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Join Date: May 2001
Location: New England
Peer-To-Peer News - The Week In Review - February 7th, '09
"Malaria is spread by mosquitoes. I brought some. Here I'll let them roam around. There is no reason only poor people should be infected." – Bill Gates
"The huge rise in surveillance and data collection by the state and other organisations risks undermining the long-standing traditions of privacy and individual freedom which are vital for democracy." – Lord Goodlad
"It’s like that scene in ‘Dinner at Eight,’ the part when the husband comes home and tells his wife he’s lost his job. And she says something like, ‘Darling, that’s fabulous! All the best people are losing their jobs.’" – Deborah Needleman
Back to the Future
I suppose it's possible for people to download more, although my acquaintances seem to be to doing it already with as much abandon as there is impunity. I personally know of no one affected by any legal campaigns, and let’s face it, with file sharers numbering the 100s of millions, and lawsuits in the thousands the odds will always favor the file sharers, and overwhelmingly so. The most game changing trend however is the exuberant return of sneakerware. Not that it ever fully disappeared but now that harddrives have crossed the 1TB threshold and easily hold 10,000 albums at high bitrates, offers to share have become ubiquitous. A quick perusal of Craigslist shows "DJ" drives being openly advertised in the 300 dollar range fully loaded with karaoke, CDs, videos or any combination one chooses. Then there're movies: a 1.5 TB drive holds 1000 high-bit AVIs at a time the average Blockbuster store has I think less than 4000 titles, and drive sizes are increasing. Soon an entire store’s inventory will fit in a home cartridge smaller than a VHS tape, no small irony for a company that was founded by enticing consumers to go out and rent them one at a time. Obviously at present transfer speeds it would take months to grab such prodigious amounts – in the unlikely event one found an uploader willing to service the transfer for that duration - but a pal-to-pal hard drive dub is measured in hours, and perfect for a socially acceptable Saturday afternoon barbecue or big Sunday game.
The internet will always be the ideal medium for low level “background transfers” and the copyright mavens have in all likelihood resigned themselves to it, and the realization their lawsuit strategies are beginning to encounter serious and expensive legal resistance. It's also beginning to dawn on them that the big issues moving forward will be full quality library swaps via hard drive, where the entire TCM archive, or all the films in Maltin's movie guide, are available to be plugged directly into a TV via consumer devices like Western Digital’s TV HD media player, and no amount of Limewire trolling is ever going to stop it. It’s no surprise they’re retiring the distracting lawsuit campaigns. In a few years time the RIAA will be looking back with fond remembrance on the good ol’ days of Napster/Grokster/BT because the media companies’ brain trust will be occupied by a truly difficult quandary: getting consumers back to the store when they already have every album they can conceivably hear and every movie they can conceivably see, and all acquired for far less than the typical price of the media center they're enjoying them on.
February 7th, 2009
Why the IFPI/Eircom Anti-Piracy Deal Sucks
This week, Irish ISP Eircom and the music industry avoided an expensive legal battle, and settled out of court with a deal to disconnect alleged pirates. Eircom didn’t want to start using filtering technology to thwart pirates, so it made a deal with the labels instead - and it sucks.
Eircom, after initially holding out and maintaining its position so strongly, has now capitulated to the wishes of the music industry. It has settled with a group which runs 90% of Ireland’s music market, putting their wishes above the requirements of its own customer base, who of course, they didn’t consult about the move.
Thanks to Eircom entering into this entirely voluntary agreement, there is no need for them or the music industry to worry about any official intervention into the methods used for accusing and disconnecting subscribers. The music industry simply accuses alleged copyright infringers (via DtecNet, the RIAA and BPI anti-piracy partner), and the ISP simply disconnects them on an agreed Terms of Service violation.
A worrisome development, to say the least. The agreement bypasses the need for any legal ruling on the issue of a government-applied ‘3 strikes regime’. So, although the government may decide against this type of action for the general public, Eircom just put it firmly on the table, completely voluntarily, for all of its subscribers.
There will be no need to take alleged copyright infringers to court. The music industry knows from the US model that doesn’t work anyway, because it involves all that messy ‘defense’ stuff that people who are wrongly accused usually have the right to. Rather than face the hell of a trial (which at least they have a chance of winning), customers will be presumed guilty rather than presumed innocent. The will be no due process on the way to the punishment disconnection.
There will likely be no easy legal challenge to a user’s disconnection. Eircom will simply change its Terms of Service to include new tougher clauses which allow them to terminate the service if the connection is ‘abused’, although arguably the old TOS allows for this already. The warnings it will hand to its customers leading up to this point will be considered enough notice, as per the new TOS.
Anyone who shares an Internet connection with friends or family, or any business that has file-sharing staff (or wireless piggy-backers etc) will mean that the entire line goes down if anyone infringes, even a child. In disconnections of this type it will mean that the bill payer is being made responsible for something which happens on his connection without his knowledge.
As a carrier, ISPs are not responsible for the activities of their subscribers. The music industry disagrees. Eircom were set to challenge this in court - but with this new agreement that opportunity has been lost. The Big Four labels also insisted that anti-piracy filtering technology could be installed at Eircom, and argued that it would work. The chance to dispel this myth has been lost too.
Perhaps even worse, this might just be the beginning. The IFPI will use the Eircom agreement to force other, smaller ISPs in Ireland to reach the same agreement with them. If they succeed, IFPI will have achieved a “3 strikes” regime in a country without need for the messy business of the government getting involved with regulation, which it would otherwise be reluctant to do.
In no way does this agreement stop the music industry from getting someone disconnected AND taking a civil legal action against them.
This agreement will do nothing to change the habits of those who wish to share files. It will, however, encourage people to find a way around the measures introduced by IFPI and Eircom so the never-ending cat and mouse game continues.
The Pirate Bay Plans to Sue IFPI
Earlier this week a Danish court decided that all ISPs have to block access to The Pirate Bay. In response to the judgment, three ISPs have already announced that they will take the case to the Supreme Court. In addition, The Pirate Bay itself now says it will sue the anti-piracy outfit IFPI if the ISPs fail to overturn the ruling.
The decision to block The Pirate Bay has once again ignited a debate on Internet filtering, the responsibilities of Internet providers and the legal status of BitTorrent sites. The IFPI - the RIAA’s global partner - has chalked up a small victory this week, but the fight is far from over.
Peter Sunde, co-founder of The Pirate Bay told TorrentFreak that they are seriously considering suing the IFPI for unfair competition. “They have had a monopoly on distribution and we’re breaking that monopoly, and in turn they sue people that allow access to our distribution method,” he said.
Meanwhile, all other BitTorrent sites are still accessible in Denmark, and thus far the IFPI hasn’t announced it will go after any of them. This, together with the fact that there are several tricks to get around the block, make their legal strategy look like a personal vendetta against The Pirate Bay instead of an effective measure against piracy.
Before The Pirate Bay takes action against the IFPI, they will first await the outcome of the Supreme Court appeal that the three ISPs - DC, Telia and Telenor - announced earlier this week. If the appeal is unsuccessful, and when they find the perfect lawyer to represent them, The Pirate Bay will sue IFPI.
The IFPI seems to be looking forward to yet another confrontation. “Peter Sunde is welcome to sue us,” Jesper Bay, the head of the Danish IFPI told Comon.dk in a response to the news. Ironically, one of the websites explaining how to get around the Danish blockade carries Jesper Bay’s name.
For now, the Pirate Bay team has another court case to focus on. In two weeks their trial in Sweden kicks off, where the IFPI will also be one of their opponents. To be continued.
Digital Pirates Winning Battle With Studios
Brian Stelter and Brad Stone
On the day last July when “The Dark Knight” arrived in theaters, Warner Brothers was ready with an ambitious antipiracy campaign that involved months of planning and steps to monitor each physical copy of the film.
The campaign failed miserably. By the end of the year, illegal copies of the Batman movie had been downloaded more than seven million times around the world, according to the media measurement firm BigChampagne, turning it into a visible symbol of Hollywood’s helplessness against the growing problem of online video piracy.
The culprits, in this case, are the anonymous pirates who put the film online and enabled millions of Internet users to view it. Because of widely available broadband access and a new wave of streaming sites, it has become surprisingly easy to watch pirated video online — a troubling development for entertainment executives and copyright lawyers.
Hollywood may at last be having its Napster moment — struggling against the video version of the digital looting that capsized the music business. Media companies say that piracy — some prefer to call it “digital theft” to emphasize the criminal nature of the act — is an increasingly mainstream pursuit. At the same time, DVD sales, a huge source of revenue for film studios, are sagging. In 2008, DVD shipments dropped to their lowest levels in five years. Executives worry that the economic downturn will persuade more users to watch stolen shows and movies.
“Young people, in particular, conclude that if it’s so easy, it can’t be wrong,” said Richard Cotton, the general counsel for NBC Universal.
People have swapped illegal copies of songs, television shows and movies on the Internet for years. The slow download process, often using a peer-to-peer technology called BitTorrent, required patience and a modicum of sophistication by users. Now, users do not even have to download. Using a search engine, anyone can find free copies of movies, still in theaters, in a matter of minutes. Classic TV, like every “Seinfeld” episode ever produced, is also free for the streaming. Some of these digital copies are derived from bootlegs, while others are replicas of the advance review videos that studios send out before a release.
TorrentFreak.com, a Web site based in Germany that tracks which shows are most downloaded, estimates that each episode of “Heroes,” a series on NBC, is downloaded five million times, representing a substantial loss for the network. (On TV, “Heroes” averages 10 million American viewers each week).
A wave of streaming sites, which allow people to start watching video immediately without transferring a full copy of the movie or show to their hard drive, are making it easier than ever to watch free Hollywood content online. Many of these sites are located in countries with lackluster piracy enforcement efforts, like China, and are hard to monitor, so media companies do not have a clear sense of how much content is being stolen.
But many industry experts say the practice is becoming much more prevalent. “Streaming has gotten efficient and cheap enough and it gives users more control than downloads do. This is where piracy is headed,” said James L. McQuivey, an analyst at Forrester Research. “Consumers are under the impression that everything they want to watch should be easily streamable.”
Some of the first fights over video piracy on the Internet involved YouTube, the Google-owned Web site that introduced many people to streaming. Some legal disputes between YouTube and copyright owners remain, most notably a $1 billion lawsuit filed by Viacom, but the landscape “has improved markedly,” Mr. Cotton said. YouTube uses filters and digital flags to weed out illegal content.
But if media companies are winning the battle against illegal video clips, they are losing the battle over illicit copies of full-length TV episodes and films. The Motion Picture Association of America says that illegal downloads and streams are now responsible for about 40 percent of the revenue the industry loses annually as a result of piracy.
“It is becoming, among some demographics, a very mainstream behavior,” said Eric Garland, the chief executive of BigChampagne.
The files are surprisingly easy to find, partly because of efforts by people like Mohy Mir, the 23-year-old founder of the Toronto based video streaming site SuperNova Tube. The site, run by Mr. Mir and one other employee, allows anyone to post a video clip of any length. As the site has grown more popular, SuperNova Tube has become a repository for copyrighted content. On a recent day, the new movies “Paul Blart: Mall Cop” and “Taken” could easily be found on the site by following links from other sites, called “link farms,” which guide users to secret stashes of copyrighted content spread around the Web.
Mr. Mir says he did not know these files were there and that his company promptly responds to any request from major rights- holders. He also says that piracy is actually his largest problem — advertisers flee when they are alerted to infringing material — and that he is constantly removing files at the request of Hollywood studios.
His reluctance is seemingly belied by his site’s name, which is based on the popular SuperNova BitTorrent hub, and its slogan: “We Work with uploaders, not against them.”
The piracy problem, however, does seem to weigh on him. He removed a copy of the movie “Twilight” from his site after a reporter pointed it out to him recently. “I think about getting sued every day. If that happens it will definitely take us out of business,” he said.
Mr. Mir has reason for concern. In December, the motion picture association sued three Web sites that it said were facilitating copyright infringement by identifying and indexing links to pirated material around the Web.
John Malcolm, the association’s director of worldwide antipiracy operations, said that although the group does not sue individuals for watching pirated videos, other lawsuits against Web sites are forthcoming, and he acknowledged that the challenge is stiff.
“There are a lot of very technologically sophisticated people out there who are very good at this and very good at hiding,” Mr. Malcolm said. “We have limited resources to bring to the fight.”
With so much pirated material online, Hollywood is turning to technological solutions. Perhaps most important, media companies are learning from the music industry’s mistakes and trying to avert broader adoption of piracy techniques. The No. 1 lesson: provide the video on the platform that users want it.
Mark Ishikawa, BayTSP’s founder and chief executive, sees a correlation between the availability of content through traditional legal channels and their popularity on pirate networks.
“When DVD releases are postponed, demand always goes up, because people don’t have an authorized channel to buy,” he said.
Partly in response to the piracy problem, a cornucopia of video Web sites now feature the latest episodes of virtually every broadcast TV show. Movie studios are experimenting with video-on-demand releases and other ways to offer films on demand. Legal alternatives, the companies hope, will stifle the stealing. The music industry, by comparison, waited years to provide legal options for online listeners.
“That’s how you start to marginalize piracy — not just by using the stick, but by using the carrot,” Mr. Garland said.
One in Three Broadband Subscribers is a Pirate
A recently published survey found that one third of all broadband Internet subscribers worldwide admits to having downloaded movies or TV-shows illegally. The majority of these downloaders are well aware that their habits are illegal, but it doesn’t play on their conscience.
Every other month a new survey pops up, and they all seem to draw the same conclusion: millions of people worldwide download files from filesharing networks such as BitTorrent - and they don’t think this is morally wrong.
Most recently, Ovum researchers surveyed a large group of broadband Internet subscribers who also own a TV, and polled their video download habits. The video trends survey found that nearly one third of the respondents watch illegally downloaded video. Because music and software wasn’t included, it is safe to say that the overall piracy rate among broadband subscribers is even higher.
Most people do not download copyrighted videos on a regular basis though. The survey found that only 4% of the total sample admitted doing so. Interestingly, two thirds of the sample - including the ones that never download illegally - didn’t see it as morally wrong. This discrepancy between the perceived morality and the legal status lies at the core of the ever increasing piracy rate.
Despite the continuous efforts of the anti-piracy lobby attempted to change the public’s attitude towards piracy, without much success. The infamous “You wouldn’t steal…” campaign is a prime example of such a failed campaign. There hasn’t been much of a change in the attitudes of the public. Instead, TV and movie insiders themselves have regularly made fun of the strategy.
For several years the entertainment industry has ignored the endless possibilities the Internet has offered them, while striving to preserve their outdated business models. Thereby they ignored the cause of the problem. The rise of illegal downloading is clearly a signal that customers want something that is unavailable through other channels.
So, should sharing copyrighted material be legalized? Not per se, but the entertainment industry should focus on monetizing filesharing networks instead of bringing them down. The movie industry has said many times that it treats piracy as just another competitor, so one day it will hopefully see that sharing is not only a good thing but also an unstoppable thing - with a multitude of profit-making possibilities attached to it.
Comcast Labels Innocent Customer a Movie Pirate
Comcast doesn’t really have a good reputation in the BitTorrent community and it’s getting worse by the day. They now have plans to cooperate with the RIAA and disconnect alleged copyright infringers. A worrisome development, especially since they have a tendency to accuse innocent customers.
As we have reported many times before, gathering evidence against copyright infringers is not an exact science. Most recently, Comcast sent out an infringement notice to an innocent subscriber because their administration was not up-to-date
Dave Satz wrote in to inform us that one of his friends was served with a DMCA takedown notice a few weeks ago. His friend, John Aprigliano, had allegedly downloaded a CAM release of “Cadillac Records”, without ever having heard of the movie. Although these takedown notices are just a formality and intended to scare the recipient, John decided to contact his ISP and ask for clarification.
After four calls to Comcast support the truth came out. The infringement notice was forwarded to the wrong person because the MAC-address of John’s old modem was still linked to his account. The Comcast techs eventually corrected the mistake, but this case yet again shows how inaccurate takedown notices can be.
Of course, this is just an exception, without any serious consequences. But what if John had lived in Ireland or New Zealand? He could have lost his Internet connection because of a mistake like this. Not to mention that if Comcast doesn’t screw up, the companies that collect the so called evidence might - it wouldn’t be the first time.
The RIAA is currently trying to get ISPs all across the world, including Comcast, on board for their “three-strikes” or “graduated response” scheme. Earlier this week ZDNet reported that AT&T and Comcast are seriously considering teaming up with the RIAA later this year to hunt down illegal filesharers. Let’s hope Comcast has fixed its administration by then.
EU Media Chief Rules Out Internet Freedom Law
A European Union law to reinforce freedom on the Internet would be unnecessary and put operators in a difficult position, the bloc's top telecoms and media regulator said on Tuesday.
The U.S. Congress has drafted a Global Online Freedom Act. Some European Parliament members want the EU to follow suit, saying authoritarian nations are increasingly censoring the Web by blocking sites and intimidating users with "cyber police."
Such actions violate human rights, the EU lawmakers say.
The American law would promote freedom of expression on the Web and protect U.S. companies from coercion to participate in repression.
"Should the EU have specific legislation on Internet freedom? I am not convinced so far that hard law is the best way to deal with the challenge," EU Telecoms Commissioner Viviane Reding told a meeting in the European Parliament.
Instruments sought by some campaigners such as export controls, civil and criminal penalties, and the creation of a specific EU body controlling European Internet companies with operations abroad were "heavy," she said.
"I believe that we should not put European companies in an invidious position where their choice appears to be to break the law or leave the market to more unscrupulous operators," Reding said.
"Rather, our goal should be to find ways to allow operators and service providers to respect human rights without doing either," she added.
Reding said the U.S. State Department and Department of Justice were cautious about the Global Online Freedom Act as even democratic countries in Western Europe could be subject to restrictions foreseen in the draft bill.
U.S. companies have called instead for a code of conduct setting out minimum corporate standards related to Internet freedom.
Suggestions that EU money could be used to research and develop anti-censorship software were attractive and would be followed up, Reding said.
(Editing by Katie Nguyen)
Canadian Labour Congress Considers Major Reversal on IP Policy
Reliable sources report that the Canadian Labour Congress is set to consider a policy resolution that would dramatically alter its approach on copyright and intellectual property policy. The resolution will apparently be brought forward to the Congress Executive Council next Monday with the possibility of consideration by the full CLC Council immediately thereafter. It should be noted that the CLC has traditionally recognized the need for a balanced approach and that support for ratification of the WIPO Internet treaties comes primarily from U.S. pressure.
For example, consider the CLC's comments on IP policy within the context of the Security Prosperity Partnership with the United States and Mexico. Following the Montebello meeting in 2007, the CLC said the following:
In what appears to be a war against copyright infringement, Leaders have committed multiple law-enforcement agencies at different levels of government to collaborate on this apparently critical threat to North American competitiveness. The Action Strategy will depend upon the sharing of best practices from the private sector and “new innovative border enforcement techniques” to detect the trade in pirated and counterfeit goods within North America and arising from “third countries”.
Once again, we must ask why this issue has been raised as the focus of this highly militarized discourse and concerted effort on the part of industry and government security forces. The answer is that IPR protect business interests and the right of corporations to sell products. The increasing reliance on security forces, however, is not going to protect freedom of speech or nourish the creative spirit in North American communities by committing public support to cultural industries, schools for the creative arts, educational institutions. Nor have Leaders redoubled their efforts to ensure freedom of expression. Rather, as if they hadn’t already been granted more than enough protection from NAFTA, the largest corporations who own copyrights, trade marks, patents and claim protection for trade secrets will be able to count on the full support of state security forces to protect and extend their already extensive private property rights. As a society, Canada would benefit from an open debate on whether or not to strengthen IPR protections, especially when it comes to issues of social concern. For a society, it is not helpful for a debate over the production of knowledge wrapped in a discourse of criminality, piracy, theft and counterfeit as the NACC suggests. The issues of law-making and law enforcement should not be conflated in this way.
While some might quibble with some aspects of this statement, it is clear that the CLC recognizes the need for an open debate and the preservation of free expression. Yet the CLC proposed resolution reportedly states the following:
WHEREAS, counterfeiting and copyright piracy continue to harm Canadian workers. Counterfeiting and piracy - also known as intellectual property (IP) theft - cost the Canadian economy an estimated 22 billion dollars each year;
WHEREAS, IP theft also exacts an extensive human toll. IP theft robs Canadian workers of jobs and wages, as income that could have been used to expand the workforce or pay higher salaries is siphoned off to pad the coffers of international organized crime
WHEREAS, counterfeiting also poses a grave threat to the health and safety of Canadian workers;
WHEREAS, since counterfeiters and copyright pirates don't pay taxes, governments at all levels are deprived of tax revenues our workers rely on for vital services;
WHEREAS, the evidence that Canadian workers are harmed by IP theft is powerful;
WHEREAS, this critical issue requires a far-reaching response involving legislative and regulatory reform, policy change, and allocation of proper resources to combat the problems. The Canadian government must be given the structure and resources to mount a sustained attack on this pervasive problem, both within Canada and internationally. The criminal and civil laws in Canada must provide adequate deterrence. And consumers must be educated that counterfeiting and piracy are not victimless, nuisance crimes, but instead strike at the heart of our long term economic security;
WHEREAS, as unions representing thousands of these workers, we urge the Canadian Government and all Members of Parliament and the Senate to work together to pass comprehensive legislation and enact the policy changes that would bolster the ability to address this growing threat;
NOW, THEREFORE BE IT RESOLVED, accordingly, we urge the enactment of broad legislative measures that can really make a difference. Any such measures should include:
Amending the Copyright Act consistent with international standards to (i) conform with the World Intellectual Property Organization’s “Internet” Treaties and ratify the Treaties; (ii) enact a strong legal framework governing the responsibility and liability of online service providers that ensures they play a role in preventing copyright infringement, including providing rightsholders with an expeditious and effective means to stop the widespread dissemination of infringing material;
This is a remarkable about-face for the CLC, which would moves from an open discussion approach to quoting with support the counterfeiting claims that have no evidentiary basis, calling for the ratification of the WIPO Internet treaties that is strongly opposed by consumer and education groups, and moving toward the enforcement-based approach that they have long criticized. With only a few days left before this unbalanced resolution is considered, those concerned with the resolution should voice their views with the CLC.
ESPN to ISPs: Pay for Your Customers to Play Video
Eliot Van Buskirk
For some sports fans, ESPN360, the online version of ESPN's television channel, is a cornucopia of more than 3,500 sporting events each year, viewable from the convenience of a computer. For others, it's a total bust. The only difference: their ISP.
The culprit is ESPN's strategy of licensing ISPs rather than users. If your ISP doesn't want to pay for you to watch ESPN360, there's nothing you can do about it, short of switching to a provider that pays for it. While other companies strive for a more direct, one-to-one relationship with consumers, ESPN is doggedly pursuing the same strategy online that made it a success in the TV world: licensing pipes, not people. And it just might work.
"We're believers," ESPN executive vice president for affiliate sales and marketing David Preschlack told Wired.com. "It's just the point of view that we have: that as opposed to just selling speed, content is going to play a role in the high-speed data marketplace."
ESPN quietly announced the plan over two years ago, but it seem increasingly incongruous in an age of bit torrent, disintermediated, direct-to-consumer distribution and legal options for watching online video. Other major media providers like Disney (ESPN's parent company) and the NFL are also charging internet providers for the right to deliver their content, and record labels are considering following suit. Disney Connection — available on Verizon but not Comcast — includes classic cartoons, games, movie previews and other content for preschoolers, kids and teens. Meanwhile the NFL Network Game Extra service offers live games on Thursday and Saturday nights with four camera angles to choose from. But unless your ISP pays, you can't see any of it.
This is a reversal of the model pushed by some major broadband companies that would like to charge content companies for the right to use their pipes. If other full-length video providers like Hulu and HBO get in on the act, the time could be approaching when you'll choose your internet service based on what selection of content it offers. Eventually, popular non-video websites might follow suit. Imagine a future water cooler conversation over broadband choice: "I went with Comcast 'cause they get Yahoo."
Ben Scott, policy director for media reform and net neutrality advocate Free Press, doesn't like this prospect one bit, and thinks it could even hurt the bottom line of companies employing this approach. If the strategy spreads, he says, the internet could become a very different place.
"Ultimately, if you carry it to its logical extreme — that's everyone charging for their content, and depending upon where you are and which ISP you're using to connect to the internet, your internet experience is different — that's a really unsettling prospect," says Scott. "I think it undermines the foundational principles that make the internet such an engine of innovation and creativity."
ESPN's work in convincing the nation's ISPs to pony up for its exclusive, live and archived content is nearly half complete. "The product is available in over 40 percent of high-speed-data homes," says ESPN's Preshlack, "so that in itself is a big positive for us." For the remaining 60 or so percent of U.S. broadband homes, though, it's a whopping negative, at least as far as sports fans are concerned. Their pain is temporary, according to ESPN. Although its ESPN360 service won't be ubiquitous until every ISP in America starts paying up, that's exactly what Preshlack expects to happen.
"I'm very optimistic in terms of where we're going to end up at the end of the proverbial game, which is full distribution for the product," he says "It just takes some time... If I were to use a baseball analogy, I'd say we're in the top or bottom of the fourth inning."
Preshlack likens the process to the company's last expansion into undercard content: ESPN2, a cable TV channel that broadcasts events beyond the more mainstream fare found on regular ESPN. Regardless of the fact that ESPN360 lives on a completely different, and traditionally open medium — the internet — ESPN is using the same game plan that worked for television: painstakingly licensing distributors in the hopes of making its service ubiquitous and reaping bigger rewards than if it had licensed each interested user, or offered its widely sought content on a free, ad-supported basis.
"For our distributors, to associate themselves with our brand in this space is very much like distributors who've associated themselves with our brand in the [cable television] space," Preshlack says.
Verizon, for one, is more than happy to pay. "It's a tremendous value-add — one more thing to help attract customers to our broadband service," says spokesman Cliff Lee, who adds that Verizon has also bought into Disney's and the NFL's paid offerings.
Preshlack describes negotiations with the remaining high-speed ISPs in America as "productive and ongoing." Neither ESPN nor any of the participating ISPs we spoke to would disclose what ISPs pay for ESPN360.
Complicating this model is the growing plethora of devices available for watching internet video. Busy sports fans might want to start a game at home on their television, continue watching via cellphone on the train, catch another hour during their lunch break on a work computer, then finish the game back at home on TV. Preshlack insists that consumers will be able to enjoy that multiscreen experience, because ESPN will eventually license its content to every cable company, ISP and cellphone network provider in the country.
But Free Press' Ben Scott thinks the this new internet model will ultimately be bad for providers. "My gut reaction is that it's a terrible business model," says Scott. "The beauty of the internet is that you put a piece of content on your server, and it's available to anyone with a computer anywhere in the world that's connected to the internet. If you begin walling off your content and selling network operators [the right to distribute content], that defeats the whole idea of maximizing the exposure of your content."
Net Neutrality: This is Serious
When I invented the Web, I didn't have to ask anyone's permission. Now, hundreds of millions of people are using it freely. I am worried that that is going end in the USA.
I blogged on net neutrality before, and so did a lot of other people. (see e.g. Danny Weitzner, SaveTheInternet.com, etc.) Since then, some telecommunications companies spent a lot of money on public relations and TV ads, and the US House seems to have wavered from the path of preserving net neutrality. There has been some misinformation spread about. So here are some clarifications. ( real video download m4v, Mpegs to come)
Net neutrality is this:
If I pay to connect to the Net with a certain quality of service, and you pay to connect with that or greater quality of service, then we can communicate at that level.
That's all. Its up to the ISPs to make sure they interoperate so that that happens.
Net Neutrality is NOT asking for the internet for free.
Net Neutrality is NOT saying that one shouldn't pay more money for high quality of service. We always have, and we always will.
There have been suggestions that we don't need legislation because we haven't had it. These are nonsense, because in fact we have had net neutrality in the past -- it is only recently that real explicit threats have occurred.
Control of information is hugely powerful. In the US, the threat is that companies control what I can access for commercial reasons. (In China, control is by the government for political reasons.) There is a very strong short-term incentive for a company to grab control of TV distribution over the Internet even though it is against the long-term interests of the industry.
Yes, regulation to keep the Internet open is regulation. And mostly, the Internet thrives on lack of regulation. But some basic values have to be preserved. For example, the market system depends on the rule that you can't photocopy money. Democracy depends on freedom of speech. Freedom of connection, with any application, to any party, is the fundamental social basis of the Internet, and, now, the society based on it.
Let's see whether the United States is capable as acting according to its important values, or whether it is, as so many people are saying, run by the misguided short-term interested of large corporations.
I hope that Congress can protect net neutrality, so I can continue to innovate in the internet space. I want to see the explosion of innovations happening out there on the Web, so diverse and so exciting, continue unabated.
Vuze Calls for FCC Probe of Cox Cable Traffic Management
Vuze is on the warpath once more, this time calling for an investigation of Cox Cable's new P2P delaying network management test. Given that Cox says it will be doing something similar to what got Comcast in trouble, the FCC may take a look.
Here we go again... maybe. The media company that petitioned the Federal Communications Commission for an investigation of Comcast's peer-to-peer throttling practices is on the warpath once more. This time Vuze has set its sights on Cox Cable, which has made itself a pretty obvious target with its announcement in late January that it will classify P2P traffic in Kansas and Arkansas as "Non-Time Sensitive," and thus "tolerant of delay."
Did somebody say P2P?
Vuze attorney Jay Monahan speaks about the throttling to Vuze users on his blog, saying, "That includes all bittorrent applications, including your Vuze application. We take that personally, and think you should too." Monahan has asked for "close scrutiny by the FCC of Cox's activities affecting peer-to-peer traffic."
Vuze is a bit sensitive to these practices because practically all the streaming content that it delivers comes via the kind of apps Cox says it will deprioritize. "While Cox may consider our content and business to be unimportant or of lower priority, all of the content we deliver through the Vuze HD Network is delivered using our bittorrent-protocol-based technology," Monahan writes. "Suffice it to say, our 10 million users who access over a petabyte of Vuze HD Network content every month care about 'delay' of their content."
To be fair, Cox has not rolled out this new practice everywhere. In fact, the company says that it's just testing the method, starting this month. Delay-tolerant applications will also include FTP, Usenet, and software updates. When Cox's network is congested, its new network management technology will give Web pages, voice calls, streaming videos and gaming an open road. But "less time-sensitive traffic, such as file uploads, peer-to-peer and Usenet newsgroups, may be delayed momentarily" when the local network is congested.
"Although Cox is investing a significant amount of time and money to test this new method of congestion management, we won't know if changes are warranted until the results of this trial are complete," the company adds.
But what makes this announcement troubling to Vuze and to Freepress, which has also called for an investigation, is that, unlike Comcast's new network management system, which just measures congestion, Cox's experiment will do what Comcast used to do: focus on specific applications. Vuze is not reassured by Cox's insistence that delays will be "very brief and likely not noticeable to customers."
"We are loath to trust the judgments of a network operator about what does or does not hurt our business, particularly when they too are in the content business," Monahan responds, adding that, "It remains to be seen whether Cox's techniques will withstand FCC scrutiny, particularly under a new FCC Chairman to be appointed by President Obama, a known supporter of net neutrality."
He's talking about likely Obama FCC pick Julius Genachowski, who helped the candidate fashion his campaign net neutrality statement. Meanwhile the company says it will be monitoring Cox's experiment on its own, using the new tools that Google has set up to track network openness. "We encourage all of you to use them and speak out about any irregularities," Monahan's blog commentary concludes.
EU Plots Pirate Bay Ban and Piracy Clampdown
In a few weeks time, members of the European Parliament will vote on the Medina report, which proposes a wide range of anti-piracy measures and regulations. The report specifically mentions The Pirate Bay, and it approves actions by national courts against the popular BitTorrent tracker.
The proposals in the report, drafted by the 73 year old Spanish socialist Manuel Medina Ortega, show many similarities to the wish lists of the RIAA, IFPI and MPAA we published earlier. The report calls for more responsibility and liability for ISPs, while copyright infringing content has to be filtered from the Internet.
Even though the European Parliament has voted against so called “three-strikes” proposals twice before, this is also suggested as a viable measure against piracy. It’s proposed that ISPs should disconnect subscribers who share copyrighted content, based on information provided by the entertainment industry.
In addition, national courts are encouraged to take action against BitTorrent sites such as The Pirate Bay. Apparently, the report deems BitTorrent sites to be illegal - which is a bold statement without any legal backup. Last year, Italy imposed a nation wide block on The Pirate Bay, but this was reversed in court due to a lack of jurisdiction; this might change if the new proposals are adopted.
In a draft of the report we read “The activities of websites that are part of the peer-to-peer phenomenon and which allow downloading of protected works or services without the necessary authorisation are illegal, and no exception can be applied to them. So the activity of internet users who send files to their peers must be regarded as an illegal act of communication to the public without the possibility of exceptions being applied.”
ISPs are further encouraged to identify and filter copyright infringing content on their networks. As we’ve said before, this might work on networks such as FastTrack/Kazaa, but it remains unclear what methods the ISP will have to implement to distinguish between copyright infringing and legal content on more tricky networks, such as BitTorrent. That will be a tough job, if not impossible. In common with RIAA recommendations, the report suggests that ISPs should be held liable for the actions of their customers.
More details are available on La Quadrature, with Jérémie Zimmermann, co-founder of the site commenting, “The Medina report is ridiculous and full of repressive measures. It is in total contradiction with what MEPs voted twice against ‘graduated response’ and with the realities of Internet. It only favors entertainment industries and doesn’t contain anything for culture, the artists, or their public.”
Of course, we encourage all of our European readers to write to their representatives in the European Parliament, as this is clearly not the right path to take.
RIAA Lied To Congress About New Filesharing Suits
On December 23, 2008, the RIAA's Mitch Bainwol sent a letter to the Judiciary and Commerce Committees of both the House and Senate, falsely representing to them that the RIAA "discontinued initiating new lawsuits in August." A copy of the letter is online (PDF). In fact, as many of you already know, the RIAA brought hundreds of new lawsuits since August. See, e.g., these 40 or so cases which just represent some of the cases brought in December.
Maybe they're just taking a broad view of the world "initiate."
New Zealand Internet Cafe Boss Faces More Film Copyright Breach Charges
A 42-year-old Auckland man is facing multiple charges after police raided a city centre internet cafe for the second time in three months.
HTC internet Cafe's sole director Yongming Nie faces 34 offences against the Copyright Act 1994.
The raids follow investigations by the New Zealand Federation Against Copyright Theft (NZFact), representing the Motion Picture Association in New Zealand (MPA).
The charges are understood to involve HTC providing facilities where members of the public, upon payment of fees, were viewing movies on computer terminals.
It was suspected that the movies were reproduced and shown without the permission of copyright owners, breaching a number of rules under New Zealand's copyright law.
NZFact investigators visited HTC a number of times in January, following Nie's appearance in court on charges arising from an earlier police raid.
These enquiries confirmed the availability of a wide variety of movies including Iron Man, What Happens In Vegas and The Chronicles of Narnia: Prince Caspian.
"It is disappointing to see this suspected criminal activity continuing despite earlier police action," said Tony Eaton, executive director of NZFact. "The illegal distribution of movies, whether on DVD or through the internet, damages our domestic movie production and distribution businesses.
"The Chronicles of Narnia: Prince Caspian was filmed here in New Zealand so it is particularly disappointing to see it being illegally distributed."
Nie is now helping police with enquiries in relation to the latest raid on HTC.
The earlier raid, on November 25, led to Nie appearing in Auckland District Court on 21 charges relating to the importation, possession and distribution of copyrighted works. He is on bail for those offences and scheduled to appear in Auckland District Court on February 20.
A study by independent research firm LEK Consulting on behalf of the MPA showed piracy cost the film industry in New Zealand an estimated 25 per cent of the potential market in 2005 - $70 million.
Internet piracy via P2P file-sharing networks accounts for the majority of New Zealand movie industry losses, an estimated $33 million in lost consumer spending in 2005.
Time Warner Posts $16 Billion Loss
Time Warner, the media and entertainment company, reported a fourth-quarter loss on Wednesday, hurt by a $24.2 billion write-down for its cable, publishing and AOL assets.
The company posted a loss of $16.03 billion, or $4.47 a share, compared with profit of $1.03 billion, or 28 cents a share, a year ago.
Quarterly results were dragged down $4.70 a share mostly because of a $24.2 billion write-down. Time Warner had anticipated the write-down, predicting in January that it would record an operating loss for the fourth quarter and the full year.
Excluding the write-down, adjusted earnings were 23 cents a share.
Revenue for the period ended Dec. 31 dipped 3 percent to $12.31 billion from $12.64 billion on softness in its filmed entertainment, AOL and publishing units.
Analysts polled by Thomson Reuters forecast earnings of 26 cents per share on revenue of $12.71 billion. Analysts’ estimates typically exclude one-time items.
At AOL, revenue slid 23 percent to $968 million as subscription revenue tumbled 27 percent and ad sales dipped 18 percent.
Time Warner Cable revenue rose 8 percent to $4.4 billion, while filmed entertainment revenue dropped 11 percent to $3.1 billion. But the cable unit had a loss in the fourth quarter as it took a $14.8 billion write-down, and lost video subscriptions because of the weakening economy and asset sales.
The New York-based cable operator lost $8.16 billion, or $8.36 a share, compared with profit of $327 million, or 33 cents per share, last year. Time Warner wrote down the value of its cable franchise by $14.82 billion.
Time Warner is nearing completion of the Time Warner Cable spinoff, which is anticipated to close in the first quarter. The cable company will pay a one-time dividend of $10.9 billion to shareholders, the bulk of which will go to the parent.
The move is expected to help the remaining company better focus on its strengths in content, especially if it can also shed all or part of AOL, acquired as part of AOL’s $106 billion purchase of Time Warner in 2001.
Revenue from Time Warner’s networks, which include HBO and Turner Broadcasting, climbed 9 percent to $2.9 billion.
The publishing division reported a 13 percent decline in revenue to $1.3 billion, primarily pulled down by a 20 percent drop in ad sales.
Time Warner expects 2009 adjusted earnings from continuing operations to be about flat compared with 66 cents per share in 2008.
For the year, the company reported a loss of $13.4 billion, or $3.74 per share, compared with profit of $4.39 billion, or $1.17 per share, in the previous year.
Annual revenue grew 1 percent to $46.98 billion from $46.48 billion.
Time Warner has also announced layoffs at its various divisions because of the recession.
Last month, its Warner Brothers Entertainment movie studio announced cuts of nearly 800 jobs, or 10 percent of its global work force, through layoffs, attrition and outsourcing, citing sinking consumer demand and the overall weak economy.
The company’s AOL Internet unit also announced a cut of 700 jobs, or about 10 percent of the work force, to cope with a slowing advertising market. The unit also said it was skipping merit pay raises in 2009.
News Corp. Loss Shows Trouble at Dow Jones
It seems that even Rupert Murdoch isn’t immune to the downturn battering media companies.
The News Corporation, the media empire controlled by Mr. Murdoch, said Thursday that it lost $6.4 billion in its second quarter as profit fell sharply at its television and movie units. The company also took a large write-down of $8.4 billion, about $3 billion of which reflected a decline in the value of the company’s newspaper unit, which includes Dow Jones, the publisher of The Wall Street Journal. Many media analysts believed that News Corp. overpaid when it bought Dow Jones just over a year ago for about $5 billion, and the write-down indicates that it lost significant value.
The announcement followed a huge write-down at another conglomerate, Time Warner, last month and a sharp decline in earnings at the Walt Disney Company this week.
Excluding the write-down, the News Corporation had income of $320 million, or 12 cents a share, significantly below the Wall Street expectations. Analysts had forecast earnings of 19 cents a share, according to Thomson Reuters.
Total revenue was $7.9 billion, compared with $8.59 billion a year earlier and the $8.4 billion analysts expected.
Mr. Murdoch, the chairman and chief executive, said the economy had deteriorated faster than anticipated in the last three months.
“Our results for the quarter are a direct reflection of the grim economic climate,” he said. “While we anticipated a weakening, the downturn is more severe and likely longer-lasting than previously thought.”
He also suggested job cuts were in the offing, saying, “We are implementing rigorous cost-cutting across all operations and reducing head count where appropriate.”
Among the company’s assets are the Fox broadcast network, Fox News, the 20th Century Fox movie studio and newspapers like The New York Post and The Wall Street Journal, as well as the social networking site MySpace.
Reflecting a sharp downturn in advertising across the broadcast television industry, the company had its steepest drop in the television unit, where income fell to $18 million, from $245 million a year earlier. The company’s television stations had a 44 percent decline, “reflecting a significant overall weakening of the local advertising markets despite increased political advertising revenues,” the company said in a statement. The film division had income of $112 million compared with $403 million a year earlier.
One bright spot was cable networks, including Fox News. The division reported income of $428 million, up $91 million from the period a year earlier. Fox News increased its operating income by 32 percent.
When times were better, Wall Street was more willing to ignore Mr. Murdoch’s affinity for newspapers and high-priced deals like the acquisition of Dow Jones.
But the company has been punished by the market more than most of its peers. The News Corporation is down 52 percent over the last six months, and 70 percent off its 52-week high. The stock closed Thursday at $6.94, up 33 cents. (The earnings report was released after the stock market had closed.)
Time Warner, Viacom and Disney are all down less than the News Corporation, while CBS is down more, off 65 percent over the last six months.
Mr. Murdoch declined to comment on the status of talks over a new contract for Peter Chernin, the company’s president, whose deal expires in the summer. Mr. Murdoch said the talks were “private” and “confidential.” Last quarter, he described them as “constructive” and “friendly.”
In recent weeks, some Wall Street analysts who cover the News Corporation have lowered their earnings forecasts for the company. For example, on Jan. 23 Anthony DiClemente at Barclay’s Capital dropped his estimate for the company’s 2009 earnings by 22 percent.
Another analyst, Michael Nathanson of Sanford C. Bernstein & Company, suggested this week seeing the company in terms of good assets and bad assets.
“The potential rescue of financial stocks by placing assets into ‘good banks’ and ‘bad banks’ has captured our imagination,” he wrote. “Why couldn’t media companies follow this strategy?”
Rich Greenfield of Pali Research also picked up the theme, writing, “our fear is that News Corp. is so committed to its existing businesses that it will be willing to sustain businesses that slip into negative profitability for years.” The New York Post loses tens of millions of dollars a year.
Mr. Murdoch remains sanguine about newspapers, saying, “I’m extremely happy with all our newspapers.” He is trying to cut losses at The Post and said Thursday that it would combine its back office with The Journal’s to save about $7 million a year.
Also on Thursday, in a concession to sharply lower advertising, The Journal eliminated about 25 newsroom jobs — the paper declined to give a precise number — out of roughly 760. The cut is minor compared with the shrinkage at most newspapers. But it stands in contrast to Mr. Murdoch’s talk in 2007 of a significant newsroom buildup and his expansion since then in the ranks of Dow Jones Newswires.
The Journal’s reduction includes 14 layoffs and an unspecified number of buyouts. The largest number of positions eliminated was in the group of reporters and editors who cover fashion and retailing.
Richard Pérez-Peña contributed reporting.
Revenue Rose, but Loss Deepens for Game Maker
Laurie J. Flynn
Video game maker Electronic Arts reported a disappointing holiday season and said it would lay off employees, close facilities and trim its roster of games.
John Riccitiello, Electronic Arts’ chief executive, said that customers were more cautious during the quarter, buying mostly hit titles, while retailers were stocking fewer products to avoid having to deal with excess inventory. He conceded that the company had also underestimated the demand for games made for the Nintendo Wii, the most popular console.
The company said it would lay off 1,100 workers, close 12 facilities and narrow its product portfolio in an effort to reduce costs.
The restructuring would result in $65 million to $75 million in charges over the next 12 months. Electronic Arts said the moves would reduce the company’s operating expenses in the 2010 fiscal year by about $500 million.
“We have hit the reset button on our cost structure,” Mr. Riccitiello said. He called the global economic environment challenging and said he saw no uptick in the coming year.
Shares of Electronic Arts rose about 4 percent in after-hours trading, as investors expressed their approval of the company’s continued cost-cutting efforts, analysts said. In regular trading, before the report was released, the shares had risen 64 cents a share to close at $15.50.
“The quarter was well below expectations,” said Colin Sebastian, an analyst at Lazard Capital Markets. “But investors are focusing on the cost-cutting.”
While the video game industry tends to weather economic downturns better than other technology sectors, Electronic Arts was an exception this holiday season. Total industry sales rose 9 percent in December, to $5.29 billion, helping fuel a 19 percent increase in sales for the year, according to the NPD Group, a market research firm.
The company had only one hit in NPD’s Top 10 list for December: “Left 4 Dead” for the Xbox 360 was ranked seventh. Five of the top 10 sellers were from Nintendo for the Wii game console.
The company reported a net loss in the third quarter of $641 million, or $2 a share, compared with a loss of $33 million, or 10 cents a share, in the year-ago quarter. Revenue rose to $1.65 billion, from $1.5 billion.
The report was far below the expectations of Wall Street analysts. The company lowered its forecast for the 2009 fiscal year, which ends in March. Electronic Arts now expects to post a loss of 35 cents a share on revenue of $4.1 billion.
Electronic Arts executives warned in early December that sales and profits for the year would be significantly lower than it had projected in October, though at the time it declined to provide new figures.
In October, the company said it would have sales of $5 billion to $5.3 billion and earnings of $1 to $1.40 a share for the year ending in March.
Sony Music, EMI Report Losses
Both Sony and EMI have reported recent financial losses as any cost-cutting measures the companies have undertaken failed to make up for lagging music sales. During the fiscal third quarter ended December 31, Sony Music Entertainment (SME) generated $1.16 billion in revenue, which is a 22 percent decrease compared with the same quarter of the previous fiscal year. Consolidated sales also decreased 24.6 percent year-on-year. Sony said in its report that "revenues were negatively impacted by the accelerated decline in the worldwide physical music market resulting from the worldwide economic slowdown, as well as unfavorable exchange rates." SME's best selling albums in the quarter were AC/DC's Black Ice, Beyonce's I Am...Sasha Fierce, P!nk's Funhouse and Britney Spears' Circus.
Meanwhile, EMI Group reported a first-half loss of £155 million ($221.9 million) on Friday. The music group's net loss for the six months ended September 30 narrowed from a £324 million loss in the same half of last year, reports the Wall Street Journal. Under Terra Firma's ownership, EMI has cut costs by reducing marketing dollars and giving musicians smaller advances. While such cuts are helping to reduce the company's losses, they also appear to be costing EMI market share, notes the WSJ. EMI's share of global CD sales fell to 9.8 percent from 10.6 percent in the half. The market share decline "reflects historical problems," the company said in a statement. "It will take some time to see the impact of a rebuilt roster and the full recovery of EMI music." http://fmqb.com/Article.asp?id=1140997
Panasonic to Cut 15,000 Jobs
Panasonic on Wednesday said it was shedding 15,000 jobs, the second significant layoff in Japan’s electronics industry in less than a week, and the latest example of how Japanese companies, exporters in particular, are scrambling to cut costs as demand evaporates.
Panasonic, along with Mitsubishi Motors and Mazda, also joined the rapidly lengthening list of companies to sharply revise their full-year outlooks Wednesday, with Panasonic now projecting a net loss of 380 billion yen or $4.2 billion for the year ending March 31, rather than the 30 billion yen profit it forecast on Nov. 27. Mitsubishi expects a net loss of 60 billion yen and Mazda 13 billion.
The speed of the demand downturn in recent months has taken manufacturers and economists by surprise, and forced many companies to sharply lower profit warnings made only months or even weeks ago.
As concerns mounts that no tangible improvement will come until late in 2009 at the earliest, companies have intensified their cost cuts: large-scale layoffs like the ones announced by Panasonic on Wednesday and by the computer maker NEC last Friday are likely to become increasingly common. NEC is shedding 20,000 jobs. Hitachi, Toshiba and Sony have all also recently announced thousands of job cuts.
The outlook for the business environment “has been extremely uncertain,”
“Business conditions have worsened particularly since last October,” Panasonic said in a statement, “due mainly to the rapid appreciation of the yen, sluggish consumer spending worldwide and ever-intensified price competition.”
During October-December, as the impact of the credit crunch triggered by the collapse of Lehman Brothers in September began to bite, Panasonic had a net loss of 63.1 billion yen in contrast to a profit of 115.2 billion yen in the period a year earlier.
Panasonic said it was shutting 13 manufacturing sites in Japan and 14 abroad by the end of March. It also plans to lay off about 15,000 workers, or 5 percent of its work force, by March 2010. Half of the cuts will be made in Japan.
Manufacturers of “discretionary” items — purchases that shoppers can put off or scrap altogether when times get tough — have been especially hard hit as much of the developed world lurched into recession last year.
Such goods include cars, which are piling up unsold as demand plummeted faster than manufacturers’ ability to cut back production.
And consumer electronics like the plasma TVs and household appliances that Panasonic is best known for.
Manufacturers in Japan have suffered the additional burden of the yen’s appreciation against the dollar over the past year. This has made their products more expensive for consumers in the key U.S. market.
In addition, Japan has a number of electronics makers — Sony, Panasonic, Sanyo and the camera makers Canon and Nikon among them — making for intense competition. The current crisis may intensify pressure for some of these to merge. Panasonic’s plans to swallow the much smaller Sanyo are awaiting regulatory approval.
Netflix Says 1 Million Xbox Members Use Movie Service
Online DVD company Netflix said on Thursday that one million Microsoft Xbox 360 video game console users have activated Netflix's movie streaming service in the past three months since the two companies formed a partnership.
Netflix said the Xbox LIVE community has watched 1.5 billion minutes of movies and TV episodes through its Watch Instantly video service, but did not say how many subscribers it has actually gained from the partnership.
Netflix, best known for renting DVDs by mail, is the only company offering a subscription-based streaming video service as other rivals like Amazon.com, Apple, and Blockbuster compete with a la carte, pay-per-view rentals.
Analysts have been watching for data on the alliance as an important gauge of the emerging market for movies delivered over the Web, particularly as traditional media companies like Walt Disney this week have reported declining DVD sales and said the traditional business for delivering home video needs to be revised.
Netflix last month said its stronger-than-expected quarterly results were propelled by growth in its Web video streaming service and that streaming was "energizing" its growth.
Netflix has offered the Watch Instantly streaming service for over two years, but it was originally only available on PCs. It has since offered streaming Netflix video from the Internet through various devices, including the Roku settop boxes, the Xbox, LG Electronics products and others.
The Netflix application offers Xbox LIVE Gold members, who pay $50 a year to Microsoft for various different applications, the ability to instantly view content from Netflix on a TV via the Xbox 360 system if they are also members of Netflix service, priced at around $9 per month to include Watch Instantly unlimited streaming.
Netflix's library of about 12,000 titles for instant viewing includes mostly older Hollywood titles as major movie studios have resisted making new releases available digitally for subscription services.
Netflix offers newer titles on DVD or high-definition Blu-ray Disc through its mail-order service, through a library of more than 100,000 titles.
(Reporting by Sue Zeidler; Editing by Gary Hill)
Can the Cellphone Industry Keep Growing?
Cellphone sales are falling, manufacturers have announced thousands of layoffs and wireless carriers are finding it harder to acquire and keep customers.
It seems like another tale of “recession bites industry,” but there are signs that this downturn is masking something more fundamental: that the cellphone industry’s best days are behind it.
Analysts and investors are beginning to ask whether the industry can continue growing. The challenge is both simple and daunting: how to expand when more than half of the six billion people on the planet already have phones. And even in developing countries where there are underserved markets, subscribers spend less on phones and services.
Craig Moffett, an industry analyst at Sanford C. Bernstein & Company, is one of the skeptics. “I don’t think anyone would argue that the salad days of the wireless industry aren’t over,” he said. He added that in terms of subscriber growth in North America, “we’re awfully close to saturation.”
“It’s not correct to call this a cyclical problem,” Mr. Moffett said. “To do so suggests that after the recession, growth rates will bounce back. There’s no reason to believe that’s the case.”
The industry’s tough news continued on Tuesday when Motorola announced its fourth-quarter earnings for 2008. The telecommunications equipment company, which is suspending its quarterly dividend, lost $3.6 billion in the fourth quarter, versus earnings of $100 million in the period a year ago. Sales were $7.14 billion, down 26 percent, from $9.65 billion in the fourth quarter of 2007.
Motorola sold 19.2 million cellphones in the quarter, down 53 percent from the period a year ago. It went from being the world’s second-largest maker of cellphones in 2007 to its fifth-largest.
Sanjay Jha, Motorola’s co-chief executive, said the industry would grow after the recession, but how much and how quickly is the interesting question. “While it may not be possible to return to the explosive growth we’ve seen in wireless, there will be good, sustainable growth as data applications become essential,” Mr. Jha said.
He said he believed that data — Internet and text messages — could assume the mantle of growth from voice communications. “Data can be similarly influential in changing people’s lives.”
Nobody is looking at the cellphone industry and making comparisons with Detroit. There is little doubt that there are tens of billions of dollars to be made selling phones and providing services, particularly those involving data.
The industry is pinning high hopes on a new generation of more powerful (and expensive) smartphones. AT&T activated 1.9 million iPhones in the fourth quarter, while Verizon added more than a million BlackBerry Storms.
Over all, these devices make up about 10 percent of the domestic cellphone market and are considered likely to grow in popularity, driving people to upgrade and pay for more data to do things like download songs and send text messages. In the fourth quarter, for example, AT&T’s data revenue for each subscriber rose 27 percent, to $16.30, from about $12 a year earlier.
Over the long term, the industry vigorously disputes the notion that it is anywhere near slowing down. “If there’s anything I can be extremely confident about, it’s that our customer base wants new phones,” said Denny Strigl, president and chief operating officer of Verizon, which owns 55 percent of Verizon Wireless (the Vodafone Group owns 45 percent).
Verizon and its chief rival, AT&T, each reported financial returns last week that hinted at challenges to sustained high levels of growth. Verizon Wireless gained 1.4 million subscribers, but that is down from 2 million a year earlier. AT&T gained 2 million subscribers, compared with 2.7 million in the fourth quarter of 2007.
SprintNextel recently announced plans to eliminate 8,000 jobs.
Some industry analysts say they believe the lure of data and the fancier phones that support it will not stop growth rates from falling over time.
Over all in the wireless industry, “there’s ton of money being made, but it’s not going to grow as fast as people have experienced or as quickly as they’re relying on it to in the future,” said Ed Snyder, an analyst with Charter Equity Research. “All this talk about data and other services bringing a renaissance of growth is wrong.”
One challenge for the long-term growth of smartphones is that they are expensive. The average selling price of the Apple iPhone is $600 (without the carrier’s subsidies) and the BlackBerry from Research in Motion costs $370, according to Broadpoint Amtech, a research firm.
By comparison, the average selling price of phones made by Motorola and Samsung (companies with fewer smartphones in their inventory) is around $120. Analysts have little doubt that this price differential will fall over time. But that still means the cellphone industry is depending on consumers to upgrade to a significantly more expensive product in the years ahead.
Smartphones are also smart in preventing their own obsolescence. As they are more dependent on software than hardware to stay up to date, a downloaded upgrade or new application (one that mobile carriers are eager to sell) can do for some of these new phones what used to require an entirely new device.
Apple’s chief executive, Steven P. Jobs, addressed this issue in 2007 when he introduced the iPhone, praising its adaptability when compared with more hardware-based competitors at the time.
“What happens if you think of a great idea six months from now?” he asked about the other devices. “You can’t run around and add a button to these things; they’ve already shipped.”
Smartphones notwithstanding, the number of handsets sold around the world has been falling in important regions — even before the recession. In Western Europe, around 191 million mobile phones were sold in 2007, a figure that fell to 171 million in 2008 and is projected at 165 million in 2009, according to Carolina Milanesi, an analyst with the research firm Gartner.
In the United States, people bought 176 million handsets in 2007, and 184 million in 2008. That number will probably remain flat this year, the Gartner analyst said. She said that Europe might provide some indication of where the United States was headed because, as highly populated as it is with phones, it is still slightly behind Europe.
The toll seemed to blindside handset makers in the last quarter. Motorola said last month that it sold half as many phones in the fourth quarter than it had the year earlier, and announced 3,000 job cuts at its cellphone unit.
In the fourth quarter, Nokia sold 113 million handsets, down about 15 percent from the period a year earlier. Samsung Electronics said worldwide cellphone demand might be down 10 percent in 2009.
Meanwhile, new and more numerous competitors are fighting over that demand. The industry did not have to contend with Apple until two years ago. This year may bring a resurgent Palm with its Pre smartphone, as well as Dell, which is reportedly working on its own mobile device.
“The macro environment is challenging and we believe will remain clearly so in 2009,” Olli-Pekka Kallasvuo, Nokia’s chief executive, said recently in a conference call with investors to discuss the earnings. He added that he believed Internet-centric phones and mobile services would drive a new generation of growth.
“It is clear that there is a tremendous opportunity to extend the value of the handset market through the integration of device hardware and Internet services,” he said. “This will drive the next wave of industry growth, and innovation will not stand still.”
One-Click iPhone App Cracker Released to the Public
Crackulous, the one-click cracking application for software purchased from Apple’s AppStore, was previously only available to a select few. Now anyone with an iPhone or iPod Touch can start cracking software purchased from Apple so that they can share them with their friends, since Crackulous has just gone public.
Recently we have reported on what can happen when iPhone software from the Apple store is cracked and made available to the public. In our articles we briefly touched on how these applications were cracked, via a piece of code known as Crackulous. This software removes the protection from iPhone and iPod Touch games and applications, to enable people to share them with their friends.
A project started by a coder named ‘SaladFork’, Crackulous was officially only available to a limited number of individuals, but it quickly gained notoriety as it makes the process of cracking software ridiculously easy. The successor to the more fiddly xCrack script, Crackulous is now being developed by ‘Angel’ and has a full GUI. All people have to do is buy an app from Apple and click a button, it’s that easy.
Although the software package was publicly released just hours ago, the source for this version (0.9) isn’t yet available. Crackulous is set to be released as open source software so that many people can contribute to its development, with original dev SaladFork commenting, “I’ve filled the source code heavily with comments explaining exactly what it’s doing and how it’s doing it. My hope is that Crackulous can be a learning resource for all the prospective iPhone developers out there, and will be able to revolutionize the cracking scene by producing a standard for application quality and functionality that can easily be reproduced to great effect.”
Currently a few people are reporting that they are experiencing difficulty getting the release to run, while others have no problems. There are also a couple of minor acknowleged bugs, but these are expected to be fixed shortly.
Crackulous is available now from the Hackulous Cydia Repo. Expect it to become one of the most downloaded iPhone apps ever and, of course, Crackulous is free of charge. Let the avalanche begin - it could be a difficult one to stop.
Despite iTunes Accord, Music Labels Still Fret
Last month the music industry and Apple, long uneasy partners, seemed a picture of harmony when they agreed on new terms for pricing on iTunes, Apple’s online music store.
Behind the scenes, however, the relationship remains as tense and antagonistic as ever.
The announcement on Jan. 6 seemed to signal a rapprochement between the music industry and its biggest distributor: record companies gave up their demand for copyright protection (called digital rights management) and Apple allowed flexible pricing, so the labels could charge more for new or popular tracks.
But according to one music industry executive involved in the negotiations, Apple’s primary goal was securing distribution of music over its iPhone, as mobile phones are expected to become an increasingly important outlet for music.
Disagreements over the timing of the changes also resulted in a particularly tense conversation on Christmas Eve between Steven P. Jobs, the chairman and chief executive of Apple, and Rolf Schmidt-Holtz, the chairman of Sony Music.
A spokesman for Apple declined to comment, as did a representative for Sony Music. But chatter about Mr. Jobs’s combative tone on the call ricocheted around the music industry, and it was regarded as another display of his tough bargaining tactics, made possible by Apple’s position as the dominant seller of music.
Mr. Jobs recently announced that he would step away from his day-to-day duties because of an illness. While Mr. Jobs’s health problems have raised questions about Apple’s operations, music executives expect their tense relationship with the company to continue.
In interviews, several high-level music executives, who spoke on the condition that they not be named to avoid angering Apple, said they operated in fear of Apple’s removing a label’s products from the iTunes store over a disagreement, even though that has never happened. The labels do not have much leverage in negotiating with Apple.
“I think Steve has been smart, and he knows he has the upper hand,” said Dave Goldberg, the former general manager of Yahoo Music who is now an entrepreneur in residence at Benchmark Capital, a Silicon Valley venture capital firm. “They can’t afford to pull their music.”
One result of the dicey relationship is the increasing search by the music industry for a future in which Apple is not so dominant. Many executives say they believe the future of music buying is over the mobile phone, not from buying individual songs but by paying a monthly subscription fee to hear vast database of music.
But right now that is a tiny business in the United States. Forrester Research estimates that downloading music from Web stores like iTunes generated $1.5 billion in 2008, compared with just $70 million in wireless sales. Apple could win in this arena as well with its iPhone, but the music industry is looking to others, like Nokia, which offers its Comes With Music service, to become viable players.
“They’re still the biggest game in town,” said David Card, a digital music analyst at Forrester Research. “It’s really Apple and everyone else. I think the industry would rather have multiple outlets.”
Apple, according to a music industry official involved in the negotiations, offered to negotiate variable pricing about a year ago. Most songs cost 99 cents, of which the label receives about 70 cents and Apple receives the remainder, although the breakdown varies slightly among the labels.
Apple indicated it was willing to make the switch to variable pricing provided that the music companies — which negotiate individually with Apple to avoid colluding — would agree to license songs for wireless downloads on the iPhone, as well as drop copyright protections using digital rights management, or D.R.M., software.
All the labels agreed except Sony Music. Its chairman, Mr. Schmidt-Holtz, wanted the pricing to go into effect right after the announcement, while Mr. Jobs wanted a longer time horizon. According to a person briefed on the telephone call, Mr. Schmidt-Holtz and Mr. Jobs had a heated exchange by phone on Christmas Eve. Eventually, Sony gave in and agreed to a longer waiting period.
Even if Mr. Jobs does not get personally involved in future negotiations, music executives still fear dealing with Apple. One chit the company holds is the power of the iTunes home page, where it promotes music. They also say that the entire Apple staff, including Eddie Cue, the vice president in charge of iTunes who handles the relationships with the record labels, do their best to follow Mr. Jobs’s style in their own negotiating.
Offline, the industry has long contended with dominant retailers like Wal-Mart, which is the biggest seller of CDs but has not been the cultural tastemaker that iTunes has become.
“Whether the industry likes it or not, the iTunes chart showing the most popular songs in America is a major influencer of how kids today discover and communicate with their friends what kind of music they like,” said Charlie Walk, the former president of Epic Records, a unit of Sony Music. “It’s a very powerful thing right now in American pop culture and immediately validates a hit song.”
In some ways, the tension stems from Apple’s power over the industry, but it also echoes the traditional divide between suppliers and distributors. Several years ago, some labels withdrew their videos from the Yahoo Music service over a dispute about compensation. Before that, when MTV began in the early 1980s, the music industry eagerly provided videos in the belief that they would help sell records, though they later regretted having provided free content for the cable channel.
“They believe they created MTV, and will say they revived Apple,” said Mr. Goldberg, speaking about the music industry in general.
Mr. Card of Forrester, however, has a different take. “If it weren’t for Apple, God knows how bad the music industry would be,” he said.
Springsteen Says He's 'Furious' With Ticketmaster
Bruce Springsteen said Wednesday he is angry with Ticketmaster and believes its selling practices constitute a conflict of interest.
When tickets for Springsteen's show at New Jersey's Meadowlands went on sale Monday, some fans got an error message on their computer screen that shut them out. The potential ticket-buyers then saw an ad for Ticketmaster subsidiary TicketsNow offering tickets for hundreds of dollars more than face value.
Springsteen said on his Web site Wednesday that he and the E Street Band are ''furious.''
''We perceive this as a pure conflict of interest,'' the band said. ''Ticketmaster is there to ensure that we have a good, fair sale of our tickets at their face value plus normal ticketing charges.''
TicketsNow allows people who have tickets to exchange, trade or sell them at marked-up prices. The band said it has received assurances from Ticketmaster that it will stop redirecting Springsteen fans to TicketsNow.
The snub to Springsteen fans led U.S. Rep. Bill Pascrell to call on the Federal Trade Commission and Justice Department to investigate possible conflicts of interest involving Ticketmaster and TicketsNow. The New Jersey attorney general's office is also investigating whether Ticketmaster violated any consumer fraud or ticket resale laws.
Ticketmaster Entertainment CEO Irving Azoff issued a statement Wednesday apologizing to the band and its fans.
''While we were genuinely trying to do the right thing for fans in providing more choices when the tickets they requested from the primary on-sale were not available, we clearly missed the mark,'' the statement said. ''Fans are confused and angry, which is the opposite of what we hoped to accomplish. We sincerely apologize to Bruce, his organization and, above all, his fans.''
Azoff said the company had taken down all links for Springsteen shows directing fans from Ticketmaster to TicketsNow.
On Tuesday, a company spokesman said only a few fans reported problems. But state attorney general's spokesman David Wald said the office has received more than 250 complaints since Monday.
Heather Dunham, of Great Meadows, said she and about a dozen of her friends were among those who tried to buy tickets when they went on sale Monday.
''The Web site just kept throwing us all off, telling you it was down for routine maintenance. That's the same message we got routinely for the better part of an hour,'' she said. ''Then it started redirecting us to the premium ticket site,'' where prices were double.
''It was outrageous,'' said Dunham, who has previously purchased Springsteen tickets from Ticketmaster. ''It's corporate greed at its worst.''
Where Are You? Show ‘Em With Google Latitude
Just a few weeks after Google announced that it was terminating its Dodgeball service, which allowed cellphone users to share their current location with their friends, the company is coming out Wednesday with a new service, Latitude, that, well, lets cellphone users share their location with their friends.
Unlike Dodgeball — which used text messages to deliver the information and thus could be used with virtually any phone — Latitude is an add-on to Google Maps. It relies on Google Maps’ My Location feature, which uses the signals from nearby cellphone towers to plot a user’s whereabouts.
That means the mobile version of Latitude can be used only on smartphones like Apple’s iPhone, Research in Motion’s BlackBerry and devices running Microsoft’s Windows Mobile or Google’s own Android operating system.
Steve Lee, product manager for Google Maps for Mobile and Google Latitude, acknowledged that limitation but said smartphone penetration had reached an “inflection point,” with more than 50 million Americans using them. “We feel it’s a much richer application” than Dodgeball, he said.
Latitude also ties into the computer-based version of Google Maps through iGoogle so that, say, a husband on the move could share his location with his wife working at an office PC. (In Mr. Lee’s case, his mom in the Midwest likes to check up on him. “She can use this as tool to see where I’m at and use it for peace of mind,” he said.)
Besides broadcasting their location, Latitude users can call, text or chat with their online friends and update their status messages. Google said the mobile version of the service is available in 27 countries.
Privacy is a key concern with any kind of location-based social networking service, and Google says Latitude is completely opt-in: Users choose who gets access and what level of information they can see. For example, users could grant close friends and family access to their exact location, while limiting acquaintances to knowing only the city they’re in. And for those moments when you need to go into total stealth mode, the application allows you to manually set your location or cloak it entirely.
It’s still unclear how much people need or want to send this kind of location information to friends and acquaintances. Dodgeball was never more than a tiny niche application, and its rivals, Loopt and Brightkite, also have yet to build a large user base.
Created by: Daniel C. Howe, Helen Nissenbaum
TrackMeNot is a lightweight browser extension that helps protect web searchers from surveillance and data-profiling by search engines. It does so not by means of concealment or encryption (i.e. covering one's tracks), but instead, paradoxically, by the opposite strategy: noise and obfuscation. With TrackMeNot, actual web searches, lost in a cloud of false leads, are essentially hidden in plain view. User-installed TrackMeNot works with the Firefox Browser and popular search engines (AOL, Yahoo!, Google, and MSN) and requires no 3rd-party servers or services.
How It Works
TrackMeNot runs in Firefox as a low-priority background process that periodically issues randomized search-queries to popular search engines, e.g., AOL, Yahoo!, Google, and MSN. It hides users' actual search trails in a cloud of 'ghost' queries, significantly increasing the difficulty of aggregating such data into accurate or identifying user profiles. To better simulate user behavior TrackMeNot uses a dynamic query mechanism to 'evolve' each client (uniquely) over time, parsing the results of its searches for 'logical' future query terms with which to replace those already used.
Note: TrackMeNot is user-installed and user-managed (integrating into the Firefox 'Tools' menu and including a variety of easily configurable options). Once downloaded, it resides wholly on users' system and functions without the need for 3rd-party servers or services. Placing users in full control is an essential feature of TMN, whose purpose is to protect against the unilateral policies set by search companies in their handling of our personal information.
Why We Created TMN
The practice of logging user search activities and creating individual search profiles - sometimes identifiable - has received attention in mainstream press, e.g. the recent front-page New York Times article on AOL's release of collected data on individual searchers; also this front-page New York Times Business Section article describing the User-Profiling Practices of Yahoo!, AOL, MSN & Google.
We are disturbed by the idea that search inquiries are systematically monitored and stored by corporations like AOL, Yahoo!, Google, etc. and may even be available to third parties. Because the Web has grown into such a crucial repository of information and our search behaviors profoundly reflect who we are, what we care about, and how we live our lives, there is reason to feel they should be off-limits to arbitrary surveillance. But what can be done?
Legal approaches -- urging legislators to support limits on access, or courts to extend Fourth Amendment protection -- might be effective, but would require orchestrated efforts by many parties. Appeals to search companies themselves seem even less hopeful as their interests, at least on the surface, are in direct conflict with such limits. Both, at best, are long term prospects.
We have developed TrackMeNot as an immediate solution, implemented and controlled by users themselves. It fits within the class of strategies, described by Gary T. Marx, whereby individuals resist surveillance by taking advantage of blind spots inherent in large-scale systems1. TrackMeNot may not radically alter the privacy landscape but helps to place a particularly sensitive arena of contemporary life back in the hands of individuals, where it belongs in any free society.
Public awareness of the vulnerability of searches to systematic surveillance and logging by search engine companies, was initially raised in the wake of a case, initiated August 2005, in which the United States Department of Justice (DOJ) issued a subpoena to Google for one week's worth of search query records (absent identifying information) and a random list of one million URLs from its Web index. This was cited as part of its defense of the constitutionality of the Child Online Protection Act (COPA). When Google refused, the DOJ filed a motion in a Federal District Court to force compliance. Google argued that the request imposed a burden, would compromise trade secrets, undermine customers' trust in Google, and have a chilling effect on search activities. In March 2006, the Court granted a reduced version of the first motion, ordering Google to provide a random listing of 50,000 URLs, but denied the second motion, namely, the request for search queries.
While viewed from the perspective of user privacy this seems a good outcome, yet it does bring to light several disquieting points. First, from court documents we learn that AOL, Yahoo!, and Microsoft have complied with the government's request, though details are not given. Second, we must face the reality that logs of our online searches are in the hands of search companies and can be quite easily linked to our identities. Thirdly, it is clear we have little idea of, or say in, what can be done with these logs. While, in this instance, Google withheld such records from the Government, it would be foolish to count on this outcome in the future.
A Tech Mogul’s Green Thumb
Michael S. Dell got rich building computers. His innovation was in pruning the PC supply chain and trimming production costs to undercut his competitors on price.
Now some of the billions of dollars he earned in technology go toward a more traditional kind of pruning and trimming. Mr. Dell, the founder and chief executive of the computer maker bearing his name, also controls ValleyCrest, the largest landscape design, construction and maintenance company in the United States.
Executives at the private company, which has received little attention in the mainstream press, said their company has managed to keep growing despite the weakening economy.
ValleyCrest has a number of brand-name clients. It has primped the lawns of the Nixon Presidential Library in Yorba Linda, Calif.; the FedEx headquarters in Memphis; and the Centennial Olympic Park in Atlanta.
It also planted the gardens at some of the biggest hotels in Las Vegas, like Caesars Palace, the Bellagio, the Wynn and the Venetian, and even installed the towering palm trees along the Las Vegas Strip.
It manicures the lawns of the rich and famous as well. In fact, Mr. Dell discovered the company when it began landscaping his sprawling residential compound in Austin, Tex.
Mr. Dell bought 51 percent of ValleyCrest in 2006 through a deal engineered by MSD Capital, the firm he created to exclusively manage the majority of his fortune.
“He was very happy with the work we did on his house,” said Richard A. Sperber, the co-chief executive of ValleyCrest.
The bulk of Mr. Dell’s estimated $17 billion fortune is spread across a portfolio of companies that is unusually diverse and low-tech for a technology mogul. MSD Capital has made investments in restaurant companies including those running IHOP, Applebee’s, Steak ’n Shake and Domino’s Pizza.
It also holds stakes in car-related companies, including the Dollar Thrifty Automotive Group, the car rental company, and MSD Automotive Partners, which invests in luxury car dealerships.
MSD Capital has vast real estate holdings in Hawaii, Mexico and California as well, and stakes in large real estate management firms that own hotels and resorts like the Hilton Times Square.
Mr. Dell, who owns $2.14 billion worth of Dell stock, declined to discuss ValleyCrest or his other investments for this article. In the past, he has argued that his investment firm’s independence allows him to concentrate on managing Dell. And yet the firm’s investment style appears to mimic Mr. Dell’s pragmatic approach toward business.
Indeed, much like Dell Inc., MSD Capital has set a pattern of jumping into consolidating markets and using its capital to give one player an edge in scale and efficiency.
Mr. Dell’s investment in ValleyCrest has done well. Despite the roughest economy in decades, ValleyCrest, a private company, expects to bring in more than $1 billion in revenue this year, growing, as it has historically, by about 12 percent a year.
“It’s been tough to communicate the state of the economy to the trees and convince them to stop growing,” Mr. Sperber joked.
Over more than 60 years, ValleyCrest, based in this city in the San Fernando Valley, northwest of Los Angeles, has moved from local highway beautification projects to building a zoo and safari park in Abu Dhabi that will have exotic plants and tens of thousands of animals.
“We’re lucky enough to have some of our designers catch the eye of the royal family in Abu Dhabi,” Mr. Sperber said.
Burton S. Sperber, Richard’s father, founded the company after buying a nursery from the widow of his employer for $700 in 1949. ValleyCrest had mostly been an installation and maintenance operation, as the industry calls it, handling the back-breaking labor on projects designed by landscape architects.
Today, in addition to maintaining the gardens of so many well-known properties, the company grows 12,000 varieties of trees for customers at an 800-acre nursery and also maintains golf courses.
Richard Sperber, who became co-chief executive with his father last year, has tried to grow the company by taking on a flashier role in projects with a wider range of services for big jobs.
ValleyCrest wants to manage every aspect of new projects from the design to the higher-profit maintenance work. To do it, ValleyCrest has poached some of the top landscape designers in the country from its old partners. For instance, Paul Comstock, a former director of landscape design for Walt Disney Imagineering, led projects like Disney’s Animal Kingdom in Orlando, Fla.
The relationship with Mr. Dell and MSD Capital has fueled ValleyCrest’s ambitions, leading to some of its top design jobs.
For example, investors in MSD Capital have relationships with the Kraft family, which owns the New England Patriots football team. That helped ValleyCrest win the contract for Patriot Place, a retail center next to Gillette Stadium, the Patriots’ home in Foxborough, Mass.
But as ValleyCrest dives into the design business, it is causing friction with some of its longtime architecture partners. Lifescapes International, in Newport Beach, Calif., worked with ValleyCrest on several of the Las Vegas properties and has had a relationship with the company for 50 years.
“It was a sad day when they decided to become competitors,” said Julie Brinkerhoff-Jacobs, president of Lifescapes. “We just don’t exchange leads like we once did.”
ValleyCrest has spent the last few years acquiring smaller landscape companies throughout the United States, giving it access to large markets in Florida, Washington and elsewhere.
Despite its growth and the presence of MSD Capital, ValleyCrest continues to operate like a small family-owned business.
“It was a bit of a leap of faith with them coming in,” Mr. Sperber said. “But they have left us to run the business the way we know how to run the business.”
ValleyCrest employs more than 11,000 people, though that number drops to about 8,000 in winter when work slows. It is one of the largest employers of Latino workers in America and takes pride in retaining staff through above-average wages and raises.
And now Mr. Dell has started to put his touch on ValleyCrest’s traditions. As the company looks to reinvent the landscape supply chain by unifying design, construction and maintenance, it has tried to turn simplicity into a way of winnings customers. “The inefficiencies of the current system are just so archaic,” Mr. Sperber said, sounding a bit like Mr. Dell.
Mr. Dell urged ValleyCrest to eliminate some of the wasteful practices in the field. After tapping a consulting firm to institute the program, ValleyCrest hired some efficiency gurus from Toyota to make the effort permanent.
“We visited the factories at Dell, and it really opened our eyes to ways we could improve,” Mr. Sperber said.
Bringing the Internet to Remote African Villages
The road from Nairobi winds 100 miles to this town deep in Masai country. The asphalt gives way to sand and dust, until finally it is just a dirt track climbing over broken hills and plunging back to desert flats. The going is slow.
The outpost, with about 4,000 inhabitants, is at the end of that road and beyond the reach of power lines. It has no bank, no post office, few cars and little infrastructure. Newspapers arrive in a bundle every three or four weeks. At night, most people light kerosene lamps and candles in their houses or fires in their huts and go to bed early, except for the farmers guarding crops against elephants and buffalo.
Entasopia is the last place on earth that a traveler would expect to find an Internet connection. Yet it was here, in November, that three young engineers from the University of Michigan in Ann Arbor, with financial backing from Google, installed a small satellite dish powered by a solar panel, to hook up a handful of computers in the community center to the rest of the world.
In recent years the mobile phone has emerged as the main modern communications link for rural areas of Africa. From 2002 to 2007, the number of Kenyans using cellphones grew almost tenfold to reach about a third of the population, many of whom did not have land lines, according to the International Telecommunication Union.
But many of the phones were simple models made more for talking than Web browsing, and wireless data networks are slow, with sporadic coverage.
Satellite connections are faster and more stable, which is why they are attracting interest from the likes of Google, as a way to provide Internet connections to the estimated 95 percent of Africans who, according to the telecommunications union, have no access.
Although providing Internet access is outside the normal business realm of Google, with this project it is looking at how obstacles might be overcome in Kenya and other parts of Africa.
The dish at Entasopia was intended to operate for months with little maintenance under harsh conditions. This station, along with two others in villages almost as remote, is part of a larger push by Google into small, marginal communities, providing them with new tools to access information, work with distant colleagues, and communicate with friends and family.
Google paid for the final design of the stations and is covering the monthly fees for satellite bandwidth. The company has also invested in O3b, a start-up that hopes to deploy a constellation of satellites over Africa by the end of next year.
“Building infrastructure is not necessarily Google’s objective, but if you look at all the areas that Google has gone into, in many cases it has been to fill a gap,” said Joseph Mucheru, who heads Google’s East Africa office. “The market should see the opportunity.”
Just how much opportunity there is remains unclear. Google is uncertain whether such satellite stations can pay for themselves in rural areas, given the cost of equipment and bandwidth. Communities may well benefit from the connection, but they do not all have the means to afford it.
Bandwidth fees for stations like the one in Entasopia could cost as much as $700 a month, though slower ones cost less, said Wayan Vota, a senior director at Inveneo, a nonprofit that works to disseminate Internet technology throughout Africa and the developing world. As these connections are introduced more widely, which is O3b’s goal, the price could fall, Mr. Vota said.
When Internet connections arrive in small towns like Entasopia, they put new tools into the hands of people hungry to use them, and for some there, that has had wide repercussions.
James Mathu has worked for the Kenyan agriculture ministry in Entasopia for five years, advising farmers on the environment, crop husbandry and soil conservation. The stable Internet link allows him to send information to district headquarters in Kajiado, instead of spending days traveling there and back to deliver monthly reports, which are too lengthy for him to send via cellphone.
“It is a five-day affair,” he said, estimating that the Internet saved him 12,000 shillings a year, or $152, in a country where the gross domestic product per person is $1,700.
Joseph Kasifu, 40, is using the Internet to try to help others. His family runs a farm, but because his legs were crippled by polio as a child, he was limited in the farm work he could do.
In Masai society, he said, disabilities like his were seen as bad omens. Traditionally, disabled newborns were abandoned and their mothers were put through a ritual cleansing to banish the evil spirits that were said to have caused the disability, while the place where the birth took place was burned. Even now, such children are often kept hidden away in the family manyatta, a wattle-and-daub hut.
Mr. Kasifu is leading a campaign to raise awareness and to build a shelter, called Tuko, for such children. With the Internet connection, he has been able to upload a short video about their plight.
“The mothers come to me and say: ‘Have you got a place to take our children?’ ” he said. “It hurts, but what can I do? Out of that hurt came this project.”
But there are significant limits to how many Kenyans the Internet can reach. Even if it is available free, not everyone can take full advantage of it, one obstacle being computer literacy.
Teddy Chenya, who for the past eight months has helped staff the community center for the Arid Lands Information Network, the Kenyan nongovernmental organization running the satellite ground stations, said that younger people were more likely to visit him than older ones, because they had time to spend and were willing to sit down, three to a computer, and learn by trial and error.
“Most people looking for information, they need help,” he said. “They still don’t know where to look or what a Web address is. I played for them streaming video, and they said: ‘Is it a radio? Is it a TV?’ ”
Another obstacle is literacy itself: many of the adults in Entasopia, especially women, cannot read.
Nthenya Mule, East Africa manager for Acumen Funds, a nonprofit organization, directs investments in regional businesses that have a social-development aspect. Ms. Mule said there were many challenges facing poor, rural communities, and progress was often held back by larger problems like lack of infrastructure, health care or loan availability, rather than the scarcity of Internet access.
“Is VSAT what’s most important?” she asked, referring to very small aperture terminal, the satellite technology being used in the project.
Still, Ms. Mule said, “there are so many issues, sometimes you just begin acting where you can.”
Local Police Want Right to Jam Wireless Signals
Spencer S. Hsu
As President Obama's motorcade rolled down Pennsylvania Avenue on Inauguration Day, federal authorities deployed a closely held law enforcement tool: equipment that can jam cellphones and other wireless devices to foil remote-controlled bombs, sources said.
It is an increasingly common technology, with federal agencies expanding its use as state and local agencies are pushing for permission to do the same. Police and others say it could stop terrorists from coordinating during an attack, prevent suspects from erasing evidence on wireless devices, simplify arrests and keep inmates from using contraband phones.
But jamming remains strictly illegal for state and local agencies. Federal officials barely acknowledge that they use it inside the United States, and the few federal agencies that can jam signals usually must seek a legal waiver first.
The quest to expand the technology has invigorated a debate about how widely jamming should be allowed and whether its value as a common crime-fighting strategy outweighs its downsides, including restricting the constant access to the airwaves that Americans have come to expect.
"Jamming is a blunt instrument," said Joe Farren, vice president of government affairs for the Cellular Telecommunications Industry Association. He and others pointed out that when authorities disable wireless service, whether during a terrorist attack or inside a prison, that action can also stop the calls that could help in an emergency. During November's raids in Mumbai, for example, citizens relied on cellphones to direct police to the assailants.
Propelled by the military's experience with roadside bombs in Iraq and Afghanistan, jamming technology has evolved to counter bombs triggered by cellphones, garage openers, remote controls for toy cars or other devices that emit radio signals. Federal authorities rank improvised bombs, which are cheap and adaptable, as one of the greatest terrorist threats to the West.
On Inauguration Day, federal authorities were authorized to jam signals at some locations in downtown Washington, according to current and former federal officials. The Secret Service and other officials declined to provide specific details, some of which are classified.
Most of the nearly 2 million people attending the swearing-in and along the parade route would have been oblivious to any unusual disruption.
"Chances are, you wouldn't even notice it was there," said Howard Melamed, an executive with CellAntenna Corp., a small Coral Springs, Fla., company that produces jamming equipment. If someone in the crowd was on a call, they might have confused the jamming with a dropped signal. "Your phone may go off network," he said. In other cases, "it may never signal, if it's a quick interruption."
Industry officials said that radio-jammers work in several ways: They can send a barrage of energy that drowns out signals across multiple bands or produce a surge of energy on a particular frequency. In other instances, the devices detect and disrupt a suspicious signal, a technique known as "scan and jam."
Some private citizens, hoping to eliminate cellphone calls in restaurants, churches or theaters, have tapped into an underground market of jamming equipment that has trickled into the United States. But that, too, is illegal under the 70-year-old federal telecommunications act, which bans jamming commercial radio signals. The Federal Communications Commission has begun to crack down on private use, which is punishable by an $11,000 fine.
The U.S. military is capable of shutting down communications across a wide area and has done so overseas, including when it has conducted raids to capture suspects. To counter explosives, devices can be set to jam signals for a distance of 50 to 500 meters, for example, or enough to allow a car to pass out of the blast zone of a small bomb.
Some federal agencies, including the FBI and the Secret Service, have standing authority to use jamming equipment or can request waivers from the National Telecommunications and Information Administration, a Commerce Department agency, when there is an imminent threat, a federal official said.
Jamming has been approved in the past for major events, ranging from State of the Union addresses to visits by certain foreign dignitaries, according to a federal official who spoke on the condition of anonymity because he was not authorized to talk about the subject.
After transit bombings in Europe, the Department of Homeland Security reached an agreement in 2006 under the National Communications System with cellphone companies to voluntarily shut down service under certain circumstances, which could disable signals for areas ranging from a tunnel to an entire metropolitan region, a DHS official said.
Much of the controversy has been fueled by the growing demands from state and local governments.
In the District, corrections officials won permission from the FCC for a brief test of jamming technology at the D.C. jail last month, after citing the "alarming rate" of contraband phones being seized at prisons around the country.
"Cell phones are used by inmates to engage in highly pernicious behavior such as the intimidation of witnesses, coordination of escapes, and the conducting of criminal enterprises," D.C. corrections chief Devon Brown wrote to the federal agency.
The test has been put on hold because of a legal challenge, but the city will keep seeking permission, said D.C. Attorney General Peter J. Nickles.
Texas prison officials made a similar request last fall after a death row inmate placed an illicit call threatening a state legislator, and South Carolina corrections officials said their department staged a test without permission in November.
In a pilot project, the FBI deputized about 10 local bomb squads across the country in 2007 so they could use a small number of radio jammers similar to the military equipment used overseas.
The local pleas for expanded permission are beginning to get a friendly reception on Capitol Hill. Sen. Joseph I. Lieberman (I-Conn.), chairman of the Senate homeland security committee, plans to introduce legislation that would give law enforcement agencies "the tools they need to selectively jam" communications in the event of a terrorist attack, a spokeswoman said.
Sen. Kay Bailey Hutchison (Tex.), the ranking Republican on the Senate Commerce Committee, has introduced a bill that would allow the U.S. Bureau of Prisons and governors to seek waivers from the FCC to jam calling at prisons.
"When lives are at stake, law enforcement needs to find ways to disrupt cellphones and other communications in a pinpointed way against terrorists who are using them," New York City Police Commissioner Raymond F. Kelly told a Senate panel Jan. 8. He also cited the Mumbai terrorist attacks, when hostage-takers used media spotters and satellite and mobile phones to help them outmaneuver police at hotels, train stations and other targets.
Backing up such requests are the commercial interests that could provide the jammers.
Melamed, with CellAntenna, has worked for several years to open what the company forecasts could be a $25 million line of domestic jamming business for itself, and the amount could be more for bigger players such as Tyco and Harris Corp. He said rules that prevent government agencies from blocking signals don't make sense.
"We're still trying to figure out how it's in the best interest of the public to prevent bomb squads from keeping bombs from blowing up and killing people," he said.
But the cellular industry trade group warns that letting the nation's 18,000 state and local law enforcement agencies decide when and where to jam phone calls would create a messy patchwork of potential service disruptions.
Critics warn of another potential problem, "friendly fire," when one agency inadvertently jams another's access to the airwaves, posing a safety hazard in an emergency. Farren said there are "smarter, better and safer alternatives," such as stopping inmates from getting smuggled cellphones in the first place or pinpointing signals from unauthorized callers.
Still, analysts said, events such as the Mumbai attacks may tip the debate in favor of law enforcement.
"Without something like Mumbai, the national security and public safety cases would not be as compelling," said James E. Katz, director of the Center for Mobile Communication Studies at Rutgers University. "Now, the burden of proof has been shifting to people who don't want these exceptions, rather than the people who do."
Video: Hacker War Drives San Francisco Cloning RFID Passports
Think of it this way: Chris Paget just did you a service by hacking your passport and stealing your identity. Using a $250 Motorola RFID reader and antenna connected to his laptop, Chris recently drove around San Francisco reading RFID tags from passports, driver licenses, and other identity documents. In just 20 minutes, he found and cloned the passports of two very unaware US citizens. Fortunately, Chris wears a white hat; his video demonstration is meant to raise awareness to what he calls the unsuitability of RFID for tagging people. Specifically, he's hoping to help get the Western Hemisphere Travel Initiative -- a homeland security project -- scrapped. Perhaps you'll feel the same after watching his video posted after the break.
Exclusive: ID Cards are Here - But Police Can't Read Them
A "waste of time" for biometric ID checks
The first UK ID cards have already been issued - but no UK police officers or border guards have any way of reading the data stored on them.
Currently no police stations, border entry points or job centres have readers for the card's biometric chip, the Identity and Passport Service (IPS) revealed in response to an FoI (Freedom of Information) request by silicon.com about the £4.7bn identity cards scheme.
The news comes in spite of the first ID cards being issued to foreign nationals in November last year, with the IPS expecting to issue 50,000 ID cards by April this year.
The cards themselves carry biographical data, as well as facial and fingerprint scans. While some details about the holder as well as their photo is printed on the face of the card, the cardholder's fingerprints can only be accessed by reading the chip.
With no readers in place, police and immigration officers are currently still relying on traditional methods of checking ID cardholders' identity, running a fresh set of prints against existing identity databases.
Identity minister Meg Hillier told silicon.com last week that the chip is a "vital part" of the ID card scheme because the "fingerprint coded into the chip … links you to the card".
The broken nature of that link has already prompted criticism by the government's political rivals. Shadow home secretary Chris Grayling said: "Once again ministers have shown that the ID card project is absolutely farcical. What is the point of spending billions of pounds on cards that can't be read in the UK?"
Cambridge University security expert Richard Clayton told silicon.com: "If this capability is not there then the biometrics are, in short, a waste of time.
"I would have thought that the government would have tried to get the readers rolled out as soon as possible as it is only when you get serious deployments that you start to learn what can go wrong."
No firm timetable has been given for the rollout of chip readers. According to Hillier, it will be up to each police force to decide when it is necessary to invest in the machines while the technology will be rolled out to immigration officers over time.
"We have always said that we would roll out the scheme incrementally. The card will not be as useful as it could be until we have got the volumes out there," Hillier told silicon.com.
"There's no prospect in the immediate future for the government directing anybody that you have to buy those things [readers] because we would be placing a burden on these organisations."
Hillier said the economics of equipment manufacturing will also play their part in determining when readers will be available.
"The manufacturers of the machines have also got to decide whether it is worth their while to produce them," she said.
"I think that organisations will decide in time that it is better, quicker and cheaper to have them."
In response to silicon.com's FoI request, the IPS said that readers will become more widely available as the cards are rolled out to the UK population, starting with airport workers and volunteers later this year.
Lords: Rise of CCTV is Threat to Freedom
World's most pervasive surveillance undermines basic liberties, say peers
The steady expansion of the "surveillance society" risks undermining fundamental freedoms including the right to privacy, according to a House of Lords report published today.
The peers say Britain has constructed one of the most extensive and technologically advanced surveillance systems in the world in the name of combating terrorism and crime and improving administrative efficiency.
The report, Surveillance: Citizens and the State, by the Lords' constitution committee, says Britain leads the world in the use of CCTV, with an estimated 4m cameras, and in building a national DNA database, with more than 7% of the population already logged compared with 0.5% in the America.
The cross-party committee which includes Lord Woolf, a former lord chief justice, and two former attorneys general, Lord Morris and Lord Lyell, warns that "pervasive and routine" electronic surveillance and the collection and processing of personal information is almost taken for granted.
Although many surveillance practices and data collection processes are unknown to most people, the expansion in their use represents "one of the most significant changes in the life of the nation since the end of the second world war", the report says. The committee warns that the national DNA database could be used for "malign purposes", challenges whether CCTV cuts crime and questions whether local authorities should be allowed to use surveillance powers at all.
The peers say privacy is an "essential prerequisite to the exercise of individual freedom" and the growing use of surveillance and data collection needs to be regulated by executive and legislative restraint at all times.
Lord Goodlad, the former Tory chief whip and committee chairman, said there could be no justification for this gradual but incessant creep towards every detail about an individual being recorded and pored over by the state.
"The huge rise in surveillance and data collection by the state and other organisations risks undermining the long-standing traditions of privacy and individual freedom which are vital for democracy," he said. "If the public are to trust that information about them is not being improperly used there should be much more openness about what data is collected, by whom and how it is used."
The constitution committee makes more than 40 recommendations to protect individual privacy, including the deletion of all profiles from the national DNA database except for those of convicted criminals and a call for the mandatory encryption of personal data held by public and private organisations that are legally obliged to hold it.
But the report is silent on proposals from Jacqui Smith, the home secretary, for a "superdatabase" tracking everybody's emails, calls, texts and internet use and from Jack Straw, the justice secretary, to lower barriers on the widespread sharing of personal data across the public sector.
But the peers are critical of whether local authorities should continue to exercise their surveillance powers under the Regulation of Investigatory Powers Act 2000. They say examples of local councils using covert surveillance operations to stop fly tipping, reducing dog fouling, and investigate fraudulent school place applications led them to question how they acquired such powers. Ministers should examine whether local authorities, rather than the police, are the appropriate bodies to mount surveillance operations, the peers say. If they are, then their use should be confined to crime investigations that carry a minimum two-year prison sentence.
The peers say individuals targeted by such operations should be informed when it is completed, as long as no investigation is prejudiced.
DMV Proposal for Face-Detection Technology Irks Privacy Groups
Even as cost-conscious Gov. Arnold Schwarzenegger looks to trim state spending every way he can, officials at the Department of Motor Vehicles are planning to spend tens of millions of dollars on new driver's license technology.
And privacy advocates say finances are the least of the plan's problems.
The proposed $63 million contract includes facial recognition software that would allow the DMV to quickly compare an applicant's new photo against other photos in the agency's database in an effort to deter identity theft. The system could eventually include as many as 25 million images of drivers statewide.
Similar software is used in Oregon, New Mexico, Texas, Colorado and Georgia. California DMV officials say that by flagging applicants who already have a license under a different name, the software has led to a reduction in fraudulent licenses and identification cards by as much as 10 percent in those states.
But the five-year contract, which is being fast-tracked and could be approved as early as next month, is drawing objections from privacy advocates who fear state and local authorities could use the biometric technology to monitor the movements of "innocent people" — for instance, spectators at a sporting event or an anti-war rally.
"What this would allow law enforcement to do is scan a crowd of folks, check that image against the database and have their names and addresses," said Valerie Smalls
The ACLU is fighting the proposal with a handful of other groups, including Consumers Union, the Electronic Frontier Foundation and the Consumer Federation of California, which says the plan poses "massive threats" to personal privacy.
"We see this as sort of creeping Big Brother government, an invasion of people's privacy," said Richard Holober, executive director of the San Mateo-based Consumer Federation of California.
The DMV says privacy concerns are overblown because, under its interpretation of state law, police departments don't have "open access" to the current database that contains drivers' information.
When police need to track down a license holder's address or driving record, said Dennis Clear, a DMV assistant director for legislation, they must request it from the department. Similarly, police would have to ask in order to check a suspect's picture against the new database. The database is protected, he said, "and that's not going to change."
If anything, Clear said, the new system will significantly improve privacy. "We believe this new contract is in the best interest of the citizens; it is in the best interest of all of us."
But the proposal also is eliciting criticism for the hasty manner in which it's being driven through the state's bureaucracy — using an expedited process for select budget items that can be funded without the scrutiny of public hearings.
The state Department of Finance, which allocates the DMV's budget, is processing the contract proposal through a so-called Section 11 application, which in many cases allows for a speedy, 30-day approval. The state would be able to sign the contract after Feb. 14, unless the Legislature intervenes before then, and the biometric features could be in place as early as 2010.
The current contract to manufacture driver's licenses expires in June. Under that contract, the state pays 65 cents for each license. The new contract will push the price to $1.40 per card, which amounts to $63 million in a five-year period, Clear said.
"We feel it's worth it as an investment because, frankly, the system we have today is wearing out," Clear said. "We have cameras that are no longer functioning, we have hardware that is breaking down."
State officials turned to the fast-track process — instead of waiting for the state budget to be approved in what has become an increasingly drawn-out process — because they say California desperately needs to improve security features on its licenses.
Sen. Joe Simitian, D-Palo Alto, perhaps the most outspoken lawmaker when it comes to privacy issues, is urging his colleagues to put the contract proposal before a public hearing, where DMV officials could provide more details about the facial recognition technology.
"There are at least four questions I want to ask," Simitian said. They are: Does the technology work? How much does it cost? Does it make the public safer? How will privacy be protected?
"None of those questions should be avoided or evaded by doing an end around the process, which is really what's being proposed here," Simitian said.
Wednesday, he formally asked the Joint Legislative Budget Committee to reject the finance department's fast-track application for the contract.
Committee spokesman John Ferrera said the committee is aware of the concerns raised by the application and is "giving the request consideration."
MySpace Turns Over 90,000 Names of Registered Sex Offenders
MySpace provided two state attorneys general the names of 90,000 registered sex offenders it had banned from its site in response to a subpoena.
The figure is 40,000 more than the amount previously acknowledged by MySpace, according to Attorney General Richard Blumenthal of Connecticut, who along with Attorney General Roy Cooper of North Carolina are among officials pressing social networking sites to adopt more stringent safety measures.
“Almost 100,000 convicted sex offenders mixing with children on MySpace — shown by our subpoena — is absolutely appalling and totally unacceptable,” Mr. Blumenthal said in a statement. “For every one of them, there may be hundreds of others using false names and ages.”
Last year, MySpace, owned by News Corporation, and Facebook.com agreed to set security standards after the Web sites were criticized for not doing enough to protect minors from sexual predators lurking on social networking sites.
Facebook, a privately held company based in Palo Alto, Calif., said the company was still working with Mr. Blumenthal to respond to a similar subpoena.
The disclosure renews the debate of whether social networking sites are a haven for sex offenders. “This is just the tip of the iceberg on MySpace,” said John A. Phillips, chief executive of Aristotle, a company that supplies identity and age verification technologies for companies like the New York State Lottery, breweries and film studios. “These are just the convicted sex offenders” who used their real names.
MySpace’s disclosure follows a report by the Internet Safety Technical Task Force, a panel created by 49 attorneys general, that said the issue is overblown. It concluded the problem of bullying among children, both online and offline, was far more serious than sexual solicitation of minors by adults online.
Mr. Phillips, who served as a member of that task force, has been critical of the report. Ernest Allen, president of the National Center for Missing and Exploited Children, said the figure was “disturbing” but that there is no way to know how large the presence of online predators really is.
“We don’t know if that’s 80 percent of the population targeting kids on the Internet or 1 percent,” Mr. Allen said.
He commended MySpace for removing convicted sex offenders from its site. “This clearly reinforces the fact that there are a significant number of people who seek access to kids online,” Mr. Allen said.
Hemanshu Nigam, chief security officer for MySpace, said the company had spent the last two years purging problem members from its site.
“The reality is there are 700,000-plus sex offenders living in the streets of America,” Mr. Nigam said. “What we did was build cutting-edge technology to figure out where they might be living on the Internet and remove them from our site.”
MySpace reported that its community grows 10 percent year over year but has also reported a 36 percent drop in the number of registered sex offenders trying to create profiles.
John Cardillo, chief executive of Sentinel Tech Holding, the company that makes the software MySpace uses to find the sex offenders, said that Facebook had become a haven for convicted offenders blocked from creating accounts on MySpace. Mr. Cardillo, who has approached Facebook about using his technology, said he could find 8,000 offenders on Facebook.
Barry Schnitt, a spokesman for Facebook, said that Mr. Cardillo’s figures were inflated. He also said the company actively monitors its Web site and users for suspicious activities.
“When you search for people on Facebook, you don’t get much information — a name and a thumbnail,” Mr. Schnitt said.
New Berlin Student Charged with Blackmailing Students into Sex Acts in Facebook Deception
Mike Johnson and Jacqui Seibel
Waukesha Circuit Court Commissioner Laura Florian Lau says the allegations contained on the criminal complaint filed against Anthony R. Stancl are the most horrific she has reviewed in her years on the bench.
New Berlin - Describing a pattern of manipulation and deception using the social networking site Facebook, the Waukesha County district attorney today announced sexual assault charges against a New Berlin Eisenhower student who authorities say coerced male students into sexual encounters.
Anthony R. Stancl, 18, posing as a female on Facebook, persuaded at least 31 boys to send him naked pictures and then blackmailed some of the boys into performing sex acts under the threat that the pictures would be released to the rest of the high school, authorities say.
All 31 boys attend New Berlin Eisenhower High School.
The sexual assaults occurred in the high school bathroom, the high school parking lot, the public library restroom, Valley View Park, Malone Park and at some of the victims' homes, authorities say.
At least seven boys were forced into performing sex acts. The 31 males range in age 13 to 19. The youngest sexual assault victim is 15.
The investigation into Stancl began after bomb threats on Nov. 12 and Nov. 13 led to the closure of Eisenhower Middle and High School on Nov 14. The sexual assaults occurred throughout 2008.
District Attorney Brad Schimel said that while the closure of school due to the bomb scare was costly and inconvenient, the charge "pales in comparison" to what investigators learned later. As police were investigating the bomb threat, which included confiscating Stancl's computer, one victim came forward, he said.
The boy, who was 15 at the time of the assaults, said he was repeatedly forced into sexual acts with Stancl, according to the complaint. Stancl took pictures of every encounter. Stancl was able to coerce the boy into repeated sexual acts by telling him the girl he met on Facebook would release the pictures to the rest of the school if they didn't continue to meet.
The boy went to his parents, and then the police after Stancl asked the boy to get nude pictures of his brother. The boy refused to get his brother involved.
More than 300 naked photos and movie clips of New Berlin boys and another 600 professionally made pornographic movies involving children were found on the computer, Schimel said. The computer contained 39 folders that were labeled using the boys' names or their screen names. The folders held pictures and movie clips of the boys.
Authorities believe there are more victims and are urging them to come forward, Police Lt. Mike Glider said.
The resulting investigation also turned up computer evidence that Stancl pulled images of females on their Facebook pages and used them to persuade male students to e-mail nude photographs to Stancl, according to the criminal complaint. Stancl then used the photos as blackmail for sexual encounters, the complaint says.
A criminal complaint filed today charges Stancl with the bomb threats plus repeated sexual assault of same child (at least three violations of first or second degree sexual assault), possession of child pornography, second and third degree sexual assaults and five counts of child enticement.
The maximum penalty if convicted on all charges is nearly 300 years in prison.
Stancl made his initial appearance in court this afternoon and was ordered held on $250,000 bail.
"In this court's 7 1/2 years on the bench this is the most horrific complaint the court has ever reviewed," Waukesha Circuit Court Commissioner Laura Florian Lau said. "The defendant is facing 293 years if convicted on these 12 counts. . . . This is a crime allegedly that involved many, many, many victims. The court is extremely concerned as to whether defendant will return to court."
As a condition of bail, Stancl cannot have access to any computers, cell phones or Internet capable devices. He also was ordered not to be on any school grounds, including school parking lots, and is prohibited from entering the New Berlin Public Library, where he is accused of using computers.
Lau ordered him to have no contact with minors and no contact with any of his victims.
During Stancl's court appearance, Schimel said that in the days prior to Stancl's arrest a victim told authorities that he found a note on the windshield of his vehicle, presumably from Stancl. The note said, "I know what you told police." It included statements that "this wasn't going to end up well as a result of that," Schimel said.
Stancl's attorney, Craig M. Kuhary, said that Stancl has cooperated with authorities during the investigation and is not a flight risk.
He said that Stancl has been expelled from New Berlin High School.
After the hearing, Kuhary declined to comment to the media, except to say that so far only one side of the case has been disclosed.
A preliminary hearing for Stancl has been scheduled for Feb. 26.
On Nov. 14, two bomb threats resulted in the closure of New Berlin Eisenhower Middle and High School.
The first threat, "Bomb 11/14/08" was found scrawled on the wall of a boys bathroom on Nov. 12.
On Nov. 13, school administrators received an e-mail that stated, "Good luck tomorrow. Boom. It won't be your average one either. It will be one that is manned. Not by me, but by those who follow me. New Berlin Eisenhower High School."
Police learned the e-mail was sent from a computer in New Berlin Public Library.
Stancl was taken into custody on Nov. 14 by New Berlin police after he admitted he played a role in e-mailing a bomb threat to the school, police said. According to the criminal complaint, he didn't do anything to place a bomb in the school but decided to send the e-mail to "make it a better story," the complaint says.
He was released from police custody that day after authorities decided that he didn't pose a threat to the public then Stancl was taken into custody Monday afternoon.
Gay or Straight, Your Facebook is Their Fortune
Rupert Neate and Rowena Mason
FACEBOOK is planning to exploit the vast amount of personal information it holds on its 150 million members by creating one of the world's largest market research databases.
In an attempt to finally cash in on the social networking site, once valued at $US15 billion ($23.6 billion), it will soon allow multinational companies to selectively target its members in order to research the appeal of new products. Companies will be able to pose questions to specially selected members based on such intimate details as whether they are single or married and even whether they are gay or straight.
The company, which has struggled to make money from advertising, has been demonstrating the benefits of its new instant polling tool to business leaders at the World Economic Forum in Davos.
Randi Zuckerberg, the global markets director of Facebook and sister of its founder, Mark Zuckerberg, said multinational companies had been bowled over by the ability to receive real-time feedback from the site's millions of users.
"I had tons of people saying 'this could be so incredible for our business'. It takes a very long time to do a focus group, and businesses often don't have the luxury of time. I think they liked the instant responses," she said.
At the conference Facebook asked a range of questions of its users before feeding the answers back to delegates within minutes. It targeted users in Palestine and then Israel with the same question about global peace, before debating the results.
Marketing experts have said the vast amount of personal information Facebook holds may be worth "untold millions" to market research companies.
Facebook has sold the new polling system, called engagement ads, to CareerBuilder, a recruitment company.
How Social Networking Sites Have Changed The Breakup Game
In the musical "South Pacific," Nellie made breaking up sound easy when she sang, "I'm gonna wash that man right outa my hair."
But Nellie didn't have Facebook in 1949, when the musical opened. If she had, forgetting him might have been a lot harder.
Just ask Alex Sanders, a junior at the University of Connecticut. When she broke up with her boyfriend, she continued to get regular updates about him, courtesy of the social-networking site. She suspected that some of them — particularly the ones that said he was at some other girl's house — were planted to make her jealous.
Sure, she could have "unfriended" him or taken other steps to cut the news about him, but she wasn't quite ready to do that. "As much as I didn't want to see what he was up to," said Sanders, "I was still curious. It was sort of self-harming because I knew if I looked at his Facebook to see what he was up to, it might hurt me."
Oh, the exquisite torture of spying on your ex. Years ago, the jilted resorted to cruising around an ex's neighborhood, trying to catch a glimpse, or delicately gleaning whatever they could from mutual friends.
With Facebook, it's only a click away, and news of an ex even arrives unbidden, unless you take steps to stop it. "I think it definitely makes it harder to get over someone," said Sanders. "There are constant reminders."
Indeed, all that interwoven connectedness, which can help ease the way into a relationship, makes it all the harder to disengage at the end.
Even if you do "unfriend" an ex, you'll still most likely encounter him often on the Facebook sites of mutual friends where his photos and comments may likely turn up.
"If it's over, it's not quite over on Facebook," said Pepper Schwartz, a professor of sociology at the University of Washington and the author of 14 books on sex, love and relationships. Updates like "Barry is in a new relationship" or "Sarah went dancing all night last night" or photos of your ex with a new woman are sure to rankle.
"It's a transparency that's kind of sweet when nobody's heart is breaking," said Schwartz, who is also the chief relationship expert at Perfectmatch.com. "It's not so sweet when you'd like to be on another planet."
It's all part of the fish-bowl visibility — from start to finish — that social networking sites give to what once were largely private matters of the heart.
For the mostly teens and twentysomethings who live out their romantic lives on Facebook, the flirting often begins with one person posting a seemingly casual comment on another's wall. The very public nature of the wall — a space on a user's profile where friends can post messages — makes it possible to explore the possibility of a relationship without revealing much.
In the past, when a relationship flourished, it might be marked by a pin or a letter sweater or a friendship ring. Today it often leads to a talk: Should we change our status on Facebook from being single to being in a relationship? Or, with the more dysfunctional dyad, one member may post a change in his or her relationship status without telling the other.
Which brings us to breaking up in the Facebook arena. Libby Simpson's boyfriend had just broken up with her when she started getting calls from friends who weren't her closest asking, "How are you?" "Are you OK?"
"What are you talking about?" Simpson, a junior at the University of Massachusetts, asked them.
"We saw it on Facebook," they said. Her ex, Andrew, had changed his status to single, and an automatic message had been sent out, accompanied with a broken heart, signaling the end of their relationship.
"I was kind of mortified," said Simpson, who has 342 friends on Facebook. "First of all I was just getting over the shock, saying OK, this is real … I didn't get out of bed for a week."
After such an experience, many Facebook users opt not to record any details about their romantic status, so that if it changes, at least they avoid having any notifications sent out. After the break-up, Simpson also weathered the Facebook updates containing tidbits about Andrew's whereabouts, reminding her of what he was doing, which friends he was seeing.
Kathleen Bogle, a professor of sociology at La Salle University in Philadelphia and the author of "Hooking Up: Sex, Dating, and Relationships on Campus," said having so much access to information about your ex "can really take jealousy to a new level."
Michael Rabby, an assistant professor of communication studies at the University of Portland in Oregon and an expert on relationships and the Internet, said it's a "hard-and-fast rule, if you break up with somebody, you really should 'unfriend' them.
"You don't want to know if they are dating or really what they are feeling because you're not going to really, recover. You're not going to heal yourself if you're constantly attuned to what your ex is doing."
But many don't "unfriend" easily, even with someone they are mad at.
Marc Gauthier, a junior at UConn, said it seems a "little extreme" to him. "A bitter break-up in 2009 might hold little meaning in 2019," particularly if the ex moves halfway across the world, and "you want to say hello."
"To defriend just because you're upset at one point in time is awfully foolish."
Back to Nellie and the late '40s. Turns out she had more trouble than she thought in her plan to "drum him out" of her "dreams." By the end of the play, she and her boyfriend are back together.
• Courant intern Katie Bushey contributed to this story.
New Illness: Facebook Depression?
This may sound like a joke, but it's not: researchers at Stony Brook University in New York have found that too much Facebook usage can leave you more prone to anxiety and depression...that is, if you're a teenage girl. In a study, a group of 13-year old girls were evaluated by psychology professor Dr. Joanne Davila and her colleague, Lisa Starr. A year later, the researchers followed up with the girls, testing them for depressive symptoms.
Feeling Down? Blame Facebook!
The results of their tests, recently published in The Journal of Adolescence, showed that the girls who talked with their friends online had significantly higher levels of depression. Says Dr. Davila, "Texting, instant messaging and social networking make it very easy for adolescents to become even more anxious, which can lead to depression."
Apparently, the problem with these electronic tools du jour is that they allowed the girls to discuss the same problems over and over again. This caused them to get stuck obsessing over a particular emotional setback, unable to move forward.
A Couple of Caveats
Turning a critical eye to this research, though, we have to wonder: is it really Facebook and IM that's getting the girls down? Or is it just the nature of teenage girls to talk themselves to tears? We already know that teenage girls engage in excessive talking and rumination...and they've been doing so for years. It's just the means by which they communicate these days that has changed.
Years ago, those same girls may have spent hours on the phone or writing out their thoughts in secret "slambooks." Even longer ago, they probably sat at their desks writing out long, emotional letters. For many girls, chatting about or dwelling on their problems is just a part of growing up.
Even Dr. Davila seemed to notice that it's not necessarily the medium through which the chatter tasks place that's the issue - it's the amount of discussion that leads to the feelings of depression. Said the professor, "[The girls] often don't realize that excessive talking is actually making them feel worse."
It's also worth pointing out that the study involved a relatively small sample of girls: 83 in total, which doesn't seem like a large enough group to form any definitive, universal conclusions.
If anything, this study just shows that social networking sites haven't changed anything about how we communicate - they've just given us a different platform through which we do so.
Behavior: TV Time Linked to Depression in Future
Lengthy television viewing in adolescence may raise the risk for depression in young adulthood, according to a new report.
The study, published in the February issue of The Archives of General Psychiatry, found a rising risk of depressive symptoms with increasing hours spent watching television. There was no association of depression with exposure to computer games, videocassettes or radio.
Researchers used data from a larger analysis of 4,142 adolescents who were not depressed at the start of the study. After seven years of follow-up, more than 7 percent had symptoms of depression. But while about 6 percent of those who watched under three hours a day were depressed, more than 17 percent of those who watched more than nine hours a day had depressive symptoms.
The association was stronger in boys than in girls, and it held after adjusting for age, race, socioeconomic status and educational level.
“We really don’t know what it was specifically about TV exposure that was associated with depression, whether it was a particular kind of programming or some contextual factor such as watching alone or with other people,” said Dr. Brian Primack, the lead author and an assistant professor of medicine at the University of Pittsburgh. “Therefore, I would be uneasy to make any blanket recommendations based on this one study.”
Hulu: We're Evil, and Proud of It
Note: Spoiler alert, if you haven't seen Hulu's Super Bowl ad.
Google's "don't be evil" motto has been the target of the occasional critic. Hulu, however, has declared in its hyped-up Super Bowl TV ad that it is evil--and it's not making any apologies.
The Web video hub, a joint venture between NBC Universal and News Corp., promised to "reveal its secret" in the Super Bowl ad created by agency Crispin Porter & Borgusky, which was running on NBC on Sunday evening. It was an important debut for Hulu, as many television audiences had likely never heard of it. Indeed, when I tried to watch the ad on the Web for the first time, Hulu's servers were overloaded, indicating server demand was high.
But eager nerds who were hoping for a big announcement of new content or a hardware tie-in were probably disappointed: the "secret" was decidedly tongue-in-cheek. We hope.
The ad, called "Alec in Huluwood," stars veteran actor Alec Baldwin, currently in the cast of the NBC show 30 Rock, narrating a 60-second spot that takes place in what appears to be an underground laboratory facility beneath the famed Hollywood sign.
"You know they say TV will rot your brain?" Baldwin asks as he descends in an elevator. "That's absurd. TV only softens the brain like a ripe banana. To take it all the way, we've created Hulu."
The thinking, per Baldwin's monologue, is that if there's loads and loads of TV content available on the Web, you can't possibly escape it ("I mean, what're you going to do? Turn off your TV and your computer?") And Hulu, he says, was created with sordid ulterior motives: "Once your brain is reduced to a cottage cheese-like mush, we'll scoop them out with a melon baller and gobble them right on up."
A tentacle slips out of Baldwin's suit jacket. "Because we're aliens, and that's how we roll."
Guess my "Hulu is people" theory wasn't that far off.
Some Fear Google’s Power in Digital Books
IN 2002, Google began to drink the milkshakes of the book world.
Back then, according to the company’s official history, it began a “secret ‘books’ project.” Today, that project is known as Google Book Search and, aided by a recent class-action settlement, it promises to transform the way information is collected: who controls the most books; who gets access to those books; how access will be sold and attained. There will be blood, in other words.
Like the oil barons in the late 19th century, Google is thirsty for a vital raw material — digital content. As Daniel J. Clancy, the engineering director for Google Book Search, put it, “our core business is about search and discovery, and search and discovery improves with more content.”
He can even sound like a prospector when he says Google began its effort to scan millions of books “because there is a ridiculous amount of information out there,” he said, later adding, “and we didn’t see anyone else doing it.”
But there is a crucial difference. Unlike Daniel Plainview, the antihero of “There Will Be Blood,” played by Daniel Day-Lewis, who cackles when describing how his rigs can suck the oil underneath other peoples’ property — drink their milkshakes, if you will — when Google copies a book the original remains.
Instead, the “property” being taken is represented by copyrights and other kinds of ownership. There will be lawsuits.
In the latest issue of The New York Review of Books, Robert Darnton, the head of the Harvard library system, writes about the Google class-action agreement with the passion of a Progressive Era muckraker.
“Google will enjoy what can only be called a monopoly — a monopoly of a new kind, not of railroads or steel but of access to information,” Mr. Darnton writes. “Google has no serious competitors.”
He adds, “Google alone has the wealth to digitize on a massive scale. And having settled with the authors and publishers, it can exploit its financial power from within a protective legal barrier; for the class action suit covers the entire class of authors and publishers.”
Google is certainly solidifying a dominant position in the world of books by digitizing the great collections of the world. It relies on a basic mathematical principle: no matter how many volumes Harvard or Oxford may have, each can’t have more than Oxford plus Harvard plus Michigan, and so on.
The class-action settlement (which a judge must still approve), Mr. Darnton writes, “will give Google control over the digitizing of virtually all books covered by copyright in the United States.”
As long as Google has a set of millions of books that it uniquely can offer to the public, he argues, it has a monopoly it can exploit. You want that 1953 treatise on German state planning? You’ll have to pay. Or, more seriously, your library wants unfettered access to these millions of books? You’ll have to subscribe.
While Harvard has allowed Google to digitize its public domain holdings, it has thus far not agreed to the settlement. “Contrary to many reports, Harvard has not rejected the settlement,” Mr. Darnton wrote in an e-mail message, in which he said his essay was “not meant as an attack on Google.” “It is studying the situation as the proposed accord makes its way through the court.”
To professors who track the fast-changing nature of content on the Internet, not to mention Google officials, the idea of Google as a robber baron is fanciful. Google has no interest in controlling content, Mr. Clancy said, and in the few cases where it does create its own content — maps or financial information, for instance — it tries to make it available free.
Eben Moglen, a law professor at Columbia and a free-culture advocate, puts it this way: if the fight over digitization of books is like horse-and-buggy makers against car manufacturers, Google wants to be the road.
To those who write about the significance of Google Book Search — and a bit of a cottage industry has formed online in a few months — it is not Google’s role as the owner of content that preoccupies them. Rather it is the digitization itself: the centralization — and homogenization — of information.
To Thomas Augst, an English professor at New York University who has studied the history of libraries, including those in the past that were run as businesses, what is significant is that the digitization of books is ending the distinction between circulating libraries, meant for public readers, and research libraries, meant for scholars. It’s not as if anyone from the public can walk into the Harvard library.
“A positive way to look at what Google is doing,” he said, “is that it is advancing the circulating of books and leveling these distinctions.”
In a final twist, however, the digital-rights class-action agreement has the potential to make physical libraries newly relevant. Each public library will have one computer with complete access to Google Book Search, a service that normally would come as part of a paid subscription.
One of Mr. Darnton’s concerns is that a single computer may not be enough to meet public demand. But Mr. Augst already can see a great benefit.
Google is “creating a new reason to go to public libraries, which I think is fantastic,” he said. “Public libraries have a communal function, a symbolic function that can only happen if people are there.”
All Korea To Have 1Gbps Broadband By 2012?
An anonymous reader writes to tell us that while 60 Mbps may be enough to get us excited in the US, Korea is making plans to set the bar much higher. The entire country is gearing up to have 1 Gbps service by 2012, or at least that is what the Korea Communications Commission (KCC) is claiming. "Currently, Koreans can get speeds up to 100 Mbps, which is still nearly double the speed of Charter's new 60 Mbps service. The new plan by the KCC will cost 34.1 trillion ($24.6 billion USD) over the next five years. The central government will put up 1.3 trillion won, with the remainder coming from private telecom operators. The project is also expected to create more than 120,000 jobs — a win for the Korean economy."
Obsolete Computers That Still Do the Job
If your ancient IT equipment is sufficient for the task, don't hesitate to squeeze more years out of it during a crummy economy
Roger L. Kay
In January, for the tenth year in a row, I took my little Hewlett-Packard (HPQ) Jornada notebook to a trade show in Las Vegas. The tech industry gathers there annually for a confab, which these days happens to be at the Consumer Electronics Show (otherwise known as CES). As an industry analyst, I go to visit with clients and prospects as well as to see the latest technologies. And I like to take notes. The Jornada was a demo unit from a HP press event in Grenoble, France, in 1998.
As I fired up and snapped shut this highly reliable machine during a cascade of meetings, I was again struck by its practicality. Although dated by any definition, the old Jornada remains—year after year—exactly the right tool for the job at hand: taking notes in appointments scheduled one after another all day in venues scattered throughout the city.
Every time I open this device, I of course have to endure the mockery of my peers. But at the same time, I am struck by a number of principles.
One has to do with the longevity of technology. This device could easily remain in service for another decade. However, like the automobile industry before it, the computer business has gotten its customers on a cycle of planned obsolescence, which suits suppliers' requirement to continue to develop and sell technology whether we need it or not. Examples of this commercial imperative include Microsoft's (MSFT) replacement of Windows XP by Windows Vista, Intel's (INTC) repeated architectural changes, and the recent move by Sony (SNE) and others to substitute Blu-ray for older optical drive formats. O.K., so products are getting better in some ways. Yes, they've got more features. But they don't always become more reliable.
Another principle has to do with the definition of "good enough." With this term, it's important to know the context. What is something good enough for? Clearly, the Jornada's performance is severely compromised. But it has plenty of power for text. Indeed, from a writer's or reporter's point of view, computers have had enough power since the mid-1980s. This one has a 190MHz StrongARM processor. Admittedly, it lacks memory, boasting a mere 16MB RAM. But those 16 million bytes are more than enough for me to jot my notes.
Rather than a hard drive, the unit has 16MB of flash (a great luxury at the time it was made), which allows it to operate quickly, silently, and at low power. Because data displayed on the screen are actually written to flash, there's no need to save your work: It's automatically saved as you type. You're effectively looking at the saved copy all the time. The 8.2-in. display is barely in color, and fonts are primitive, but who needs acres of screen real estate, color, or fancy fonts for writing? The system runs on the very first version of Microsoft's Windows CE, a super lightweight OS, and word processing is provided by Pocket Word, also light as a butterfly.
Low Power Demand, Big Battery
The fact that I'm still using the Jornada is a testament to the durability of well-made technology products. Those Mars Rovers are still roving around out there, a lot longer than anyone expected. And what makes the Jornada really stand out has a lot to do with its longevity. It's got unbelievable battery life, the product of a big battery relative to the demands of its low-power components. The product literature claims that the Li-Ion rechargeable battery gets 10 hours. But I juiced it up before getting on the plane, took notes for three days, flew home, and transferred the notes five days later, all without ever plugging it in again. And the battery gauge still showed 62% remaining (6.5-7.5 hours). The trick to making the two coin backup batteries last is taking them out and tossing them in the bag with the unit until next year. That way, they get maybe five years of life.
Another great boon of the ancient technology is that it's instant on—and I mean instant. None of this five-seconds stuff. It's blup! On. And blup! Off. A lot of the battery savings comes just from turning it off during short idle times, which instant-on makes practical. The keyboard is small but usable. And despite the relatively large battery, the unit is as light as a (big) paperback. What's not to love? It goes great in my backpack as I bicycle between appointments on the Strip and the show floor.
The Pocket Word transfer to a modern PC gets a little tougher each year, as the interfaces between the past and present grow progressively more twisted, but I still find pathways around. Speaking of which, the Jornada is not the only piece of old technology I've got in service. I'm still using a printer, also HP, circa 1992. That's 17 years. It, too, is slowly being marooned in the past by its connectors.
This year, as IT and financial managers wonder whether, given the economic situation, they can squeeze another year out of their existing client PCs, it's not a bad idea to revisit the principles of useful life. A good tool should last a long time.
This minor release fixes false-positives due to tags such as table or div defined with a width of exactly 468 or 728 px (and yes, there are!). There you go: http://www.adsweep.org/AdSweep.zip
In other news, I am working on a new version of the AdSweep engine for sites like physorg.com that are...Problematic
The next release will be have increased flexibility and code readability.
Keep in touch!
VOD to Overtake Blu-Ray by 2017, Reveals Report
New research suggests future of home entertainment is online
Blu-ray - the home entertainment clock is ticking
A new study suggests it may take a further eight years for Video on Demand services to become the dominant media provider.
Research firm SNL Kagan has predicted that physical media – ie, Blu-ray and DVD – will continue to be the leading providers of home entertainment.
According to the study, DVD is still overwhelmingly the main market leader, with a 97.1 per cent share.
This is set to continue for the next five years, with Blu-ray finally becoming market leader – by an estimated 59.7 per cent – in 2014.
Blu-ray is driving force
Blu-ray's dominance will be short-lived according to SNL Kagan. It expects Video on Demand to be the biggest provider of home entertainment by 2017.
The company points to a number of factors, including the rise of high-speed internet in the home.
Wade Holden, analyst at SNL Kagan, said about the findings: "Blu-ray will be the driving force behind the video retail market throughout the next decade.
"The current economic climate, however, will slow the growth of this new format and likely keep it from reaching the heights that it may have in better times.
"VOD services will continue to improve in both technology and content over the next decade and begin to draw consumers away from Blu-ray and DVD by 2017."
Wozniak Accepts Post At a Storage Start-Up
Steve Wozniak, the co-founder of Apple, could ignore the call of the motherboard no longer. He is going back to work — this time at Fusion-io, a start-up company that tweaks computers to let them tap vast amounts of storage at very quick rates.
In the early days of Apple, Mr. Wozniak stood out as one of Silicon Valley’s most creative engineers. He demonstrated a knack for elegant computer designs that made efficient use of components and combined many features into a cohesive package. At Fusion-io, Mr. Wozniak will be called upon for similar work, although this time with larger server computers and storage systems rather than PCs.
The three-year-old company, based in Salt Lake City, is expected to announce Thursday that Mr. Wozniak, already a member of Fusion-io’s advisory board, will become its chief scientist.
“I have a pretty quiet life, and I like to watch technology evolve,” Mr. Wozniak said in an interview. “In this case, I like the people and the product, and said I would like some greater involvement.”
Fusion-io has come up with a play that analysts consider rather unusual in the hardware industry.
The company relies on high-speed flash memory, commonly used to store data on an iPod or digital camera. Fusion-io takes many flash chips and packs them together on a module that is a bit bigger than a deck of cards. The module slides into certain slots inside servers. That gives the main computing chip quick access to data stored on the flash chips. In traditional systems, servers must hunt for data on separate storage systems linked to the processor by a slower connection.
Fusion-io says it has more than 300 customers, including Hill Air Force Base in northern Utah. Douglas Babb, the chief IT systems architect at the base, said a $10,000 module from Fusion-io can handle much of the work usually done by storage systems costing more than $100,000 sold by EMC, NetApp and others.
The amount of time it takes for tasks like modeling jet wings or analyzing manufacturing and supply data, Mr. Babb said, can be reduced to just hours or even minutes from days with the Fusion-io technology. “In my opinion, it’s absolutely a game-changing product,” he said.
All of the major storage makers will release products packed full of high-speed flash memory as well, although they continue to house the flash memory on disks sitting in separate systems. At the moment, Fusion-io appears to be the only company that has managed to place that memory right next to the main computational chip in servers.
Companies with large databases, including manufacturers, financial services firms and search engines like Google could benefit from the technology, said Joseph Unsworth, a technology analyst at the research firm Gartner.
Dell has invested in Fusion-io, and the start-up has sales arrangements in place with Dell, Hewlett-Packard and I.B.M.
The idea of eliminating a middleman — in this case, a storage maker — appealed to Mr. Wozniak’s penchant for efficient hardware designs, he said.
Mr. Wozniak expressed support for Steven P. Jobs, Apple’s co-founder and chief executive, who took a leave of absence from Apple in January to deal with unspecified health issues. Asked about public concerns over Mr. Jobs’s health and lack of public disclosures, Mr. Wozniak played the matter down.
“I am kind of glad that it subsided quickly and has been rather low-key,” he said.
Mr. Wozniak said that, if asked, he would consider joining Apple’s board. “I have thought about that in recent years, but it’s not on my mind at all right now,” he said. “I think I have a better place at smaller companies looking at new ideas.”
An Apple spokesman declined to comment on Mr. Wozniak’s possible future involvement with the company.
In 2006, Mr. Wozniak shut down Wheels of Zeus, another start-up, and he did not have a full-time job until taking the role at Fusion-io.
India's $10 Laptop: Too Good to be True
India's much-hyped plan to build a $10 laptop has been exposed as a massive exaggeration.
Several media outlets, including The Industry Standard, cited a Times of India article that last week stated India would be unveiling the laptop as an educational tool for children across the country.
The Times article quoted a government official -- Secretary of Higher Education R. P. Agarwal - which seemed to provide more legitimacy to the claim. Indian offficials had said it was to be an answer to Nicholas Negroponte's One Laptop Per Child project.
Now it turns out that the project actually centers around a 2GB hard drive with wireless capabilities.
Fast Company reports that the device "appears to be nothing much more sophisticated than a specialized digital storage hub/net access point for educational media."
Video Chats Overcome Clunkiness
When AT&T demonstrated its video telephone at the 1964 World’s Fair, everyone — including AT&T — pretty much figured that it would be the future. People wouldn’t just hear each other over the phone — they would see each other, too.
What everyone forgot, of course, was a little factor called human nature. People don’t want to be watched on the phone. You don’t want to have to make yourself presentable, to perform or to give up the freedom of multitasking. In the absence of video, you can walk around cleaning, perform small acts of personal grooming, maybe roll your eyes at a stupid comment.
And so here we are, 45 years later, still making audio-only phone calls. Not because of technological limits, but human ones.
So what about Skype?
If you’re under 30 or so, you probably know all about Skype. It’s a free program (Mac, Windows or Linux) that connects you to other people who have Skype. You can type instant messages back and forth, make crystal-clear audio calls, and, yes, even make video calls, provided your computers have webcams or built-in cameras — all without paying a penny.
No wonder more than 300 million people have tried Skype. It’s a natural for the college crowd, in particular; free calls are especially attractive when you’re young and broke and miles from your friends and family.
Of course, plenty of other programs do the same things: iChat, Google Talk, MSN Messenger, AIM, Yahoo Messenger, SightSpeed and Oovoo. But because of its simplicity, its quality and its early start, Skype is the one whose name has become a verb.
On Tuesday, after a year of public testing, the Skype team (now owned by eBay) released Skype 4.0 for Windows, which the company calls “the biggest new release in Skype’s history.”
The first change strikes you immediately — and during the months of public testing, caused howls of protest among the faithful: Skype is no longer a flotilla of little windows dancing around your screen. It’s now a single consolidated window. You can still carry on multiple chats or audio calls simultaneously, but you switch among them by clicking their names in a list at the left side, rather than juggling multiple windows. (A variation of the old arrangement is still available.)
All kinds of useful features are on display. You can drag various sections of the software to resize them; discreet notifications pop up from your system tray when people are trying to reach you; you can import the address book from Hotmail, Yahoo or Outlook.
The most important changes in Skype 4, though, have to do with video calls. If you’ve ever used video-chat programs before, then you know what an unsatisfying experience it can be. The picture breaks up. Connections are dropped. Clarity comes and goes.
Worst of all, there’s that annoying delay that makes both you and your conversation partner seem slightly dimwitted. Reactions lag, jokes fall flat and you wind up accidentally interrupting each other — “Oh, I’m sorry, go ahead ”— all because there’s a one-second delay between saying something and its arrival at the other person’s speakers.
The video quality still varies when you use Skype. Fast Internet connections and fast computers still work better than slow ones. But if you do have a good setup — wow. With certain Logitech or Philips webcam models, Skype 4.0 can deliver a picture that’s as big and sharp and smooth as a TV picture (30 frames a second, 640 by 480 pixels), with almost no delay.
In my test calls to friends in California, New York and Virginia, we were amazed at what a difference it makes when the delay goes away. (Maybe, for its next trick, Skype can lend its technology to the world’s cellphone carriers.)
Just for kicks, we then tested iChat, Oovoo and Sightspeed under the same conditions, on the same computers. None of them matched Skype’s immediacy or video and audio quality.
According to the company, you get the best results if both parties are using Skype 4.0 for Windows (or Skype 2.8 for Mac). But some quality improvement will be apparent even if only one party has the latest.
Skype’s audio quality has always been terrific — more like a CD than a telephone, so if you have decent speakers, audio calls have an eerie, you-are-there presence. But the company says that the new version requires only half as much data to transmit all of that sound. In other words, no matter what your Internet connection, you’ll probably hear an improvement.
Skype’s video now offers some handy bells and whistles. You no longer have to begin a video chat by first starting with an audio call, for example; there’s a dedicated Start Video Chat button. You can also expand the window to full screen, or capture a still image during the call, with one click.
You can resize both your partner’s video image and your own, smaller picture-in-picture image, or drag them around the screen to suit the situation. And a small utility strip below the picture offers space to type Web addresses or other instant messages to your partner. You can even send a file to your pal by clicking the Send File button in this box.
Still, the new Skype is not necessarily the king of video-chat apps. It’s missing some big-ticket items that you can find in its rivals. For example, although Skype can accommodate several participants in a typed chat or an audio call, video calls are strictly one-to-one.
In programs like Oovoo, SightSpeed and Apple’s iChat, by contrast, several of you can be on a single video call, creating virtual meetings that bring together participants from far-flung corners of the globe without ever involving airplanes. In this economy, that’s not such a bad idea.
SightSpeed also offers a “video answering machine”— your buddies can leave a video recording for you when you’re not around. The paid versions of SightSpeed’s service also offer one-click recording of your video chats, which can be a useful record indeed, especially in matters of the heart (or business deals).
Weirdly, Skype 4.0 doesn’t offer screen sharing — an indispensable collaboration and troubleshooting tool that’s in Skype for Macintosh. It lets you see your buddy’s computer screen and even operate the mouse by long distance. (“Coming soon,” says Skype.)
And while we’re quibbling: it’s great that Skype offers you the chance to place calls from your computer to somebody’s actual telephone for a couple of cents a minute — that, after all, is how the company makes money. (Rates are, for example, $3 a month for unlimited calling to United States and Canadian phones, or $10 a month globally.) But Skype really shouldn’t charge you to send text messages this way. Other chat programs let you send text messages straight to people’s cellphones at no charge to you.
Even so, Skype 4 is better than before, and it’s free, and that means it’s a no-brainer to upgrade. So if video calling is inching closer to being instantaneous, clear, and satisfying, does that mean that AT&T’s 1964 vision will finally come to pass? Will we one day adjust to the idea of being on camera every time someone calls?
In the end, video chatting isn’t a replacement for phone calls but a supplement to them, a perfect way to check out someone’s new place, check in with distant family members and friends or show off a new talent (or baby). They saw the possibilities back in 1964 — they just didn’t realize that we wouldn’t always want to use them.
Watch a Live Video, Share Your PC with CNN
Many people who watched live streaming video of the inauguration of U.S. President Barack Obama on Jan. 20 may not realize that their PC was used to send the video to other PCs, too.
Clicking "yes" to a CNN.com dialog box installed a peer-to-peer (P2P) application that uses your Internet bandwidth rather than CNN's to send live video to other viewers.
The P2P application is called Octoshape Grid Delivery and is managed by Octoshape ApS, a company based in Copenhagen, Denmark.
Web surfers who visit CNN.com and select a live video stream for the first time see in their browsers a dialog box, shown in Figure 1, saying, "This site requires the Octoshape Grid Delivery enhancement for Adobe Flash Player." The dialog box doesn't appear when playing an ordinary video file, only when starting a live feed. (Feeds labeled LIVE typically appear in the upper-right corner of CNN.com's home page during business hours.)
According to Octoshape's end-user license agreement (EULA), what's installed is a peer-to-peer app that will "deliver parts of the video and audio stream to other end users of the Software."
Why should you care? Windows Secrets contributing editor Ryan Russell, using a network sniffer, measured Octoshape using upstream bandwidth of 320 kilobits per second on a broadband connection. Dan Ferrell, in a comment on contributing editor Susan Bradley's blog, reports seeing 600 Kbps of upstream traffic. At first glance, Ferrell adds, the multiple connections to his PC looked on his security alert system like some kind of SQL attack.
The Internet Storm Center, an Internet security organization, reported that traffic on Jan. 20 had jumped to a level thousands of times higher than usual on port 8247, which is used for UDP, the User Datagram Protocol. (See Figure 2.) The center quickly identified the source as legitimate — CNN — but security consultant Raul Siles warned in his report, "It would be easy for an attacker to hide his actions on this port if we simply ignore it."
In a telephone interview, Octoshape's P2P nature was confirmed by Mike Wise, group technical advisor for platform R&D at Turner Broadcasting System, the parent of CNN.
Wise emphasized that the news network had selected the most considerate software for the job: "The Octoshape technology uses a congestion control mechanism that's less aggressive than TCP and most UDP implementations." As one example of the way Octoshape gives priority to user tasks, he explained, "we chose an implementation that wouldn't interfere with consumer's VoIP [Voice over Internet Protocol] applications."
As a European company, Octoshape's technology was initially used on the continent to stream live feeds of such high-profile events as the Eurovision Song Contest and the UEFA Cup. "We're their first big United States customer, as least that I know of," says Wise.
"We did some limited trials leading up to the election" on Nov. 4, as Wise describes it. The big test came with the Jan. 20 inaugural address. More than 26 million live feeds (including restarts of crashed streams) were served that day by CNN.com, according to a Jan. 25 article and chart in the New York Times. CNN's nearest rivals served "only" 9.1 million (MSNBC) and 8 million (AP).
To my surprise, I've seen only a few blogs comment on the implications of CNN using so much upstream bandwidth — and almost no headlines in the mainstream U.S. media.
Most Internet service providers support far less bandwidth in the upstream direction (from a PC to the Internet) than they do downstream (from the Internet to a PC). But that isn't the only concern with CNN's use of people's Internet connections:
• Deceptive marketing. Octoshape's dialog box warns that playing a live video "requires" installing new software. Despite this, however, if you click "no" to Octoshape, you can play the feed using the streaming video capability built into Windows Media Player or Adobe's Flash Player, although possibly with less fidelity. Small links to choose one of the two standard formats appear in the bottom-right corner of the playback window.
The Octoshape EULA doesn't become available until after the user is required to select "yes" or "no" to install the app. But even if the EULA appeared before the buttons, burying in legalese the commandeering of a person's PC isn't my idea of "informed consent." Only a clear explanation of the repurposing of a PC's bandwidth — in on-screen text, readable without scrolling — is an adequate way to inform users of such a technique.
• Cost-shifting to ISPs. CNN's use of Octoshape might make live feeds look somewhat smoother to end users, but the primary benefit is a reduction in cost to the cable news network.
The TorrentFreak blog cites an unnamed insider as saying 30% of CNN's live feed traffic was served from individual PCs and not the network's own servers. That saves CNN big time on bandwidth. But the cost doesn't just disappear — it's shifted to ISPs.
Brett Glass, the owner of Lariat.net, a small ISP in Laramie, Wyoming, testified before the FCC last year on cost-shifting. Bandwidth, he explains, can cost hundreds of dollars per Mbps per month to providers in rural areas like his. "CNN is setting up a server on the ISP's network without permission or compensation," he told me in an interview. "CNN's not a charity, in fact it's doing a lot better than some ISPs."
• Costs to end users. Many ISPs around the world restrict how much bandwidth users can consume. Those providers charge by the megabyte for any traffic above that level. Users who installed Octoshape's app and served traffic upstream as well as down may get an unpleasant surprise in their next monthly bill. Octoshape anticipated this in the company's EULA by saying, "You are responsible for any telecommunication or other connectivity charges incurred through the use of the Software."
In addition, ISP terms of service usually prohibit customers from using their Internet connection to host a server. The FCC ruled last year against Comcast, a major U.S. ISP, on peer-to-peer restrictions, as explained in an Ars Technica article. But other legal issues on home-grown servers remain unsettled.
(In an interview, Comcast spokeswoman Jenny Moyer declined to address CNN's use of Octoshape, saying, "I don't think it's anything we're going to be able to comment on at this time.")
• Ludicrous license terms. Anyone who reads Octoshape's EULA after clicking "yes" to install the app finds that they've agreed to some hilarious prohibitions:
• "You may not collect any information about communication in the network of computers that are operating the Software or about the other users of the Software by monitoring, interdicting or intercepting any process of the Software. Octoshape recognizes that firewalls and anti-virus applications can collect such information, in which case you not are allowed to use or distribute such information."
Company policies on outbound traffic. No one has suggested that Octoshape is doing anything other than relaying live video streams to other PCs. In a blog comment, Johan Ryman, Octoshape manager of strategic partnership and sales, assures users that the app is well-behaved and stops consuming upstream bandwidth within five seconds of a live stream being closed.
• Many companies, however, have policies against sending data outside their LAN. How many CIOs will be comfortable with an app that sends unknown information to random PCs?
Use of Flash's install mechanism. Octoshape is the only outside company that's allowed to download software using the Adobe Flash Player's so-called Express Install feature, according to a Flash Magazine technical analysis. Express Install is used by Adobe to push updates and other software, such as Acrobat Connect and the Adobe AIR runtime.
IT admins who'd like to turn off the installation of Octoshape within their companies could disable Flash's update mechanism, as explained in Adobe TechNote 16701594. But doing so would disable all auto-updates from Adobe, not just Octoshape.
• Security vulnerabilities. The Octoshape app is supported by an established company and is not any kind of virus or worm. However, most programs have bugs, and Octoshape specifically communicates with its own servers and other PCs in ways that are not apparent to end users.
Any Web site you visit that is "Octoshape aware" can invoke the application. If a security vulnerability is discovered in the Octoshape software, hackers could exploit the weakness.
Media players expose PC users to serious security flaws more often than Windows itself does, as WS associate editor Scott Dunn reported on Aug. 16, 2007. For instance, several new vulnerabilities were discovered in Flash Player version 9 in 2008 alone, including one rated "highly critical," according to advisories by the security firm Secunia.
In a follow-up article on Sept. 6, 2007, Scott reported that Flash Player 9 was found to be unpatched in 62% of the Windows PCs that participated in a test. End users can correct these holes by patching the player or upgrading to version 10, but too few do so.
• Corporate revolving doors. It's remarkable to see how a small company in Denmark has managed to gain exclusive contracts with Adobe and CNN. I'm all for innovative software firms selling cutting-edge technology.
At the same time, I wonder how these relationships came into being. Last month, Octoshape hired as its new U.S. CEO Scott Brown, previously a vice president of Turner Broadcasting, according to the Business of Video blog. Sounds like the connection between CNN and Octoshape is getting stronger all the time.
The question isn't whether peer-to-peer technology is "good" or "bad." P2P is here to stay.
But if all TV programs are going to be streamed live by media giants, as I'm sure will eventually happen, the question is what impact this will have on Internet bandwidth — and who will pay for it.
I'd like to see the computer industry start a well-publicized discussion in the major news media about this. If we're going to stream TV across the Internet, shouldn't we select an open standard (the TorrentFreak blog likes P2P-Next), rather than proprietary technology that's restricted to a few parties with patents?
What to do if you have Octoshape on your PC
As I mentioned earlier, the Octoshape app isn't currently a threat. But I personally would rather put up with a slightly jerky video than run an application on my PC that's sending God-knows-what to who-knows-whom.
Fortunately, the Octoshape program isn't hard to find or remove:
Jail for Photographing Police?
The relationship between photographers and police could worsen next month when new laws are introduced that allow for the arrest - and imprisonment - of anyone who takes pictures of officers 'likely to be useful to a person committing or preparing an act of terrorism'.
Set to become law on 16 February, the Counter-Terrorism Act 2008 amends the Terrorism Act 2000 regarding offences relating to information about members of armed forces, a member of the intelligence services, or a police officer.
The new set of rules, under section 76 of the 2008 Act and section 58A of the 2000 Act, will target anyone who 'elicits or attempts to elicit information about (members of armed forces) ... which is of a kind likely to be useful to a person committing or preparing an act of terrorism'.
A person found guilty of this offence could be liable to imprisonment for up to 10 years, and to a fine.
The law is expected to increase the anti-terrorism powers used today by police officers to stop photographers, including press photographers, from taking pictures in public places. 'Who is to say that police officers won't abuse these powers,' asks freelance photographer Justin Tallis, who was threatened by an officer last week.
Tallis, a London-based photographer, was covering the anti-BBC protest on Saturday 24 January when he was approached by a police officer. Tallis had just taken a picture of the officer, who then asked to see the picture. The photographer refused, arguing that, as a press photographer, he had a right to take pictures of police officers.
According to Tallis, the officer then tried to take the camera away. Before giving up, the officer said that Tallis 'shouldn't have taken that photo, you were intimidating me'. The incident was caught on camera by photojournalist Marc Vallee.
Tallis is a member of the National Union of Journalists and the British Press Photographers' Association. 'The incident lasted just 10 seconds, but you don't expect a police officer to try to pull your camera from your neck,' Tallis tells BJP.
The incident came less than a week after it was revealed that an amateur photographer was stopped in Cleveland by police officers when taking pictures of ships. The photographer was asked if he had any terrorism connections and told that his details would be kept on file.
A Cleveland Police spokeswoman explained: 'If seen in suspicious circumstances, members of the public may well be approached by police officers and asked about their activities. Photography of buildings and areas from a public place is not an offence and is certainly not something the police wish to discourage. Nevertheless, in order to verify a person's actions as being entirely innocent, police officers are expected to engage and seek clarification where appropriate.'
The statement echoes the Prime Minister's answer to a petition signed by more than 5700 people. Gordon Brown reaffirmed, last week, that the police have a legal right to restrict photography in public places.
'There are no legal restrictions on photography in public places. However, the law applies to photographers as it does to anybody else in a public place. So there may be situations in which the taking of photographs may cause or lead to public order situations or raise security considerations,' Downing Street says.
'Each situation will be different and it would be an operational matter for the officer concerned as to what action if any should be taken in respect of those taking photographs. Anybody with a concern about a specific incident should raise the matter with the chief constable of the relevant force.'
However, Liberty, which campaigns on human rights, has decried the excessive use of stop-and-search powers given to police officers under section 44 of the Terrorism Act. The group's legal director, James Welch, said the powers were used too widely.
In December, freelance press photographer Jess Hurd was detained for more than 45 minutes after she was stopped while covering the wedding of a couple married in Docklands.
She was detained under section 44 of the Terrorism Act. Her camera was forcefully removed from her, and while she showed her press card, three police officers insisted on viewing the footage she had taken.
'Any officer who suspects an offence has been committed has the right to detain you,' a Metropolitan press officer told BJP at the time. 'Because you are a press photographer does not preclude you from being stopped under section 44 of the Terrorism Act. If the officer thought the photographer acted suspiciously, and especially if it was in a sensitive place, he had a right to detain and question the photographer.'
The tension between police officers and photographers is not limited to the UK. Last week, Icelandic police fired pepper spray on photojournalists as they were covering protests in front of the country's parliament building.
Kristjan Logason, a press photographer in Iceland, tells BJP that he was targeted along with other press photographers. 'The Icelandic police systematically tried to remove photographers by pepper-spraying them,' he says.
The photographers were covering a protest in front of the Althing parliament building in the capital Reykjavik. Iceland's financial system collapsed in October under the weight of billions of dollars of foreign debts incurred by its banks.
Already seven photographers have come forward as having been targetted by the Icelandic Police.
AP Alleges Copyright Infringement of Obama Image
On buttons, posters and Web sites, the image was everywhere during last year's presidential campaign: A pensive Barack Obama looking upward, as if to the future, splashed in a Warholesque red, white and blue and underlined with the caption HOPE.
Designed by Shepard Fairey, a Los-Angeles based street artist, the image has led to sales of hundreds of thousands of posters and stickers, has become so much in demand that copies signed by Fairey have been purchased for thousands of dollars on eBay.
The image, Fairey has acknowledged, is based on an Associated Press photograph, taken in April 2006 by Manny Garcia on assignment for the AP at the National Press Club in Washington.
The AP says it owns the copyright, and wants credit and compensation. Fairey disagrees.
"The Associated Press has determined that the photograph used in the poster is an AP photo and that its use required permission," the AP's director of media relations, Paul Colford, said in a statement.
"AP safeguards its assets and looks at these events on a case-by-case basis. We have reached out to Mr. Fairey's attorney and are in discussions. We hope for an amicable solution."
"We believe fair use protects Shepard's right to do what he did here," says Fairey's attorney, Anthony Falzone, executive director of the Fair Use Project at Stanford University and a lecturer at the Stanford Law School. "It wouldn't be appropriate to comment beyond that at this time because we are in discussions about this with the AP."
Fair use is a legal concept that allows exceptions to copyright law, based on, among other factors, how much of the original is used, what the new work is used for and how the original is affected by the new work.
A longtime rebel with a history of breaking rules, Fairey has said he found the photograph using Google Images. He released the image on his Web site shortly after he created it, in early 2008, and made thousands of posters for the street.
As it caught on, supporters began downloading the image and distributing it at campaign events, while blogs and other Internet sites picked it up. Fairey has said that he did not receive any of the money raised.
A former Obama campaign official said they were well aware of the image based on the picture taken by Garcia, a temporary hire no longer with the AP, but never licensed it or used it officially. The Obama official asked not to be identified because no one was authorized anymore to speak on behalf of the campaign.
The image's fame did not end with the election.
It will be included this month at a Fairey exhibit at the Institute of Contemporary Art in Boston and a mixed-media stenciled collage version has been added to the permanent collection of the National Portrait Gallery in Washington.
"The continued use of the poster, regardless of whether it is for galleries or other distribution, is part of the discussion AP is having with Mr. Fairey's representative," Colford said.
A New York Times book on the election, just published by Penguin Group (USA), includes the image. A Vermont-based publisher, Chelsea Green, also used it—credited solely to Fairey_ as the cover for Robert Kuttner's "Obama's Challenge," an economic manifesto released in September. Chelsea Green president Margo Baldwin said that Fairey did not ask for money, only that the publisher make a donation to the National Endowment for the Arts.
"It's a wonderful piece of art, but I wish he had been more careful about the licensing of it," said Baldwin, who added that Chelsea Green gave $2,500 to the NEA.
Fairey also used the AP photograph for an image designed specially for the Obama inaugural committee, which charged anywhere from $100 for a poster to $500 for a poster signed by the artist.
Fairey has said that he first designed the image a year ago after he was encouraged by the Obama campaign to come up with some kind of artwork. Last spring, he showed a letter to The Washington Post that came from the candidate.
"Dear Shepard," the letter reads. "I would like to thank you for using your talent in support of my campaign. The political messages involved in your work have encouraged Americans to believe they can help change the status quo. Your images have a profound effect on people, whether seen in a gallery or on a stop sign."
At first, Obama's team just encouraged him to make an image, Fairey has said. But soon after he created it, a worker involved in the campaign asked if Fairey could make an image from a photo to which the campaign had rights.
"I donated an image to them, which they used. It was the one that said "Change" underneath it. And then later on I did another one that said "Vote" underneath it, that had Obama smiling," he said in a December 2008 interview with an underground photography Web site.
Associated Press writer Philip Elliott in Washington contributed to this report.
ACTA, an Example of Global Democracy Deficit -- the Secret Treaty Negotiation
In the past several days there are some new details about about a secret treaty negotiation to create binding global norms for the enforcement of intellectual property rights.
The negotiation involves something called the Anti-Counterfeit Trade Agreement (ACTA). It has very little to do with counterfeiting -- the scope is much broader, covering the gamut of issues relating to the enforcement of intellectual property rights. The emotive term counterfeiting is in the title to make it sound as if only a member of organized crime would object to the agreement.
So far everything about the agreement has been secret. The names of the people who attend the meetings are secret. The agendas of meetings are secret. And most of all, the text of the agreement is secret. In the U.S., there is broad bipartisan support in the Congress for the secrecy. The European Union loves the secrecy. The Japanese government loves the secrecy. Well-connected corporate lobbyists for publishers and pharmaceutical companies love the secrecy (because they get everything anyway, through legal channels and informal networks). Groups like KEI, EFF, Public Knowledge, PIRG, Consumers Union, CFA, and Essential Action (to mention just a few of the U.S. groups following this), and academics like Michael Geist, etc, hate the secrecy.
It is now clear that ACTA is designed to be an aggressive, detailed and extensive agreement touching on many controversial aspects of the enforcement of intellectual property rights.
One area that I follow concerns injunctions. Few people understand the details of intellectual property rules or trade agreements, but they can still be important. One basic idea is that a patent or copyright is always a strict legal monopoly, and always warrants super very tough enforcement measures. Another idea is that in some cases, you give people the freedom to use a copyrighted work or patented invention in return for remuneration (sometimes referred to as a liability rule), or you allow some freedom to use works even without remuneration (another type of exception to the exclusive right), or you acknowledge that there are legitimate disputes over what actually constitutes an infringement (such as, what are the valid claims in a patent, or what uses of a copyrighted work constitute infringement?).
The first view is the one guiding the ACTA negotiators. The second is the more complex world we actually live in today, a world without ACTA.
Here are some examples of what these policies can mean. In current U.S. law (28 USC 1498), no one can get an injunction against the federal government or its contractors for using a copyrighted work or a patented invention. The possibility of injunction is eliminated for those cases. The patent or copyright owner is not without a remedy, however, They can get money - a reasonable amount for the use of the invention or work. But they can't stop the government from using the work or the invention.
Last year the U.S. Congress considered legislation to allow people the right to use "orphaned" copyrighted works --- cases where the copyright owner is impossible to find, such as for works owned by businesses that have disappeared, or by anonymous authors. One important section of the law would allow publishers who used orphaned works in larger compilations to continue to use the works, even after an author was eventually identified, in return for remuneration to the author.
In Canada, the owner of a copyrighted architectural work can't get an injunction to have a building torn down as a remedy for a infringement -- the copyright owner can only seek a monetary judgment.
These are all cases where injunctions are not possible, because the system works better, on balance, when remedies are limited to a reasonable royalty or monetary damage.
The U.S. judiciary is also changing the rules regarding injunctions, so that in some cases, particularly in cases where the patented invention is only a small part of a larger product, the injunction is not available, but a reasonable royalty payment is available.
There are proposals in the ACTA negotiations to make require the possibility of an injunction in all cases. This would eliminate the flexibility governments now have under the existing rules (Article 44.2 of the TRIPS).
At the same time, there are proposals in ACTA to change global norms for compensation for infringing uses. Rather than "reasonable" or "adequate" remuneration, governments would be required to consider various measures of "lost profits," the "market value," the "suggested retail price," or "at least the amount of royalties or fees" the owner would have requested. These are legal terms that would make it more expensive to infringe, in some cases, so much so that people will avoid doing things that are taken for granted today. The possible impact of these changes are broader than you may think. The Huffington Post, like other user generated content sites, is involved in many cases where bloggers infringe copyrighted photos or other materials. Youtube videos may or may exceed the rights under U.S. "fair use" doctrine. Some experiential uses of biomedical materials may violate patent rights. The businesses that host these actions take some risks, based upon one set of expectations regarding damages if they are found to have infringed. If you continue to racket up the damages on everything, a lot of useful activity will be deterred.
Looking to the future, there are proposals to radically change reward systems for medical R&D and other areas, using cash prizes linked to health care outcomes. The legality of these regimes under current global intellectual property norms would be undermined by some of the proposals in the ACTA.
These and a hundred other important issues are complicated, and important. New global norms on these topics should not be negotiated in secret. The reason this is happening in secret is that the U.S. Congress, the U.S. Executive Branch, the European Commission, the European Council of Ministers, and many other governments are unduly influenced by a handful of aggressive and often dim witted and ham handed corporate lobbyists who could care less about the larger impact of the changes they are proposing.
It would be nice if even one member of the U.S. Congress, from either party, would stand up and say: "the public deserves to know what is going on." This negotiation should not be held in secrecy.
Outline of the (secret) ACTA provisions Chapter One Initial Provisions and Definitions Section A: Initial Provisions Section B: General Definitions
Chapter Two Legal Framework For Enforcement of Intellectual Property Rights
Section 1: Civil Enforcement
Section 2: Border Measures
Section 3: Criminal Enforcement
Section 4: Special Requirements Related to Rights Management Technology and the Internet
Chapter Three International Cooperation
Chapter Four Enforcement Practices
Chapter Five Institutional Arrangements
Chapter Six Final Provisions
Details Emerge of Secret ACTA Negotiation
There are plans for the next ACTA negotiation to take place in Rabat, Morocco. However, since none of the Obama trade people have been placed at USTR, this might be delayed.
The USTR is still maintaining secrecy over details of the negotiation, including the names of participants and all of the proposed texts for negotiations. Despite this, KEI has obtained some documents related to the negotiations. We can report the following:
The U.S. and Japan have proposed that willful trademark and copyright infringement on a commercial scale be subject to criminal sanctions, including infringement that has “no direct or indirect motivation of financial gain.” This will further:
include sentences of imprisonment as well as monetary fines sufficiently high to provide a deterrent to future acts of infringement, consistent with a policy of removing the monetary incentive of the infringer
There is a section on “Unauthorized Camcording.” This provides that
Each Party shall provide for criminal procedures and penalties to be applied against any person who, without authorization of the holder of copyright or related rights in a motion picture or other audiovisual work, knowingly uses an audiovisual recording device to transmit or make a copy of or transmits to the public the motion picture or other audiovisual work, or any part thereof, from a performance of the motion picture or other audiovisual work in a motion picture exhibition facility open to the public.
In the area of Border measures, there is a proposal to delete all references to “in-transit” goods. Another proposal deals with “disclosure of information.”
Article 2.10: Disclosure of Information
With a view to establishing whether an intellectual property right has been infringed under national law and in accordance with national provisions on the protection of personal data, commercial and industrial secrecy and professional and administrative confidentiality, the competent authorities have detained infringing goods, shall inform the right holder of the names and addresses of the consignor, importer, exporter, or consignee, and provide to the right holder a description of the goods, the quantity of the goods, and, if known, the country of origin and name and addresses of producers of the goods.
In another section of the proposed text, a proposal on damages reads as follows:
Article 2.2: Damages
1. Each Party shall provide that in civil judicial proceedings, its judicial authorities on application of the injured party shall have the authority to order the infringer who knowingly or with reasonable grounds to know, engaged in infringing activity of intellectual property rights to pay the right holder damages adequate to compensate for the actual prejudice the right holder has suffered as a result of the infringement, taking into account all appropriate aspects, inter alia, the lost profits, the value of the infringed good or service, measured by the market price, the suggested retail price, unfair profits and elements other than economic factors or other legitimate measure of value submitted by the right holder.
2. As an alternative to paragraph 1, each Party may establish or maintain a system that provides:
(a) pre-established damages, or
(b) presumptions for determining the amount of damages1,
sufficient to compensate [Option US: fully] the right holder for the harm caused by the infringement.2
3. Where the infringer did not knowingly, or with reasonable grounds knows, engage in infringing activity, each Party may lay down that the judicial authorities may order the recovery of profits or the payment of damages, which may be pre-established.
4. Each Party shall provide that its judicial authorities shall have the authority to order, at the conclusion of civil judicial proceedings, reasonable and proportionate legal costs and other expenses incurred by the successful party shall be borne by the losing party, unless equity does not allow this..
fn1 Such measures [Option J: shall][Option US: may] include the presumption that the amount of damages is (i) the quantity of the goods infringing the right holder’s intellectual property right and actually assigned to third persons, multiplied by the amount of profit per unit of goods which would have been sold by the right holder if there had not been the act of infringement or (ii) a reasonable royalty or (iii) a lump sum on the basis of elements such as at least the amount of royalties or fees which would have been due if the infringer had requested authorization to use the intellectual property right in question.
In terms of injunctions, the ACTA text now includes the following proposal for provisional measures:
Article 2.6: Provisional Measures
1.Each Party shall provide that its judicial authorities shall have the authority, at the request of the applicant issue an interlocutory injunction intended to prevent any imminent infringement of an intellectual property right. An interlocutory injunction may also be issued, under the same conditions, against an intermediary whose services are being used by a third party to infringe an intellectual property right.
The proposed text on injunctions overturns Article 44.2 of the TRIPS and 28 USC 1498 of US Law, as well as several other national laws limiting the use of injunctions (such as the Canada and India limitations on the use of injunctions for architectural plans).
Article 2.7: Injunctions
Each Party shall ensure that, where a judicial decision is taken finding an infringement of an intellectual property right, the judicial authorities may issue against the infringer an injunction aimed at prohibiting the continuation of the infringement. Where provided for by domestic law, non-compliance with an injunction shall, where appropriate, be subject to a recurring penalty payment, with a view to ensuring compliance. The Parties shall also ensure that right holders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe an intellectual property right.
U.S. negotiators know, but apparently don’t care, that 28 USC 1498 eliminates the possibility of injunctions for cases where the U.S. government or its contractors infringe patents, copyrights or plant breeder rights. Canadian negotiators are apparently clueless regarding the Canada copyright law limits to the ability to obtain injunctive relief for architectural works:
“40. (1) Where the construction of a building or other structure that infringes or that infringes or that, if completed, would infringe the copyright in some other work has been commenced, the owner of the copyright is not entitled to obtain an injunction in respect of the construction of that building or structure or to order its demolitions. (2) Sections 38 and 42 do not apply in any case in respect of which subsection (1) applies. R.S., 1985, c. C-42, s. 40; 1997, c.24, s.21”
U.S. negotiators are also clueless that the U.S. Congress is considering legislation that would eliminate injunctions for certain uses of orphaned copyright works. (One of the pitfalls of secret negotiations is that the negotiators don’t know enough and lack understanding of the broader ramifications of the texts they are negotiating).
In terms of institutional details, they are proposing a permanent structure, that will include an ACTA Oversight Council, to supervise ACTA implementation, consider amendments, interpretations, and modifications to the agreement, and establish and delegate responsibilities to ad hoc working groups, as well as:
assisting with resolving any disputes that may arise regarding the interpretation of application of ACTA;
ensuring that ACTA avoids duplication of other international efforts regarding IP enforcement;
seeking input from non-governmental persons or groups, particularly with respect to best practices in the field of intellectual property enforcement;
endorsing best practice guidelines for implementing ACTA;
supporting the efforts of international organizations active in the field of intellectual property enforcement;
assisting non-Party governments with developing assessments of the benefits of accession to ACTA; and
adopting its own rules of procedure.
These are only a few elements of the negotiation, and the outline suggests a much larger agreement. These proposals are formally available to cleared corporate lobbyists and informally distributed to corporate lawyers and lobbyists in Europe, Japan and the U.S. They are inexcusably secret from the U.S. Public.
If you don’t think this negotiation should take place in secret, contact Senator Leahy, Representative Conyers, Obama IP advisors such as Professor Arti Rai, members of the European Parliament, or people who write editorials. You could contact the European Commission, I suppose, but do they really want transparency?
Putting Together the ACTA Puzzle: Privacy, P2P Major Targets
Negotiations on the Anti-Counterfeiting Trade Agreement resume next month in Morocco, but as the discussions drag on, details on the proposed treaty are beginning to emerge. Obtaining information through official channels such as Freedom of Information requests has been very difficult; however, there is little doubt that lobby groups have been privy to inside information and so reliable sources have begun to sketch a fairly detailed outline of the proposed treaty.
There is some good news from the details that have started to emerge. First, the treaty is far from complete as there are six main chapters and some key elements have yet to be discussed. Moreover, it is clear that there is significant disagreement on many aspects of the treaty with the U.S. and Japan jointly proposing language and many countries responding with potential changes or even recommendations that the language be dropped altogether.
If that is the good news, the bad news is that most other fears about the scope of ACTA are real. The proposed treaty appears to have six main chapters: (1) Initial Provisions and Definitions; (2) Enforcement of IPR; (3) International Cooperation; (4) Enforcement Practices; (5) Institutional Arrangements; and (6) Final Provisions. Most of the discussion to date has centred on the Enforcement of Intellectual Property Rights chapter. As for the other chapters, the U.S. has supplied some proposed definitions and Canada supplied a "non-paper" on the institutional arrangements once a treaty is concluded that calls for the creation of an "ACTA Oversight Council" that would meet each year to discuss implementations, best practices, and assist other governments who are considering joining ACTA.
The work on Enforcement of IPR is broken down into four sections - civil enforcement, border measures, criminal enforcement, and Rights Management Technology/the Internet.
The Civil Enforcement proposals call for the availability of civil judicial procedures for the enforcement of any intellectual property right, though some countries would like this limited to copyright and trademark. Parties to the treaty would be required to implement procedures that include the availability of statutory damages for copyright and trademark infringement (some countries would like this to be optional, while the U.S. would like the damages provisions expanded to patent infringement) as well as court costs.
Additional required remedies include orders to destroy the infringing goods without compensation. The proposals also call for significant mandated information disclosure, including ordering alleged infringers to disclose information regarding any person or third parties involved in any aspect of the infringement (some countries want this deleted and others are seeking to preserve privacy protections).
The Border Measures proposals are also still subject to considerable disagreement. Some countries are seeking de minimum rules, the removal of certain clauses, and a specific provision to put to rest fears of iPod searching customs officials by excluding personal baggage that contains goods of a non-commercial nature. The U.S. is pushing for broad provisions that cover import, export, and in-transit shipments.
The proposals call for provisions that would order authorities to suspend the release of infringing goods for at least one year, based only on a prima facie claim by the rights holder. Customs officers would be able to block shipments on their own initiative, supported by information supplied by rights holders. Those same officers would have the power to levy penalties if the goods are infringing. Moreover, the U.S. would apparently like a provision that absolves rights holders of any financial liability for storage or destruction of the infringing goods.
The Criminal Enforcement proposals make it clear that the U.S. would like ACTA to go well beyond cases of commercial counterfeiting. Indeed, their proposal would extend criminal enforcement to both (1) cases of a commercial nature; and (2) cases involving significant willful copyright and trademark infringement even where there is no direct or indirect motivation of financial gain. In other words, peer-to-peer file sharing would arguably be captured by the provision. The treaty would require each country to establish a laundry list of penalties - including imprisonment - sufficient to deter future acts of infringement. Moreover, trafficking in fake packaging for movies or music would become a criminal act as would unauthorized camcording.
All of these provisions are obviously subject to change since the treaty is still very much a work-in-progress. This may sound repetitive, but citizens of the many countries involved in the ACTA negotiations should not have to rely on leaks and speculation to learn what their governments are proposing. All governments should support a more transparent process that begins with full public disclosures of drafts as well as more robust public consultation and participation.
ACTA Draft Leaks: Nonprofit P2P Faces Criminal Penalties
Public interest groups and scholars are piecing together the Anti-Counterfeiting Trade Agreement through leaks and sources. While ISP filtering and "three strikes" rules are nowhere to be found, noncommercial file-swapping done on a "commercial scale" could get criminal penalties.
It's becoming clear that the Anti-Counterfeiting Trade Agreement is not, as backers have suggested, just a minor tuneup to worldwide intellectual property law, one done for the purpose of cracking down on fake DVD imports or Coach handbag ripoffs.
Such a law—one that amounted essentially to some streamlining and coordination in the fight against actual pirates—might well be hashed out between nations operating in secret. But a treaty that seeks to apply criminal penalties to peer-to-peer file-sharing? Let's open a window and let the sunlight in.
Rightsholders, especially in the music and movie businesses, have been upfront about what they want, and it's a long and sometimes scary list. But it has been hard to know if any of these ideas are actually moving forward in the ACTA negotiating sessions, since none of the countries involved have seen fit to release much in the way of useful information on the process—To the public, anyway. Based on sources and leaked documents, Knowledge Ecology International now asserts that ACTA drafts are in fact "formally available to cleared corporate lobbyists and informally distributed to corporate lawyers and lobbyists in Europe, Japan, and the US."
As for what's in these drafts, which are too secret to be seen by the public paying the negotiators' salaries, it's a long and mostly boring list of items intended to stop or slow shipments of counterfeit goods. But the ACTA proposals currently include language that would make copyright infringement on a "commercial scale," even when done with "no direct or indirect motivation of financial gain," into a criminal matter.
ACTA drafts are in fact "formally available to cleared corporate lobbyists and informally distributed to corporate lawyers and lobbyists in Europe, Japan, and the US."
Both KEI and Canadian law professor Michael Geist, who has been working his own sources, say that the current proposals require all signatories to "establish a laundry list of penalties—including imprisonment—sufficient to deter future acts of infringement." Geist believes that P2P use is the obvious target here, though such provisions might well be enacted only against file-sharing hubs rather than end-users.
Camcording in theaters gets its own special section and must also be considered a "criminal act" by countries that adopt ACTA. Handling fake movie and movie packages would also get the deluxe criminal treatment.
Also interesting, though of less concern to end users, are the proposed "border measures" that would allow customs agents to act against counterfeit goods.
According to Geist:
The proposals call for provisions that would order authorities to suspend the release of infringing goods for at least one year, based only on a prima facie claim by the rights holder. Customs officers would be able to block shipments on their own initiative, supported by information supplied by rights holders. Those same officers would have the power to levy penalties if the goods are infringing. Moreover, the US would apparently like a provision that absolves rights holders of any financial liability for storage or destruction of the infringing goods.
ACTA will also become a sort of institution, with the creation of an ACTA Oversight Council to coordinate enforcement, schedule yearly meetings, etc.
Taking the hint
Some governments appear to be listening to the public criticism of the process. Michael Geist filed an Access to Information Act with the Canadian government and dug up a few new interesting documents.
One shows that Canadian negotiators at least read the documents submitted during public consultations; in it, negotiators noted "that the issue of transparency in the formal negotiation process is important for many of our stakeholders. Stakeholders have also requested additional information on the scope of the proposed ACTA, as well as further information on why the Agreement is being negotiated in this manner, as opposed to in existing multilateral fora such as WIPO or the WTO."
Such concerns are apparently being aired to the other ACTA countries, though it's clear that not everyone involved shares the Canadian public's interest in transparent process. The US Trade Representative has held a public consultation and a public meeting in DC to address concerns about ACTA, but little information has been forthcoming.
Just how little? Public Knowledge today detailed its struggle to get some ACTA documents using a Freedom of Information Act Request. The government turned over 159 pages of information, then indicated it had found another 1,390 pages.
But, according to PK attorney Sherwin Siy, "Of these, 1,390 will be withheld under various statutory exemptions to the FOIA. Yes, thats all of them."
Things haven't been much better in the EU, where a Dutch group has tried to access documents and gotten nowhere.
When have we ever lied to you?
So what we have to go on are largely leaked documents and the bland reassurances of governments. The European Union is a good example of the latter. "ACTA is about tackling large scale, criminal activity," we are told. "It is not about limiting civil liberties or harassing consumers."
It is not about limiting civil liberties or harassing consumers.
It goes on to say, "ACTA is not designed to negatively affect consumers: the EU legislation (2003 Customs Regulation) has a de minimis clause that exempts travellers from checks if the infringing goods are not part of large scale traffic. EU customs, frequently confronted with traffics of drugs, weapons or people, do neither have the time nor the legal basis to look for a couple of pirated songs on an i-Pod music player or laptop computer, and there is no intention to change this."
And if you think that these negotiations are taking place in smoky backrooms to which only corporate lobbyists have access, you couldn't be more wrong. "It is alleged that the negotiations are undertaken under a veil of secrecy," says the EU. "This is not correct. For reasons of efficiency, it is only natural that intergovernmental negotiations dealing with issues that have an economic impact, do not take place in public and that negotiators are bound by a certain level of discretion."
Let's hope it's all true, and that the concerns of civil society groups and citizens really are considered. Perhaps they are; perhaps they will be. But it's certainly hard to tell at the moment. The EU and everyone else involved can issue all the say-nothing press releases they like, but those who care about the issue would feel a lot better if they could see the evolving drafts and have some process for providing input on them; asking people to turn in one document months ago without having seen even a set of proposals hardly qualifies as an "open process."
Still, when you consider that RIAA-backed measures like ISP filtering don't appear in the current leaked drafts and MPAA-backed "three strikes" laws also appear to be absent, perhaps the governments truly are attempting to keep ACTA focused on industrial-scale piracy. It would just be comforting to have something other than their words to go by.
Privacy Professional Facing Criminal Charges
Google's global privacy counsel will appear in Italian court this week on criminal charges of defamation and failure to exercise control over personal data. The charges follow a two-year investigation by Italian authorities into footage uploaded onto Google Video that showed a disabled teen being disparaged by peers. Google's Paris-based Global Privacy Counsel Peter Fleischer and three other executives charged in the case will appear before the Criminal Court of Milan on February 3. The charges carry a maximum sentence of 36 months.
It is believed to be the first criminal sanction ever pursued against a privacy professional for his company's actions.
The video that sparked the investigation was captured in a Turin classroom. Four high school boys were recorded taunting a young man with Down syndrome, ultimately hitting the 17-year-old with a tissue box. One of the boys uploaded the footage to Google Video's Italian site on September 8, 2006.
According to Google, more than 200,000 videos are uploaded to Google Video each day. Under EU legislation incorporated into Italian law in 2003, Internet service providers are not responsible for monitoring third-party content on their sites, but are required to remove content considered offensive if they receive a complaint about it. Between November 6 and 7, 2006, Google received two separate requests for the removal of the video–one from a user, and one from the Italian Interior Ministry, the authority responsible for investigating Internet-related crimes. Google removed the video on November 7, 2006, within 24 hours of receiving the requests.
Nonetheless, Milan public prosecutor Francesco Cajani decided that by allowing the 191-second clip onto its site, Google executives were in breach of Italian penal code.
Peter Fleischer was on his way into the University of Milan for a speaking engagement January 23, 2008 when five law enforcement officials with summonses surrounded him. According to Fleischer, the officers had been waiting for him, but ultimately allowed him to deliver his talk before taking him to a deposition before the public prosecutor.
Cajani is prosecuting Google as an Internet content provider. Unlike Internet service providers, Italian penal code states that Internet content providers are responsible for the third-party content posted to their sites. This is essentially the same law regulating newspaper and television publishers.
But the Internet is a different medium, says Google. "We cannot agree with the concept that a tool can be blamed for the use that is made of it," a company spokesperson said.
Rocco Panetta, former lawyer for the Italian data protection commission, questions the authorities' decision to prosecute Google executives. "It seems to me that the public prosecutors in Milan almost did not take into significant consideration legislation currently in force by means of which the position of an ISP is different from that of an Internet content provider."
The legal proceedings are expected to continue for months. Marco Pancini, public policy counsel for Google Italia, says the company has been in "full compliance with Italian laws and international proceedings," adding that Google's cooperation in the investigation thus far helped lead authorities to those responsible for the video. The youths have already been prosecuted for their actions.
"We are confident the process will end in our favor," Pancini said.
UAC Vulnerability Found in Windows Vista
A new analysis claims that over 90% of the Windows security vulnerabilities reported last year were made worse by users logged in with administrative privileges -- an issue Microsoft has been hotly debating recently.
BeyondTrust Corp. (BTC), a software development company specializing in enterprise rights management, has indicated that the act of giving users administrative rights may leave systems more open to risk.
The report issued by BTC was prepared by assessing security vulnerability bulletins released by Microsoft in 2008, and identifying specific "mitigating factors" (those that could reduce or negate the risk of an attack) within the bulletin. If Microsoft reported that having fewer security privileges would negate or eliminate risk, BTC concluded that the vulnerability was admin-privilege related.
The result of the analysis of the 154 critical Microsoft vulnerabilities indicated that a full 92% could have been prevented if users were not logged into their systems with administrator status. BTC believes that restricting the number of users who can log in with these privileges will "close the window of opportunity" for attackers. This is particularly true for users of Internet Explorer and Microsoft Office. (Source: computerworld.com)
Microsoft has been relatively transparent in their revelation of security vulnerabilities, and has worked with organizations such as Cert.org to identify and address security concerns to the online community. (Source: cert.org)
While Microsoft is not denying the vulnerabilities present in its various Windows operating systems, they have not been exactly forthright about how internal programming "holes" (such as increased vulnerability for users with admin privileges) may make users susceptible to threats or attacks.
Bloggers Demonstrate Threat posed by Vista's UAC
In recent news, two bloggers were able to demonstrate the threat posed by the Vista's Windows User Accounts Control (UAC) feature. UAC, a feature that provides a prompt when users attempt to perform tasks such as installation of new programs or changes to settings, is meant to provide added security to the system. (Source: computerworld.com)
Bloggers were able to script an artificial and malicious code that entered via the UAC feature and was then able to make changes to the system and create copies of itself as an entity with full administrative privileges. When the bloggers confronted Microsoft with their findings, they were assured that the UAC feature was "not a vulnerability" and that no changes would be made in Windows 7 to address this potential concern.
In fact, the official answer from Microsoft seemed to indicate that the UAC was behaving exactly as it was intended to and that any threats resulting from the supposed "flaw" were not a result of the program at all. (Source: istartedsomething.com)
Tips to Reduce Risk of Attack or Infection
So what can average users do to reduce their risk of attack or infection on their own PCs? Generally, the consensus seems to be that limiting the amount of time spent logged on as an administrator is the best means of limiting the risk. Also, as both Microsoft and Cert.org recommend, it is always wise to restrict administrative actions to a computer or workstation that you can trust, such as one with a personal firewall. (Source: cert.org)
Typical users shouldn't have much to fear from the vulnerabilities associated with admin status, but it is cause for some concern that the very security features installed for user protection, like UAC, may be those that pose the greatest risk.
It remains to be seen how many of these security issues will be solved by Windows 7.
Geek Tech: Why Your Pop-Up Blocker Doesn't Work as Well as it Used to
It's a 1990s revival, as the intrusive world of pop-up ads fights its way back through your defences...
You may have noticed that a lot of sites are managing to launch pop-up windows that can penetrate any standard blocker built into a web-browser these days, and pretty much all proprietary blockers too. What's going on? The innovation creeping in to return us to the God-awful 1990s is Adimpact, which charges its clients a rolling fee to feed DHTML-based pop-ups to their sites. There seems little protest around on the web, though a quick search will find various PRs and sellers eulogising the technology. Adimpact was launched in 2006, but seems to have finally attracted some higher-profile clients such as the IMDB.
The company behind Adimpact got a little too carried away in the early days and advised that placing Google Adsense ads in one of these irritating and unwelcome intruders was good marketing. Google disagreed:
"Publishers are not permitted to alter the behaviour of Google ads. This includes implementing the AdSense ad code in a floating windows. We therefore ask that you do not use www.adimpact.com to place your Google ads in floating windows. We appreciate your cooperation and understanding."
Shawn Collins affiliate marketing blog describes how the 'Instant Attention' tech on offer "works around Microsoft SP2 Update, Google Toolbar Blocker, Symantec’s Pop-Up Blocker and more...The Dynamic Popup Generator can create pressure pop-ups, unblockable DHTML pop-ups, PictoPop-ups, conditional popups, instant opt-in pop-ups, and rotating pop-ups".
This technique seems to work beautifully for pop-unders too. We can only await the Kryptonite.
IE Slips Further as Firefox, Safari, Chrome Gain
The amount of market share commanded by Microsoft's Internet Explorer browser has dropped for the seventh consecutive month.
Internet Explorer now has 67.55 percent of global browser market share, a drop of over seven percentage points in a year, according to figures from Web metrics company Net Applications, released Monday. Mozilla's Firefox browser, meanwhile, has gained market share in the same time frame, climbing over three percentage points to 21.53 percent.
Microsoft's browser has steadily lost ground to its competitors in the past year. Its share dropped sharply in both October and November 2008, when it lost over one percentage point in each month.
Apple's Safari browser now stands at 8.29 percent, up from 7.13 percent in November, when IE dipped. Safari has gained share more quickly than Firefox in that period: Mozilla's browser accounted for 20.78 percent of browser use three months ago, and now has 21.53 percent.
Google's Chrome browser, launched in September 2008, now has 1.12 percent of the market, having overtaken Opera in November. Opera's share of the market now stands at 0.7 percent.
Internet Explorer's drop of seven percentage point since February last year is a continuing trend. Microsoft lost over nine percent of browser market share in the preceding two years.
Most of IE's drop in the past year has been in Internet Explorer 6, which fell from 30.63 percent last February to 19.21 percent this January. Internet Explorer 7 has gained market share overall over the same time period, rising from 44.03 percent to 47.32 percent.
Microsoft launched the first release candidate for Internet Explorer 8 last week. It hopes to regain lost ground by adding features such as private browsing and a cross-site scripting filter.
Panasonic to Launch Slimmer, Greener Plasma TVs
Panasonic Corp said it would launch in April in Japan plasma TVs that are a quarter of the thickness and consume half as much electricity as conventional models, in a bid to stir up demand amid a spreading recession.
Panasonic, the world's largest plasma TV maker ahead of Samsung Electronics Co Ltd, aims to boost its combined sales of LCD and plasma sets by 50 percent to 15.5 million units in the year starting in April.
A 50-inch screen model about an inch in depth that consumes an estimated 260 kilowatt hours of electricity a year is likely to sell for 600,000 yen ($6,685) and a 54-inch model for 700,000 yen, the company said on Tuesday.
Launches in North America are slated for this summer.
(Editing by Hugh Lawson)
Comcast Testing New Free Wi-Fi Service
Comcast Corp. is testing a free wireless Internet service for its cable subscribers in parts of New Jersey, following in the footsteps of a fellow cable operator.
Comcast shadowed Cablevision Systems Corp., which is offering Wi-Fi in its Long Island, Connecticut and Westchester markets and will complete the wireless rollout by early 2010.
The collaboration is meant to extend the reach of each cable operator's Wi-Fi; a Comcast customer can access his cable operator's Wi-Fi in certain Cablevision markets and vice versa.
Comcast spokeswoman Mary Nell Westbrook said Wi-Fi speeds will be 1.5 Megabits per second, comparable to DSL at home. Users will be asked for the username and password they use for Comcast's Internet service before they can access Wi-Fi.
If all goes well, Comcast could decide to roll out the free service nationwide, to be accessed by laptops and other Wi-Fi devices. But Westbrook cautioned that the trial is still in its very early stages.
Philadelphia-based Comcast said the Wi-Fi trial is separate from its mobile wireless joint venture with Clearwire Corp. and other companies using WiMax technology. Cablevision decided to go the Wi-Fi route, since it wasn't involved in the Clearwire deal.
So it won't lose customers to phone companies, cable operators have been looking to add wireless to their video, Internet and phone services.
Comcast, the nation's largest cable operator, has set up equipment at about 100 New Jersey Transit commuter rail stations and parking lots.
They are in the Main-Bergen County area, Glen Rock, the Montclair-Boonton area, Morris, Essex, the North Jersey Coast, Pascack Valley, Raritan Valley and along the Northeast Corridor.
Film, TV Actor James Whitmore Dies of Lung Cancer
James Whitmore, the many-faceted character actor who delivered strong performances in movies, television and especially the theater with his popular one-man shows about Harry Truman, Will Rogers and Theodore Roosevelt, died Friday, his son said. He was 87.
The Emmy- and Tony-winning actor was diagnosed with lung cancer the week before Thanksgiving and died Friday afternoon at his Malibu home, Steve Whitmore said.
''My father believed that family came before everything, that work was just a vehicle in which to provide for your family,'' said Whitmore, who works as spokesman for the Los Angeles County Sheriff's Department. ''At the end, and in the last two and a half months of his life, he was surrounded by his family.''
His long-running ''Give 'em Hell, Harry,'' tracing the life of the 33rd president, was released as a theatrical movie in 1975. Whitmore was nominated for an Academy Award as best actor, marking the only time in Oscar history that an actor has been nominated for a film in which he was the only cast member. His Teddy Roosevelt portrait, ''Bully,'' was also converted into a movie.
He later became the TV pitchman for Miracle-Gro plant food, and used the product in his large vegetable garden at his Malibu home.
While not known for his politics, Whitmore was an early supporter of President Barack Obama. He stumped for Obama during a 2007 rally at the Gibson Theatre at Universal Studios, telling the crowd that Obama had the wisdom ''to deal with a very, very confused and complex country, and the world.'' Whitmore also appeared in TV commercials in 2008 for the ''First Freedom First'' campaign, which advocates religious liberty and preserving the separation of church and state.
Whitmore had regularly attended an Oscar night bash, Night of 100 Stars, and had sent in his RSVP for this year, said Edward Lozzi, a spokesman for agent Norby Walters' gala.
Whitmore started both his Broadway and Hollywood careers with acclaimed performances, both as tough-talking sergeants. In 1947, discharged a year from Marine duty, he made his Broadway debut in a taut Air Force drama, ''Command Decision.'' He was awarded a Tony for outstanding performance by a newcomer.
Two years later, Whitmore was nominated for an Academy Award and won a Golden Globe as supporting actor in the war movie ''Battleground.''
He followed with memorable performances in scores of films, refusing to be typed. Besides war movies, he appeared in Westerns (''The Last Frontier,'' ''Chato's Land''), musicals (''Kiss Me Kate,'' ''Oklahoma!''), science fiction (''Planet of the Apes,'' ''Them''), dramas (''The Asphalt Jungle,'' ''The Shawshank Redemption'') and comedies (''Mr. O'Malley and Mrs. Malone,'' ''The Great Diamond Robbery.'')
Shirley Jones, a teenager when she starred in ''Oklahoma,'' said she came to know Whitmore during months of filming in Nogales, Ariz., and recalled being impressed by her good-humored and highly disciplined colleague.
''He told me, `If you're going to be in this business, you better learn your craft,''' Jones recalled. ''And he never stopped learning.''
His favorite film was ''Black Like Me'' (1964), a true story about a white reporter who used medication to blacken his skin to experience life as an African-American in the South.
Another of his rare starring roles was ''The Next Voice You Hear'' (1950), in which a family hears the voice of God via the radio. He played opposite Nancy Davis, the future Mrs. Ronald Reagan.
Whitmore often appeared on television, starring in the series ''The Law and Mr. Jones'' (1960-1962), ''My Friend Tony'' (1969) and ''Temperatures Rising'' (1972-1973). He received an Emmy in 1999 as guest actor in a series for ''The Practice.''
Jones recalled seeing him in a 2007 episode of the TV drama ''CSI: Crime Scene Investigation'' and marveling at his still-sharp talent. ''I was absolutely blown away by that. He had a huge role, playing a lawyer, and it was phenomenal,'' she said.
A student of history, Whitmore delighted in portraying famous American personages. He toured in the play ''The Magnificent Yankee,'' about Supreme Court Justice Oliver Wendell Holmes Jr. He played Ulysses S. Grant in a 1960 TV movie, Adm. William F. ''Bull'' Halsey in the Pearl Harbor attack spectacle ''Tora! Tora! Tora!'', and Walt Whitman in a dramatic reading, ''A Whitman Portrait.''
The monologues of Harry Truman, Will Rogers and Teddy Roosevelt brought Whitmore his greatest success. In 2000, he appeared in ''Will Rogers, U.S.A.'' at Ford's Theater in Washington, D.C., his eighth engagement in the show at Ford's over a 30-year period.
President Ford attended a performance of ''Give 'em Hell, Harry'' at Ford's Theater after Richard Nixon resigned. Whitmore worried about Ford's reaction to Truman's crusty words about Nixon.
The actor recalled: ''I was three feet from Gerry Ford when I said to the press as Truman: `Nixon is a no-good lying (expletive); if he ever caught himself telling the truth, he'd tell a lie just to keep his hand in.' After the show, (Ford) came up on stage and put his arm around me and said, `That was a pretty good blocking back.''' Ford had been line coach when Whitmore played football at Yale.
His movie and television careers continued into the 21st century, but he admitted that he preferred the stage.
''I find the process of making movies absolutely boring,'' he told a reporter in 1994. ''It's so fragmented. You wait and wait and wait and then, look, as Jack Lemmon says, `It's magic time.' In the theater, once the curtain goes up, the actor is in charge.''
Born in 1921 in White Plains, N.Y., Whitmore was active in school sports and acted in Gilbert and Sullivan operettas, though his strict Methodist family disapproved of the profession. After a year at an Ivy League prep school, Whitmore in 1939 enrolled in prelaw at Yale University, where he had won a football scholarship. Two knee injuries ended his football career, and he devoted himself to dramatics.
After graduating from Yale, he enlisted in the Marines and served in the South Pacific. ''I had a lot of time to think in the Marine Corps,'' he recalled, ''and so I decided it wasn't the law I wanted but the theater.''
In New York he studied at the American Theater Wing under the G.I. Bill, living on $20 a week and rooming with another hopeful actor, Jack Warden. After a season in summer stock in New Hampshire, he returned to New York and won the role of Sergeant Harold Evans in ''Command Decision.'' Rave reviews started his career in motion.
He married Nancy Mygatt in 1947, and the couple had three sons, James, Steven and Daniel. They later divorced, and in 1971 he married an actress, Audra Lindley. They often appeared in plays together, even after their 1979 divorce. He remarried his first wife in the 1980s, but another divorce ensued. Nearing 80 in 2001, Whitmore married actress-writer Noreen Nash.
Whitmore is also survived by eight grandchildren.
AP entertainment writers Lynn Elber and Derrik J. Lang contributed to this report.
Lux Interior, 62, Singer in the Punk-Rock Era, Is Dead
Lux Interior, who introduced the excitement of deviant rockabilly to the punk era as the lead singer of the Cramps, died early Wednesday in Glendale, Calif. He was 62.
The cause was heart failure, said Aleix Martinez, the band’s publicist.
The Cramps were founded in New York around 1976 by Lux Interior (born Erick Purkhiser in Stow, Ohio) and the guitarist Poison Ivy (Kristy Wallace) with a distinct musical and visual style. As connoisseurs of seemingly all forms of trashy pop culture from the 1950s and ’60s — ranging from ghoulish comic books to Z-grade horror films to the rawest garage rock — they developed a sound that mixed the menace of rockabilly’s primitivist fringe with dark psychedelia and the blunt simplicity of punk.
Cultivating a sense of sleazy kitsch, the band played songs with titles like “Creature From the Black Leather Lagoon,” and its members dressed like a rock ’n’ roll version of the Addams Family. Lux Interior, gaunt and dark, was fond of skintight rubber, although onstage he usually ended up in just his leopard-skin trunks, or less. Poison Ivy often performed in pin-up or bondage costumes, and others who passed through the band developed tawdry characters of their own.
Lux Interior and Poison Ivy met when he picked her up as a hitchhiker in California in the early ’70s. They bonded over their pop-culture interests — both scoured flea markets and thrift shops for discarded 1950s records — and by 1975 they had moved to New York. They took stage names and became regulars at CBGB and Max’s Kansas City, and they later married. She survives him.
After several singles in the late 1970s that were produced by Alex Chilton of the Box Tops and Big Star, the band released “Songs the Lord Taught Us” in 1980, and it became a club and college-radio standard. But subsequent albums had limited success, and the band’s album “A Date With Elvis,” considered by many critics to be among its best, was released in Britain in 1986 but not in the United States until four years later.
Though the band never found wide popularity, it had a fierce cult audience, and its approach to the sound of early rock ’n’ roll has been echoed in acts like the Jon Spencer Blues Explosion and the White Stripes. The Cramps made eight studio albums and have numerous live and compilation records, and had been working on a new album, Mr. Martinez said.
In 2002 Lux Interior performed the voice of a character on the children’s television show “SpongeBob SquarePants”; he was the lead singer of an all-bird rock band called the Bird Brains.
In 1979 the Cramps were guest D.J.’s on WPIX-FM in New York, spinning records by Wanda Jackson, the Electric Prunes, Herbie Duncan and other vintage rockabilly and garage acts. Lux Interior was asked by one of the station personalities about the music.
Taken aback by the question, he replied: “Rock ’n’ roll has absolutely nothing to do with music. It’s much more than music. Rock ’n’ roll is who you are. You can’t call the Cramps music. It’s noise, rockin’ noise.”
Peggy Sue Got Where?
Buddy Holly died 50 years ago, but his music lives on, including his hit Peggy Sue. But who was it about and what's it like to be immortalised in a popular song? Caroline Frost meets the real Peggy Sue.
Fifty years ago today the music died, according to Don McLean at least - the day when Buddy Holly was killed in an aeroplane crash at the peak of his talents and passed into rock 'n' roll legend.
In the half-century since, as well as inspiring McLean's thumping standard American Pie, Holly has been recognised as one of popular music's great pioneers, his influence felt by everyone from Bob Dylan to the Beatles and Run-DMC. For one woman in particular, though, he's remained especially close.
Peggy Sue Gerron, a sweet-faced woman of 68, is an unlikely piece of walking rock 'n' roll memorabilia. But in 1957, she was the girlfriend of Holly's best pal, Jerry Allison, and so became the inspiration for the singer's jiving classic.
Today, Ms Gerron smiles and plays down her role of musical muse, when asked.
"I think he decided he was going to write a girl's song, and sometime during the middle of the night he got Norman Petty, the producer, and he told him, 'I've written this song and I've named it after Jerry's girlfriend, Peggy Sue'."
Holly was already a radio star when she first encountered him. In a scene that could have come straight from a movie, Holly was rushing to a high school gig in Sacramento, California, when he sent a young Ms Gerron flying on the steps.
"He ran over to me, guitar in one hand, amp in the other, and said, 'I don't have time to pick you up, but you sure are pretty', before he ran off. So another girl came and helped me pick up my books and she said, 'Do you know who that was? That was Buddy Holly.'
Three weeks later, Ms Gerron was on a date with her future husband Jerry Allison - a drummer in Holly's group The Crickets - who introduced her to his friend Buddy, "and he started laughing, Jerry asked him what was so funny, and he said 'I've already overwhelmed your Peggy Sue.'"
Still a teenager, Peggy Sue first heard the song written for her in a packed school auditorium in the company of hundreds of screaming teenagers, and Holly hadn't let her down.
"I was just delighted, I thought it was a fascinating song. It's really hard to stand still when you're listening to Peggy Sue."
Peggy Sue, Peggy Sue
Pretty, pretty, pretty, pretty, Peggy Sue
Oh, my Peggy, my Peggy Sue
Oh, well, I love you gal and I need you, Peggy Sue
Peggy Sue, by Buddy Holly, Jerry Allison and Norman Petty
The song stands as one of Holly's classics - "right up at the top" according to John Gribbin, author of the recent book Not Fade Away: The Life and Music of Buddy Holly.
"It's like most Buddy Holly songs," he says of the two-minute, 30-second classic. "They are deceptively simple. He wrote songs that are easy to play, easy to listen to and to dance to. He knew that would spread the word about his music."
But Holly's huge success came to an abrupt end on 3 February 1959, when he died, aged 22, in a plane crash while on tour. The news of the accident that killed Holly and fellow musicians Richie Valens and the Big Bopper only 18 months later was as shocking to the Allisons - Peggy Sue had married Jerry in 1958 - as to everyone else. Jerry Allison had quit the band before Holly's last tour and the couple were staying with Holly's parents.
"Somebody called the house and told us the Crickets were dead, so Jerry made some calls," remembers Ms Gerron. "It turned out Mr and Mrs Holly didn't know, they actually heard about it on the radio."
Holly's premature death did nothing to stem his popularity, with songs such as Peggy Sue, Not Fade Away, Maybe Baby and That'll Be the Day becoming enduring classics. Ms Gerron has long been used to hearing her name sung in the car, the supermarket, the lift. She's also adept at dealing with the question left dangling in the air whenever she meets someone new.
"I'm introduced, and there's a pause, and they say, 'Oh, are you...?' and I say 'Yes, I'm Peggy Sue.'"
Despite the kick it evidently still gives her, she is not blind to the preconceptions that can come with such a celebrated moniker.
"People have their own image of who you are and what you are. I think certain people expect things of me, that no one else would be called upon to do. They look at me and go, well she can afford to do that, and that's not always accurate."
They also sometimes are wrong-footed by the sight of a grandmother in her late 60s - somehow expecting the subject of this half-century-old teenage love song to be preserved in a polka-dot prom dress.
"I think they have me frozen in time, I think when most people think of me, it's as a young woman frozen in an era that has long passed. But it hasn't limited me. You have to be you, and I couldn't stand up and say, well, no, that's not me."
The song has certainly afforded Ms Gerron rare opportunities in life.
"Yeah, it's allowed me to meet people and do things I wouldn't otherwise. Dick Clark [the US TV chat show host] calls for me to come over and do the show... that doesn't happen to Jane Doe."
Yet there was a big part of her life when she didn't play up to the reputation as Buddy Holly's Peggy Sue - as wife to her second husband (her first marriage, to Allison, broke up), mother to their two children and business partner in the couple's small plumbing business in California. For a long time the children knew little of their mother's past.
"I didn't want them to think that we were different, that we had an edge. When you are raising children you want them to be secure and normal and you don't want the entertainment industry in their lives."
And serious Holly fans will know Ms Gerron's name appears in not one, but two, song titles by their idol - the other being, Peggy Sue Got Married. Striking a more melancholy note than its predecessor, it was recorded by Holly on a home tape recorder in 1958 and only heard after Holly's death.
Today Ms Gerron makes the most of her footnote role in pop history. Last year she published an autobiography, Whatever Happened to Peggy Sue?, and she will be marking the 50th anniversary of Holly's death as a guest of honour at the opening of the Buddy musical in Melbourne Australia.
So, inspiring one of the most famous songs by one of the century's most popular musicians - weighing it all up, is that a burden or a privilege?
Peggy Sue smiles again. "A privilege, always. I never get tired of it."
Hello Kitty and Barbie, Round 1
TO the canon of legendary fashion feuds, as in Chanel versus Schiaparelli, Geoffrey Beene versus John Fairchild, and Giorgio Armani versus just about everyone, comes one this season that seems especially childish.
Hello Kitty is taking on Barbie for the title of most fashionable plaything.
There is not a designer worth his polyester who hasn’t spent a little too much time obsessing over dolls, so it is perhaps less surprising than tasteless to find fashion folk falling all over themselves to dress Barbie and Ms. Kitty for Fashion Week events. Barbie, who turns 50 next month, is having a runway show on Feb. 14 in Bryant Park, with Barbie-inspired clothes by one group of designers. Hello Kitty was set to show off looks by another group at a party Thursday night given by MAC, which has also created a new Hello Kitty cosmetics collection. Marketing ploys, indeed, but they do raise the question: Who’s the bigger fashionista?
Let’s put it this way: Barbie is to Cindy Crawford what Hello Kitty is to Naomi Campbell. One is the conscientious workhorse of her oeuvre, with a heart of gold (or plastic) and an improbably perfect body; the other is more difficult to read, with a sinister streak lurking behind that sweet, beautiful facade.
“I love that there is an innocence about Hello Kitty, but she’s also sexy,” said Esteban Cortazar, the Ungaro designer, who was taken by her cockeyed red bow. (He is among the 30 designers who have made Hello Kitty dresses, which will be auctioned on eBay next week to benefit the Museum at the Fashion Institute of Technology.)
Of course, Barbie is the bigger diva. Mattel estimates that more than a billion fashion items have been created for her clique, and her show will include looks from 50 designers. But as Hello Kitty, who is 34, would say if she had a mouth, Barbie is a lot older.
“They’re both pretty relevant in terms of their fashion,” said David Blond, a designer of the cult label The Blonds. “Hello Kitty is edgier, and Barbie is more sophisticated.”
Then again, Mr. Blond is working both sides of the playpen, having designed outfits for both events. At least Mr. Cortazar was willing to take a side when he was asked which he would prefer to have at his own show.
“I would go with Hello Kitty,” he said. “There are enough girls coming to the show who look like Barbies already.”
A Girl World Closes, and Fans Mourn
WHEN Domino magazine folded last week, another casualty of the economic smack-down, a howl of protest rang through the blogosphere. Fans of the girlish, how-to decorating magazine owned by Condé Nast were vociferous in their disappointment, posting anguished comments on design sites like Apartment Therapy, Decorno and Design Sponge (which accrued 498 remarks in just a few hours), as well as nondesign sites, like The Huffington Post. Even Gawker readers set aside their snark to mourn.
The commenters bemoaned the death of a magazine that “felt” like them, and worried that their Domino subscription renewals, already paid, would yield subscriptions to Architectural Digest, Condé Nast’s remaining shelter title (median reader age: 50).
Most commenters linked to their own blogs or Flickr pages, and slideshows of their own homes, each bearing the distinct Domino imprimatur (much throwing of sheepskin, chic-cute tablescapes and Lucite furniture).
Many compared the arrival of their monthly Domino to Christmas morning.
“Noooooo,” lamented Sewbettie on Design Sponge, “this is the one design magazine that I really related to — it had design I could actually aspire to (instead of, um, yeah, maybe after I win the lottery).”
Sewbettie is the screen name of Cara Angelotta, 25, a second-year medical student in Chicago who runs a fabric company, Sewbettie.com, with her boyfriend, Mark Cesarik. Web-savvy and creative, Ms. Angelotta is emblematic of the Domino readership. For a few hours last week, posters on Design Sponge grew so excited by their own numbers, they wondered if they might petition Condé Nast and agitate for a stay of execution for their beloved title.
And why not? In under four years, Domino had succeeded in attracting the young, energetic readers that all media profess to desire beyond all else. Indeed, their sheer numbers seem to pose a question: why would a giant media company like Condé Nast cut off access not only to its present — energetic young women eager to shop at Target for mirrored tiles to glue around a fireplace, as Sandee Royalty did recently in her suburban Houston home, following something she saw in Domino — but also to its future? Here was vivid proof of a dedicated fan base for a magazine that seemed perfectly poised to transition to the Web, that in fact already had an appealing Web presence, rather than the awkward foothold sites of most Condé Nast titles.
But while its circulation was strong and growing, advertising numbers, much more important, demanded it die: it received less than half the amount of advertising pulled in by Architectural Digest last year (a drop of 4.5 percent from 2007, according to Media Industry Newsletter).
Did Domino’s demise augur the crumbling of a larger, cultural movement, characterized by a girlish and fizzy optimism and an appetite for Jonathan Adler ceramics and Parsons tables from West Elm, and peopled by thousands of crafty, handy young women — like Carrie Bradshaw but cooler, with fewer shoes, better values and a mortgage?
In 2004, when Deborah Needleman, then a young House & Garden editor, pitched a new shelter magazine to James Truman, Condé Nast’s editorial director at the time, she described it as “Lucky for the home.” While Lucky sells itself as a “magazine about shopping,” from the get-go in September 2000 it had been modeled in part on Sassy, a young women’s title that spoke directly to its readers in their own vernacular, and with staff writers who were characters on the page.
“The shelter format was 100 years old,” Ms. Needleman said recently. “There seem to be two kinds: either the out-of-reach aspirational ones,” and the very direct, how-to titles like Real Simple and Better Homes and Gardens.
“I didn’t want to do either of those things. Truthfully, most magazines talk to ad categories, like ‘the beauty buyer.’ I just wanted to talk to the reader. The whole idea was, What is each person’s idea of how they want to live and how can we give her the tools?” Domino would be generational, and reflective of its time; it would engage with its readers with hand-written type, headlines like “Trad Is Rad,” and features on how to translate the colors and style of an outfit into a room, or another called “You bought it, now what?”
By most yardsticks, the magazine largely succeeded in its mandate. Its rate base — the number of paid subscriptions advertisers are guaranteed — reached 850,000 this month. Its newsstand sales were increasing, according to Jack Hanrahan, a media consultant and the editor of CircMatters, a newsletter about the magazine business.
Mr. Hanrahan noted that Domino’s newsstand sales averaged 111,000 last June, up from about 96,000 the year before. And since last March, he said, “they’ve been serving 200,000 more than their promised 850,000, because they took on House & Garden’s subscriptions when it folded.”
“They are promising 850,000 and delivering 1.161 million paid and verified copies, which is a huge bonus to advertisers,” he said. “The readers are there. It’s the advertising that’s got to come back around.”
The business model for magazines, of course, is based on ad revenues, not magazine sales. And home advertisers, like everyone else, are beyond skittish. In a press release issued Dec. 28, Charles Townsend, president and chief executive of Condé Nast, announced, “This decision to cease publication of the magazine and its Web site is driven entirely by the economy.” The company declined to comment further for this article.
“I think it’s pretty simple,” said Charlie Rutman, senior adviser to MPG North America, a media buying company. “The magazine industry in every category is under extreme pressure, extraordinary pressure, for a lot of reasons: the Internet, the cost of subscriptions in a tough economy, the tough economy, you name it. By the way, there probably are too many magazines, but if companies can’t survive these kinds of pressures we’re not going to have any magazines in the future.”
Recently Mr. Hanrahan ran some numbers on the shelter category (what he called “the home service category” and which includes titles like Family Handyman and Hobby Farms — who knew?). He compared the number of titles in 2008 to the numbers in 2006. “The category had 38 magazines in 2006,” he said, “and 38 in 2008. Four dropped out, but were replaced by four new ones.” Overall, he continued, “single copy sales lost 2 percent, a very minor slip when you think about how bad the single copy sales have been overall” — sales of all magazines were down 8 percent early last year. “This is why I came to the conclusion that this category is as vibrant to readers as it’s ever been,” he said.
Jamie Meares, 28, would certainly agree. Ms. Meares, who has a business screen-printing T-shirts in Raleigh, N.C., lives in a ’50s bungalow that she and her husband are slowly decorating, with Domino as inspiration. She buys two or three copies of each issue — the pristine ones go in a binder, others are torn up for ideas.
Ms. Meares is hip enough to listen to My Chemical Romance, but she’s grown-up enough to have a mortgage. And she has a blog, isuwannee.blogspot.com (a Southernism, she said, for “I swear, or have you ever?”), which details how when “Domino spoke, I listened,” as she put it. Indeed, links to her Flickr files showed a nice sampling of her at-home interpretations of elements from the Domino canon like a “landscaped” bureau, and the deployment of woven ethnic textiles called suzanis.
“Domino worked for me because there were women in there that were my age,” she said, “and I loved that. It’s not Karl Lagerfeld’s house, not totally unattainable. And they would tell you where to get things, at places like West Elm or Target or Pottery Barn, places you could go and touch and feel and be a part of.” It worked, too, for Sandee Royalty, a stay-at-home mother in her late 30s, living in Houston’s outer suburbs. “Domino was my major resource for anything practical. I would get my 100-calorie M&M’s and my hot cup of tea and my Domino and go through the whole thing cover to cover.” Her Flickr pages show a contemporary house, all ’30s glam, with a white shag rug, white leather chairs and a white fireplace tiled with mirrors — a Domino trick, she said — and guarded by two white resin poodles (“$29.95 at T.J. Maxx,” she said proudly) copied from a Domino photo (“except their poodles were $400”).
She explained a pastime she calls “magazining” — sitting on the couch with her friends and “traveling” through the pages of Domino. “Like shopping, but we don’t spend any money,” she said. As much as she uses and likes them, the design blogs aren’t a satisfying substitute. “I need something I can archive, something I can ‘magazine’ with my friends,” Ms. Royalty said.
Marian Salzman, a trend spotter and partner at Porter Novelli, a marketing and public relations company, wondered if, as she put it, “these women may have made Domino a part of their life, but they may not have made consumption a part of their life.” Nevertheless, she said, the Domino reader may not be buying now, “but she is the consumer of the future.” Condé Nast, she suggested, had severed “another link to that emerging market of tomorrow.”
Domino’s demise does not, in the end, sound a death knell for the girly aesthetic it promoted. It leaves a vacuum in the print media, to be sure, but on the Web, Ms. Angelotta, Ms. Meares, Ms. Royalty and their sisters all contribute to what Ms. Salzman, the trend spotter, would describe as a “granular” portfolio of ideas, “you know, something by, for and about them, friend-to-friend stuff,” she said. In other words, the blogs.
On Friday, Domino’s offices were nearly all packed up. “We did our serious drinking and packing all day Thursday,” Ms. Needleman said. You could hear the sharp crackle of packing tape in the halls and the pop of bubbles in the wrapping; Chase Booth, the renovation editor, was handing around bottles of Stella Artois to the remaining staffers. Cynthia Kling, a contributing editor, paused on her way out the door and offered this epitaph.
“It’s like that scene in ‘Dinner at Eight,’ ” she said, shrugging parka-clad shoulders, “the part when the husband comes home and tells his wife he’s lost his job. And she says something like, ‘Darling, that’s fabulous! All the best people are losing their jobs.’ ”
Screen Actors Guild Takes Its Feud to Court
An internal feud among the leadership of the Screen Actors Guild spilled into court on Tuesday, where a judge temporarily derailed an attempt by the union’s president to prevent a newly appointed task force from taking over negotiations for a contract between the union and the major Hollywood studios.
Judge James C. Chalfant of Los Angeles Superior Court denied a petition for a temporary restraining order that was filed by the president of the actors’ union, Alan Rosenberg, and three other union board members. They filed the court action against the union and the 41 members of the national board who voted to oust the union’s executive director and chief negotiator late last month. In dismissing the claim, the judge noted several errors in the original complaint.
The legal challenge caused the union to postpone its scheduled resumption of contract negotiations with the Alliance of Motion Picture and Television Producers, which represents the major Hollywood studios. Those talks have been stalled since negotiations with a federal mediator broke down in November. The union’s contract with the television and film studios expired at the end of June.
The lawsuit was prompted when a group representing 53 percent of the members of the union’s national board forced the firing of Doug Allen as executive director and chief negotiator for the union. The board majority acted by delivering a “written assent” document, which under the union’s constitution allows for a majority of the board to take action outside of a formal board meeting.
Tuesday’s ruling is not likely to end the dispute, which has riven the union in recent months. Eric M. George, a lawyer who represents the Rosenberg group, said in an interview that the complaint would be amended and refiled and that he expected a hearing to take place on Thursday.
“There was absolutely nothing on the merits of the case addressed or decided in court today,” he said, adding that he was confident that the Rosenberg group would prevail.
Ned Vaughn, a spokesman for a faction of the union that moved to oust Mr. Allen, said it was “outrageous” that Mr. Rosenberg and the others were suing the union and trying to stand in the way of members who “voted for a new direction in the last election.”
The lawsuit challenged the legality of the “written assent” document, claiming that a two-thirds majority is required for such action. It claimed that the union would suffer “irreparable harm” if the task force were allowed to negotiate with the producers’ alliance.
Linux Defenders Organize to Fight Patent Trolls
Linux group tries to head off abuse of patents
In December, General Patent Corp. announced it was working on behalf of Worlds.com to enforce its patents on "Scalable Virtual World Chat Client-Server System" and "System and Method for Enabling Users to Interact in a Virtual Space," which date back to 1995.
Attorney Sean Kane, writing in his "Virtual Judgment" blog, commented:
"Therefore, it would seem that General Patent Corporation and Worlds.com are taking the position that the above-referenced patents cover the idea of the computer architecture for a three-dimensional graphical multi-user interactive virtual world system. If so, this announcement is arguably a very thinly veiled notice to the virtual world industry that infringement suits are forthcoming for those companies who do not enter into a licensing deal with General Patent Corporation and Worlds.com."
Are you tired of hearing of patents granted for obvious innovations? Are you weary of hearing about old patents that are purchased by firms like Niro, Scavone, Haller & Niro which "concentrates its practice in intellectual property law" and became notorious as a hugely successful "patent troll"? Do you think that the people suing Google, Apple and Microsoft for infringement of a patent ludicrously granted for "a system and method for iconic software environment management" that they claim covers thumbnail images should be granted their day in court?
If you think that the U.S. Patent and Trademark Office (USPTO) desperately needs help to clean the earwax out of its cerebral sulci, there’s an excellent example from the world of Linux that would bear watching and emulating in other fields.
The Open Invention Network, the Software Freedom Law Center and The Linux Foundation are sponsoring an organization called the Linux Defenders, which has three key projects (quoting from their Web page):
Peer to Patent
Peer-to-Patent is a historic initiative by the United States Patent and Trademark Office (USPTO) that opens the patent examination process to public participation for the first time. Peer-to-Patent is an online system that aims to improve the quality of issued patents by enabling the public to supply the USPTO with information relevant to assessing the claims of pending patent applications. Peer-to-Patent provides an opportunity to open up the closed patent review process to more information and enable better decision making and improve the patent system by avoiding the issuance of overly broad patents. Linux Defenders is working in cooperation with the established Peer-to-Patent program to create a portal for the Linux and open source community to participate in the program and provide parallel initiatives with the same common goal of improving patent quality and enabling freedom of action/freedom to operate.
Post-Issue Peer to Patent
Post-Issue Peer-to-Patent takes a community-based approach to peer review for issued patents. In recent years the USPTO has at times been overwhelmed by the number of patent applications being filed in areas of new technology, such as software and business methods. Lacking access to comprehensive prior art in these subject matter areas, the USPTO had little choice but to grant patents that would otherwise have failed the test of patentability had relevant prior art been before the examiner. The rigor is provided by the community of peer reviewers who elect to participate in the review of issued patents and support the invalidation of poor quality patents and the patent office’s goal of improving the quality of future issued patents.
Defensive publications, which are endorsed by the USPTO as an IP rights management tool, are documents that provide descriptions and artwork of a product, device or method so that it enters the public domain and becomes prior art upon publication. This powerful preemptive disclosure prevents other parties from obtaining a patent on a product, device or method that is known though not previously patented. It enables the original inventor to ensure access to the invention across the community by preventing others from later making patent claims on it.
These efforts can serve as models for the entire high-technology industry to marshal our intellectual resources to stop abuse of the patent system.
It’s time to organize to fight the trolls.
Bill Gates Unleashes Swarm of Mosquitoes on Crowd
Microsoft founder turned philanthropist Bill Gates released a glass full of mosquitoes at an elite technology conference to make a point about the deadly disease malaria.
"Malaria is spread by mosquitoes," Gates said while opening a jar onstage at the Technology, Entertainment, Design Conference — a gathering known to attract technology kings, politicians, and Hollywood stars.
"I brought some. Here I'll let them roam around. There is no reason only poor people should be infected."
First reported on social networking site Twitter, Facebook's Senior Platform Manager Dave Morin blogged, "Bill Gates just released mosquitos into the audience at TED."
Gates then waited a minute or so before assuring the audience the freed insects were malaria-free.
The unusual presentation on malaria prevention was confirmed by the Bill and Melinda Gates Foundation's media office. A spokesman said the insects released were not carrying malaria.
Gates retired as head of Microsoft last year to focus more on his foundation. One of its key projects is ending malaria and it has spent millions on fighting the disease.
The philanthropist has been pushing to reduce malaria deaths through the nonprofit. In September, Gates announced that the Bill and Melinda Gates Foundation would provide $168.7 million to the PATH Malaria Vaccine Initiative to help develop a vaccine for the deadly disease.
House Votes to Delay Switch to Digital TV
Television owners appear to have four more months to upgrade their old sets before they will no longer receive analog signals.
The House of Representatives voted Wednesday to extend the transition to digital television by four months, ending a debate about whether to allow consumers more time to make the switch. Broadcasters were scheduled to cease analog broadcasts on Feb. 17, as part of a long-awaited move to digital broadcasting that will make the analog spectrum available for other applications, including for use by wireless companies and public safety agencies. The new deadline is expected to be June 12.
The Senate passed similar legislation last week, and President Obama has signaled that he will sign the bill. In a statement Wednesday, White House spokeswoman Amy Brundage said that “the passage of this bipartisan legislation means that millions of Americans will have the time they need to prepare for the conversion.”
Most television owners, including those with cable or satellite connections, will not be affected by the signal change. But viewers with old antennas will lose service unless converter boxes are installed to translate the digital signals.
Last month The Nielsen Company estimated that 6.5 million households are completely unprepared for the switch, meaning that no televisions in those homes are equipped to receive digital signals.
Mr. Obama had raised concerns about the impending switch during the presidential transition process last month. His transition team called financing for the switch inadequate and called on Congress to consider a delay.
On Wednesday, Ms. Brundage said the White House would “continue to work with Congress to improve the information and assistance available to American consumers in advance of June 12, especially those in the most vulnerable communities.” The stimulus package before Congress may include up to $650 million in financing for coupons to ease the transition.
“Wednesday’s vote came one week after House Republicans blocked the bill when it was in a special fast-track vote that required two-thirds support to pass,” The Associated Press reports. “This time, the bill passed the House under a regular floor vote, which only requires a simple majority.” The House voted 264 to 158.
Michael J. Copps, the acting chairman of the Federal Communications Commission, said that the additional four months of transition time would afford “urgently-needed time for a more phased transition.”
In a separate statement, fellow commissioner Robert M. McDowell said the government should stay on message, saying: “If you need a converter box, get it today and hook it up today and start enjoying the benefits of digital television today.” Information on the transition is available at DTV.gov.
Forget Coupons — Are There Enough DTV Converters?
Two weeks before the country was supposed to shut off its analog television broadcasts, there is a shortage of converter boxes that people need to get over-the-air digital television.
Michael Petricone, the senior vice president for government affairs at the Consumer Electronics Association, told the Federal Communication Commission Thursday that three million to six million converter boxes are in the pipeline and available to be sold, according to an account in Broadcasting & Cable.
Many of these converters will be purchased with $40 coupons provided by the government. At the current rate of coupon redemption, 115,000 per day, plus sales without coupons, that means the current stock of converters could be sold out by the end of this month.
Mr. Petricone told the commission that production was starting up again in Asia, and new shipments of converters will hit the stores in April.
As you may remember, Congress didn’t allocate enough money for the coupons, so there has been a waiting list building since December. New coupons are mailed out only when old ones expire unused. So there are now requests for 3.7 million coupons on hold.
So what would have happened if the whole digital transition worked the way it was supposed to? Many of those 3.7 million people would be marching into their local Radio Shack and Best Buy stores trying to buy converter boxes next weekend right before the scheduled cutoff on Feb. 17. And if the electronics association’s numbers are right, the boxes would have sold out.
If you think people are angry about the problems the program did have, that’s nothing compared to what might have happened were there a last-minute converter shortage.
As it turns out, new coupons won’t be sent to everyone on the waiting list until several weeks after Congress approves the new money for them as part of the stimulus bill. So by the time people actually do get the coupons and head to the mall, the new stock may well have arrived.
Radio Needs your Help....Yes, You
Peter H. Smyth
It seems these days that Washington, D.C. is where the action is, where the decisions are being made that will hopefully snap us out of this economic storm that has been raging for months now. It’s a story that gets played out nightly on your news channel of choice.
There is another battle that will be played out in Washington in the coming weeks and months, although it may not receive the front page treatment. But for you and for me, it is a battle that is as important as any other we are facing today.
The Performance Tax has once again reared its ugly head and the RIAA and its allies are preparing to introduce legislation in Congress that could, realistically, cost the radio industry between $400 million and $7 billion per year.
There will be claims that this is a question of fairness and the money is needed to help recording artists. The fact is that the record companies – not individual artists – will be the primary beneficiaries of a performance tax on radio. The same companies who denied, resisted and ultimately blew their business in the transition to digital delivery now want to dig into the pockets of radio to save their skins.
For the past 80 years, the relationship between the music industry and radio has been mutually profitable for both industries, providing limitless on-air promotional exposure of artists’ music at absolutely no cost. Radio has profited as well with access to great recorded musical content and we have been a willing partner in creating highly profitable careers for a long roster of artists in all music genres. Radio has been and continues to be the prime driver that puts people in concert seats and motivates them to buy music, whether it is at iTunes, Amazon or a brick and mortar store. Radio will continue to be the best possible channel for widespread distribution of music in a cost-effective and profitable fashion for some time to come.
Right now, with a new Congress in Washington and a new administration taking over, the RIAA has undertaken a major new push to upset this bargain and strike a new, more favorable one for themselves – one in which radio pays a high price for the “privilege” of promoting the recording industry to our listeners – and they intend to use the legislative process to do so.
For each of us who are working daily in radio, this is a direct economic threat that can be more damaging to our future than anything the economy has handed us so far. A direct tax on radio’s already-suffering profitability would force a wholesale rethinking of our station’s formats, our staffing, our ability to contribute to our communities, and how we run our business. It is a disruption that should never be considered, especially in this time of economic uncertainty.
We cannot assume that someone in Washington is going to ride to our aid; no industry group can fight this battle by itself. It is going to take personal involvement by each of us, regardless of our job title, to let our local representatives in Congress know just how important it is to stop this ill-advised legislation. Take a moment today to write or call your Congressional Representative’s office. Ask them to co-sponsor the “Local Radio Freedom Act” (H. Con. Res. 244), which is being introduced in the US House of Representatives. Tell them what it means for your industry, your job, your future. For more specific background information, or to check and see who your local representative is, click here.
The radio industry is actively working to meet the challenges presented to it by the digital age and the economic downturn. We cannot and should not have to deal with a legislative mandate that would turn our business upside down. I will continue to keep you up to date on this battle as it unfolds in the months to come. Please pitch in if you care about the future of this industry.
Senator: Talk Radio Hearings Could Be On The Way
Sen. Debbie Stabenow (D-MI) told nationally syndicated talk host Bill Press this morning that the recent flips of liberal Talk stations in several markets were a "disservice to the public."
Stabenow said that, in the day of the Fairness Doctrine, "you had to have balance," and continued, "I think something that requires that in a market with owners that have multiple stations that they have got to have balance -- there has to be some community interest -- balance, you know, standard that says both sides have to be heard."
Stabenow told Press that the airwaves are "dominated by one view" that "overwhelms people's opinions -- and, unfortunately, incorrectly," and said that "right-wing conservative talk hosts" are "trying to make people angry and saying all kinds of things that aren't true and so on."
When Press asked if it is time to bring back the Fairness Doctrine, Stabenow responded, "I think it's absolutely time to pass a standard." To Press' inquiry as to whether she will push for hearings in the Seante "to bring these owners in and hold them accountable," Stabenow replied, "I have already had some discussions with colleagues, and, you know, I feel like that's going to happen. Yep."
The Economics of Giving It Away
In a battered economy, free goods and services online are more attractive than ever. So how can the suppliers make a business model out of nothing?
Over the past decade, we have built a country-sized economy online where the default price is zero -- nothing, nada, zip. Digital goods -- from music and video to Wikipedia -- can be produced and distributed at virtually no marginal cost, and so, by the laws of economics, price has gone the same way, to $0.00. For the Google Generation, the Internet is the land of the free.
Which is not to say companies can't make money from nothing. Gratis can be a good business. How? Pretty simple: The minority of customers who pay subsidize the majority who do not. Sometimes that's two different sets of customers, as in the traditional media model: A few advertisers pay for content so lots of consumers can get it cheap or free. The concept isn't new, but now that same model is powering everything from photo sharing to online bingo. The last decade has seen the extension of this "two-sided market" model far beyond media, and today it is the revenue engine for all of the biggest Web companies, from Facebook and MySpace to Google itself.
In other cases, the same digital economics have spurred entirely new business models, such as "Freemium," a free version supported by a paid premium version. This model uses free as a form of marketing to put the product in the hands of the maximum number of people, converting just a small fraction to paying customers. It's an inversion of the old free sample promotion: Rather than giving away one brownie to sell 99 others, you give away 99 virtual penguins to sell one virtual igloo. (Confused? Ask a child: This is the business model for the phenomenally successful Club Penguin.)
With physical stuff, samples must be doled out sparingly -- there are real costs to be paid. With bits, the free versions are too cheap to meter and can be spread far and wide. That's why so many people businesses (expensive!) are turning into software businesses (cheap!), which is why your cranky tax accountant has morphed into free TurboTax online, your stockbroker is now a trading Web site and your travel agent is more likely a glorified search engine.
All this worked well in a rising economy, where non-monetary riches such as attention (Web traffic) and reputation (Google PageRank, which determines how high your site will appear in a search) could be turned into cash with the wave of a venture capitalist's wand or a well-timed acquisition. But this year, for the first time since 2001, the overall tide of investment and advertising won't rise. Indeed, it will almost certainly fall. Venture capital has dried up, Google is killing products rather than buying them, and Yahoo can barely support itself, much less look for others to fund. What does that do to Free as an economic model?
Something for Nothing
The Hype Machine monitors hundreds of music-related blogs, and lets users listen to songs posted on those blogs for free -- just type in the name of a band or track. (It's also a good place to find out what's new and popular in the music blogosphere.) Songs can't be downloaded, but Amazon and iTunes links appear next to most tracks.
Compare fares from multiple vendors, including airlines and online travel agencies, on this fare-search site. Kayak breaks down itineraries by airline, time of day, number of stops and length of layovers. It also lets users exclude turboprop aircraft or regional jets from searches. You have to go directly to the vendor to buy the ticket though (a link is provided).
A free photo-editing site that doesn't require registration or software downloads. Users crop and adjust photos within their browser window -- special effects and frames are available, too -- and can post images to sites like Flickr or Facebook without leaving Picnik. A premium account ($24.95 a year) offers features including batch photo uploading, advanced editing tools and no ads.
Play free online or downloadable games -- including card, puzzle, word and board varieties -- at this ad-supported site from Electronic Arts. More than 100 games are available including Scrabble, Monopoly and Trivial Pursuit. A paid account ($5.99 per month, or $39.99 per year) gets rid of ads and provides access to more games.
Billed as the online alternative to a personal shopper, this service emails members when retailers mark down their favorite designers. Users specify their preferred sizes and brands, and choose how frequently they want to be alerted. Tracked brands include Prada and Theory; the site searches a limited number of retailers including Saks, Nordstrom and shopbop.
-- Juliet Chung
From a consumer perspective, it should only help. After all, when you have no money, $0.00 is a very good price. Expect the shift toward open source software (which is free) and Web-based productivity tools such as Google Docs (also free) to accelerate. The cheapest and coolest computers today are "netbooks," which sell for as little as $250 and either ship with free versions of Linux or super-cheap old versions of Windows. The people who buy them don't load Office and pay Microsoft hundreds of dollars for the privilege. Instead, they use online equivalents, as the netbook name implies, and those tend to be free.
These same consumers are saving their money and playing free online games, listening to free music on Pandora, canceling basic cable and watching free video on Hulu, and killing their landlines in favor of Skype. It's a consumer's paradise: The Web has become the biggest store in history and everything is 100% off.
What about those companies trying to build a business on the Web? In the old days (that would be until September of last year) the model was pretty simple. 1. Have a great idea. 2. Raise money to bring it to market, ideally free to reach the largest possible market. 3. If it proves popular, raise more money to scale it up. 4. Repeat until you're bought by a bigger company.
Now steps 2 through 4 are no longer available. So Web startups are having to do the unthinkable: come up with a business model that brings in real money while they're still young.
This is, of course, nothing new in the world of business. But it is a bit of a shock in the Web world, where "attention" and "reputation" are the currencies most in demand, with the expectation that a sufficient amount of either would turn into money someday, somehow.
The standard business model for Web companies that don't actually have a business model is advertising. A popular service will have lots of users, and a few ads on the side will pay the bills. Two problems have emerged with that model: the price of online ads and click-through rates. Facebook is an amazingly popular service, but it also an amazingly ineffective advertising platform. Even if you could figure out what the right ad to serve next to a high-school girl's party pictures might be, she and her friends probably won't click on it. No wonder Facebook applications get less than $1 per 1,000 views (compared to around $20 on big media Web sites).
Google has built an enviable economic engine on the back of its targeted text ads, but the sites on which they run rarely feel as flush. Running Google's Adsense ads on the side of your blog, no matter how popular it may be, will not pay you even minimum wage for the time you spend writing it. On a good month it might cover your hosting fees. I speak from experience.
What about the oldest trick in the book: actually charging people for your goods and services? This is where the real innovation will flourish in a down economy. It's now time for entrepreneurs to innovate, not just with new products, but new business models.
Take Tapulous, the creator of Tap Tap Revenge, a popular music game program for the iPhone. As in Guitar Hero or Rock Band, notes stream down the screen and you have to hit them on the beat. Millions of people have tried the free version, and a sizable fraction of them were ready and willing to pay when Tapulous offered paid versions built around specific bands, such as Weezer and Nine Inch Nails, along with add-on songs. (The Wall Street Journal is pursuing a strategy of blending free and paid content on its Web site.)
At the other end of the business spectrum there's Microsoft, which now has to compete with the free word processors and spreadsheets of online competitors such as Google. Rather than complain about the unfair competition (which would be ironic), Microsoft created Web versions of its business software and offered them free to small and young companies. If your firm is less than three years old and under $1 million in revenues, you can use Microsoft's software without charge under its BizSpark program. When those companies get bigger, Microsoft is betting that they'll keep using its software as paying customers. In the meantime, the program costs it almost nothing.
But extracting a business model from free is not always easy, especially when your users have come to expect gratis. Take Twitter, the fantastically popular (and free, of course) 140-character messaging service where people update the world on what they're doing, one haiku-like snippet at a time. After taking over the world, or at least the geeky side of it, it now finds itself having to actually make enough money to cover its bandwidth bills. Last year it hired a revenue guru to try to find a business model and has announced that it intends to reveal its strategy early this year. Speculation as to what that will be ranges from charging companies to have their "tweets" recommended to consumers (which is a bit like "friending" the Burger King on Facebook) to certifying identity to avoid impersonation. The revenue officer has his work cut out for him.
Meanwhile YouTube is still struggling to match its popularity with revenues and Facebook is selling commodity ads for pennies after its effort to charge for intrusive advertising led to a user backlash. And news-sharing site Digg, for all its millions of users, still doesn't make a dime. A year ago, that hardly mattered: The business model was "build to a lucrative exit, preferably in cash." But now the exit doors are closed and cash flow is king.
Does this mean that Free will retreat in a down economy? Probably not. The psychological and economic case for it remains as good as ever -- the marginal cost of anything digital falls by 50% every year, making pricing a race to the bottom, and "Free" has as much power over the consumer psyche as ever. But it does mean that Free is not enough. It also has to be matched with Paid. Just as King Gillette's free razors only made business sense paired with expensive blades, so will today's Web entrepreneurs have to not just invent products that people love, but also those that they will pay for. Not all of the people or even most of them -- free is still great marketing and bits are still too cheap to meter -- but enough to pay the bills. Free may be the best price, but it can't be the only one.
Until next week,
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|Peer-To-Peer News - The Week In Review - January 24th, '09||JackSpratts||Peer to Peer||0||21-01-09 09:49 AM|
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