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Old 02-09-09, 07:22 AM   #1
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Join Date: May 2001
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Default Peer-To-Peer News - The Week In Review - September 5th, '09

Since 2002

"It's clear that it's not just about free content. P2P users are important to the revenue model of traditional media and entertainment companies." – Mike Vorhaus

"Aggregation is something that we are engaged in at all of our newspapers. It is completely appropriate and enables us to provide a broad array of news stories to our readers, viewers and online users." – Gary Weitman, The Tribune Company

"Over the past three years, we've had pretty consistent admissions and increasing revenues, coming back from a period when people were talking about the industry being in a downward spiral. We're seeing nothing like that now." – Patrick Corcoran, The National Association of Theater Owners

September 5th, 2009

Media Cos.' Best Customers: Those Who Steal Their Content
Mike Vorhaus

Historically, an easy way to stoke the ire of a major media executive was to start talking about the surge in peer-to-peer file distribution.

Now, we do lots of research at Frank N. Magid Associates to take the pulse of various media channels for customers, and recently a P2P company, Vuze, hired us to find out how its users' media habits compare with those of the average internet user. When we did, we found that those media execs may not have cause for all the quaking. (While we conducted the study on behalf of a client, I assure you we used the same sound, time-tested methods we use for any of our in-house, proprietary research.)

We compared a random set of Vuze users with a national sample of internet users ages 18 to 44, and results revealed that users of P2P technology spend considerable money on traditional media and entertainment. They are, in fact, important and valued customers of the traditional media companies. Our survey shows that the P2P user attends 34% more movies in theaters, purchases 34% more DVDs and rents 24% more movies than the average internet user. The P2P user owns more HDTVs and is more likely to own a high-def-DVD player, too.

It's clear that it's not just about free content. P2P users are important to the revenue model of traditional media and entertainment companies.

Nintendo And Sony Move To Curb Piracy
Tom Ivan

Nintendo and Sony have made fresh moves to curb piracy on their gaming platforms.

Nintendo has expanded its anti-piracy team with the appointment of Neil Boyd as European anti-piracy counsel. Boyd joins the platform holder from Warner Brothers, where directed the firm’s anti-piracy strategy. He will be assisted by Jonathan Tully and Matthias Damm, Nintendo’s European anti-piracy legal advisors.

“Creating a pan-European anti-piracy team shows how seriously Nintendo takes the threat of videogames piracy and our willingness to take action against criminals who are making money out of the infringement of games developers’ copyright,” said Jodi Daugherty, Nintendo’s senior director for anti-piracy.

Sony has also implemented new PSP anti-piracy measures. According to SCEA’s director of hardware marketing, John Koller, the PSP Go’s lack of an external battery will combat PSP firmware modding previously enabled by the Pandora battery.

"You won't be able to rip your games and play them on the system, the firmware precludes that," he told PS Insider. "There's no external [PSP Go] battery, so there's a number of protections put into place on the system."

While the internal battery may help to stem PSP software piracy, it will also mean that systems in need of new batteries will have to be shipped back to Sony.

The DS and PSP have both suffered from high levels of software piracy. Last year John Hillier, manager of ELSPA’s Intellectual Property Crime Unit, claimed that up to 90 per cent of DS users were playing pirated games because of the R4 chip, which bypasses the DS's security system allowing users to play games illegally downloaded from the internet. Nintendo responded by saying that Hillier’s claims were overblown, noting that while such copying devices “cause Nintendo concern, they have not reached the mass market as indicated.”

Sony has gone as far as to call PSP piracy levels “sickening,” with SCEA’s senior VP of marketing, Peter Dille, suggesting that piracy has taken out “a big chunk” of the handheld’s software sales. Dille added that PSP piracy had made it more difficult to convince third party developers to support the platform. One such developer was Ubisoft, which only recently announced plans to fully back the PSP again following the emergence of "new ways to control piracy" on the platform.

Internet Providers Seek Low Broadband Bar
John Poirier

The biggest U.S. Internet service providers urged regulators to adopt a conservative definition of "broadband," arguing for minimum speeds that were substantially below many other nations.

The submissions were filed with the Federal Communications Commission which had sought comments by August 31 on how the agency should define broadband for a report to be submitted to Congress early next year.

The Obama administration is seeking ways to extend broadband services to both unserved Americans living in rural areas and to make broadband affordable for those living in urban areas.

Some of the submissions from service providers argued for a definition that even undercut an international ranking of U.S. Internet speed.

A 2008 study by the Organization for Economic Co-operation and Development showed that the United States ranked 19th with an advertised rate of 9.6 megabytes per second (mbps). The top three countries were Japan with 92.8 mbps, Korea with 80.8 mbps and France with 51 mbps.

"The definition must include those services that Americans actually need and want -- and can afford -- to participate in the Internet-driven economy," AT&T Inc said in its comment letter to the FCC.

AT&T said regulators should keep in mind that not all applications like voice over Internet protocol (VoIP) or streaming video, that require faster speeds, are necessarily needed by unserved Americans.

Verizon Communications Inc and Verizon Wireless, a joint venture between Verizon and Vodafone Group Plc, urged the FCC to maintain speeds of at least 0.768 mbps downstream and 0.200 mbps upstream.

Those speeds are being used by the U.S. government in administering $7.2 billion in loans and grants for broadband projects as part of the U.S. economic stimulus package.

"It would be disruptive and introduce confusion if the commission were to now create a new and different definition," Verizon said in its letter.

Comcast Corp, the biggest cable provider, said that "simpler is better" and that the actual online experience of any particular consumer at any particular moment in time involves a wide range of factors.

"Many of which are outside the control of the Internet service provider," Comcast said in its letter, which argued for defining "basic" broadband as having a downstream and upstream speed of 0.256 mbps.

However, Free Press, a public interest group, urged Congress and the FCC to set the bar high and to consider broadband as a critical infrastructure.

In its submission, Free Press urged the FCC to craft a definition with a minimum upstream and downstream speed of at least 5 mbps for each end user.

"We fully recognize that incumbents for the most part will scoff at a symmetrical definition," wrote Derek Turner, research director at Free Press. "The commission must ignore any such self-serving pleas for watered-down standards."

FCC Chairman Julius Genachowski told Reuters in July that broadband was the "the major infrastructure challenge of our generation."

(Reporting by John Poirier; Editing by Tim Dobbyn)

The Internet After Dark (Part 1)
Craig Labovitz

After dark when the dinner dishes are put away and the kids are safely tucked into bed, the Internet subtly changes. Starting in the twilight of early evening, business traffic slows to a crawl, previously dormant applications flicker on home computer screens, and like clockwork, Internet activity begins its nightly climb towards a regular after hours bandwidth peak.

But before we get too carried away with metaphor and innuendo, some background.

In our last post blog post, we found (somewhat unexpectedly) that the pattern of North American daily Internet traffic differs from Europe and Asia. Unlike European Internet traffic which peaks around 7pm GMT and then quickly drops off until morning business hours, US Internet traffic reaches its peak at 11pm EDT and then stays relatively high until 3am in the morning (i.e. stays above 60% of peak or more).

This uniquely American traffic pattern holds true across dozens of individual ISPs, tens of millions of subscribers, and petabytes of daily Internet traffic.

The question is what are Americans doing at night?

To begin answering this question, we first recap Internet Observatory data from our earlier post. The below graph shows the daily average traffic fluctuations of 40 North American consumer / regional providers (taking the average of 10 weekdays in July). To make the graph more readable, we show traffic as a percentage of peak traffic levels. All times are EDT.

The way to interpret the graph above is that at 6am EDT North American traffic volumes are at 50% of their daily peaks. Traffic then climbs to a local maxima at 4pm and then a daily peak around 11pm EDT before again dropping during the early morning hours.

To understand the two North American traffic peaks at 4pm and 11pm graphed above, it helps to look only at consumer Internet traffic (i.e. as opposed to enterprise and tier1 transit). Below we overlay in yellow the average daily traffic from only US and Canadian consumer providers (i.e. only showing cable / DSL and excluding tier2, research, content, tier1, etc.).

From the graph its pretty clear consumer traffic plays a large role in the midnight North American traffic peak. We also see consumer traffic tends to climb later in the day (i.e. consumer traffic crosses 50% threshold after 9am as opposed to the broader Internet average of 6am) and consumer traffic trends towards filling the bulk of after-hours traffic. Perhaps most telling is the change in slope of graphed average consumer traffic around 6pm and then again around 8-9pm — all likely related to Americans turning to the Internet after dinner and during evening leisure hours.

But though we now know it is consumers driving the late night Internet traffic peak, we still have not answered what they are doing.

In response to our last post on the somewhat mysterious differences between American and European traffic patterns, readers offered a range of theories including:

* More so than Europe, American traffic grows with web surfing and at night
* Larges surges of P2P would explain North American traffic spikes
* Americans watch more video and related adult entertainment late at night
* In general, Europeans use the Internet less at night, have better social interactions, eat better food and generally live better lives

We finish this blog post by exploring which of the above theories do not account for the large midnight spike in North American traffic. I have no way to evaluate the last bullet point around higher European quality of life (although I’m pretty sure my high school French teacher is still insisting this is true).

During both the day and night the single largest Internet application is the web (52% of all Internet traffic on average).

But while web surfing plays a large role in North American traffic trends, the graph below shows web does not provide the complete explanation behind the American bandwidth peaks.

The “Daily Web Traffic” graph shows web as an average daily percentage of all North American Internet traffic. For purposes of this blog post, we define “web” as traffic on port 80, 8080 and 443. We note that web traffic includes both html page downloads as well as video and other applications running over HTTP.

From a daily low of 42%, web traffic grows by 10% at night to account for 52% of all Internet traffic. So web accounts for slightly over half of the late night traffic, but what is consuming the other half of American traffic?


Given all the press and provider angst over P2P traffic, many commenters suggested (incorrectly) that P2P is the source of the post midnight bulge in American Internet traffic. As a category, P2P is the second largest source of American Internet traffic coming in at roughly 15-20% of all North American traffic.

[Note: We'll devote an article on the evolution of P2P traffic in an upcoming post. And, of course, the upcoming "2009 Internet Observatory" report goes into far more detail on the statistics and methodology than our more casual blog postings.]

Since most P2P does not use standard ports and/or includes encryption, we extrapolate the data below using a combination of Observatory port data with statistics from application payload characterization across several large US and Canadian cable operators. We again graph P2P as an average daily percentage of all North American Internet traffic.

Unlike the web and almost all other applications, the daily average P2P cycle does not coincide with broader traffic trends. In fact, the P2P daily trend is pretty much completely inverted from daily traffic. In other words, P2P reaches it low at 4pm when web and overall Internet traffic approaches its peak. P2P traffic only bursts from a low of 8% to a high of 17% of Internet traffic after midnight and then drops off at 6am.

As a side note, the cyclical inverted traffic pattern of P2P is interesting in its own accord. The inversion is highly suggestive of either persistent congestion or, more likely, evidence of widespread provider manipulation of P2P traffic rates.

So P2P also does not explain the midnight spike of American Internet traffic. What does? Next week we’ll complete this blog post in Part II and explore the applications behind North American traffic after dark.

uTorrent iPhone App Rejected by Apple, Goes Underground

Apple is known for the stringent guidelines it applies when deciding which software it allows in their App Store – BitTorrent is one of the things on their ban list. Apple argues that BitTorrent is often used to infringe copyrights and that such applications are a no go for the App Store, forcing developers to go underground.

然onitor is a handy iPhone application that allows users to control their uTorrent client on the go. After putting months of hard work into getting the software ready for a public release, the developer Claudio was told by Apple that everything related to BitTorrent has been banned from their App Store.

“We’ve reviewed 然onitor and determined that we cannot post this version of your application to the App Store at this time because this category of applications is often used for the purpose of infringing third party rights. We have chosen to not publish this type of application to the App Store,” Apple wrote to the developer after a 4 month review process.

This is not the first time that Apple has excluded a BitTorrent-related product from its store. In May they also banned an application designed to remotely-control the Transmission BitTorrent client for the same reasons outlined above.

Interestingly Apple has no problem allowing Usenet related applications in their store. myNZB for example is an application that is available from the App Store although it’s similar in functionality to the BitTorrent apps that were rejected.

Despite Apple’s blockade, there is still a way to get 然onitor on your iPhone. Instead of throwing months of hard work overboard, 然onitor’s developer has recently decided to bypass the Apps Store and make the application available to ‘jailbroken’ iPhone users from the Cydia repository.

Thanks to Apple, uTorrent users who want to control their torrent via an iPhone application have no other option than to jailbreak their phone. Detailed instructions on how to get 然onitor working on your phone can be found on Claudio’s website.

T-Mobile Users to be Billed for Bills
Bob Sullivan

Rob Connor of Charleston, S.C., watches his bills carefully. So he's pretty "steamed" that soon he's going to have to pay for the right to do so.

Connor is caught in a debate that could pit environmentalists against consumer rights advocates over the basic monthly task of paying the bills.

Connor's mobile phone provider, T-Mobile, recently sent him a note saying it will now charge customers $1.50 per month to receive paper bills mailed to their homes, or $3.50 per month for detailed bills. E-mailed bills are free, but Connor says that won't help him. He doesn't have Internet access at home.

T-Mobile says it's making the change, which takes effect in September, in part to help the environment, but Connor doesn't buy that.

"This thing of having to pay so I can pay is just a little too much," he said. "And I'm certainly not interested in some bogus argument about me contributing to global warming by NOT signing on to making it cheaper for T-Mobile to send me a bill."

Is T-Mobile stiffing consumers like Connor or helping the environment? Many companies are strongly encouraging consumers to forgo paper bills in favor of electronic versions. Sprint offers a $5 credit to consumers to enroll in online billing. Verizon recently offered consumers who make the switch a chance to win a Toyota Prius.

But T-Mobile's fee for even summary paper bills marks one of the most aggressive steps by companies trying to push consumers into the paperless world.

"After considering a number of factors, including rising costs for paper, printing, and postage, as well as environmental impacts associated with printing paper bills, T-Mobile has started to charge customers who would like to receive a paper bill," the company said in a statement. It stressed that consumers can access billing information online for free at any time or, in some cases, with their handsets.

The firm is not the first wireless company to charge for paper bills. Verizon Wireless and AT&T charge $2 monthly fees for consumers who want to receive detailed bill statements via U.S. mail. Basic summary bills are still free, however.

The cost savings for the companies are obvious. Verizon recently said it saves about $600,000 each year for every 100,000 customers who go without paper bills. In 2008, the firm replaced paper bills with electronic versions, saving 4.3 million pounds of paper, or about 52,000 trees, it said.

The PayItGreen Alliance – a banking industry group – says that if 20 percent of U.S. households switched to electronic bills, 1.8 million trees would be saved each year.

But Connor thinks he has a right to the paper bills for free, and he's not alone. T-Mobile customers have taken their displeasure with the new policy to the Internet, registering complaints on dozens of Web sites.T-Mobile’s own consumer message boards are full of angry notes.

“It really pisses me off when companies hide behind the environmental wackos for a reason why not to include services anymore,” reads one.

“E-mails don't receive much weight from me, I respond much quicker and better to a physical bill in the mail than an electronic statement,” said another.

Get out of their contracts?

Harvey Rosenfeld, founder of Consumer Watchdog and lead attorney in several lawsuits against the mobile industry, says Conner and other complainers may have legal grounds for their objection. He recently settled a lawsuit against Nextel Corp. for requiring consumers to pay for detailed billing statements back in 2003. As part of the settlement, Nextel agreed to refund customers. He says consumers are entitled to bills and invoices that itemize costs.

"There's a lot of policy language in state and federal law that says consumers need to be able to determine the validity of a bill," he said. "You need to know if you're being overcharged, if you've received a promotional discount. You can't figure anything out from a bill if all they give you is a single unitemized bill."

Rosenfeld says he's seen hospital bills where the consumer was charged $2.50 to obtain a copy of the bill.

"To bill you for the price of billing you is an outrage" he said. "It's the cost of doing business."

T-Mobile counters that it is providing a free means for customers to receive their bills – on the Web.

Nextel also made that case, Rosenfeld said, but at the time, millions of the firm's consumers did not have Internet access. T-Mobile probably has a stronger case on that point today, but Rosenfeld still thinks consumers who want itemized paper bills shouldn't have to pay for them.

Meanwhile, many T-Mobile consumers are wondering if the new paper bill fee constitutes a change in contract terms which would allow customers to break their contracts without paying an early termination fee.

T-Mobile says no.

"It doesn't qualify for opt out in the contract because customers were given 30 days notices as part of terms and conditions. They have the option to opt out. And they have access to bills for free online," said a company spokesman, speaking on condition he not be identified.

But Rosenfeld said the firm has clearly changed the cost to consumers – a $50 plan now costs $50 plus at least $1.50 to get a paper bill – so consumers should have the right to cancel.

"If a company starts charging for a service that they previously did for free ... that’s a material change for sure," he said. "I think consumers can get out of their contracts."

Group that Represents Canadian Songwriters Suing Company that Operates XM Radio

A group that represents Canadian songwriters and music publishers is taking the company that operates XM Radio (TSX:XSR) to court, alleging it has defaulted on its royalty obligations.

CSI, the group launching the lawsuit, is a joint venture of the Toronto-based Canadian Musical Reproduction Rights Agency Ltd., (CMRRA) and Montreal-based Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC).

On Tuesday, they launched a notice of application in Federal Court against Canadian Satellite Radio Inc., the subsidiary of XM Radio.

CSI alleges it is owed royalties dating back to 2005, when XM Radio first went on the air in Canada.

The lawsuit did not specify the amount owed, saying the figures are confidential.

CSI is seeking an injunction prohibiting XM Radio from broadcasting songs by Canadian artists represented by CSI and the Society of Canadian Authors and Music Publishers of Canada until payment is made.

According to court documents, CSR was required to pay royalties by July 31 of this year, but did not do so. CSI alleges that CSR has indicated it will pay no royalties until 2010.

In May of this year, the Copyright Board of Canada certified a tariff to be paid each month by multi-channel subscription satellite radio services for broadcasting Canadian music.

A spokesperson for XM Radio was not immediately available for comment.

BMI Has Landmark Year In Fiscal 2009

BMI announced its results for fiscal 2009, and the music copyright organization earned more than $905 million in revenues. The company also increased royalty distributions to more than $788 million for the songwriters, composers and copyright owners it represents. Despite one of the toughest economic climates in BMI’s history, the company also enjoyed some big achievements over the past year. BMI said in a statement that it experienced its best-ever year in international revenues, thanks to global hits from Lady Gaga, Colbie Caillat, Taylor Swift, Pink, Kid Rock, Kings of Leon, Shinedown and others. Furthermore, BMI completed the integration of Landmark Digital Services’ radio performance data into its radio survey, giving the company more comprehensive and granular data on radio airplay. Landmark’s BlueArrow technology is now delivering data to BMI from radio stations nationwide.

BMI also said that it continued its long-term focus on revenue diversity, which provided stability to the company’s results despite the challenges presented by the economy. Revenue from non-broadcast media such as cable, satellite and digital media continue to increase its share of BMI’s total, joining general licensing as key growth areas. Thanks to long-term agreements, revenue from traditional broadcast radio and television remained strong.

"As BMI marks its 70th anniversary in the year ahead, we know we will be looking at an extremely challenging economic environment," commented President/CEO Del Bryant. "We understand the significant market pressures faced by the businesses which we license, and we anticipate tough discussions in the year ahead as we negotiate new agreements for the use of our repertoire. At the same time, we are encouraged by the steady growth in our market share, and in the expanded use of music by both traditional and digital media, both dynamics that drive our licensing income. We have an intense focus on efficiency and cost containment. These factors give us confidence in our ability to meet the challenges of this volatile economic landscape, and to provide a point of stability to our songwriters and value to our customers, as the economy works its way to recovery."

Live365 Files Lawsuit Over Constitutionality Of CRB

Webcaster Live365 has filed a lawsuit in U.S. District Court in Washington D.C., bringing into question the Constitutionality of the Copyright Royalty Board. In a statement, Live365 says that "Each year, millions of dollars are spent by the RIAA, SoundExchange, artists, music labels, and broadcasters on legal fees before the Copyright Royalty Board. But recent opinions by the U.S. Court of Appeals for the District of Columbia have called into question whether the Judges of the Copyright Royalty Board were appointed in violation of the U.S. Constitution's separation of powers.

The company quotes an appellate Judge who stated that "billions of dollars and the fates of entire industries can ride on the Copyright Royalty Board’s decisions." The CRB "exercises expansive executive authority … unsupervised by the Librarian of Congress or by any other Executive Branch official" and that this "statutory structure raises a serious Constitutional issue."

Live365's lawsuit asks for an injunction to prevent any further proceedings before the CRB until the Constitutional question is resolved. "The constitutional issue is the elephant in the room at the CRB. Before any hard-earned artists’ royalties and webcaster investments are spent on a potentially invalid royalty setting court, we are just requesting, for the benefit of all parties, to have this significant concern addressed and answered," said Mark Lam, CEO of Live365, Inc.

Ara Hovanesian, legal counsel for Live365 added, "Copyright owners and artists should be especially supportive of getting this Constitutional issue decided now because money spent litigating rates before an unconstitutional CRB is wasted if the proceedings are ultimately declared unconstitutional and the artists and labels are forced to fund a ‘do over’ litigation before a constitutional panel of Judges."

Lam added, "We are hopeful to bring this issue before the Courts expeditiously and to have a decision before any more time and money is spent before the CRB."

In World of Songwriting, at the Top of the Pack
Jim Dwyer

When Ellie Greenwich was married in the fall of 1962, she had not yet written her giddy song about married love, “Chapel of Love,” that has been played at thousands of weddings.

And still ahead of her were dozens of pop hits, including “Be My Baby,” “Da Doo Ron Ron,” “Leader of the Pack” and “River Deep, Mountain High.”

On her wedding day, she was just another 22-year-old hoping for a break in the music world and a happy marriage, said Dorothy Danziger, who worked in an office with her in Midtown Manhattan. “We had life in common, not music,” Ms. Danziger said Thursday. “Hopes and dreams, that kind of thing.”

Ms. Greenwich, whose masterful way with melody helped to shape popular music in the early 1960s, died last week at 68. She was widely heard and little known. With Carole King and Cynthia Weil, she was one of three influential women songwriters who came of age in New York just after the three-minute 45-r.p.m. vinyl record became a standard.

She learned her craft in the Brill Building, at 1619 Broadway, near 50th Street, a place teeming with music publishers, arrangers, musicians, composers, promoters. It was as if an entire industry had settled into a high-rise hive.

“Brill was a building where songwriters would go up to the 11th floor and would come down on the elevator and stop at each floor, trying to sell their songs at every office,” said Mike Stoller, a composer who, along with Jerry Leiber, wrote early hits of Elvis Presley.

For those who could not afford space in the building, the phone booths in a restaurant on the street, the Turf, served as a kind of office. Session musicians and writers lingered there.

“If a songwriter was doing a demo session and someone hadn’t shown up, they’d run into the restaurant and shout, ‘I need a bass player,’ and he’d get one,” Mr. Stoller said.

As the story goes, Ms. Greenwich, who taught high school for less than a month after attending Queens College and Hofstra, made the rounds in the Brill Building, selling a few songs for $25. One day, a friend of a friend got her an appointment to see a big-name songwriter, who turned out to be busy elsewhere. Told to sit in a room in the ninth floor offices of Leiber and Stoller that was equipped with a piano, she played a few of her songs while she waited.

Mr. Leiber, who thought he was hearing Carole King, stuck his head in and said, “Carole?” Ms. Greenwich introduced herself, and he told her to keep playing and to come back as often as she wanted. He also gave her $100 a week, in exchange for having the chance to hear her tunes first. Ms. Greenwich teamed up with another writer, Jeff Barry; they married and lived in Lefrak City in Queens, composing one of their first songs as they rode the E train. They also wrote with Phil Spector and a producer, George Morton.

These were not the crystalline lyric songs of musical theater, or hard-banging rock and roll; the “concept” album had not yet been born. Ms. Greenwich and Mr. Barry specialized in girl groups, with lyrics that painted, or crayoned, the high dramas of the teenage heart.

These young composers “became keenly conscious that they were writing records, not songs,” writes Ken Emerson in his rich history of the Brill Building era, “Always Magic in the Air”.

Nearly for the first time, women songwriters were being widely heard. “The prominence of Carole King, Cynthia Weil, and Ellie Greenwich was unprecedented in American popular music, all the more so because King and Greenwich not only wrote but arranged and produced songs,” Mr. Emerson wrote.

Mr. Stoller, whose joint autobiography with Mr. Leiber, “Hound Dog,” was published in June, said that Ms. Greenwich had a knack for stripping songs to their essentials. “It’s very difficult to write simple,” he said. “She could write simple songs that were ultimately indelible.”

She and Mr. Barry separated after three years of marriage; they continued to write together for a short time. She occasionally worked as a song doctor while singing backup for stars like Aretha Franklin, Cyndi Lauper and Debbie Harry. She had a comfortable income from royalties, but had signed away valuable stakes in the songs.

After parting with Mr. Barry, she did not find another collaborator in work or life, and never had children, to her regret. In an interview for a radio series by Charlotte Greig, she reflected on the unkept promise of her “Chapel of Love” — that “we’ll never be lonely anymore.”

“Lord knows, if you go by my songs and the way my personal life has gone, you’d say, ‘Oh my, this lady was dreaming,”’ Ms. Greenwich said. “But I still feel it would be nice.”

A few weeks ago, at the Caffe Lena in Saratoga Springs, a captivating jazz singer named Jeanne O’Connor closed a show with a song for a member of the band who was getting married: “Chapel of Love.”

It’s not likely that many in the audience knew who Ellie Greenwich was. But all of them, from kids to old-timers, spontaneously sang out her chorus, “We’re going to the chapel ...” They knew it by heart.

YouTube and PRS Make Peace as Musicians Protest About Plans to Punish File Sharers

Thousands of music videos pulled from YouTube in a royalties dispute will go back online after peace broke out today between the website and the music industry.

A new licensing deal with PRS for Music, the trade body that collects music royalties, has brought the six-month dispute to an end.

It began when YouTube accused the PRS of proposing exorbitant new payment terms and led to the website fending off criticism from the PRS, which felt it was punishing British music fans by removing videos in the quest for greater profits.

Thousands of music videos are now being reinstated after being blocked from the site by YouTube's parent company Google during the licensing wrangle.

But while this conflict has been resolved, another dispute has erupted over the digital future of the music industry.

A rift has opened between music's creators and its record labels, with a broad alliance of musicians, songwriters and producers fiercely criticising the business secretary Lord Mandelson's plans to cut off the broadband connections of internet users who illegally download music.

In a statement seen by the Guardian, a coalition of bodies representing a range of stars including Sir Paul McCartney, Sir Elton John and Damon Albarn attacks the proposals as expensive, illogical and "extraordinarily negative".

The Featured Artists Coalition (FAC), the British Academy of Songwriters, Composers and Authors (Basca) and the Music Producers Guild (MPG) have joined forces to oppose the proposals to reintroduce the threat of disconnection for persistent file sharers, which was ruled out in the government's Digital Britain report in June.

The plans have already been attacked by privacy campaigners, internet service providers and a range of MPs, some of whom accuse the business secretary of being influenced by secret meetings with senior figures from the music and film industry, a charge he denies.

The coalition accuses the government of being backward looking, saying there is "little support from logic" in proposals to cut off file sharers – a move welcomed by the record companies and UK Music, the umbrella body for the entire industry.

The statement says: "We vehemently oppose the proposals being made and suggest that the stick is now in danger of being way out of proportion to the carrot. The failure of 30,000 US lawsuits against consumers and the cessation of the pursuit of that policy should be demonstration enough that this is not a policy that any future-minded UK government should pursue."

There has been an explosion in file sharing in the last decade, with albums being swapped hundreds of thousands of times over the internet – Lady Gaga's The Fame was swapped 388,000 times on P2P site Pirate Bay within seven days of its release. But there is little agreement in the music industry about how the problem should be tackled.

The BPI, the body representing record labels, argues that the UK's 7 million file sharers cost the industry an estimated 200m a year and called Mandelson's proposals "a step forward".

But Patrick Racklow, the chief executive of Basca, said those involved in music had to look for new ways of licensing new music technologies, rather than fighting them. "The problems the music industry faces will not be dealt with effectively through legislation," he said. "We can't support these proposals because we don't think it will work, it will cost too much and is far too blunt a tool."

Research suggesting that people who file share also buy more music provided hope, he said. "The music industry is quite a scary place to be at the moment and we don't know what it will look like in 10 years' time, but if we find ways of licensing, new ways of doing things will evolve. What we can't do is try to push things forward by looking back."

Deals such as the one struck between YouTube and PRS, as well as licensing agreements with music-streaming websites such as Spotify and We7, may provide light at the end of the tunnel for the industry, proving that compromises can be made if consumer demands are considered.

Patrick Walker, YouTube's director of video partnerships, said the dispute had been regrettable, but that the service was committed to building relationships with the music industry. "This deal provides a positive example that people can come together with the objective of satisfying user demands," he said. "It is a very fast-moving area and we need to make sure we don't retrench but remain flexible so that everyone can benefit."

Andrew Shaw, the managing director of broadcast and online at PRS, said the organisation was delighted that music videos were back on YouTube. "We hope it is the first of many deals with other services so that music can get out there in whatever way people want to listen to it, while making sure our members get paid," he said.

Both organisations were vague about the agreement, but music industry analyst Mark Mulligan, vice-president of Forrester Research, said the disclosure that a lump-sum deal had been reached suggested the terms were more favourable to YouTube than PRS.

The YouTube deal and the musicians' condemnation of plans to prosecute file sharers were indicative of the fundamental power shift happening in the music industry, he said.

"We are in a period of transition, and traditional business models are being reassessed," he said. "The position of the record labels is inherently weaker because of the falling value of recorded music and that gives the other people in the equation, including artists, managers and producers, more power. What we are seeing here is those players flexing their muscles, which is only possible because the record labels are weakening."
Sound and fury: industry's uphill struggle

In 1999 the music business was booming, CDs were flying off the shelves and, even if the Backstreet Boys were at the top of the charts, the music industry felt like a good place to be. Few people were aware that at the Northeastern University in Boston student Shawn Fanning was creating an online music file sharing service that would transform the music landscape forever. Napster – as the service was called – allowed people to easily share their MP3 files, cutting out the record labels and paying little heed to copyright. For a music industry which had long complained that home taping was killing music, this was devastation of a different order.

Napster was soon followed by similar websites KaZaA and Gnutella and, as the potential of filesharing to undermine the record sales became clear, the music industry's reaction was quick and brutal.

In 2001 Napster was shut down by a US court order, but it had paved the way for other peer-to-peer file-sharing programmes, which continue to plague record labels today. A year later Apple's iPod was launched, instantly allowing music fans to carry hundreds of albums with them in digital form. It was followed in 2003 by the launch of the iTunes store, providing a legal online store for people to buy digital music. It was arguably too late. Profits were plummeting, and by 2007 British album sales had dropped 10.4% on the previous year.

In 2004 global revenue from CD and DVD sales was around $32bn (20bn), by 2008 that had dropped to $22bn and by 2012 it is expected to drop to about $11bn.

New ways of getting music online began to appear. MySpace debuted in 2004, providing a new platform for bands to interact directly with fans, allowing them to post music that could be listened to instantly. In the same year, digital single sales surpassed physical single sales for the first time. In 2008 Spotify, a legal ad-funded online streaming service, was launched allowing music fans to listen to hundreds of thousands of tracks and albums instantly, and for free.

Video games like Guitar Hero, released in 2005, began boosting music sales for some artists. As CD sales continue to fall today artists are making more money than ever from concerts – figures from PRS for Music revealed that UK music tour revenues increased by 30% last year. As a result, record labels are increasingly trying to sign artists on "360 contracts" that take a cut of merchandising, live music, and sponsorship deals.

The industry continues to look for new ways to make money in the digital age. In June the cable company Virgin Media announced the launch of an unlimited download service in partnership with the world's largest music company, Universal, which would allow subscribers to stream and download as many tracks as they want for 10-15 a month.

Roxanne's Nonexistent Revenge

Heard about the rapper who forced her label to pay for her Cornell Ph.D.? It never happened.
Ben Sheffner

It was the feel-good story of the summer. According to the New York Daily News, Roxanne Shant, a 1980s female hip-hop pioneer famous for the 1984 underground hit "Roxanne's Revenge," had finally gotten her own revenge on Warner Music, the record label she accused of "cheating with the contracts, stealing and telling lies," to avoid paying her what she was owed. How? After valiantly fighting, reported Daily News freelancer Walter Dawkins, Shant had convinced Warner to honor a contractual agreement to "fund her education for life." Warner ended up paying more than $200,000, Dawkins reported, to finance Shant's education, which Shant said included an undergraduate degree from Marymount Manhattan College and a Ph.D. in psychology from Cornell. And now, said the Daily News, "Dr. Roxanne Shant" has "launched an unconventional therapy practice focusing on urban African-Americans," in which she "incorporates hip-hop music into her sessions, encouraging her clients to unleash their inner MC and shout out exactly what's on their mind."

The story was endlessly blogged and tweeted, heralded as an example of a heroic triumph by a girl from the projects over her evil record label. Credulous music-industry critics lapped it up; Techdirt, after stating flatly that Warner had "tr[ied] to cheat [Shant寯 out of her contract," reflected the online sentiment: "It's nice to see how Warner Music actually did some good in the world, even if it had to be dragged there kicking and screaming."

One problem: Virtually everything about the Daily News' heartwarming "projects-to-Ph.D." story appears to be false.

An investigation by Slate has revealed:

• According to Warner, neither it nor any of its subsidiary record labels ever had a contract with Shant, and it was not obligated to pay for her education. Indeed, there's no evidence that it ever did.
• Shant—real name Lolita Shant Gooden—doesn't have a Ph.D. from Cornell or anywhere else. Indeed, she admitted it in an interview with Slate. And Cornell has no record of Gooden (or "Shant") ever attending or receiving a degree.
• According to Marymount Manhattan College records, Shant enrolled there but dropped out less than four months later without ever earning a degree.
• New York state records indicate that no one named Lolita Gooden or Roxanne Shant is licensed to practice psychology or any related field.

In the course of several phone interviews and exchanges over Facebook's internal e-mail system, Shant—who refers to herself as "Dr." and "doctor"—admitted that she never received a Ph.D. The Daily News, which trumpeted the false accomplishment in its headline, made a "mistake," she said. And she insisted that she received an M.A. from Cornell. "I got my master's in psychology. I didn't complete my Ph.D.," she admitted. But according to Cornell records, provided through a service called National Student Clearinghouse to which the university directed me, Cornell "was unable to locate either a degree or enrollment record for the subject of your verification request."

Marymount Manhattan College records, also provided through National Student Clearinghouse, indicate that "Lolita S. Gooden" attended "02/06/1995 to 05/23/1995" but did not earn a degree. "Student withdrew for the semester and never returned," according to a notation from Marymount Manhattan. And in an interview, Marymount Manhattan communications director Manny Romero confirmed: "She was only here for the three months in 1995. She did not graduate from Marymount Manhattan." Romero would not discuss the source of Shant's tuition money, citing federal privacy laws.

Told of the records indicating she attended only briefly and never graduated, Shant maintained that she "absolutely" received a B.A. from Marymount Manhattan in 1995. "I didn't attend [the] graduation ceremony; at that time I was …" her voice trailed off. "I had my own reasons for that." Yet she insisted: "Yes, I do have a diploma." Shant did not respond to a request for a copy, and Marguerita Grecco, the Marymount Manhattan dean who, Shant told the Daily News, fought Warner on her behalf, did not return several phone calls and e-mails seeking comment.

In a subsequent e-mail, Shant wrote, "I also attended College under an alias, because of a Domestic Violence situation" and speculated that she "made a mistake on an application and put my old name so maybe that's the reason for the computer error?" But she was unable to substantiate such claims.

In a prepared statement, Warner denied that it ever had a contractual relationship with Shant, explaining that "her agreement was with an independent record label known as Cold Chillin' Records." According to court documents reviewed by Slate, Shant's record label Cold Chillin' did have an agreement with Warner starting in 1987 to distribute Cold Chillin's records—a common arrangement between a major company and an indie label. But Cold Chillin' was not owned by Warner, and, in fact, those two companies ended up battling each other in court; in April 2006, a federal judge ordered Cold Chillin' to pay Warner $230,000 for copyright infringement.

And Warner's statement made clear that it had no obligation to pay for Shant's education: "Our examination of that file [of Warner's relationship with Cold Chillin'] ... has not revealed any evidence of any 'education clause' in any agreement." Of course, Warner had no objection to her using any money she made in the music business to fund her education; it just wasn't Warner paying the bills: "Roxanne Shant's story is a compelling one and we wish her all success in her good works. ... In fact, our view is that artists' compensation can be put to many good uses; if Cold Chillin' guided this artist's compensation to education expenses that would certainly be a worthy one."

None of the half-dozen music industry sources contacted by Slate for this article had ever heard of a record label making an open-ended commitment to finance an artist's education.

Although the Daily News article said Warner declined to comment about the newspaper's allegations, Warner Music Group spokeswoman Amanda Collins denied that the Daily News contacted WMG for its Roxanne Shant article. "No one at the company was called for comment on this story," she told Slate. "It's quite possible he attempted to reach someone at a subsidiary label, but he did not contact Warner Music Group directly."

When Slate told the Daily News about the problems with the story this morning, spokeswoman Jennifer Mauer said the newspaper would look into it. Slate has so far been unable to track down freelancer Walter Dawkins, who wrote the Daily News story; the Daily News has not responded to requests for his contact information.

There is also no evidence that Shant's original record label, a small indie called Pop Art Records, ever promised to finance her education. I spoke with Jonathan Black, an attorney who represented Pop Art 1982-88. He said he negotiated the company's 1984 recording contract with Shant, signed by both her and her mother, since she was a minor at the time. Black, who no longer has a copy of the contract—he stated in a sworn declaration filed in federal court that the company's copy was destroyed in a flood—is confident that it contained no obligation to pay for Shant's education. "I'm sure that I didn't negotiate a contract that covered that kind of arrangement. I never did anything like that," he told me.

In a reversal of the common "my label ripped me off" scenario, Pop Art actually sued Shant in 2005 after allegedly discovering that that Shant was trying to rip off Pop Art by seeking to collect license fees for music whose copyright was owned by the label. The case quickly settled, said Paul Rapp, an attorney who represented Pop Art in the lawsuit. For her part, Shant told me that she never had a contract with Pop Art, suggesting that her mother may have entered into an agreement with the label without her consent.

When told of Warner's denial that it financed her education, Shant repeated, "Hip-hop paid for my education, kept me from going to the streets." But she was unable to provide detail. "To my knowledge, that [Warner] is exactly where the checks came from. … All I know is that it was done." In a later e-mail, Shant wrote that she was informed by Cold Chillin's former CEO Tyrone Williams that Warner "along with another party that chose to stay anonymous paid for my education." Shant did not respond to Slate's request that she put us in touch with Williams.

Shant's claim to be a "doctor" also fails to check out. She's not a medical doctor, and she admits (and Cornell confirms) that she lacks a Ph.D. And a search of the New York Office of the Professions licensing database fails to reveal licenses to practice psychology or in any related field for either "Lolita Gooden" or "Roxanne Shant."

All Together Now: Play the Game, Mom
Seth Schiesel

THERE may be no better way to bait a baby boomer than to be anything less than totally reverential about the Beatles. So the news that the lads from Liverpool were taking fresh form in a video game (a video game!) called The Beatles: Rock Band struck some of the band’s acolytes as nothing less than heresy.

Luckily, Paul McCartney and Ringo Starr, along with the widows of George Harrison and John Lennon, seem to understand that the Beatles are not a museum piece, that the band and its message ought never be encased in amber. The Beatles: Rock Band is nothing less than a cultural watershed, one that may prove only slightly less influential than the band’s famous appearance on “The Ed Sullivan Show” in 1964. By reinterpreting an essential symbol of one generation in the medium and technology of another, The Beatles: Rock Band provides a transformative entertainment experience.

In that sense it may be the most important video game yet made.

Never before has a video game had such intergenerational cultural resonance. The weakness of most games is that they are usually devoid of any connection to our actual life and times. There is usually no broader meaning, no greater message, in defeating aliens or zombies, or even in the cognitive gameplay of determining strategy or solving puzzles.

Previous titles in the Rock Band and Guitar Hero series have already done more in recent years to introduce young people to classic rock than all the radio stations in the country. But this new game is special because it so lovingly, meticulously, gloriously showcases the relatively brief career of the most important rock band of all time. The music and lyrics of the Beatles are no less relevant today than they were all those decades ago, and by reimagining the Beatles’ message in the unabashedly modern, interactive, digital form of now, the new game ties together almost 50 years of modern entertainment.

With all due respect to Wii Sports, no video game has ever brought more parents together with their teenage and adult children than The Beatles: Rock Band likely will in the months and years to come.

One Friday evening last month I invited a gaggle of 20-something hipsters (I’m 36) to my apartment in Williamsburg, Brooklyn, to try the game. After 15 minutes one 25-year-old said, “I’m going to have to buy this for my parents this Christmas, aren’t I?” After nine hours we had completed all of the game’s 45 songs in one marathon session. On Saturday afternoon, I woke up to watch a 20-year-old spend three hours mastering the rolling, syncopated drum sequences in “Tomorrow Never Knows.” Thirty-six hours later, near dawn Monday morning, there were still a few happy stragglers in my living room belting out “Back in the U.S.S.R.” Good thing my neighbors were away for the weekend.

I grew up in Woodstock, N.Y., steeped in classic rock, so I had a head start on my younger band mates. (I suspect many parents will enjoy having a similar leg up on their progeny.) Yet I watched the same transformation all weekend long. We would start a song like “Something” or “While My Guitar Gently Weeps,” and as it began, they would say, “Oh yeah, that one.” Then at the end there would literally be a stunned silence before someone would say something unprintable, or simply “Wow” as they fully absorbed the emotional intensity and almost divine melodies of the Beatles.

Not only was the game serving to reintroduce this music, but by leading the players through a schematic version of actually creating the songs, it was also doing so in a much more engaging way than merely listening to a recording. It is an imperfect analogy, but listening to a finished song is perhaps like being served a finished recipe: you know it tastes great even if you have no sense of how it was created.

By contrast, playing a music game like Rock Band is a bit closer to following a recipe yourself or watching a cooking show on television. Sure, the result won’t be of professional caliber (after all, you didn’t go to cooking school, the equivalent of music lessons), but you may have a greater appreciation for the genius who created the dish than the restaurantgoer, because you have attempted it yourself.

Previous music games have been about collections of songs. The Beatles: Rock Band is about representing and reoffering an entire worldview encapsulated in music. The developers at Harmonix Music Systems have translated the Beatles’ scores and tablature into a form that is accessible while also conveying the visceral rhythm of the music. In its melding of source material and presentation, The Beatles: Rock Band is sheer pleasure. The game is scheduled to be released by MTV Games for the PlayStation 3, Wii and Xbox 360 consoles on Wednesday, the same day the remastered Beatles catalog is slated to be released on CD.

Mechanically it is almost identical to previous Rock Band games. One player sings into a microphone, replacing the original lead vocals, while another plays an electronic drum kit and two more play ersatz guitar and bass. (The new game supports up to two additional singers for a potential maximum of six players.)

In the game’s story line mode, players inhabit the various Beatles as they progress from the Cavern Club to Ed Sullivan’s stage; Shea Stadium; the Budokan in Japan; Abbey Road; and their final appearance on the Apple Corps roof in 1969. Unlike in previous Rock Band games, players are not booed off the virtual stage for a poor performance; rather the screen cuts to a declarative “Song failed” message. Previously unreleased studio chatter provides a soundtrack for some of the menu and credits screens, but there is no direct interaction with avatars of John, Paul, George or Ringo.

The colorful psychedelic dreamscapes used to represent the band’s in-studio explorations are particularly evocative, though they serve mostly to entertain onlookers rather than the players themselves (who will be concentrating on getting the music right rather than looking at the pretty pictures).

Of course almost nothing could be more prosaic than pointing out that playing a music game is not the same as playing a real instrument. Yet there is something about video games that seems to inspire true anger in some older people.

Why is that? Is there still really a fear that a stylized representation of reality detracts from reality itself? In recent centuries every new technology for creating and enjoying music — the phonograph, the electric guitar, the Walkman, MTV, karaoke, the iPod — has been condemned as the potential death of “real” music.

But music is eternal. Each new tool for creating it, and each new technology for experiencing it, only brings the joy of more music to more people. This new game is a fabulous entertainment that will not only introduce the Beatles’ music to a new audience but also will simultaneously bring millions of their less-hidebound parents into gaming. For that its makers are entitled to a deep simultaneous bow, Beatles style.

LG to Unveil 15-Inch OLED TV

South Korea's LG Electronics said on Sunday it would launch a 15-inch television set using organic display technology next month, the largest commercial model so far.

Active-matrix organic light-emitting diode (AM-OLED) displays, which use self-glowing materials, have better picture quality, consume less power and are thinner than widely used liquid crystal displays (LCD) that need backlight units.

But high price has kept it from becoming a mass-produced technology in the market dominated by cheaper LCD panels. OLED screens are making inroads into high-end mobile phones but costs to apply the technology for PCs and TVs are still prohibitive.

Sony Corp launched the world's first OLED TV in late 2007 but has not followed with new models yet.

LG, the world's second-biggest TV brand, said in a statement that it would be unveiling a 15-inch AM-OLED TV at the IFA 2009 consumer electric show in Berlin in September.

The TV set would be commercialized in Korea in November and offered overseas next year, it said.

Research firm DisplaySearch expects the market for OLED TV to reach 2.33 million units in 2013 compared with estimated 320,000 units in 2011, according to data provided by LG.

"We are planning to unveil a 40-inch grade (OLED) product in a not too distant future," LG quoted an executive as saying.

(Reporting by Marie-France Han and Rhee So-eui)

Developer Denies Software to Beat Chinese Censors is Malicious

UltraSurf programmer says the software acts suspiciously, but it’s just trying to put one over on the Great Firewall of China.
Tim Greene

Software designed to beat Chinese censorship may behave in ways that seem suspect, but it is all part of the application’s strategy to fool the Great Firewall of China, according to one programmer of the software.

“There are many built-in tricks that do all kinds of things to confuse the firewall,” says David Tian, a scientist for NASA who works spare-time on UltraSurf, the free software designed to promote unrestricted Internet access for citizens of China persecuted for being members of Falun Gang, the religious group the Chinese government is trying to suppress.

How the Chinese Internet is different from yours

Some of those tricks were pointed out last month at the Black Hat security conference by researchers who interpreted the odd behaviors as counterproductive to the anti-censorship goal and as perhaps malicious. After about a month, Tian recently responded to a request made during the conference for reaction to the research.

UltraSurf is a proxy network that masks where traffic is being sent to and received from in an effort to keep the Chinese government’s Internet filters from detecting forbidden communication. It calls for users to download an UltraSurf client, which sends and receives traffic via a network of proxies set up and maintained by UltraReach, a subgroup under the Global Internet Freedom Consortium.

Kyle Williams, security director of XeroBank, an Internet privacy vendor, said in his Black Hat conference briefing that UltraSurf automatically attempts to make HTTPS encrypted connections to servers unrelated to the UltraSurf proxy network.

“How does it know I got an invalid server if the traffic is really end-to-end encrypted?” Williams says.He also noted these odd behaviors:
= When the client appears to connect to an IP address within a private network, it probes sequentially close IP addresses as well, Williams says.
= When an UltraSurf client seeks a non-existent URL via HTTPS, it receives a response from an UltraSurf server
= UltraSurf taps a Google Reader RSS feed for updates that Williams interprets as lists of targets for the software to probe.
= Commercial anti-virus software detects UltraSurf as a Trojan.

Tian addressed each behavior, but the overriding theme of his answers was that UltraSurf does an ever-changing variety of strange things in order to fool the Great Firewall of China. The response from UltraSurf servers to attempts to reach non-existent URLs is due to the proxy network sending back a notification. It proxies all the communication including SSL so any response will be from a proxy, Tian says

When UltraSurf appears to probe private IP space, it is actually sending out ruse connection attempts. “We send pretend connections out and the purpose is to confuse the Great Firewall and possibly local firewalls,” he says.

Chinese authorities monitor UltraSurf carefully and try to identify signatures that can be used to set filters, so the software sends out useless traffic to make noise that makes it difficult to characterize the legitimate traffic, he says.

The software taps Google Reader RSS feeds to download software updates, just as some commercial applications tap servers to download new versions and patches, Tian says. UltraSurf uses Google Reader and other third-party resources because Chinese authorities would soon discover and block download sites maintained by Global Internet Freedom Consortium, he says.

Commercial anti-virus software detects UltraSurf as malware because it does engage in suspicious ac tivity, he says, but some anti-virus vendors have agreed to white list the application. Those that have not agreed report it as malware, Tian says.

UltraSurf programmers play a cat-and-mouse game with Chinese censors trying to block its traffic, so the team working on it has to continually alter its methods to adapt to each innovation in the Great Firewall, he says. “We have a great understanding of the Great Firewall and how to defeat it.”

He says he has been working on UltraSurf since 2002 with a team of other volunteers distributed around the world. He gives the software credit for enabling Iranian protesters to send messages out of the country during the aftermath of that country’s elections in June. Demand for UltraSurf servers was so high that Global Internet Freedom couldn’t afford the bandwidth and ultimately had to cut off access.

“We couldn’t afford to support them. Traffic doubled every day. If we had the money I think history would be quite different,” Tian says.

Not Every Cloud Has a Silver Lining

There's something you won't see mentioned by too many advocates of cloud computing – the main attraction is making money from you
Cory Doctorow

The tech press is full of people who want to tell you how completely awesome life is going to be when everything moves to "the cloud" – that is, when all your important storage, processing and other needs are handled by vast, professionally managed data-centres.

Here's something you won't see mentioned, though: the main attraction of the cloud to investors and entrepreneurs is the idea of making money from you, on a recurring, perpetual basis, for something you currently get for a flat rate or for free without having to give up the money or privacy that cloud companies hope to leverage into fortunes.

Since the rise of the commercial, civilian internet, investors have dreamed of a return to the high-profitability monopoly telecoms world that the hyper-competitive net annihilated. Investors loved its pay-per-minute model, a model that charged extra for every single "service," including trivialities such as Caller ID – remember when you had to pay extra to find out who was calling you? Imagine if your ISP tried to charge you for seeing the "FROM" line on your emails before you opened them! Minitel, AOL, MSN — these all shared the model, and had an iPhone-like monopoly over who could provide services on their networks, and what those service-providers would have to pay to supply these services to you, the user.

But with the rise of the net – the public internet, on which anyone could create a new service, protocol or application – there was always someone ready to eat into this profitable little conspiracy. The first online services charged you for every email you sent or received. The next generation kicked their asses by offering email flat-rate. Bit by bit, the competition killed the meter running on your network session, the meter that turned over every time you clicked the mouse. Cloud services can reverse that, at least in part. Rather than buying a hard-drive once and paying nothing – apart from the electricity bill – to run it, you can buy cloud storage and pay for those sectors every month. Rather than buying a high-powered CPU and computing on that, you can move your computing needs to the cloud and pay for every cycle you eat.

Now, this makes sense for some limited applications. If you're supplying a service to the public, having a cloud's worth of on-demand storage and hosting is great news. Many companies, such as Twitter, have found that it's more cost-effective to buy barrel-loads of storage, bandwidth and computation from distant hosting companies than it would be to buy their own servers and racks at a data-centre. And if you're doing supercomputing applications, then tapping into the high-performance computing grid run by the world's physics centres is a good trick.

But for the average punter, cloud computing is – to say the least – oversold. Network access remains slower, more expensive, and less reliable than hard drives and CPUs. Your access to the net grows more and more fraught each day, as entertainment companies, spyware creeps, botnet crooks, snooping coppers and shameless bosses arrogate to themselves the right to spy on, tamper with or terminate your access to the net.

Alas, this situation isn't likely to change any time soon. Going into the hard-drive business or the computer business isn't cheap by any means – even with a "cloud" of Chinese manufacturers who'll build to your spec – but it's vastly cheaper than it is to start an ISP. Running a wire into the cellar of every house in an entire nation is a big job, and that's why you're lucky if your local market sports two or three competing ISPs, and why you can buy 30 kinds of hard drive on Amazon. It's inconceivable to me that network access will ever overtake CPU or hard-drive for cost, reliability and performance. Today, you can buy a terabyte of storage for 57. Unless you're recording hundreds of hours' worth of telly, you'd be hard-pressed to fill such a drive.

Likewise, you can buy a no-name quad-core PC with the aforementioned terabyte disc for 348. This machine will compute all the spreadsheets you ever need to tot up without breaking a sweat.

It's easy to think of some extremely specialised collaborative environments that benefit from cloud computing– we used a Google spreadsheet to plan our wedding list and a Google calendar to coordinate with my parents in Canada – but if you were designing these applications to provide maximum utility for their users (instead of maximum business-model for their developers), they'd just be a place where encrypted bits of state information was held for periodic access by powerful PCs that did the bulk of their calculations locally.

That's how I use Amazon's S3 cloud storage: not as an unreliable and slow hard drive, but as a store for encrypted backups of my critical files, which are written to S3 using the JungleDisk tool. This is cheaper and better than anything I could do for myself by way of offsite secure backup, but I'm not going to be working off S3 any time soon.

Using ‘Free’ to Turn a Profit
Damon Darlin

GIVING away a product has always been a great marketing concept. Even an unsavvy consumer can see a benefit in snatching free products. Free has also become a mantra for business gurus who advocate giving Web start-ups a shot at fast growth by bringing the price of most of their wares to zero.

But as a revenue generator, free can come up short. Sure, it attracts customers, but the challenge is to find someone to pay for it. Although thousands of businesses offer free services online — two of the biggest are the Flickr photo service from Yahoo and YouTube from Google — few can claim to be profitable. (Analysts say Flickr and YouTube are not.) While free is an enticing proposition, it is very hard to make it work.

Indeed, in just the last few weeks, eBay has been looking to shed Skype, the free Internet phone call service. And Sampa, a personal Web site creation service started by former Microsoft executives, folded.

Advertising was always the easy answer for making free pay. But that rarely covered expenses even before a glut of advertising space and a severe recession cut the revenue stream.

The fallback position is charging a few customers for premium service, in the hope that revenue from dedicated users will cover everyone else. A number of sites, like Flickr, do this.

Fred Wilson, the New York venture capitalist, codified this model and popularized a term for it: freemium. And he continues to receive an enthusiastic reception to the idea on his blog, A VC.

But the question remains. Just how does it work? Phil Libin, the chief executive of Evernote, a start-up in Mountain View, Calif., was kind enough to give me a tour of his privately held company’s financials to reveal the mystery.

The company gives away a Web application that saves data you accumulate. You can use it to keep a wide range of information: meeting notes and voice memos, for example, or even photographs of wines consumed or recipes found in magazines. The information is stored on the company’s computers so all the data can be synchronized on every computer the customer uses — and on smartphones as well.

Snap a picture of a business card with a smartphone like a Palm Pre or an iPhone and it shows up on the phone’s Evernote app — as well as on the Dell back at the office. It is searchable, right down to words in photographs. So if you type in “Samsung,” for example, every business card from that company pops up.

“It is a universal memory drawer,” says Mr. Libin, who has run and sold two other start-ups.

Evernote, of course, is free. That’s important because the company, which does no advertising, needs to acquire customers as cheaply as possible. “Our product is our marketing,” Mr. Libin says.

In 18 months, 1.4 million people have tried the service. An additional 4,500 try it each day.

“Free is not a loss leader,” he says. “If we can get a small percentage of users to pay we start to make money.”

How many times has a venture capitalist heard that? But Mr. Libin showed that the magic is not only that it takes just a small percentage of customers to turn red ink into black, but also that the longer they remain customers, the more profitable they become.

About 75 percent of the customers walk away within the first four months. That’s not worrisome, because the revenue from Evernote’s 500,000 active users is growing faster than the growth in the customer base. How? Customers discover that they need more than the basic storage space or want some extra features, like the ability to scan PDF documents for a particular word. Evernote charges them $5 a month or $45 a year for these and other benefits.

Mr. Libin studied the behavior of the earliest adopters and found that the longer customers used the service, the more likely they were to start paying for it. About 0.5 percent convert to paying customers in the first month. But after about a year, 4 percent have converted. (He says he thinks the figure will top out at about 22 percent.)

It makes sense. The shoebox of data is more valuable to the customer as it becomes larger. In addition, compelling uses — like photographing those business cards — quickly eat up the monthly allotment of memory, inducing a person to start paying. The longer the customer stays, the more valuable he becomes.

The company gets about 3 cents of revenue for each active user in the first month of use, but after a year that same cohort of customers is providing 35 cents each.

EVERNOTE made $79,000 from paying customers in July, Mr. Libin says.

That’s not enough to cover the cost of the engineers who design new features and the additional servers to store all the added data. But the cost of staffing doesn’t rise exponentially as more customers join, and the cost of adding storage declines because computing power keeps getting cheaper. (Electricity costs go up, but that is not a budget killer.)

The variable cost for each active user was about 50 cents a month when the company started, but has been dropping along a curve to 9 cents a month. By January 2011, Mr. Libin projects, the company will break even.

Mr. Libin’s model of freemium won’t work for every company. But it certainly could work for other companies who can retain customer loyalty and make their service more valuable over time while driving down costs.

It has convinced him and his investors that giving away the store is the right plan. “We are committed to being free,” Mr. Libin says.

Code-Breaking Quantum Algorithm Run On a Silicon Chip
Colin Barras

A quantum calculation able to crack one of the most common forms of data encryption has been performed on a silicon chip for the first time.

The study demonstrates that complex quantum circuits can be built relatively easily out of silicon and silica – a significant milestone on the road to full-blown quantum computing.

Fifteen years ago, Peter Shor, a computer scientist at the Massachusetts Institute of Technology, predicted that quantum computers could beat even the most powerful supercomputers and crack the widely used RSA encryption algorithm.

Code cracking

RSA relies on a mathematical asymmetry: it's easy to calculate the result of multiplying together two large prime numbers, but hard to work backwards from the result and find the two factors. RSA encryption uses the product of two large primes to make a public "key", safe in the knowledge that only those authorised to know the factors used to make it can decode the message.

There is a way to crack the code, however: by carrying out a relatively basic calculation again and again a computer can search for patterns and break the code. But in reality the pattern will be so large that a conventional computer would take an impossibly long time to find it.

Shor predicted that a quantum computer could do it much faster, though. Thanks to quantum entanglement, all the numbers spewed out by a quantum computer are interconnected, so just a few of them hint at the code-breaking pattern. Shor wrote an algorithm for future quantum computers that would allow them to take a shortcut to decoding confidential material.

Now a proof-of-principle version of Shor's idea has been demonstrated on a silicon chip for the first time.

Quantum chip

The 26-millimetre-long chip was designed and built using standard fabrication processes by Jeremy O'Brien, Jonathan Matthews and Alberto Politi at the University of Bristol, UK. It can run Shor's algorithm in cut-down form – confirming that 3 and 5 multiply to form 15, which is the simplest possible demonstration.

Unlike the silicon chips inside conventional computers, the Bristol team's chip uses light rather than electricity. Light-transmitting silica on a silicon wafer guides photons with entangled quantum properties around, an approach first demonstrated by the same team last year.
Glad grads

"We've made rapid progress, which is testimony to the strength of this approach," says O'Brien.

Dan Browne, a quantum physicist at University College London who was not involved in the study, agrees. He worked on one of the first quantum circuits to run Shor's algorithm in 2007: a table-top setup that sent photons travelling through the air rather tiny guides on a chip.

"A free-space optics experiment looks a mess, with many mirrors and lenses for an experiment with say, 4 or 5 photons," Browne says. "Imagine being the poor grad student who has to align all those mirrors."

Light classical

The new chip saves time, says O'Brien. "It's almost as simple as stamping the design out onto the chip and it's there and working," he says.

Andrew White, a quantum physicist at the University of Queensland in Brisbane, Australia, is impressed with the progress towards shrinking quantum-circuit size.

"It is very important to shrink the circuitry, and the Bristol group has shown the quantum community that this can be done using well-established techniques from classical photonics," he says.

But White points out that the technology used to generate individual photons to feed into the chip, and to detect them as they emerge, is not efficient, fast or compact enough yet. Although the new chip is only 26 mm long, it has to be surrounded by a whole table top of that equipment.

Skype Trojan Can Log VoIP Conversations

Security giant Symantec claims to have found the public release of source code for a Trojan that targets Skype users.

Trojan.Peskyspy is spyware which records a voice call and stores it as an MP3 file for later transmission.

An infected machine will use the software that handles audio processing within a computer and save the call data as an MP3. The file is then sent over the internet to a predefined server where the attacker can listen to the recorded conversations.

Since the call is an MP3 it does not take up too much space, and means that transfer speeds are lower.

Symantec admits that the threat risk is low at the moment but that, since the code is publicly available, malware authors are likely to use it as part of a customised snooping package.

The downside for the malware creators is that they would need a lot of time on their hands to go through hours of Skype audio files to find anything of monetary interest.

In a Sale, Skype Wins a Chance to Prosper
Brad Stone

With its sale to private investors, the online calling service Skype has thrown off the last of the shackles that limited its growth and potential as a unit of eBay. Now its challenge is to turn its global popularity into bigger profits.

EBay announced on Tuesday that it was selling Skype to a group led by Silver Lake Partners, a private equity firm in Silicon Valley. As part of the deal, which values Skype at $2.75 billion, the buyers agreed to pay $1.9 billion in cash, which includes a loan from eBay of $125 million, for 65 percent of the company. EBay, which is based in San Jose, Calif., will retain a 35 percent stake.

Skype offers free software for computers and smartphones that lets people make free voice and video calls to other Skype users over the Internet. It makes money primarily by charging for calls to landlines and cellphones around the world, although its rates are generally far below those of traditional phone companies.

When it acquired Skype in 2005, eBay said it hoped the service would support its auctions and its PayPal payment service by letting buyers and sellers discuss transactions. But eBay users were not so chatty.

The deal announced Tuesday would essentially allow Skype to go back into start-up mode. For example, it will be able to conceal investments in projects and new technologies from the public — and from rivals — instead of disclosing them in eBay’s public regulatory filings.

The company will also be able to lure new employees with its own stock, which could become valuable if Skype’s buyers decide to sell shares in an initial public offering.

“This gives us a great set of investors who are going to add a lot of value to the business,” said Josh Silverman, Skype’s chief executive. “And as a stand-alone company we are focused solely on communications, and there is always benefit to focus.”

The group buying Skype includes the London venture capital firm Index Ventures and Andreessen Horowitz, a new venture capital firm co-founded by Marc Andreessen, the Netscape co-founder.

The deal completes a journey that began early last year, when Meg Whitman, eBay’s longtime chief executive, left the company and her deputy, John Donahoe, took over. Mr. Donahoe moved Mr. Silverman over from Shopping.com, another eBay division, and gave Skype, which is based in Luxembourg, wide latitude to operate independently.

“All the previous presidents had a really short leash back to San Jose, and the company was basically a bureaucratic mess,” said Phil Wolff, editor of Skype Journal, a blog covering the service. “With the changes last year, the company got a strong leadership team and a strong sense of direction.”

The result has been steady, solid growth, even as competing Internet calling services like Google Voice came on the scene. Skype, which had 276 million registered users in the first quarter of last year, ended July with 480 million.

Revenue rose to $170 million in the second quarter of this year from $136 million in the same quarter a year earlier. EBay does not break out Skype’s profits but says it has been profitable for 10 consecutive quarters.

In a sign that Skype may have discovered new opportunities outside the personal computer, the Skype application for the iPhone has been one of the most popular programs for the device since it was released in March. Skype has also struck deals to place its service on Nokia phones.

Egon Durban, managing director at Silver Lake Partners, said the iPhone application was “a great example of what we feel are the attractive opportunities for the company to develop.”

“This is one of the leading Internet franchises with terrific growth prospects,” Mr. Durban said. He gave no specifics on features Skype might offer, but said it was easy to imagine possibilities. He also said the buyers had no plans for a public offering.

Some of Skype’s newest features may suggest directions for the company. The latest version of its software, released this year, emphasizes face-to-face video chats. Skype now says that 34 percent of calls between Skype users include video, and such chats have become a popular way for people around the world to connect with one another.

In addition to working on allowing outside programmers to weave Skype’s features and infrastructure into their own programs or Web sites, the company is also working on replacing the service’s underlying peer-to-peer technology. That is partly out of legal necessity. The rights to that technology remain with Skype’s founders, Niklas Zennstrom and Janus Friis, who have sued eBay in a British court over some changes eBay made to it. That case is to go to trial next year.

For eBay, selling Skype — particularly at a valuation higher than many analysts had thought possible — offers partial redemption for a deal that many Internet analysts said was an awkward fit. EBay paid $2.6 billion for Skype, and performance incentives lifted the final price to $3.1 billion.

“The purchase was a serious mistake by Meg Whitman. It was an attempt to buy growth, which investors saw through instantly,” said Jeffrey Lindsay, an analyst at Sanford C. Bernstein. The new eBay management found ways for Skype to generate revenue, he said, “and now they sold it at a great price.”

Mr. Donahoe said eBay did not regret having bought Skype when company executives believed eBay was in a mortal struggle with Google, which was also pursuing the service. He said the spinoff would allow eBay to focus on its core e-commerce and online payment businesses and avoid extra distractions.

“We don’t regret having done this at all. We compete in a dynamic market, and you have to move quickly and take risks,” Mr. Donahoe said. “When we bought Skype we thought it had synergies with our other two businesses, and it turns out it did not. But it also turned out that it’s a great stand-alone business.”

Ashlee Vance contributed reporting.

EBay CEO: Skype Investors 'Confident' Of Work-Around Software
Scott Morrison

An investor group paying $1.9 billion to eBay Inc. (EBAY) for 65% of Skype is "very confident" new software the Internet telephony business is developing will allow it to sidestep a licensing dispute with Skype's co-founders, said eBay Chief Executive John Donahoe.

San Jose-based eBay, which bought Skype in 2005, has been locked in a dispute over the licensing of peer-to-peer software at the core of Skype technology. Joltid Ltd., a company owned by Skype co-founders Niklas Zennstrom and Janus Friis, retained the rights to the software when they sold the company.

Joltid has threatened to end its licensing agreement with eBay, a development the ecommerce giant recently acknowledged could put Skype's continued operation at risk. In a July regulatory filing, eBay said it was developing "work-around" software to supplant the original technology still owned by Skype's founders.

But Tuesday's deal underscores confidence that eBay's work-around - which the company in July warned could "result in loss of functionality or customers" - was likely to succeed, Donahoe said in an interview with Dow Jones Newswires.

The consortium investing in Skype is led by private-equity group Silver Lake Partners, and includes venture capital firms Index Ventures and Andreessen Horowitz, as well as the Canada Pension Plan Investment Board.

"They understand that the work-around that we disclosed in our second-quarter 10Q is a very viable work-around path," Donahoe said.

Donahoe made his comments after eBay announced it would sell a roughly two-thirds stake of Skype to the group. The deal valued Skype at $2.75 billion, more than Wall Street analysts had expected.

EBay later in the day revealed in a regulatory filing that it had agreed to bear 50% of the cost of any monetary judgment rendered following the closing of the transaction as a result of its dispute with Joltid. An eBay spokesman said the company was confident in its position concerning the Joltid litigation.

Mike Volpi, a general partner at Index, declined to speak about the litigation, but said in an email that Donahoe's comments reflected the views of the investor group.

Donahoe said the Skype co-founders weren't party to the deal and had not agreed to drop their claim against eBay.

"There is no agreement (with the Skype co-founders) as of this moment and the deal is not contingent on an agreement," Donahoe said.

Joltid has alleged that eBay violated its licensing agreement for the technology and has threatened to end the agreement. EBay, in turn, has asked an English court to declare it is not in breach of the license.

The dispute had clouded Skype's future and put a planned 2010 IPO in question. Donahoe said Skype's new investors have a deep background in peer-to-peer and internet technologies, as well as significant resources.

Skype allows users to make free voice and video calls between computers, using a technology called voice-over-Internet protocol. Though the majority of consumers use Skype's free services, the company also charges pennies per minute for calls patched through to traditional phone lines and for voice mail services.

Spectrial 2: Pirate Bay Appeal Scheduled for November

In April The Pirate Bay Four were sentenced to a year in prison, and on top of that each of them was ordered to pay the entertainment industry $905,000 in damages. The defendants soon announced that they would appeal, and the date for the new trial has been set for November by the Appeal Court.

Millions of BitTorrent users all around the world followed the Pirate Bay trial with great interest this February. Many had hoped that the Court would decide that operating a BitTorrent tracker is no offense, and indeed the ten day trial started off with a small victory for the defendants.

On day two of the trial the prosecutor announced that half of the charges against the four defendants had been dropped. The prosecutor couldn’t prove that the .torrent files that were submitted as evidence actually used The Pirate Bay’s tracker, and he had to let go of all charges that accused the Pirate Bay folks of ‘assisting copyright infringement’.

What remained is the claim that they were ‘assisting in making copyright content available’. The prosecution argued that this was indeed the case and brought in screenshots of websites and torrent files in as evidence, and the judge agreed with this assessment.

On April 17th all four defendants were found guilty and sentenced to one year in prison and a fine of $905,000 to cover the entertainment industry’s damages. Despite this verdict The Pirate Bay continued to operate while the defense filed for an appeal.

For a while it looked like there could even be a retrial instead of an appeal, since judge Tomas Norstr闣 was involved with pro-copyright lobby groups and never declared these activities before he took on the case. The Appeal Court investigated the bias issue and ruled that the judge’s ties to these groups did not influence his judgment.

Instead of a retrial there will be an appeal, and the Court announced this week that it has two weeks set aside for the case starting November 9. The defense team is not happy with the dates, and Peter Sunde – one of the defendants – told TorrentFreak that the defense team will try to get the appeal date postponed because several of the people involved have other obligations.

The appeal will be handled by judge Ulrika Ihrfelt who was previously removed from the bias investigation of Pirate Bay judge Tomas Norstr闣, because she was linked to pro-copyright groups herself. Nevertheless, handling the appeal doesn’t seem to be a problem. This is guaranteed to cause some controversy in the months to come.

California Mine Digs in for "Green" Gold Rush
Steve Gorman

The future of wind farms and hybrid cars may well hinge on what happens to a 55-acre (22.3-hectare) hole in the ground at the edge of California's high desert.

The open-pit mine at Mountain Pass, California, holds the world's richest proven reserve of "rare earth" metals, a family of minerals vital to producing the powerful, lightweight magnets used in the engines of Toyota Motor Corp's Prius and other hybrid vehicles as well as generators in wind turbines.

Seeking to replace China as the leading supplier of these scarce materials, Colorado-based Molycorp Minerals LLC plans to reopen its long-idled quarry to resume extracting and refining thousands of tons of rare earth ore in the next few years.

Last month, Molycorp reached a joint venture deal with Arnold Magnetic Technologies Corp. of Rochester, New York, to make "permanent" magnets from rare metals at Mountain Pass.

Backed by hundreds of millions of dollars from equity investors, including Goldman Sachs, Molycorp aims to avert a looming rare-earths supply crunch that threatens to muffle the green-technology boom.

"The world has been looking for an alternative to these rare-earth permanent magnets for over 20 years, and one has not been found," Molycorp chief executive Mark Smith said. "What Molycorp is proposing as a business strategy is to fill that supply chain and go all the way from mining to magnets."

Success hinges on Molycorp's ability to operate the mine and its processing facilities much more efficiently than in the past.

At the peak of its operations two decades ago, the mine produced 20,000 tonnes of rare earth oxides a year, accounting for the entire U.S. supply and about a third of the world's total. Most of the rest came from China.

China Factor

But as Chinese production and exports grew through the 1990s, rare earth prices worldwide plunged, undercutting business for Molycorp, then owned by oil company Unocal.

Mountain Pass operations came under further pressure after a 1996 wastewater spill. Mining there ceased in 2002 when Molycorp's old permit expired.

"Most companies that were in the business stopped producing because it wasn't profitable anymore," said James Hedrick, a rare earths specialist for the U.S. Geological Survey.

Refinement of previously extracted ore at Mountain Pass resumed on a small scale in 2007, two years after Unocal was acquired by Chevron Corp. Last year, Molycorp was sold to a group of private investors.

Chinese rare earth production, meanwhile, has swelled to about 97 percent of global supplies, or 139,000 tonnes of refined material in 2008, experts say. Output is expected to reach 160,000 tonnes a year by the middle of the next decade.

But global demand is climbing faster, driven by the clamor for clean energy and clean cars, leading to projections of a 40,000-tonne annual shortfall by 2015.

"We're reaching a crunch point," said Jack Lifton, a commodities analyst and leading authority on rare metals.

Rare earths go into hundreds of gadgets and consumer goods, usually in minuscule amounts. Some products use more.

The electric motor in Toyota's market-leading hybrid car, the Prius, requires 1 kilogram (2.2 lb) of neodymium, the key component in the alloy for permanent magnets. And each Prius battery uses 10 to 15 kg (22-33 lb) of another rare earth, lanthanum, according to Lifton.

"The Prius automobile is the biggest user of rare earths of any object in the world," he said.

Crunch Point

With China seen sharply curtailing its rare earth exports to feed rapid expansion of its own industries, the projected global shortage will only grow more acute.

Looking to meet the challenge is Molycorp, with a new 30-year mining plan given final approval in the summer of 2004 following a 15-year regulatory review.

Smith said his company has since been perfecting an advanced extraction process that will allow Molycorp to nearly double the amount of rare earth metals it can pull from the bastnaesite ore it mines.

"It means I don't have to extract as much ore from the surface pit to have the equivalent amount of material for sale to a customer," he said. "It lowers our costs tremendously."

Plans call for mining to resume at Mountain Pass by 2012, at the rate of about 1,000 tons of ore a day, enough to produce 20,000 tonnes of rare earth oxides for sale each year. Smith said the mine has approval to double that volume in time.

"If we put our facilities into the fully permitted production rates, we could come very close to meeting the needs of most of the rest of the world," he said.

But Molycorp first needs to drain some 95 million gallons (360 million litres) of water that has filled the pit's bottom and remove surface rock covering the ore, a two-year process.

Mountain Pass is considered the world's richest reserve of its kind, with ore deposits averaging a concentration of rare earths above 9 percent. Most deposits around the world outside China report ore grades under 5 percent, Smith said.

It's also the largest outside of China, estimated to hold 20 million to 47 million tonnes of ore. The mine is further blessed with negligible traces of uranium and thorium -- two radioactive elements often found together with rare earths that can make recovery of them more costly.

Mountain Pass, not far from Las Vegas, first opened in the 1940s, when rare earths were mined for use in tracer ammunition for the military and the flints of cigarette lighters.

With the advent of color television in the 1960s, Mountain Pass became the world's only supplier of europium, used to produce red picture tones. By the 1980s, lanthanum, neodymium and other rare earths were being mined for new discoveries in batteries and magnets.

Molycorp is ahead of the game but not alone. A number of companies are seeking to develop rare earth deposits elsewhere, including two promising sites in western Canada and two more in Australia that have attracted Chinese interest.

(Editing by Alan Elsner and Mary Milliken)

All a Cub Reporter Needs Is a Scoop and an iPhone
Claire Cain Miller

A Web site for local news hopes to fill the growing void in professionally reported local news by recruiting citizens armed with iPhones as reporters.

The site, Fwix, will release an iPhone application this week that enables its users to file news updates, photos and videos, live from the field. The items will appear on Fwix’s year-old Web site, which also collects links to local news articles from newspapers and blogs in 85 cities.

“We believe we are the real-time local newswire,” said Darian Shirazi, Fwix’s 22-year-old founder.

Many local news Web sites are sprouting up, relying on sources like police reports and neighborhood bloggers to supplement dwindling local newspaper reporting. But most provide an incomplete picture of a reader’s town.

Fwix, which is backed by BlueRun Ventures, hopes reader submissions about a fire, car crash or new restaurant down the street will fill in the picture. Peter Krasilovsky, who studies local media at the research firm Kelsey Group, said he was skeptical that enough people would actually send in news reports.

Still, user participation has jumped for other sites when they offer mobile apps. When Citysearch let people write local business reviews from their phones, there was a sharp increase. People are more likely to submit content to a Web site in the moment, said Dinesh Moorjani, who runs mobile for Citysearch.

Of course, people are already using Twitter for on-the-go news updates, but news gets lost amid tweets about the cat and plans for dinner. Mr. Shirazi said Fwix would offer more relevant updates. Its software ranks items based on whether other users submit articles that mention similar events and locations and if the person was at the scene, information it gleans from the iPhone’s GPS location data.

Fwix said that 400,000 people visit its site each month but eight million see its ever-updating lists of headlines and local text ads in widgets on other sites, like Weather Underground. Mr. Shirazi said local media outlets have expressed interest in running Fwix headlines, too.

That is key to its success, Mr. Krasilovsky said. “If it could be like The A.P. and be widely distributed, that could be fantastic.”

Courant Says it Took Content, Dropped Attribution

The Hartford Courant says it is reviewing its policy for attributing news to other media sources after it was accused of stealing content from newspapers throughout Connecticut.

Jeffrey Levine, senior vice president and director of content for the newspaper, says the Courant dropped attribution or attributed to its own reporters stories that it published in its print editions. Levine says the newspaper took "immediate steps to correct this process."

The Journal Inquirer took its complaints about the policy public by publishing a story Saturday about the practice. The story said content had been copied from newspapers in Manchester, Bristol, New Britain, Torrington and Waterbury.

The publisher of the Bristol Press and New Britain Herald, Michael Schroeder, calls the practice "at best plagiarism, at worst outright theft."

Hartford Courant Competitors Seethe Over Web Site
Patrick Sanders

After cutting its newsroom by half because of the recession and sagging advertising revenue, The Hartford Courant found a new source for news—its competition—and found itself in a plagiarism scandal.

The episode began this summer when The Tribune Co.-owned newspaper began summarizing or rewriting other newspapers' stories and putting them on the Courant Web site. The company defended that as a legitimate practice.

But its competitors and some journalism experts said it wasn't so innocent, because the Courant was using stories right from its own backyard rather than around the country.

"They can't afford to cover local news anymore," said Chris Powell, managing editor of the family-owned Journal Inquirer newspaper in nearby Manchester. It covers dozens of communities east of Hartford, producing stories about town budgets, school boards and other municipal functions while the Courant has closed bureaus in the area. "People want local news, so they'll steal it from their competitors. I see it as nothing more than theft."

Powell's newspaper, which makes news on its Web site available only to paid subscribers, complained to the Courant last week, and followed up with a Page 1 story. It pointed out that some stories the Courant posted from other newspapers on its Web site later appeared in print editions of the Courant with attribution stripped off, or changed to the Courant.

In Friday's newspaper, the Courant's CEO and publisher, Richard Graziano, acknowledged that the Courant had plagiarized its competitors. He apologized to readers in a note on the opinion page.

"We are taking corrective action to prevent it from happening again," Graziano wrote.

Graziano's apology appeared to be referring to the fact that online stories landed in the newspaper without proper attribution, and it's not clear whether the newspaper still plans to aggregate news from its competitors—and give them credit—online. Since the criticism of that practice emerged, the newspaper's Web site has ceased running such stories. But Courant executives did not return calls seeking comment about whether this was a permanent or temporary change.

Online aggregators, such as Google, Huffington Post and the Drudge Report, link to news from multiple sources. Many newspaper blogs do it, too. And some newspapers share material willingly, to help each other broaden their coverage.

But online aggregation can be controversial if the creators of the original material believe that the aggregator's summaries are thorough enough to dissuade readers from going to the source's own Web site. That loss of traffic can kill ad revenue.

For instance, in December, newspaper publisher GateHouse Media Inc. sued The New York Times Co. over The Boston Globe's practice of running headlines and lead sentences from GateHouse stories on its Web site. The case was settled before going to trial.

The resolution didn't settle the broader question of how much material blogs and news sites can grab from other sites when they also provide links to the original stories. The Associated Press has been an especially vocal critic of the way that some sites aggregate news without paying for it. The AP, a not-for-profit cooperative owned by newspapers, has sued some online aggregators and urged other sites to reduce how much AP content they reproduce, even when they link to the underlying material.

Tribune Co. has stood by the idea of aggregating content on its Web sites in Hartford and elsewhere. Tribune, which is operating under bankruptcy protection, also owns the Chicago Tribune, the Los Angeles Times, The Sun of Baltimore and other newspapers and 23 TV stations.

"Aggregation is something that we are engaged in at all of our newspapers," Tribune spokesman Gary Weitman said. "It is completely appropriate and enables us to provide a broad array of news stories to our readers, viewers and online users."

The Courant, which won Pulitzer Prizes in 1992 and 1999 and prides itself on being the nation's longest continuously published daily newspaper, announced its Web aggregation plans in July. In a memo describing the role of the "aggregation editor," Editor Naedine Hazell said the person would collect and rewrite other newspapers' content "to broaden the news we offer readers online and in print."

Since then, the Courant has posted numerous stories on its Web site that were based on material originally written by newspapers in Torrington, Bristol, New Britain, Waterbury, Stamford and other places. The stories appeared in the main news section of Courant.com, mixed in with articles that were reported by the newspaper's own staff.

In some cases, each paragraph of the story was attributed to the originating newspaper. At other times, the Courant has published just headlines and brief summaries on its Web pages, along with a link to the originating newspapers' Web sites.

Journalism professor Jerry Dunklee at Southern Connecticut State University said that even before the Web stories landed in print, the Courant was violating ethical and legal standards by aggregating local competitors' online material.

"When they cut back staff and take smaller newspapers' and radio stations' reporting, even if they identify the reporter and news organization ... they are still taking that material that they should be covering themselves," Dunklee said.

Privacy Missing from Google Books Settlement

Privacy experts and librarians hope Google will give details on how it will protect the privacy of Google Books users
Robert McMillan

If Google digitizes the world's books, how will it keep track of what you read?

That's one of the unanswered questions that librarians and privacy experts are grappling with as Google attempts to settle a long-running lawsuit by publishers and copyright holders and move ahead with its effort to digitize millions of books, known as the Google Books Library Project.

For librarians, many of whom are working with Google to digitize their collections of books, it's a thorny question. That's because librarians and the online world have different standards for dealing with user information.

Many libraries routinely delete borrower information, and organizations such as the American Library Association have fought hard to preserve the privacy of their patrons in the face of laws such as the U.S. Patriot Act.

But now, as more and more titles become available in Google Book Search, it's not clear whether digital readers will enjoy the same privacy protections they have at the library.

"Which way are we going to go?" said Michael Zimmer, a professor from the University of Wisconsin at Milwaukee. "Is this service going to be an extension of the library, or an extension of Web searching?"

Zimmer spoke at a panel discussion at the University of California, Berkeley, on Friday. He was one of several panelists who called on Google to make a stronger privacy commitment as it develops the Google Books service.

Google has taken extra steps to preserve privacy with other offerings. It has blurred faces on Google Maps Street View and kept records for Google Health users that are separate from other Google services.

With its mobile location-based service, called Google Latitude, Google doesn't keep a log of user locations. "One wonders if this could be applied in some sense to Books," said Jason Schultz, acting director of the Samuelson Law, Technology & Public Policy Clinic.

Google posted a "frequently asked questions" document about Google Books and privacy late last month, but the company plans to release a more formal privacy statement in the coming weeks, according to Google Books engineering director Dan Clancy.

Google often says that privacy is important, but it needs to talk more about what steps it will take, said Chris Hoofnagle, director of the Berkeley Center for Law & Technology's information privacy programs. "The details are what really matter," Hoofnagle said.

"Privacy, by design, requires early intervention," he added.

Last year, Google reached a settlement agreement in a class-action lawsuit brought by authors and publishers who argued that Google Books Library Project violated their copyrights.

The U.S. District Court for the Southern District of New York will decide whether to accept this agreement on Oct. 7, but affected parties have until Sept. 4 to submit comments to the court.

Groups such as the Center for Democracy and Technology and the Electronic Frontier Foundation hope that the settlement -- which has yet to be approved by the court -- will provide an opportunity to address privacy concerns and clearly spell out what Google will do, for example, if approached by a government agency and asked for a record of what a user has read.

"It gives us an opportunity to get them to commit in legal language, in a binding document that would be different than all the other products, which are sort of ad hoc," Schultz of the Samuelson Clinic said.

If the settlement agreement isn't modified by the court or the parties involved, however, the activists will have lost that opportunity. But they may be able to push for privacy protections via the U.S. Department of Justice, which has opened an inquiry into Google Book Search, or simply by putting public pressure on Google to respond to their concerns.

At present, the agreement is "absolutely silent on user privacy," said Angela Maycock, assistant director with the American Library Association's Office for Intellectual Freedom.

Google has made a lot of statements about privacy, she said, "but they're informal statements, and we need to make sure that those informal statements and assurances actually get codified into policy."

"Digi-Novel" Combines Book, Movie and Website
Michelle Nichols

Is it a book? Is it a movie? Is it a website?Actually it's all three. Anthony Zuiker, creator of the "CSI: Crime Scene Investigation" U.S. television series, is releasing what he calls a "digi-novel" combining all three media -- and giving a jolt to traditional book publishing.

Zuiker has created "Level 26," a crime novel that also invites readers to log on to a website about every 20 pages using a special code to watch a "cyber-bridge" -- a three-minute film clip tied to the story.

Starting next Tuesday, readers can buy the book, visit the website, log in to watch the "cyber-bridges," read, discuss and contribute to the story.

"Just doing one thing great is not going to sustain business," he said. "The future of business in terms of entertainment will have to be the convergence of different mediums. So we did that -- publishing, movies and a website."

He said he did not believe the digi-novel would ever replace traditional publishing, but said the business did need a shot in the arm.

"They need content creators like myself to come in the industry and say, 'Hey, let's try things this way,'" he said.

Zuiker put together a 60-page outline for the novel, which was written by Duane Swierczynski, and wrote and directed the "cyber-bridges." He said the book could be read without watching the "cyber-bridges."

Gadgets Change Reading Landscape

Zuiker said the United States was infatuated with technology and it had become such a permanent part of people's lives that more entertainment choices were needed.

Increasingly, people are reading books on electronic readers like Amazon.com's Kindle and Sony Corp's Reader.

Those devices don't play videos, so "Level 26" readers still need to log on to the Internet on a different device. Apple Inc is said to be developing a touchscreen tablet, which some analysts envision as a multimedia device that could play videos.

Zuiker said people's attention span was becoming shorter and shorter and that it was important to give people more options on how they consumed entertainment and books.

"Every TV show in the next five, 10 years will have a comprehensive microsite or website that continue the experience beyond the one-hour television to keep engaging viewers 24/7," he said. "Just watching television for one specific hour a week ... that's not going to be a sustainable model going forward."

"I wanted to bring all the best in publishing, in a motion picture, in a website and converge all three into one experience," he said.

"And when the book finished and the bridges finished, I wanted the experience to continue online and in a social community."

Zuiker said he came up with the idea for the "digi-novel" during a three-month TV writers strike in 2007/08.

(Editing by Claudia Parsons and David Storey)

Disney to Buy Marvel Comics for $4 Billion

The Walt Disney Company said Monday that it would buy the comic book giant Marvel Entertainment for about $4 billion.

Under the terms of the deal, Marvel shareholders will receive a $30 a share in cash plus about 0.745 Disney shares for each Marvel share they own. The boards of both companies have approved the deal, which was valued at $50 a share.

With the acquisition, Disney will acquire more than 5,000 Marvel characters, including Spider-Man, Iron Man, Captain America, Hulk and the X-men.

“We believe that adding Marvel to Disney’s unique portfolio of brands provides significant opportunities for long-term growth and value creation,” the chief executive of Disney, Robert A. Iger, said in a statement.

Ike Perlmutter, Marvel’s chief executive, said: “Disney is the perfect home for Marvel’s fantastic library of characters given its proven ability to expand content creation and licensing businesses. This is an unparalleled opportunity for Marvel to build upon its vibrant brand and character properties by accessing Disney’s tremendous global organization and infrastructure around the world.”

Mr. Perlmutter will oversee the Marvel properties, and will work directly with Disney’s global lines of business to build and further integrate Marvel’s properties.

The acquisition comes as Disney, with its vast theme park operations and television advertising business, has been struggling because soft advertising sales at ABC and ESPN and drooping consumer spending at Disney World. Disney’s profit in the third quarter dropped 26 percent.

Over all, Disney’s net income fell to $954 million, or 51 cents a share, from $1.28 billion, or 66 cents a share, in the year-ago period. Revenue fell 7 percent, to $8.6 billion. Earnings per share for the current quarter included a one-cent restructuring charge related to an accounting gain. Excluding that charge, Disney narrowly beat Wall Street’s expectations.

MPAA Again Demands Washington Close "Analog Hole"

Hollywood's bid to force a yet-to-be-agreed-upon number of households to buy new home theater gear is back in business. The Motion Picture Association of America has once again asked the Federal Communications Commission for the right to selectively control output streams to the TV entertainment systems of consumers. "The pro-consumer purpose" (!) request "is to enable movie studios to offer millions of Americans in-home access to high-value, high definition video content," three MPAA biggies explained during a meeting they held with seven FCC Media Bureau staffers last Thursday.

Consumer groups, electronics makers, pro-consumer bloggers, and consumers, it should be noted, think this idea is a very stinky dog. So did former FCC Chair Kevin Martin. But that does not seem to dissuade the MPAA, whose principals just can't seem to let the issue go. What's interesting about the group's latest filing, however, is that it effectively concedes that the output changes it wants could, in fact, hobble some home video systems.

"The vast majority of consumers would not have to purchase new devices to receive the new, high-value content contemplated by MPAA's" request, the group assures the FCC. But first, a history of this controversial crusade.

No go with the flow

As we've reported for well over a year, in June of 2008 the MPAA petitioned the FCC for a waiver on a practice that the agency banned in its 2003 "plug and play" Order—messing with a video stream so as to disable either the analog or digital flow to a consumers' home HDTV/DVR system. This is called "selectable output control." Hollywood says it wants to partner with cable companies to offer pre-DVD releases of big movies, but not unless they transmit through "secure and protected digital outputs in order to prevent unauthorized copying and redistribution." That means bleeping the analog stream, which MPAA worries is less "secure."

In the interviews we did with several MPAA officials, we tried very hard to get them to explain to us what exactly they want security from (naughty consumers trying to record the movie, perhaps?), but to no avail. What the trade group rather robotically emphasizes is that pre-DVD releases will benefit people who for various reasons can't get to theaters. "Physically challenged or elderly consumers who have limited mobility would have greater choice in movie viewing options," the group's filings on this issue say. "It would similarly benefit parents who want to see a new movie, but who cannot find or afford a babysitter."

But critics of the proposed deal want to know why the FCC should let the studios on whose behalf MPAA is petitioning—Paramount, Sony, Twentieth Century Fox, Universal, Disney, and Warner Brothers—limit the capabilities of home TV systems that consumers have already bought and installed. "The side effect," warns the consumer group Public Knowledge in an educational video it has put out on this question, "is that SOC would break all eleven million HDTVs in the US that don't have digital input. In essence, all the MPAA wants is to control when and how you watch the stuff you've already paid for."

Frozen critics

From this point of departure came a quick he-said-she-said at the FCC about how many home video systems SOC would screw up. In mid-November, the Consumer Electronics Association, which not surprisingly also hates this idea, warned that if the FCC gave Hollywood an SOC waiver, 20 million HDTV sets could cease to function as they did when they were bought by US consumers. PK's Jef Pearlman showed up at the agency's door a few days later and called this a low estimate, since it didn't count DVRs and other devices that might get their input exclusively from analog connections.

Not to be outdone, the MPAA returned to the FCC's HQ in late November with the rejoinder that its critics were, in essence, Luddites.

"At its core, the position of CEA is that technology should be frozen in time, and any new services that require advanced technology should be banned," a small crew of MPAA folk and supporters explained at a meeting with former Commissioner Jonathan Adelstein. "This position is quite astonishing, coming from an organization that in the past has advocated in favor of technological innovation."

Finally we asked then Commission Chair Kevin Martin at one of his last press conferences what he thought about SOC. "I'm not supportive of moving forward with this MPAA proposal at this time," Martin told us in late December. But when Ars pressed if the issue was now tabled for the Obama administration's FCC, the outgoing boss said yes. "If another Commission" wants to deal with the question, "they will be able to, obviously, but I'm not supportive of it," he explained.

And so, not surprisingly, SONY Pictures was once more into the breach by early February, trying to get interim Chair Michael Copps to see "the advantages of expanded consumer choices in the marketplace" that would supposedly come with a waiver on SOC. There is no evidence that Copps, who was totally preoccupied by the DTV transition at the time, gave this issue more than a moment's thought.

Not to worry

MPAA's latest filing takes issue with PK's 11 million number, noting that a comment submitted by the group last September doesn't cite a source for the figure. But then it continues: "Even if accurate, the Public Knowledge figure is vastly overinclusive because it counts homes where consumers do have at least one television set with protected digital inputs (even though they also may have older sets in other rooms in the house). In fact, the vast majority of consumers would not have to purchase new devices to receive the new, high-value content contemplated by MPAA’s waiver request."

Our translation: SOC could screw up plenty of home theater equipment, but that's ok, because those households have backups with digital inputs. The MPAA filing does not explain why any device that a consumer bought with their good money should be hobbled in this instance. Nor does it counsel the FCC on how to help those whom MPAA effectively concedes would have to buy a new device. Nor are we any closer to a reasonable estimate of how many households would face this unfortunate result.

And don't ask us what FCC Chair Julius Genachowski thinks about this mess because we don't know, yet.

Read the MPAA's filing (PDF)

Venice Documentary Attacks Berlusconi Media Empire
Gabriella Podimane

Prime Minister Silvio Berlusconi's grip on television in Italy is at the heart of "Videocracy," a new documentary looking at how his media empire has shaped information and culture in the country over 30 years.

Screened at the Venice film festival this week, "Videocracy" mixes images of scantily clad showgirls -- a regular feature on Italian television -- with news reels of Berlusconi's public appearances and interviews with real or aspiring TV celebrities.

For director Erik Gandini, who was born and brought up in Italy but now lives in Sweden, the message is clear: Italy is now a "TV-republic," embodied by Berlusconi, where entertainment and politics are intertwined.

One example of that, he says, is that a former showgirl is now Berlusconi's Equal Opportunities Minister.

"Videocracy" points to the pervasiveness of television in Italian life, which makes it in the eyes of many -- particularly young people -- a launching pad to instant fame and money.

"You get a picture of a generation which is very very obsessed by brands, by their own appearance, not interested in politics so much, nor in the world," Gandini told Reuters in an interview.

"You have a country which is culturally caught in a bubble of values which are what I call a videocracy, where image is everything," he added.

With 80 percent of Italians using their TV sets as their prime source of information, the power of television is vastly increased by the control Berlusconi exerts over it, says Gandini.

"People don't read many newspapers. Television is the media which has the biggest impact ... that's why Berlusconi is so strong," he said.

"What goes on television exists, and what is not on television does not," he added.

The 72-year old media tycoon and three-time prime minister has made a fortune out of commercial television, which he launched in Italy in the late 1970s.

His Mediaset empire owns the three largest private networks in the country. Mediaset and state television RAI's three channels -- on which Berlusconi has considerable influence as prime minister -- make up 90 percent of free-to-air television in the country.

Berlusconi denies any conflict of interest and says he has no say on Mediaset or RAI programs.

Both broadcasters have refused to air ads promoting "Videocracy," which was warmly applauded in Venice and is released in Italian cinemas Friday.

(additional reporting by Ilaria Polleschi; writing by Silvia Aloisi; Editing by Steve Addison)

Movie Sequels Lift Summer Box Office to New Record

Summer box office sales narrowly hit a new record in North America -- with a little help from an angry memo written by "Transformers" director Michael Bay.

The filmmaker in May accused Paramount Pictures executives of fumbling the marketing campaign for his June 24 release "Transformers: Revenge of the Fallen."

"Right now we are not an event. We are just a sequel, which is very different," he wrote in the missive that was leaked to the media.

Fortunately for both parties -- if not for the overwhelming majority of critics who eviscerated the big-bang spectacle -- Paramount's marketing plan kicked into high gear and the movie became the top draw at the summer box office in North America.

The movie grossed $399 million in the United States and Canada, well ahead of the No. 2 choice Warner Bros.' "Harry Potter and the Half-Blood Prince" with $294 million.

When overseas sales are included, the rankings are reversed. "Harry Potter" earned $905 million worldwide, and "Transformers" $828 million.

The two franchise pictures helped the summer moviegoing season reach another record -- barely.

North American ticket sales totaled $4.18 billion for all films from May 1 through September 2, according to tracking firm Rentrak Corp. This represents a 0.01 percent rise from the year-ago haul of $4.14 billion.

"Even in a tight economy, consumers seeking a great entertainment value continued to flock to movie theaters to see blockbusters across action, comedy, drama and family-friendly genres," said Ron Giambra, Rentrak's executive vice-president of Theatrical Worldwide.

Summer is the most lucrative season for the studios, with ticket sales accounting for as much as 40 percent of annual theatrical income. With their target audience of young males in mind, they unleash costly "popcorn" pictures loaded with explosions and special effects.

The top five was rounded out by the Pixar cartoon "Up" ($290 million), the surprise Warner Bros. bawdy hit "The Hangover" ($270 million) and Paramount's "Star Trek" reboot ($257 million).

That's not to say other demographic groups were completely ignored. Counterprogramming efforts such as "The Ugly Truth" ($86 million) and the early Oscar bait "Julie & Julia" ($71 million and counting), both from Columbia Pictures, scored with female audiences. Sandra Bullock enjoyed the biggest movie of her career (before adjusting for inflation) with Disney's "The Proposal" ($160 million), the No. 9 movie of the summer.

At the other end of the scale, notable bombs included Paramount's Eddie Murphy comedy "Imagine That" -- a $55 million project that grossed $16 million.

Universal struck out with such disappointments as the costly Johnny Depp gangster drama "Public Enemies," which grossed $97 million, Sacha Baron Cohen's "Bruno" ($60 million), and Will Ferrell's "Land of the Lost" and director Judd Apatow's "Funny People" with about $50 million each.

Universal, a General Electric Co unit, lags the six major studios in market share so far this year, according to tracking firm Box Office Mojo (www.boxofficemojo.com).

Time Warner Inc's Warner Bros, leading in No. 1 openings this year, rules the pack with 20.6 percent, followed by Viacom Inc's Paramount (18 percent), News Corp's 20th Century Fox (12.5 percent), Walt Disney Co (12.1 percent), Sony Corp's Columbia (11.9 percent) and Universal (9 percent).

United States Box Office
Issued Tue Sep 1, 2009
Title/Distributor Wknd. Gross Total Gross # Theaters Last Wk. Days Released
WARNER BROS. $27408309 $27408309 3121 0 3
THE WEINSTEIN COMPANY $19303653 $73022841 3165 1 10
THE WEINSTEIN COMPANY $16349565 $16349565 3025 0 3
SONY PICTURES $10270435 $90383712 3180 2 17
PARAMOUNT $7715572 $132151954 3467 3 24
SONY PICTURES $7035675 $70628063 2503 5 24
WARNER BROS. $6452270 $47900418 2961 4 17
WARNER BROS. $4511345 $13206697 3105 6 10
FOCUS FEATURES $3457760 $3478335 1393 0 5
WALT DISNEY STUDIOS $2824808 $111780350 1926 7 38
WARNER BROS. $2466423 $294258075 1508 8 47
FOX SEARCHLIGHT $2008956 $25203886 909 13 45
WALT DISNEY STUDIOS $1887921 $11033256 880 12 17
SONY PICTURES $1587710 $85747932 1252 9 38
FOX SEARCHLIGHT $1467947 $5307922 1959 11 10
WARNER BROS. $1340141 $270237753 801 14 87
PARAMOUNT VANTAGE $1188109 $13817928 1426 10 17
WALT DISNEY STUDIOS $664375 $160154402 520 21 73
19 UP
WALT DISNEY STUDIOS $649188 $289639811 392 25 94
PARAMOUNT $$575531 $399416040 622 16 68

Warner Bros. Poised to Take Summer Box-Office Crown
Carl DiOrio

Topping the summer box office has become habit-forming at Warner Bros.

Hollywood's summer ends Labor Day, but already it's clear that Warners again will top distributor market-share rankings with $957 million in domestic grosses since the season began May 1, according to Nielsen EDI.

That's down from the studio's "Dark Knight"-fueled $1 billion tally last summer. Still, Warners sits well ahead of the domestic distribution pack year-to-date and is tracking 3 percent ahead of its industry-record haul from a year ago with $1.47 billion and counting.

The studio's seasonal performance has yielded an industry-best market share of 23 percent. Paramount copped the season's silver medal with $874 million so far and a 21 percent share; Disney is third with $604 million and 15 percent.

All told, when receipts are calculated through Labor Day, summer box office will finish north of summer 2007's record $4.16 billion. But with 3D premiums driving a big rise in average ticket prices, there's scant chance of beating summer 2004's admissions record of 642 million tickets sold after accounting for inflation.

Meanwhile, Warners brass say the studio's best is yet to come.

"We have 10 films to release by the end of the year, so it looks to me that we're going to break our record again," Warners domestic distribution president Dan Fellman says. "But we'll have to take it one picture at a time."

'Potter' Power

Warners might wish they were all Harry Potter movies. After opening worldwide July 15, "Harry Potter and the Half-Blood Prince" is on track to become the six-film franchise's first $300 million domestic grosser since the 2001 original.

Though the studio's May 21 release "Terminator Salvation" underperformed with $125 million domestically, pictures produced by Warners' New Line label are proving to be the gift that keeps on giving.

New Line's summer successes included "Ghosts of Girlfriends Past," a modestly budgeted romantic comedy that unspooled May 1 en route to $55 million, and "The Time Traveler's Wife," an August 14 release that has grossed nearly $50 million.

Then there was "The Hangover." A co-production of Warners and Legendary Pictures, the bawdy Vegas comedy managed to overachieve even before hitting theaters. Prerelease buzz was so strong that Warners green-lighted a sequel for release in May 2011.

"There's no question that 'Hangover' was the breakout hit of the summer -- maybe even of all time," Fellman says.

The description hardly is hyperbolic. The $35 million picture has legged past "Beverly Hills Cop" ($235 million) to become the highest-grossing R-rated comedy of all time with $271 million.

'Revenge' is Sweet

Paramount had five summer releases, led by the season's top grosser, the DreamWorks-produced "Transformers: Revenge of the Fallen," which this weekend will reach $400 million domestically and $829 million globally.

"You have to feel great when you have movies of the caliber of 'Star Trek,' 'G.I. Joe' and 'Transformers,'" Paramount distribution chief Jim Tharp says. "We were a little below the previous summer. But last year we had DreamWorks Animation's 'Kung Fu Panda' in the summer, whereas this year their picture 'Monsters vs. Aliens' went out in March."

Disney executives stress the profitability of their six-film seasonal slate.

"Absolutely, it was a profitable summer for us," Disney film president Mark Zoradi says.

Zoradi declined to say whether the Jerry Bruckheimer-produced "G-Force" ($112 million domestic) will turn a profit. But clearly, Pixar's "Up" ($290 million) and Sandra Bullock-starring "The Proposal" ($160 million) paid off handsomely.

Elsewhere in the summer pecking order, Fox bounced back from a tough 2008 with a solid $591 million through last weekend, good for a 14 percent share. In fifth place, Sony ($524 million; 13 percent share) had a quieter summer, but the Culver City studio avoided major misfires.

Overseas Muscle

Fox and Sony also enjoyed outsize international campaigns. Fox's 3D animated threequel "Ice Age: Dawn of the Dinosaurs" padded its $193 million domestic haul with more than three times as much overseas, good for more than $830 million in global box office, and Sony posted a nifty $484 million worldwide tally for its Tom Hanks-starring "Angels & Demons" thanks to $351 million in foreign receipts.

Rounding out domestic rankings among the major studios, Universal ($343 million; 8 percent) suffered a series of disappointments during the summer. Its June 5 release "Land of the Lost" was produced for an estimated $100 million but struggled to register $50 million domestically.

"It was a very disappointing summer for us," Universal marketing and distribution president Adam Fogelson says. "We are all linking arms and doing everything we can to course-correct and to make sure we never have another summer like this."

Indie and specialty distributors found little traction in a season dominated by popcorn movies.

The Weinstein Co.'s late-August bow of Quentin Tarantino's "Inglourious Basterds" drew intense scrutiny, mainly for its potential effect on the company's fiscal health.

Fortunately for the Weinsteins, "Basterds" has performed well ($75 million domestically). The film's success also serves as an upbeat coda for an industry seeking to believe that movie lovers still love going to the movie house.

Year to date, 2009 heads into summer's final session nearly 4 percent ahead of the same portion of last year, at $7.07 billion.

"Over the past three years, we've had pretty consistent admissions and increasing revenues, coming back from a period when people were talking about the industry being in a downward spiral," National Association of Theater Owners spokesman Patrick Corcoran says. "We're seeing nothing like that now."

Three wide releases hit theaters Friday for the season-concluding holiday frame: Fox's romantic comedy "All About Steve," Lionsgate's sci-fi action picture "Gamer" and Miramax's comedy "Extract." "Steve" is the strongest of the bunch in prerelease polling, thanks to topliner Bullock's recent marquee magic, and should top the session with low-double-digit millions. "Gamer" and "Extract" could get stuck in the single-digit millions.

(Editing by Sheri Linden at Reuters)

Twitter Sways Movie Grosses
Michael Sragow

This summer, movies such as "Brno" and " G.I. Joe" have had unexpected tumbles at the box office — just within their opening weekends — while "Transformers: Revenge of the Fallen" survived blistering critical reaction to become a blockbuster.

Box-office watchers say the dramatic swings might be caused by Twitter and other social-networking sites that can blast instant raves — or pans — to hundreds of people just minutes after the credits roll.

"Almost every time after I go out (to a movie), I'll tweet about it," says Lindsay Wailes, a cook and barista from Westminster, Md. "I tweeted about 'G.I. Joe' as soon as I left the theater."

Her take: "If you like science or plot, this isn't a movie for you; if you like explosions for no reason, you'll love it."

She also listens to what others have to say: She turned her back on "Brno" because of downbeat Twitter reviews. Studios are trying to gauge the impact of an avalanche of tweets and how it affects the staying power of a movie. Was the 39 percent box-office drop of "Brno" from one Friday to the next day a case of disappointed moviegoers tweeting from theater lobbies? Or did a limited fan base for "Brno" exhaust itself on that first day?

"I think Twitter can't be stopped," says Stephen Bruno, the Weinstein Co.'s senior director of marketing. "Now you have to see it as an addition to the campaign of any movie. People want real-time news, and suddenly a studio can give it to them in a first-person way."

Eamonn Bowles, president of Magnolia Pictures, says studios are worrying about a time when "people will be Twittering during the opening credits — and leaving when they don't like them." But he also warns, "the next step [for the Twitter Effect] is for studio marketing to manipulate it."

The Weinstein Co. has done that big-time for the release of the Quentin Tarantino- Brad Pitt World War II epic " Inglourious Basterds."

The company packed a screening at San Diego's Comic-Con with people who won access via Twitter. It also staged "the first ever Red Carpet Twitter meet-up" during the movie's premiere at Grauman's Chinese Theatre in Hollywood, generating celebrity tweets including Sarah Silverman's "just made me smile forever" and Tony Hawk's "another Tarantino classic."

Twitter has broadened the reach of bloggers and other aspiring opinion makers.

"Just two years ago, if I saw a movie I loved or I hated, I'd be able to tell a dozen friends, tops," says John Singh, who works for the movie and social networking website Flixster. "Now I can be walking out of a theater as the credits are rolling and immediately tell 500 people what I thought. ... It's never been this easy to be this influential."

Take "The Proposal," a film that had little buzz yet has become one of the summer's most profitable productions. (It cost $40 million and is grossing upward of $159 million.) Flixster, which runs the Movies application for iPhones, worked with Disney/Touchstone to promote the Sandra Bullock- Ryan Reynolds romantic farce. Singh credits the campaign with increasing the film's opening-weekend haul by 30 percent.

Positive reviews from her Twitter friends can persuade Wailes to attend a film if she's "undecided." If it "gets raves from people I network with, since I know I have something in common with these people, I figure there must be something in the movie that I might want to see."

Gregg Kilday, film editor of The Hollywood Reporter, notes that it's impossible to separate the factors that would explain a film's drop or rise in box office.

"Even if you don't have Twitter, a lot of people, especially kids, have long had the ability to text each other, sometimes from within the theater," he says. "And for a lot of the mass-market movies, the potential audience will go whether friends tell them they're good or not."

Vt. Teen Sentenced to Prison in 'Sexting' Case

An 18-year-old pleaded guilty to reduced charges Thursday in Vermont's first ''sexting'' case, in which he allegedly directed two teenage girls to videotape or photograph themselves performing sex acts and send him the results.

Isaac Owusu, of Morrisville, was sentenced to up to two years in prison but will serve 90 days after pleading guilty to two counts of committing a prohibited act and one count of lewd and lascivious conduct.

Sexual assault charges originally lodged against him were dropped as part of the plea, as were two counts of promoting a sexual recording.

The deal was offered in part because the state Legislature recently passed a law decriminalizing sexting.

''We respect the process in Montpelier,'' said Chittenden County State's Attorney T.J. Donovan. ''We understood their point. We heard what they said. And as a result, we dismissed what is called the 'sexting' (charges).''

He said the sexual assault charges were the focus of the prosecution to begin with.

Earlier this year, Vermont enacted a new law that allows minors charged with a first offense of ''sexting'' to be declared delinquent in juvenile court and sent to a diversion program, not prosecuted as adults or put on the state's sex offender registry.

''Sexting'' is generally defined as using a computer or other electronic device to transmit an indecent picture of oneself. Vermont's law also applies to people who possess a picture of a minor that has been received through sexting.

In passing the measure, lawmakers said they didn't want teenagers going to jail as sex offenders or being labeled as such for the rest of their lives for something so foolish.

Owusu -- a former standout athlete at South Burlington High School -- contended the girls were willing participants in the December incident.

Under the plea, the sexual assault charges were downgraded and Owusu got a five-year deferred sentence on the lewd and lascivious count. That means he will serve no jail time for it unless he violates probation.

His lawyer, Leroy Yoder, didn't return a telephone call seeking comment.

Facebook Exodus
Virginia Heffernan

Things fall apart; the center cannot hold. Facebook, the online social grid, could not command loyalty forever. If you ask around, as I did, you’ll find quitters. One person shut down her account because she disliked how nosy it made her. Another thought the scene had turned desperate. A third feared stalkers. A fourth believed his privacy was compromised. A fifth disappeared without a word.

The exodus is not evident from the site’s overall numbers. According to comScore, Facebook attracted 87.7 million unique visitors in the United States in July. But while people are still joining Facebook and compulsively visiting the site, a small but noticeable group are fleeing — some of them ostentatiously.

Leif Harmsen, once a Facebook user, now crusades against it. Having dismissed his mother’s snap judgment of the site (“Facebook is the devil”), Harmsen now passionately agrees. He says, not entirely in jest, that he considers it a repressive regime akin to North Korea, and sells T-shirts with the words “Shut Your Facebook.” What especially galls him is the commercialization and corporate regulation of personal and social life. As Facebook endeavors to be the Web’s headquarters — to compete with Google, in other words, and to make money from the information it gathers — it’s inevitable that some people would come to view it as Big Brother.

“The more dependent we allow ourselves to become to something like Facebook — and Facebook does everything in its power to make you more dependent — the more Facebook can and does abuse us,” Harmsen explained by indignant e-mail. “It is not ‘your’ Facebook profile. It is Facebook’s profile about you.”

The disillusionment with Facebook has come in waves. An early faction lost faith in 2008, when Facebook’s beloved Scrabble application, Scrabulous, was pulled amid copyright issues. It was suddenly clear that Facebook was not just a social club but also an expanding force on the Web, beholden to corporate interests. A later group, Harmsen’s crowd, grew frustrated last winter when Facebook seemed to claim perpetual ownership of users’ contributions to the site. (Facebook later adjusted its membership contract, but it continues to integrate advertising, intellectual property and social life.) A third wave of dissenters appears to be bored with it, obscurely sore or just somehow creeped out.

My friend Alex joined four years ago at the suggestion of “the coolest guy on the planet,” she told me in an e-mail message. For a while, they cultivated a cool-planet online gang. But then Scrabulous was shut down, someone told her she was too old for Facebook, her teenage stepson seemed to be losing his life to it and she found the whole site crawling with mercenaries trying to sell books and movies. “If I am going to waste my time on the Internet,” she concluded, “it will be playing in online backgammon tournaments.”

Another friend, who didn’t want his name used, found that Facebook undermined his whole notion of online friendship. “It’s easy to think of your circle of ‘Friends’ as a coherent circle, clear and moated, when in fact the splay of overlap/network makes drip/action painting a better (visual) analogy.” Something happened to this drip painting that he won’t discuss. He said, “Postings that seem private can scatter and slip unpredictably into a sort of semipublic status.”

That friend was not the only Facebook dissenter who was reticent about specifics. Many seem to have just lost their appetite for it: they just stopped wanting to look at other people’s photos and r廥um廥 and updates, or have their own subject to scrutiny. Some ex-users seemed shaken, even heartbroken, by their breakups with Facebook. “I primarily left Facebook because I was wasting so much time on it,” my friend Caroline Harting told me by e-mail. “I felt fairly detached from my Facebook buddies because I rarely directly contacted them.” Instead, she felt as if she stalked them, spending hours a day looking at their pages without actually saying hello.

But then came the truly weird part: “Facebook was stalking me,” Harting wrote. One day, on another Web site, she responded to an invitation to rate a movie she saw. The next time she logged on to Facebook, there was a message acknowledging that she had made the rating. “I didn’t appreciate being monitored so closely,” she wrote. She quit.

Julie Klam, a writer and prolific and eloquent Facebook updater, said in her own e-mail message, “I have noticed the exodus, and I kind of feel like it’s kids getting tired of a new toy.” Klam, who still posts updates to Facebook but now prefers Twitter for professional networking, added, “Facebook is good for finding people, but by now the novelty of that has worn off, and everyone’s been found.” As of a few months ago, she told me, Facebook “felt dead.”

Is Facebook doomed to someday become an online ghost town, run by zombie users who never update their pages and packs of marketers picking at the corpses of social circles they once hoped to exploit? Sad, if so. Though maybe fated, like the demise of a college clique.

Internet Addiction Center Opens in US
Nicholas K. Geranios

Ben Alexander spent nearly every waking minute playing the video game "World of Warcraft." As a result, he flunked out of the University of Iowa.

Alexander, 19, needed help to break an addiction he calls as destructive as alcohol or drugs. He found it in this suburb of high-tech Seattle, where what claims to be the first residential treatment center for Internet addiction in the United States just opened its doors.

The center, called ReSTART, is somewhat ironically located near Redmond, headquarters of Microsoft and a world center of the computer industry. It opened in July and for $14,000 offers a 45-day program intended to help people wean themselves from pathological computer use, which can include obsessive use of video games, texting, Facebook, eBay, Twitter and any other time-killers brought courtesy of technology.

"We've been doing this for years on an outpatient basis," said Hilarie Cash, a therapist and executive director of the center. "Up until now, we had no place to send them."

Internet addiction is not recognized as a separate disorder by the American Psychiatric Association, and treatment is not generally covered by insurance. But there are many such treatment centers in China, South Korea and Taiwan - where Internet addiction is taken very seriously - and many psychiatric experts say it is clear that Internet addiction is real and harmful.

The five-acre center in Fall City, about 30 miles east of Seattle, can handle up to six patients at a time. Alexander is so far the only patient of the program, which uses a cold turkey approach. He spends his days in counseling and psychotherapy sessions, doing household chores, working on the grounds, going on outings, exercising and baking a mean batch of ginger cookies.

Whether such programs work in the long run remains to be seen. For one thing, the Internet is so pervasive that it can be nearly impossible to resist, akin to placing an alcoholic in a bar, Cash said.

The effects of addiction are no joke. They range from loss of a job or marriage to car accidents for those who can't stop texting while driving. Some people have died after playing video games for days without a break, generally stemming from a blood clot associated with being sedentary.

Psychotherapist Cosette Dawna Rae has owned the bucolic retreat center since 1994, and was searching for a new use for it when she hooked up with Cash. They decided to avoid treating people addicted to Internet sex, in part because she lives in the center with her family.

According to Dr. Kimberly Young of the Center for Internet Addiction Recovery in Bradford, Pa., addiction warning signs are being preoccupied with thoughts of the Internet; using it longer than intended, and for increasing amounts of time; repeatedly making unsuccessful efforts to control use; jeopardizing relationships, school or work to spend time online; lying to cover the extent of Internet use; using the Internet to escape problems or feelings of depression; physical changes to weight, headaches or carpal tunnel syndrome.

Exactly how to respond is being debated.

For instance, Internet addiction can be a symptom of other mental illness, such as depression, or conditions like autism, experts say.

"From what we know, many so-called `Internet addicts' are folks who have severe depression, anxiety disorders, or social phobic symptoms that make it hard for them to live a full, balanced life and deal face-to-face with other people," said Dr. Ronald Pies, professor of psychiatry at SUNY Upstate Medical University in Syracuse, N.Y.

"It may be that unless we treat their underlying problems, some new form of `addiction' will pop up down the line," Pies said.

There is debate about whether to include Internet addiction as a separate illness in the next edition of the "Diagnostic and Statistical Manual of Mental Disorders," due in 2012, which determines which mental illnesses get covered by insurance.

Pies and Dr. Jerald Block, of Oregon Health Sciences University in Portland, said there is not enough research yet to justify that.

"Among psychiatrists there is general recognition that many patients have difficulty controlling their impulses to chat online, or play computer games or watch porn," Block said. "The debate is how to classify that."

Cash, co-author of the book "Video Games & Your Kids," first started dealing with Internet addiction in 1994, with a patient who was so consumed by video games that he had lost his marriage and two jobs.

Internet addicts miss out on real conversations and real human development, often see their hygiene, their home and relationships deteriorate, don't eat or sleep properly and don't get enough exercise, Rae said.

Alexander is a tall, quiet young man who always got good grades and hopes to become a biologist.

He started playing "World of Warcraft," a hugely popular online multiplayer role playing game, about a year ago, and got sucked right in.

"At first it was a couple of hours a day," he said. "By midway through the first semester, I was playing 16 or 17 hours a day.

"School wasn't interesting," he said. "It was an easy way to socialize and meet people."

It was also an easy way to flunk out.

Alexander dropped out in the second semester and went to a traditional substance abuse program, which was not a good fit. He graduated from a 10-week outdoors-based program in southern Utah, but felt he still had little control over his gaming.

So he sought out a specialized program and arrived in Fall City in July. He thinks it was a good choice.

"I don't think I'll go back to `World of Warcraft' anytime soon," Alexander said.

How UK Government Spun 136 People Into 7m Illegal File Sharers

The British Government's official figures on the level of illegal file sharing in the UK come from questionable research commissioned by the music industry, the BBC has revealed.

The Radio 4 show More or Less - which is devoted to the "often abused but ever ubiquitous world of numbers" - decided to examine the Government's claim that 7m people in Britain are engaged in illegal file sharing.

The 7m figure comes from the Strategic Advisory Board for Intellectual Property, a Government advisory body.

As if the Government taking official statistics directly from partisan sources wasn't bad enough, the BBC reporter Oliver Hawkins also found that the figures were based on some highly questionable assumptions

The Advisory Board claimed it commissioned the research from a team of academics at University College London, who it transpires got the 7m figure from a paper published by Forrester Research.

The More or Less team hunted down the relevant Forrester paper, but could find no mention of the 7m figure, so they contacted the report's author Mark Mulligan.

Mulligan claimed the figure actually came from a report he wrote about music industry losses for Forrester subsidiary Jupiter Research. That report was privately commissioned by none other than the music trade body, the BPI.

Fudged figures

As if the Government taking official statistics directly from partisan sources wasn't bad enough, the BBC reporter Oliver Hawkins also found that the figures were based on some highly questionable assumptions.

The 7m figure had actually been rounded up from an actual figure of 6.7m. That 6.7m was gleaned from a 2008 survey of 1,176 net-connected households, 11.6% of which admitted to having used file-sharing software - in other words, only 136 people.

It gets worse. That 11.6% of respondents who admitted to file sharing was adjusted upwards to 16.3% "to reflect the assumption that fewer people admit to file sharing than actually do it." The report's author told the BBC that the adjustment "wasn't just pulled out of thin air" but based on unspecified evidence.

The 6.7m figure was then calculated based on the estimated number of people with internet access in the UK. However, Jupiter research was working on the assumption that there were 40m people online in the UK in 2008, whereas the Government's own Office of National Statistics claimed there were only 33.9m people online during that year.

If the BPI-commissioned Jupiter research had used the Government's online population figures, the total number of file sharers would be 5.6m. If the researchers hadn't adjusted their figures upwards, the total number of file sharers would be only 3.9m - or just over half the figure being bandied about by the Government.

Until next week,

- js.

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