[JackSpratts]

Anti-Piracy Vigilantes Track File Sharers
Kevin Poulsen

A pair of coders nurturing a deep antipathy for software pirates set off a controversy Thursday when they went public with a months-old experiment to trick file sharers into running a Trojan horse program that chastises users and reports back to a central server.

As of Thursday, the crime-busting duo's server had logged over 12,000 victims of "Walk the Plank," and a sequel they call "Dust Bunny," since the cyber sting secretly launched in January. The programs have circulated disguised as activation key generators and cracks for Unreal Tournament 2004, Pinnacle Studio 9, Norton Antivirus, TurboTax, and as a copy of the leaked Microsoft source code -- all titles chosen for their popularity on peer-to-peer networks. When executed, a large message appears scolding, "Bad Pirate!"

"So, you think you can steal from software companies do you?," the text continues. "That's called theft, don't worry your secret is safe with me. Go thou and sin no more."

The program does not permanently install itself, open a back door or harvest the user's name or other personal information. But it does "phone home" to a central server, sending the filename under which it was executed, and the amount of time the user spent staring in shock at the sermonizing text before closing the window-an average of about 12 seconds. The "Dust Bunny" revision launched last month also sends a unique I.D. number that' embedded in each copy of the program; the server logs the I.D., then sends back a new number that gets patched into the code, allowing the creators to track the program as it's re-distributed across the networks.

The whole thing is logged in real time to a public website, date and time stamped with each user's IP address and country of origin.

"We were going to see how many executions we'd get -- how much people would download it -- and we thought we could turn it into a tracking thing and track how it spread," says 19-year-old Clifton Griffin, the North Carolina college student who wrote the program with an online friend called "Justin X. B."

After initially distributing it on Gnutella from their own machines, the pair stopped sharing it directly when they found that the program was sustaining itself-- eventually even crossing to other networks. "Searching eDonkey and stuff like that, we've found that a lot of people must be using multiple file sharing services," says Griffin, "Certain versions have up to 150 sources on eDonkey alone. It's definitely making its way to different networks."

Legal Issues
On Thursday, the pair finally revealed their "war on illegal file sharing and pirates" on a blog they both run. The online community site Broadbandreports.com picked up the story, and its message boards quickly filled with outraged posters dubbing the project "malware" and a "virus," and suggesting the coders might be in violation of the law - "they infiltrate your computer under false pretenses," wrote one. Some craftier users obtained and reversed-engineered a copy of the program, and someone subverted the phone home mechanism to post unkind comments about Griffin to his own website.

"The response has either been, 'very cool,' 'hilarious,' etc., or, 'I'm offended,' 'you're going down,' 'I'm suing you.,'" says Griffin, who dismisses his critics as likely pirates, and insists that Walk the Plank is perfectly legal. "They chose to download it from us, and it doesn't do anything harmful to them," Griffin says.

But Jason Schultz, a staff attorney with the Electronic Frontier Foundation, is wary of the vigilante effort. "It's sort of an invasion of your computer, not much different from other malicious programs or spyware," says Schultz. "When you use file sharing to download an application, you're not giving the person who's sending you the file permission to run rampant on your computer. The fact that they're in some ways tricking you into running it may pose some real problems for them in court."

"I think there's an awful lot of presumptions going on about who's downloading these files and for what reason," Schultz says -- an attorney or a journalists might download software in an investigation, for example. "Even if it's the case that the people who download this are trying to get illegal files, two wrongs don't make a right."

Notwithstanding the controversy, the website charting the program's movements around the world is strangely compelling. A field at the top of the page even keeps a running count of the total amount of minutes the program has sat running on people's machines, displaying its tough-on-crime message and wasting the downloader's time. "We tried to calculate how long we took to develop the program so we'd know when we 'broke even'," says Griffin. That happened weeks ago: the two versions of the program took a total of 32 hours to code, he says, and they've racked up eighty-five hours of running time.
http://www.securityfocus.com/news/8279


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Hewlett-Packard to Sell Linux PCs in Asian Markets
From Dow Jones / Associated Press

Hewlett-Packard Co. plans to be the first company to trumpet personal computers that run the freely distributed Linux operating system in Asia, HP's Japanese unit said Tuesday.

Other details, such as when the sales will begin, haven't been set.

The move by Palo Alto-based HP, which sells about 17% of the world's PCs, could be a threat to Microsoft Corp., maker of the dominant Windows operating system.

For its Linux PCs, HP "will target emerging markets, where Windows PCs are not used so widely," an HP spokesman said. The company has not decided whether it will sell Linux PCs in Japan, he said.

Linux is an open-source operating system, meaning its code is freely distributed and shared by programmers.

The HP computers will use an operating system made by Tokyo's Turbolinux, and will include the company's OpenOffice.org 1.1 suite of software. OpenOffice is designed to be compatible with Microsoft Office.

The Nihon Keizai Shimbun newspaper reported Tuesday that shipments could reach 1 million units in the first year.

HP's move may prompt other PC makers to follow suit, since prices of Linux PCs are expected to be lower than those of Windows-based PCs. That would further fuel already-intense price competition in the global PC market.

Hewlett-Packard shares increased 8 cents to $21.79 on the New York Stock Exchange.
http://www.latimes.com/technology/la...nes-technology


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The Boston Consulting Group/OSDN Hacker Survey

Who are the hackers that create all this great free software? How much time do they spend? Why do they do it? Where are they from? Do they think its sustainable? In order to better understand the nature of this dynamic community and provide lessons to the business world about innovation, The Boston Consulting Group, in cooperation with OSDN, surveyed hackers participating on software projects on SourceForge.net, the world's largest collaborative software development Web site for the Open Source community and the Linux kernel mailing list.

The preliminary results of the BCG/OSDN survey reveal that:

· Participants note extremely high levels of creativity in their projects.
· Having fun, enhancing skills, access to source code and user needs drive contributions to the Open Source community. Defeating proprietary software companies is not a major motivator.
· The Open Source community is truly global in composition with respondents coming from 35 countries.
· Most participants dedicated at least 10 hours per week in their shared programming efforts
· Contrary to popular belief about hackers, the open source community is mostly comprised of highly skilled IT professionals who have on average over 10 years of programming experience.

Release 0.3 of the survey analysis is available here ( pdf, html ), and Release 0.73 is here ( pdf, html ).

Contact Karim Lakhani (lakhani@mit.edu) or Bob Wolf (bob@bcg.com) for more information.
http://www.osdn.com/bcg/


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Overheard

mburns

good lord yatta, THAT was why your bandwidth was clogged. There is no reason to have 39 connections, it defeats the purpose of WASTE.

http://www.mirwin.net/forum/index.ph...pic=108&st=110


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Antitrust Fine for Microsoft Said to Be $613 Million
Paul Meller

RUSSELS, March 22 - Antitrust regulators will fine Microsoft 497 million euros ($613 million) on Wednesday, when the European Commission formally rules that the company abused its monopoly in computer operating systems, people close to the company said on Monday.

The fine, which was set late last week after settlement talks with Microsoft broke down, was endorsed by regulators from the 15 member nations of the European Union on Monday.

Microsoft said the fine was too big. "In view of the absence of a clear legal standard under E.U. law, a fine of this size isn't warranted," said Tom Brookes, the company's spokesman in Brussels.

On Tuesday, the fine is to be discussed by senior aides to all 20 commissioners before being brought up at the European Commission's final meeting on the case on Wednesday morning.

Microsoft would then be officially informed of the fine and sent a summary of the ruling by fax, shortly before Mario Monti, the competition commissioner, holds a news conference to announce the decision.

Under the European Union antitrust laws, the commission can set a fine of as much as 10 percent of a company's global sales, which in Microsoft's case would be more than $35 billion. European antitrust regulators, however, have never fined a company the full 10 percent, and Brussels-based lawyers and officials had expected the fine against Microsoft to range from 100 million euros to 1 billion euros.

The biggest previous fine imposed by the commission was 462 million euros, or about $406 million at the exchange rate at that time, against Roche of Switzerland in 2001 for its role in several cartels that fixed prices and market shares of vitamin products in the 1990's. (Seven other vitamin makers were fined lesser amounts.)

Still, some people close to Microsoft had been speculating over the weekend that the commission would not impose a fine at all.

But Amelia Torres, a spokeswoman for Mr. Monti, said: "We have already told Microsoft many times that a negative ruling will incur a fine. A small company could claim it didn't know the rules, but not one the size of Microsoft."

The commission is expected to rule that Microsoft abused the monopoly position of its Windows operating system in two ways. By withholding vital information about Windows from rival makers of software for servers, the company gained an unfair advantage in the separate market for server software. It also competed unfairly by including its Media Player audio-video software as part of Windows. The commission is expected to announce remedies to restore competition in these markets, requiring Microsoft to sell two versions of Windows to PC makers in Europe, one of them with Media Player stripped out.

It would also have to share more Windows code to allow rival makers of server software to compete with Microsoft more fairly, according to people close to the case. Computer servers drive networks of PC's.

These remedies would have more of an impact on Microsoft than a fine, because the company has more than $50 billion in cash reserves and has already set some of that aside for covering legal costs.

After negotiations toward a settlement of the charges collapsed last week, Brad Smith, the chief lawyer for Microsoft, said the company would appeal any ruling at the European Court of First Instance in Luxembourg.
http://www.nytimes.com/2004/03/23/te...gy/23soft.html


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RIAA Keeps Pressure on P2P Users
Roy Mark

The Recording Industry Association of America (RIAA) hit alleged music file swappers with another round of legal actions Tuesday, marking the music industry's third consecutive month of stepped- up litigation against peer-to-peer (P2P) network users. Since January, the RIAA has filed almost 1,600 such actions.

Included in this month's round of 532 'John Doe' subpoenas seeking the names of suspected music pirates are 82 actions against individuals the RIAA claims used college and university networks to illegally distribute copyrighted music.

The RIAA identified university networks being used for illegal file sharing at schools in Arizona, California, Colorado, Indiana, Maryland, Michigan, New York, Pennsylvania, Tennessee, Washington, D.C., and Wisconsin. The schools are not part of the legal actions other than being requested to supply the names of the file-swappers.

The other 443 lawsuits were filed against file sharers using commercial Internet service providers (ISPs) in California, Colorado, Missouri, Texas and Virginia.

More than a year ago, the RIAA and a number of colleges and universities formed a joint committee to address music piracy on college campuses.

While the RIAA said Tuesday "real progress" has been made regarding music piracy at schools, lawsuits remain a key component of the music industry's strategy to curb P2P music file sharing.

"There is an exciting array of legal music services where fans can get high-quality online music," RIAA President Cary Sherman said in a statement. "Lawsuits are an important part of the larger strategy to educate file sharers about the law, protect the rights of copyright owners and encourage music fans to turn to these legitimate services."

Since music piracy remains "rampant on college campuses, it's important for everyone to understand that no one is immune from the consequences of illegally 'sharing' music files on P2P networks,'" Sherman said.

The RIAA said the first round of lawsuits filed in January is "proceeding along." All four courts in that round have granted the group's preliminary request to issue subpoenas to ISPs to learn the identity of illegal file sharers.

Once an individual is identified by the RIAA, the record companies plan to offer settlements. If the file sharer rejects the settlement offer, the RIAA will proceed with copyright infringement litigation.

For the second round of suits brought in February, courts in Georgia and New Jersey have approved the RIAA's motion to begin issuing subpoenas but a court in Florida has requested an additional briefing. In Philadelphia, the RIAA is asking the court to reconsider an initial decision that the RIAA needed to file individual complaints for each illegal file sharer.

Like the 1,063 RIAA lawsuits brought in January and February, the March suits employ the John Doe process, which is used to sue defendants whose names aren't known. The lawsuits identify the defendants only by their Internet protocol computer address.

A decision by a Washington, D.C., federal appeals court on Dec. 19 that the information subpoena process allowed by the Digital Millennium Copyright Act (DMCA) cannot be used in infringement cases involving P2P networks forced the RIAA to change to the John Doe process.

From September to mid-December, the RIAA issued more than 3,000 DMCA subpoenas to obtain names for copyright infringement suits. The DMCA subpoenas were filed prior to any charges of infringement and were not subject to a review by a judge, and required no notice to, or opportunity to be heard by, the alleged infringer.

The status of those lawsuits has not been determined.
http://www.internetnews.com/xSP/article.php/3330071


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Groove Reloads for Virtual Office
Steve Gillmor

The ideas behind Groove Networks are compelling. For Ray Ozzie, Groove was a reboot from the original precepts of Lotus Notes, which Ozzie architected before the Internet changed everything.

Groove initially promised a "just works" philosophy with zero IT requirements; a secure, user- deployable architecture that distributed resources; and communications from centralized servers to the edge of the network. But like Notes, the client was sloooooow, the development methodology cumbersome and the business case elusive for all but the collaboration-committed.

Ozzie, however, is a persistent visionary. His focus has shifted from Groove's original charter—
serving the changing nature of business—to serving the changing nature of work itself. The sweet spot of the new Groove is the virtual office.

"Last year was the year of Wi-Fi, the transition to laptops," Ozzie told me in a conversation about the Groove v3.0 public beta. Today's mobile workers require a secure, rapidly deployable layer of what he calls rich client-side middleware. Then they require tools that abstract the details of operating systems and tool sets that reside across the firewall.

Click here to read an interview with Ray Ozzie on Groove's role in the changing nature of work and information routing.

"My IT organization cannot dictate what directory or standards another organization deploys," Ozzie said. "All [Groove users] need to know is the person they need to work with. That's it." Whether it's Windows 98 or XP or eventually "Longhorn." "Software on PCs is not used unless it's really user-friendly, and software that's deployed by enterprises isn't used unless it's able to be managed," he said.

Groove Management Server provides one-click deployment, directory federation, PKI integration, and auditing and monitoring tools. Performance has been improved by a factor of 2, 4 or in some cases 10. But a new feature, GFS (Groove File Sharing), is perhaps the tail that will wag the dog.

"In [Version 2] we put certain mail integration features in because we noticed that people like to start sharing based on the things that they're talking about in e-mail," Ozzie said. Now, with the ability to synchronize files directly from the Windows file system across Groove's secure XML network, users can share documents in the context they're already comfortable working in: Windows Explorer.

Couple group file sharing with v3.0's enhanced notification and alert architecture, and you make pervasive what Ozzie calls "swarming." "It's shifted so much activity of what people do into Groove," Ozzie said, "it feels more like a place [where] other people live, and you get things done more quickly."

Craig Samuel, HP Services' chief knowledge officer, said he thinks GFS alone can save HP serious money by letting users share lower-demand data at the periphery of the enterprise. "GFS is at the least a bridging mechanism and potentially an alternative to Microsoft's Longhorn file sharing," Samuel told me.

Groove has found its killer app.
http://www.eweek.com/article2/0,1759,1553100,00.asp


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Microsoft Replaces bCentral, Launches New Web Site
Reuters

Microsoft Corp. (nasdaq: MSFT - news - people) said on Tuesday that it would phase out its bCentral brand for offering online services and software for smaller businesses and replace it with a new global Web site that will offer information, customer support and advice on using business software.

Microsoft, which is betting that it will be able to sell $10 billion in software to small business by the end of the decade, has been streamlining its software portfolio acquired through transitions, its sales force and marketing around the initiative.

Steven Guggenheimer, vice president in charge of sales and marketing for small businesses, said that the new Small Business Center Web portal would first launch in 10 countries and soon expand to 30.

"We'll retire the bCentral brand and the site itself," Guggenheimer said.

Microsoft launched bCentral in 1999 to offer support and some online software services to customers that operated businesses of five to a few dozen employees.

But Microsoft never clearly defined its strategy to sell software to smaller businesses until it spent $2.4 billion acquiring small business software makers Great Plains and Navision to shore up its business solutions division.

While Microsoft integrates those divisions, it has rolled out customer relationship management software for smaller businesses and rolled out a version of its server software that allows smaller businesses to set up an office network with e-mail, file sharing and data management features.

Microsoft said that the Small Business Center portal will provide sales and marketing tools and advice, customized information, and information on how to buy relevant software from resellers.
http://www.forbes.com/technology/new...tr1309171.html


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Microsoft Cues Up Net Music Store
Jim Hu

Microsoft said Friday that the second half of the year will see the launch of its online music store, a long-expected entry into an increasingly crowded business dominated by Apple Computer's iTunes.

The software giant this week began offering sneak peaks of the service to independent record labels at the South by Southwest trade show in Austin, Texas. Though Microsoft remains mum about specific details, this week's dog and pony show signals the company's heightened ambitions to enter the world of online music sales with a bang.

Microsoft will promote its music store primarily through its MSN.com Web portal, according to company spokeswoman Lisa Gurry. Visitors will be able to sign up via MSN and browse a catalog of songs and albums to purchase and download onto their computers. Gurry declined to comment on pricing or on the number of songs Microsoft plans to initially release on the service.

"We are absolutely going to be striving for a large catalog of music, but we have no specific numbers to confirm," Gurry said in an interview.

The store will also let buyers transfer their music onto portable playback devices. About 60 percent of portables currently support Microsoft's Windows Media audio format, Gurry said. She added that Microsoft has not decided whether to extend its song portability to non-Windows Media devices.

Currently Apple's popular iPod player is compatible with Microsoft's Windows operating system, as is its iTunes music store. Gurry also declined to say whether Microsoft's music store would be bundled into Windows or featured on its Windows Media playback software.

Online song sales have started to catch on, and many companies are trying to elbow their way into the market. Apple recently said it has sold 50 million songs through iTunes, while smaller players, such as Roxio's Napster, have sold as many as 5 million. Still, the business is difficult because margins are low. Still other companies, such as Yahoo, have publicly expressed doubt about the business but have nonetheless noted that the trend is becoming too powerful to ignore.
http://news.com.com/2100-1027-5176411.html


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Musical Chairs With the Big Boys
Steve Lohr

IS RealNetworks the next Netscape?

Rob Glaser, the founder and chief executive of RealNetworks, a pioneering maker of music-playing software for the Internet, bridles at the notion. "Our situation is very different in some important ways," he said in a lengthy interview last week.

Netscape, of course, was a path breaker in Web-browsing software and Exhibit A in a sweeping government antitrust case that resulted in a stinging legal setback for Microsoft. Yet Netscape soon faded as a force in the industry.

The fate of RealNetworks is a question awaiting an answer. But the similarities between it and Netscape are uncanny, especially now that the European Commission is preparing to rule against Microsoft on Wednesday after a final round of settlement talks collapsed last week.

The commission will order the company to offer a version of its dominant Windows operating system for personal computers without a digital media player, a market in which RealNetworks was the front-runner until Microsoft moved in.

The ruling, if upheld on appeal, may make it easier for RealNetworks to get its software on more personal computers. But it will not undo the damage already done to the company's business.

In many ways, the European case can be seen as a sequel to the American antitrust suit against Microsoft. Netscape was at the center of that case, which Microsoft lost but then settled with the Bush administration in 2001. Some of the names have changed, but the pattern is the same.

In both cases, Microsoft was accused of being a nasty monopolist that bundled new software into Windows, gave it away and engaged in bullying tactics intended to stifle competition by crushing the early leader in an emerging market.

Competing on those terms proved to be near fatal for Netscape, which was eventually acquired and exists today in a forlorn corner of Time Warner. And it has not been any easier for RealNetworks, which has lost money for four straight years - $245 million in red ink.

As if battling Bill Gates were not enough, Mr. Glaser also finds himself pitted against perhaps the second-most-famous computer entrepreneur in the land: Steven P. Jobs of Apple Computer. Apple's iTunes music store has recently overshadowed RealNetworks' Rhapsody as the stellar brand in digital music.

The RealNetworks story has the added theme of former friends turned enemies. Mr. Glaser, 42, worked for a decade at Microsoft, where he became one of Mr. Gates's trusted lieutenants, and a very rich man. He left and founded RealNetworks in 1994, parting on good terms. Microsoft took a 10 percent stake in the start- up, originally called Progressive Networks.

But then Microsoft itself got into the digital media market, and the partners became adversaries. In 1998, Mr. Glaser testified before the Senate against Microsoft, describing what he said were the abusive tactics of his former employer. Later that year, Microsoft announced that it was selling its stake in RealNetworks.

The most recent salvo from RealNetworks came three months ago, when it filed a private antitrust suit against Microsoft, seeking $1 billion in damages. Despite the bitter rivalry, Mr. Glaser maintains that his company is neither defined nor obsessed by its huge competitor and Seattle area neighbor. "This is not some quixotic Ahab-and-the-whale thing," he said.

Mr. Glaser may be protesting too much, but there is a strong case to be made that his company's future will not be just a rerun of the Netscape script. RealNetworks seems to have the quick instincts of a survivor. Its losses are declining sharply, and it has overhauled its business.

For most of its young corporate life, the main business of RealNetworks was software - the software needed to play on a personal computer the music or video received in digital streams over the Internet and the software needed by developers and companies to create and send it.

Particularly in the last year, the company's digital media offerings to consumers - its Rhapsody music service, computer games and streaming video of Nascar races, N.B.A. games and news from CNN and ABC - have grown sharply. Most are sold as subscriptions, at $5 to $10 a month. In 2001, software accounted for roughly 60 percent of RealNetworks' revenue; by the fourth quarter of last year, the software share had fallen to 25 percent. Over the same period, the share of revenue from consumer services more than doubled, to 75 percent.

TODAY, RealNetworks can be thought of as the Internet equivalent of the early cable television networks of decades ago, like MTV or ESPN. And it is much less dependent on software than it was before, and thus less susceptible to being run over by Microsoft. RealNetworks says it will return to profitability in the second half of this year, excluding the legal costs of suing Microsoft, estimated at $3 million a quarter.

"RealNetworks has done a very good job of moving its business to a new center of gravity," said Michael Gartenberg, an analyst for Jupiter Research. "RealNetworks is not Netscape. It will not be the next company vanquished by Microsoft."

Yet even in its new bailiwick of consumer services, RealNetworks faces daunting competition as well as opportunity. Its music services, for example, are growing rapidly, with the number of subscribers increasing to 350,000 in the fourth quarter last year from 250,000 in the third quarter. The number of songs streamed to RealNetworks' subscribers has increased to 48 million in February from 16 million last August, when it completed its purchase of Listen.com.

REALNETWORKS' business has benefited considerably from the music industry's crackdown on online piracy and the willingness of more people to pay for digital music. Yet no one did more to legitimize digital music than an innovative outsider to the business, Apple Computer. Its easy-to-use service, iTunes Music Store, charging 99 cents a downloaded song, has been a huge hit since it began last April. Last week, Apple announced that 50 million songs had been bought from its Internet music store.

With its 350,000 subscribers, RealNetworks is the largest of the digital music subscription services, a nascent market that allows users to listen to music without storing it on their computers. It includes MusicNet, Musicmatch, Roxio's Napster and others. At the end of last year, the music services had more than 700,000 paying subscribers, triple the number of a year earlier, industry analysts estimate.
http://www.nytimes.com/2004/03/21/bu...ey/21real.html


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Real's Glaser Exhorts Apple To Open iPod
Michael Kanellos

RealNetworks CEO Rob Glaser has a message for Apple Computer chief Steve Jobs: Open iPod or shrivel.

Glaser, the feisty founder of the Internet entertainment network, said during a panel discussion Tuesday at PC Forum here that Apple is creating problems for itself by using a file format that forces consumers to buy music from Apple's own iTunes site. (CNET Networks, publisher of News.com, last week acquired EDventures, which sponsors PC Forum.)

Because Apple's iPod music player does not support other proprietary music formats and does not license its own format to rivals, Real's Rhapsody and other song sites are blocked from easily reaching iPod users.

"Apple's (market) share will go down if they continue to do this. The only way to presently put songs on an iPod is to (buy) them from iTunes," Glaser said, referring to downloads purchased from online music stores. In addition to iTunes songs, the iPod can play files encoded in the MP3 format, including tracks ripped from CDs.

Hewlett-Packard, which has partnered with Apple on digital music, is in a position to persuade the company to change its practice, he said.

"There is a good opportunity to say to Steve, 'You've done a good job of promoting this thing, but now one of two bad things will happen,'" Glaser said. "One, Apple's market share will go down to its historical single-digit levels, or two, it will slow down the development of this market."

Glaser predicted that customers will say, "I bought an iPod and can only shop at one store. What is this? The Soviet Union?"

Shane Robison, chief technology officer of HP, shared the panel with Glaser and said diplomatically that discussions on many issues are always ongoing.

Apple could not be reached for comment.

Glaser also applauded actions taken by European regulators to limit Microsoft's ability to bundle technology into Windows. Real has been directly affected by the practice, because it makes a competing media player.

"I think it is a step in the right direction. It is not transcendent," he said. "The specific solutions have not been announced yet, but the outcome suggests that the European regulators did the right thing for the right reasons."

Glaser further said that the European Commission's ruling is not likely to exert massive political pressures because most of the companies directly affected by the decision--Sun Microsystems, RealNetworks and Apple, among others--are based in the United States. The commission, however, has said it entered the investigation on behalf of European citizens.

Microsoft, meanwhile, struck a deal with Major League Baseball to offer live audio and video on its networks. MLB used to have a partnership with RealNetworks.
http://news.com.com/2100-1025-5177914.html


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Watch For Falling Music Download Prices
Dinesh C. Sharma

Wal-Mart Stores is bringing cut-rate prices to the ever-more-crowded world of online music.

On Tuesday, the mammoth chain retailer formally opened its online music store, from which customers can download music at 88 cents per song. That's 11 cents less than Apple Computer charges at its iTunes music store, which has been the pacesetter on this e-commerce track.

The Wal-Mart service allows customers to play downloaded music on Windows PCs, to burn songs to a CD or to transfer music to portable devices. Usage rights are uniform across the company's catalog of music. The retailer began testing the service in December and is working in partnership with Liquid Digital Media, formerly Liquid Audio.

The service includes a "download manager" designed to help customers retrieve full albums and groups of songs.

There's no shortage of companies that want to be the outlet for consumers looking to acquire songs online. Besides Apple, which last month said it was selling approximately 2.5 million downloads per week, the competition includes MusicMatch and the reborn Napster. Microsoft plans to enter the fray in the second half of the year.

Bentonville, Ark.-based Wal-Mart said it has an exclusive two-month deal with Curb Records, whose country music stars include Tim McGraw, LeAnn Rimes and Jodee Messina.
http://news.com.com/2100-1027-5177937.html


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Hands-On Leader Fuels Rare Revival in Record Industry
Chris Nelson


Photo: Steve Goldstein for The New
York Times

HOLLYWOOD — Andrew Slater is not your typical music industry executive.

A former manager and producer of artists like the Beastie Boys, Don Henley and Macy Gray, Mr. Slater now runs Capitol Records, one of the few labels in this unsteady era of file sharing that is not only stable but also has the rare distinction of substantial growth.

Since taking over nearly three years ago Mr. Slater and his very hands-on approach to music making — from rerecording parts of songs to dissecting new videos — have transformed Capitol from a languishing heritage label best known for the Beatles and Frank Sinatra into a company that can once again develop hit artists. He he has nearly doubled Capitol's market share through the middle of March compared with the same period last year, the second-best performance of any label, according to Nielsen SoundScan, which tracks music sales in the United States. (Capitol had 3.24 percent of the market; Columbia, the leader, 6.9 percent.)

"Rock 'n' roll is about style and rebellion and sex and love," Mr. Slater said. "And in order to deliver those messages, there's an aspect of the two-dimensional image that has to addressed. The elements in a record package or a video have to define, help define, who that artist or that sentiment is."

On a recent Saturday night Mr. Slater stopped by Studio A in the basement of Capitol building in Hollywood to talk with producers who, at his request, were creating a middle section for a song on the debut album of teenage singer-songwriter Skye Sweetnam.

The next afternoon he drove up to Santa Monica to look at a rough cut of the video for the Vines' "Ride." He pointed out frames in the video that might bring the band unwanted comparisons to the look and work of Nirvana. The segments were cut.

When he arrived at Capitol Mr. Slater was baffled by the artists then signed to carry on the legacy of giants like the Beach Boys, the Band and Pink Floyd. Aside from the arty rockers Radiohead and the Beastie Boys, the label had few acts to boast about, he said.

"I saw Capitol as a great brand that had been tarnished," said Mr. Slater, who, in jeans and sneakers, with wavy hair combed back, could pass for a session musician.

He soon looked at which band under contract he could develop into a hitmaker the fastest. Judging Coldplay the best bet, he pushed its 2001 debut, "Parachutes," which eventually sold two million copies.

Since then Capitol has issued a stream of steady-selling discs. In the months before Mr. Slater took over, there were six gold acts (500,000 units shipped) or nearly gold acts on Capitol. Today there are 16 on a similarly sized roster, including Radiohead, the hip-hop group Westside Connection and the pop singer Lisa Marie Presley.

Capitol's revenue in the United States has more than doubled since Mr. Slater took over, said Jeanne Meyer, the senior vice president for corporate communication at EMI North America, Capitol's parent company. (She would not provide specific figures, she said, because EMI does not break out its labels, which also include Virgin and Blue Note.)

Capitol's and EMI's recent strength has been caution, said Michael Nathanson, a media analyst with Sanford C. Bernstein who specializes in the music business. "Most of the industry has been in a boat going down a river without a paddle," he said. "But what they've done in this uncertain environment, they've been very cautious in committing resources to things that won't work," not overspending for artists and keeping the number of releases under control.

"It's being strategic about the records that you release, and how you release them, that will have the most impact on the business," Mr. Slater said.
http://www.nytimes.com/2004/03/23/ar...ic/23CAPI.html


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Can The Music Business Compete With Free?
Tim Weber

The UK record industry is threatening to get tough on people illegally downloading music. Where will this leave consumers, artists and the industry?

Mother is happy. Fourteen-year-old George is safely at home and not with his dubious friends.

Pecking away at his computer, listening to Outkast's Hey Ya, he won't get into trouble with police, will he?

He might - soon.

George downloaded the Outkast album from the internet without paying, and in the eyes of music industry bosses that's just as bad as if he had shoplifted the CD in the Virgin Megastore down the road.

In the US, the record industry has filed lawsuits against nearly 1,600 people for online copyright infringement.

"This is not about going after our customers. Illegal downloading is stealing, they are not customers but thieves," says David Munns, boss of EMI Music in North America.

The UK's music industry association, the BPI, might soon follow suit.

Final warning

An "awareness campaign" will drive home the message that most filesharing is illegal, and warn darkly of lurking dangers: computer viruses roaming filesharing networks, and software like Kazaa allowing strangers to sniff out personal files like your tax return.

Hardcore offenders that offer large numbers of songs for illegal download will have warning messages pop up on their screens, a "final warning" that they "risk legal penalties".

Lawsuits are not imminent in the UK, industry officials insist. The threat is there, though.

The perfect storm

The original Napster frenzy may be long over, but new software like Kazaa, WinMX, Grokster and Gnutella has taken its place.

ILLEGAL MUSIC FILES

April 2002: 600m
April 2003: 1.1bn
Jan 2004: 900m

USERS OF FILESHARING

April 2002: 3 million
April 2003: 5 million
Jan 2004: 6.2 million
source: IFPI

The International Federation of the Phonographic Industry, IFPI, estimates that in January this year about 900m illegal music files were available on the internet, offered by 6.2m users of so-called peer-to peer software.

Together with the spread of CD burners in home computers and a tsunami of CDs pirated commercially in Russia and the Far East, the music industry says it is in the centre of a "perfect storm" that's been raging for four years.

Global annual record sales have plummeted in value from $40bn to $30bn.

"If you get what you want when you want it for free, there's no incentive to buy," says IFPI boss Jason Berman.

Top executives, meanwhile, paint a doomsday scenario of a collapsed industry, where nobody nurtures new bands or markets stars.

Filesharing and artists

Many will find it hard to shed tears for record bosses.

Small bands depend on record sales for 60% of their income

But this is not just about them, says Peter Gabriel of Genesis fame and a rock legend in his own right.

He has a unique insight into the industry: a successful musician, owner of a studio and the Real World label, and one of the founders of OD2, currently Europe's biggest music download retailer, serving portals like Wanadoo and Tiscali.

"Yes, the big stars might be able to give away their music for free, because they have lots of revenue streams: concerts, television deals, merchandising," says Mr Gabriel.

"It's the smaller bands and artists that will suffer, because they depend on record sales for 60% of their income."

Of course, piracy has been around for ages. But today's pirated copies are of perfect quality, and many songs appear online even before they are officially released.

Every time that happens it leaves "a huge global damage crater," says Peter Jamieson, the BPI's executive chairman.

The online mess

But why did the industry fail?

Music firms made the "cardinal mistake of totally ignoring consumers," says Alain Levy, the boss of EMI Music.

Download sites came and went, failing over poor usability, faltering technology and expensive pricing.

And the movie industry is next in line for a beating.

"When the new Star Wars movie was released, it was online within 24 hours. Two days later it had been downloaded 45,000 times," says Richard Gelfond, co-chairman of Imax, the large-screen and 3D cinema firm.

Downloading that film took four hours. With broadband pipes rapidly getting fatter, DVDs could go the way of CDs.

Dangling carrots

To stop the rot, the media giants can't just rely on law suits.

"We have to have carrots along with the sticks," says a top executive at one of the big five record companies.

But talking to music bosses, it quickly becomes obvious that nobody is sure what would make the best carrot.

Pete Gabriel says that "to compete with free we have to provide something better".

Get a song for free, for example, but pay for cuts of the song in progress or extended live recordings. Or let the artist become your digital companion, scheduling your Media player with the music he or she listens to.

Some of this has already begun to happen.

Days after the Super Bowl, Beyonce's rendition of US national anthem Star Spangled Banner popped up on iTunes.

And don't just buy your favourite tune but get the very version you heard at last week's open-air festival. US cult band Phish already has more than 40 gigs on offer.

In the movie world Richard Gelfond hopes "the Imax experience" will do the trick, as it can't be brought into the living room.

The nasty DRM secret

For music executives, though, this does not solve the problem of rampant copying. How can consumers be stopped from becoming distributors through file-sharing?

The magic formula is DRM, short for Digital Rights Management, usually a software solution that controls what a buyer can do with the music.

The results, though, can be infuriating. Radiohead's most recent CD can't be transferred to MP3 players and played on a PC it effectively freezes the rest of the machine.

In an age where MP3 players are replacing the walkman, it leaves consumers cheated.

Record executives take heart from the arrival of technology firms on the scene. Online music stores like Apple's iTunes and Roxio's Napster 2.0 at last promise the ease of use, pricing and DRM technology that can persuade consumers to stay on the legal side of downloading.

There are still hitches. iTunes, for example, ties you to Apple's expensive iPod player if you want to be mobile.

Pricing could still become an issue. In the US a song usually costs 99 cents; UK consumers, charged nearly double at 99 pence, might bemoan another "rip-off".

And after a long drought European consumers will soon face online music overload, with dozens of web sites ranging from iTunes and MSN's music club to Wippit's legal peer-to-peer technology vying for attention.

But 2004 could be the year when online music is finally taking off - in its legal form, that is.
http://news.bbc.co.uk/2/hi/business/3563629.stm


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Record Stores: We're Fine, Thanks
Katie Dean

AUSTIN, Texas -- Some independent music stores are thriving despite the competition from illegal downloads on the Internet.

The stores are finding that file sharing can help create a buzz online that can lead to more sales, according to a panel of independent music store owners who spoke at the South by Southwest Music Conference & Festival here Friday.

Take Hoodlums Music, located on the Arizona State University campus, which opened during the heyday of Napster. One might think Net-savvy students would ignore the shop in favor of free downloads.

"It's a myth," said Steve Wiley, co-owner of the store. "We see them wanting to buy music."

High prices, rather than file sharing, are what usually stop a kid from buying a CD, Wiley said.

Typically, the music industry wants stores to sell CDs for $18 when they should be going for $15, he said. That $3 can make the difference in terms of whether or not a CD is going to sell.

"The file sharing, the Internet -- just makes them music junkies," Wiley said.

Paul Epstein, owner of Twist & Shout, a store in Denver, agreed that piracy has helped his bottom line. He said it's like radio, another form of promotion that spurs sales.

"File sharing is a danger, but it really turns a lot of kids on to music," he said.

The independent music shops that are thriving have built a close connection to their communities and deliver personal service that so-called big box stores like Wal-Mart and Best Buy can't match, the panelists said.

Sometimes that means trying out new ideas to bring customers in the door.

Epstein, a former English teacher, wanted his store to resemble his high-school bedroom, which was decorated with music memorabilia.

The store, site of a former Safeway supermarket, has 19-foot ceilings. It's "half museum," he said.

Uncle Sam's Music in Miami Beach, Florida, plays pop music most of the day, but at 6 p.m. the store switches to dance music. It stays open until 2 a.m. and provides turntables so DJs can come in and spin.

Kids frequently stop by after leaving nightclubs to buy the tunes they just danced to, said owner Lisa Teger- Zhen, who runs another store in Ft. Lauderdale, Florida.

To be sure, independent music retailers can do well in major music markets like Austin, Seattle and Denver, but small towns are a different story.

Communities that are just large enough to support one big box store may be left with mainstream music choices from Wal-Mart.

Don VanCleave, president of the Coalition of Independent Music Stores, said high-school students in his hometown of Birmingham, Alabama, complain to him about not being able to buy what they want locally.

Instead, they go online to download it.

"It's the end of the record store in those markets," said Carl Singmaster, owner of Manifest Disc & Tapes of South Carolina.

Singmaster, who once owned seven stores, decided to close his operation in December.

Although he believes Internet file sharing sank sales at one store, Singmaster doesn't blame piracy for his decision to get out of the business.

It "stopped being fun anymore, (becoming) 90 percent business, 10 percent fun," he said. "This wasn't a future I wanted to invest in."

As it happens, Manifest Disc & Tapes lives on under new ownership. The announced closings generated so much buzz in the community that four of them were purchased. One of the buyers was a long-time customer, Singmaster said.
http://www.wired.com/news/digiwood/0,1412,62742,00.html


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Valenti To Retire As Head Of Top Hollywood Trade Group

Jack Valenti, who oversaw the creation of Hollywood's movie-ratings system in the 1960s, said Tuesday he will step down as head of the Motion Picture
Association of America, possibly within three months.

Valenti, 82, has hinted at retirement over the last two years. He made it official at ShoWest, an annual convention of theater owners. May will mark Valenti's 38th anniversary in the job.

``I look at this with mixed emotions, because when you've done something so long, it's difficult to tear yourself away from it,'' Valenti told reporters before announcing retirement plans to theater owners in an address to open the convention. ``But also, in any job, you want to leave before people ask you to leave.''

Valenti, who received a standing ovation from a crowd of about 1,200 theater owners, said he hopes to give up the job in two to three months if a successor can be found that quickly.

MPAA has hired media recruiter Spencer Stuart to hunt for a new leader for the trade group, which represents Hollywood's top seven studios -- Disney, Warner Bros., Universal, Sony, 20th Century Fox, Paramount and MGM.

The job had been offered to U.S. Rep. Billy Tauzin, a Louisiana Republican, but he declined last January.

A former advertising and political consultant, Valenti was a speechwriter and congressional liaison for President Johnson before becoming head of the MPAA in 1966. The group implemented the ratings system two years later to replace a hodgepodge of government boards that censored movie content.

Critics have harped on the ratings system for decades, with some saying the ratings board is too loose on violence and overly prudish on sexuality.

But the system has stood largely unchanged from the G, PG, R and X ratings it began with. In the 1980s, a PG-13 category was added for movies inappropriate for preteens to attend on their own, while the NC-17 designation replaced the X rating for adult movies in the early 1990s.

Last year, the MPAA's annual poll of about 2,600 movie-goers found that 76 percent of parents with children younger than 13 found the ratings system useful, Valenti said.

``Jack Valenti has been a consummate leader of this industry for 38 years,'' said John Fithian, who heads the National Association of Theatre Owners. ``And we're not sure what we're going to do without him.''

As home-video and digital technology has advanced, Valenti has become involved in studio efforts to fight film piracy, which he said costs the industry about $3.5 billion a year as bootleggers duplicate movies on video tape and DVD or make them available on the Internet.

One anti-piracy attempt backfired last year, as Valenti took the lead on a studio-backed plan to ban so-called ``awards screeners,'' video copies of new movies sent to Academy Awards voters and those who pick other Hollywood honors so they can watch the films in their homes.

Those screener copies had been a source of counterfeit videotapes, DVDs and Internet downloads, Valenti said.

Small film outfits and independent producers objected, saying awards screeners allowed their movies to compete for Oscars with big-studio films that have huge marketing budgets.

Opponents sued, and the ban on awards screeners was lifted by a federal judge. Valenti said Tuesday that in the future, it will be up to individual studios and film distributors to decide if they want to send screener copies of their awards contenders.

Valenti said he will maintain an ``umbilical relationship'' with the MPAA and Hollywood, though he was not certain what that role would be.

``I've been blessed with some genetic energy, so I'm not going to fade away,'' Valenti said.
http://www.siliconvalley.com/mld/sil...al/8257608.htm


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

RIAA Site Disabled For Five Days
Robert Lemos

As the Recording Industry Association of America continues its push to shut down digital pirates, the industry group suffered its own defeat online.

According to data from Internet watcher Netcraft, the trade group's site has not been reachable for nearly five days. The Internet performance measurement company believes that the root of the outage is a variant of the MyDoom computer worm.

"The current outage now exceeds the RIAA site's four-day outage in July 2002, which was attributed to a DDoS," or distributed denial-of-
service, attack, Netcraft said Monday on its Web site.

The MyDoom mass-mailing variant started spreading in February through e-mail, infecting Windows computers whenever people clicked on the attached file. The number of computers infected by the virus is unknown. The program has been causing compromised systems to attack Microsoft's and the RIAA's sites between March 17 to March 22.

The RIAA refused to comment on the outage, except to confirm that the site is currently inaccessible. The group would not specify how long the outage has lasted.

Microsoft's Web site remains up. The software giant could not immediately be reached for comment.

Previous versions of the MyDoom computer virus attempted to inundate Microsoft's Web site and successfully overwhelmed the SCO Group's site. Unix seller SCO has claimed rights to code contained in the Linux kernel.

The attacks are expected to subside by Tuesday, and access to the RIAA Web site likely would be restored at that time.
http://news.com.com/2100-7355-5177326.html
















Until next week,

- js.














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