[JackSpratts]

"Web-surfing worker can't be fired." – AP


"For the above reasons, the Court hereby ORDERS that the Plaintiffs’ [RIAA’s] cause of action against Defendant Brittany Chan be DISMISSED." – United States District Court, Eastern District Of Michigan, Southern Division


"The library is pretty much full with people on MySpace, and with them banning it you won't have anything to distract you." – Paul Martinez


"That was a zero-day rootkit to us, so we decided to throw it at CoPilot as part of the operational tests. We detected the Sony rootkit in all its vectors, in real-time." – Jamie Butler


"This IP lookup process does not include any information that is used to identify you or contact you, and only gives a rough geographic representation of where users are located." – Microsoft


"The reason the recording industry is now insisting on a different standard has nothing to do with fairness. XM and the record industry are in the middle of renegotiating their performance license. By changing the standard now, the recording industry hopes to stack the deck in its favor." – Gary Parsons


"'It's not a pod. It's a mother ship.'" – Mitch Bainwol
































All Aboard

A new item on the hardware scene is an everyman PC from Chinese manufacturer Yellow Sheep River. They call it the Municator, and at $150.00 retail this box is the perfect example of why it's getting harder and harder for first time buyers (the majority of the world's population afterall) to justify the expense of DRM-laden Wintel/Apple systems. With open source email, instant messaging, Word and PowerPoint type office apps, or access to such via websites like Thinkfree, with good sound, fast video and Skype telephony, it does basically what the corporate boxes do and does it with more freedom, more privacy and for far less money, and all this without reporting your IP back to Redmond or Cupertino. Imagine that.

The general price trend in desktop computers has been moving south but now that magic 99 dollar tag seems to be hovering right over our heads. Out of reach at the moment, but probably not for long and when it arrives - watch out.

After seeing this news eye-opener I’ll bet more than a few Wintel/Apple execs will be checking their retirement investments.

What’s going to be eye-opening for the rest of us though is the effect these ultra affordable machines will have on the population of the internet, and P2P in particular, when some 4 billion people finally log in.

"Welcome to the Ubernet. So glad you could join us."

Won’t that be interesting?


















Enjoy,

Jack.






















April 29th, ’06







MS Expands Anti-Piracy Program, Reissues Patch
Brian Krebs

Microsoft today began expanding its anti-piracy program by quietly pushing out a software update that in many cases automatically scans Windows computers and reports on whether they are powered by unlicensed software.

The "new pilot program" is a fairly broad expansion of Microsoft's Windows Genuine Advantage program, under which the anti-piracy check was required only for users who wish to download security updates or other free programs from Microsoft's site. Under WGA, users who chose to receive fixes via Automatic Updates were not prompted to install and run the anti-piracy software.

Starting today, however, Windows XP users in the United States who have set up automatic security updates will receive the anti-piracy tool. After installation and reboot, they may find their computers popping up an alert that reads: "This copy of Windows is not genuine; you may be a victim of software counterfeiting." Microsoft also is pushing the new tool out to auto-update users in Britain, Malaysia, Australia and New Zealand.

I hadn't heard about this program until today, when my laptop -- which of course is running a legitimate copy of XP Home Edition -- received this update today and prompted me to restart. When I rebooted the machine and went to "Add Remove/Programs," the hyperlinked Microsoft Knowledge Base article that was supposed to describe more about this patch was not available, so I sent a few questions over to Microsoft. Below are their answers:

How does Microsoft plan to disseminate this? Through automatic updates?:

"Yes. As part of the pilot program, some customers in the U.S. U.K., Malaysia, Australia and New Zealand will be invited to receive WGA Notifications through Automatic Updates (AU) to learn whether or not they are running genuine Windows. Customers who opt in to the pilot and learn they are using non-genuine versions of Windows will receive a message during logon that their copy of Windows appears to be non-genuine and will be directed to the WGA Web site to learn more. If they choose not to obtain a copy of genuine Windows at that time, the customer will receive reminders until they are running genuine Windows. While the pilot is presently opt-in, as it expands later in the year, AU and WU customers may be required to participate. Users who have not validated their machines as genuine through WGA will not be able to download IE 7 and Windows Defender among other downloads and updates. However, they will not be denied critical security updates" (my emphasis added).

Will the Windows customer who uses auto-updates have the opportunity to decline this update and still install other updates?:

"The pilot is opt-in, so all participants are given a choice about whether or not they wish to participate. The opt-in is via a License Terms dialog, and users can chose to accept or decline. Only users who accept will receive the software. Once installed, participants will have the option to suppress notifications for some length of time. Users will not have the option of uninstalling WGA Notifications. Customers [already] running genuine Windows Advantage will be unaffected by WGA notifications. Users running non-genuine Windows will see the notifications at boot time, login time, and periodically to via a system tray bubble notification. Messages are displayed until the system is running genuine Windows. Users can choose to suppress the notifier. The notifier will remind such users that they are not running genuine Windows and direct them to the WGA failure page, where they can learn more about the benefits of genuine software and take advantage of the Microsoft genuine Windows offers designed to help victims of counterfeit software. All users are able to receive High Priority Security & reliability updates regardless of their validation status. Users will not have the option of uninstalling WGA Notifications" (again, my emphasis).

What has been the rate of acceptance among Windows users to the Genuine Advantage program so far? How many potentially pirated versions of Windows has Microsoft received reports of thus far through the WGA program and installed tools?

"To date, we have already validated more than 150 million systems worldwide with WGA. As of March 2006, the WGA notifications program has been offered to more than 13 million users and we estimate an additional 13 million customers will receive the program with the present expansion. The ultimate goal of WGA is to differentiate genuine Windows software from non-genuine software. WGA also helps Microsoft learn more about counterfeit resellers and their illegal practices. We don't have specific numbers to share."

What exactly happens in the event that the tool finds a PC that is suspected of running a counterfeit version of Windows (what info, if any, is then shared with Redmond)?:

"WGA Notifications is for Windows XP users. Our client software does not collect any information that can be used to identify or contact a user. We use the same process used by many popular search engines and Web sites to determine where their users are from -- a form of IP lookup. This IP lookup process does not include any information that is used to identify you or contact you, and only gives a rough geographic representation of where users are located."

Microsoft also said it is planning to expand the anti-piracy pilot to Microsoft Office products. Initially this will affect users of various foreign language versions of Office, including Brazilian Portuguese, Czech, Greek, Korean, Simplified Chinese, Russian and Spanish.

Microsoft has every right to defend its intellectual property rights, and I don't for a single second begrudge the company for trying to quash software piracy, which is a very costly and global problem. But I'm a little concerned that this action could cause a number of Windows users to turn off automatic updates completely, and as such leave their systems unpatched and sitting ducks for would-be attackers who might use those machines for criminal purposes.

For my part, I turned off Automatic Updates several months ago, mainly because I got sick of telling Windows not to install its "malicious software removal tool," (even though I checked the box next to "don't ask again" or something to that effect, Windows asks permission to reinstall the program every time other updates are available).

Microsoft also released today an update to fix a Windows security patch (MS06-015) it issued a week ago that caused problems for some users of Hewlett-Packard hardware and software, as well as some Windows users who have certain Nvidia graphics cards installed.

Microsoft said that if you are configured to receive automatic updates, you don't need to do anything: "It will detect if you have the problem and deliver the update to you. If you have not yet installed MS06-015, the revised version will be offered to you." Automatic update users will also get a complimentary copy of the new Windows anti-piracy tool as well.
http://blog.washingtonpost.com/secur...ipiracy_p.html





How Piracy Opens Doors for Windows

Bill Gates may not be entirely dismayed by software thieves. They seed the world market and make Microsoft a standard.
Charles Piller

Microsoft Corp. estimates it lost about $14 billion last year to software piracy — and those may prove to be the most lucrative sales never made.

Although the world's largest software maker spends millions of dollars annually to combat illegal copying and distribution of its products, critics allege — and Microsoft acknowledges — that piracy sometimes helps the company establish itself in emerging markets and fend off threats from free open-source programs.

The gist of the beneficial piracy argument is that the retail price Microsoft charges for signature products such as Windows and Office — as much as $669, depending on the version — can rival the average annual household income in some developing countries. So the vast majority of those users opt for pirated versions.

The proliferation of pirated copies nevertheless establishes Microsoft products — particularly Windows and Office — as the software standard. As economies mature and flourish and people and companies begin buying legitimate versions, they usually buy Microsoft because most others already use it. It's called the network effect.

"The first dose is free," said Hal Varian, a professor of information management at UC Berkeley, facetiously comparing Microsoft's anti-piracy policy to street-corner marketing of illicit drugs. "Once you start using a product, you keep using it."

Even as the Internet makes global piracy easier than ever, Microsoft's revenue and profit have risen steadily. It earned $12 billion on $41.4 billion in revenue in calendar '05.

That record of success has led many experts and software companies to regard piracy as less of a problem than initially assumed or even part of a comprehensive strategy, said Eric Goldman, a law professor at Marquette University in Milwaukee and the former chief counsel of a Silicon Valley Internet firm.

"Is widespread piracy simply foregone revenue, a business model by accident or a business model by design?" he asked. "Maybe all three."

Of course, Microsoft executives prefer that people buy, but theft can build market share more quickly, as company co-founder and Chairman Bill Gates acknowledged in an unguarded moment in 1998.

"Although about 3 million computers get sold every year in China, people don't pay for the software. Someday they will, though," Gates told an audience at the University of Washington. "And as long as they're going to steal it, we want them to steal ours. They'll get sort of addicted, and then we'll somehow figure out how to collect sometime in the next decade."

That's exactly what has happened around the globe, according to the Business Software Alliance, a Microsoft-backed anti-piracy group. Even Vietnam, which at more than 90% has the highest piracy rate in the world, has improved from 100% in 1994. The No. 1 software firm in Vietnam: Microsoft.

Closer to the company's Redmond, Wash., headquarters, the decline of piracy in the United States has tracked Microsoft's rise. Stratospheric 25 years ago, the U.S. piracy rate dropped to 31% in 1994, then to 21% in 2004 — the lowest in the world.

Microsoft's public posture on piracy is one of zero tolerance.

"We're all working five days a week and getting paid for three," said Cori Hartje, the company's director of license compliance. "We do everything we can to stop piracy."

The company sues online auctioneers and computer makers that supply pirated products, including Windows, the operating system for more than 90% of the world's personal computers. It cooperates with law enforcement agencies to seize pirated discs and warns users around the globe that counterfeit programs may destabilize their systems.

The effort even prompted Islamic clerics in Saudi Arabia and Egypt to declare fatwas, or religious edicts, against software piracy.

Microsoft, like most other software companies, has experimented with technical tricks to prevent copying, such as discs that could be used only once and hardware "dongles" that had to be connected to the PC before a software program could run.

Legitimate users complained bitterly. Such methods caused software bugs and prevented customers from reinstalling programs when their computers malfunctioned, yet hackers quickly subverted each new attempt.

"Copy protection is a balancing act because it always reduces the value of your product," said Bruce Schneier, chief technical officer of Counterpane Internet Security Inc. "State-of-the-art copy protection makes your customers hate you."

By 1986, like most other software companies, Microsoft abandoned copy protection.

Now it attacks piracy with technical and legal carrots and sticks. In 2004, it launched the Windows Genuine Advantage program, which offers special features and updates for legal users. It also requires a product activation key — a string of letters and numbers the retail buyer of Windows or applications such as Word must enter to install the product on a computer.

Experts applauded the approach as thoughtful, given past problems with copy protection. But it does little to deter piracy, because thousands of activation keys — stolen or generated by software programs — can be found easily on the Web.

Microsoft's legal approach differs sharply with that of the music industry, which sues as if it were in the fight of its life, said John G. Palfrey Jr., director of the Berkman Center for Internet & Society at Harvard Law School.

"They put Napster out of business and sued Grokster to the Supreme Court," he said.

Like Microsoft, the music industry sees network effects from piracy. For little-known artists who have trouble getting airtime, piracy can be crucial to create buzz. But instead of generating revenue growth, pirated music generally replaces a CD purchase. In most countries, music revenue is falling.

In a loudly public campaign, music publishers have pressed more than 15,000 suits against individual pirates worldwide. Microsoft and the Business Software Alliance have rarely sued individuals, instead making claims against dozens of distributors and institutional users of illicit products.

More commonly, according to industry observers, Microsoft has cut pragmatic deals to convert institutional piracy into standard sales. Instead of suing, it asks organizations found to use illicit copies to replace them with licensed, paid versions. Microsoft wares become entrenched without competitive bidding, via piracy, and formal forgiveness cements the commercial relationship.

Microsoft declined to comment on how often it uses this approach.

Piracy also prevents free, open-source alternatives such as Linux from chipping away at Microsoft's monopolies, especially in developing nations.

China, for instance, promotes Red Flag Linux — a local, open-source competitor to Windows. As Gates concluded in 1998, piracy may be the only way Microsoft can stay in that market, embracing the opportunity to gradually convert pirates to payers. If Microsoft launched a draconian crackdown, UC Berkeley's Varian said, it would provoke the obvious reaction: "People would just switch to open source."

In China, pirated versions of Windows are easy to find on the street for 5 yuan, or about 62 cents. Why doesn't Microsoft put the thieves out of business by giving away or deeply discounting local-language versions of its products? The strategy would offer network benefits while providing better data on users.

Consistent global pricing reduces confusion for multinational buyers, Hartje said.

Experts believe high prices encourage piracy but offer the company offsetting advantages. If Microsoft sold Windows for, say, $10, it would lose money on every copy because of manufacturing, distribution and support costs. At zero cost to Microsoft, piracy enhances network effects by getting Windows out to users who can't or won't pay, without undercutting normal prices.

"Microsoft benefits from piracy, then says, 'If you think prices are high, blame the Chinese, because they are the thieves,' " said Ariel Katz, a law professor at the University of Toronto and an expert on the economics of piracy.

"They like us to feel guilty — to think that piracy is wrong and immoral. Economically, it's not necessarily true, but it resonates with the public."
http://www.latimes.com/business/la-f...0,414067.story





No steps forward, two steps back

Congress Readies Broad New Digital Copyright Bill
Declan McCullagh

For the last few years, a coalition of technology companies, academics and computer programmers has been trying to persuade Congress to scale back the Digital Millennium Copyright Act.

Now Congress is preparing to do precisely the opposite. A proposed copyright law seen by CNET News.com would expand the DMCA's restrictions on software that can bypass copy protections and grant federal police more wiretapping and enforcement powers.

The draft legislation, created by the Bush administration and backed by Rep. Lamar Smith, already enjoys the support of large copyright holders such as the Recording Industry Association of America. Smith, a Texas Republican, is the chairman of the U.S. House of Representatives subcommittee that oversees intellectual-property law.

A spokesman for the House Judiciary Committee said Friday that the Intellectual Property Protection Act of 2006 is expected to "be introduced in the near future." Beth Frigola, Smith's press secretary, added Monday that Wisconsin Republican F. James Sensenbrenner, chairman of the full House Judiciary Committee, will be leading the effort.

"The bill as a whole does a lot of good things," said Keith Kupferschmid, vice president for intellectual property and enforcement at the Software and Information Industry Association in Washington, D.C. "It gives the (Justice Department) the ability to do things to combat IP crime that they now can't presently do."

During a speech in November, Attorney General Alberto Gonzales endorsed the idea and said at the time that he would send Congress draft legislation. Such changes are necessary because new technology is "encouraging large-scale criminal enterprises to get involved in intellectual-property theft," Gonzales said, adding that proceeds from the illicit businesses are used, "quite frankly, to fund terrorism activities."

The 24-page bill is a far-reaching medley of different proposals cobbled together. One would, for instance, create a new federal crime of just trying to commit copyright infringement. Such willful attempts at piracy, even if they fail, could be punished by up to 10 years in prison.

It also represents a political setback for critics of expanding copyright law, who have been backing federal legislation that veers in the opposite direction and permits bypassing copy protection for "fair use" purposes. That bill--introduced in 2002 by Rep. Rick Boucher, a Virginia Democrat--has been bottled up in a subcommittee ever since.

A DMCA dispute
But one of the more controversial sections may be the changes to the DMCA. Under current law, Section 1201 of the law generally prohibits distributing or trafficking in any software or hardware that can be used to bypass copy-protection devices. (That section already has been used against a Princeton computer science professor, Russian programmer Dmitry Sklyarov and a toner cartridge remanufacturer.)

Smith's measure would expand those civil and criminal restrictions. Instead of merely targeting distribution, the new language says nobody may "make, import, export, obtain control of, or possess" such anticircumvention tools if they may be redistributed to someone else.

"It's one degree more likely that mere communication about the means of accomplishing a hack would be subject to penalties," said Peter Jaszi, who teaches copyright law at American University and is critical of attempts to expand it.

Even the current wording of the DMCA has alarmed security researchers. Ed Felten, the Princeton professor, told the Copyright Office last month that he and a colleague were the first to uncover the so-called "rootkit" on some Sony BMG Music Entertainment CDs--but delayed publishing their findings for fear of being sued under the DMCA. A report prepared by critics of the DMCA says it quashes free speech and chokes innovation.

The SIIA's Kupferschmid, though, downplayed concerns about the expansion of the DMCA. "We really see this provision as far as any changes to the DMCA go as merely a housekeeping provision, not really a substantive change whatsoever," he said. "They're really to just make the definition of trafficking consistent throughout the DMCA and other provisions within copyright law uniform."

The SIIA's board of directors includes Symantec, Sun Microsystems, Oracle, Intuit and Red Hat.

Jessica Litman, who teaches copyright law at Wayne State University, views the DMCA expansion as more than just a minor change. "If Sony had decided to stand on its rights and either McAfee or Norton Antivirus had tried to remove the rootkit from my hard drive, we'd all be violating this expanded definition," Litman said.

The proposed law scheduled to be introduced by Rep. Smith also does the following:

• Permits wiretaps in investigations of copyright crimes, trade secret theft and economic espionage. It would establish a new copyright unit inside the FBI and budgets $20 million on topics including creating "advanced tools of forensic science to investigate" copyright crimes.

• Amends existing law to permit criminal enforcement of copyright violations even if the work was not registered with the U.S. Copyright Office.
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• Boosts criminal penalties for copyright infringement originally created by the No Electronic Theft Act of 1997 from five years to 10 years (and 10 years to 20 years for subsequent offenses). The NET Act targets noncommercial piracy including posting copyrighted photos, videos or news articles on a Web site if the value exceeds $1,000.

• Creates civil asset forfeiture penalties for anything used in copyright piracy. Computers or other equipment seized must be "destroyed" or otherwise disposed of, for instance at a government auction. Criminal asset forfeiture will be done following the rules established by federal drug laws.

• Says copyright holders can impound "records documenting the manufacture, sale or receipt of items involved in" infringements.

Jason Schultz, a staff attorney at the digital-rights group the Electronic Frontier Foundation, says the recording industry would be delighted to have the right to impound records. In a piracy lawsuit, "they want server logs," Schultz said. "They want to know every single person who's ever downloaded (certain files)--their IP addresses, everything."

CNET News.com's Anne Broache contributed to this report.
http://news.com.com/Congress+readies...3-6064016.html





Bill Seeks Music Royalties For Satellite Downloads
Brooks Boliek

A bipartisan group of lawmakers has introduced legislation that would require satellite radio companies to compensate the music industry for downloads, industry and congressional sources said.

The legislation, by U.S. Senators Dianne Feinstein, D-Calif., Lindsey Graham, R-S.C., and majority leader Bill Frist, R-Tenn., is aimed at compensating copyright holders as satellite radio services become distribution services.

The "PERFORM Act" or the "Platform Equality and Remedies for Rights Holders in Music Act of 2006" would require satellite, cable and Internet broadcasters to pay fair market value for the performance of digital music. Additionally, the bill would require the use of readily available and cost-effective technological means to prevent music theft.

"The birth of the digital music place has been a boon for businesses and consumers. However, these new technologies and business models have become so advanced that the clear lines between a listening service and a distribution service have been blurred," Feinstein said. "I believe that the PERFORM Act would help strike a balance between fostering the development of new technologies and ensuring that songwriters and performers continue to be fairly compensated for their works."

Record industry executives want so-called "parity" among the different download platforms. They argue that the new devices XM Radio is bringing to the market that allow customers to save songs on the receivers without paying for the download rip off the copyright holder.

"Digital sales are finally replacing physical losses," said Mitch Bainwol, chairman and CEO of the Recording Industry Assn. of America, which lobbies for the major labels. "If someone gets a distribution right without paying for it, that blows a hole in the digital marketplace."

Warner Music Group chairman and CEO Edgar Bronfman Jr. endorsed the legislation in testimony prepared for a hearing on the issue scheduled for Wednesday.

"When I see a device that permits consumers to identify the specific tracks they want from a satellite broadcast, record them and library them for future use, I call that device an iPod and I call the satellite service making that device available a download service," Bronfman said. "What is clear to everyone is that these services no longer resemble and will increasingly stray from our collective understanding of what constitutes a traditional radio service."

The bill protects copyright holders by ensuring that "the same rules apply to all of the satellite, cable and Internet services, which avail themselves of a compulsory license under" the nation's copyright laws.

Sirius Satellite Radio has reached deals with the major record companies that compensate them for downloads on its S-50 receiver that allows customers to record content, but XM has not. A pair of devices, the Pioneer Inno and Samsung NeXus, allow customers to record programming.

XM executives contend that the devices are nothing more than a high-tech way to record radio programming, which is protected. In XM chairman Gary Parsons' prepared testimony, he said that the Feinstein-Graham bill, tentatively known as the Perform Act, will "lead to a new tax being imposed on our subscribers."

The company already pays millions in copyright royalties to the record companies, and said their push for a new royalty is a negotiating tactic designed to push those rates higher. The copyright office is currently reviewing those rates.

"The reason the recording industry is now insisting on a different standard has nothing to do with fairness," Parsons said. "XM and the record industry are in the middle of renegotiating their performance license. By changing the standard now, the recording industry hopes to stack the deck in its favor."

Bainwol denied the charge.

"Competition should be based on the offering. Their license is for a performance, not a distribution," he said. "I was struck by the power of their slogan: 'It's not a pod. It's a mother ship."'
http://www.washingtonpost.com/wp-dyn...042600054.html





Piracy Worse Than Child Pornography

Society's new perspectives
Nick Farrell

THE NEW look Digital Millenium Copyright Act (DMCA) seems to be giving the world an unusual moral code.

Details of the upgraded act, which has the blessing of the music and film industry and the Bush administration, are now coming to light. It appears that the DMCA will have a maximum sentence of ten years inside for the crime of software and music piracy. It will also give the FBI the powers to wiretap suspected pirates.

Although sentencing varies in the US, the new law does send a very strange message as to what the government considers 'bad' in the 21st century.

For example assaulting a police officer will get you five years, downloading child porn will get you seven years, assaulting without a weapon will get you ten years and aggravated assault six years.

So in other words if you copy a Disney CD and sell it you will be in the same league as a paedophile who is distributing pictures of sexual attacks on children.

If you copy Craig David's CD you get ten years, but if you punch him in the face and pummel him into a seven day coma you will only get six. You are more likely to get the respect of the prison population with your six year sentence as well.
http://www.theinquirer.net/?article=31256





Senator Plans Net Taxes But No Net Neutrality
Anne Broache

More Americans would be forced to pay taxes subsidizing broadband service in "unserved" locales, and cities would be free to go into the Wi-Fi business under an upcoming U.S. Senate bill.

Later this week, Sen. Gordon Smith, an Oregon Republican, plans to introduce a legislative package called the Broadband for America Act of 2006, he said Tuesday morning at a conference here hosted by the National Telecommunications CooperativeAssociation, which represents small and rural carriers.

Conspicuously absent from the bill, however, is any mention of Net neutrality, which refers to the idea of the federal government forcibly preventing broadband providers from favoring some Web sites or video streams' connection speeds over others. The concept has generated significant controversy in the House of Representatives' version of a telecommunications reform bill. The House Energy and Commerce Committee is scheduled to take up its own proposal again on Tuesday evening, with a vote expected later in the week.

A copy of the 41-page bill seen by CNET News.com is essentially a combination of existing proposals introduced by Smith and his colleagues on the Senate Commerce Committee. That committee's Republican chairman, Sen. Ted Stevens of Alaska, has also been readying what Smith called "an even more comprehensive bill" intended to overhaul the Telecommunications Act of 1996, which has been criticized as outdated for failing to account for the Internet's vast new influence.

Smith's bill is not intended to rival Stevens' proposal, he said, but he hopes that its "targeted" nature will allow it to pass more speedily through committee and to the Senate floor. "The bigger it is, the more comprehensive it is, the more likely it is to get bogged down," he said.

As network operators roll out more advanced broadband services, particularly video, they've argued that they should be able to finance those efforts by charging bandwidth-hogging content providers extra fees for the privilege of faster transmission or other preferential treatment. Net neutrality supporters say they're concerned such a practice would amount to unprecedented Internet "gatekeeping" that could raise consumer costs and inhibit innovation, and they've called on Congress to legislate against it.

Smith, for his part, told reporters after his speech that he'd rather "wait and see whether there's a problem before we legislate (on Net neutrality). I'm not convinced we're there yet." Senate Commerce Committee Chairman Stevens has also voiced reluctance to include Net neutrality in his broad telecommunications reform bill. A committee aide said Tuesday that Stevens is still wrestling with whether to include any such language.

Smith's bill instead focuses on four major areas. It would require the FCC to establish rules requiring that all companies "capable of supporting two-way voice communications" pay into the Universal Service Fund, a multibillion-dollar pool of money that's currently used to subsidize telecommunications services in rural and other high-cost areas, schools and libraries.

Right now, long-distance, wireless, pay-phone and wireline telephone services are required to pay a fixed percentage of their revenues to the fund, which they typically do by tacking an additional fee onto their customers' bills. A number of the larger voice over Internet protocol providers, including Vonage, have said they already pay into the fund, but there doesn't appear to be a formal regulation requiring them to do so.

Smith's bill also proposes allocating up to $500 million per year for supplying broadband service in areas where private investors are "reluctant" to set up networks. Certain users, such as low-income households, would be exempt from the fees under Smith's proposal.

A second portion of the bill, rooted in two earlier proposals, would give the Federal Communications Commission 180 days to establish rules for unlicensed use of so-called "white spaces" on the broadband airwaves--that is, empty, unused channels in the broadcast TV bands. Consumer advocates say using those slices of the radio spectrum would enable cheaper and easier setup of broadband networks, but the broadcasting lobby has voiced fears that such uses would muddle their stations' reception.

A third provision comes from the Community Broadband Act introduced last summer by Sen. John McCain of Arizona and Sen. Frank Lautenberg of New Jersey. That bill, aimed at preventing states from blocking public-sector entrants into the broadband business, appears to be targeting more than a dozen states that have already passed laws bearing such restrictions or prohibitions.

Another provision is designed to relieve new entrants to the video services market from negotiating franchise agreements with individual cities and towns--a matter that has sparked controversy among cable companies, which have historically had to negotiate such deals, and phone companies seeking relaxed regulations so that they can roll out their own video services more quickly.
http://news.com.com/Senator+plans+Ne...3-6064743.html





Senator Refuses iPod; Fears It Might Influence His Pro-RIAA Views?
from the can't-have-divided-interests dept

Earlier this year, we noted that Senator Ted Stevens had been suggesting that his views towards the RIAA and copyrights might be changing... in part because he now owned an iPod.

It appears that IPac, the political action committee formed to push for public interest cultural and technology issues realized that perhaps more of our elected officials need iPods. So, they began a campaign to raise money to buy Senators iPods, hoping that perhaps a few more would see the same light Senator Stevens saw. On the list was Senator Conrad Burns, who in the last year appears to have accepted just shy of $60,000 from the entertainment industry -- putting him in 4th place on the list of who has received the most money from the entertainment industry.

IPac (whose website is unfortunately down) did everything by the book and sent Burns an iPod -- as a perfectly legal contribution valued at $316.94. Burns, however, can't have any of that, and sent the iPod back, claiming he couldn't accept it (found via Digg). Obviously, this is a bit of a publicity stunt by IPac, but it would be nice of Burns gave a more thorough explanation for the money he's taken from the industry -- and why he feels a little contribution from the "other side" for balance is problematic.
http://techdirt.com/articles/20060424/2244256.shtml





Computerless Family Sued By Record Companies
Lowell Vickers

A Rockmart family is being sued for illegal music file sharing, despite the fact that they don’t even own a computer.

A federal lawsuit filed this week in Rome by the Recording Industry Association of America alleges that Carma Walls, of 117 Morgan St., Rockmart, has infringed on copyrights for recorded music by sharing files over the Internet. The lawsuit seeks an injunction and requests unspecified monetary damages.

The lawsuit states, “Plaintiffs are informed and believe that Defendant, without the permission or consent of Plaintiffs, has used, and continues to use, an online media distribution system to download the copyrighted recordings, to distribute the copyrighted recordings to the public, and/or to make the copyrighted recordings available for distribution to others.”

This came as shocking news to the Walls family, who were notified of the lawsuit Friday afternoon by a newspaper reporter. James Walls, speaking on behalf of his wife and family, said they have not been served with legal papers and were unaware of the lawsuit.

After being shown a copy of the court filing, Walls said he found the whole thing bewildering.

“I don’t understand this,” Walls said. “How can they sue us when we don’t even have a computer?”

Walls also noted that his family has only resided at their current address “for less than a year.” He wondered if a prior tenant of the home had Internet access, then moved, leaving his family to be targeted instead.

However, the RIAA’s lawsuit maintains that Carma Walls, through the use of a file-sharing program, has infringed on the copyrights for the following songs: “Who Will Save Your Soul,” Jewel; “Far Behind,” Candlebox; “Still the Same,” Bob Seger; “I Won’t Forget You,” Poison; “Open Arms,” Journey; “Unpretty,” TLC; No Scrubs,” TLC; and “Saving All My Love for You,” Whitney Houston.

The lawsuit follows similar wording as in some 3,500 other lawsuits filed by the RIAA in the United States since June 2003.

Typically, the lawsuits have targeted users of Kazaa, Grokster and other peer-to-peer Internet services – most of which have since been shut down by RIAA lawsuits. With these services, users typically have an open folder on the computer that allows other users of the service access to any songs that have been saved in a digital format, such as MP3 files.

The RIAA lawsuits have come under fire, with critics calling the effort a “scare tactic” meant to intimidate the public from file sharing activities.

However, in a public statement defending the litigation, the RIAA says its efforts have been effective in dissuading illegal activity.

“The industry’s anti-piracy efforts have deterred a sizeable number of would-be illegal downloaders,” the RIAA statement reads. “Although a significant online problem undoubtedly persists, particularly with hard-core, frequent peer-to-peer users, absent action by the industry, the illegal down-loading world would be exponentially worse.”
http://news.mywebpal.com/news_tool_v...yID=11575&on=1





Dutch Anti-Piracy Group BREIN Takes Action Against Major Illegal File Sharing Service
Press Release

Dutch anti-piracy organisation BREIN handed over a claim at the private address of an operator of an illegal bittorrent site on 12th April. The 20-year old from Helmond, Netherlands operates the p2p file sharing service Torrentit.com, formerly known as 123torrents.

The site offered almost 2000 confirmed links to movies, television series, music, computer games and other copyrighted content. Many of the films come from well-known groups that are dedicated to making available illegally the latest films on the Internet soon after, or even before, their legitimate release date. Torrentit has 27,000 registered users and last week the site ceased its file-sharing activity, announcing that it will be back.

BREIN has demanded and immediate end to the illegal activities and undertakings with significant financial penalties attached. The operator will be summoned if he does not comply with BREIN's demands and a complaint may be put to the criminal authorities. BREIN reserves the right to claim damages and profits.

Torrentit had previously been taken down by its Dutch service provider, in response to a notice from BREIN. However, it had been relocated to a server in Malaysia and continued its infringing activities. Meanwhile the operator tried to sell the site for 30,000 euros.

Tim Kuik, managing director of BREIN, said: "This case sends a strong message to people engaged in illegal file-sharing and shows our determination to track down illegal music distributors on whatever network they are operating. Other p2p filesharing services such as eDonkey will also be targeted again and we will expand our enforcement to newsgroups which offer copyright protected content. Our enforcement is not about technology, but about what you do with it." http://www.ifpi.org/site-content/press/20060420.html





CEA Launches Its Own Pirating Awareness Campaign
Chris Thilk

The Consumer Electronics Association has created an ad that will run in a couple of Washington, D.C. print publications dealing with music piracy. The difference between these ads and those that have been created by the Recording Industry Association of America, though. Where the RIAA labels individuals who copy music as pirates, the CEE says it's the music labels and the RIAA that are the real pirates. The ad spotlights the legislation and technologies that would restrict people's rights to copy their own music for their own purposes and labels it as unfair and intrusive.
http://www.adjab.com/2006/04/27/cea-...ness-campaign/





Judge: Web-Surfing Worker Can't Be Fired

Rules it's equivalent of reading newspaper, talking on phone
AP

Saying surfing the web is equivalent to reading a newspaper or talking on the phone, an administrative law judge has suggested that only a reprimand is appropriate as punishment for a city worker accused of failing to heed warnings to stay off the Internet.

Administrative Law Judge John Spooner reached his decision in the case of Toquir Choudhri, a 14-year veteran of the Department of Education who had been accused of ignoring supervisors who told him to stop browsing the Internet at work.

The ruling came after Mayor Michael Bloomberg fired a worker in the city's legislative office in Albany earlier this year after he saw the man playing a game of solitaire on his computer.

In his decision, Spooner wrote: "It should be observed that the Internet has become the modern equivalent of a telephone or a daily newspaper, providing a combination of communication and information that most employees use as frequently in their personal lives as for their work."

He added: "For this reason, city agencies permit workers to use a telephone for personal calls, so long as this does not interfere with their overall work performance. Many agencies apply the same standard to the use of the Internet for personal purposes."

Spooner dispensed the lightest possible punishment on Choudhri, a reprimand, after a search of Choudhri's computer files revealed he had visited several news and travel sites.

Martin Druyan, Choudhri's lawyer, called the ruling "very reasonable."
http://www.msnbc.msn.com/id/12462332/





Oklahoma Senate OKs Violent-Games Bill
Leslie Katz

The Oklahoma Senate on Monday unanimously approved a controversial bill that would make it a crime to sell violent video games to children under 18, according to The Oklahoman (registration required).

HB3004, by Senate Republican leader Glenn Coffee, adds violent video games to a list of products--including outdoor advertisements for sexually explicit businesses--described in Oklahoma state law as harmful to minors. Coffee said studies have shown that violent games can make kids more aggressive.

The bill passed 47-0 in the state Senate, but is being held on a motion to reconsider the vote within three legislative days before being sent back to the House to vote on Senate amendments.

Earlier this month, a federal judge overturned a Michigan law restricting the sale of violent video games, the most recent in a series of decisions that have gutted similar laws on free-speech grounds.
http://news.com.com/2061-10797_3-606...5106&subj=news





Texas Community College Bans MySpace.com

Popular site blocked after complaints of slow network performance
AP

Del Mar College students now have to use computers outside the school's system if they want to visit the popular Web site MySpace.com.

The community college has blocked the site in response to complaints about sluggish Internet speed on campus computers.

An investigation found that heavy traffic at MySpace.com was eating up too much bandwidth, said August Alfonso, the school's chief of information and technology. Forty percent of daily Internet traffic at the college involved the site, he said.

"This was more about us being able to offer Web-based instruction, and MySpace.com was slowing everything down," President Carlos Garcia said.

MySpace.com — a social networking hub with more 72 million members — allows users to post searchable profiles that can include photos of themselves and such details as where they live and what music they like.

Paul Martinez, 20, is a frequent visitor to MySpace.com and finds the site to be addictive. Restricting access to the site could be a good idea, he said.

"The library is pretty much full with people on MySpace, and with them banning it you won't have anything to distract you," he said.

Some though, disagree with Del Mar College's decision.

"We pay for school and the resources that are used," said Zeke Santos, 20. "It's our choice, we're the ones paying for our classes. If we pass or fail, it's up to us."
http://www.msnbc.msn.com/id/12459826/ How Piracy Opens Doors for Windows





Government-Funded Startup Blasts Rootkits
Ryan Naraine

A startup funded by the U.S. government's Defense Advanced Research Projects Agency is ready to emerge from stealth mode with hardware- and software-based technologies to fight the rapid spread of malicious rootkits.

Komoku, of College Park, Md., plans to ship a beta of Gamma, a new rootkit detection tool that builds on a prototype used by several sensitive U.S. government departments to find operating system abnormalities that may be linked to malicious rootkit activity.

A rootkit modifies the flow of the kernel to hide the presence of an attack or compromise on a machine. It gives a hacker remote user access to a compromised system while avoiding detection from anti-virus scanners.

The company's prototype, called CoPilot, is a high-assurance PCI card capable of monitoring the host's memory and file system at the hardware level. It is specifically geared towards high-security servers and computers.

Gamma, meanwhile, is a separate, software-only clone of CoPilot that will target businesses interested in a low-assurance tool for protecting laptops and personal computers.

Komoku launched quietly in 2004 with about $2.5 million in funding and rootkit detection contracts from DARPA, the Department of Homeland Security and the U.S. Navy.

The company has its roots at the University of Maryland, where computer scientist William Arbaugh worked on what he calls a "unique approach" to finding rootkits.

"Security technologies depend on the correctness of the system they're actually checking," said Arbaugh, who now serves as president of the five-employee outfit.

"If something changes the system at the operating system level, it can't be reliably detected via the OS itself or through applications running on the system," he said in an interview with eWEEK.

"We have this notion of what the operating system is supposed to look like and we look for deviations [from] that. We aren't initially looking for the rootkit; we look at the side effects of the infection."

Komoku has partnered with security vendor Symantec to handle disinfection and restoration after rootkits and other sophisticated forms of malware are detected.

Symantec's LiveState product combines with CoPilot and Gamma to restore the system to its original state.

Jamie Butler, a renowned rootkit researcher who works as Komoku's chief technical officer, said Gamma will have limited clean-up capabilities because it is software-based and susceptible to direct attack, much like any application running on the operating system.

"Clean-up is a very difficult goal while maintaining a running system. When you find a rootkit, you essentially have several choices. The easiest choice is to halt the system. But, that means that you'll lose any evidence that might be in memory. It also means that the services provided by that system are made unavailable," Butler explained.

Another choice might be to eliminate the effects of the rootkit, but this could be very difficult because of the complicated nature of an operating system.

A third choice would be to allow the rootkit to remain active while you attempt to discern its motives, Butler added, noting that both Gamma and CoPilot will allow all three of these choices.

The plan is to have both the hardware and software versions collect forensic data when a compromise is detected. Butler said products are able to capture hidden malware in memory and send it back to a central management station where the products are running in enterprise mode.

The company is also exploring potential partnerships with other security companies that have offline malware analysis tools, he said.

Pricing details have not yet been worked out, but Arbaugh expects to ship CoPilot to high-end enterprises with super-sensitive data.

Gamma, on the other hand, is a lower-assurance product and is aimed at protecting business assets that don't require high-end security protection or are unable to install hardware.

Arbaugh said Gamma has been built with two modes of operation: an enterprise mode where it communicates with a central server to receive updates and incident reports, and a stand-alone mode where incidents are reported locally.

Updates will be available via a subscription service similar to those in the anti-virus space, he said.

Citing confidentiality issues, Arbaugh declined to discuss the severity of the rootkit threat on government networks. However, he said that during actual CoPilot tests, it was "very clear that the government shares the same problems like everyone else."

The product was in the midst of testing on the U.S. Navy networks when news of the Sony rootkit issue made headlines in November 2005.

"That was a zero-day rootkit to us, so we decided to throw it at CoPilot as part of the operational tests. We detected the Sony rootkit in all its vectors, in real-time," Butler said.

According to statistics from Microsoft, rootkits account for more than 20 percent of all malicious programs removed from Windows machines.

The stealthy technology has been found in a variety of threats, including spyware, Trojans and DRM (digital rights management).
http://www.eweek.com/article2/0,1895...06dtx1k0000599





Warner Tackles Chinese Piracy With Cut-Price DVD
Mure Dickie

Warner Home Video has begun trial sales in China of a movie DVD priced at just Rmb12 ($1.50), a move likely to anger consumers in developed markets such as Europe and the US, who typically pay $20-$30 for a recently released film on DVD.

The test sales of the modestly packaged edition of the The Aviator mark one of the boldest efforts yet by an international film company – WHV's Chinese joint venture, CAV Warner – to adjust its marketing strategies to the potentially huge but piracy-plagued Chinese DVD market.

The "simple pack" edition of the Oscar-winning epic, which comes in a cardboard folder rather than the standard DVD plastic box, went on sale earlier this month in selected Chinese cities, said Christine Hu, CAV Warner public relations manager.

"This is a first step to see if the consumer can accept this product at this price," Ms Hu said, adding that it was too early to judge the results of the experiment.

Hollywood studios have struggled to establish significant businesses in China because of tight government controls on the number of foreign films approved for release and rampant piracy in the DVD market.

Pirate producers have long benefited from loose enforcement of intellectual property laws in China and from state censorship that complicates DVD imports.

However, local distributors say that the best way to combat the pirates would be for international companies to cut both the time lag between the release of their films at the cinema and on DVD and the gulf in prices between legitimate products and pirated discs.

Pirate DVDs can easily be bought for prices starting at about Rmb6.

WHV has established itself as perhaps the most innovative of the foreign film companies since launching its joint venture with China Audio and Video Publishing House, a state company controlled by the Ministry of Culture, in February 2005.

Shanghai-based CAV Warner already sells recent-release films on DVD in a number of different packages.

"Silver releases" cost about Rmb22 and are often issued in all-Chinese versions that can go on sale in China a month before their US DVD release. CAV Warner later issues "gold releases" at about Rmb35 that include a number of extras.

Low prices are vital for a mass market used to cut-price pirate discs, but Ms Hu said there had been surprising demand for pricey box sets.
http://msnbc.msn.com/id/12425693/





Winners Take All In Rockonomics
Robert Plummer

As Madonna fans in the UK know to their cost, tickets for rock and pop concerts keep getting more expensive.

The price of a seat for the London gigs in the singer's forthcoming Confessions On A Dancefloor tour ranges from £80 to £160, with an additional £13 booking fee.

Judging from e-mails received by the BBC News website, there are plenty of people who are prepared to pay. For every person denouncing the ticket costs as an "outrage", there is a fan who feels the show is "worth every penny".

Of course, veteran Madonna-watchers will be used to such high prices by now.

It's been just two years since her Re-Invention tour, which saw UK tickets selling for up to £150 and grossed $125m (£71m) worldwide - more than any other star's concerts that year.

In fact, Madonna is one of the key beneficiaries of some powerful economic forces that have re-shaped the world of live music - for better or for worse.

Since the start of the 1980s, the superstar effect has become more pronounced in rock and pop, with a small number of performers taking an ever larger share of the spoils.

Research into the market in the US, where the trend started, has found that in 1982, the top 1% of artists received 26% of concert revenue. By 2003, that figure had gone up to 56%.

Rock professor

Over the same period of time, the cost of US concert tickets has been outpacing the country's inflation rate.

From 1981 to 1996, gig-goers found prices going up by 4.6% a year, while the consumer price index increased by 3.7% annually.

Since then, ticket prices have soared. From 1996 to 2003, they rose by 8.9% a year, as against inflation of just 2.3%. Similar sharp increases have been noted in Europe, including the UK.

These insights come from the work of an economist at Princeton University in the US, Alan Krueger, who has been described as "the world's first and foremost professor of rockonomics".

He based his conclusions on an analysis of information provided by US trade publication Pollstar, which has collected data from venue managers since 1981.

In a paper he wrote with Princeton graduate student Marie Connolly, he says concerts are now a much bigger source of income for major-league stars than CD sales.

"Only four of the top 35 income-earners made more money from recordings than live concerts," the paper says. "For the top 35 artists as a whole, income from touring exceeded income from record sales by a ratio of 7.5 to one in 2002."

Businesslike

Professor Krueger told the BBC his interest in the subject began when he took his father to the US Superbowl in 2001 after buying tickets on the "secondary market," as he put it.

"I had to pay $2,500 a ticket, but the list price was just $325," he said.

A newspaper article that he wrote about his experience brought him to the attention of Pollstar, which gave him access to its database.

He soon found out that rock concerts and American football games were subject to the same market forces. Both had become more businesslike over the years, he said.

"Early on in the entertainment industry, it's in the interest of the business to think of themselves as throwing a party, not selling a product. I think they attract more of a following that way," he said.

"But over time, the industry takes more the form of a market and is driven by market forces. The Superbowl initially felt like it was rewarding its fans. But then it becomes established and the League finds it in its interest to push up prices."

'Bowie Theory'

But why has the rise in ticket prices been so sudden? Professor Krueger says there is no simple answer - but one explanation could be what he calls "Bowie Theory".

He points out that sales of recorded music fell from 1999 to 2002, causing artists' income to decline. He believes record sales are down because many potential customers frequently download music free from the Web or copy CDs, either legally or illegally.

Professor Krueger said his view had prompted a mixed reaction. "I got some critical e-mails. There are some people who are big defenders of the free availability of the internet. But the general reaction that I got has been agreement."

LONDON TICKET PRICES
Welsh National Opera's Tosca (Royal Opera House, Covent Garden) - £45-£180
Royal Ballet's Giselle (as above) - £4-£77
Billy Joel (Wembley Arena) - £50-£75
Bruce Springsteen (Hammersmith Apollo) - £47.50
Red Hot Chili Peppers (Earls Court) - £40
Take That (Milton Keynes Bowl, moved from Wembley Stadium) - £35-£40
Chas & Dave (Amersham Arms, New Cross) - £17.50

Before the advent of illegal downloads, artists had an incentive to underprice their concerts, because bigger audiences translated into higher record sales, Professor Krueger argues.

But now, he says, the link between the two products has been severed, meaning that artists and their managers need to make more money from concerts and feel less constrained in setting ticket prices.

Professor Krueger says this tendency was spotted by David Bowie, who told the New York Times in 2002 that "music itself is going to become like running water or electricity".

Bowie has advised his fellow performers: "You'd better be prepared for doing a lot of touring, because that's really the only unique situation that's going to be left."

Creativity

These days, the biggest concert draws tend to be performers such as Bowie, the Rolling Stones and Paul McCartney - artists whose latest albums are often greeted with indifference, but who can still make money by singing their greatest hits.

Does that mean an end to creativity in popular music? Not necessarily, says Professor Krueger.

"It should lead to more creativity in terms of live performances," he says. "A concert is more than just an artist at a microphone. Look at all the light shows at a U2 concert."

And, of course, the increasing sophistication of such shows is another factor putting upward pressure on concert ticket prices.

But as Professor Krueger points out, the internet is ultimately going to lead to even bigger economic changes in the music industry.

"There will be a good deal of shaking out. There will be new modes of distributing music - more diversity and more competition. But technological innovations continually cause change, ever since Edison. The industry has to change and it is changing."
http://news.bbc.co.uk/go/pr/fr/-/2/h...ss/4896262.stm





RIAA Increases Profits After Piracy Bust
Drew Wilson

Latin music rose 15 percent in value according to a report compiled by PricewaterhouseCoopers LLP. This is despite alleged piracy rates. The RIAA claims that the rise in sales was a result of anti-piracy movements.

Physical commercial piracy is a concept that has brought the scorn of many internet users. The RIAA would be more then willing to put both file-sharing users and physical pirates in the same boat. However, a recent report states that the RIAA has recently targeted physical pirates in an anti-piracy effort dubbed "Operation Remaster".

"Operation Remaster" targets physical pirates. The result was two guilty pleas which was reported earlier this month. It was reported that Ye Teng Wen and Hao He, both 30 years of age, pleaded guilty on five counts of piracy. The two, along with a third man, Yaobin Zhai, 33, were indicted in October. 200,000 pirated Latin music CD's were seized according to Kevin Ryan of the U.S. Attorney for Northern California. Over 500,000 CD's were seized. According to the RIAA, it was the biggest domestic piracy bust ever.

While it may be debatable on whether or not three indictments would make any difference in the Latin music marketplace, the RIAA claims that the 14 percent increase in shipments was partially the result of the anti-piracy operation.

The other part was because of big hits from Latin artists including Daddy Yankee, Don Omar, Wisin & Yandel, and Hector "El Father" along with Latin Pop artists including RBD, Juanes, Alejandro Sanz, Bebe and Shakira.

RIAA stated that 55.6 million units shipped in 2005 which is compared to 48.6 million in 2004. The press release states, "The total suggested list price for the industry was $753.7 million. The total wholesale value of the industry was $463.8 million."

Additionally, the RIAA claims that Latin music piracy is running rampant. Interestingly, the report states, "Latin music accounts for about 6 percent of the overall U.S. music market, yet nearly 40 percent of all pirate product seized by RIAA investigators."

The RIAA controls 80 to 90 percent of the Latin music market.
http://www.slyck.com/news.php?story=1156





EMI Finally Sees Music Sales Increase
Eric Bangeman

Over the past several years, the music labels have pointed the finger at illicit downloads in response to their declining sales. Nevermind the fact that they hadn't adapted their marketing strategies or business models to account for changing consumer habits and desires. Nevermind the fact that they kept prices on CDs artificially high. It wasn't their fault.

Really.

For the first time in five years, EMI is reporting an increase in sales from the pervious years. One of the factors in the increase was sales of downloaded music. Revenues from sales via online music stores doubled from the previous year, and now account for over 5.5 percent of the label's sales and £110 million in sales.

Having some of the more popular acts as part of its portfolio helps, as EMI is the home of Coldplay, Norah Jones, and The Rolling Stones, among others. However, sales via online music stores are big profit centers for the labels, as they can avoid the costs associated with creating and distributing physical inventory (i.e., CDs) in favor of the much cheaper downloads. That's why they are so anxious to raise prices on more popular tracks, whether they can do so and avoid angering their customers any further is another question.

EMI's financials should come as no surprise to those who don't share the labels' myopic views. Earlier this month, we looked closely at the RIAA's claims that they were in dire straits because consumers are buying fewer CDs. What we discovered is exactly what EMI reported: digital downloads are skyrocketing faster than CD revenues are falling, meaning that the industry is poised to reverse years of lackluster performance.

There's one caveat. The RIAA and individual labels have shown an amazing ability to shoot themselves in the foot. Witness the Sony-BMG rootkit foulup, price fixing investigations, and lawsuits. That kind of history doesn't do much to inspire confidence, at least not in the Orbiting HQ. The golden goose could easily be killed by another DRM disaster, price hikes, and the labels' usual general slowness to adapt to changing market conditions. If the record labels can avoid those and other missteps, the next ten years will look a lot better than the last ten did.
http://arstechnica.com/news.ars/post/20060421-6646.html





Did EMI and UMG Lie to Antitrust Investigators?
Fred von Lohmann

Did EMI and Universal Music Group lie to the Department of Justice in order to throw federal investigators off the scent during the antitrust investigation involving the major labels, MusicNet, and pressplay? According to a ruling issued last week, the evidence suggests they did.

This is the latest chapter in the Napster case. Yes, that Napster case.

Years after the original company went bankrupt and sold their name to the highest bidder, the Napster case continues to drag on. The record labels, you see, are still pressing their case against Hummer Winblad and Bertelsman for investing in Napster years ago.

The defendants, however, argue that the RIAA companies forfeited their copyright claims thanks to their coordinated and illegal effort to monopolize digital music distribution through MusicNet and pressplay, the ill-fated joint ventures set up by the major labels back in the days of the Napster revolution. The DoJ launched an antitrust investigation in 2001, but ultimately found no evidence of wrong-doing.

But were the antitrust investigators fed misleading information by the labels? Discrepancies have come to light in the Napster case, where the defendants are reviewing all the documents relating to the DoJ investigation.

The documents reveal that the major labels included "MFN" (most favored nation) clauses in all of their licenses with MusicNet and pressplay, resulting in a de facto coordination of terms. They also show that the labels used "independent consultants" and "side letters" to share information regarding licensing negotiations and coordinate their positions.

During the DoJ investigation, EMI and UMG apparently misled the investigators about these activities. In the words of Judge Patel: "[T]he documents provided by Hummer provide reasonable cause to believe that the statements in the [labels' report to DoJ] were deliberately misleading, if not completely false."

The judge has ordered UMG and EMI to hand over previously withheld documents relating to the DoJ investigation, overriding the attorney-client privilege because "the court ... finds reasonable cause to believe that the attorney's services were utilized in furtherance of the ongoing unlawful scheme." The labels have 30 days to comply. Stay tuned.
http://www.eff.org/deeplinks/archives/004584.php





NZB Zone Closes Due to MPAA Legal Action
Drew Wilson

While it was only untill recently that NZB sites and the MPAA (Motion Picture Association of America) locked horns, NZB sites seemed to be able to keep out of the sites of legal pursuit. Now it appears that NZB sites are becoming no more immune than BitTorrent sites. NZB Zone has shut down allegedly because of MPAA action.

Recently, NZB Zone has shut down. A note was left stating, "no details other than what I heard from admin, MPAA involved"

It was only earlier this year that NZB sites were under possible legal threat of copyright authorities. While TVNZB has merely changed ownership and despite claims that they'll be open in a week, TVNZB has yet to re-open.

According to a press release earlier this year, NZB-Zone.com BinNews.com and DVDRs.net were all named in a list of sites that were under legal pressure from the MPAA. Why only recently NZB-Zone has closed is a question that is thus far unanswered. Details are currently scarce, as Slyck is currently looking into the situation.
http://www.slyck.com/news.php?story=1157





Patent Awarded to RealNetworks May Give It a Competitive Edge
John Markoff

RealNetworks has received a patent on a way to stream multimedia content over the Internet, and the company said last week that it believed the patent would give it leverage as companies rapidly expand their efforts to turn the Internet into a broadcast medium.

RealNetworks competes against Apple, Adobe, Microsoft and other companies in developing and selling software to media businesses that use the Internet to broadcast audio and video. The patent could allow the company to demand royalty payments from those competitors or from media companies.

In a telephone interview Friday, Robert Glaser, the founder and chief executive of RealNetworks, said the patent was related to an invention that the company first sought protection for in 1994. Mr. Glaser called it a "foundation" patent, giving RealNetworks a strong position that it would seek to use to help it sell its Helix media server product, which streams video and audio in several formats.

Mr. Glaser described what he referred to as a Kafkaesque struggle to persuade the patent office that RealNetworks' "click to stream" invention was a novel one that deserved patent protection. The company, which now has 35 patents in the interactive multimedia field, went back and forth with the patent office for five years before it filed the 1999 patent in its current form.

Mr. Glaser, who left Microsoft to found what was first called Progressive Networks in Seattle in 1994, said the company would probably not use the patent against its direct competitors. Many of the companies it competes with use patents as defensive protection, like the needles on porcupines, he noted.

"We're an operating company and we're not likely to go after big hairy porcupines," he said, "but we want our intellectual property to be respected."

The patent, which is described as being for a "multimedia communications system and method for providing audio on demand to subscribers" (No. 6,985,932), describes the idea of permitting a PC user to play back audio, video and other information on a PC. RealNetworks executives said the technology was distinguished from other similar systems by the fact that it permitted "intelligent" streaming of data in potentially congested networks.

"We're hoping that people will say, 'Oh, I get it,' and that this will boost the identity of Helix," Mr. Glaser said.

The patent lies at the heart of one of the commercial Internet's most competitive arenas. Thousands of companies are now offering multimedia services over the Internet, from AOL, Yahoo and ABC to newer video storage and distribution services like Google Video and YouTube. The new patent is known as a continuation patent, with additional claims based on an original filing in November 1994. One of the challenges that will confront RealNetworks in enforcing the patent is an earlier one owned by Apple Computer. Apple applied for a patent related to its QuickTime technology for streaming media in May 1994, before RealNetworks' first filing. The Apple patent, No. 5,561,670, for "method and apparatus for operating a multicast system on an unreliable network," was issued in October 1996. It appears the patent office examiners did not consider it in their evaluation of the RealNetworks patent.

Several analysts said they believed that the RealNetworks patent, coupled with the company's other patents related to broadcasting multimedia, could be used to help it expand its market share.

"The timing is pretty interesting," said Allen Weiner, an analyst at Gartner, a market research firm. "Streaming has always been important in the media world. However, with the creation of a significant number of services, streaming is the hottest thing around."

The issue facing RealNetworks will be how to turn this into an opportunity, Mr. Weiner said. "This is less about who they can go after legally, and more about how they can turn their business in a new direction and make themselves attractive to all of these media companies."

Several industry veterans said that Mr. Glaser, whose name is listed first on the patent, had been early to happen upon the idea of the Internet as a broadcast medium.

"At the National Association of Broadcasters meeting in 1995, he came up to me like a madman and asked me if I wanted to a listen to a baseball game broadcast over the Internet," said Richard Doherty, president of the Envisioneering Group, a consumer electronics consulting firm based in Seaford, N.Y. "I had never heard audio on the Internet."

But Mr. Glaser was not the first one to think of the idea. One pioneer who proceeded him was Carl Malamud, an early member of the community of Internet researchers who explored new uses for the technology before it was commercialized.

In 1993, Mr. Malamud, who was then a writer and an economist based in Alexandria, Va., began broadcasting a weekly 30-minute radio talk show over the Internet.

In an interview last week, Mr. Malamud, who is now a fellow at the Center for American Progress in Washington, said he thought Mr. Glaser had been an innovator.

"Rob, to his credit, did make some innovations," he said.
http://www.nytimes.com/2006/04/24/te.../24patent.html





Gonzales Calls For Mandatory Web Labeling Law
Declan McCullagh

Web site operators posting sexually explicit information must place official government warning labels on their pages or risk being imprisoned for up to five years, the Bush administration proposed Thursday.

A mandatory rating system will "prevent people from inadvertently stumbling across pornographic images on the Internet," Attorney General Alberto Gonzales said at an event in Alexandria, Va.

The Bush administration's proposal would require commercial Web sites to place "marks and notices" to be devised by the Federal Trade Commission on each sexually explicit page. The definition of sexually explicit broadly covers depictions of everything from sexual intercourse and masturbation to "sadistic abuse" and close-ups of fully clothed genital regions.

"I hope that Congress will take up this legislation promptly," said Gonzales, who gave a speech about child exploitation and the Internet to the federally funded National Center for Missing and Exploited Children. The proposed law is called the Child Pornography and Obscenity Prevention Amendments of 2006.

A second new crime would threaten with imprisonment Web site operators who mislead visitors about sex with deceptive "words or digital images" in their source code--for instance, a site that might pop up in searches for Barbie dolls or Teletubbies but actually features sexually explicit photographs. A third new crime appears to require that commercial Web sites not post sexually explicit material on their home page if it can be seen "absent any further actions by the viewer."

A critic of the proposal said that its requirements amount to an unreasonable imposition on Americans' rights to free expression. In particular, a mandatory rating system backed by criminal penalties is "antithetical to the First Amendment," said Marv Johnson, legislative counsel to the American Civil Liberties Union.

During his speech, Gonzales also warned that Internet service providers must begin to retain records of their customers' activities to aid in future criminal prosecutions--a position first reported by CNET News.com--and indicated that legislation might be necessary there as well. Internet service providers say they already cooperate with police and appear to be girding for a political battle on Capitol Hill over new regulations they view as intrusive.

An idea once proposed by Democrats
The Bush administration's embrace of a rating system backed by criminal penalties is uncannily reminiscent of where the Clinton administration and a Democratic member of Congress were a decade ago.

In the mid-1990s, the then-nascent Internet industry began backing the Platform for Internet Content Selection, or PICS. The idea was simple: let Web sites self-rate, or let a third-party service offer ratings, and permit parents to set their browsers to never show certain types of content. Netscape and Microsoft soon agreed to support it in their browsers.

At a White House summit in July 1997 hosted by President Clinton and Vice President Al Gore, the head of the Lycos search engine proposed that only rated pages would be indexed. (Bob Davis, the president of Lycos at the time, said: "I threw a gauntlet to other search engines in today's meeting saying that collectively we should require a rating before we index pages.") Sen. Patty Murray, a Democrat from Washington state, suggested that misrating a Web site should be a federal crime. And Australian government officials began talking about making self-rating mandatory.

The popularity of the idea of rating eventually faded, though, thanks in no small part to the knotty problem of labeling news sites. News articles can feature sexually explicit content (when reporting on a rape trial or sexual education), and major online publishers decided in August 1997 that they were going to refuse to rate themselves.

Because of those and other problems, courts have tended to take a dim view of mandatory rating systems. In a 1968 case called Interstate Circuit v. Dallas, the U.S. Supreme Court ruled that Dallas' ordinance requiring that movies be rated was unconstitutional because the criteria for rating were unclear and vague.

Eugene Volokh, a law professor at UCLA who has written a book on the First Amendment, said the Bush administration's proposal may be more likely to survive judicial scrutiny. Because the definitions of sexually explicit material have been used elsewhere in federal law, Volokh said, "it has the virtue of relative clarity. I think that's probably constitutional."

But David Greene, director of a free-speech advocacy group called The First Amendment Project, thinks it wouldn't survive a court challenge. "I believe the law would be struck down as impermissible compelled speech," Greene said. "The only times courts allow product labeling is with commercial speech--advertisements."

For the rating system's definition of sexually explicit material, the Bush administration proposal borrows language from existing federal law. It covers: sexual intercourse of all types; bestiality; masturbation; sadistic or masochistic abuse; or lascivious exhibition of the genitals or pubic area of any person.

In practice, courts have interpreted those definitions quite broadly. In one case, U.S. v. Knox, the Supreme Court and an appeals court ruled that the "lascivious exhibition" of the pubic area could include images of clothed people wearing bikini bathing suits, leotards and underwear. That suggests, for instance, that photos of people in leotards and bathing suits would have to be rated as sexually explicit if the commercial Web site owner wanted to avoid going to prison.

There is one exception: Sexual depictions that constitute a "small and insignificant part" of a large Web site do not have to be rated.

In an unusual twist, Gonzales' remarks this week represent a high-profile reversal of two of the Bush administration's previous positions.

First, James Burrus, the FBI's deputy assistant director, told a Senate committee in January that there was no need for new laws to deal with child exploitation on the Internet. Second, the Justice Department has previously expressed (Click for PDF) "serious reservations about broad mandatory data retention regimes" such as the one that Gonzales proposed on Thursday.
http://news.com.com/Gonzales+calls+f...3-6063554.html





First-Instance District Court Of Hamburg Says Forum Operators Are Liable For Comments
Craig Morris

After more than four months, the first-instance district court of Hamburg has handed down its written statement on its widely reported ruling of December 02, 2005 on liability for forums. The statements refers to web forums as an "especially dangerous feature." Those who operate such a source of trouble, the court argued, must be held especially liable.
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The previous legislation held that forum providers were only liable for illegal content that they had knowledge of and were not obligated to actively search for such; now, the judges in Hamburg have overruled that interpretation. Providing Internet forums is, they argued, a type of business operation. Operators therefore have to be able to hire enough staff with legal training to be able to handle such operations. "If the number of forums and comments in them is so great that the opposing party does not have the staff or technical means to review comments before they are published, they either have to expand their in-house resources or [...] reduce the scope of their business operations," the first-instance district court of Hamburg argued.

In the case at hand, Universal Boards and its director Mario Dolzer believe that their rights were being violated. Some participants in a forum for a report published at heise online about the business practices of Universal Boards made a script public that was designed to limit the operation of the company's download services. The company's lawyer, Bernhard Syndikus, promptly sent a letter to the publisher demanding that it refrain from "actively disseminating 'reader comments' whose letter or gist incites other users to download files, in particular the program 'k.exe', as often as possible from my client's servers to overload my client's servers."

The publisher immediately deleted the offending comments in the forum but refused to sign the formal obligation as it did not believe it had to take action if it did not know about potentially illegal comments. Although no other comments were posted with calls to overload the company's servers after this deletion, Universal Boards nevertheless had the first-instance district court of Hamburg issue a temporary restraining order. The publisher protested against this restraining order, but the court was not to be swayed.

The court sees the publisher as the party that is "disturbing the peace" because it allowed inadmissible campaigns to be propagated in its forum. The court held that a publisher would have been able to prevent such incitations by "reviewing the content of the comments before publishing them." The court clearly did not believe Heise Zeitschriften Verlag's argument that constant reviewing of the content of more than 200,000 comments per month would be an unreasonable burden on the publisher.

The court did not clearly state its opinion on whether every Web forum could be held liable or only the services of the press. Its statement speaks of "people who operate facilities in which content is disseminated as in the press." The court further stated that this "also applied for companies that disseminate content via the Internet." Heise Zeitschriften Verlag was thus found to be propagating statements in its Web forum "as in the press." Consequently, every Internet forum probably falls under this category because the judges did not make any further distinctions.

Even before the written statement on the ruling had been handed down, lawyers had been sending out fines to operators of forums they claimed were breaking the law. Such actions will probably now become common. Heise Zeitschriften Verlag is appealing this ruling. As the publisher's legal adviser Joerg Heidrich put it, "Moderation of user comments would mean the end of the fledgling forum culture in Germany. We believe that this ruling is grossly unfair. If it stands, it will have severe consequences for all forum operators."
http://www.heise.de/english/newsticker/news/72085





Probation Over Web Site
AP

A man who ran a pornographic Web site that included grisly photographs of war dead taken by U.S. troops was sentenced Friday to five years' probation, his attorney said.

Chris Wilson, 28, a former Eagle Lake police officer, pleaded no contest in January to five misdemeanor charges of possession of obscene materials. The state dismissed 296 other similar charges.

Wilson's Web site gave soldiers free access to pornography in exchange for posting pictures from the Iraq and Afghanistan wars. Polk County sheriff's officials said Wilson's arrest in October stemmed from the site's sexually explicit content, not the pictures of war dead.

"He agreed to stay out of the adult Web site business for the term of his probation," defense attorney Larry Walters said.

Though the Web site launched a Pentagon investigation into how war zone photos of charred and dismembered bodies described as victims of U.S. attacks could have surfaced, military investigators did not pursue criminal charges against Wilson
http://hosted.ap.org/dynamic/stories...MPLATE=DEFAULT




New Law Requires Some Businesses To Secure Their WiFi Networks
Eric Bangeman

One New York county has solved the "problem" of unauthorized access to unsecured wireless networks by passing a new law. Businesses operating in Westchester County will soon need to turn on security settings for their WiFi networks if they are used to access financial information for their customers.

Calling it the first law of its kind, Westchester County Executive Andrew Spano said the new law would cut down on identity theft while allowing businesses to avoid the "public relations disasters" that accompany data breaches. He's right about the second part, anyway. When CardSystems was hacked after deciding to contravene its agreement with Visa and keep names and credit card numbers used in transactions it processed, the result was an avalanche of bad press along with a lot of lost business.

According to the county's CIO, county officials found that almost half of the 248 WiFi networks discovered during a 20-minute wardriving session were wide open. That led to the new mandatory security measures for certain businesses, along with a requirement that businesses operating open WiFi networks to post signs to warn their customers about the perils of surfing unprotected networks.

"For your own protection and privacy, you are advised to install a firewall or other computer security measure when accessing the Internet."

Unauthorized access of WiFi networks—especially wide-open ones—have been making news lately. Last month, an Illinois man was fined US$250 for using a business' unprotected wireless access point to surf the Internet from his car. That followed last year's indictment of a Florida resident for felony unauthorized access to a computer network for using an open WAP.

I have mixed feelings about the law. It's always good to remind people to be careful when they're using the Internet. Many of us here at Ars as well as a sizable portion of you readers are often called upon to do tech support for family and friends. How many times have you had to perform a malware exorcism because of a user's carelessness?

On the other hand, identity thefts from businesses via open wireless networks aren't exactly common. In fact, it's highly debatable whether the law will have any discernible effect on identity theft at all. Yes, packet data sent over an unsecured WiFi network can be read by anyone with the know-how. In fact, some commonly used 802.11b/g security settings aren't all that secure, period. Having said that, if someone wants to get ahold of your personal data, there are other, simpler ways of doing so.

Securing your wireless network is a trivial matter, given the ease with which most WAP can be configured. Check out our Wireless Security Blackpaper if you need a refresher.
http://arstechnica.com/news.ars/post/20060421-6647.html





C.I.A. Employee Fired for Alleged Leak
AP

The CIA has fired an employee for leaking classified information to the news media, an agency official said Friday. A federal criminal investigation has also been opened.

CIA spokesman Paul Gimigliano said an officer had been fired for having unauthorized contacts with the media and disclosing classified information to reporters, including details about intelligence operations.

''The officer has acknowledged unauthorized discussions with the media and the unauthorized sharing of classified information,'' Gimigliano said. ''That is a violation of the secrecy agreement that everyone signs as a condition of employment with the CIA.''

Citing the Privacy Act, the CIA would not provide any details about the officer's identity or assignments. It was not immediately clear if the person would face prosecution.

Justice Department officials declined to comment on the firing and whether the matter had been referred to federal prosecutors for possible criminal charges. One law enforcement official said there were dozens of leak investigations under way.

A second law enforcement official confirmed there was a criminal investigation under way and said the CIA officer had provided information that contributed to a Washington Post story last year saying there were secret U.S. prisons in Eastern Europe.

Both of those officials spoke on condition of anonymity because of the sensitivity of the matter.

The Washington Post report caused an international uproar, and government officials have said it did significant damage to relationships between the U.S. and allied intelligence agencies.

CIA Director Porter Goss has pressed for aggressive investigations. In his latest appearance before Congress, Goss condemned the unauthorized disclosure of information.

''The damage has been very severe to our capabilities to carry out our mission,'' Goss said in February, adding that a federal grand jury should be impaneled to determine ''who is leaking this information.''

------

Associated Press Writer Mark Sherman contributed to this report.
http://www.nytimes.com/aponline/us/A...n er=homepage





Spymaster Tells Secret of Size of Spy Force
Mark Mazzetti

John D. Negroponte, the director of national intelligence, said Thursday that the United States' global spying apparatus now numbered nearly 100,000 people assigned to stealing secrets and analyzing information to help protect national security.

The total number of personnel who report to the 16 disparate intelligence agencies and departments has until now remained secret, an effort by the government to mask the size of its spying operations. Mr. Negroponte disclosed the figure at a lunchtime speech here, calling those who serve in the intelligence field "patriotic, talented and hard-working Americans."

The disclosure came just months after another American intelligence official divulged, apparently by accident, another closely guarded secret: that the budget for American intelligence agencies last year totaled $44 billion. That disclosure was made by Mary Margaret Graham, a top deputy to Mr. Negroponte who served previously as a senior official of the Central Intelligence Agency.

Mr. Negroponte's office was created a year ago to overhaul American intelligence operations after multiple intelligence failures, including the faulty reports about Saddam Hussein's nuclear, chemical and biological weapons, which the intelligence chief referred to Thursday as the "W.M.D. fiasco."

Defending his office against critics, some of them senior lawmakers, Mr. Negroponte said the intelligence reforms had not been an "exercise in bureaucratic bloat" but an effort to create an intelligence culture that "closes the breach in our defenses" that were revealed by the attacks of Sept. 11, 2001.

Mr. Negroponte was asked after his speech whether the new intelligence structure had brought the government any closer to catching Osama bin Laden. He said that while he wished the United States had already found Mr. bin Laden, the government had made great progress in capturing or killing several other members of the high command of Al Qaeda.

"I think we've dealt them a number of body blows," he said, "but we haven't yet dealt a knockout blow to Mr. bin Laden himself."
http://www.nytimes.com/2006/04/21/wa...n/21intel.html





No Proof of Secret C.I.A. Prisons, European Antiterror Chief Says
Dan Bilefsky

The European Union's antiterrorism chief told a hearing on Thursday that he had not been able to prove that secret C.I.A. prisons existed in Europe.

"We've heard all kinds of allegations," the official, Gijs de Vries, said before a committee of the European Parliament. "It does not appear to be proven beyond reasonable doubt."

But Mr. de Vries came under criticism from some legislators who called the hearing a whitewash. Kathalijne Buitenweg, a Dutch member of Parliament from the Green Party, said that even without definitive proof, "the circumstantial evidence is stunning."

"I'm appalled that we keep calling to uphold human rights while pretending that these rendition centers don't exist and doing nothing about it," she said.

Many European nations were outraged after an article in The Washington Post in November cited unidentified intelligence officials as saying that the C.I.A. had maintained detention centers for terrorism suspects in eight countries, including some in Eastern Europe. A later report by the advocacy group Human Rights Watch cited Poland and Romania as two of the countries.

Both countries, as well as others in Europe, have denied the allegations. But the issue has inflamed trans-Atlantic tensions.

Mr. de Vries said the European Parliament investigation had not uncovered rights abuses despite more than 50 hours of testimony by rights advocates and people who say they were abducted by C.I.A. agents. A similar investigation by the Council of Europe, the European human rights agency, came to the same conclusion in January — though the leader of that inquiry, Dick Marty, a Swiss senator, said then that there were enough "indications" to justify continuing the investigation.

A number of legislators on Thursday challenged Mr. de Vries for not taking seriously earlier testimony before the committee of a German and a Canadian who gave accounts of being kidnapped and kept imprisoned by foreign agents.

The committee also heard Thursday from a former British ambassador to Uzbekistan, Craig Murray, who said: "I can attest to the willingness of the U.S. and the U.K. to obtain intelligence that was got under torture in Uzbekistan. If they were not willing, then rendition prisons could not have existed." But Mr. Murray, who was recalled from his job in 2004 after condemning the Uzbek authorities and criticizing the British and American governments, told the committee that he had no proof that detention centers existed within Europe.

He said he had witnessed such rendition programs in Uzbekistan, but he seemed to back up Mr. de Vries's assertion when he said he was not aware of anyone being taken to Uzbekistan from Europe. "As far as I know, that never happened," he said.

While he was ambassador, Mr. Murray made many public statements condemning the government of President Islam Karimov of Uzbekistan for its poor human rights record.

At the time, the Bush administration was using Uzbekistan as a base for military operations in Afghanistan after the Sept. 11 attacks. Mr. Murray, who has remained an outspoken critic of American and British policy toward Uzbekistan, has since been criticized by Foreign Secretary Jack Straw of Britain for breaching diplomatic protocol.
http://www.nytimes.com/2006/04/21/wo...rendition.html





China's President Ends U.S. Visit With Yale Speech
John O'Neil

President Hu Jintao concluded his first trip to the United States with a speech today at Yale University aimed at reassuring Americans about his country's rise. But he made clear that China would remain "focused wholeheartedly" on economic growth and would move only "prudently" to expand political rights.

Mr. Hu also appeared to take up Mr. Bush's call in their White House meeting for China to become a "stakeholder" — a word meant to convey that it must use its new power for more than economic gain.

"We must not only become stakeholders," Mr. Hu said. "We must become partners in constructive cooperation."

Mr. Hu said China's need for rapid growth was the best reason for it to promote peace. "We need to concentrate our energy and resources on resolving those problems, and that's why we hope to see a peaceful international environment," he said.

"China's development will not compromise the interests of other nations nor will China's development threaten anyone," he said.

Speaking before an invited audience of about 600 students, faculty and administrators — a sizable portion of whom seemed to understand Mr. Hu's jokes before they were translated — Mr. Hu stressed repeatedly that China remained a poor country despite its rapid economic progress.

"Although China has become, comparatively speaking, stronger, it has a population of 1.3 billion," Mr. Hu said, after quoting figures on the rise in gross domestic product. "Any figure divided by 1.3 billion will necessarily become a smaller one."

He noted that on a per-capita basis China does not rank among the 100 richest nations, and said that its official development plan called for it to become "moderately prosperous" by 2020.

A portion of his speech was devoted to a history lesson that traced China's troubles from the time of the Opium War, when European countries gained ascendancy.

China's growing trade imbalance and soaring use of oil have both been points of tension with the United States. But while Mr. Hu promised Mr. Bush that he would try to stimulate more consumer demand at home, he has also rebuffed calls for changes in China's currency that Washington has sought as a way of curbing its export growth.

The demonstrators whose presence has irked Chinese officials at every stop of his trip were out in force on the streets of New Haven today, but were offset to some extent by supporters of the Chinese government who arrived on buses from New York. A truck cruised around the perimeter of campus with a giant poster bearing a photo of Mr. Bush shaking hands with Mr. Hu.

The New Haven police estimated the size of the crowd at one of several protest sites as more than 1,000. Several streets running through the downtown campus were closed to traffic, and police officers in riot gear guarded campus entrances.

The chants of demonstrators could be heard outside Sprague Memorial Hall, the site of the speech, but apparently not inside.

At a private gift exchange ceremony in Mr. Levin's office, a CNN producer was thrown out by school officials after asking Mr. Hu whether he had seen the demonstrators gathered just one block away, said Helaine Klasky, a Yale spokeswoman. The producer, who officials declined to identify, was part of a pool of journalists at the ceremony, which Ms. Klasky said was a photo opportunity, not a news conference.

"One journalist broke all ground rules, behaved in rude and disorderly conduct and was escorted out of the private meeting," Ms. Klasky said.

The New Haven police reported one arrest in connection with Mr. Hu's visit. Jianyin Peng, 41, of New York, was arrested on a charge of assaulting a peace officer after throwing a water bottle. He was released after promising to appear in court.

In a brief question-and-answer session after his speech, Mr. Hu was asked about restrictions on political freedom. The written questions from the audience were read by Ernesto Zedillo, the former president of Mexico and now the director of Yale's Center for the Study of Globalization.

"I believe that the development of the political infrastructure must be compatible with the economic foundation," Mr. Hu said, adding that he did not think it was fair to say there had been no political progress since modernization began in 1978.

During his speech, Mr. Hu repeatedly mentioned the traditional cultural emphasis on social harmony, and described China as pursuing a path of "scientific development" that "put people first."

Demonstrators with the Falun Gong spiritual sect began protesting at 6 a.m. just outside Yale's Old Campus quadrangle, reciting the Nine Commentaries over loud speakers. Pro-government demonstrators responded by blaring the Chinese national anthem, to the dismay of Yale freshmen sleeping in nearby dormitories.

Waving Chinese and American flags and holding banners written in Chinese and English, the demonstrators assailed Mr. Hu's record on human rights and called for the Chinese government to end prosecution of Falun Gong practitioners.

"As a righteous person, he should do something about the atrocity in China," said Min Deng, 33, a postdoctoral student in biology and president of Yale's Falun Gong club. "There are innocent people who are dying for their beliefs and this shouldn't happen in a modern society."

On Thursday, Falun Gong organizers presented the office of Yale's President, Richard C. Levin, with a petition signed by 2,517 people calling on Mr. Levin to raise the issue of human rights in his meeting with Mr. Hu.

Jane Zhizhen Dai, a 43-year-old resident of Sydney, Australia, said she had come to the edge of Yale's campus with her 6-year-old daughter to protest Mr. Hu's visit. Ms. Dai said her husband was killed in 2001 after writing a letter calling on the Chinese government to stop killing Falun Gong practitioners.

"I want to speak out for all the orphans because their voices cannot be heard," Ms. Dai said, as her eyes teared up.

Some supporters of Mr. Hu's government came on buses this morning from New York to support the president.

"This government is good now," said Fong Wa, 42, a native of Hong Kong who lives in New York. "Maybe 10 or 20 years before it was different from now."

Mr. Hu's visit to Yale marks only the second time a Chinese president has addressed an American university. The first was in 1997 when Hu's predecessor, Jiang Zemin, spoke at Harvard University.

Mr. Hu is speaking at President Bush's alma mater, and when Mr. Bush traveled to China earlier this year he spoke at Mr. Hu's alma mater, Tsinghua University. Today, the Chinese represent the largest group of foreign students at Yale, accounting for more than 300 of Yale's 11,000 students. More than 300 undergraduates are taking Chinese language courses, with many more participating in Yale's 80 academic collaborations and exchanges with Chinese universities.

In a lift for managers of Yale's $15 billion endowment, the Chinese government this week authorized the university to trade domestic stocks and bonds, making Yale the first foreign university granted access to China's closely restricted securities market.

Students filing out of Sprague Hall after the speech said they were impressed by Mr. Hu, but not surprised by his message.

Minhua Ling, 25, a doctoral student in anthropology from Shanghai, said she thought Mr. Hu was more direct today than he had been at the White House.

"The message was very clear: China will do its own democracy in a very Chinese kind of way," Ms. Ling said.

Philip Rucker contributed reporting for this article from New Haven.
http://www.nytimes.com/2006/04/21/ny...ner =homepage





'United 93' Actor Says Entry to US Denied

An Iraqi actor who plays a hijacker in a new film about the September 11 attacks on the United States has been denied entry into the country for the movie's premiere, he told a newspaper on Friday.

in Britain since 1995, stars in "United 93," which premieres at the Tribeca Film Festival in New York next week.

Directed by Briton Paul Greengrass, the film about the hijacked plane that crashed in Pennsylvania has sparked debate about whether Americans are ready to see an on-screen portrayal of the events.

Alsamari, 30, said he may have been denied entry by the U.S. embassy in London because he served in the Iraqi army in the early 1990s.

"I think this was because I am still an Iraqi citizen and fought in the army -- but that was only because I was forced to," he told London's Evening Standard newspaper.

"It would be so disappointing not to be able to go because I still have not seen the film. I have only seen footage and it would have been amazing to be in New York for the premiere."

A spokeswoman for the U.S. embassy in London said she was aware of the case, but did not have any immediate comment on the status of Alsamari's application to travel to New York.

Alsamari added: "I hope I am not going to have to wait until the film comes out in Britain to watch United 93. It seems strange that I cannot go over for the premiere."

He said he escaped from the Iraqi army in 1993 and stayed in neighboring Jordan until 1995, when he moved to Britain seeking asylum. According to the Standard, he was granted asylum in Britain in 1998.

In February, actors starring in Michael Winterbottom's politically charged "The Road to Guantanamo" were held by British police under anti-terrorism legislation on their return from Berlin where the film premiered.

One of them said a police officer abused him verbally at Luton airport.
http://news.aol.com/entertainment/mo...21075609990001





TSA: Computer Glitch Led To Atlanta Airport Scare

A bomb scare that led authorities to evacuate security checkpoints at Atlanta's Hartsfield-Jackson International Airport on Wednesday was the result of a "software malfunction," Transportation Security Administration Director Kip Hawley said.

While screening carry-on luggage, a TSA employee identified the image of a suspicious device but did not realize it was part of routine testing for security screeners because the software failed to indicate such a test was under way, Hawley said.

Authorities evacuated the security area for two hours while searching for the suspicious device, causing flight delays and forcing travelers who could not get through to the terminals to wait outside the airport. (Watch what happens when the world's busiest passenger airport shuts down -- 2:30)

Willie Williams, the airport's federal security director, said the screener saw something suspicious and notified a supervisor. The two manually rechecked all the bags on the conveyor belt but could not find anything resembling what was seen on the screen, Williams said.

The information was passed on to the security director, who made the decision to ground flights and call in the Atlanta Police Department's bomb squad.

Hawley said TSA screeners are given tests around the clock to check their alertness. Images of bombs and other suspicious devices that are hard to detect are put up on the X-ray machine, followed after a brief delay by an alert that reads, "This is a test."

After reviewing a tape of the images, Hawley said the software failed to alert the screener of the test.

Hawley said all procedures were followed correctly.

The Atlanta facility was the nation's busiest passenger airport in 2005.

The airport's general manager, Ben DeCosta, said he was not satisfied with the way passengers were notified of the incident.

CNN's Rusty Dornin, Jeanne Meserve and Deanna Proeller contributed to this report.
http://www.cnn.com/2006/US/04/20/atl...ort/index.html





Disney and CBS Explore Univision Deal
Andrew Ross Sorkin

Several big media companies, including the Walt Disney Company and CBS, have held meetings with Univision's management over the last week about making a takeover offer for the company, people involved in the talks said yesterday.

Univision, the largest Spanish-language television and radio company in the nation, put itself up for auction in February.

The latest negotiations appear to demonstrate that there may be more interest in Univision than some rivals have so far let on.

Just yesterday, the chief executive of CBS, Leslie Moonves, told investors on an earnings conference call that "we're not looking for an acquisition of that size."

Disney, which had not been identified before as showing an interest in acquiring Univision, has been spending considerable time with Univision's management poring over the company's books in recent days, these people said.

Of course, these people cautioned, it remains possible that both companies could decide against making a final bid.

Exact terms of preliminary bids could not be learned, but Univision has long suggested internally that it is not willing to sell itself for less than $40 a share, or about $14 billion. Shares of Univision closed yesterday at $34.84, up 16 cents.

The negotiations with Disney and CBS come as Grupo Televisa, Mexico's biggest media company, which provides much of Univision's most popular programming, is planning to join the auction formally in the next week with its own investor consortium, these people said.

Last month, The New York Times reported that Grupo Televisa had joined with Providence Equity Partners, Madison Dearborn Partners, the Cisneros Group of Venezuela and the media entrepreneur Haim Saban.

People close to the group said the Carlyle Group and Kohlberg Kravis Roberts & Company are expected to join the consortium, though they said a final decision had not been made and it was possible the composition of the group could change again.

Another bidding group, which includes the Texas Pacific Group, Thomas H. Lee Partners and Goldman Sachs's private equity arm is also pursuing an offer, these people said. The Blackstone Group, which had been talking about being a partner with Kohlberg Kravis, could end up joining any one of the groups or might possibly team up with CBS, these people said.

Time Warner, which expressed interested in Univision early on, seems to have cooled to the idea of joining the auction, these people said. And EchoStar Communications, which unexpectedly expressed interest in Univision early in the process, no longer appears to be pursuing the auction seriously, these people added.
http://www.nytimes.com/2006/04/27/bu...ia/27deal.html





Television Stations Are Urged to Break a Few Rules
Stuart Ellott

THE expression "think outside the box" has been overused enough to become jargon. But for a few hours yesterday it was appropriate, as local television stations were urged to diversify beyond their boxes, i.e., TV sets, to remain relevant — and profitable — in the new digital age.

"Conventional wisdom, it's an enemy at a time like this," said Beth Comstock, president for digital media and market development at NBC Universal, part of General Electric. "In media today, I don't think there is a single rule that can't — and frankly, probably shouldn't — be broken.

"This isn't just about driving growth," she added. "It's about staying in business."

Her call to action came at the annual marketing conference sponsored by the Television Bureau of Advertising, an organization that promotes broadcast TV as a medium. For the fifth year in a row, the conference was held during the New York International Auto Show at the Jacob K. Javits Convention Center, reflecting the status of automakers atop the list of America's largest marketers.

For the first time, the conference was devoted to a single topic: the importance of the "multiplatform" — that is, offering content and advertising not only on local broadcast stations but also online, on cellphones and other wireless devices, through video on demand and on video iPods.

The sole topic was intended to underscore that "advertisers and their agencies are increasingly asking for — make that demanding — a multiplatform strategy from all their media partners," said Christopher Rohrs, president of the bureau, in a speech he gave to almost 1,200 attendees to begin the conference.

To address that, Mr. Rohrs said, the bureau has selected a dozen members to serve on a committee devoted to multiple-media platforms, which plans to hold its first meeting today. The committee members include executives from ABC, CBS, Gannett Broadcasting, Meredith Broadcasting, NBC, the New York Times Company Broadcast Media Group and Pappas Telecasting.

There are two principal reasons that TV stations are seeking to broaden their horizons. One is "consumers will increasingly choose what they want to see, when they want to see it, on whatever device they want to see it," said Alan Frank, president and chief executive at the Post-Newsweek Stations division of the Washington Post Company.

The other reason was offered by David Rehr, president and chief executive at the National Association of Broadcasters: "Every new stream of programming is potentially a new source of revenue. Most distribution channels will create more value for our content."

Those prospects were the subject of a panel discussion led by Gordon Borrell, president and chief executive at Borrell Associates, a consulting company specializing in the local online advertising market.

Mr. Borrell discussed a new report from his company showing that local television stations more than doubled their Internet ad revenue last year compared with 2004, to $283 million from $119 million. And, he predicted, the figure would climb to $410 million by the end of 2006.

But ad revenue last year for Web sites operated by local newspapers totaled $2 billion, according to the report, or more than nine times what the Web sites of the local TV stations took in.

Local television "has the power to significantly drive traffic to the Internet" by cross-promoting with the contents of station broadcasts, Mr. Borrell said, "yet it hasn't in many cases."

"You have a tremendous opportunity in front of you," he added. "All media are in flux, and flux is a great time to institute change."

As an example, Mr. Borrell cited the Web site operated by WRAL-TV, the CBS affiliate in Raleigh, N.C., that is owned by the Capitol Broadcasting Company. The ad revenue for the site (www.wral.com) exceeds the ad revenue for www.newsobserver.com, the Web site operated by the leading local newspaper, The News and Observer, published by the McClatchy Company.

When it comes to capitalizing on additional methods of delivering content and ads, Mr. Borrell said, "we are where television was in the late 1950's."

That outlook was echoed by the announcement yesterday of the final figures for Internet ad revenue last year, released by the Interactive Advertising Bureau and PricewaterhouseCoopers. The results set a record at $12.5 billion, up 30.2 percent from $9.6 billion in 2004.

"We must be like Google, in a constant beta state," said Christine M. Di Stadio, senior vice president for marketing and new media at the New York Times Broadcast Media Group. Her reference was to the myriad test products and services offered on the Google Web site.

Local stations ought to offer opportunities for social networking on their Web sites, Ms. Di Stadio suggested, to compete with popular services like MySpace; streaming video, to compete with Web sites like YouTube; and mobile marketing.

As an example, Ms. Di Stadio described a "mobile physician finder" she is developing, listing doctors and their telephone numbers. Cellphone users will be able to "click on the phone number and dial, using click-to-call technology," she said.

"Guys, we needed all these screens to come along to make us exciting and vibrant again," Ms. Di Stadio said, laughing.

Brian Wheelis, vice president and group media director on the giant AT&T account at GSD&M in Austin, Tex., part of the Omnicom Group, cautioned the attendees against worrying that they will be competing against themselves.

"If you think about the Web as cannibalizing, you've already given up and you're not ready for it," Mr. Wheelis said. He praised the Web site of KXAN, the NBC affiliate in Austin, owned by LIN TV, which offers blogs, podcasts, streaming video and other new media at www.kxan.com.

Another member of Mr. Borrell's panel, David Buonfiglio, advised local TV stations to take part in the nascent trend known as user-generated or consumer-created content, which is meant to build emotional connections between customers and brands.

Mr. Buonfiglio, vice president for local sales at Internet Broadcasting Systems, cited a contest sponsored by the Web site of WPTZ, an NBC affiliate owned by Hearst-Argyle Television that broadcasts to Burlington, Vt., and Plattsburgh, N.Y. The contest on the site (www.thechamplainchannel.com) "invited viewers to write the next commercial" for a local car dealer, Mr. Buonfiglio said, and drew twice as many entries as had been forecast.

Mr. Buonfiglio also offered some advice in a humorous vein. "You really should go out and tell agencies what you can do," he said. "Get a capabilities presentation. If you don't have capabilities, get some of them first."
http://www.nytimes.com/2006/04/21/bu...ia/21adco.html





Microsoft Loses in Patent Suit
Matt Slagle

A federal jury in East Texas returned a $133 million verdict against Microsoft Corp. and Autodesk Inc. for infringing on two software patents owned by a Michigan technology company.

The lawsuit, filed in 2004 by z4 Technologies of Commerce Township, Mich., claimed Microsoft and Autodesk used two z4 patents in their Office and AutoCad software programs without paying royalty fees.

After deliberating for 19 consecutive hours, jurors agreed Wednesday, ordering Microsoft to pay $115 million and San Rafael, Calif.-based Autodesk $18 million.

The patents were created and owned by David Colvin, owner of privately held z4. U.S. patent 6,044,471 refers to a method and apparatus for securing software to reduce unauthorized use, while patent 6,785,825 involves a method for securing software to decrease software piracy.

Autodesk and Microsoft had argued during the six-day trial in federal district court in Tyler that the patents were invalid. But the jury said Autodesk and Microsoft were never able to clearly show that was the case.

A Microsoft spokeswoman said the company was disappointed in the jury's decision, which could be appealed. Separately, Microsoft is appealing a $521 million judgment in a case involving patents owned by Eolas Technologies Inc. and the University of California.

"We continue to contend that there was no infringement of any kind and that the facts in this case show that Microsoft developed its own product activation technologies well before z4 Technologies filed for its patent," Microsoft spokesman Jack Evans wrote in an e-mail.

Evans said Microsoft believes z4 knowingly withheld information from the U.S. Patent and Trademark Office when the patents were submitted and is waiting for the court to rule on the issue.

Ernie Brooks, lead attorney for z4, declined to comment on the verdict.

Telephone messages left with an Autodesk spokeswoman weren't immediately returned.

Jurors began deliberating about 5:15 p.m. Tuesday and continued through the night before returning a verdict at 12:15 p.m. Wednesday.

Companies often file patent cases in federal courts in East Texas because they are known for handling patent cases quickly.

Last week, a federal jury in nearby Marshall, Texas, awarded TiVo Inc. nearly $74 million after deciding that EchoStar Communication Corp. had copied key technologies from the digital video recording pioneer.

Shares of Microsoft fell 19 cents to $27.03 and Autodesk stock dropped 31 cents to 43.31 in the close of trading Wednesday on the Nasdaq Stock Market.
http://hosted.ap.org/dynamic/stories...MPLATE=DEFAULT





WSJ: eBay Looking For Allies Against Google
Anders Bylund

A report in the Wall Street Journal (subscription only) today talks about how eBay is looking for partners to defend against the growing threat of Google. Specifically, Google Base and the payment system in the works in Mountain View are seen as possible dangers to eBay's auctions and PayPal payment operations, says the report. Google Talk just throws some salt in the wounds by looking for a toehold in Skype's turf.

"After years of working closely with the search giant, eBay last year became alarmed as Google started assaulting its turf in multiple ways," the report said.

The multitude of ways to infringe on eBay's core business makes Google look dangerous. With an ally like Yahoo! or Microsoft, eBay hopes to stave off the threat and prevent Google from making any significant inroads to the auction and private payment markets. eBay may be doing the right thing if it hitches its wagon to someone other than big G, though it remains to be seen how much damage Google could inflict on Meg Whitman's crew. eBay has an impressive lead in mindshare and expertise when it comes to selling people's old trinkets online.

Whether it's Yahoo! or MSN, the WSJ reports that advertising through the chosen partner could be boosted significantly, and in return for favorable advertising rates, eBay could provide access to consumer data collected over the years. But it won't be easy to make a major change. The two companies have come to rely on each other rather heavily:

The auction giant gets about half of its traffic from some form of online advertising, making it very dependent on Google.

"If eBay reduced its spending on Google, revenue at eBay would take a hit," says Jim Friedland, an analyst with Cowen & Co. "If eBay stopped spending on Google, the revenue decline would be dramatic and it would be disastrous for the stock. For better or for worse, eBay needs to continue to spend and grow its relationship with Google."

On the other hand, the eBay revenue is very significant to Google as well. "Most" of eBay's annual US$400 million marketing budget goes to Google, and shareholders would surely notice the loss of that large a sum. So the two giants are locked into a dance neither one necessarily wants to dance; eBay needs Google to drive traffic, and Google needs eBay dollars. Even if eBay does form a partnership of some kind with another big online player, the advertising cash will continue to flow to the online advertising market leader.

Google hasn't trumpeted a desire to muscle eBay out of business or anything like that, but online auctions represent yet another method for Google to extract a few pennies from us consumers. Give Google a finger and it might rip you to pieces and mulch its petunias with your remains. If anybody still thinks of Google as a mere search engine, that impression isn't likely to last much longer:

Industry observers have also noted that Google, which has a cash pile of $10 billion, has recently begun to act as a venture capital firm, investing in a string of projects and placing bets in a number of areas. Julie Meyer, chief executive of technology VC firm Ariadne Capital, said: "Google is undertaking the biggest landgrab the world has ever seen. We are seeing it exercise its market power, its cash and its brand. It probably would take a coalition of major players, a kind of super-union, to stop it and I would not be surprised at all to learn of a whole host of discussions behind the scenes."

Such is the power of a strong brand name backed by a lot of cash. There's really no reason why Microsoft couldn't do what Google is doing, apart from a couple of decades of bureaucratization and a brand people think of as ruthless and old school rather than progressive and "not evil." Somebody will eventually mount a serious effort to challenge the power of Google, and a confederation of Google's peers would probably stand a better chance than one company going it alone. Why not eBay; why not now?
http://arstechnica.com/news.ars/post/20060421-6649.html





Google Posts 60% Gain in Earnings
Saul Hansell

Google returned to favor among investors yesterday as its profit for the first quarter increased 60 percent, well above expectations.

Three months ago, the company disappointed investors, even though its profit grew 82 percent, and its stock sagged. This time, Google's ascent was enough to satisfy.

"Investors, surprisingly, acted rationally this quarter and had low expectations," said Safa Rashtchy, an analyst at Piper Jaffray & Company. Google's stock rose about 8 percent in after-hours trading after the announcement, recouping its losses since the last earnings report.

Pointing to particulars behind its successful quarter, the company said its share of the search market continued to grow around the world, as did the money it earned from advertising for each search result displayed.

Eric E. Schmidt, Google's chief executive, said the market share increase might be related to the use of some of the company's new products, like Google Video, Google Earth and Google Maps, as well as the introduction of Google News in several countries.

These services attract people to Google's site, where they may also conduct searches, he said in an interview. "All of a sudden Google is top of mind again, over and over again."

Google continued to make substantial capital investments, mainly in computer servers, networking equipment and space for its data centers. It spent $345 million on these items in the first quarter, more than double the level of last year. Yahoo, its closest rival, spent $142 million on capital expenses in the first quarter.

Google has an enormous volume of Web site information, video and e-mail on its servers, Mr. Schmidt said. "Those machines are full. We have a huge machine crisis."

Jordan Rohan, an analyst for RBC Capital Markets, called Google's capital spending "unfathomably high," noting that it spent the same percentage of its revenue on equipment as a company in the telephone business, an industry traditionally seen as far more capital-intensive than the Internet.

He said investors would tolerate this high spending level as long as Google's results continued to be so strong.

"If Google's market share continues to increase, and its position as the central hub of the Internet is reinforced, an extra $1 billion is a worthwhile investment," Mr. Rohan said. "The day market share peaks, we have a problem."

Investors saw little problem in the latest numbers. Google earned $592 million in the first quarter, compared with $369 million in the year-earlier period.

Excluding charges for stock-based compensation and payments to the plaintiffs' lawyers in the settlement of a class-action lawsuit, earnings were $2.29 a share, well ahead of the $1.97 that analysts had anticipated.

Gross revenue was $2.25 billion, up 79 percent. Analysts prefer to look at Google's revenue after deducting the payments it makes to services like America Online, which display its advertisements and keep most of the money from them. Using this measure, Google's revenue was $1.53 billion, compared with the $1.44 billion that analysts had estimated.

The company's stock, which ended regular trading at $415, up $4.50, rose after hours to $448.31 It reached a high of $475.11 in January and was at $432.66 before its last earnings report, then fell back as far as $337.06 in March.

Google saw faster growth on the Web sites it owns, which are far more profitable because it does not have to share advertising money. Google's sites posted revenue of $1.3 billion, up 97 percent.

Revenue from partner sites was $928 million, up 59 percent. Google kept 22 percent of the revenue for ads shown on partner sites, compared with 21 percent a year ago.

Revenue is growing faster overseas. Revenue from outside the United States was 42 percent of total revenue, compared with 39 percent a year ago. The company said that it noted particular growth in Britain, France and elsewhere in Northern Europe.

Mr. Rohan said that in the first quarter, Google's search revenue in the United States grew 10 percent from the fourth quarter of 2005, about the same growth as Yahoo. Google has long grown substantially faster than Yahoo, and it is still increasing its share of user searches, he said. That means Yahoo is starting to catch up on technology to generate more advertising revenue for each search, he said.

Google added $825 million to its cash hoard, giving it $8.4 billion in cash at the end of the quarter. In April, it raised another $2.1 billion by selling shares to the public and spent $1 billion to buy 5 percent of AOL.

The company also continued to hire at a breakneck pace. It added 1,110 workers in the quarter for a total of 6,790 full-time employees.

In a conference call with investors, Mr. Schmidt highlighted several areas for future growth.

One was advertising from local businesses on the company's main search service, as well on its local search and maps products. The delivery of such advertising is based on an inference of the user's location from the search query or Internet protocol address.

"Locally targeted ads are an increasingly meaningful contributor to revenue, and much more is coming," Mr. Schmidt told the investors.

Mr. Rashtchy, the Piper Jaffray analyst, estimated that 10 percent of Google's advertising was local.

Mr. Schmidt also said the company saw great opportunity in developing services for mobile phones. It has developed a system called a transcoder that will reformat Web pages for display on the small screens of cellphones.

The company has started delivering advertising on its mobile service in Japan and it is negotiating with wireless carriers to put advertising on its services in other countries as well, Mr. Schmidt said in an interview.
http://www.nytimes.com/2006/04/21/te.../21google.html





Intel Posts Sharp Fall in Profit
Laurie J. Flynn

Intel, accustomed to riding high, is getting more practice in delivering bad news.

Intel, the world's largest chip maker, reported a 38 percent decline in quarterly profit Wednesday in the face of stiff competition from Advanced Micro Devices and a general slowdown in the personal computer market that caused inventories to swell.

The downturn included a decline in revenue for the first quarter and lower-than-expected revenue forecasts for the current quarter and full year.

But investors' expectations seem to have been so diminished that Intel's stock price, driven down more than 20 percent since the start of the year, actually rose after the announcement, to $19.77, up from $19.56 at the end of regular trading.

Apjit Walia, an analyst with RBC Capital Markets, called the quarter "a disaster," though certainly not a surprise. The slowdown in PC growth rates and the resulting inventory problems have analysts concerned that the road to recovery could be bumpier than Intel is predicting.

Paul S. Otellini, Intel president and chief executive, acknowledged in a conference call with analysts that PC growth had "moderated somewhat" from the double-digit rates of recent years.

Intel executives, however, insisted the company would work down its inventory by the end of the second quarter. "The first half of 2006 has been a time to reset our business," Mr. Otellini said.

He added that he expected Intel to return to "normal seasonal patterns" in the second half of the year.

In lowering its revenue forecast for the full year, Intel said it now expected revenue to decline 3 percent from last year's revenue of $38.8 billion, rather than increase 6 percent to 9 percent, as the company had said in January. It said revenue for the second quarter would be $8 billion to $8.6 billion, below Wall Street's forecast of $8.85 billion.

To help address the problem, Mr. Otellini said Intel was cutting its costs by more than $1 billion for the year, while maintaining its current product plans.

In the third quarter, Intel is expected to roll out a new chip design, the "core microarchitecture," which the company hopes will help it gain back market share. Intel has lost some ground as Advanced Micro ramped up its new dual-processor server line faster than Intel, giving it an early-lead advantage.

But perhaps just as significant for investors is that Intel's gross profit margin has shrunk to 55.1 percent, substantially below the 59 percent the company forecast in January. Intel executives said margins were hurt by lower microprocessor revenue and higher inventory write-downs.

Andy D. Bryant, Intel's chief financial officer, defended the company's performance against Advanced Micro during the quarter, asserting that Intel did not lose any additional market share after conceding last month that it had experienced a "slight" loss in the fourth quarter.

In the fourth quarter of 2005, Intel's share of the overall microprocessor market was 76.9 percent, compared with 82.2 percent a year earlier, while Advanced Micro rose to 21.4 percent, from 16.6 percent, according to Mercury Research.

Intel's net income declined 38 percent during the first quarter, which ended April 1, to $1.35 billion, or 23 cents a share, compared with $2.18 billion, or 35 cents a share, a year earlier. Without a change in accounting to reflect stock options, Intel said the first-quarter earnings would have been 27 cents a share.

First-quarter revenue fell 5.2 percent, to $8.94 billion, roughly the midpoint of the revised guidance the company issued in March. Analysts surveyed by Thomson First Call had forecast earnings of 23 cents a share on revenue of $8.91 billion.

In March, the company lowered its revenue forecast to a range of $8.7 billion to $9.1 billion, down from a previous estimate of $9.1 billion to $9.7 billion, citing a "slight" loss of market share and weaker sales of microprocessors.

Mr. Walia, the RBC analyst, said he wished that Intel would be more realistic in its assessment of how long its turnaround was going to take, adding that the worst might not yet be over. "For all the things Intel needs to work out, you've got to have a perfect scenario," he said. "They're being hit from all sides."
http://www.nytimes.com/2006/04/20/business/20chip.html





Apple Reports Sharp Climb in Both Sales and Earnings
Steve Lohr

The ascent of Apple Computer continued in the most recent quarter with the company reporting a sharp increase in sales and profit.

In a conference call yesterday, Apple executives offered a conservative outlook for the current quarter that fell short of Wall Street's projections. But investors seemed reassured by the strong quarterly results, showing that iPod sales were healthy in the postholiday quarter and that the sales of Macintosh computers held up.

Macintosh sales, executives said, are expected to be soft as customers put off purchases until later this year when Apple completes its transition to machines powered by Intel microprocessors and software written for the Intel-based Macintosh computers is ready.

In after-hours trading, Apple shares rose $2.95, or 4.5 percent, to $68.60 a share. In regular trading, shares fell 57 cents, at $65.65.

Apple's profit in its second quarter, ended April 1, increased 41 percent, to $410 million, compared with $290 million a year earlier. Earnings were 47 cents a share, up from 34 cents a year ago.

Sales rose 34 percent, to $4.36 billion, compared with $3.24 billion a year ago. Sales were slightly below the Wall Street consensus estimate of $4.52 billion.

The challenge Apple faces on Wall Street, it seems, is mostly in managing high expectations. For example, Apple sold more than 8.5 million of its popular iPod portable music and video players, or 60 percent more than in the quarter a year ago. Still, most analysts estimated that Apple would sell 9 million and 10 million in the quarter.

"People come up with all sorts of numbers, but I think 8.5 million of anything is pretty great," the chief executive of Apple, Steven P. Jobs, said in an interview yesterday.

Wall Street analysts, Mr. Jobs said, will have a tricky time projecting quarterly iPod sales because "no one has ever done this before," meaning sold digital music players at the pace that Apple has recently. Sales, as expected, fell off from the holiday quarter, when Apple sold 14 million iPods. But Apple pointed to industry figures showing its share of digital music player sales in the United States market rose to 78 percent in March.

Apple switched half of its Macintosh models to Intel microprocessors in the quarter, replacing PowerPC chips supplied by I.B.M. "We're moving rapidly and we're thrilled with how it's going," Mr. Jobs said.

Macintosh sales in the quarter were about the same as a year ago, rising slightly to 1,112,000 machines.

"People are postponing the purchases of Macs, especially professionals in advertising, publishing and design who are waiting for specialized software programs to be ready for the Intel-based Macs," said Charles Wolf, an analyst at Needham & Company, who owns Apple shares and has a hold recommendation on the stock.

"It's going to be difficult to get a real sound sense of underlying demand for most of this year," Mr. Wolf said. "But Apple has dodged the Intel transition bullet so far. And sales could really take off, once the shift is complete and the software is ready."

Apple's profit margins, executives said, were lifted by lower-than-anticipated prices for some parts, notably the flash memory in iPods.

In the current quarter, Apple said it expected sales of $4.2 billion to $4.4 billion and earnings of 39 cents to 43 cents a share, after charges for stock-based compensation. Both the sales and profit guidance were below analysts' expectations.

If cautious about the current quarter, Apple is optimistic for the long term. In a sign of that optimism, Mr. Jobs announced plans Tuesday evening to build a 50-acre corporate campus near company headquarters in Cupertino, Calif. At a meeting of the Cupertino City Council, Mr. Jobs said that Apple's rapid growth meant it needed more room.

The complex will probably take four or five years to design and build. When completed, it would accommodate up to 3,500 workers. The campus will be in addition to the headquarters in Cupertino.

"We'll occupy both of them," Mr. Jobs said in an interview.
http://www.nytimes.com/2006/04/20/te...y/20apple.html





Native Speaker:

There May Be an End-run for Apple Around Windows After All
Robert X. Cringely

Dave Winer, in his NerdTV interview several months back, said that he viewed his software developer job as giving customers whatever they want. It wasn't his job to say "no" to customers, but rather to say "yes," adding features and capabilities as needed to delight the people who were ultimately paying Dave's bills. It is an enlightened and unusual position to take, especially for an engineer, because engineers typically say something can't be done at all before they eventually say that doing it is trivial. Dave, who has plenty of ego in his own right, claims to have eliminated ego in his quest for customer delight. I hope he has. But even if Dave, himself, hasn't reached that level of Nirvana, he presents an interesting question of how best to give the customer what he or she says they want? In this, our third consecutive week of, "What the heck is Apple really doing with Windows?" we can try to ask this same question about Apple and see if there is an obvious answer emerging. I think there is.

To recap, Apple has now officially endorsed the idea of people running Windows on their MacIntel computers using a dual boot loader called Boot Camp. I wrote last week that drunken Microsoft engineers had confirmed that Vista would run on Mac hardware and Apple might even become a Windows OEM like John Dvorak has been predicting. But I also wrote last week that the better route for Apple to take would be true operating system virtualization with Windows Vista running atop OS X for greater security. Finally, I wrote that OS X might be getting a new kernel now that Avie Tevenian is leaving Cupertino.

As usual, hundreds of readers weighed-in with new facts and opinions, promoting various virtualization schemes and products from Vmware, Altiris, Parallels and others. Some said virtualization wasn't even needed and that Apple might just use Wine to run Windows apps atop OS X, or maybe they'd use dual-core chips to run one OS per core. I'm beginning to think I know what's up, but first let's tackle that OS X kernel issue. Why would Apple want a new kernel?

Speed. Quite simply, a monolithic kernel like the one used in Linux or most of the other Open Source Unix clones is inherently two to three times faster for integer calculations than the Mach microkernel presently used in OS X 10.4. That's why the world hasn't embraced xServes, for example, because for simple web or database service they are slower and serve fewer users.

Apple has evidently reached the point where they need to trade claimed performance, -- typically based on floating-point operations that aren't a part of much web or database service -- for real performance.

Speeding-up performance is great, but normally a system vendor won't want to do that for older hardware, which might encourage some users to keep their old box and just add a new OS. But in this case, Apple HAS NO installed base of Intel Macs to worry about having to compete with, so speeding up the OS becomes a no-brainer, especially if it simultaneously encourages PowerPC owners to upgrade so they can share in the fun.

For this reason alone, I'm guessing that the new OS X Kernel won't be backward compatible to PowerMacs. But this is just a guess.

Speeding-up performance is important, too, if you intend to compete in a broader market and not just with your own installed base. Apple has plenty of experience emulating old operating systems to maintain compatibility, whether it was 680X0 emulation on early PowerPC machines, System 9 or Classic emulation under OS X, or even today's Rosetta on-the-fly conversion of PowerPC apps to run on MacIntel boxes. But in all three cases, the performance result was slower than users would have liked. Apple could get away with that when it was an Apple-versus-Apple contest, but now we are talking about Apples running Vista (or Windows apps) versus Dell or HP computers running native Vista. To win, Apple has to be more secure, easier to use, more solid, and not too much slower, so every hardware tweak they can find is great, thanks.

So I think it safe to say that whatever Apple's overall strategy, we're likely to see a new kernel in OS X 10.5, though the look and feel and underlying functionality shouldn't change at all. Those who think the kernel change will have to wait for 10.6 forget that Apple has had parallel versions of OS X in development for years, so who's to say they haven't had a monolithic-kernel version running in the lab since 10.3?

Apple will most likely offer more than one way to satisfy Big Business's desire to run Windows or at least Windows applications. I think Apple is sincere, for example, in their interest in allowing Apple hardware to boot straight into Vista. Not even Steve Jobs would go for months pretending to be a Vista OEM then give that up the night before. (Now watch him prove me wrong.) So for those who absolutely must have Windows, then let them have Windows, with which the new kernel ought to make performance quite snappy.

Another option for Apple would be full OS virtualization like I championed last week. I'm sure it will be available, though maybe not from Apple, since there are plenty of third party applications ready to fight for that business. These applications, probably even more than running straight Vista on Apple hardware, could use the extra oomph of a faster kernel.

But what I believe Apple will push as its core strategy is what's behind Door Number Three -- something completely different for those who may not want to run Windows Vista, but want to run Windows XP, instead.

XP is strangely compelling on Apple hardware, primarily because most users will already have XP licenses they can transfer and applications they not only own but are familiar with as well. Many people might argue, too, that OS X 10.4 (or 10.5) has many features slated to be coming in Vista, so running XP atop 10.4 could be as good or better than moving to Vista at all.

Now for the interesting part: I believe that Apple will offer Windows Vista as an option for those big customers who demand it, but I also believe that Apple will offer in OS X 10.5 the ability to run native Windows XP applications with no copy of XP installed on the machine at all. This will be accomplished not by using compatibility middleware like Wine, but rather by Apple implementing the Windows API directly in OS X 10.5.

Huh?

Wine is great, but it is also a moving target subject to Microsoft meddling. If Wine gets too good, Microsoft can "accidentally" break it at will. But Microsoft can't afford to do that with its own Windows API. The courts will no longer allow checking for a different underlying OS as Redmond did back in the days of DR-DOS. Besides, unless we are strictly talking about Microsoft apps, there isn't even much code involved here that Microsoft CAN meddle in. The wonder is, of course, that Apple could even dare to do such a thing?

Oh they can dare. Not only that, this is one dare Apple can probably get away with.

Remember Steve Jobs' first days back at Apple in 1997 as Interim-CEO-for-Life? Trying to save the company, Steve got Bill Gates to invest $150 million in Apple and promise to keep Mac Office going for a few more years in exchange for a five-year patent cross-licensing agreement? The idea in everyone's mind, of course, was that Microsoft would grab lots of Apple technology, which they probably did, and it quite specifically ended an Apple patent infringement suit against Microsoft. But I'm told that the exchange wasn't totally one-way, that Apple, in turn, got some legal right to the Windows API.

That agreement ran for five years, from August, 1997 to August 2002. Even though it has since expired, the rights it conferred at the time still lie with the respective companies. Whatever Microsoft grabbed from Apple they can still use, they just aren't able to grab anything developed since August 2002. Same for Apple using Microsoft technology like that in Office X. But Windows XP shipped October 25, 2001: 10 months before the agreement expired.

I'm told Apple has long had this running in the Cupertino lab -- Intel Macs running OS X while mixing Apple and XP applications. This is not a guess or a rumor, this something that has been demonstrated and observed by people who have since reported to me.

Think of the implications. A souped-up OS X kernel with native Windows API support and the prospect of mixing and matching Windows and Mac applications would be, for many users, the best of both worlds. There would be no copy of Windows XP to buy, no large overhead of emulation or compatibility middleware, no chance for Microsoft to accidentally screw things up, substantially better security, and no need to even take a chance on Windows Vista.

I think Dave Winer would see it as Apple saying "yes," to its customers. Alternately, it could be Apple saying, "Hell no" to Microsoft.
http://www.pbs.org/cringely/pulpit/pulpit20060420.html





Apple Ready To Steal Market Share
Jonny Evans

Needham & Co analyst Charles Wolf is maintaining a 'Hold' rating on Apple stock - but has hopes that Mac sales will surge once the entire range move to Intel.

He expects the full product transition to complete by the first quarter of 2007. And he thinks that Boot Camp will be integral to future success. "Mac shipments could surge on the strength of the ability of Macs to run Windows applications," he wrote.

No Photoshop for Intel slows sales

The transition isn't without risks, the analyst said, citing the non-availability of Adobe Photoshop for Intel processors as an example.

"MacBook Pro and forthcoming PowerMac sales could experience sale postponements that extend into 2007," he wrote, "because Adobe is unlikely to introduce native versions of Photoshop and other design programs until early 2007. Apple's professional audiences, which are heavy users of these products, are likely to postpone their upgrades until they arrive," he observed.

Windows open on Apple

However, Apple's secret market share weapon - Boot Camp - could be integral to the company's future fortunes: "The driver of the sales upside will be the ability of the Mac to run Windows applications either through dual-booting or virtualisation," the analyst explained.

Wolf adds that he thinks Apple will extend Windows support in its future Leopard OS by adding a virtualisation engine that lets Mac users run Windows at the same time as OS X. At present users can only choose to boot into Mac or Windows operating systems.

"In our opinion, we believe there is a reasonable chance that Apple itself will build virtualisation into Leopard, the next version of Mac OS X, which should ship soon after MacWorld San Francisco in January 2007," he explained.

iBook imminent

Wolf sees Apple's Q2 as a good result in which the company "escaped" too much impact from its Intel transition.

"An inkling of postponed purchases reduced December quarter shipments. Postponements were undoubtedly higher in the March quarter. And they should continue at least through the September quarter and possibly into December," Wolf warned.

Products drive success, particularly in the consumer markets, and Wolf echoed industry consensus, saying: "We expect Apple to introduce a new
iBook with an Intel processor in time for the K-12 school-buying season, which begins in June. Without the new model, the season could be quite short."

Speaking during this week's Apple Q2 conference call, chief financial officer Peter Oppenheimer warned that gross margins would decline slightly in the current quarter, attributing this to the beginning of the K-12 buying season.

Wolf translates this as evidence of the debut of a consumer notebook that's set to capture education sales on the basis of price.

A 'moral victory' in Q2

Overall, it was a good quarter: "Apple shipped 1.11 million Macs in the March quarter, in line with our 1.15 million forecast. In view of the fact that Apple introduced three new Intel Macs during the quarter and a significant number of customers most likely postponed purchases, we regard this number as something of a moral victory. Shipments could have been far lower," he said.

Looking into the future for iPod sales, Wolf observed a slowing in sales growth for the product, and surmised that this would leave the iPod more susceptible to seasonal changes in buying patterns.
http://www.macworld.co.uk/news/index...ge=1&pagePos=1





Apple Pushes To Unmask Product Leaker
Declan McCullagh

A California court in San Jose on Thursday is scheduled to hear a case brought by Apple Computer that eventually could answer an unsettled legal question: Should online journalists receive the same rights as traditional reporters?

Apple claims they should not. Its lawyers say in court documents that Web scribes are not "legitimate members of the press" when they reveal details about forthcoming products that the company would prefer to keep confidential.

That argument has drawn stiff opposition from bloggers and traditional journalists. But it did seem to be sufficient to convince Santa Clara County Superior Court Judge James P. Kleinberg, who ruled in March 2005 that Apple's attempt to subpoena the electronic records of an Apple news site could proceed.

"Unlike the whistleblower who discloses a health, safety or welfare hazard affecting all, or the government employee who reveals mismanagement or worse by our public officials, (the Macintosh news sites) are doing nothing more than feeding the public's insatiable desire for information," Kleinberg wrote at the time.

The Electronic Frontier Foundation, which is representing the Apple news site PowerPage.org, is hoping the appeals court will pull the plug on a subpoena that could yield details about who leaked information about a FireWire audio interface for GarageBand that has been codenamed "Asteroid." The subpoena is on hold during the appeal.

"The California Court of Appeals has a long history of protecting freedom of the press," Kurt Opsahl, an EFF staff attorney who is arguing the case, said on Wednesday. "We're hopeful they'll continue to do so."

In the lawsuit, filed in late 2004, Apple is not suing the Mac news sites directly, but instead has focused on still-unnamed "John Doe" defendants. The subpoena has been sent to Nfox.com, PowerPage's e-mail provider, which says it will comply if legally permitted.

Even though the AppleInsider site also published information about the Asteroid device, it operated its own e-mail service and would have been able to raise a stronger First Amendment claim if it had been sent a subpoena. (In a separate case, Apple directly sued another enthusiast site, Think Secret, alleging that it infringed on Apple's trade secret in soliciting inside information.)

The types of articles about Apple that Jason O'Grady, PowerPage.org's creator, posts every few days don't seem that different from those that many news organizations produce. They include reports on Apple's patent disputes, benchmarks of software performance, reviews of software and news about upcoming products that have not officially been announced.

Being the first to publish news about forthcoming products--as long as the information is accurate--is generally regarded by journalists as a coup. CNET News.com was the first to report, for instance, that Apple was switching from PowerPC processors to Intel chips last year. (Full disclosure: O'Grady has begun writing a blog for ZDNet, also owned by CNET.)

Free speech vs. trade secrets...

A coalition of bloggers, law professors and journalist-rights groups has filed a legal brief (click for PDF) siding with the EFF, saying that "the medium though which reporters communicate is simply unrelated to the Constitutional mandate of the protecting the free flow of information and the freedom of the press."

For purposes of this appeal, Apple has agreed that O'Grady can be viewed as a reporter. But the coalition wants the California appeals court to go even farther and say that bloggers and other online writers "may invoke the protection of the newsgatherer's privilege" of protecting their sources when they act as journalists.

The brief's signers include The First Amendment Project, Reporters Without Borders, and Gawker Media. The Associated Press, Hearst Corp., the Los Angeles Times and other major media companies filed their own brief arguing that the Mac sites should not be forced to divulge their confidential sources.

Free speech vs. trade secrets
To Apple and its allies, though, the case is about something much more straightforward: how to protect intellectual property rights in the age of the Internet.

"The First Amendment cannot trump a property right," said Ian Ballon, an intellectual property attorney in the East Palo Alto, Calif., office of Greenberg Traurig.

As long as the courts agree that Apple is protecting a legitimate trade secret, Ballon said, intellectual property should trump free speech rights. "The law is certainly on Apple's side on this issue," he said.

A slew of other large software and hardware companies have lined up behind Apple. Intel and the Business Software Alliance (which counts Microsoft as a prominent member, along with Adobe, Apple and Symantec) said in their own filing that trade secret laws "are vital to the health of California's high technology businesses" and that there is no public interest in having trade secrets "stolen and plastered on the Internet."

The Information Technology Industry Council took a similar position, saying that EFF has "greatly exaggerated" the threat that the subpoena poses to "legitimate First Amendment interests." It involves no wrongdoing by government officials, or muckraking, or corporate waste, but simple disclosure of trade secrets, the council says.

Intel is scheduled to participate in Thursday's oral arguments, along with the actual litigants, an attorney for mainstream media organizations, and the Bear Flag League--a group of conservative bloggers that is siding with PowerPage.

CNET News.com's Ina Fried contributed to this report.
http://www.zdnetasia.com/news/busine...9353413,00.htm