Peer-To-Peer News - The Week In Review – January 10th, '04

[JackSpratts]

Charts And Crafts

This week we’ve been treated to the dubious news that reported file sharing is down by half, that the RIAA’s scorched earth campaign against swappers has paid off and that sales are back up and on the rise. Sounds great. And it’s so simple. They’ve been telling us for years that file sharing is killing sales so it stands to reason that if they kill file sharing sales will come back to life. The info we got this week came from a survey known as the Pew report, and like its name suggests, there may be something off about the numbers.

To begin with file sharing is a worldwide phenomenon; it’s not exclusive to the U.S. where the survey was conducted nor tied to any particular locale. We can look at other countries to test the “file sharing kills sales” hypothesis and see if it’s actually true. We’ve already done it - and we know that it’s not. In the UK and Australia for instance with rampant hot beds of P2P use file sharing and sales are up, and have been for years. We can explore other things that put lie to the statement that file sharing = lower sales but the fact is there is no easy correlation between the two. Massive trading can coexist with healthy sales in the same markets and often does. MP3’s and CD’s are different animals. One does not necessarily replace the other. But OK, say we forget about the UK and Australia, that for some strange reason the RIAA’s universal statements don’t apply in those other English-speaking countries and file sharing has no negative effects there (but only there...), can we still say that the reported decrease in sharing here in the U.S. has led to the reported increase in sales? Well, no – because the reporting methodology used is not strong enough to build that case. The Pew report is so tied to the specific as to be all but pointless in extrapolating to the general. As the articles in this week’s WiR show, the report focuses on a handful of programs and uses them to suggest they represent all other programs, that if use is down in four of them then usage must be down in all of them. The flaw in such thinking is widespread and misses any migrations that might be occurring from one program to another. Especially those where users move to stealthier apps when available. People aren’t particularly stupid; they’re more than capable of going around obstructions, it’s one reason why traffic reports are so popular on radio. If the cops are spot-checking cars getting off exit 8, most drivers will use exit 7 and avoid the hassles. It doesn’t mean there’s less traffic, it just means there’s less “trapable” traffic. The same is true for many things. No bright reporter would think of writing that car sales were down because a survey said less people were buying cars from General Motors, even a novice reporter would first see if sales were slow at other car companies too before filing such a story. If they couldn’t find out before publication then all they could truthfully report would be the survey’s results - as they applied to GM alone. If a small group of people are saying they’re not using Kazaa as much as they did last year, the matter needs to be fully probed before one can state with any legitimacy that it means people countrywide are walking away from file sharing applications in general. It pays to remember that when Napster collapsed, file sharing went up. The same could be happening now.

We may be witnessing another major shift in the habits of filesharers as they move from open spaces to sheltered enclaves. Programs with decentralized and serverless protocols that are gatekeeper protected and inherently low profile. These are powerful utilities that are every bit as efficient in moving information around the world as Kazaa is - just ask anyone who’s using one (if they’ll tell you). You just won’t find them splashed across web-sites advertising for members - because there aren’t any corporations loading them up with spyware and hawking them. One reason adware infested Kazaa lasted as long as it did was because it had always been so easy getting clean, spyware free versions. Lately the company has been aggressively closing down the hobbyists responsible for those uncontaminated “lite” versions. That’s causing many users to migrate off the network taking their files with them. As the inventory drops people find the network less useful and the migrations increase. Corporately, Kazaa/Altnet’s actions alone may be chasing away network users and hurting the company’s financial outlook, witness Altnet parent Brilliant Digital’s delisting from the American Stock exchange. With alternatives comes choice. People are wary of coming home to spyware infested PC’s running who knows what in the background, sucking up resources, bandwidth and sending little notes home to cloaked strangers telling of usage habits and sites visited. They’re demanding change. Even mighty AOL, for years blissfully nonchalant about such matters has found out that surprise, its subscribers are no longer clueless about the problem. They hate the stuff, forcing the media giant to get rid of spyware. All this happens independently of the RIAA. And it can happen fast.

Simply owning a peer-to-peer does not immunize a company against shortsightedness. Two years ago the most popular post-Napster application was Morpheus and it crashed and burned over the course of a spectacular 72 hour period, going from millions of files to zero and losing all of it’s members in a blazing corporate flameout. It had nothing to do with the RIAA but it also had no effect on file sharing ultimately. All it took was a quick program download and all those previous Morpheus users were back online, trading like it was business as usual.

File sharing evolves and file sharing clients evolve as well. Sometimes all it takes is a better idea and an email. You rarely have to bend over backwards with surveys and tea leaves. Sometimes people, seeing a better system, gravitate towards it. Sometimes as Freud mused, a cigar is just is cigar.

The RIAA might have had a point if after all those files were harder to acquire.

Instead they’re easier to get than ever. Take it from me. Not that you have to, you probably already know.










Enjoy,

Jack.










Online Music Sharing Drops, But Do Figures Tell Real Story?D. Parvaz

The number of people downloading and sharing music online has dropped significantly since the recording industry began filing lawsuits against alleged copyright violators last fall, according to a survey by the Pew Internet & American Life Project.

About 18 million people admitted downloading music online, a 50 percent drop since the previous Pew survey, done in spring.

But whether those numbers capture the true behavior of music downloaders and file sharers is another thing.

The Pew study, released yesterday, didn't differentiate between paid online music services and free, file-swapping applications, but comScore data (which accompanied the Pew survey) indicate the number of file swappers is dropping and paid online services (a relatively new development in the world of online music) are growing at a steady pace.

Peer-to-peer, non-paid, file-sharing music sites seem to have taken the greatest hit, but some industry insiders say that survey numbers don't tell the whole story.

"I completely discount it all," says Wayne Rosso, former president of Grokster, which provides file-sharing software, and current CEO of Optisoft SL, the proprietary network for other file-sharing applications.

Rosso criticizes the Pew methodology because, he says, people lie, especially if they think file sharing will get them in trouble.

Pew Internet Project Director Lee Rainie says survey participants were more likely ignorant than dishonest. And he admits it would have been better if the questions distinguished between paid online music services and peer-to-peer file swapping. But, he says, that wasn't done because of the problems it would pose.

"People are confused and don't know what's going on with copyright laws," Rainie said.

Angie Beining, 19, seems to know what's going on with copyright laws. She says she used to be an avid music file swapper but isn't anymore.

"I used to swap songs online all the time. ... I hardly bought any CDs for a couple of years," she says, adding that now she doesn't do it "like ever, because I hear they're suing people." It's not worth the trouble, she says, but that doesn't mean she's started to buy songs online, either.

"Now I just rip them off a friend's CD or computer, or I just buy the CD myself." She knows that ripping CDs poses copyright issues, too, but says, "It's impossible to track."

Rainie says the recorded decrease in downloading was consistent among all survey groups, regardless of age, race, gender and household income. "I'm pretty confident that we've captured a reality of online life here."

Rosso disagrees.

"Our revenues aren't dropping, and I promise you Grokster's aren't. Nobody's been crying the blues," says Rosso, who adds Optisoft had 3 million unique users this year. "All these guys are really full of baloney."

Well, not quite, says comScore, whose numbers agree with Pew.

ComScore analyst Graham Mudd said its data were gathered with a program installed on 1.5 million computers, which allowed the firm to directly track the applications used.

Data gathered by the Virginia-based firm say things aren't looking good for file-swapping sites. The number of computers running any one of the four surveyed file- sharing applications is down (KaZaa is down 15 percent, Grokster 59 percent, WinMx 25 percent and BearShare 9 percent). These figures reflect the number of people running the applications on their computers, not necessarily the use of them.

"Without a doubt the number of people simply going to these sites or actively visiting them is on a downward trend," says comScore Senior Vice President Dan Hess.

But it's possible people were running other file-swapping applications that were not tabulated in the study, Graham says.

Grokster, the company with the greatest drop in users, doesn't have an official spokesperson. KaZaa did not respond to an interview request.

Paid music sites are a different story altogether, Hess says. ComScore data show that the numbers for sites such as Napster and Apple's iTunes are on an upswing.

"Those numbers, in all likelihood, are continuing to grow, and some of that has to do with starting from scratch," Hess says.

Indeed, the customer base for some of these legal downloading services, such as Seattle-based RealNetwork's Rhapsody, continues to swell. About two weeks ago, the company announced its second quarter of double-digit growth, this last quarter taking it from 250,000 subscribers to 350,000 for both its Rhapsody and RealRadio products.

"That's a dramatic increase from where we started the year," Rhapsody spokesman Matt Graves says, adding that the increase in numbers is on track with other tech music services such as broadband and home WiFi setups.

ITunes is one of the major players in the online music game, but a spokesperson declined to offer specific numbers for how many users were registered. ComScore, however, tracked the site as having 1,380,000 visitors in October and 2,663,000 in November.

MusicMatch.com also is reporting a steady increase -- the number of accounts has increased by 41 percent from November to December. A representative declined to give specifics.

The drop in non-paid downloads that Pew found might not continue, as the battle between record labels and the file-swapping community is just beginning. Legal judgments, such as last month's decision by the Dutch Supreme Court that KaZaa is not violating copyright laws for music or movie files swapped using its software, continue to shift the landscape of the online music world. (The U.S. version of the KaZaa lawsuit is pending in a Los Angeles district court.)

"This is definitely not the end," Rainie says.
http://seattlepi.nwsource.com/pop/15...wnloads05.html


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

BitTorrent Users Chuckling Over Pew Peer-To-Peer Report
John Paczkowski

The suits over at the Recording Industry Association of America are likely a bit more smug than usual today thanks to a report that suggests the number of people swapping music files online has declined dramatically since the lobbying group began suing people who illegally trade copyrighted music online. According to a report released Sunday by the Pew Internet & American Life Project and comScore Media Metrix, the number of individuals illegally downloading music from the Internet plummeted from 35 million to 18 million between late May and mid-December. "Nothing has ever fallen off the cliff the way that downloading has," Lee Rainie, director of the Pew Internet project, told Newsday. "Obviously the lawsuits were a watershed, and they dramatically changed some online behavior." But just how did they change it? Pew researchers would have us believe that fewer people are downloading music illegally. But they sampled only four peer-to-peer applications - Kazaa, WinMX, BearShare and Grokster -- each of them known to be heavily monitored by the RIAA. What of BitTorrent? Or eDonkey and eMule? Or Carracho? Isn't it possible that more of the trafficking is just moving off the radar?
http://www.siliconvalley.com/mld/sil...sv/7637880.htm


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

Why the Decline in Downloading?
Seth Jayson

In a discussion of yet another proposal for a new model of online music, I said, "Suing the file-swappers seems to have little deterrent value."

But earlier this week, the Pew Internet and American Life Project (PIP) released a report that disputes my assumption. The report claims that record industry lawsuits drove down the percentage of Americans who downloaded music files by 50% since last spring. The mainstream press picked up the story and trumpeted this as a success for the Recording Industry Association of America (RIAA).

I hate to play naysayer, but I'm not sure PIP found the true cause for the decline in downloading.

The PIP report claims that "a fifth of those who say they continue to download or share files online say they are doing so less often because of the suits." It also touted significant-sounding reductions in the use of peer-to-peer (P2P) software like KaZaa, WinMX, BearShare, and Grokster.

But if we look at the report through our skeptic's goggles, we see that it raises key questions. First, how big is this success when only 20% of the still-active cyber-pirates cite fear of lawsuits as a deterrent? And more important, is it accurate to say that the 50% overall drop in downloading is also attributable to the RIAA bogeyman?

I doubt it. But since PIP doesn't release its data until six months from now, we can't quibble with its methodology or analysis.

By now you are probably thinking, "So why do you think people are doing less file-swiping?"

I'm going to go way out on a limb and suggest that we might have hit the magical inflection point in music downloading, the point where paid services are actually beginning to be perceived as normal -- and more convenient than old-school P2P networks (or even CDs).

Anyone who has used common P2P software knows it isn't exactly free. In fact, it's an enormous pain. Most networks are supported by shady spyware and pop-up purveyors, like whipping boy Claria (formerly Gator). These programs load their invasive software on the backs of many file-sharing programs, slowing users' computers and generally being a nuisance.

On the side of the righteous, we have the first convenient, economical, and popular online music services, such as Apple's (Nasdaq: AAPL) iTunes -- which claims 70% of the market for legal music downloads -- and the black-hat-turned-white Napster. Wal-Mart (NYSE: WMT) is in the game, too, and Microsoft (Nasdaq: MSFT) is joining the party. As the cash costs for downloading continue to sink relative to the aggravation costs of pirating software, you can expect more people to pony up for their downloads.

So don't be fooled. The recent successes have come in spite of, not because of, the RIAA's shortsighted legalism.
http://www.fool.com/News/mft/2004/mft04010717.htm


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

Getting A Handle On P2P
P2PNet

P2p goes to the very heart of the original Net concept - distributed autonomous processes communicating via a dumb packet network without central control.

But, "add the rapid and accelerating uptake of mass-market broadband IP access, and the result is rampaging bandwidth consumption that is threatening to choke the Internet on an uncontrolled diet of file-sharing traffic, much of it of dubious legality," says a new report by Heavy Reading chief technologist Geoff Bennett.

Called Controlling P2P Traffic and published by Light Reading and Boardwatch, "Welcome to the world of mass- market P2P media file sharing - the first killer application of the broadband age," it says.

"It's both popular and bandwidth intensive. What more could an ISP want? Yet how much are they making out of it? Zilch, pretty much, because it is all part of an undifferentiated traffic stream (and mostly offnet, to boot). And what is it costing them? An arm and a leg as new capacity fills up, congestion grows, and P2P non- enthusiasts (they exist) complain more loudly about falling service quality as their traffic gets squeezed out."

On some networks, more than 90% of traffic is p2p at times and worse, "ISPs may not even realize how much P2P traffic they have, as standard methods of analyzing traffic by looking at TCP ports are frequently fooled by P2P applications using random ports or those usually assigned to other applications," says the report.

But, it goes on, p2p doesn't have to be the first ISP-killer application - "the hyphen is important".

In fact, because it's a highly efficient and resilient way to distribute content over IP, it makes a lot of sense from both an engineering and business viewpoint to think of ways of exploiting these virtues and, "it can be done, but only by making the network more intelligent and application-aware.

"Current network architectures just aren't designed to cope with P2P traffic patterns or even to distinguish them. Yet, with the right tools and application management platforms, P2P traffic can be identified, classified, controlled - and eventually built into revenue generating services."

p2p background

Already, three distinct generations of p2p technology have emerged, says Bennett's report.

In the beginning was Napster, a centralized system. Then came Gnutella, "which distributed everything (files and file-location database) to avoid the legal issues of Napster". The third generation is a hybrid of the first two with New Gnutella, FastTrack, KaZaA, and Grokster as current examples.

And, "In KaZaA, for example, some of the nodes become supernodes, which hold the lists of files and the locations of the clients from which they can be downloaded. The term 'client' here is in the context of the control plane of KaZaA, where ordinary nodes only have control connections to supernodes, and the supernodes form their own higher-level mesh of connections."

It's Terabytes Now

P2p apps are the most downloaded and p2p now accounts for 50% to 70% of all Internet traffic, Controlling P2P Traffic goes on and although KaZaA leads worldwide, Winny leads in Japan, with runners-up eDonkey and WinMX. Newcomers on the scene include Piolet and BitTorrent: "So in network terms P2P is big - and it is creating big problems for carriers and service providers."

It seems to trap service providers between falling revenues on one side and rising capacity investment costs on
the other - effectively giving an ugly negative return on investment.

"Provider survival is going to depend on abuse control and the meaningful offering of tiered levels of service for different types of application," Bennett states. "To do this, providers must look much more closely at their network usage and how it can be managed."

What's happening to traffic P2p appl "have some very striking - and somewhat unexpected - effects on aggregate network traffic flows. Critically important is that upstream and downstream flows are pretty much symmetrical. In other words, the aggregate volume of traffic downstream over a period is similar to the volume sent upstream."

This matters, says the report, because mass-market broadband access networks such as residential DSL are based on the idea that downstream traffic will dominate, as it does with browsing and streaming media and, ""The whole assumption of ADSL is that it can steal some of the upstream spectrum without damaging application performance. But if flows are symmetrical, this argument flies out the window.

"At the level of a single subscriber doing a P2P download, the traffic is, of course, asymmetric because there is a small customer file sent upstream, followed by a larger file being transferred downstream. So the download traffic by itself looks just like the client/server model of the Web. But, because subscribers are sharing files as peers, at any given time a home PC may be a client or a server, so this combination of different subscribers uploading and downloading at the same time makes the aggregate traffic for file sharing symmetrical.

And P2P traffic is always on, meaning a lot of file sharing occurs in the background - "probably even when some subscribers are sleeping, having left their PCs switched on.

"Another critical fact is that bandwidth for standard interactive applications is most needed during peak hours, as this is when most customers are active and form their perceptions of service quality. To have interactive bandwidth and Web traffic competing with huge quantities of P2P traffic during these hours is a recipe for trouble."

Traffic and Applications

So P2P users are creating a vast wall of bytes that's hitting the Net. For example, the report continues, Ellacoya Networks measured 37 terabytes in total over 35 days behind one 12,000-subscriber cable-modem termination system alone, "utterly dwarfing the other application categories".

And yet, it's estimated that although p2p users can account for only about a quarter of online users at a time
(although this proportion is increasing), they can be 'hogging' more than 90% of the bandwidth and, "The upshot is that the popularity of P2P traffic is causing network-capacity issues for providers, not only because of total amount of traffic, but also from its unique nature compared to traditional applications, such as browsing and email."

P2p wasn't planned from the service-provider viewpoint, and now they're actively looking at a solution to try to address these issues, says the report.

"However," it says, "this isn't easy, because P2P applications have some pretty weird characteristics compared to the applications and protocols service providers are used to dealing with. They tend to be nonstandard or proprietary, and are often developed by hackers with the deliberate intention of fighting back against efforts made to control them. So they can use port hops to random port numbers, including those assigned to other applications, and some are now moving to using an encrypted mode (for example, Winny, which uses random port selection as well)."

'Combatting' P2P

Controlling P2P Traffic says there are various possible solutions, "and the good news is that these can be deployed together in certain combinations".

Keep cranking up the bandwidth.

"This is fine to a very limited extent, but P2P tends to expand to fill the bandwidth available and drives a lot of
off-net bandwidth, which is expensive for service providers. And they don't get any extra revenue from their customers who are running P2P traffic."

So, why not just shut down P2P?

"There are several reasons why this isn't going to happen. Service providers could potentially be sued by the P2P companies, for instance. But probably the biggest reason is that the first ISP that blocks KaZaA will lose a huge number of customers overnight; these are the applications that are driving the rollout of residential broadband. However, there's a special case with the enterprise network. Here the CIO really must get a grip over nonbusiness P2P traffic and shut it down. CIOs have a solid legal position, and the Recording Industry Association of America (RIAA) has threatened to sue companies that allow their networks to be used for the downloading of copyright-infringing files." [Our emphasis]

What about capping?

"In practice, such caps go down like a lead balloon with customers. In the U.K., NTL Inc. had only to mention that it was thinking of applying bandwidth caps to receive a wave of complaints from users."

Or what about prioritizing traffic to throttle back P2P volumes?

This, says the report, can be hard with conventional IP filters because P2P traffic tends to masquerade as other traffic.

Another option is to cache content, but, "Of course, caching makes sense only if the frequency distribution of downloaded files is heavily skewed, but this seems to be so. It turns out that a big chunk of P2P traffic comes from a tiny proportion of files - there are definitely top-100 lists for both music and movie files.

"The issue with caching may well be its legality. ISPs are currently safe from prosecution by the RIAA because they aren't responsible for the nature of traffic that passes through their network. However, if they use caches, they are technically storing illegal material. The legal position has yet to be settled."

The final option is the most elegant, says Bennett: "apply traffic management and service control to the P2P traffic. This puts control back in the hands of the service provider, which can now create tiered services or apply priorities as desired.

Service Control

Service control and optimizing the network for peer-to-peer traffic is a two-step process.

"The first step is to gain a much better, or more granular, view of the traffic on the network. The goal is to develop a clearer view of what applications are running on the network, and to analyze this information to understand traffic patterns - for example, by time of day, or whether traffic is off-net or on-net traffic - and even to identify some of the top users of P2P.

"The second step is to control the amount of P2P traffic on the network, taking into account the other applications that are running and the service provider's overall objectives for the network. So the provider might decide to halve the bandwidth currently being used by P2P and instead use the freed-up capacity to improve the service experience for other applications - and also to introduce new revenue-generating services."

In particular, "upstream file-sharing bandwidth control is very effective at reducing bandwidth and goes undetected by an ISP's paying subscribers, as typically over 93 percent of traffic is served off-net to nonsubscribers."

How and Where to Control P2P

Service providers can control P2P bandwidth, "on an aggregate or on a per-protocol basis, or control upstream only, or control downstream only," the report goes on. "They can apply control in both directions and at different rates. And control can be applied to an entire group of subscribers, or just to subgroups or even individual subscribers. And all these options can be combined in various ways, and applied differently at different times during the day."

But, it states, there's a further angle to service control and traffic management that potentially goes far beyond P2P congestion control and capacity optimization: differentiated services.

P2P Differentiated Services

"By implementing service control in the network, service providers are adding a layer of intelligence to make the network smarter," Bennett says at the coinclusion of his report.

"Being able to identify P2P applications and optimize the network clears the ground for the next stage of
providing differentiated services.

They can create new application-based plans, which is a new way of thinking for them. Traditionally, providers have concentrated on speed tiers through, for example, Gold, Silver, and Bronze services offering decreasing bandwidths. But application-based plans could involve tiers such as:

Basic Internet (email and Web) + Basic P2P (limited shared bandwidth)
Basic Internet + Premium P2P (channels for specific applications, such as gaming)

Further, providers can think in terms of driving the consumption of legal content by providing new services – for example, by faster downloads and integrated billing with content distribution partners and, "Apple iTunes is a specific example of this opportunity.

"Each download of a $0.99 iTunes track is treated as a separate transaction and attracts a standard credit-card fee to Apple of 1.735% + $0.20 (about $0.22). Financially, this is not very efficient, both for Apple and the content providers. Apple could, of course, improve matters by grouping transactions, but service providers historically have been masters at billing efficiently for small amounts. So collecting payments efficiently for content providers could become an important new revenue stream for the service providers."

But to make this transformation possible, providers need a new piece of kit: a service-management platform that has to perform four tasks:

* Accurate identification and classification of traffic on a per-application and per-subscriber basis
* Real-time control over classified traffic - for example, bandwidth shaping or application blocking
* Adaptation to changes in protocol encoding and rapid support for new applications because of the rapid turnaround needed for supporting emerging P2P applications
* Support for high-speed network rates and large subscriber capacity, which means classifying, analyzing, controlling, and reporting at gigabit line rates

"Once service-management platforms are installed, service providers can transform their broadband networksinto efficient, intelligent, application-aware distribution networks," the report concludes. "And this presents a real opportunity to turn P2P into a legitimate application to everyone's benefit.

"P2P is undoubtedly the killer application that broadband has been waiting for, but so far the commercial opportunity has been missing. The people who are effectively funding the P2P revolution at the moment are unfortunately the copyright owners. But one very positive thing that has come out of P2P is that it is a very efficient and very resilient distribution-network architecture.

"So there is a real opportunity here for broadband service providers to take P2P as a serious business proposition for content distribution. And there is growing evidence - witness iTunes - that subscribers are willing to pay for legal content if it is reasonably priced and easy to obtain. Providers would receive carriage fees for the content they carry, while offering faster downloads as a premium channel. By integrating download transactions onto a cable or broadband bill they could eliminate transaction fees - one of the bugbears of distribution. And they would be exploiting the high subscriber penetration of Tier 1 operators."
http://p2pnet.net/ez/index.php/content/view/full/475/


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

Macrovision Sues DVD-Copying Firm
John Borland

Copy-protection company Macrovision said Wednesday that it sued DVD-copying software producer 321 Studios, joining the movie industry in a legal fight against the small software maker.

Macrovision claims that by making copies of DVDs, 321's software also is copying Macrovision's own patented anticopying technology, which guards against a different copying process.

"This lawsuit is based on a fundamental cornerstone of the American economic system--protection of intellectual capital," Macrovision Chief Executive Officer Bill Krepick said in a statement. "It is ironic that 321 Studios itself employs a sophisticated mechanism to prevent people from making illegal copies of its software, while at the same time selling products that aid in the theft of the intellectual property created by moviemakers."

Hollywood's lawsuit against 321 remains one of the most closely watched outstanding intellectual property cases.

The studios argue that the company's software, which makes virtually perfect copies of DVDs, violates the Digital Millennium Copyright Act, which forbids distribution of tools that break through digital copyright locks. A handful of other companies that produce similar products also have been sued.

Although initial arguments in the case were heard last May, both sides are still waiting for a judge to decide whether an injunction should block sales of the software, which is available in stores such as CompUSA. The decision could come at any time.

Executives at 321 Studios said they had not seen the lawsuit, nor had they been contacted by Macrovision.

"Macrovision is a company that manufactures an analogue copy-protection device that has absolutely nothing to do with anything of 321 Studio's products," 321 President Robert Moore said. "We are puzzled by Macrovision's press release today and disappointed that the company officers did not contact 321 Studios directly to clear up any misperceptions or confusion they have about our product."
http://news.com.com/2100-1025-5137077.html


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

Consumers Sue Over Anti-Copy CDs
BBC

Major record labels are being sued by a European consumer group over copy-protected CDs that fans say are faulty.

Belgium-based Test-Achats says new technology that stops CD copying also stops fans playing them on some devices and making legitimate back-up copies.

The group wants EMI, Universal, Sony and BMG to stop releasing copy-protected CDs and to reimburse fans.

But the International Federation of the Phonographic Industry (IFPI), a trade group, said the suit was baseless.

The copy protection technology was introduced two years ago by record companies who faced a sales slump and wanted to stop pirated CDs reaching the black market.

It usually works by placing a layer of data on a CD that only enables playback on a home stereo or portable hi-fi device.

But Test-Achats, known as Test-Aankoop in Dutch, said it had received 200 complaints from fans who were angry at the fact that they could not listen to the discs on some CD players.

Big-selling releases including Shakira's Laundry Service and Radiohead's Hail to the Thief were affected, they said.

Test-Achats spokesman Mechels Ivo said: "We are trying to establish legal precedent in this matter. Then we expect other consumer organisations will follow."

'Protect'

But an IFPI statement said: "European law is clear that record companies and other copyright holders have the right to protect their works through technical means."

Industry observers say the lawsuit is the biggest European legal challenge yet to the music industry's practice of releasing copy-protected discs, according to the Reuters news agency.

The lawsuit is expected to be heard in a Belgium court this week.

Warner Music is the only one of the five major music labels not named.
http://news.bbc.co.uk/1/hi/entertain...ic/3372859.stm


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

The RIAA Goes Back To Washington
Donna Johnson Edwards

Let's start with the fact that some people just don't seem to be concerned about the property of others. If one can get something for nothing, one tends to do just that. Just look at the music industry, the Recording Industry Association of America (RIAA) and Verizon Communications, Inc. have been involved in a bleeding edge controversial legal battle that could eventually be settled by the U.S. Supreme Court if it keeps the legal pace set in 2003.

The basis for the skirmish is the controversial law, Digital Millennium Copyright Act (DMCA) which, among other things, was enacted to protect Internet Service Providers (ISP) from becoming entangled in copyright infringement suits. But in this well publicized legal conflict, it may be your privacy that is the ultimate loser.

Here is the background -- the RIAA is a watchdog group representing the recording industry. The group routinely nabs music software pirates (people illegally exchanging music files) and seeks prosecution under U.S. Copyright laws. The laws protecting the interests of copyright holders provide for both civil and criminal punishments of infringers. Fines of $150,000 per incident of infringement are hefty incentive for the RIAA to track down offenders and that is just what they have done.

In a provision of the 1998 DMCA, if an ISP is informed by a copyright holder that infringing material is being hosted on the ISP's site, the ISP must promptly remove the infringing material and in doing so will be protected from being included in a copyright infringement lawsuit.

The RIAA identified Verizon and other ISP's subscribers who were using the Kazaa peer-to-peer (P2P) file service to exchange pirated music. Pirated music is, quite simply, songs for which the copyright holder has not been paid a proper fee for use. The RIAA could not determine the offender's names; only that Verizon was the ISP. The RIAA asked Verizon to turn over the names of the suspects; however Verizon refused to comply without a subpoena on the grounds that doing so would violate customer privacy rights as well as due-process. Good for you Verizon!

The DMCA allowed copyright holders to request a subpoena by asserting that a copyright had been infringed to force an ISP to divulge the names of the accused. The subpoena could be requested on a single page form and subsequently issued by a clerk of the court, not even requiring review by a judge. Ouch!

Verizon argued in court that the DMCA subpoenas only applied when the infringing material was hosted on the ISP's network and not on the infringer's own computer. In other words, Verizon was simply the conduit not the host. It lost that case and was ordered to turn over the subscriber's name. Verizon appealed the federal judge's decision and requested a stay of the order to allow the appeal case to be heard. A 14 day stay was allowed but the U.S. Court of Appeals in Washington would not suspend the order and forced Verizon to turn over the subscribers names.

The RIAA has issued more than a 1,000 of these subpoenas to ISPs, universities and businesses demanding the names, addresses and sometimes the e-mail addresses of users it alleges are engaged in copyright infringement through music file swapping. The subpoenas were issued from the U.S. District Court in Washington, DC which had to reassign clerks to help with the backlog! Your tax dollars at work my friends!

Verizon, other ISPs, as well as privacy groups contend that clerk-issued subpoenas open the door for abuse by, not only the RIAA, but potentially pedophiles, stalkers and the like. All the while there was an uncontested avenue for the RIAA and other watchdog groups to ascertain this information. All that was required of the RIAA was to file "John Doe" lawsuits, in which they needed to convince a judge that the user's identity should be revealed. Thought that avenue has been available, the RIAA sought to shortcut the legal process by requesting the names via clerk- issued subpoenas.

Now a three-judge panel from the U.S. Court of Appeals for the District of Columbia has overturned the trial judge's ruling that enforced the clerk- issued subpoenas and has now ruled that the streamlined subpoena process being used to compel alleged file-swappers' ISPs to reveal their identities is illegal!

However, before this latest ruling, the RIAA reached out-of-court settlements with over 200 Internet users after tracking their actions on- line and forcing Internet providers to provide their names. Some of those caught in the high-speed net were grandmothers and even a 12 year-old girl (a fact that caused some very bad publicity for the RIAA).

My head is spinning trying to keep up with the legal game show hosted by the music industry! I expect it will not be long before the RIAA comes up with another approach and we can only hope that Verizon and other ISP haven't emptied their legal coffers and will continue to protect our privacy.

The fact of the matter is this, since the explosion of subpoenas, a plethora of new on-line music sites have evolved providing a legitimate source to download music at reasonable prices. Did it really take all of this legal mess to prompt the industry to solve its own inadequacies?

It is possible this conundrum will only be settled by the U.S. Supreme Court and whichever side of this digital war comes out ahead in the courtroom, it is likely that modifications to the DMCA will indeed be made to clarify the intent of the law.

Meanwhile, like many, I'm still not buying overpriced CDs. I'm not downloading "free" or "for fee" music either. I'm just turning on the radio and changing the channel when a commercial interrupts the tunes. It is appropriate for musicians to be compensated for their artistic work. But it's hard to have much sympathy for the artists when the music industry associations are attacking our children and our privacy.

The belief one is "anonymously" surfing the Internet is now a part of history. Watchdog groups no longer ignore individuals who violate copyright laws. What is happening on your organization's IT systems? What is happening on your own home PC? Could you or your organization afford to pay the stiff fines associated with these laws? Has every precaution been taken to prevent this type of activity from taking place in your organization? Understanding the law and protecting the integrity of an IT infrastructure is essential. Ask yourself this question: Who will be the next casualty of the RIAA, will it be your university, your business or your children?
http://www.richmond.com/business/out...tical=Business


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

iTunes DRM Cracked Wide Open For Gnu/ Linux
Andrew Orlowski

Exclusive

Norwegian programmer Jon Lech Johansen, who broke the DVD encryption scheme, has opened iTunes locked music a tad further, by allowing people to play songs they've purchased on iTunes Music Store on their GNU/Linux computers.

"We're about to find out what Apple really thinks about Fair Use," Johansen told The Register via email.

Johansen cracked iTunes DRM scheme in November by releasing code for a small Windows program that dumps the stream to disk in raw AAC format. This raw format required some trivial additions to convert it to an MP4 file that could be played on any capable computer.

But in the best Apple ease-of-use tradition, Johansen has now made this completely seamless, integrating it with the VideoLAN streaming free software project.

How it works

Johansen deduced that the system key which locks the locked music to a single Windows computer is derived from four factors: the serial number of the C: drive, the system BIOS version, the CPU name and the Windows Product ID.

"When you run the VideoLAN Client under Windows it will write the user key to a file. The user key is system independent and can thus be used by the GNU/Linux version of VLC," he explains.

While Apple's iTunes Music Store is restricted to Windows and Apple computers, and Apple only supports its own iPod player as a playback device, VideoLAN is GPL software that runs on a wide variety of computers including Linux, the BSDs, Solaris and even QNX. Although users are at present permitted to burn a CD with music they've purchased, only three Apple or Windows computers are "authorized" at any time. These terms may be tightened at any time, Johansen himself noted recently.

"The RIAA can at any time change the DRM rules," he wrote in November, "and considering their history, it's likely that they will when the majority of consumers have embraced DRM and non-DRM products have been phased out. Some DVDs today include commercials which can't be skipped using 'sanctioned' players. If the RIAA forces Apple to include commercials, what excuses will the Mac zealots come up with? 'It's a good compromise'?"

Reaction

"The restrictions are very frustrating for consumers, and frankly, are unnecessary," Electronic Frontier Foundation attorney Fred Von Lohmann told The Register.

"Every song on iTunes Music Store has been available on the Peer to Peer networks within four hours. All the DRM does is frustrate legitimate consumers; it doesn't stop file sharing," he says. "The real innovation of the last several years was Kazaa and the other file sharing applications. These are leaps and bounds more relevant than iTunes Music Store."

Although the number of downloaders has diminished in the face of lawsuits by the RIAA, tens of millions of Internet users continue to share music on the P2P networks, dwarfing the number of locked- music downloads from DRM stores such as Apple's iTMS.

Apple is widely expected to announce more locked music playback hardware at the MacWorld show in San Francisco this week. But with support growing for flat fee licensing models even amongst record industry executives, today's DRM Goldrush (and the ensuing iTunes vs Windows Media war) could be a very short lived skirmish.

Johansen broke the CSS encryption scheme on DVDs - a case the Norwegian government finally let go - so he could watch a movie that he'd legitimately purchased on his Linux PC. Now millions of Linux users can do the same with iTunes locked music. You can download the code here.
http://www.theregister.co.uk/content/6/34712.html


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

ThinDivide.com Launches Industry's First P2P Network for Pay-Per-Download Music Distribution.
Press Release

ThinDivide.com, home of the first peer-to-peer music distribution platform that provides music content owners with security and distribution control, allowing for cost efficient and prompt music promotion. You decide what music, song or artist you want to promote and when, not the other way around.

ThinDivide ensures that your music file is accurately, instantly and securely delivered to the end-user for their preview and potential purchasing. ThinDivide.com has created a revolutionary way to securely distribute and assist content owners in promoting artists’ new singles or albums instantly to millions of listeners, worldwide. Distributing music content via ThinDivide will never interfere with the usage of end users’ computers, nor will they notice any performance disturbances when the song is downloading and getting ready to play.

ThinDivide.com offers non-exclusive, cost effective online music distribution and promotional campaigns. Thindivide insures that your music is accurately, instantly and securely delivered to the listeners, without interruption of services or loss in content quality. "We have created the ultimate equalizer for the music industry and have priced it within the budget of most every music professional.", expresses Daniel Nichols, Director of Business Development.

ThinDivide is dedicated to utilizing its Peer-to-Peer network to help put the control of music content distribution back into the hands of the content owners. Take control of your band or labels' future and contact www.thindivide.com today!
http://www.emediawire.com/releases/2004/1/emw97083.htm


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

Peer-to-Peer File Replication

RDS enables mission critical scheduled replication and synchronization of file systems over networks regardless of content, volume or production environment.

RDS is for enterprises running both UNIX and Windows operating systems in production environments, performing a one-to-one and cascaded file replication.

RDS scales to handle very large files and huge replication trees - without maximum size limit or performance degradation as content volume grows. The synchronization time does not depend on the total volume of data to be replicated, but only on the volume of changes.

Replication processes run unattended. The scheduling framework provides automated recovery that is resilient to any failure including reboot, power outage and loss of network connectivity. Failure recovery resumes at the exact point of failure once connectivity is restored.

RDS is flexible and feature rich, allowing the user to configure replications according to business needs. Replications can be tuned to include or exclude specific files and folders, to perform pre and post replication tasks, and to be sensitive to network bandwidth or server CPU. RDS is built to accommodate high-speed LAN networks as well as slow WAN networks or busy networks where replication bandwidth use needs to be controlled.

Either GUI, command line or API interface can be used to define, monitor, and control file replication processes from anywhere on the network. Centralized reporting and logging options provide replication related data at corporate IT level. Runs as an unattended service or daemon with control from anywhere on the network. Detailed centralized reporting and logging functions.

RDS provides secured replication. Being TCP/IP based and not relying on windows networking, it is firewall friendly. Data transfer is encrypted and authenticated.
http://products.enterpriseitplanet.c...073216813.html


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

Time For File-Sharing's Day In Court
Kate Taylor

What I'd really like to see in 2004 is a few good music-industry lawsuits make it to the courts.

That's not just journalistic schadenfreude. One of the difficulties in sorting through the rights and wrongs of the downloading debate that raged throughout 2003 is that much of the law it involves is untested -- or at least untested as it applies to the new technology.

Is downloading illegal? Probably not, but it's complicated. Is uploading illegal? Probably so, but it's complicated. Are the answers to these questions different in Canada than there are in the United States? Could be. Can the courts force Internet service providers to release their customers' addresses? We'll have to wait and see. This doesn't exactly produce the simple rules that would be needed to convince file sharers that they are infringing copyright law even if the music industry insists they are.

The U.S. record companies' legal campaign suffered a recent set back when a federal appeals court ruled that the 1998 copyright law under which the industry was garnering addresses from the ISPs predated file sharing and thus didn't apply, but the mere threat of the lawsuits does seem to have borne fruit: U.S. use of Kazaa, the popular file-sharing website, was down more than 40 per cent this fall according to Nielsen/NetRatings.

This has encouraged the Canadian industry to consider the same tactics. After $1-million education campaign proved to have little effect in changing attitudes, the Canadian Recording Industry Association is now saying it will sue file sharers in 2004, and will obtain their addresses through court orders.

CRIA has specifically stated, however, that it will not sue mere downloaders. Although CRIA argues the practice is illegal, when you download a music file from the Net, you could be considered to be making a single copy for personal use, which is permitted under copyright law. When you upload, that is when you allow other users to copy your copy, you are on much shakier legal ground because you are distributing the music. And it is the users with thousands of music files sitting on their computers and available for sharing who are the industry's target for lawsuits.

The notion that downloading is probably okay is specially well recognized here because the Copyright Board of Canada has placed a levy on the sale of blank CDs, tapes and, most recently, MP3 players, that is intended to compensate artists and record companies for copying. The U.S. also has a levy system established in the early 1990s, but because it prematurely picked the wrong technology -- digital audio tape rather than CDs -- it raises a pittance.

The levy has many critics -- including a coalition of groups that includes the retailers who sell the targeted technology, telecommunications companies and academics favouring more liberal copyright -- who don't like the way it indiscriminately makes all customers pay no matter what their intended usage, but this fall did see the start of some discussion in the U.S. about a Canadian-style levy as a solution to the problem.

Still, the levy has proved a double-edged sword for the Canadian music industry, which lobbied hard for its establishment. It's a case of be careful what you wish for. CRIA doesn't consider the few million raised by the levy to be compensation for $250-million in CD sales lost in the last three years, but opponents can argue that, in Canada, users are already paying for their copying. The levy has also been used as a weapon as the two sides argue over whether Canada should follow the U.S. lead and ratify two international treaties established by the World Intellectual Property Organization to extend copyright into the digital era.

The federal government is currently examining how it would bring Canadian law into sync with the treaties, which the music industry wants to see ratified as soon as possible, but opponents argue that Canada would then have to extend its levy to international artists to the tune of hundreds of millions of dollars. The pro-treaty forces dismiss these doubts as a red herring, arguing that Canada would only pay such fees to countries who have similar systems in place and thus are already paying us, which doesn't include the all-important U.S. market.

As the legal whizzes on both sides battle it out, it would be very interesting to hear what a judge has to say about the implications of the levy system for downloading and file sharing, and to know just how much use of music files the courts consider permissible. File-sharing technology has created a wide boulevard of music where fans are gleefully joy-riding; it's going to take a more authoritative cop than the music industry to turn it into a narrow, one-way street.
http://www.globetechnology.com/servl...3/TPTechnology


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

Ruling May Affect University File-Sharing Case
Emily Steel

A recent decision by a federal appeals court could trickle down to preserve the anonymity of the UNC student accused of making songs available for downloading.

The student has enlisted the help of the American Civil Liberties Union and has filed to quash the latest subpoena, issued Nov. 12 by the Recording Industry Association of America as part of its battle against illegal file-sharing.

The RIAA withdrew its first subpoena, filed Oct. 6, because it was filed in Washington, D.C., and was invalid in North Carolina.

Judges in the U.S Court of Appeals in Washington ruled Dec. 19 that Internet service providers are not required to release the names of computer users who share songs.

Aden Fine, a staff attorney for the ACLU, said the federal court's decision most likely will affect the result of the motion filed by the ACLU Nov. 21 at the U.S. District Court in Greensboro.

"By stating that the RIAA's actions are unconstitutional, this case should certainly have an impact," he said.

David Parker, senior associate University counsel, said University officials are waiting to release to the RIAA the name of the UNC student accused of illegal file- sharing until a judge makes a decision on the case.

Fine said all briefs have been filed in this case and judges probably will set a date for a hearing within the next month.

ACLU filed the last brief Dec. 31 in response to the RIAA's brief.

The reply brief argues that the allegedly incriminating information is not on the University's system and that the subpoena violates the due process clause of the Fourteenth Amendment because it does not adequately protect against the curtailment of constitutionally protected expression.

It also states that the motion violates a mandate that court actions and judicial processes be obtained only in pending cases and controversies.

"In this case, each argument the recording industry is making in the UNC case was firmly rejected by the appellate court," Fine said. "The decision is now in the hands of the court."

He predicted that the federal case will change the RIAA's approach to its crackdown on illegal file-sharing.

"This case is still very important not just to what the RIAA is doing, but should affect how the University will respond to subpoenas," Fine said.

Parker said University officials will continue to follow court orders when subpoenaed to disclose the identity of students accused of illegal file-sharing.

"The University will do whatever the court orders us to do."
http://www.dailytarheel.com/vnews/di.../3ffc0a7b0b3d5


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

Five Tech Giants Unite To Deter File Sharing
John Markoff

The technology and entertainment industries have long been at odds over the best way to secure intellectual property rights, as digital technology advances.

Now, five of what industry executives say are the world's most powerful computer, cell phone and electronics companies are planning a new system for protecting digital music, video and software from illicit file sharing that they hope will at least narrow that gap.

A global consortium of technology companies is laying the groundwork for a campaign to convince Hollywood and the recording industry that it has finally found an acceptable way not to just limit the copying of music CDs and movie DVDs, but to protect digital content in the fast-growing market for handheld devices capable of playing music, video clips and computer games while wirelessly connected to the Internet.

As these groups prepare to converge on Las Vegas this week for the annual Consumer Electronics Show--by far the biggest trade show for the makers of digital devices and the shapers of what goes into them--the fight over what has come to be known as "digital rights management" is expected to move to the back burner, at least briefly.

That way, everyone can celebrate the long-awaited recovery for the consumer electronics and entertainment businesses that manifested itself in their best holiday buying season since the late 1990s. But the issue will not go away. The consortium--known as Project Hudson and made up of Intel, Nokia, Samsung, Toshiba and Matshushita-- plans to announce its new approach in early February to precede the Grammy music awards and the movie industry's Academy Awards ceremony, executives say. Unlike the system used to protect DVD content, an Internet-based wireless protection plan could permit users of handheld devices to share movie or music files on a limited basis or permit files to be shared for promotional purposes. Users could also hear a song before deciding whether to buy it.

For the entertainment industry, the Internet has often been viewed primarily as a threat, because it makes it possible to transmit copies of just about any original work that can be converted to digital code to just about anyone in the world. But it is increasingly being viewed more positively by some entertainment strategists, who recognize that the Internet's nature as an "always on" medium makes it possible to refine new "digital leashes" to help ensure that copy protection plans are not subverted.

Beyond trying to convince Hollywood and the recording industry that new technology can prevent illegal sharing of digital content without unduly restricting use, the consortium's approach represents an effort to control the standards and garner the rewards from developing a successful system. Project Hudson pits the new group against other copy protection systems that are being advanced by Sony and Royal Philips Electronics, Apple Computer, RealNetworks and others. But the most important target is probably Microsoft.

"They would say they are anti-Microsoft forces," a recording industry executive close to the companies said. "The alternative is to sign up with Redmond."

Microsoft, based in Redmond, Wash., is promoting its own plan, known as the Windows Media Rights Manager. But it has been held back, in part, by a legal challenge over the infringement of software patents that belong to a smaller American company, InterTrust Technologies, which Sony and Philips acquired in late 2002.

Fears in Hollywood and the recording industry over Microsoft's potential control had also stalled the software maker's thrust into the world of digital media. But those fears have lessened lately, in part because of the emergence of competing technologies from Apple, RealNetworks, Roxio and others. Digital content providers are increasingly finding ways to use some of Microsoft's technology without giving up control of their content.

"There had been a general fear that Microsoft would own the entire security stack," said William Randolph Hearst III, a partner at Kleiner Perkins Caufield & Byers, a prominent Silicon Valley venture capital firm in Menlo Park, Calif. But companies are starting to tell Microsoft that they are willing to use only part of its software protection technologies, he said.

Another new consortium of companies is engaged in an effort to create a set of standards that will make it possible to universally distribute digital content across different platforms and technologies. That group, known as the Content Reference Forum and backed by Microsoft, Nippon Telegraph and Telephone, Universal Music Group, VeriSign and others, announced its effort in December.

The group cites an example of a personal computer user who wishes to share a digital video file with a friend. Instead of sending the file directly, the file owner would first send a "content reference," a digital pointer that permits the file to be downloaded and tailored to the receiver's own country as well as the specific computer or other playback device. If the file needed to be purchased, the system would perform the commercial transaction before sending the file.

The interest in new copy protection approaches has also been spurred by Apple's successful iTunes music store, which has shown that consumers are willing to put up with digital copy protection plans that do not seriously interfere with their ability to enjoy entertainment products easily when and wherever they want and, within limits, share what they buy.

"If you put up the right kind of speed bump, people will generally honor it," said Mike Godwin, a lawyer who represents Public Knowledge, a group in Washington, D.C., that advocates giving consumers greater weight in the struggle with business interests over intellectual property rights.

Adding to the interest in developing new copy protection approaches was Sony's announcement last May that it expects to introduce a new wireless handheld device in time for the 2004 holiday buying season.

Sony, with its Walkman line, was once the leading force in the field of portable electronics, but it has lost a lot of ground by not keeping up with innovations from others, particularly Apple's increasingly popular iPod digital music player.

To help itself get back in the game, Sony, which controls its own digital content and technology standards, is also expected to introduce a smaller audio CD standard.

Other consumer electronics companies consider the potential popularity of the format a threat, said Richard Doherty, an industry consultant who is president of The Envisioneering Group of Seaford, N.Y.

After years of separate development of various handheld digital devices, industry executives expect music and video players, cell phones, personal digital assistants and handheld video game players to increasingly converge on common portable platforms. Moreover, such devices will have data-networking capabilities that rival personal computers connected to the Internet via high-speed cable modems and digital subscriber lines.

Sony has a great deal riding on its new handheld player. Ken Kutaragi, the Sony executive who created the company's highly successful PlayStation business, has referred to it as a "Walkman for the 21st century."

He said the Japanese electronics company will go to great lengths to create strong data protection plans for what it is now calling the PSP (PlayStation Portable), after facing extensive software piracy of video game titles designed for its first-generation PlayStation.

Balancing the proliferation of competing digital information protection plans is a growing realization that the industry needs common standards.

That failure is hampering the growth of digital technologies, said Leonardo Chiariglione, an Italian electrical engineer who founded the group that developed the original MP3 digital audio-compression standard widely used to play music on computers and share it across networks.

"Content should be as transparent as it is today with MP3," Chiariglione said. "It should be movable anywhere and still be protected. If we stay with digital islands, people have a legitimate excuse to piracy."
http://news.com.com/2100-1025-5135586.html



Shoe - Macnelly


Secret Movie Moguls

In a highly elite realm of the Internet, ego-driven pirates race to be the first to post films illegally. Profit is not the object.
Jon Healey

Nearly halfway around the world from Hollywood, a 17-year-old high-school student is trying to make a name for himself as a film distributor.

Unlike the moguls in Tinseltown, though, he and his colleagues in a group called MysticVCD don't cut deals, take meetings or campaign for Oscars. Instead, their goal is to put a movie on the Internet first, long before it's officially released on tape or disc. If MysticVCD wins the race, the digital copy it produces will be downloaded onto tens of thousands of computers around the globe, potentially reaching more screens than the film itself did in theatrical release.

MysticVCD is one of dozens of "ripping" or "release" groups that obtain, prepare, package and feed movies, songs and games into a secretive and complex distribution scheme that functions a bit like the illegal drug trade — minus the bloodletting.

Insiders and piracy experts say the groups are motivated mainly by ego. Instead of cash, the online underground is powered by bartering — admission to these elite circles is granted only to those with something valuable to offer, such as computer parts or a pre-release copy of a DVD.

"I am in the scene in order to provide movies to the people" and to gain access to private sites with pirated goods, the founder of MysticVCD said via e-mail. Asking not to be named, he would say only that he lives in the Greenwich mean time zone, which stretches from the British Isles south to western Africa.

There's also a social aspect to the scene even though most groups' members know one another only by code names such as "markalso" and "bambino" and never meet in person.

Common to most groups is a disdain for selling pirated goods in favor of giving free access to anything and everything.

"Please remember: We do this for FUN. We do not make money off this whole business," said a posting from a group called Centropy. "All of us go to the movies regularly and pay for our tickets just like everyone else."

Not everyone in the scene is so pure. Some players — including members of Centropy — are suspected of selling pirated movies and music to commercial bootleggers who have made billions of dollars peddling knockoff CDs and DVDs on the streets of cities around the world.

Regardless of whether there's money involved, what the ripping groups do violates copyright law. Federal agents recently mounted three sweeps of online piracy groups that netted at least 46 guilty pleas and 19 prison sentences. Those nabbed range from a 40-year-old Australian to a 20-year-old student at Duke University. More investigations are underway.

"The risk that really wasn't there for them a few years ago is now, I would say, pretty significant," said Bob Kruger, vice president of enforcement for the Business Software Alliance, which has been chasing online software pirates since the early 1990s.

On the whole, however, music and movie groups have operated with near impunity, protected in part by the elaborate steps they take to screen participants, conceal their identities and disguise their locations. The entertainment industry has focused on filing suits against file-sharing networks such as Kazaa and their users, who ultimately copy much of the ripping groups' works. The industry also is trying to deter piracy at the grass-roots level with electronic locks for CDs, DVDs and downloadable items.

Kruger said online piracy groups have been around at least since the early 1990s. The initial focus was "warez," or computer programs that had been stripped of their anti-piracy protections.

Although most piracy groups still concentrate on software and computer games, a steadily growing number dedicate themselves to movie and music piracy. NFOTemple.com, a site that catalogs the boastful explanatory notes, or NFO files, posted by release groups, listed 140 crews devoted to movies in 2003, up from 32 in 2002.

The growth was fueled by the skyrocketing capacity of computer hard drives and the proliferation of high-speed Internet connections. The technology for turning analog audio and video signals into compact digital files improved rapidly too, slashing the time needed to transmit movies or albums online.

The scene is closed to much of the world; would-be participants have to gain the trust of insiders and prove their worth before gaining entry. And the lifespan of groups tends to be short, at least on the Net, where players come and go.

The ripping groups often share similar structures, with officers who grant or revoke privileges, set policies and assign duties to the members. And their members, who share a love for free access to virtually any movie, song, game or software program, include not only teens but also 30-something professionals with families.

The first task for a movie-focused group is getting its hands on a film, possibly by obtaining a disc or tape from someone in the industry's distribution pipeline before its official release. A ripping crew that calls itself Chosen Few alluded to these sources in a recent online posting.

"If you or someone you know works at a video store, movie review affiliate, DVD distribution warehouse, production studio, Academy Awards/Oscar staff and/or have some other means of getting your hands on screener/retail VHS or DVDs ahead of store date, contact us now."

Another approach — the one typically used first — is to sneak a digital camcorder into a cinema, then record the film as it is projected. That's what MysticVCD did in November, obtaining a version of "Elf."

Music-oriented groups, meanwhile, try to grab pre-release copies of CDs and vinyl records from radio stations, reviewers and record-label insiders. For example, the group RNS obtained and released a copy of "In Time: The Best of R.E.M." a week before the disc went on sale in late October.

Once a movie is in a ripping group's hands, it may be passed along a virtual assembly line where members with different skills perform time-consuming tasks. For example, an encoder would convert the tape or disc into a computer file, then leave it for other members to edit out the identifying marks studios insert to track copies, break the file into pieces small enough to move easily through the Net and check the final package for errors.

The next step is to release the pirated goods online and claim the credit.

Many groups, particularly the more established ones, have at least one member operating private Internet sites as banks for their pirated goods. These members — often skilled computer technicians who work on corporate or university networks — have access to computer servers with ultra-fast connections to the Internet, which they use to power the group's sites.

Other crews release the fruits of their labor to sites operated by better-known groups. To make sure everyone knows whom to credit, ripping crews include their monikers in each release's file name and add a boastful explanatory note to the package.

Mike Nguyen, a network administrator, operated two sites for the warez group Drink or Die until federal agents descended on him late in 2001. He pleaded guilty to criminal copyright infringement and was sentenced in September to five years' probation, with an obligation to perform 2,400 hours of community service.

Although he told group members that he'd hidden the sites' hardware in an air conditioning duct at the California university where he worked, Nguyen actually kept the two computers tucked under his workbench. The computers were stuffed with extra hard drives and other upgrades that Nguyen had collected from people who wanted to be granted access to the site's goods. The drives gave each computer 20 to 40 times the storage of a typical PC, enough to hold "the functional equivalent of every piece of software, music and movie sold at a Best Buy or Circuit City or CompUSA," said Assistant U.S. Atty. Christopher Johnson.

A few dozen digital vaults known as "topsites" have acquired a leading role by having the fastest Internet connections, the largest capacity, the earliest copies of the most sought-after goods and the most capable couriers for delivering material around the Net.

As soon as an item is released online, a second set of groups, called couriers, goes into high gear. Like drug mules or drones in an anthill, the couriers' job is to move pirated goods to other private sites on the Net.

Even groups with their own topsites want their releases copied to other sites. The point, said a source close to the scene, is to spread the word of their exploits and earn praise from the rest of the groups, which is the main reward for 99% of the people involved.

Sometimes group members will send files to other sites themselves, using a technique called File Transfer Protocol instead of e-mail. But there's so much data involved — a typical movie can consume 2 gigabytes — that using multiple couriers with fast Internet connections in various locations around the globe accelerates the process.

Couriers who bring new booty to a site are rewarded with credits that they can use to download other pirated goods. These credit accounts act as a sort of currency and fuel the rapid and widespread distribution of movies, music and other digital goods online.

It's not easy to get into any of the private sites, which typically conceal their Internet addresses and communicate only with pre-approved computers.

The general rule, Nguyen said, is that "you have to know someone who can vouch for you or have something you can offer that is of interest to that site operator or group." Topsite operators tend to have everything they want, "but on non-topsites you might be able to work a deal."

Such a deal might involve providing storage capacity and bandwidth, especially outside the United States.

Another way to gain entry is to offer a movie that is in high demand. The main factors affecting the value of a pirated film are how early it's released, how good the video and sound are and how highly it's rated on the Internet Movie Database.

"The higher the IMDB rating, the more sites that will accept it," said the source close to the scene.

MysticVCD's release was the fifth version of "Elf" to hit the Net — three came out before the movie's Nov. 7 premiere, two after — but the group justified it by claiming superior picture quality. It was released on three topsites operated by members of the group, the founder said, adding that he expects to be offered access to more sites after the group puts out more movies.

He may have to improve the quality of his product first. MysticVCD's version of "Elf" got mixed reviews from online commentators, with some praising the effort but others complaining about blurry images.

According to Nguyen, it takes minutes for a newly released item to reach all of the topsites, but it may take hours or days to reach the lower echelon of private sites. After that, the digital booty leaks out intermittently to online areas more accessible to the public, such as chat channels and news groups.

That process, which is haphazard, can take days or even weeks. "The lower down the totem pole you go, things are not as organized as they are in the higher echelons," Nguyen said.

"When things start flying around on the Internet," Kruger said, "I don't know that you can identify where they're coming from."

One way pirated goods move from private to public sites is through a new layer of groups that operate on the chat channels. These groups compress and re-release the ripping groups' movies, often adding their own brand to the file names. Unlike the private sites, most of the chat channels and news groups are open to anyone who can master their relatively arcane protocols.

The last stop is one or more online file-sharing networks, which is where the piracy problem mushrooms for the movie industry and other copyright owners. The cross- pollination often comes from a "middle-level geek" who trolls the chat channels and news groups for newly pirated goods, then offers them on a file-sharing network, said the source close to the scene.

Randy Saaf of MediaDefender, an anti-piracy company based in Los Angeles, estimated that 20,000 to 30,000 people have access to the private sites and close to 100,000 use the news groups. By contrast, at any given moment more than 3 million people around the world are using Kazaa, the most popular file-sharing network.

According to BayTSP, another anti-piracy firm, nearly 15,000 copies of "Elf" were on the three leading file-sharing networks as of Dec. 15. That's pretty tame compared with "Finding Nemo," which showed up on more than 100,000 file sharers' computers in June.

"As long as there's material potentially out there, there's going to be people dedicated to doing it," said Tom Temple, director of worldwide Internet enforcement for the Motion Picture Assn. "All it takes really is two people, or even one person who's motivated to keep up the activity, and then it will go on."
http://www.latimes.com/technology/la...nes-technology

LA Times’ “Chain of Piracy” - Graphic.

[JackSpratts]

Norway's "DVD Jon" Seals Victory

OSLO (Reuters) - Norwegian police say they will not appeal a landmark DVD piracy case for a second time, marking a final victory for a 20-year-old hacker and a defeat for Hollywood.

An Oslo appeals court cleared 20-year-old Jon Johansen, dubbed "DVD Jon", of piracy charges in late December, angering the U.S. film industry which had hoped for a legal precedent to prevent unauthorised copying of DVDs around the world.

Norwegian police, which brought the charges on behalf of the Motion Picture Association of America (MPAA), had considered appealing to Norway's Supreme Court by a two-week deadline from the December 22 ruling.

Police "have decided not to appeal the ruling in the DVD case. The acquittal in the District Court will therefore stand," they said in a statement, but gave no further detail.

The appeals court said Johansen, hailed by hackers worldwide as a hero for free speech, had not broken the law by helping to unlock a code and distribute a computer program on the Internet enabling unauthorised copying of DVD movies.

He made the program, called DeCSS, when he was only 15. Supporters worldwide have portrayed the trials as a David against Goliath battle over a teenager's right to free speech.

"This brings this case to a final end, following acquittals in both the district court and the appeals court," Johansen's lawyer Halvor Manshaus told Reuters. "I am pleased with the final outcome and so is my client."

The verdict was a major defeat for the MPAA, grouping Hollywood studios like Walt Disney Co., Universal Studios and Warner Bros, which had brought the case in a bid to stifle piracy that it says costs $3.0 billion a year in lost sales.

The studios feared an erosion of their DVD sales similar to that experienced by the music industry when Napster created a free service allowing online users to download digital free music from other users.

Napster, however, was successfully sued by the five largest record companies for copyright infringement, forcing it into bankruptcy.
http://uk.news.yahoo.com/040105/80/eic7o.html

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

RealNetworks to Unveil New Media Player
Jon Healey

Upping the ante for computer programs that play movies and music, RealNetworks Inc. is expected today to unveil a new version of its signature digital media player.

RealPlayer 10 offers a downloadable music store as well as music videos and other video clips, songs on demand from selected albums, and the ability to pause and temporarily record live audio and video feeds from the Internet.

RealPlayer 10, which comes in free and premium versions, uses Real's software for deterring piracy, unlike other players and downloadable music stores. In an effort to bridge the compatibility gap, the player is designed to play files obtained from all the major online sources, including Apple Computer Inc.'s competing iTunes Music Store, and transfer them to any device able to play them.

Unlike other companies with media players, Real generates a significant portion of its revenue by selling access to online news, sports and entertainment clips.
http://www.latimes.com/technology/la...nes-technology


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

DATA BECKER Introduces Private File Transfer, a New Tool for Safely Sharing Large Files

Software Allows Users to Share Files of Any Size and Format Through Standard PC Internet Connection
Press Release

DATA BECKER Corporation, a leading publisher of affordable, high-performance productivity software, today announced the release of Private File Transfer. The software application allows users to quickly and securely share files between two computers without the need of a server or additional Internet services.

Private File Transfer combines the premise of peer-to-peer networking with greater file sharing control, privacy and manageability. After selecting which files to share, the software generates and sends a Web link invitation via e-mail to the designated recipients. Clicking on the link brings each recipient to the secure folders of the host computer where files can then be downloaded or uploaded. Only the host computer needs Private File Transfer installed to move files between systems, further simplifying the file transfer process.

"Private File Transfer lets users share large documents and presentations, or swap feature-rich digital media such as video, music and photos without the complexity and cost of traditional file-sharing methods," said Andrew Langhauser, director of marketing at DATA BECKER Corporation. "Users no longer need to concern themselves with the technical complexities of FTP servers or the file size limitations of e-mail. They simply select the files they wish to share and with whom to share them."

Unlike mass peer-to-peer file-sharing programs, which can be insecure and highly unreliable due to mislabeled or corrupted files and dropped connections, Private File Transfer transmits files to and from verified, secure locations. Three levels of security, including password authentication and file-sharing limitation controls, protect the connection established by Private File Transfer.

Availability and Pricing

Private File Transfer is now available directly from DATA BECKER at www.databecker.com and soon in retail stores throughout the United States and Canada. Suggested retail price for Private File Transfer is $49.95. For more information call DATA BECKER at 617-614-0600 or visit www.databecker.com.

System Requirements

Private File Transfer requires Windows(TM) 98, 98SE, ME, XP, 2000; Pentium(TM)-compatible processor 300 or higher; 128 MB RAM; 40 MB of free hard drive space, high color, 16-bit graphics card with 4MB RAM, 800x600 resolution, Internet connection and CD-ROM Drive.
http://home.businesswire.com/portal/...&newsLang =en


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

Device for DVD Movies Raises Legal Issue

PARIS - Hollywood's bid to control how its movies are copied, stored and played is being tested by an unlikely source: a former
French oil engineer in an out-of-the-way Paris suburb, Wednesday's Wall Street Journal reported.

Henri Crohas's company, Archos SA, makes a small hand-held device, like a bulky Palm Pilot, that can record and then play back scores of movies, TV shows and digital photos on its color screen or a TV set. The gadget -- which in effect does to movies what Apple Computer Inc.'s iPod does to music -- already has sold 100,000 units world-wide during the past six months, beating the big consumer electronics makers to the U.S. market.

Archos's device, which costs about $500 to $900 depending on the model, ignores an anticopying code found on a majority of prerecorded DVDs. That means consumers can plug the Archos device into a DVD player and transfer a movie to it. Users also can transfer recorded TV programs and digital music files to the Archos device. The Archos uses a video compression standard called MPEG-4 to cram as many as 320 hours of video at near-DVD quality onto its hard drive, the company says -- the equivalent of 160 two-hour movies.

A second kind of anticopying protection thwarts users from recording a playable copy of a DVD movie onto the hard-drive of a personal computer and then onto the Archos. But videos can be transferred from the Archos to a PC, where they could be burned onto a DVD or sent over the Internet, though that would likely violate copyright laws.

The gadgets alone aren't likely to spawn a Napster-style boom in online film piracy. Already, scofflaws with a PC equipped with a DVD player and special software can rip off films and share them over the Internet. And the process is slow: It takes as long to copy a DVD movie to the Archos device as it does to watch the movie. Still, Mr. Crohas and his 150-employee team at Archos ( pronounced AR kos) present a fresh headache for Hollywood because they show how the industry's campaign to keep control of its films could be challenged by small players.
http://money.cnn.com/2004/01/07/tech...e.dj/index.htm


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

Brilliant Digital Entertainment Receives Notice of Delisting from American Stock Exchange; Company Will Appeal to Listing Qualifications Panel
Press Release

Brilliant Digital Entertainment, Inc. (AMEX:BDE) announced today that on January 5, 2004, the Company received notice from the American Stock Exchange that it intends to file an application with the Securities and Exchange Commission to remove the Company's common stock from listing and registration on AMEX. AMEX has permitted the Company's common stock to be listed pursuant to a waiver of certain quantitative listing requirements, which expired with the filing of the Company's September 30, 2003 Quarterly Report on Form 10-QSB. AMEX determined that the Company was not in compliance with the following continued listing standards:

(i) maintaining at least $4 million of stockholders' equity, having incurred losses from continuing operations and/or net losses in three of its four most recent fiscal years (at September 30, 2003, the Company's stockholders' equity was approximately $2,473,000);

(ii) maintaining at least $6 million of stockholders' equity, having incurred losses from continuing operations and/or net losses in its five most recent fiscal years;

(iii) sustaining losses which are so substantial in relation with its overall operations or its existing financial resources, or its financial condition has become so impaired that it appears questionable, in the opinion of AMEX, as to whether the Company will be able to continue operations and/or meet its obligations as they mature.

Brilliant intends to appeal AMEX's decision to a Listing Qualifications Panel, and to present its reasons in support of continued listing. The Company currently is negotiating with various parties to sell equity securities, convert or exchange existing indebtedness into equity securities, and otherwise reorganize its balance sheet in an effort to increase its stockholders' equity and improve its working capital position, and thus regain compliance with the AMEX continued listing requirements. There can be no assurance that the Company will be successful in these efforts or, even if successful, that the Listing Qualifications Panel will permit the Company's common stock to remain listed on the American Stock Exchange. Pending the resolution of the appeal, the Company's common stock will continue to be listed on the American Stock Exchange. If the Company's common stock is delisted from AMEX, the Company expects that its shares will be eligible for quotation on the OTC Bulletin Board.

About Brilliant Digital Entertainment

Brilliant Digital Entertainment, Inc. (AMEX:BDE) is the parent company of Altnet inc. and a developer of 3D rich media advertising and content creation technologies for the Internet. The b3d rich media format is used to produce entertainment, advertising and music content for consumers distributed over the Internet. Find out more at www.brilliantdigital.com.

About Altnet

Altnet is the leading peer-to-peer distributor of secure digital media that originates from content owners. Altnet reaches an estimated 100 million users and is the #1 issuer of rights managed music in the world. Altnet's products integrate with websites, applications, and peer-to- peer networks to allow Internet users to simply and easily locate, download, preview and purchase digital content. Altnet is a subsidiary of Brilliant Digital Entertainment (AMEX:BDE).
http://home.businesswire.com/portal/...&newsLang =en


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

Infotainment to Hit $7.2B
Unstrung News

Not only are wireless Infotainment services expected to generate worldwide revenues of $7.2 billion by 2008, but their success can make the mobile phone, more than ever, the indispensable tool for modern living. These are some of the key findings from a new research report: "Mobile Infotainment: News, Travel & Information", now available from Alexander Resources, a leading research, consulting and education firm specializing in wireless communications.

According to the report, Infotainment encompasses Personal/Peer-to-Peer and Third Party services which are designed to support and enhance a user's daily life, while on the move. Personal/Peer-To-Peer services include Personal Data/Management, SMS and MMS messaging applications. Third Party services include three subsegments: Mobile News, Sports and Weather Services, Mobile Travel Services and TV, Celebrity, Financial & Other Services.

By supporting rather than competing with actual entertainment services, by improving the way subscribers communicate and manage their lives, by building on highly successful services and technologies such as text messaging, and by focusing on user's needs while on the move, Infotainment can make the mobile phone the focal point of a user's life. This increased reliance on the mobile phone is vital to the mobile industry as a whole and to its future profits, potentially positioning Infotainment as the cornerstone for future non-voice and voice-adjunct mobile services.

The report forecasts worldwide revenues for wireless Infotainment to grow from $1.5 billion in 2005 to $7.2 billion in 2008. To reach these revenues the market must first overcome some significant hurdles. These include market pricing, user willingness and ability to pay, the need for enhanced carrier billing systems, and improved security and privacy measures.
http://www.unstrung.com/document.asp?doc_id=45622


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

Peer-to-peer technique ramps up wireless speeds.

Software Change Supercharges 802.11 Chip
Ron Wilson

A new software package for use with the Prism Nitro 802.11 g wireless LAN chip promises to substantially increase throughput, in one mode of particular interest to home media network applications, to as much as 140 Mbits/s.

The software from parent Globespan/Virata exploits existing features in the Nitro chip, according to DAve Feller, Prism's director of wireless LAN products. This means that the fundamental media data rate, the modulation scheme and the 802.11 protection mechanisms remain untouched. The new software also leaves the device fully compatible with existing 802.11b or .11g equipment.

To reach the full 140 Mbits/s claimed at the top line, Prism has turned to an altogether proprietary technique: the new software establishes a peer-to-peer link directly between clients when they are passing data from one client to another. This is in contrast to the normal 802.11 architecture in which the data would move from the sending client to the access point, and then to the receiving point. "In effect, this doubles the available data rate, because you aren't transmitting the same data twice," Feller said.

In this mode the software sets up the peer-to-peer link automatically and transparently to the user while maintaining a side-channel connection to the access point. This preserves the security and power-management features of the network while eliminating the need to repeat the data transmission.

Feller explained that this mode would be used, for example, in home network applications where a user might send data to a printer from a digital camera, or might transmit a video stream from a DVD player in one room to a display in another.
http://www.commsdesign.com/showArtic...cleID=17300038


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

File sharers: don't crow yet.

The Recent Court Ruling Isn't The Latest Word On Digital Copying. Congress Will Have To Weigh In.
Editorial

As a ruling by the U.S. Court of Appeals in Washington, D.C., points out, technology races so far ahead of judges and legislators that it's hard to know when using software, hardware and digital networks to copy intellectual property is, or should be, a crime.

The decision last month — barring record companies from forcing Internet service providers to reveal the names of alleged music swappers — was, on its face, a victory for consumer privacy rights. Though it won't halt the Recording Industry Assn. of America's legal onslaught against piracy — the trade group has sent out nearly 3,000 subpoenas and sued 382 people since last summer — it will slow it. It also may yellow-light similar anti-bootlegging efforts that the film industry has suggested it will begin this year.

Before the ruling, the RIAA simply had to request a subpoena from any U.S. district court clerk's office. Now, it must prove to a judge that it has sufficient evidence before naming any individual in a lawsuit and obtaining a subpoena. The judges drew useful distinctions between legitimate and excessive legal actions to defend property. The court, in effect, said the situation was analogous to letting a retailer safeguard its clothes with electronic tags and door guards but forbidding it to sneak into houses to find blouses without receipts.

The ruling, however, was not the triumph that some Internet file-sharing advocates claimed.

The judges mostly punted the gnarly issue to Congress, holding, "It is not the province of the courts … to rewrite [copyright law] in order to make it fit a new and unforeseen Internet architecture, no matter how damaging that development has been to the music industry."

When work began on the Digital Millennium Copyright Act of 1998, which laid the legal foundation for fighting digital piracy, lawmakers had no idea that file-sharing, MP3 players and other digital innovations would be so popular. The act, thus, has little useful to say about what sort of copying constitutes fair use.

That's why Congress should stop digging its head into the silicon and confront an issue it hasn't for years. Sen. Orrin G. Hatch (R-Utah) should make good on his recent promise to herd the unruliest industry folks around a table and compel them to develop ways to take advantage of — rather than just try to halt — technology.

They could begin with an idea forwarded by Internet provider Verizon: to create licensed subscriptions with sharing included in the price. It's just a start. As Consumers Union has put it, "There are all sorts of ways to protect content that don't involve creating content prisons."
http://www.latimes.com/technology/la...nes-technology


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

Skype: Net Telephony as File-Trading

The peer-to-peer phone company, started by KaZaA's Scandinavian founders, aims to do to telecom what KaZaA did to the music biz
Alex Salkever

Niklas Zennstrom and Janus Friis could be the two most dangerous men on the Internet -- dangerous to entrenched business models, that is. The Scandinavian duo created the KaZaA file-swapping software that became the dominant online music-trading platform after lawsuits killed Napster in 2001. With tens of millions of Web surfers trading music files daily, KaZaA, as much as any other factor, forced the big recording labels to agree to offer music downloads for as little as $1 a song.

Now Zennstrom and Friis have drawn a bead on the phone business, where they see voice communications over broadband hookups as a huge, untapped market. Their weapon in this offensive is a piece of software they call Skype. Though it rhymes with hype, Skype is anything but. Distributed by Stockholm-based Skyper, a private company owned by Zennstrom and Friis, the free program gives Windows PCs with a broadband connection the ability to make high-quality computer-to-computer calls anywhere on earth -- as long as both parties are using Skype's software.

"SCREW THE PHONE SYSTEM"

That should frighten not only the established local and long-distance phone carriers but also cable-TV companies and startups that hope to sell Internet phone service. They generally charge $40 a month for unlimited local and domestic long-distance calls, and traditional phone companies charge more. Either price will look ridiculously high should Skype grow large enough to hit critical mass -- as it appears to be doing.

The success of Skype, which debuted only four months ago, raises a question whose answer could define the future of telecom: Can next-generation phone systems take the shape of decentralized, peer-to-peer file-sharing networks that run over the Net and eliminate phone-company middlemen? "What Skype and others like it say is: Screw the phone system.... Let's build a voice app -- software -- that does what the telephone does," says Clay Shirky, a consultant and adjunct professor at New York University who studies peer-to-peer and networking technologies.

Since Skype's software appeared on its Web site in August, it has gone viral. Without spending a dollar on marketing, Zennstrom and Friis have tallied more than 5.2 million downloads, and they figure that perhaps half that many people are using the software. True, that's a blip in the global telecom industry, which serves billions of customers and gathers about $200 billlion in annual revenue. Yet Skype's biggest weakness -- that both parties to a conversation must have it installed to talk via their PCs -- is also what makes it a danger to the telecom Establishment.

GOING MAINSTREAM.

Anyone with access to large numbers of desktops -- from Internet service providers to sellers of operating-system software -- could in theory become a phone company by simply installing the software and eschewing investments in phone-system infrastructure. While it's easier to say that than to make it happen, the possibility is real. "There's no way anyone can combat what they're doing," declares Jeff Pulver, a telecom consultant and the founder of a competing no-charge VoIP offering, Free World Dialup

"MARGINAL NICHE."

Now the popularity of this idea appears to be spreading beyond geeks and adventuresome chief information officers. Startup VoIP providers such as Vonage and 8X8 (EGHT ) expect to have millions of customers within three years. All of the major instant-messenger clients -- from America Online (TWX ), Yahoo! (YHOO ), and Microsoft's (MSFT ) MSN service -- already have some voice capability. Microsoft has quietly inserted key building blocks of PC-to-PC telephony into its Windows operating system. And Apple's (AAPL ) iChat AV software provides voice quality that rivals many cell phones and approaches the quality of a copper line.

Moreover, broadband's rapid adoption in the U.S., Asia, and Europe has made high-speed connections common enough to allow software-based telephony to approach critical mass. A roomful of low-end servers can now handle as much voice traffic as an entire old-line telecom-switching facility. "A company like Skyper can flourish in what for big phone companies would be a marginal niche," says Dave Burstein, publisher of DSL Prime, a telecom-industry newsletter. "They can make profits on a few hundred thousand users. All it takes is a couple of cheap PCs and some good software."

While several companies are trying to tap those dynamics, Skype seems to have broken from the pack -- mainly thanks to its ease of use. Unlike most other Internet voice applications, Skype automatically navigates through firewalls and network address translation systems, elements of broadband systems that commonly trip up phone software for PCs.

GROWING FAST.

Furthermore, Skype uses a peer-to-peer configuration that harnesses the broadband capacity of its users' PCs to build an ever-expanding network of nodes that can create highly stable and adaptable systems. This also means that Skyper itself doesn't have to pay for bandwidth to carry calls -- those who use it provide such capacity via their Internet connections.

To date, Skype says its network has handled as many as 170,000 concurrent users without a major outage. Its growth has been impressive enough to secure an initial round of venture-capital funding, rumored to be in the millions of dollars, with Bessemer Venture Partners in Larchmont, N.Y., as the lead investor. Skyper opened a London office in December and has already grown from less than a dozen employees to 25, with lots of new hiring ahead. It plans to introduce its premium products sometime this spring, and in the meantime, Pulver says, it has been talking to other VoIP startups about ways to more easily interconnect their respective customers.
http://www.businessweek.com/technolo...5171_tc138.htm


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

DMCA doubletalk alive and well with Canadian Politicos

The Liberal Party is Going to Sue Us

I woke up on Wednesday morning to a phone call from a friendly guy named Tim, who informed me that I had one hour to take down the website, PaulMartinTime.ca, or he would set the lawyers loose on our asses (that's not a quote, but it's an accurate summary).

In between his friendly but businesslike remarks, he dropped a few remarks intended to make me nervous. He said, for example, that he "had a little trouble getting through privacy.ca, but they're no longer supporting your cause." If we had in fact been using privacy.ca, that would be pure power-play. It would mean that he had intimidated (legally or otherwise) a company whose function it is to protect the identity of people who use it into breaking its sole mandate. As it turns out, we don't use privacy.ca; the address of Rob Maguire, the person who registered paulmartintime.ca, is publically available, for all with an internet connection to see.

I immediately called Dave and Rob, the people I collaborate on the site with, to determine a plan of action. Dave came over, and we called Rob to discuss the situation. We thought it was strange that some guy had called us up out of the blue, not giving his full name and claiming to work for the Liberal party, telling us to shut down our site in one hour.

Not the most legal way to do things.

First, we set out to figure out who this guy was. We assumed he was with a law firm working for the Liberals. Not having his last name made this effort completely fruitless. Then we get an email from him, to "confirm" that he has our addresses. This was followed by a bizarre message, also from him, that simply read: "Tim Tierney would like to recall the message, 'Address confirmation.'" It turns out that the friendly intimidator (Tim Tierney), is the Liberal Party webmaster.

I have to admit that I was shocked that the guy who makes and maintains web sites all day, every day for the Liberal party would have such a natural grasp of intimidation tactics. I should mention that this guy was out of the textbook of legal intimidation: friendly, casual, yet vaguely paternalistic tone; subtle name-drops indicating the power of the Liberal party to crush us and not think twice; multiple references to the fact that he knows where we live; emphasis that he believes in free speech. I'm a web developer myself, and I can't pull that kind of thing off. If that's their webmaster, what kind of shop are they running, anyway?

Dave and I go over the site, and make a few changes to the design to make it less of an overt copy of Paul Martin's official site. We call up Tim to clarify things. We don't actually get him on the phone until we block callerid from identifying our number. It's the same story: "I see you've made some changes to the site, but I don't think that it's enough." He had passed our names on to the pack of wolv... lawyers, who he refused to name. "They'll get in touch with you," he says.

And then he--completely gratuitously, but sounding like it's a totally natural thing to say--casually mentions that the lawyers will be getting in touch with CIRA (the body that oversees who has .ca domain names). Given the context, the obvious implication is that the Liberal party has the power to take our domain name from us unilaterally, and are willing to do it. Who knows if they actually are, but they're comfortable using the threat, anyway. He also emphasizes that he believes in free speech, and thinks the text of the site is just fine. He takes back the request to take the whole site down, saying that he just wants us not to use the Liberal party's intellectual property.

Before hanging up, he makes a point of repeating that he has all of our names (which we have made no effort at all to hide) and addresses.

The next day, we get the following note:

Sent: 19 Dec 03, 5:52 AM
Subject: Copyright Infringement
Dear Messrs. Macguire, Ron and Jay:

I act on behalf of the Liberal Party of Canada (LPC) with respect to your website, www.paulmartintime.ca and your collective and individual infringement of my client's copyright in relation to the form and content of its website, www.paulmartintimes.ca.

As you are no doubt aware, not only have you utilized LPC's art and graphics but, as well, you have, without alteration, made use of its style sheet. Furthermore, the name of your website is, notwithstanding the minor variance, a clear usage of title without alteration. Even your logo is an exact copy of that found at www.paulmartintimes.ca.

Although my client does not, for a moment, question your Constitutionally guaranteed right to express your opinions, you have failed to take account of the fact that the laws of this country also require that this right be excercised within a lawful framework and it is not prepared to countenance your continued blatant infringement of its copyright. You cannot resort to the entitlement to free speech in a manner whereby my client's proprietary interests are infringed upon.

My client is insisting that you immediately cease your unlawful use of its art work, graphics and style sheet by way of deleting your website in its entirety or, in the alternative, making amendments sufficient to address the improper usages referred to.

Again, you are certainly free to voice the opinions of your choice, but only within a lawful framework.

I am assuming that the required action on your part will be completed within five (5) days of this email, that is, by no later than 5 p.m. on Wednesday, December 24th, 2003, failing which those steps needed to obtain injunctive and any other required relief will be sought without further notice to you. Furthermore, should such litigation be necessary, we will also be seeking recovery from each of you of all costs incurred in pursuing this matter.
I trust that you will each govern yourselves accordingly and that this email will mark the end of the matter. If it does not, you should not be under any doubt as to my client's intention to proceed in the manner referred to.

Andrew P. Davis
c/o Shore Davis
Barristers-at-Law
800-200 Elgin Street
Ottawa, ON.
K2P 1L5
Tel: (613)233-7747 (Ext. 227)
Fax: (613)233-2374

As you can imagine, we were thrilled that Paul Martin's lawyers support our right to free speech.
http://paulmartintime.ca/lawsuit/000061.html


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

Ten Colo. Music Swappers Settle Lawsuits For Up To $4,000
Erin Gartner

At least 10 Coloradans accused of illegally downloading music have settled lawsuits brought against them by the recording industry, some paying as much as $4,000.

"The only reason I did was because I'd spend that much money in attorney's fees," said Brad Wise, a Highlands Ranch resident who settled his copyright suit for $2,814.30.

The settlements were made available Tuesday in U.S. District Court. Eight people settled for between $1,000 and $4,000 while two people were not ordered to pay. All agreed to not use the Internet to illegally download music in the future.

The Washington-based Recording Industry Association of America has filed at least 382 copyright suits across the country since September, when it began an aggressive campaign against online music piracy.

At least 24 Coloradans have been named in such suits.

Court-issued subpoenas have compelled Internet providers, such as Comcast Cable Communications, to identify their customers linked to the online accounts used to download songs.

Wise estimated that his son, who was attending Colorado State University in Fort Collins, downloaded about 1,300 songs while Wise was paying his son's bill for Comcast. The bill was in Wise's name.

"I told him if he ever did it again, I'd kill him," Wise said. "The bill is no longer in my name. It's in his name."

Most of the RIAA's cases have been settled. Record companies can legally demand $150,000 per song, but defense lawyers familiar with some of the cases have said penalties ranged from $2,500 to $7,500 each.

The lawsuits seem to be having their desired effect. The percentage of Americans who download music online has been cut in half, according to a report released Sunday by the Pew Internet & American Life Project and comScore Media Metrix, a Web tracking firm.
http://www.usatoday.com/tech/webguid...aa-suits_x.htm


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

“Get me some of that Internet.”

We Hate Spam, Congress Says (Except When It's Sent by Us)
Jennifer 8. Lee

Even as Congress was unanimously approving a law aimed at reducing the flow of junk e-mail, members were sending out hundreds of thousands of unsolicited messages to constituents.

The spasm of activity is aimed at attracting voluntary subscribers to the lawmakers' e-mail lists, which would not be subject to House rules that normally impose a 90-day blackout before an election for taxpayer-supported Congressional mass communications.

In September, the House Administration Committee voted, 5 to 3, along party lines to allow e-mail messages to the subscribers to be sent in the blackout period, but maintained the ban on free postal mail from House members to voters. The policy change affected only House rules and was not part of the junk e-mail legislation.

At least 40 House members have bought or agreed to buy e-mail address lists from at least four vendors. The lists, which each have tens of thousands of addresses, are generally created by a process called e-mail appending, taking voter registration files from a member's district. The next step is to cross match them with large databases of names and e-mail addresses assembled by consumer data companies like Equifax, which has a database of more than 75 million e-mail addresses. E-mail addresses can usually be found for 10 percent to 20 percent of the voter file.

Many members of Congress praise the new policy for allowing cheaper and more effective communications with constituents. But consumer advocacy groups say the policy may unfairly give an advantage to incumbents over challengers because it allows elected officials to use government resources to communicate with voters right up to Election Day. In addition, the consumer advocates say, sending bulk e-mail messages to constituents who have not agreed to receive it is essentially electronic junk mail, or spam.

The ability to communicate with constituents at taxpayer expense, the franking privilege, is one of the most cherished and controversial perks of office. For 30 years, advocacy groups have lobbied and sued Congress to try to close loopholes and stop abuses of the privilege.

Critics say the policy has created a significant new loophole.

"The core value is that you don't want to leverage technology to increase incumbent advantage," said CeliaViggo Wexler, research director at Common Cause, a group that has sued to limit franking. "What is troubling is that essentially the House is saying, `O.K., you can communicate with the constituency up to an election, and we're not really going to check what you are saying with them.' The point is without that kind of oversight, it's ripe for abuse."

Before the change, e-mail was subject to the same treatment as regular postal mail. Correspondence sent to more than 500 constituents had to obtain approval from the franking commission and was subject to a 90-day blackout before an election. But individual responses to citizens were not subject to the restrictions.

Congressional officials said the old policy was too cumbersome.

"Anything over 500 e-mails you had to submit that to the franking commission," said Brian Walsh, the Republican spokesman for the House Administration Committee. "There was going to be a delay of a couple of days to get approved. We didn't feel that was consistent with the technology that existed."

The new policy says that lawmakers can freely send messages to voters who have agreed to subscribe to their e-mail lists. To build such lists, House members are sending huge amounts of bulk e-mail messages to their districts in the hope that some voters will subscribe.

The unsolicited messages go out from Congressional offices as often as twice a month. The unsolicited messages, which have to stop 90 days before an election or a primary, are still subject to approval from the franking commission.

"They are regulating commercial spam, and at the same time they are using the franking privilege to send unsolicited bulk communications which aren't commercial," David Sorkin, a professor at the John Marshall Law School in Chicago, said. "When we are talking about constituents who haven't opted in, it's spam."

President Bush signed the law on spam on Dec. 16, and it takes effect on Thursday. It will ban the sending of bulk commercial e-mail using false information like fake names, as well as misleading subject lines and automated harvesting of e-mail messages. It will also require all commercial e-mail messages to include a valid postal address and give recipients an opportunity to opt out of receiving more messages.

The law restricts only commercial e-mail, a sector that accounts for more than half of all e-mail traffic. The law does not apply to unsolicited political messages. It also authorizes the Federal Trade Commission to study the possibility of a "do not spam" list.

Violators of the law will be liable for a fine up to $250 per violation, up to a cap of $2 million, except in extreme circumstances, when the fine could be tripled. Violators could also face up to five years in prison.

Members of the House say their unsolicited e-mail messages are not junk e-mailings, because the messages are directly intended for constituents who have the right to opt out, and the messages have received positive reactions.

"Our experience has been that we get hundreds and hundreds of people who opt in for every person who opts out," said Representative Brad Sherman, a California Democrat who has bought a list. "E-mail has been a great communications device."

From a technology perspective, commercial and political bulk e-mail look startlingly similar.

Advocacy Inc., a consultant in Washington, had its first unsolicited bulk e-mail, sent on behalf of Representative Pete Stark, Democrat of California, initially blocked by America Online's spam filters. AOL later agreed not to block the messages, Advocacy said.

The new policy is fueling an e-mail arms race. Democrats say that the new policy, which was drawn up by the Republicans who control the House, took them somewhat by surprise, but they are catching up.

"The Democrats are worried," said Roger A. Stone, the chief executive of Advocacy, who has been signing up Democratic offices at the rate of about five a week. "I'm dealing with people whose boss said, `Get me some of that Internet.' "
http://www.starbanner.com/apps/pbcs....2280313&Ref=AR


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

Songwriters Say Piracy Eats Into Their Pay
David Bernstein

They think of themselves as the unsung victims of Internet music piracy.

Much of the publicity in the battle over illicit Internet music downloading has gone to artists and record labels. But songwriters say they are also being hurt financially.

Unless they are also performers, most songwriters are typically neither rich nor famous, and their names may be known only to those who bother to read album credits or liner notes.

But their incomes can depend on royalties from sales of recorded singles and albums. In fact, songwriters' earnings are more directly tied to album sales than those of recording artists, who can potentially earn substantial sums through live concerts and merchandise sales.

Charles Strouse, a composer best known for his Tony-winning musicals "Bye Bye Birdie" and "Annie," says illegal downloading has had a disastrous impact on his profession, not to mention his income.

"I am hurting," said Mr. Strouse, who is 75. Even though his songs are not as widely sought as hits by popular rock or pop stars like Sheryl Crow and Eminem, he felt the effects of downloading after the hip-hop artist Jay-Z drew on Mr. Strouse's "It's the Hard Knock Life" from "Annie" for the 1998 album, "Vol. 2 . . . Hard Knock Life."

According to BigChampagne, an online media measurement company, Jay-Z's version of "Hard Knock Life" was downloaded 1.16 million times from July 2000 (when the company began tracking Internet use) to May 2003. The total is probably much higher, said Eric Garland, BigChampagne's chief executive, because the entire lifespan of the song was not counted.

Although songwriters typically earn only pennies for every sale of a recorded song, if every person who downloaded "Hard Knock Life" had bought a CD instead, Mr. Strouse would have collected at least $46,000 in royalty payments, assuming he would have received 4 cents a download.

Mr. Strouse took in about $250,000 from recording royalties in 2002, according to his publisher, Helene Blue. Last year, she said, Mr. Strouse drew only about half that total, mainly because of illegal downloading of various recordings containing his songs.

"I've gotten fat off this business," Mr. Strouse said. "But obviously I'm very annoyed. It's awfully hard to write music. Ownership should be guarded very carefully."

Writers can receive as much as 8.5 cents for each song that appears on an album, each time a copy of that album is sold.

In practice, however, many songwriters receive less, since royalties are typically split with their publishers, leaving them with 4 cents. If a song is co-written, that 4 cents is split again, so the total can amount to just 2 cents. Songwriters also receive royalties of varying amounts when a song is played on the radio, or is used in movies or television.

"Eight cents is nothing; it's cheap," said Carey Ramos, a lawyer for the National Music Publishers' Association, which represents music publishers and their songwriters.

But "a penny here, a penny there - they add up,'' he said. "In the aggregate, it's a big difference in the paycheck of a songwriter."

Barton Herbison, executive director of the Nashville Songwriters Association International, an industry group, estimates that because of the difficulties in making a living from the craft, there are only half as many working songwriters today as a decade ago.

Nowhere have songwriters suffered as much as in Nashville, the nation's songwriting capital. The town is teeming with record companies, recording studios and publishing houses, most of which are concentrated in a small area along Music Row, a half-mile stretch along 16th and 17th Avenues, near Vanderbilt University. The city is also home to some 4,000 songwriters, Mr. Herbison said.

"I know people that have had No. 1 songs who are working at the Dillard's makeup counter," Mr. Herbison said. "Not that there's anything wrong with that - it's an honorable occupation - but that's not what they intended to do."

Illegal downloading "doesn't just affect Garth Brooks," he added. "It affects songwriters, it affects every studio in Nashville that's closing, it affects the working musicians. What it ultimately affects is the choice of music the public gets. When I have No. 1 songwriters working other jobs, we're not getting more music."

David Ross, publisher of "Music Row," a Nashville music industry publication, said music publishing companies had sharply reduced the number of songwriters because of plunging revenues from Internet downloading and industry consolidations.

Jason Blume, 47, is one of 15 staff writers who lost his job at the publishing house Zomba Music Group after BMG Music acquired it in 2002. Mr. Blume had been a staff writer at Zomba since 1991, most of that in Nashville, and his credits included hit songs recorded by the likes of Britney Spears, the Backstreet Boys and Collin Raye.

Now, as Mr. Blume searches for another staff writing job, he said, the sense of despair in Nashville is so prevalent that when people walk down Music Row, "they say they feel like they're on the Titanic."

According to Mr. Ramos of the publishers' group, since the first popular file-sharing service, Napster, emerged in 1999, annual collections of royalties from recording sales (known as mechanical royalties) have fallen 22 percent, to $455 million.

In the four years before 1999, he said, those royalty collections grew 24 percent. Assuming that the pre-Napster growth rate would have continued, and if illegal downloading had not occurred, Mr. Ramos said, songwriters would have collected an estimated $300 million more in payments since 1999.

Shelly Peiken, 46, a songwriter in Los Angeles who co-wrote Christina Aguilera's "What a Girl Wants" estimates that she has lost nearly $200,000 in royalties because of online piracy. Still, she considers herself one of the luckier ones.

"Some of my friends are at the ends of their rope," she said. "I'm not going to make myself sick over it. But if I hadn't had these hits, I'd probably be pretty strung out right now."

Not everyone is convinced that downloading is the devastating problem that the music industry makes it out to be.

"There are a lot of pieces that go into the industry's problems that we're not hearing about," said Wendy Seltzer, a lawyer for the Electronic Frontier Foundation, an Internet civil liberties group. "It's easy and convenient to blame it all on piracy."

Ms. Seltzer cited the sluggish economy and consolidation among record labels and radio companies as other reasons that record sales had fallen sharply over the last four years. She argued that, assuming the downloading is authorized, online music distribution actually lowered costs and increased exposure for songwriters and artists.

Songwriters "will have to learn how to adapt to the new technology,'' Ms. Seltzer said. "The buggy manufacturer doesn't have a place in the world of automobiles."

She suggested that the music publishing industry adapt for the recording business a model similar to one used in radio, where broadcasters pay blanket fees for rights to play songs and the money is split among the songwriters.

Whether or not online piracy is the main reason for declining music sales, songwriters are trying harder to make their voices heard in the debate. The Nashville songwriters' association has made more than 20 trips to Washington this year to lobby lawmakers over music piracy, Mr. Herbison said.

In September, Representative Marsha Blackburn, a Tennessee Republican, formed the Congressional Songwriters Caucus to help address illegal downloading. About 40 members in the House have joined the caucus.

Songwriters and publishers have also sought new sources of income to compensate for the losses caused by piracy.

Ms. Blue, who has been in the music business 35 years, says one of the most lucrative sources of new revenue has been royalties from cellphone ring tones. Last year, cellphone users bought more than 4.8 million ring tones, according to IDC, a technology research firm.

But with two billion unauthorized downloads of songs every month, according to the Recording Industry Association of America, royalty fees produced from ring tones cannot make up for the toll that piracy has taken on songwriters.

"There's a big dark cloud over the business right now," the songwriter Ms. Peiken said.
http://www.nytimes.com/2004/01/05/bu...ia/05song.html


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

Music Trade Group Probes Cheap CDs
Bernhard Warner

The record industry says it is investigating a number of Web retailers, including Amazon.com, to determine whether they are breaking the law by selling discounted compact discs.

The probe is being conducted by the British Phonographic Industry (BPI), a music industry trade association which of late has stepped up its monitoring of Web sites' selling practices.

According to UK law, retailers must sell compact discs sourced from within the European Economic Area in accordance with broader European laws.

A BPI spokesman said on Wednesday the group recently began looking into whether Amazon, among others, is selling to UK consumers CDs obtained from overseas wholesalers.

Many Web retailers have built a brisk business by selling music titles at a discount to high street chains. The BPI's crackdown, industry observers say, may kick off the biggest probe into how Web retailers source their product.

The BPI has already launched law suits against two online music retailers -- CDWow and Play.com -- arguing they are able to undercut high street retailers by sourcing product from cheap overseas suppliers.

The industry's concern is that online retailers will rely heavily upon discount wholesalers and distributors, particularly in Asia, to circumvent strict import laws and put downward pressure on the market price for music.

The industry is in a tight spot, though, because it often acknowledges that Internet retailers have become an important source of revenue at a time of crisis over declining sales.

On Wednesday, the BPI played down the investigation into Amazon.

"This is a standard routine. We look at many Web sites to determine if the product is legitimate," said Matt Phillips, a BPI spokesman. "If we find a Net retailer is importing music from outside Europe, then they are infringing copyright law."

Amazon could not immediately be reached for comment.

The probe applies to Amazon's U.S. division only, the BPI spokesman said, because Amazon.co.uk sells music sourced from the UK.

The BPI represents most of the world's largest music labels including EMI, BMG, Sony Music, Warner Music and Universal Music.
http://uk.news.yahoo.com/040107/80/eijlu.html


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

New talks Over Webcasting Fees Begin
John Borland

The dust has barely cleared from the last round of battles over the fees that Net radio stations pay record labels, but federal regulators are opening up a new series of negotiations over those royalty rates.

The United States Copyright Office said Tuesday that it is opening up a six-month period for negotiations over new Webcasting fees. Today's royalty rates--decided only after bitter negotiations, a regulatory arbitration process, and successive intervention from the Library of Congress and Congress itself--expire in 2004.

Small Webcasters continue to hold considerable resentment over the outcome of the previous process, and one group has even sued the Recording Industry Association of America (RIAA) on antitrust grounds. But medium-size and larger Net radio operations say they think this round will be more amicable than the last.

"I think a lot has changed this time around and that the labels' attitude toward Net radio has changed," said Michael Roe, owner of Florida-based RadioIo.com and one of a small group of Webcasters who negotiated with the RIAA for small- business rates last year. "I think both sides are going to be more amenable to reaching agreement before getting into a situation that requires intervention this time."

The initial dispute lasted several years, after Congress created the royalty in 1998 but left the rates up to the industry to decide. For years, the fees were put on hold, and thousands of tiny Webcasters sprung up across the Net.

But as the fees began to snap into place last year, Net radio stations either had to begin paying a small per-song fee or a separate payment of between 8 percent and 10 percent of revenue. Many small Webcasters went off the digital airwaves as a result.

The Digital Media Association (DiMA), the trade association for large Webcasters and Net companies including America Online and Yahoo, said it hasn't begun polling its members as to whether they want a substantial revision of the rates for next year.

Jon Potter, DiMA's executive director, said his group is more focused on legislation reforming the regulatory and arbitration process by which the royalty rates are determined, hoping to extend the active period of the fees so they don't have to be renegotiated every two years.

"It's still not a highly profitable business--and is still an evolving business," Potter said. "As industry has consolidated, there are more stable companies who have a growth path, but they also are reticent to spend money on litigation rather than on marketing."

A representative for SoundExchange, the organization that collects the fees on behalf of record labels and artists, could not immediately be reached for comment.

Small Net companies, represented by the Webcaster Alliance, say they are still being ignored by the big labels and SoundExchange and are continuing with their lawsuit against the RIAA.

If Webcasters and record labels do not voluntarily reach agreement on fees for the 2005 to 2006 period, the issue will go in front of a federal arbitration panel again.
http://news.com.com/2100-1027-5136949.html


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

Sony Unveils Music Store, Gadgets At CES
Richard Shim

LAS VEGAS--Sony Electronics unveiled a slew of new gadgets at the annual Consumer Electronics Show and threw its hat into the ring for music download services, as part of its parent company's ongoing efforts to meld its content and electronics businesses.

As expected, Sony announced a music download service called Connect, which will be available this spring and will offer more than 500,000 titles for 99 cents per track. The service, demonstrated at CES, will aggregate content from all the major labels and will be run as a wholly owned subsidiary.

Connect will be headed by Jay Samit, a former EMI Recorded Music executive, and ATRAC will be the audio format used by the service.
The music download service is part of an effort by its parent company to stem declines in its music division and also to remain competitive with the growing list of rivals, such as Apple Computer, Dell, Microsoft, Wal-Mart Stores and most recently RealNetworks, which are increasingly encroaching into Sony's key electronics and content markets.

The service is also part of a larger conglomerate-wide strategy of making its hardware--from computers to digital music players--the centerpieces of digitally networked homes. Sony aims to provide entertainment content directly to consumers and bets that it will drive demand for the company's hardware.

But Sony has been in a uniquely uncomfortable position that straddles the entertainment and consumer electronics world. Hamstrung in part by its movie and music divisions' fears of digital piracy, it has seen independent companies jump ahead in development and sales of digital music players, while its own copy protection-enabled devices have had only lukewarm appeal.

The different divisions within Sony, including Sony Music, Sony Pictures, Sony Electronics and Sony Corporation of America, have been working to develop new services, and Connect is part of those efforts.

"Music is just the start of many more services to come," said Kunitake Ando, chief operating officer of Sony.

The electronics division also announced several new products that build on new trends in the consumer market, in an effort to reverse disappointing results from last year.

Among its parent company's divisions, the consumer electronics business took the hardest fall last year when Tokyo-based Sony posted such disappointing results that financial analysts referred to the report as "Sony shock."

The electronics business, which is the largest revenue contributor among Sony's divisions, cited a sales decline last year for Vaio PCs and for CRT televisions as reasons for its poor results.

The electronics business has turned a corner, Sony Electronics President Hideki Komiyama said.

"As the holidays approached, Sony Electronics achieved record-setting, double-digit growth, which we saw in virtually every consumer product category," Komiyama said in a statement.

Sony Electronics is looking to ride its momentum into this year with a new, higher-capacity MiniDisc format called HiMD. An HiMD disc can hold up to 1GB of content and will cost about $7. The division will also release four HiMD players, two NetMD players, a flash-based player and eight ATRAC CD players.

The company also introduced a 42-inch liquid-crystal display television, 61-inch Wega plasma television and a 12-inch portable broadband LCD television, which allows a consumer to wirelessly watch TV shows or browse the Internet.

Sony demonstrated a Blu-Ray Disk ROM player, a new Handycam camcorder, dual-layer DVD recording technology and new home DVD Dream Theater systems.

The company will also add a new version of its Vaio 505 series, the X505, to its notebook line. The unit is already available in Japan.
http://news.com.com/2100-7353-5137127.html


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

Romania Becoming Hub For Cyber-Crime
William J. Kole

BUCHAREST, Romania -- It was nearly 70 degrees below zero outside, but the e-mail on a computer at the South Pole Research Center sent a different kind of chill through the scientists inside.

"I've hacked into the server. Pay me off or I'll sell the station's data to another country and tell the world how vulnerable you are," the message warned. Proving it was no hoax, the message included scientific data showing that the extortionist had roamed freely around the server, which controlled the 50 researchers' life-support systems. The FBI traced the e-mail to an Internet cafe in Bucharest and helped Romanian police arrest two suspects -- the latest evidence that computer-savvy Romanians are fast emerging as a bold menace in the shadowy world of cyber-crime.

"It's one of the leading places for this kind of activity," said Gabrielle Burger, who runs the FBI's office in Bucharest and is working with Romanian authorities to arrest cyber-baddies "and avoid the September 11 of cyber-crime."

Law enforcement documents portray a loosely organized but increasingly aggressive network of young Romanians conspiring with accomplices in Europe and the United States to steal millions of dollars each year from consumers and companies.

Their specialties: defrauding consumers through bogus Internet purchases, extorting cash from companies after hacking into their systems, and designing and disseminating computer-crippling worms and viruses.

Alarmed authorities say the South Pole case underscores the global impact of this new breed of cyber-outlaw.

"Frustrated with the employment possibilities offered in Romania, some of the world's most- talented computer students are exploiting their talents online," the U.S.-based Internet Fraud Complaint Center, run by the FBI and the National White Collar Crime Center, said in a recent report.
http://washingtontimes.com/world/200...4214-9056r.htm


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

Justice Dept. Closes Net Music Antitrust Scrutiny
John Borland

After more than two years of quiet investigation, the U.S. Department of Justice said Tuesday that it is closing its antitrust scrutiny of the major record labels' online activities, without filing charges.

When originally revealed in mid-2001, the regulators' investigation was said to be focused on the MusicNet and Pressplay online-music joint ventures and the possibility that the record labels were colluding to favor their own affiliated services at the expense of potential rivals.

But in a statement Tuesday, antitrust regulators said they had found no evidence that the labels had crossed any legal lines.

"The (Antitrust) Division's substantial investigation of Pressplay and MusicNet has uncovered no evidence that the major record labels' joint ventures have harmed competition or consumers of digital music," Assistant Attorney General R. Hewitt Pate said in a statement. "None of the several theories of competitive harm that the Division considered were ultimately supported by the facts."

The Justice Department's investigation was initially hailed by critics of the big music labels, who long suspected that the labels were acting collectively to prevent new Internet companies from gaining prominence in the music business.

But the digital landscape has changed substantially since mid-2001. At that time, the label-affiliated MusicNet and Pressplay were the only services licensed to distribute large amounts of major-label music through subscription services.

Today, online song stores that offer hundreds of thousands of tracks for download are springing up on an almost daily basis. Pressplay, originally a joint venture of Sony Music Entertainment and Universal Music Group, was sold to software company Roxio and folded into the new Napster service.

In a review of its findings, the Justice Department said it studied major-label licensing practices and said the terms offered to third parties differed significantly, indicating that there was no illegal collusion.

The fast growth of the Internet market over the past year and the improvement of MusicNet and Pressplay from their "poor quality and restrictive nature" at launch indicates that the labels are not trying to hold back the Internet as a distribution medium, regulators added.

Peer-to-peer companies such as Roxio and Sharman Networks have repeatedly raised the issue of record label collusion as a defense in their own copyright-infringement cases, but the strategy has never gone far enough to elicit evidence-gathering on the issue.
http://news.com.com/2100-1027-5133148.html


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

Flip Side To File Sharing
Critic at Large

The Recording Industry Association of America (RIAA) proudly announced this week that its full-frontal assault on "file sharers" - people who download copyrighted songs for free on the Internet - is succeeding.

By suing several hundred random downloaders for huge sums of money, the record company trade organization says it has scared millions of others onto the path of righteousness, so they either aren't downloading at all or they have switched to legal paid services like iTunes.

As evidence, the RIAA cites a Pew Internet survey that found only 14% of Americans admitted to downloading in December, compared to 29% in May.

Meanwhile, more people are paying - 99 cents a song or $8 for a CD - to download legally.

And that's fine.

No one objects to artists being paid, though it's also true that, for many of them, the big hurdle to compensationhas been record companies, not fans.

But downloading issues will not be solved by dropping an anvil on a few unlucky file sharers. For starters, downloading music isn't a little room with one door.

It's a big drafty warehouse with many entrances, exits, windows and cracks.

That fewer Americans admit to downloading music through Peer-to-Peer (P2P) services like Kazaa doesn't necessarily mean they aren't doing it. It could mean they're just not admitting it. They also could be sharing music through other electronic channels, including E-mail.

Moreover, the biggest music "piracy" problem isn't American teenagers. It's the many parts of the world that have the same computers and fewer laws.

The RIAA knows this, of course. It also must know a few other things that put downloading into better perspective.

First, the industry shot itself in the foot when it tried to kill singles and force fans to buy whole $18 CDs for the one or two songs they really wanted. The fact millions of fans now pay to download singles makes it clear individual songs are still what sells popular music.

Second, one of the main reasons the RIAA insisted it had to start blasting downloaders out of the water last summer was that CD sales were plummeting - by almost 11%, the RIAA said.

Well, Nielsen Soundscan figures for the year are out, and they show CD sales in 2003 were 687 million, compared to 693 million in 2002.

The 2003 total was boosted by a strong fourth quarter, but still, that's an overall drop of less than 1%, which is hardly apocalyptic in a rough year when purchases of everything from cars to movie tickets were also down.

One reason many folks feel no guilt about downloading is that they think record companies behave like weasels.

The business isn't offering much of a rebuttal.

http://www.nydailynews.com/entertain...p-134296c.html












Until next week,

- js.














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

Current Week In Review.




Recent WIRs -

January 3rd, December 27th, December 20th, December 13th

Jack Spratt’s Week In Review is published every Friday. Please submit letters, articles, and press releases in plain text English to jackspratts at lycos.com. Include contact info. Submission deadlines are Wednesdays @ 1700 UTC.