What Price Music?
Amy Harmon
Since the introduction of vinyl records after World War II, recorded music has assumed many shapes and sizes, each one coming with a higher price tag than the last. Eight-track tapes cost a dollar more than LP's when they rose to popularity in the late 1960's and cassettes commanded a premium over eight-tracks. When CD's debuted in the mid-1980's, record labels sold the shiny discs for $18, more than double the price of what they charged for the same music on LP's and cassettes that cost more to manufacture.
Unlike these formats, which the industry adopted voluntarily and marketed vigorously, the latest shift— to digitized versions of songs that can be distributed online— have been thrust upon it, the outgrowth of a technology it could not control. Battered by a sales slump it attributes largely to digital piracy and heartened by a limited test with Apple computer owners, this fall the record industry is trying to catch up with its file-swapping customers: the major labels and many independents have agreed to deconstruct the album, allowing anyone with a computer to buy any of hundreds of thousands of individual songs. Soon huge catalogs of every genre of music will be available for sale on the Internet from over a dozen retailers, bearing the blessing and license agreements of the major record labels.
No one knows what all the effects will be. But one will certainly be on price; music in the new format will cost at least a little less than it did in the old. The standard charge has become 99 cents a track. Albums that cost between $12 and $18 on CD now sell for about $10 online. The labels have also authorized several services to offer a kind of online lease program for music: subscribers pay a flat $10 a month to listen to as many as half a million tracks as often as they want over the Internet, rather than storing them on a computer or burning them to a CD.
And the next months are expected to bring price wars — in both the usual and a more figurative sense of the term. As musical recordings have increasingly shed their physical form, the record industry and its customers have been at odds over what it all should cost. Music fans complain of high CD prices and copy more music illicitly than they purchase legally, while the record companies rail against the devaluation of their product and take file-sharers to court.
Since legal ways to experience online music are only now becoming widely available, there is no established record of what the market will bear or how these innovations will be received. Will each song purchased online represent the loss of a whole CD sale in the store? Or will customers respond to the ease and selection of e-commerce by buying more, overall? One possible development is that hit songs could cost more than obscure recordings. Another is that retailers would set prices on a sliding scale, to favor students or high-volume buyers — a departure for an industry that has basically sold one product, in one configuration, discounted at periodic intervals, for decades.
With all these unknowns, and with all the labels in competition with one another, how did the online services decide — even for the time being — on what to charge for a song? By most accounts, the 99 cent trend started with Apple Computer's chief executive, Steven P. Jobs. One record executive who insisted that he not be identified described a meeting last winter of the company's senior management that Mr. Jobs addressed in New York. "He came in and said, `People pay $3.99 for a cup of Starbucks coffee, and it's gone in 10 minutes,' " he recalled. "If you compare it to free, then 99 cents may seem like a lot. If you compare it to a cup of Starbucks coffee, it seems like a very good value."
An executive at another label, who also declined to be identified, put it slightly differently: "Who the hell knows?" he said of the pricing decision. "It's a shot in the dark."
Ninety-nine cents is only slightly less than the cost of a song on a CD (given the usual price, around $14, and the usual number of tracks, around 12). And adjusting for inflation, it is about 10 times more than 45-r.p.m. singles cost during their heyday in the 1950's. Still, Mr. Jobs's take on the psychological appeal of the price, at least for the small, affluent audience of Macintosh users to whom the iTunes service has been marketed, may be apt. Apple said last month that the iTunes store had sold 10 million songs in its first four months of operation, about half of which were sold as full albums. The company plans to offer the service to the much larger market of Windows PC users this week.
http://www.nytimes.com/2003/10/12/ar...ic/12HARM.html
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Ares Update
Thomas Mennecke
Forged form the roots of Gnutella, Ares departed this community in the latter part of 2002 to create its own network. Success has developed quickly as this network begins to pick up steam.
Just like any other network that was of a similar size, Ares is experiencing its fair share of growing pains. This includes frequent network redesigns and constant client upgrades. Also, typical of a network of its size, its resourcefulness is limited to more popular music.
Its important to note that a typical search query yields an impressive amount of results; its actually getting a file to download that remains problematic. There is a bit of a silver lining however; many of the songs put into queue did eventually download. Like any popular networks such as SoulSeek or WinMX, waiting for a song to download is the key to success.
While problems do still exist, Ares has improved considerably, and continues to do so. To get a better idea about Ares, we talked to Alberto, head developer. First off, we asked him to explain some of the noticeable improvements to the network.
"I think that the increased download/rate may be simply related to the fact that September has always been a good month for file sharing. [In addition,] Ares is more stable than it used to be, the program has a clean interface, it's quite easy to use and doesn't install spyware."
We also addressed the network size, noticing that the population has remained fairly constant. While the network may appear small, it is in fact organized into smaller clusters of approximately 10,000 users.
"Ares it's among the fastest programs to download popular files, but its network topology is quite conservative when you're looking for rare content. In fact, in order to reduce load on supernodes and keep upload queues reasonably small, I've limited the average peer's search horizon to 10,000. So..I'd like to increase advanced user's satisfaction by making Ares more 'community oriented' and therefore I'm working to release an improved version of the program which is going to include new features, mostly on chatroom servers."
Will Ares turn into the next Manolito or SoulSeek network? This remains to be seen, but all the right moves, including the backing of a well-sized community are already in place. The lead developer maintains an open dialog with his community, an attribute that helped SoulSeek and the Manolito networks become the successes they are today.
http://www.slyck.com/news.php?story=269
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Record Companies Sue New Jersey Flea Market
David Kocieniewski
As shoppers at the Columbus Farmers' Market browsed through table after table of battery-operated nose-hair trimmers, $10 bras, Spice Girls posters, athletic socks and smoked pigs' ears on Thursday, there were few signs that they were on the front lines of the recording industry's latest effort to discourage music piracy.
But a group of record companies is suing the owners of the market, where, they say, more than 15,000 counterfeit CD's have been seized during raids over the past three years. The industry group says the Columbus market and other flea markets knowingly act as havens for thousands of illegal discs and cassettes each year and deprive record companies of millions in sales.
Managers of the market, which attracts tens of thousands of shoppers from central New Jersey and Philadelphia each weekend, say they have already chased out bootleggers, and — at the recording industry's request — spend $24,000 each year to hire off-duty police officers to patrol the tables for contraband.
The lawsuit filed by the Recording Industry Association of America charges that the market has made only token efforts to deter the sale of counterfeit and pirated recordings, and says that, like many flea markets, Columbus profits by virtue of its underground reputation as a marketplace for cheap discs.
"There are 3,000 flea markets in the country, and at many of them, vendors are offering home-burned CD's or other illegal recordings," said Cary Sherman, president of the music industry group. "It adds up to a huge problem."
The lawsuit against the Columbus market, and similar suits against flea markets in Texas and California last year, is just part of the record industry's aggressive attempt to control a problem that executives say costs them $4.2 billion a year in sales worldwide and more than $300 million annually in the United States. The industry first challenged Internet file-sharing companies like Napster, and more recently began suing individuals who had illegally downloaded music.
Those moves brought the industry some criticism; some people view the file sharing as a natural extension of the Internet as a medium for the exchange of ideas, and others recoil at the thought of multinational entertainment corporations bullying teenagers for downloading a copy of the latest release by Bubba Sparxx.
In contrast, the effort to rein in flea markets has brought little public outcry, even from critics of the music industry. Many of the illegal discs sold at the markets are counterfeited en masse at offshore facilities, and the advancement of CD-copying methods has also begun to transform the bootlegging business from a sophisticated underground operation to a desktop cottage industry.
"No one in the music community would argue that the industry should not be vigilant in addressing that kind of piracy," said Michael Bracy, director of government relations for the Future of Music Coalition, a nonprofit group that promotes broadcast diversity. "The more difficult question is how the industry is responding to the new technologies that are flourishing and allow for digital transmission of music."
Indeed, the owners of the Columbus Farmers' Market, which was opened as a livestock and farm equipment auction in 1929 and today operates under the corporate name Flea World, say they have no sympathy for purveyors of illegal CD's.
Matthew R. McCrink, a lawyer who represents the market, said that after 12,000 illegal CD's were seized in a police raid in 2000, managers issued stern warnings to vendors and hired extra security guards to look out for illegal merchandise. Mr. McCrink said that after spending $2,000 a month to hire extra security, the market invited record industry inspectors to patrol the grounds, but the music industry group declined.
"The recording industry wants all this enforcement, but they want the market to pay for it," he said. "We've done everything they've asked. This whole lawsuit is frivolous, and it's a publicity gimmick, and we may countersue them."
Mr. Sherman, of the recording industry group, conceded that the industry did hope that its suit against the market would serve as a warning to others, but he insisted that the market had shirked its legal obligation to deter the sale of counterfeits.
"Are they saying that they'll only obey the law if we enforce it for them?" he asked. "Stores aren't allowed to sell illegal merchandise, and there is a clear body of law that states that flea markets aren't either."
Vendors and patrons said the number of illegal discs being sold at the market had dropped sharply in the past three years.
Mary Sharp, owner of Wojciechowski Bologna Kitchen, said she thought it was unfair to single out CD vendors, because many of the merchants who rent tables in the lot sell second-hand merchandise.
Despite the crackdown on illegal-disc sales, the owner of a music store in the market said he could not afford to sell new music because he had to pay $10 a disc wholesale and the flea market shoppers were unwilling to pay enough for him to turn a profit.
Instead, he sells classic tapes and discs in his store and was busily setting up a table in the parking lot Thursday afternoon to expand his business.
"This is where the money is now," he said, unpacking a box of X-rated DVD's, which sold for $2 a copy.
http://www.nytimes.com/2003/10/10/nyregion/10PIRA.html
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Tuning Up for the Online Music Business
Making a buck selling songs online will be tough, but a raft of sites are at the ready
Peter Burrows, Ronald Grover, Jay Greene and bureau reports
For years, record companies squelched efforts to sell tunes online, for fear of Napster-style piracy. Now, suddenly, the floodgates are opening. Giants ranging from Dell (DELL ) and Sony (SNE ) to Amazon.com (AMZN ) and Wal-Mart (WMT ) are scrambling to set up Web music stores. So are a number of smaller players including -- yes -- a revived Napster, which is being relaunched by Roxio (ROXI ) Inc. this month. Also within weeks Apple Computer (AAPL ) Inc. will likely go ahead with the much-anticipated launch of its iTunes online store for Windows users. "Within a very short period," says Dell Inc. CEO Michael Dell, "the labels will want to be on as many music stores as they can."
With at least a dozen players likely to enter the market over the next few months, competition will be fierce. Just as the real world has everything from Wal-Mart to the indie record store, the new entrants are looking to carve out niches. Two classes of winners will likely emerge: those with sufficient scale to convert meager per-song margins into meaningful profits and those that use music to sell add-ons, be it hardware, subscriptions to online music magazines, or concert tickets. Says Jonathan Hurd, a vice-president with management consultant Adventis Corp.:"The ones that get the customer experience right will benefit -- but there are many ways to mess up."
To avoid that fate, the new services will largely mimic the business model Apple created for its popular iTunes site. Most will sell songs for 99 cents apiece. Users will be able to burn the songs to as many CDs as they want and play them on up to three PCs or mobile devices. Music execs hope that will provide listeners with the flexibility they crave while preventing mass copying and file-sharing.
TOUGH ECONOMICS. But even at 99 cents a song, making profits selling music online could prove tough. Under existing arrangements, 75 cents or so will go to the label, and credit-card processors will pocket another 5 cents. That leaves just 19 cents for marketing, technology, and all other costs. The rush for market share will almost certainly force services to slash prices -- and to find other ways to make money. Earlier this year, Listen.com experimented by charging 49 cents a song but ultimately retreated to 79 cents -- and only for those with a $9.95 subscription.
So why the rush to jump in? For hardware giants such as Dell, Sony, or Apple, the real money will be made selling music players. Dell is clearly counting on its online music offerings to create demand for its new player, the DJ, set to launch this month. And for Wal-Mart, which accounts for 20% of all music sold in the U.S., it's too big a market to ignore.
Smaller players are counting on selling premium content. For a monthly subscription of $10 or so, customers of Musicmatch Inc. and Napster 2.0 will get a range of perks -- say, exclusive recordings or the ability to easily buy a song heard on a Web radio station.
Whatever the model, getting downloaders to pay for online music will mean giving them sufficient control over their songs. Already, there are signs that the labels will be slightly less flexible with the vast Windows universe than they were with Apple; with 2% of the market, it was less of a piracy concern. Industry insiders say that to discourage users from sharing playlists of, for instance, dance or jazz tunes, EMI (EMI ) Group PLC has forced the services to reduce the number of playlists consumers can burn to a CD to five, for example. That's down from 10 at iTunes.
Other limitations could also give music fans pause. Many new songs won't be available, and acts such as the Beatles still won't be online. Different services, moreover, will use different technologies to ensure customers don't cheat on copying or downloading. Without standards, users will find their portable players won't play songs from every online service.
Still, a year from now, many kinks will be gone. The best services may match the elegance of iTunes, and prices will probably have dropped. That's the best news music fans have heard in a long time.
http://www.businessweek.com/premium/...53060.htm?se=1
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Microsoft Sued Over Music Downloads
John Borland
A small New York company has sued Microsoft, charging that the software giant's new music download service in Europe infringes on a patent it owns nearly 20 years old.
E-Data, a Long Island-based company that's focused largely on licensing its patents, contends that Microsoft, Internet service provider Tiscali and digital music company OD2 are collectively trespassing on its rights with their new music download services, recently released in several European countries. E-Data is asking that the services, variously called MSN Music Club and Tiscali Music Club, be shut down until a patent licensing deal is worked out.
"(Those companies) are offering downloads of music over the Internet, which can be downloaded onto CDs for a fee," said E-Data spokesman Gerald Angowitz. "We believe that violates our patent."
The little-known company's claims could ultimately affect businesses on both sides of the Atlantic, as music services from MusicMatch to Sony rush to emulate the initial success of Apple Computer's iTunes music store. With razor-thin margins on digital sales of songs, any unexpected patent licenses could prove a headache for these companies.
The patent in question was granted in 1985 and covers the transmission of information to a remote point-of-sale location, where information is then transferred to a material object. Courts in the United States have held that this does not include saving information such as a song onto a computer's hard drive, but that selling the information on a physical media such as a disc at an in-store kiosk could be covered.
E-Data contends that when music is sold over the Internet, a person's home computer takes the role of that remote kiosk, and when the music is saved on a CD or an MP3 player, it has been transferred to the requisite physical object.
A Microsoft spokesman had no immediate comment on the suit, which E-Data filed in Germany last week. E-Data's patent is also valid in nine other European countries, including England, France, Austria, Switzerland, the Netherlands, Italy, Luxembourg, Belgium and Sweden.
Angowitz said his company's patent expired in the United States in January, making Apple's service--which launched in April--an unlikely target for an infringement suit.
However, other music companies that previously allowed download and burning might find themselves in court on the issue. Federal law allows companies to sue for past infringements for six years after a patent has expired, and E-Data says it still may take a look at U.S. companies that were operating services in 2002 and earlier.
"We'll likely take action to protect our past rights in the United States in a not-too-distant future," Angowitz said.
E-Data previously settled with or won court judgments against several companies over download services, including sheet music publisher Hal Leonard and computer games company Broderbund.
http://news.com.com/2100-1027-5090679.html
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Can’t scare ’em with music, drags out kiddie porn myths.
Hatch: P2Ps Are Child Porno Central
In a twisted turn of unintended consequences, the enormous success of the Internet as a distribution vehicle for pornography has created competitive pressures among smut purveyors to provide more depictions than ever of children engaging in violent and deviate sexual conduct.
John G. Malcolm, deputy assistant attorney general in the Criminal Division of the Justice Department, told the Senate Judiciary Committee Wednesday afternoon that the "proliferation of this material and the desire by pornographers to differentiate themselves in a highly-competitive market have prompted pornographers to produce ever-more offensive materials."
Malcolm said that in addition to child pornography, depictions "glorifying" bestiality, scatology and rape are "readily available" and "aggressively marketed" on the Internet.
"Because the Internet has popularized the trade in child pornography, there has been a surge in demand and a corresponding surge in production of child pornography," Malcolm said.
Malcolm cited a recent survey by the National Society of the Prevention of Cruelty of Children stating that approximately 20,000 images of child pornography are posted to the Internet every week. He added that the study indicates that about half of new images appearing on the Internet depict children between the ages of 9-12 years-of-age and the rest are younger.
"We must never forget that each image represents the rape of a child. Each image is a tragedy and a gruesome memorial of trauma, abuse, powerlessness and humiliation that will be with that child for the rest of his or her life."
While Wednesday's witnesses focused on Web sites featuring Internet child pornography, Judiciary Committee Chairman Orrin Hatch singled out peer-to-peer (P2P) networks as the most pernicious purveyors of online child pornography.
http://dc.internet.com/news/article.php/3092661
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Labels Launch Mobile Song-Swapping Tech
Reuters
Warner Music Group and Bertelsmann's BMG Entertainment introduced on Monday a new antipiracy technology that enables music fans to download songs onto a mobile phone and share the music with other phone users.
The new digital rights management (DRM) technology, called OMA (object management architecture) DRM, was developed by three-year-old technology company Beep Science of Oslo, Norway, the music giants said in a statement.
The technology works on the concept of a restricted peer-to-peer network in which owners of mobile phones equipped with Multimedia Message Service, or MMS, can send and receive pictures and sound clips to and from other mobile phones.
With OMA DRM, the music labels can collect revenue for each song that's downloaded from a central computer server and for those that are swapped between mobile phone users, said Jan Rune Hetle, chief executive of Beep Science.
The emergence of MMS phones enables media companies to sell a variety of short media clips, including songs and condensed sports highlights.
The money-making potential, however, is fraught with uncertainty. Music executives are desperate to keep tight controls on the exchange of songs between mobile phones.
Unsanctioned peer-to-peer networks on the Internet such as Kazaa and Grokster have created a booming black market for free music, which the industry blames for contributing to a three-year decline in recorded music sales.
Hetle said BMG and Warner Music are the first two major music labels to test the technology, which 50 mobile phone operators, including Vodafone Group and Swisscom, are introducing across Europe.
The technology works with Nokia's 6220 handset. "All the big handset makers are expected to follow suit, including Siemens and Samsung," Hetle said.
The ITU Telecom World 2003 trade fair in Geneva showcased OMA DRM for the first time Monday.
http://news.com.com/2100-1027-5090135.html
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Copyright Lawsuit Is Turnabout for SCO
John Markoff
The SCO Group, the company that touched off a computer industry slugfest last spring by suing I.B.M. over its use of Unix software, may find itself embarrassed by a similar claim against a company once related to SCO.
Since filing a lawsuit claiming that I.B.M. added parts of the Unix operating system to the freely distributed Linux software, SCO has threatened other computer companies, the open source software movement and hundreds of corporations that rely on Linux, saying they are unfairly using Unix software that SCO owns.
But in an unpublicized case, one of SCO's former sister companies, Lineo, has agreed to quietly settle a third party's accusations that it engaged in the same kind of copyright infringement that is at the heart of SCO's claim against I.B.M., industry executives who have been briefed on the matter said.
The case spotlights the behind-the-scenes role of Canopy, an investment firm formed by Ray Noorda, the founder of Novell and a personal computer industry pioneer. Canopy is SCO's largest shareholder and formerly controlled Lineo.
Mr. Noorda, who has retired, acquired the rights to the Unix operating system from AT&T in 1992 while he was running Novell. He hoped to use Unix in his strategy to compete with Microsoft. Later that strategy shifted to backing the freely distributed Linux operating system, and Mr. Noorda helped finance a number of Linux software companies, including Caldera Systems, which last year changed its name to SCO Group. Lineo, was spun out of Caldera in 1999 and sold to Motorola last December.
Lineo was sued last year by MontaVista, a maker of software for specialized computers used in consumer and industrial applications that is based in Sunnyvale, Calif. The MontaVista executives said they had been notified that software their programmers had written and licensed under the GNU General Public License - the license that governs companies that distribute Linux software - had appeared, with copyrights removed, in Lineo's software. The license, which allows for the free distribution of software, still requires that the copyright notices be retained.
Neither side would comment on the settlement, which was put under a court seal last month.
http://www.nytimes.com/2003/10/13/technology/13sco.html
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Shift Key Opens Door to CD and Criticism
Lisa Napoli
The latest twist in the story of the music industry and the Internet generation involves a Phoenix company, a Princeton University graduate student and the shift key on a computer keyboard.
The student, John A. Halderman, a 22-year-old Princeton doctoral candidate in computer science, published a research paper on the Web revealing how easy it was to skirt a new security feature of the music industry. "I believe artists are entitled to be compensated," he said in an interview. "My hope is that my research demonstrates how weak these technologies can be."
Mr. Halderman had tested the encryption technology used on a CD by the R&B singer Anthony Hamilton, released by Arista/BMG. The technology was meant to be the first to allow a buyer to make several, but not limitless, copies of the songs. Earlier encryption experiments did not allow any copying. Mr. Halderman found that by holding down the shift key after inserting the disk he was able to override the encryption software, freeing him to make as many copies as he liked.
Peter Jacobs, chief executive of SunnComm, the creator of the encryption software, said Mr. Halderman was free to make his discovery, but that did not give him the right to publish a paper and send it to reporters. Mr. Jacobs and BMG said the security feature was not designed to be foolproof but was merely the latest experiment in piracy deterrence.
Mr. Jacobs was quoted threatening to sue Mr. Halderman and Princeton over the $10 million decline in the company's stock last week. . But he said on Friday that after receiving "three thousand e-mails'' criticizing him, he had decided not to sue. Instead, in the interest of encouraging encryption research, Mr. Jacobs, being cynical, said, he would consider the plunge in shares as a "donation of $10 million to Princeton.''
http://www.nytimes.com/2003/10/13/te...gy/13disk.html
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Patriot Act Curbing Data Retention
Bob Tedeschi
COULD the Patriot Act threaten the growth of e-commerce?
That is the question being raised by some online booksellers and e-tailing analysts, who suggest that the Patriot Act, passed in October 2001 to give the government new counterterrorism capabilities, has already changed the way some companies and consumers do business online. For some consumers, it has meant fewer online purchases of politically incorrect books. For the Web sites, it has meant changes to privacy policies and marketing strategies, among other things.
Some moderate voices among online businesspeople see no true threat, and the Justice Department dismisses the risks of the Patriot Act altogether. But Phillip Bevis sees it otherwise.
Mr. Bevis, the founder and chief executive of Arundel Books, which sells used and rare books online and off line, says that his customers' concerns about the Patriot Act have forced him to severely curb the amount of customer data he retains, and to alter his marketing as a result. Because he no longer keeps information about customer purchases - so as to avoid the possibility of having to disclose it to the government - he can no longer discern the buying habits of his patrons and then offer them advertisements for books they may like.
"This has certainly had a chilling effect on us, and our customers," Mr. Bevis said.
At the core of his concerns is Section 215 of the Patriot Act. Under that section, businesses, organizations or citizens can be compelled by the Federal Bureau of Investigation, if it has a federal judge's order, to hand over any records the F.B.I. deems relevant to an investigation of terrorism or espionage, as long as the investigation is not based solely on actions already protected by the Constitution's free speech provisions.
If an investigation, for example, is based solely on a suspect's radical religious statements, which receive broad First Amendment protections, the investigator would very likely be denied access to records of related books the suspect bought. But if the investigation is based on suspected terrorist bombings, and a federal judge deemed the records of a suspect's book purchases on bomb making a necessary part of the inquiry, a bookstore might be required to produce the records.
Compared with companies that sell their wares only in stores, online businesses - particularly those engaged in selling so-called expressive materials like books, music and videos - are good candidates for law enforcement requests under the Patriot Act. While off-line customers can avoid creating an audit trail by paying cash for their purchases, consumer anonymity is hard to achieve online, where transactions typically involve credit cards and shipping addresses.
Even before the Patriot Act raised Mr. Bevis's anxieties, he was served with an F.B.I. subpoena in August 2001, seeking more than six years worth of customer data in connection with an investigation of campaign contributions to Robert G. Torricelli, the former Democratic senator from New Jersey, who in January 2002 was cleared of accepting illegal gifts and cash from a wealthy contributor. Mr. Bevis said he fought the subpoena until the matter was dropped - as it happened, a few days before the Sept. 11, 2001, terrorist attacks. But that legal battle, and the subsequent passage of the Patriot Act, led him to conclude that he should keep little customer data.
"Unfortunately, that restricts our ability to serve our customers," Mr. Bevis said. "We've had to stop customer follow-on contact, we've disabled the software that tracks customer purchases - all the things that turn a transaction into a continuing customer relationship."
http://www.nytimes.com/2003/10/13/te...gy/13ecom.html
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The DMCA Doesn't Go Nearly Far Enough
Donna Wentworth
...or so argues the MPAA, which appears perilously close to victory in its long battle to persuade the FCC to make the "broadcast flag" mandatory.
As my colleague Seth Schoen notes in an Advogato piece published Friday, no current law requires that technology manufacturers include digital rights management (DRM) in their products. In fact, the Digital Millennium Copyright Act (DMCA) contains a "no mandate" provision, 17 U.S.C. 1201(c)(3), stating that the law cannot be construed to require consumer electronics, computer, or telecommunications products to "provide for a response to any particular technological measure."
Translation? In passing the DMCA, Congress made it very clear that its provisions could not be used to dictate the design of consumer electronics, computer or telecommunications products.
Needless to say, Hollywood isn't very happy about that.
Writes Seth:
MPAA has been saying for several years that this principle (in the DMCA and prior related caselaw) is untenable. It's been saying so in court (in litigation against file-sharing software developers) and in Congress and before the FCC.
This position is remarkable. Most people in our community consider the DMCA anticircumvention rules to be insane technology and copyright policy, but MPAA still says these rules are insufficient for its needs!
The MPAA's "fix"? The broadcast flag mandate--which Seth warns is only one of three promised MPAA initiatives (PDF) to expand technology regulations beyond the scope of the DMCA.
So what can we do about this? Seth encourages readers to take advantage of the EFF's current broadcast flag action alert to voice their objections to the mandate. He also urges fellow technologists to write their own letters to the FCC, providing arguments from a technologist's perspective about why the mandate isn't the right direction for technology policy.
I also recommend a reading, or re-reading, of Senator Sam Brownback's (R-KS) statement introducing the Consumer, Schools, and Libraries Digital Rights Management Awareness Act of 2003 (PDF). Much of the press attention has focused on provisions to amend the DMCA's rules on subpoenas, but Brownback tackles the broadcast flag mandate as well. States Brownback (emphasis, mine):
http://www.copyfight.org/20031001.shtml#56006
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Let's Play Starving Artist, the New Game From the RIAA. Except it Ain't New
Richard Menta
I could not help but be stunned when I first read about it in the New York Times. It was surreal, even comical, but delivered in a distorted seriousness that begged my concern. A campaign aimed school children through the schools and lead by the entertainment industry with the help of Junior Achievement.
You can read the details in the above Times article, but essentially the film and record industries (mostly the film industry) have orchestrated a school-to-school tour to "educate" 5th through 9th graders about the evils of file trading. A program designed to reach 900,000 students that is offspring of those ancient industrial films regularly parodied on the Simpsons (smokestacks are your friends kids).
One of the key activities of this program - and what caught my eye - was a game called 'Starving Artist' where students come up with an idea for a record album, cover art, and lyrics. After this exercise is completed a volunteer teacher drops the supposed bombshell, that the album is already available for download for free. From the Times article "According to the lesson, the volunteer would then "ask them how they felt when they realized that their work was stolen and that they would not get anything for their efforts."
All I could think of when I read this was what a wonderful opportunity this was for the record industry in particular to use file trading to its advantage. Not as a promotional tool as we have written about so many times in these pages, but as an entity to take the rap for their past actions. Something to take the blame for the record industry's decades-old systematic exploitation of artists through their audit departments.
Rock Historian Dave Marsh once described being an artist in the record industry as the equivalent of sharecropping. In sharecropping, the farmer doesn't really own the vegetables they raise, the landowner does. The landowner pays them a fee for the amount of produce they create, but charges back the cost of the feed, fertilizer, use of equipment, even water - all at inflated prices. In the end, the sharecropper makes the minimum it takes to keep them and their families alive so they can work the land the next year and the next. As the sharecropper suffers in poverty, the landowner garners excess wealth.
This fact has become very clear to the music buying public. Several months back another NY Times reporter queried a few 13 year-old boys about file trading and if they thought there was anything wrong with it. The boys, who were active traders, told the reporter that the record industry steals from the artists they idolize anyway, so they felt they were doing nothing wrong. I am going to assume these kids do not regularly read the Times, yet the message that the record industry cheats artists is reaching them. Whether one thinks this message is accurate or not is beyond the point. This is the consumer perception and one that extends not just to adults but to children.
To me this was evidence of the bad PR the record industry has generated over the last few years, bad PR coming from the public dissection of industry practices in the wake of the Napster trial. The original Napster is gone now, but its specter is still there and still changing the music industry dramatically.
The media companies in a savvy twist are looking to change the perceptions of children who have yet to reach any such conclusions about them. If kids hear artists are starving no less than their own teachers will collectively point all the blame on KaZaa, iMesh, and the various Gnutella clients.
I say, if our schools are going to allow industrial propaganda like 'Starving Artist' in our school, if we are going to allow the teachers we pay to be shills for the record industry, then let's do it right.
Let the game represent Marsh's reality, not the RIAA's version of it. Balance this game by also letting Courtney Love and Janis Ian and Pearl Jam tour these classrooms and give them THEIR reality of the record business. That the only ones taking their livelihood from them and taking the foods from their mouths are the record companies who claim ownership of the music they create and the ticket and venue monopolies who collect their concert receipts.
Do that and then you have a more accurate program called Starving Artist.
Good lord, my taxes go to pay school boards that would allow this? What's next, a school tour by the Christian right warning of the temptations of Islam and Judaism?
http://www.mp3newswire.net/stories/2...ingartist.html
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
New Internet Speed Record Set
Reuters
Two major scientific research centres said on Wednesday they had set a new world speed record for sending data across the Internet, equivalent to transferring a full-length DVD film in seven seconds.
The European Organisation for Nuclear Research, CERN, said the feat, doubling the previous top speed, was achieved in a nearly 30-minute transmission over 7,000 kms of network between Geneva and a partner body in California.
CERN, whose laboratories straddle the Franco-Swiss border near Geneva, said it had sent 1.1 Terabytes of data at 5.44 gigabits a second (Gbps) to a lab at the California Institute of Technology, or Caltech, on October 1.
This is more than 20,000 times faster than a typical home broadband connection, and is also equivalent to transferring a 60-minute compact disc within one second -- an operation that takes around eight minutes on standard broadband.
Using current technology, a DVD -- or digital video disc -- film of some 90 minutes length takes some 15 minutes to download from the Internet.
Olivier Martin of CERN, which is also the European Laboratory for Particle Physics and home to a hugely ambitious particle-smashing project to unravel the fundamental laws of nature, hailed the feat as a milestone.
It would bring closer researchers' final goal of abolishing distance and making collaboration between scientists around the world efficient and effectively instantaneous, he said.
Harvey Newman of Caltech, another of the world's major research centres, said the achievement boosted hopes that systems operating at 10 gigabits per second "will be commonplace in the relatively near future."
http://www.cnn.com/2003/TECH/interne...ut/index.html#
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Seagate Spins 100GB Platter
Ed Frauenheim
Seagate Technology on Tuesday said it has pushed the data-density envelope in the disk-drive industry, announcing a product that squeezes 100GB onto a single 3.5-inch platter.
Today's highest-density hard disk drives pack 80GB onto a 3.5-inch platter, the part of a drive that rotates and contains data. Although Seagate's news can be seen as a step forward for the disk-drive industry, it also reflects a slowdown in the pace of data density advances. For several years beginning in the late nineties, density doubled annually. Drives with 80GB per platter shipped late last year, so this new advance demonstrates the slower growth in data density.
Seagate's new product is part of its Barracuda 7200.7 family of drives. The drive has two platters, for a total capacity of 200GB. It can use the more-traditional parallel ATA interface or the newer serial ATA interface (SATA).
Seagate said the Barracuda 7200.7 is the industry's first hard-drive family capable of supporting SATA Native Command Queuing. This is a feature that allows a SATA hard drive to reorder outstanding commands before reading or writing data, improving the performance of queued workloads, according to Seagate.
Seagate said it would demonstrate the queuing technology on its new 200GB Barracuda 7200.7 SATA hard drive on Tuesday at the Intel Developer Forum in San Jose, Calif.
The queuing technology isn't generally available on Seagate products yet. Seagate said it would be installed on Barracuda 7200.7 SATA hard drives for shipment when computer designs that support the technology become more broadly available.
Seagate said the new 200GB drives are ideal for products such as network-attached storage devices, entry-level ATA servers, mainstream and high-performance PCs and home-entertainment PCs. The 200GB drive with a parallel ATA interface is slated to ship worldwide next month through distributors, while shipments of the 200GB SATA version are scheduled to begin in November.
http://news.com.com/2100-1015-5077293.html
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Maxtor's New Slant On Disk Recording
Ed Frauenheim
Disk-drive maker Maxtor says it has reached a milestone in devising cost-effective platters for a next-generation technology called perpendicular recording.
The company announced Monday that its subsidiary, MMC Technology, has demonstrated a method of making disk-drive media for the new technology at roughly the same cost as media used in today's drives. With the new media and perpendicular recording technology, Maxtor said it is possible to more than double the amount of data that can be crammed onto a typical disk, from the standard 80GB per 3.5-inch platter to 175GB.
Ken Johnson, vice president of research and development at MMC Technology, said other companies may have ways of making perpendicular recording media, but not necessarily a means to do it cheaply. "As we know, in this industry, cost effectiveness is very important," he said.
Perpendicular recording involves arranging magnetic charges--which hold digital information--vertically on a platter. In a sense, the disk surface is made up of tiny magnets standing vertically. The approach contrasts with the current industry standard method, called longitudinal recording. In longitudinal recording, charges are arranged horizontally on the surface of the platter.
Perpendicular recording is decades old, but it has yet to be widely used. The disk-drive industry has enjoyed rapid advances in data density without it. For example, data density doubled annually in the late 1990s. But the rate of growth has slowed, thanks partly to technical challenges.
Perpendicular recording has had its own challenges. One relates to the "soft underlayer" of magnetic material that helps a perpendicular recording head to write and read charges on the disk. Johnson said researchers have thought the underlayer needed to be as thick as 400 nanometers. Given that the final top layer of magnetic material is about 30 nanometers, the underlayer represented a relatively large amount of material to deposit on a platter, he said.
Using novel compositions and structures for the soft underlayer, Maxtor was able to reduce the thickness to 100 nanometers, he said. "That makes it 'make-able' in today's equipment," he said.
http://news.com.com/2100-1015-5089953.html
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
An Invitation to Groove on the Move
J. D. Biersdorfer
LIKE the herds of ever-smaller personal cassette players that roamed the earth in the 1980's, droves of tiny devices that play music in digital form are peeking out from pockets, purses, briefcases and backpacks everywhere you turn these days.
Although some will argue that their audio fidelity is not as high, digital music players do have one distinct advantage over the portable cassette, disc and minidisc players competing for the public's ear: you can leave the tapes, CD's or minidiscs at home and still listen to lots of different albums or mixes. With a digital player, you can carry anywhere from two hours to four weeks of continuous music with you, ready to pour through your headphones.
To the uninitiated, it may seem like there are as many digital audio formats (MP3, WMA, AAC and so on) as there are brands of digital audio players (iRock, iRiver, Yepp, Nomad and others). To those less than fluent in gadgetspeak, it may seem more confusing than it really is. Here is an outline of what you need to know and acquire to get your music moving.
http://www.nytimes.com/2003/10/16/te...asi.html?8hpib
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
File-sharing Goes Social
Clay Shirky
The RIAA has taken us on a tour of networking strategies in the last few years, by constantly changing the environment file-sharing systems operate in. In hostile environments, organisms often adapt to become less energetic but harder to kill, and so it is now. With the RIAA's waves of legal attacks driving experimentation with decentralized file-sharing tools, file-sharing networks have progressively traded efficiency for resistance to legal attack.
The RIAA has slowly altered the environment so that relatively efficient systems like Napster were killed, opening up a niche for more decentralized systems like Gnutella and Kazaa. With their current campaign against Kazaa in full swing, we are about to see another shift in network design, one that will have file sharers adopting tools originally designed for secure collaboration in a corporate setting.
Napster's problem, of course, was that although Napster nodes acted as both client and server, the central database still gave the RIAA a single target. Seeing this, Gnutella and Kazaa shifted to a mesh of nodes that could each act as client, server, and router. These networks are self-assembling and self-reconfiguring with a minimum of bootstrapping, and decentralize even addresses and pointers to files.
The RIAA is now attacking these networks using a strategy that could be called Crush the Connectors. A number of recent books on networks, such as Gladwell's The Tipping Point, Barabasi's Linked, and Watts' Six Degrees, have noted that large, loosely connected networks derive their effectiveness from a small number of highly connected nodes, a pattern called a Small World network. As a result, random attacks, even massive ones, typically leave the network only modestly damaged.
The flipside is that attacks that specifically target the most connected nodes are disproportionately effective. The RIAA's Crush the Connectors strategy will work, not simply because highly publicized legal action will deter some users, but because the value of the system will decay badly if the RIAA succeeds in removing even a small number of the best-provisioned nodes.
However, it will not work as well as the RIAA wants, even ignoring the public relations fallout, for two reasons. The first is that combining client, server, and router in one piece of software is not the last move available to network designers -- there is still the firewall. And the second is simply the math of popular music -- there are more people than songs.
Networks, Horizons, and Membranes
Napster was the last file-sharing system that was boundary-less by design. There was, at least in theory, one Napster universe at any given moment, and it was globally searchable. Gnutella, Kazaa, and other similar systems set out to decentralize even the address and search functions. This made these systems more robust in the face of legal challenges, but added an internal limit -- the search horizon.
Since such systems have no central database, they relay requests through the system from one node to the next. However, the "Ask two friends to ask two friends ad infinitum" search method can swamp the system. As a result, these systems usually limit the spread of search requests, creating an internal horizon. The tradeoff here is between the value of any given search (deeper searches are more effective) vs the load on the system as a whole (shallower searches reduce communications overhead.) In a world where the RIAA's attack mode was to go after central resources, this tradeoff worked well -- efficient enough, and resistant to Napster-style lawsuits.
However, these systems are themselves vulnerable in two ways -- first, anything that reduces the number of songs inside any given user's search horizon reduces the value of the system, causing some users to defect, which weakens the system still further. Second, because search horizons are only perceptual borders, the activity of the whole network can be observed by a determined attacker running multiple nodes as observation points. The RIAA is relying on both weaknesses in its current attack.
By working to remove those users who make a large number of files persistently available, the RIAA can limit the amount of accessible music and the trust the average user has in the system. Many of the early reports on the Crush the Connectors strategy suggest that users are not just angry with the RIAA, but with Kazaa as well, for failing to protect them.
The very fact that Crush the Connectors is an attack on trustworthiness, however, points to one obvious reaction: move from a system with search horizons to one with real membranes, and making those membranes social as well as technological.
Trust as a Border
There are several activities that are both illegal and popular, and these suffer from what economists call high transaction costs. Buying marijuana involves considerably more work than buying roses, in part because every transaction involves risk for both parties, and in part because neither party can rely on the courts for redress from unfair transactions. As a result, the market for marijuana today (or NYC tattoo artists in the 1980s, or gin in the 1920s, etc) involves trusted intermediaries who broker introductions.
These intermediaries act as a kind of social Visa system; in the same way a credit card issuer has a relationship with both buyer and seller, and an incentive to see that transactions go well, an introducer in an illegal transaction has an incentive to make sure that neither side defects from the transaction. And all parties, of course, have an incentive to avoid detection.
This is a different kind of border than a search horizon. Instead of being able to search for resources a certain topological distance from you, you search for resources a certain social distance from you. (This is also the guiding principle behind services like LinkedIn and Friendster, though in practice they represent their user's networks as being much larger than real-world social boundaries are.)
Such a system would add a firewall of sorts to the client, server, and router functions of existing systems, and that firewall would serve two separate but related needs. It would make the shared space inaccessible to new users without some sort of invitation from existing users, and it would likewise make all activity inside the space unobservable to the outside world.
Though the press is calling such systems "darknets" and intimating that they are the work of some sort of internet underground, those two requirements -- controlled membership and encrypted file transfer -- actually describe business needs better than consumer needs.
There are many ways to move to such membrane-bounded systems, of course, including retrofitting existing networks to allow sub-groups with controlled membership (possibly using email white-list or IM buddy-list tools); adopting any of the current peer-to-peer tools designed for secure collaboration (e.g. Groove, Shinkuro, WASTE etc); or even going to physical distribution. As Andrew Odlyzko has pointed out, sending disks through the mail can move enough bits in a 24 hour period to qualify as broadband, and there are now file-sharing networks whose members simply snail mail one another mountable drives of music.
A critical factor here is the social fabric -- as designers of secure networks know, protecting the perimeter of a network only works if the people inside the perimeter are trustworthy. New entrants can only be let into such a system if they are somehow vetted or vouched for, and the existing members must have something at stake in the behavior of the new arrivals.
The disadvantage of social sharing is simple -- limited membership means fewer files. The advantage is equally simple -- a socially bounded system is more effective than nothing, and safer than Kazaa.
If Kazaa, Gnutella and others are severely damaged by the Crush the Connectors attack, users will either give up free file-sharing, or switch to less efficient social spaces. This might seem like an unalloyed win for the RIAA, but for one inconvenient fact: there are more people than are songs.
For the sake of round numbers, assume there are 500 million people using the internet today, and that much of the world's demand for popular music would be satisfied by the availability of something like 5 million individual songs (Apple's iTunes, by way of comparison, is a twentieth of that size.) Because people outnumber songs, if every user had one MP3 each, there would be a average of a hundred copies of every song somewhere online. A more realistic accounting would assume that at least 10% of the online population had at least 10 MP3 files each, numbers that are both underestimates, given the popularity of both ripping and sharing music.
Worse for the RIAA, the popularity of songs is wildly unequal. Some songs -- The Real Slim Shady, Come Away With Me -- exist on millions of hard drives around the world. As we've moved from more efficient systems like Napster to less efficient ones like Kazaa, it has become considerably harder to find bluegrass, folk, or madrigals, but not that much harder to find songs by Britney, 50 Cent, or John Mayer. And as with the shift from Napster to Kazaa, the shift from Kazaa to socially-bounded systems will have the least significant effect on the most popular music.
The worst news of all, though, is that songs are not randomly distributed. Instead, user clusters are a good predictor of shared taste. Make two lists, one of your favorite people and another of your favorite songs. What percentage of those songs could you copy from those people?
Both of those lists are probably in the dozens at most, and if music were randomly distributed, getting even a few of your favorite songs from your nearest and dearest would be a rare occurrence. As it is, though, you could probably get a significant percentage of your favorite songs from your favorite people. Systems that rely on small groups of users known to one another, trading files among themselves, will be less efficient than Kazaa or Napster, but far more efficient than a random distribution of music would suggest.
What Happens Next?
Small amounts of social file-sharing, by sending files as email attachments or uploading them to personal web servers, have always co-existed with the purpose- built file-sharing networks, but the two patterns may fuse as a result of the Crush the Connectors strategy. If that transition happens on a large scale, what might the future look like?
Most file-sharing would go on in groups from a half dozen to a few dozen -- small enough that every member can know every other member by reputation. Most file-sharing would take place in the sorts of encrypted workspaces designed for business but adapted for this sort of social activity. Some users would be members of more than one space, thus linking several cells of users. The system would be far less densely interconnected than Kazaa or Gnutella are today, but would be more tightly connected than a simple set of social cells operating in isolation.
It's not clear whether this would be good news or bad news for the RIAA. There are obviously several reasons to think it might be bad news: file-sharing would take place in spaces that would be much harder to inspect or penetrate; the lowered efficiency would also mean fewer high-yield targets for legal action; and the use of tools by groups that knew one another might make prosecution more difficult, because copyright law has often indemnified some types of non-commercial sharing among friends (e.g. the Audio Home Recording Act of 1992).
There is also good news that could come from such social sharing systems, however. Reduced efficiency might send many users into online stores, and users seeking the hot new song might be willing to buy them online rather than wait for the files to arrive through social diffusion, which would effectively turn at least some of these groups into buyers clubs.
The RIAA's reaction to such social sharing will be unpredictable. They have little incentive to seek solutions that don't try to make digital files behave like physical objects. They may therefore reason that they have little to lose by attacking social sharing systems with a vengeance. Whatever their reaction, however, it is clear that the current environment favors the development and adoption of social and collaborative tools, which will go on to have effects well outside the domain of file-sharing, because once a tool is adopted for one purpose, it often takes on a life of its own, as its users press such social tools to new uses.
http://www.shirky.com/writings/file-sharing_social.html
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Indian Minister Joshi: “Expand Fair Use” - Publishers Immediately Attack
Bisheshwar Mishra
NEW DELHI: HRD minister Murli Manohar Joshi’s recent speech at a Unesco conference has raised the hackles of legal experts here in the wake of the controversy over plagiarism in NCERT textbooks.
Many of these experts suspect a design to justify plagiarism in Joshi’s plea for expanding the ‘‘fair use’’ clause in copyright law.
Speaking in Paris on October 3, Joshi had argued for inclusion of ‘‘fair use’’ clauses in copyright laws for defending the interests of researchers, academics and poor book-lovers. ‘‘We urge Unesco to mobilise an international consensus on reasonable interpretation of ‘fair use’ clauses in international and copyright laws which should provide a good balance between private profit and public good and allow the pursuit of research and education,’’ Joshi said.
Copyright law experts, however, question Joshi’s move which comes in the wake of reports that the NCERT had lifted para after para from Ralph & Burns’ World History to embellish its history textbook for Class XII. ‘‘Joshi was essentially trying to expand the defence of ‘fair use’ in favour of infringers of the law,’’ a copyright law expert said. Joshi was trying to find legal justification for NCERT’s plagiarism, she said.
‘‘Why was the minister pleading for reasonable interpretation of ‘fair use’ doctrine when the Indian Copyright Act itself provides what constitutes ‘fair use’ and the courts have already laid down guidelines and parameters for its reasonable interpretation?’’ asked advocate Hemant Singh.
http://timesofindia.indiatimes.com/c...ow?msid=233224
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
To Whom May I Direct Your Free Call?
Nicholas Thompson
IN the fall of 2000, Niklas Zennstrom and Janus Friis had not yet earned any powerful enemies, at least so far as they were aware. They were just two obscure Swedish entrepreneurs who had worked with three Estonian programmers to write a file-sharing application called Kazaa. At the time, the free program was merely one of Napster's several weak stepsisters, lumped together in news reports with the likes of Snarfzilla and ToadNode.
But a few months later, the record industry and its lawyers swatted down Napster. And Kazaa, with its easy-to-use interface and reliable technology, quickly began scooping up users. Kazaa does essentially everything Napster did, with one important difference.
Because Kazaa's file sharing relies on routing requests through individual users' computers instead of central servers, the record industry has been unable to shut down the service in court - but not for lack of trying.
As their legal bills mounted, Mr. Zennstrom and Mr. Friis decided to sell the company to Sharman Networks last year. But the two have since hatched a plan that has a chance at causing another, potentially bigger uproar.
Mr. Zennstrom and Mr. Friis have reunited with the same team of Estonian programmers who wrote the code for Kazaa and have created a way to allow people to make high-quality phone calls over the Internet without having to pay a penny.
On Aug. 29, their new company, called Skype, released a preliminary version of the program. Already, more than a million people have downloaded it, the company's Web site says.
It is "a real opportunity to do something that is disruptive in a very positive way," Mr. Zennstrom said. "We have a big ambition with Skype: it is to make it the global telephone company."
Skype, which rhymes with "hype" and has no particular meaning, allows free calls between any two users who have downloaded the software. It is simple to use and provides clear connections to anyone with a broadband connection and a basic headset.
The program relies on a technology called "voice over Internet protocol,'' or VoIP. By routing calls over the Internet, VoIP essentially turns computers into phones. It is the core technology driving a number of small phone companies and is causing headaches for traditional providers, who are trying to fend off new rivals even as they attempt to integrate VoIP into their own systems.
Everyone, it seems, is getting into the act. Cable companies like Time Warner Cable are starting to offer VoIP calling plans; Microsoft and Yahoo are using the technology to power their instant-messaging programs; and Cisco Systems is selling hardware that allows businesses to convert their internal phone systems to VoIP.
What makes Skype so special? Well, it's free.
And unlike other VoIP offerings, Skype's software and audio connections are based entirely on the same peer-to-peer infrastructure that powers Kazaa. For example, if two users want to call each other, the call can be routed directly between their computers instead of having to pass through central servers. Peer-to-peer routing also frees the company from having to buy and maintain much equipment, because its system relies entirely on the computers of individual users.
Even Mr. Zennstrom, 37, and Mr. Friis, 27, say they are surprised by how fast Skype is catching on. Based in Stockholm, the company is controlled by a privately held holding company called Skyper Limited. It has spent no money on marketing the software.
The company does not earn any money right now, but is betting that consumers will eventually pay for premium services, like voice mail. This winter, Skype plans to introduce a feature that will enable users to call people on regular telephones - for a fee it says will be "substantially lower'' than current phone service. That means that Skype wouldn't just allow computer-savvy users to call one another; it would allow them to call anybody with regular phone service.
IN a recent report on the telecommunications industry, Daiwa Securities wrote that Skype "is something to be scared of, and is probably set to become the biggest story of the year'' in the telecom sector. "We think the Skype offering (and whatever may follow it) is akin to a giant meteor hurtling on a collision course toward Earth," the report said.
Other analysts are more skeptical. Eventually, they say, Skype's growth will depend on customers who do not understand peer-to-peer networking or have computer headsets. Moreover, the program works best over broadband connections, which just 16 percent of Americans have at home, according to a May report from the Pew Research Center.
"Will Skype be important and influential? It absolutely has the potential to be that and to drive regulatory debates and to be a financial disruption," said Blair Levin, a former chief of staff at the Federal Communications Commission who now works as a senior telecommunications analyst at Legg Mason. "But I don't think it's as scary to the phone companies as Napster and Kazaa were to the record companies." If the phone companies are scared, they're certainly not showing it. "Skype has a couple of challenges,'' said Vint Cerf, senior vice president of technology strategy at MCI. Most of all, he said, Skype "needs to deal with the fact that there are a lot of people who need to be reached who are not on the Internet.''
Skype, which has been around for only a month, doesn't dispute that. But the company says that enabling its users to call regular telephones is one of its chief priorities.
And even skeptics who do not think that Skype is much of a threat agree that the basic technology that drives it - VoIP - will lead to fundamental changes in the industry.
"VoIP is going to change everything," says Jeff Kagan, a telecommunications consultant based in Atlanta.
"The big telecom companies worry that VoIP could completely undermine their business within 12 months," says Berge Ayvazian, a senior research fellow at the Yankee Group.
With VoIP, when someone speaks into the telephone, or microphone, the sounds are broken down into ones and zeros, sorted into packets of information, and then shot across the worldwide network of fiber lines, just like e-mail messages. At the designated end points, the packets of binary code are reassembled and turned back into sounds. In the regular phone network, calls initially pass over less efficient copper wires and the phone companies must maintain dedicated connections between users, instead of just mixing the information in with the rest of the Internet.
The first VoIP companies were established in the mid-1990's, but they were plagued by confusing technology and connections that made users sound as though they were talking in caves, and with mouths full of cotton candy. Now, though, new engineering, faster connections and agreements on standards have solved many of those problems. All the interviews for this article were conducted either using Skype or an alternate VoIP service.
A few start-ups - most notably Vonage, based in Edison, N.J. - offer customers complete VoIP calling plans for a fee, using standard telephones connected to VoIP adapters. Vonage already has 55,000 subscribers and offers unlimited calls within the United States and Canada for $35 a month. The presidential campaign of Howard Dean has installed Vonage's system in several of its field offices.
THE major phone companies have responded with a two-pronged strategy. On the one hand, they are rapidly building the technology into their own offerings. MCI expects to have made a complete transition to VoIP by 2005. AT&T will offer a major digital voice service to businesses in 2004 and has begun a consumer pilot program, based mainly in New Jersey.
On the other hand, the regional Bell companies are arguing for new regulations that would tie up VoIP companies that let consumers make calls to customers on the regular phone network, as Skype hopes to do soon.
According to critics, VoIP companies receive an unfair advantage because the F.C.C. and state governments regulate them as information, not phone, companies because they rely completely on the Internet. That frees them from multiple tax and regulatory commitments, like directly paying into the federal "universal service fund" that subsidizes rural telephone access. Some state governments are considering that issue; in Minnesota last week, a federal judge overruled a decision by the state's Public Utilities Commission to force Vonage and other VoIP companies to submit to the state's traditional phone regulations. The F.C.C. and Congress will almost certainly take up the issue soon, too.
"When Congress looks at it, it will be an interesting collision of two mantras: One, you shouldn't regulate the Internet; and two, there should be regularity parity," says Representative Edward J. Markey of Massachusetts, the ranking Democrat on the House telecommunications subcommittee.
UNLIKE their experience with Kazaa, Mr. Zennstrom and Mr. Friis said they did not see any fundamental problems on the legal front for Skype, a contention that major phone companies agree with. Skype's main use will almost certainly be social - making phone calls.
Ultimately, Mr. Zennstrom said, Skype will have to deal with regulations once the company allows users to call the existing public phone network. But he said he hoped that the Internet service providers that give subscribers access to Skype would end up paying the universal service fees.
For the most part, Mr. Zennstrom is taking the same position with Skype that he adopted with Kazaa. He says that the company is just providing software; that users can do with it what they want; and that there are too many potential legal issues internationally to worry about them all.
"We don't know if Skype will be banned in Bhutan," Mr. Zennstrom said. "The only thing that we know for sure is that we are providing something very competitive that is very good for the consumers using it. If a country were to ban it, that would be very bad for consumers there."
Skype also faces a potential standoff with the F.B.I. Because traffic over Skype is strongly encrypted and distributed over wide-ranging sources, it could hamper authorities' ability to wiretap.
Paul Bresson, an F.B.I. spokesman, said, "It is legal; it is a concern; and it is something that we are looking into."
For now, Mr. Zennstrom and Mr. Friis are charging ahead. "I am here to have fun and to have some challenges and try to achieve them and to make an impact,'' Mr. Zennstrom said. "Of course, I want to make money, too."
Does Mr. Zennstrom relish the idea of causing trouble for the telecom industry? He laughed, then said, "Yes, that's fun."
http://www.nytimes.com/2003/10/12/bu...ey/12kaza.html
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Public Spaces – Communal P2P “Video Walls” From Project Dynamo
Jack Spratts
Researchers in England have created software that facilitates file sharing in open environments.
Designed either for business meetings or public communities
Project Dynamo lets users walk up to a video wall, view content and start a transfer. The USB based system supports both up and downloading and can also handle “sealed” files for privacy. You can put up a file for a friend who might be along later confident it will reach only the one it's meant for - or you can post public content that anyone can access.
It sounds like a great idea for musicians, performers and promoters, and anyone interested in reaching large numbers of people who gather in public spaces and I imagine the walls will become popular very fast.
I can see these in parks and in Great Spaces like Piccadilly Circus or Rome’s Piazza Navonna, where thousands gather mixing cultures from all over the world, but also in more prosaic spots as well like small town Main Streets and shopping malls.
It’s tailor-made for the new pocket-sized high capacity
thumb drives, now reaching two gigs.
Here’s thier
video.
Until next week,
-
js.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Current Week In Review.
Recent WIRs -
http://www.p2p-zone.com/underground/...threadid=17709 October 11th
http://www.p2p-zone.com/underground/...threadid=17605 September 29th
http://www.p2p-zone.com/underground/...threadid=17552 September 20th
http://www.p2p-zone.com/underground/...threadid=17495 September 13th
Jack Spratts Week In Review is published every Friday. Please submit letters, articles, and press releases in plain text English to jackspratts at lycos.com. Include contact info. Submission deadlines are Wednesdays @ 1700 UTC.