection as a Wi-Fi signal so that all nearby computers — not just one privileged laptop — can go online.

With those PC cards, you can go online anywhere there's a cellular signal: in a taxi, on a bus, in a waiting room or wherever. In major cities, the speed is delightful, like a D.S.L. or slowish cable modem (400 to 700 kilobits a second). In other areas, you can still go online, but only slightly faster than with a dial-up modem. (Also note that uploading is far slower than downloading.)

All right, go ahead, ask it: If you can already outfit your laptop with one of these miraculous cards, why do you need a mobile router that translates the cellular connection into a Wi-Fi one?

First, not all computers have the necessary card slot. ( Apple's iBooks and new MacBook Pro laptops come to mind.) Second, a mobile router can accommodate machines with no wireless features at all — like desktop computers — thanks to standard Ethernet network jacks on the back. (The Kyocera has four, the Junxion two and the Top Global one.)

Above all, Wi-Fi lets lots of computers share the same Internet signal. Cellular PC-card service is very expensive: $60 a month for unlimited use ($80 if you don't also have a voice plan). That's a lot to pay for a single computer to go online. A mobile router opens up that signal to any computer within about 200 feet; $60 a month is a lot more palatable when 10 or 20 of you are sharing it.

MOBILE routers have become essential equipment for traveling groups. Bus and train companies are experimenting with these boxes to see if having high-speed Wi-Fi on board appeals to passengers. These boxes are also becoming standard amenities for the casts of TV shows and movies and for rock bands, so that they can check e- mail or surf the Web between takes or whenever they're on location or on the tour bus.

But a mobile router might make sense even in stationary environments. Small businesses can use one as a backup connection when the power goes out. (A mobile router can draw its power from a car or battery pack.)

Other people are canceling their home D.S.L. or cable modem service altogether. Instead of paying twice for Internet access — for a cable modem and a cellular laptop plan — they use the cellular card at home and on the road and save a lot of money.

To use a mobile router, you insert your cellular laptop card (which must first be activated in a Windows laptop). Then you connect the router to your computer using an Ethernet cable (included). You type the box's numeric address into your Web browser, and presto: you're viewing its configuration page. Here's where you indicate which brand of PC card you have (Novatel, Sierra Wireless or whatever), turn on password protection, and fiddle with pages and pages of network and security settings, if you're into that sort of thing.

The Junxion box is a biggish slab of folded sheet metal, unimpressive except for its bright green paint job, measuring 6.3 by 10.3 by 1.1 inches and costing $600. As you can tell from the price, Junxion seeks corporate buyers, not individuals. Yet only a few of its features cry out "corporate." (One of them lets a network geek configure a fleet of Junxion boxes by remote control, from the comfort of company headquarters.)

For $600, you might expect more than two measly status lights, and geeks might expect the wireless signal to be 802.11g instead of the older "b" variant. On the other hand, the Junxion has some neat features, including the ability to greet colleagues with a splash screen. ("Welcome to Dave's free Wi-Fi highway! Click Connect to continue, and don't forget to thank Dave by dropping off cash or baked goods at his cubicle.")

The new Kyocera KR1, developed jointly with D-Link, is more attractive for a couple of important reasons. First, it costs only a third as much ($200 after rebate). It's also much smaller and better-looking (8.5 by 5.3 by 1.3 inches) and feels more like a finished commercial product.

Note, however, that the KR1 works only with Verizon and Sprint cards — or as the techies might say, it works only on EV-DO networks. Its rivals, by contrast, can accommodate almost any card from any service, including the new BroadbandConnect service from Cingular (so far available in 16 cities).

On the other hand, only the KR1 can draw its Internet connection from certain EV-DO cellphones instead of a PC card. That is, you can connect the Samsung A890 or Audiovox 8940, for example, with a U.S.B. cable. The phone becomes a sort of Internet antenna for the router.

If the Junxion box represents the complete absence of industrial design, then Top Global's 3G Phoebus represents the height of it. This mobile router is a white, gray or black plastic pyramid (7 by 7 by 5.5 inches) that makes no attempt to look like a piece of networking equipment. You either love that approach or you don't.

Design aside, the Phoebus has a lot to recommend it. It's the only model with an on-off switch — a clicky chrome marble on the front. It's also the only model that when used with Sprint or Verizon cards, automatically configures itself; you can skip the setup steps involving the Ethernet cable and Web browser. You literally plug the thing in, insert the card, and start surfing. That feature, and its super-clear browser-based Web setup page, makes the Phoebus the simplicity champion.

The only causes for pauses are the single Ethernet jack in the back, the price ($400) and the difficulty of finding a place to buy the thing. (Homemade-looking Web sites like americanevdo.net carry it.)

There's no overstating the joy of carrying around your own Wi-Fi hot spot, ready for your whole gang to enjoy wherever you can find a power outlet or even a car's cigarette-lighter socket.

Not everyone is happy about this product category, however. Verizon, in particular, strongly objects.

"Broadband access is designed for individual customers," said Brenda Raney, a Verizon Wireless spokeswoman. "When customers use unauthorized devices to share the service, they are in violation of their service agreements."

Yet this objection should sound distinctly familiar to anyone who remembers the dawn of the cable modem era. The cable companies originally hoped to charge $40 a month for each computer in your home, and did everything in their power to dissuade people from hooking up network routers that could share the signal. In the end, of course, common sense won, the cable companies lost, and now just about every home D.S.L. or cable modem signal is shared among two or more computers.

If you like the idea of a mobile router, any of these hot-spots-in-a-box will do the trick. But considering its polish and low price, the Kyocera KR1 has the edge (provided you're a Sprint or Verizon customer). Until the United Nations finally gets around to blanketing the earth with an uninterrupted cloud of Wi-Fi coverage, these gadgets are the next best thing to finding a wireless connection everywhere you go.
http://www.nytimes.com/2006/02/23/te...=1&oref=slogin





It Rings, Sings, Downloads, Uploads. But Can You Stand It?
Ken Belson

Greg Harper is your classic gadget freak, with the latest cellphones and strong opinions about each of them.

You would think that he'd be wildly enthusiastic about the new third-generation, or 3G, cellphones that play video and music. But instead, he seems less than impressed — a reaction that could spell trouble for Sprint, Verizon Wireless and other providers that have spent billions of dollars upgrading their networks to lure customers to their high-speed 3G systems.

"I'm no longer worrying about hot spots or being out of touch," said Mr. Harper, a business consultant who carries a Motorola phone from Verizon for talking, a Sprint Pocket PC smart phone for e-mail and an iPod for music. "The big problem is how hard it is to navigate the stuff," he said. "And they hit you with these extra charges, so you don't want to use it."

Mr. Harper's advanced phones enable him to watch TV segments, send e-mail messages and photos, download music and games, and search the Web about five times faster than with a standard cellphone. But the 3G service for his phones and laptop PC adds as much as $60 a month to each of his cellular plans. Figuring out how to use all the features on the handsets is also a chore.

If the nation's biggest cellular carriers are not impressing early adopters like Mr. Harper, it may be years before ordinary consumers start signing up in sizable numbers for the new services, which were introduced about a year ago.

American carriers combined have spent about $10 billion in the last three years to upgrade their networks. Verizon Wireless now offers 3G services in 181 markets, while Sprint expects to match Verizon's coverage in the coming months. Cingular uses a different 3G technology that is available in 52 cities. (T-Mobile, the fourth-largest carrier, plans to introduce 3G services next year.)

With individual subscribers spending less on standard voice-only plans, the carriers are banking on consumers to move rapidly to more expensive 3G services and do more than talk on their handsets. But the experience of carriers that introduced 3G services in Japan, Korea and elsewhere is sobering. In those countries, it took years before phones and plans were cheap enough to entice consumers to use the new data features, and even longer before carriers saw any return on their investment.

American carriers have not released separate figures for 3G cell subscribers. But industry analysts say there may be fewer than five million 3G phones in use, or less than 3 percent of the market, and only two million of those are connected to a 3G data plan.

"The biggest impediment is not pricing or technology, but consumer behavior," said Charles S. Golvin, an analyst at Forrester Research. "Most people still look at these things as phones."

To be sure, the amount that consumers spent on data services has nearly doubled in the past year, and revenue from those services now makes up nearly 10 percent of overall sales at the largest carriers. Last Wednesday, Sprint Nextel said that its customers had downloaded one million songs from its music site since it opened in October (some were promotional giveaways; others sold for $2.50 a song). Verizon said that in the fourth quarter, its customers sent 7.4 billion text messages and 135 million photos with their handsets.

But thus far, the bulk of the data being swapped on phones — short messages, ring tones and photos — can be handled by the current generation of phones. Only about one-quarter of Verizon Wireless's handsets are even capable of providing 3G services, though the company is steadily adding more models to its lineup.

The carriers are trying to keep prices for the new phones in line with other high-end handsets, lest they scare away customers. Verizon Wireless's LG 8100, which lets customers watch television clips, play games and listen to music, costs $150 after rebates.

Verizon's 3G data service, called V Cast, which allows users to watch CNN, CBS News and MTV segments, among other programs, costs an additional $15 a month.

Sprint has a $15-a-month plan that lets subscribers watch segments of ABC News and other programs, listen to a Sirius radio channel and roam the Web. For $20 or $25 a month on Sprint, users can watch extra programming from ESPN, Animal Planet and other channels that have been reformatted for the small screen.

While watching video on cellphones may be novel, the experience is hardly overwhelming. As Mr. Harper and others have found out, downloading a video clip can often take as long as watching it. The program clips on V Cast are updated only a few times a day and often there are only a handful for each category, some of which are sports, news and entertainment.

"All the services are lacking," Mr. Harper said. "Verizon's V Cast is better than Sprint's, but it ain't there yet."

Cingular has introduced a more complete TV experience called MobiTV, which gives subscribers 25 channels of live television, including CNBC, Fox Sports and Discovery, on their phones for $9.99 a month in addition to their data and voice plans.

Verizon also plans to introduce a similar type of video service created by Qualcomm called MediaFLO that will provide access to live television broadcasts.

Still, for business users like Mr. Harper, few phones have all the functions he needs. Many business executives still buy devices like the Treo or the BlackBerry because their larger screens make it easier to read e-mail and open large attachments. Adding a 3G data plan makes sending and receiving those messages faster as well.

One bright spot for the carriers is that many companies are starting to buy their broadband PC cards, which plug into laptops to enable them to connect wirelessly to a 3G network.

Doris Mosblech, the network manager at Embarcadero Systems, which provides technology to shipping companies, is using PC cards from Sprint Nextel to let her company's workers access their e-mail with their laptops. The cards, priced at around $250 retail, can send data up to 10 times faster than older PC cards. With the new PC card, a user still needs to subscribe to a monthly 3G plan.

"As time has gone on, the applications we use require more broadband," Ms. Mosblech said, referring to larger e-mail attachments, videoconferencing and Internet phones. "The new cards felt almost like the speeds we get on our desktops."

In time, carriers may cut the prices for the cards and the PC data plans, which now cost between $40 and $80 a month. That was the pattern in other countries where 3G services were introduced.

American carriers, while late to 3G, have also learned from what has succeeded and flopped overseas. Verizon and Sprint have relied heavily on Samsung and LG, two companies with experience making 3G handsets in South Korea. Other manufacturers have ironed out many of the kinks — like poor battery life and bulky size — that plagued the first 3G phones released in Japan in 2001.

The carriers are also introducing flat-rate data plans; the Asian providers learned that consumers did not like having to pay by the piece for the data they sent.

Still, though customers are upgrading their phones and plans in Japan, the amount that individual subscribers spend has declined, a trend that may make American carriers think twice about expecting any windfalls from their 3G networks.
http://www.nytimes.com/2006/02/20/te...=1&oref=slogin





Chicago Gears Up for Wireless Broadband
Dave Carpenter

The nationwide rush to go wireless appears poised to extend to its biggest city yet. Chicago is launching an effort to offer wireless broadband, city officials said Friday, jumping on the Wi-Fi bandwagon as similar initiatives proceed in Philadelphia, San Francisco and smaller cities.

Chicago has hundreds of Wi-Fi hotspots in places like coffee shops, bookstores and libraries, where anyone can walk in, sit down and connect to the Web. Hoping to extend that wireless blanket to all 228 square miles, the city plans to ask technology companies this spring to submit proposals for the project.

While it's too soon to say how the system would operate, the goal is to make Internet access "broad and affordable" for residents and heighten Chicago's appeal for businesses and tourists alike, according to Chris O'Brien, the city's chief information officer.

The city did not specify goals for how much the system would charge for access. In Philadelphia, EarthLink Inc. (ELNK) is building a citywide network that will charge a wholesale rate of $9 a month to Internet service providers that would then resell access to the public at an undetermined price.

"We think it's important for residents of the city and tourists and businesses to have lots of different ways to connect," O'Brien said. "For a city as big as Chicago, with the vibrant business community and diverse citizen base that we have, you want to make sure all kinds of technology are available to them as they work and enjoy entertainment options."

If all goes smoothly, the system could be running as soon as 2007, O'Brien said. That would all but certainly leave the city behind Philadelphia, which hopes to have its entire system in place late this year or early next year. But the size of a Chicago network would dwarf Philadelphia's planned 135-square-mile network or anything now in place.

Currently, the biggest municipal Wi-Fi network is the all-free MetroFi in the south San Francisco Bay area at 35 square miles, according to Wi-Fi expert Glenn Fleishman. By spring, that title will be passed to one covering nearly 110 square miles in the neighboring Phoenix suburbs of Tempe and Chandler, Ariz., he said.

Cities' race to get into municipal broadband is being increasingly embraced by Internet service providers, since most cities are enlisting private companies to help build the wireless systems rather than doing it on their own. EarthLink created a division last year to solicit deals similar to Philadelphia's with the 50 largest cities.

Cities besides Philadelphia that have put Wi-Fi projects out for proposals in the last four months alone, according to EarthLink, include Portland, Ore.; San Francisco, Anaheim, Pasadena and Long Beach, Calif.; Denver and Aurora, Colo.; Minneapolis; Milwaukee; Grand Rapids, Mich.; Pittsburgh; Arlington, Va.; and Brookline, Mass.

Rather than viewing the cities' efforts as competition, said Don Berryman, president of EarthLink's municipal networks division: "This allows us to build our own network and provide broadband service anywhere we want and not have to work through the Bell company or the cable company, so it gives us a lot of freedom."

Chicago's main phone company, AT&T, says it similarly would not be opposed to a city-initiated effort.

"AT&T always has believed that the best approach is to stimulate investment in broadband," spokesman Rick Fox said. "As long as you're working with the private sector, that's a good thing."

The idea of a citywide Wi-Fi network got a big thumbs-up from several Chicagoans who were sitting in cafes with their laptops Friday.

"I'm always searching for Internet hotspots," said Beibei Que, a law student getting in some work at a coffee shop. "I like to have the Net at my fingertips wherever I go."

Katy Harper, who works mostly out of her home, said she would welcome the chance to get online elsewhere. "It's nice to be able to go out and sit somewhere and get connected," she said.

Chicago officials haven't yet committed to specific goals for the project, but they don't want to spend city funds. They have been closely watching Philadelphia's project, including its priority on low user costs and its intent to ensure that more computers and training programs are available for low-income residents.

"Our main mission is to increase access and help overcome the digital divide," said Robert Bright, board chairman of the Wireless Philadelphia nonprofit group overseeing that initiative.

Fleishman said building a municipal Wi-Fi network as big as the ones envisioned in Philadelphia and Chicago could be troublesome. He cited issues surrounding the need for high-powered antennas and interference from existing Wi-Fi networks.

"Once you get into dense urban environments, it's not that it won't work but it's more problematic," he said. "Nobody's built a network of this size."
http://apnews1.iwon.com/article/20060217/D8FR5HTO0.html





San Francisco Gets Proposals for Free Citywide Wi-Fi Net
Matt Richtel

Google and EarthLink have teamed up to offer to build a free citywide wireless network here — one of six proposals by companies and nonprofit groups vying to become the municipality's access provider.

San Francisco joins Philadelphia, Anaheim, Calif., and other cities to push for widespread wireless access.

What makes San Francisco different is that it could become the first major city to offer free access to all its residents. At least two of the six proposals submitted to the city would provide free access: the one from Google and EarthLink, an Atlanta-based Internet access company; and one from SF Metro Connect, a collaboration between Cisco Systems, I.B.M. and SeaKay, a nonprofit group.

Jennifer Petrucione, a spokeswoman for Mayor Gavin Newsom, said that a panel of experts planned to evaluate all the proposals by April and make a recommendation to the mayor.

Under the proposal from Google and EarthLink, Google said it would provide free access over the 47-square-mile city, but that access would be at modest speeds of 300 kilobits per second. Megan Quinn, a spokeswoman for Google, said that the company had not yet determined how and whether it would subsidize the free access.

"At this point, we don't know exactly how we will monetize this service," Ms. Quinn wrote in an e-mail message. She declined to speculate whether Google planned to pay for the service by delivering paid advertisements to users. "However, like Web search, our goal is to create services that satisfy the information needs of users while also creating new markets for advertisers and local businesses," she said.

In addition, EarthLink said it planned to offer higher-speed access of 1 megabit per second for $20 a month, a fee that would support the $15 million cost to build and maintain the system over 10 years.

Under the proposal from SF Metro Connect, the organization said it would provide free access at speeds of at least 1 megabit or higher, and would allow commercials on the network.

The other proposals came from Communications Bridge Global, MetroFi, NextWLAN and Razortooth Communications.
http://www.nytimes.com/2006/02/23/te...gy/23wifi.html





Tech CEOs Urge US Find More Wireless Airwaves

Chief executive officers of some leading technology companies plan to call on Thursday for the U.S. government to find more wireless airwaves for use as new applications emerge.

The Technology CEO Council said on Wednesday it will issue a report urging Congress to order the Bush administration to analyze which airwaves are not being used best, and how they might be re-allocated.

Additionally, the organization plans to urge the Federal Communications Commission and the National Telecommunications and Information Administration to consider allowing government airwaves that are underutilized to be used for other purposes.

"Our nation's wireless needs are too often governed by 1970s regulations that hinder economic progress and innovation," Motorola Inc. CEO Edward Zander said in a statement obtained by Reuters. He serves as chairman of the technology organization.

The group pushing for the changes also includes executives from Hewlett-Packard Co. (HPQ.N: Quote, Profile, Research), IBM (IBM.N: Quote, Profile, Research), Intel Corp. (INTC.O: Quote, Profile, Research), Dell Inc., EMC Corp. and Unisys Corp., among others.

Wireless companies have been hungry for more airwaves as they deploy new services like high-speed Internet and video content.

The executives also plan to suggest the FCC ease restrictions on wireless licenses so companies have more flexibility to use the airwaves for new services. They also will recommend making more unlicensed spectrum available that could be used for a variety of purposes.

The organization also plans to recommend Congress and regulators ensure that public safety organizations have the airwaves they need. Safety officials have complained about poor communications during disasters like the September 11 attacks and Hurricane Katrina.

The FCC is slated to start auctioning some airwaves June 29, including some airwaves that government agencies are vacating.

Other airwaves are expected to be sold in 2008 ahead of the 2009 move by U.S. television broadcasters from analog wireless airwaves to other airwaves for their digital television signals.
http://today.reuters.com/news/newsAr...ELESS-CEOS.xml





Copyright Ruling Against Google

Google's image search service violates the copyrights of an x-rated magazine and Web publisher, Perfect 10, by displaying thumbnail-size photographs on its site, a federal judge has ruled.

In the ruling, Judge A. Howard Matz of United States District Court for the Central District of California ruled that Google's use of thumbnail photos made it a customer of Perfect 10, particularly because Perfect 10 produces small images for mobile telephones.

A Google lawyer, Michael Kwun, said Google expected to appeal any injunction against it.
http://www.nytimes.com/2006/02/23/te...=1&oref=slogin





Kazaa Heads Back To Court
Jim Welte

Found guilty of encouraging its users to infringe copyright, file-sharing service's appeal will be heard in Federal Court in Australia.

The legal battle between Kazaa and the music industry begins its next chapter today as the file-sharing service heads back to court to appeal a judge's ruling that found it guilty of inducing copyright infringement.

The controversial, Australia-based peer-to-peer (P2P) service hopes to avoid being shut down by convincing a full bench of the Australian Federal Court in Sydney to reverse the ruling from last September.

But the Australian recording industry--some 30 record labels--also found some parts of the prior decision unfavorable to its argument and is also appealing the decision.

Kazaa is owned by Sydney-based Sharman Networks.

"Sharman Networks is determined to resist the record companies' appeal in this case and bring its own appeal presenting arguments against the record companies' position," the company said today in a statement. "We are confident that the ultimate outcome of this case will be positive for Kazaa."

The case has taken quite a few twists since its February 2004 inception, and even more turns since the ruling last September.

When Kazaa announced its intention to appeal the case, Federal Justice Murray Wilcox agreed to delay the shutdown on the condition that Sharman install a keyword-filtering system by December 5 that would block access in Australia to some 3,000 popular artists such as Kylie Minogue, Madonna, and Eminem.

But instead of implementing filters, the company blocked network access to all Australian users, a measure Sharman said complied with the court order pending the outcome of the appeal.

The music industry, however, did not agree, saying the blocking of network access only prevented new users from committing copyright infringement--not existing ones. The industry then filed a motion asking Wilcox to find Sharman CEO Nikki Hemming and Kevin Bermeister, CEO of Kazaa technology partner Altnet, in contempt of court.

The appeal hearing is expected to last five days.
http://www.mp3.com/stories/3366.html





In Europe, Microsoft Faces a New Antitrust Complaint
Paul Meller

Microsoft's antitrust battle in Europe intensified Wednesday when some of its biggest rivals filed a new complaint against it, accusing the company of a wide range of antitrust abuses.

I.B.M., Oracle, Sun Microsystems and six other companies submitted a formal complaint to the European Commission on Wednesday, claiming that Microsoft continues to abuse its dominant position in the software market in spite of a 2004 European antitrust ruling against it.

The complaint opened a new chapter in Microsoft's long-running battle with competition regulators. The European Commission says Microsoft has not complied with its antitrust ruling, and is threatening to fine the company as much as 2 million euros ($2.4 million) a day. Microsoft paid 497 million euros in fines after the 2004 ruling.

The commission's apparent inability to get Microsoft to comply with the ruling had frustrated many of Microsoft's rivals, but the threat of daily fines has restored the commission's credibility, and spurred the competitors to further action.

"Today's complaint brings to the European Commission's attention anticompetitive Microsoft practices in a growing number of areas," said Simon Awde, chairman of the European Committee for Interoperable Systems, a trade association representing the nine companies that filed the complaint.

The other companies behind the complaint are Nokia, Red Hat, RealNetworks, Opera, Corel and Linspire.

The complaint focuses on the Microsoft Office bundle of applications, which includes the PowerPoint software, made for use in public presentations.

The commission's spokesman for antitrust issues, Jonathan Todd, said competition officials would examine the new complaint carefully. Microsoft said it had expected the new complaint. "We have come to expect that as we introduce new products that benefit consumers, a few competitors will complain," it said in a statement.

It dismissed the trade association as "a front for I.B.M. and a few other competitors," adding that when faced with innovation, "they choose litigation."

The association said it believed that the issues raised in its complaint were vital to restoring competition in software. The Office bundle of software applications are especially important to businesses and its inability to work smoothly with applications like those in Star Office software, has prevented rivals from gaining a foothold in the market for desktop operating systems.

Open-source desktop operating system manufacturers have "effectively been kept at bay by the lack of interoperability of the Office applications," said Thomas Vinje, a partner in the Brussels office of the law firm Clifford Chance.

The lack of interoperability of Office applications was never part of an antitrust case in the United States, though the state of Massachusetts raised the issue in a discussion with Microsoft over public procurement. The state government said it would only order Office software if it worked well with open, interoperable software formats.

Microsoft agreed, and said it would open up Office. The new version, Office 12, which is to be released before the end of the year, will use extensible markup language, or XML, an industrywide standard, said Tom Brookes, the company's spokesman in Brussels.

Microsoft has submitted Office 12 to Ecma International, the industry standards body, to be registered as a standard software format interoperable with all rivals.

The trade association however, dismissed the move. "We are well aware of the XML standardization initiative, and we reached the conclusion that it doesn't solve the problem we are complaining about," Mr. Vinje said.
http://www.nytimes.com/2006/02/23/te...=1&oref=slogin





iPod Takes Japan by Storm
The Godzilla of digital-musical players far outsells rivals from local consumer-electronics giants like Sony. After all, it's so kawaii (cute)

Shibuya retail and fashion conclave, and you will doubtless see electronic shops galore hawking MP3 players such as Sony's (SNE ) Walkman, Toshiba's Gigabeat, and the Panasonic D-Snap brand. Yet a determined young couple on hand recently -- Megumi Mizuno, 22, and Takaaki Tokuyoshi, 17 -- bypassed them all, making a straight shot to the Apple (AAPL ) outlet. Why? They've been infected by the near-global iPod obsession.

"The iPod design is cool," says Mizuno, a college student majoring in psychology, who wants a replacement for her aging mini-disk player. Tokuyoshi, meanwhile, is looking for a step up from his DoCoMo (DCM ) mobile phone, which he currently uses to listen to music. "iPod's sound quality is better, and the cell-phone battery doesn't last long enough to enjoy listening to music," he says. "The prices are reasonable, too." The iPod nano, with 4 gigabytes of memory, retails for about $230 in Japan.

It seems iPod mania is alive and well in Japan -- one of the most competitive consumer-electronics markets on the planet. Despite an array of well-entrenched Japanese rivals, such as Sony and Matsushita (MC ), the iPod had cornered 51.3% of the digital-music player market as of the end of 2005, up from about 32% in 2004, according to research firm BCN. Sony was a distant second with 16.2%, while Panasonic grabbed just 8.2% of the market.

SLICK MARKETING CAMPAIGN. Others have exited the market entirely. In November, Olympus (OCPNY ), maker of the m:robe music player, pulled its product. D&M Holdings, owner of the Rio brand, exited the stage in August. Apple's killer market-share grab is even more impressive when you consider that the overall Japanese market for music players shot up 50% to 4.2 million units in 2005. "Suffice to say, iPod has been a huge success," says Hiroshi Kamide, an analyst at KBC Securities in Tokyo.

Japanese consumers, much like their U.S. counterparts, are jazzed by iPod's sleek and hip design, easy-to-use functions, and first-class software -- something local rivals have yet to match. "Apple has focused on developing a seamless, end- to-end experience for the consumer when it comes to portable music," says Jon Erensen, a senior research analyst at Gartner Dataquest. "Other companies, including the Japanese consumer-electronics giants, have been focused on one or two pieces of the equation." Sony, for example, has received plaudits for design and sound quality, but criticism for its Connect software.

Slick marketing has helped, too. In January the Nikkei Marketing Journal named Apple's TV advertising campaign for iPod the best of 2005. Another big boost has been the August rollout of a Japanese version of Apple's iTunes Music Store. The company also opened the brick-and-mortar store in Shibuya -- Tokyo's vibrant youth center. A month later it introduced its best-selling, ultra-slim iPod nano to Japan.

MOBILE-PHONE THREAT. Still, iPod's continuing dominance in Japan isn't a sure thing. For starters, Sony isn't giving up the chase. Its new Walkman, which will be released in the U.S. this year, has been well-received in Japan. Analysts say Sony's working hard to improve the software.

What's more, downloads from Mora, a Japanese download service backed by Japan's major music labels, including Sony, grew rapidly in 2005. Last December, for the first time, it topped 1 million downloads in one month. That's a 190% increase over the year-ago period. One advantage Mora has over the iTunes Music Store is access to Japanese pop talent. Apple doesn't have tie-ups with some of the biggest local record companies, such as Sony Music Entertainment (Japan) and Warner Music Japan.

A bigger threat is the growing sophistication of mobile phone-based music in Japan. Cell phones are frequently discussed as potential iPod killers, and Japan's carriers are pushing the hardest to make that a reality. AU, a unit of KDDI, is particularly aggressive. Since November, 2004, AU customers have been able to download full songs from the carrier's 3G networks, using a service called Chaka Uta Full. As of mid-January, more than 33 million songs had been downloaded, and 5.9 million phones can access the service.

STEPPED-UP QUALITY. In January, AU unveiled a new service called LISMO, which allows subscribers to supplement tracks downloaded over its 3G networks to cell phones with songs uploaded to their PCs. It also debuted some impressive musical handsets. One of them, made by Toshiba (TOSBF ), includes a 4- gigabyte hard drive capable of storing 2,000 songs. And in April, AU is adding an online music site called DuoMusic Store, which will enable subscribers to download tracks to their PCs or phones. Apple claims iTunes is the leading supplier of downloadable music via PCs in Japan.

The music quality on mobile phones is improving as well. Tracks downloaded from AU's 3G network, for example, are compressed using the HE-AAC format, which stands for high-efficiency advanced audio coding, and is generally considered a step up from the MP3 format. On the latest products, "the music experience is very similar on a handset player," says Mark Kirstein, an analyst at research firm iSuppli.

For now, though, the iPod absolutely rules Japan's digital-music player market -- pretty amazing when you consider that Japan is home to some of the toughest competitors imaginable in the global consumer-electronics game.
http://www.businessweek.com/globalbi...223_774050.htm





A Milestone for iTunes; a Windfall for a Downloader
Claudia H. Deutsch

It may well have been the best 99 cents Alex Ostrovsky ever spent.

Early yesterday, he paid that amount to download "Speed of Sound," a song on the Coldplay album "X&Y," from the iTunes Music Store, the Internet music shop that Apple Computer started less than three years ago.

He did not know it, but it was the billionth song the site had sold, and Apple was not about to let that go unnoticed.

So at 12:45 a.m., Mr. Ostrovsky's phone rang. It was an Apple employee, telling him that in addition to the song, Apple was giving him a 20-inch iMac, 10 iPods and a $10,000 gift card for the iTunes store. It is even establishing a scholarship at the Juilliard School in his name.

Mr. Ostrovsky, 16, was still trying to absorb it all yesterday. His phone had been ringing all day, alternating between reporters wanting to know his reaction and friends wanting to congratulate him.

At one point Mr. Ostrovsky, who lives in West Bloomfield, Mich., went to an Apple store to look at iMacs. "Everyone there knew who I was, too," he said. "It's just surreal."

He has pretty concrete ideas about how he will use the prizes, though. The iMac stays with him — "I'd been asking my parents for a new computer for a while, so this was a dream come true," he said. He will keep an iPod, and family and friends will get the rest. But the $10,000 gift card has him a bit flummoxed.

"My sister has already called from New York to talk about divvying it up," he said, "and I'll probably buy some music for friends."

But he will also buy more for himself. Until now, Mr. Ostrovsky has not been a frequent user of the iTunes store. "I've downloaded maybe 50 songs, but I was always more likely to borrow CD's from my friends," he said. "I'm certainly going to download more songs now."

That would certainly be music to Apple's ears.
http://www.nytimes.com/2006/02/24/te...=1&oref=slogin





Razorback2 Bust Fails to Dent eDonkey Traffic
John P. Mello Jr.

"Copying of music and movies is more prevalent today than it was in 2001 when Napster was at its height," said Fred von Lohmann, a staff attorney with the Electronic Frontier Foundation. "All the lawsuits against thousands of individuals as well as people maintaining sites like Razorback2 don't appear to be making a serious dent in peer-to-peer file sharing."

Despite some chest beating by the entertainment industry Wednesday over the shutdown of one of the biggest index servers on the eDonkey network, a raid by Belgian and Swiss police seems to have had little impact on file-sharing traffic.

"We have seen no effect on the eDonkey traffic levels," Andrew Parker, chief technical officer at CacheLogic, a UK-based watcher of Internet traffic patterns, told the E-Commerce Times.

"On a technical level that isn't particularly surprising," he added. "The Razorback server is purely an eDonkey index server. It doesn't actually contain any of the illegal content itself, just the details of who is sharing what content."

Razorback2 was rubbed out Tuesday when, in a coordinated offensive, Swiss police arrested the server's operator and Belgian gendarmes seized his hardware in an Internet hosting center just outside Brussels.

Major Victory

Razorback2 was a very popular eDonkey server, used by an estimated one million file sharers, or about a third of all eDonkey users.

"This is a major victory in our fight to cut off the supply of illegal materials being circulated on the Internet via peer-to-peer [P2P] networks," proclaimed Motion Picture Association Chairman and CEO Dan Glickman in a statement.

"By shaving the illegal traffic of copyrighted works facilitated by Razorback2," he continued, "we are depleting other illegal networks of their ability to supply Internet pirates with copyrighted works which is a positive step in our international effort to fight piracy."

In a separate statement, the music industry's European arm, the International Federation of Phonographic Industries, observed, "This is a very significant breakthrough in the fight against Internet piracy internationally, removing one of the biggest and most well known sources of illegal music files on the Internet."

Antique Technology

Although popular, Razorback2 was far from state-of-the-art in the current eDonkey world.

"Razorback2 uses the old eDonkey protocol, which is in some ways similar to the old Napster protocol in that it relies on central servers," Fred von Lohmann, a staff attorney with the Electronic Frontier Foundation in San Francisco told the E-Commerce Times.

"For the last four to five years, peer-to-peer protocols have been decentralized," he continued. "So in some ways, by shutting down Razorback2, they're shutting down an antique in the peer- to-peer world."

Parker, of CacheLogic, explained that modern eDonkey clients, such as eMule, automatically download a list of index servers at startup. With Razorback2 out of the picture, eDonkey clients are just rerouting traffic to the more than 100 index servers still in operation.

Clever Algorithm

Moreover, he said, the eDonkey network can operate without any index servers due to a fully decentralized component called KAD, or Kademila.

The theory behind Kademila was developed by Petar Maymounkov, now a doctoral student at the Massachusetts Institute of Technology (MIT) in Cambridge, Mass.

"It's an algorithm that avoids the need for a central server altogether," he told the E-Commerce Times. "It's a moderately clever algorithm that can find something by asking a small number of computers on the Internet.

"In the current state of the art, people don't want to hear about central servers any more," he added. "They're remains of the past. As you can see, they're being shut down one after the other."

P2P Keeps Sharing Along

Those shutdowns, though, don't seem to be crimping P2P growth, according to the EFF's von Lohmann.

"The number of users on peer-to-peer networks have been at record highs for several months," he said.

"It's true that they're shutting down some site operators," he acknowledged, "but when you have tens of millions of people using these networks, shutting down a few sites -- even a high profile one like Razorback2 -- is unlikely to substantially change reality.

"Copying of music and movies is more prevalent today than it was in 2001 when Napster was at its height," he contended. "All the lawsuits against thousands of individuals as well as people maintaining sites like Razorback2 don't appear to be making a serious dent in peer-to-peer file sharing."
http://www.technewsworld.com/story/49007.html





Free Software? You Can't Just Give It Away

Who could be upset by a scheme that allows free use of software? Well, Gervase Markham has found one Trading Standards officer who is

Who could possibly be upset with the Mozilla Foundation for giving away itsFirefox browser?

One of my roles at the Mozilla Foundation relates to copyright licensing. I'm responsible for making sure that the software we distribute respects the conditions of the free software licences of the underlying code. I'm also the first point of contact for licensing questions.

Most of the time, this job involves helping people who want to use our code in their own products understand the terms, or advising project members who want to integrate code from another project into our codebase. Occasionally, however, something a little more unusual comes along.

A little while ago, I received an e-mail from a lady in the Trading Standards department of a large northern town. They had encountered businesses which were selling copies of Firefox, and wanted to confirm that this was in violation of our licence agreements before taking action against them.

I wrote back, politely explaining the principles of copyleft – that the software was free, both as in speech and as in price, and that people copying and redistributing it was a feature, not a bug. I said that selling verbatim copies of Firefox on physical media was absolutely fine with us, and we would like her to return any confiscated CDs and allow us to continue with our plan for world domination (or words to that effect).

Unfortunately, this was not well received. Her reply was incredulous:

"I can't believe that your company would allow people to make money from something that you allow people to have free access to. Is this really the case?" she asked.

"If Mozilla permit the sale of copied versions of its software, it makes it virtually impossible for us, from a practical point of view, to enforce UK anti-piracy legislation, as it is difficult for us to give general advice to businesses over what is/is not permitted."

I felt somewhat unnerved at being held responsible for the disintegration of the UK anti-piracy system. Who would have thought giving away software could cause such difficulties?

However, given that the free software movement is unlikely collectively to decide to go proprietary in order to make her life easier, I had another go, using examples like Linux and theOpenOffice office suite to show that it's not just Firefox which is throwing a spanner in the works.

She then asked me to identify myself, so that she could confirm that I was authorised to speak for the Mozilla Foundation on this matter. I wondered if she was imagining nefarious copyright-infringing street traders taking a few moments off from shouting about the price of bananas to pop into an internet cafe, crack a router and intercept her e-mail.

However, the more I thought about it, providing a sensible reply to that question is somewhat difficult. How could I prove I was authorised to speak for the Foundation? We're a virtual organisation – we have three employees, one in Vancouver, one in Virginia and one in leafy North London, with no office or registered trading address in the UK. As far as the Mozilla part of my life goes, my entire existence is electronic.

In the end, I just had to say that the fact that I am capable of receiving and replying to e-mail addressed tolicensing@mozilla.org would have to be sufficient. She would just have to take it on trust that I was not a router-cracking banana merchant. She must have done so, as I never heard from her again.

While the identity verification aspect of this incident is amusing, what is more serious is the set of assumptions her e-mails implied. It demonstrates how the free software model disrupts the old proprietary way of doing things, where copying was theft and you were guilty until proven innocent.

In a world where both types of software exist, greater discernment is required on the part of the enforcers. I hope this is the beginning of the end of any automatic assumption that sharing software with your neighbour must be a crime.

Gervase Markham says that he works for the Mozilla Foundation, a non- profit organisation dedicated to promoting choice and innovation on the internet. Of course, he may just be a banana seller. His blog is Hacking For Christ
http://business.timesonline.co.uk/ar...051196,00.html















Until next week,

- js.


















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