Peer-To-Peer News - The Week In Review - September 10th, ’05

[JackSpratts]

When the Levee Breaks

If it keeps on rainin', levee's goin' to break
If it keeps on rainin', levee's goin' to break
And the water gonna come in, have no place to stay
Well all last night I sat on the levee and moan
Well all last night I sat on the levee and moan
Thinkin' 'bout my baby and my happy home
If it keeps on rainin', levee's goin' to break
If it keeps on rainin', levee's goin' to break
And all these people have no place to stay
Now look here mama what am I to do
Now look here mama what am I to do
I ain't got nobody to tell my troubles to
I works on the levee mama both night and day
I works on the levee mama both night and day
I ain't got nobody, keep the water away
Oh cryin' won't help you, prayin' won't do no good
Oh cryin' won't help you, prayin' won't do no good
When the levee breaks, mama, you got to lose
I works on the levee, mama both night and day
I works on the levee, mama both night and day
I works so hard, to keep the water away
I had a woman, she wouldn't do for me
I had a woman, she wouldn't do for me
I'm goin' back to my used to be
I's a mean old levee, cause me to weep and moan
I's a mean old levee, cause me to weep and moan
Gonna leave my baby, and my happy home

Memphis Minnie, 1929















































September 10th, 2005





Kuro File-Swapper Distributors, User Sentenced To Prison
Carmen Russell

The two-year case against the distributors of Kuro, Taiwan's most popular peer-to-peer (P2P) software, ended yesterday with unprecedented prison sentences for its distributors and one of its users.

"Kuro violated copyright law by offering members software with which to download MP3 music," said Liu Shou-sun, a spokesperson for the Taipei District Court which heard the case.

While the court neglected to adjudicate the legality of P2P software, it found Kuro responsible for encouraging its members to illegally trade copyrighted content through advertising.

In addition to NT$300,000 fines for each of its top three executives, chairman Chen Shou-teng received a sentence of two years in prison while CEO James Chen and general manager Victor Chen were each sentenced to three years.

The court also handed down a four-month prison term to Chen Chia-hui, a member that used Kuro to download more than 900 songs, likely setting an explosive example for Kuro's other estimated 500,000 users.

Ruby Hsu, an attorney who represented IFPI in the Kuro lawsuit, said that the judgment brings Taiwan up to international judicial standards.

"This verdict follows international cases such as those against Kazaa and Grokster," Hsu said, referring to recent court judgments against the two major P2P providers in Australia and the U.S. "The foreign courts have decided that if you offer a P2P service and you know a high percentage of the songs that are traded are copyrighted, you have to take responsibility."

When reminded that the prison sentences deviated from the foreign court rulings, Hsu said that such punishments were necessary in Taiwan.

"In the case of Napster in the U.S., the civil court told them they must shut down and they had to respect the judgment of the court," she explained. "The injunctions against Kuro and Ezpeer have been largely ignored, so Taiwan has had to employ criminal punishments."

Even after yesterday's verdict, Kuro representatives have declared that the show will go on as they appeal to a higher court.

"Currently Kuro's member services and day-to-day business will remain the same," said Kuro attorney C.P. Lee.

Kuro spokesperson Eric Yang added that the company is unlikely to make any changes to the problem areas identified by the court despite the threat of imprisonment.

"We will not stop advertising," he said.

Yang also blew off the idea that the company executives may actually spend time in jail.

"We will worry about that when the appeals verdict is handed down."
http://www.chinapost.com.tw/i_latestdetail.asp?id=30600





Judge Rules Kazaa Illegal

AN AUSTRALIAN judge today ruled that popular peer-to-peer network Kazaa is illegal.

In a groundbreaking decision, Federal Court Judge Murray Wilcox ordered Kazaa's owners Sharman Networks to modify its software to prevent illegal downloading of music files.

While the ruling is only enforceable in Australia, today's verdict is likely to have far-reaching implications for file sharers around the world.

John Kennedy, chairman of the International Federation of Phonographic Industries, told the BBC: "Today's judgement shows that Kazaa, one of the biggest engines of copyright theft and the biggest brand in music piracy worldwide, is illegal."

"This is a milestone in the fight against internet piracy worldwide."

Lawyers representing Sharman say the company plans to appeal against today's decision.
http://www.mirror.co.uk/news/tm_obje...name_page.html





Kazaa Hit By File-Sharing Ruling
BBC

An Australian court has ruled that the popular file-swapping program Kazaa urged its users to breach copyright. The Federal Court ordered Kazaa's owners, Sharman Networks, to modify the software to prevent further piracy. The ruling comes after months of legal wrangling between Sharman Networks, and a group of record labels. The case is the latest courtroom battle between peer-to-peer networks and copyright holders, such as record labels and music studios.

'Milestone'

Although the ruling is only enforceable in Australia, the record industry has hailed it as a victory that would resonate around the world. "Today's judgement shows that Kazaa, one of the biggest engines of copyright theft and the biggest brand in music piracy worldwide, is illegal," said John Kennedy, chairman of the International Federation of Phonographic Industries. "This is a milestone in the fight against internet piracy worldwide."

The defeat for Kazaa comes two months after the Supreme Court in the US ruled that file-sharing services could be held liable for copyright infringement under certain circumstances.

The lawsuit was brought by five record labels - Universal, EMI, Sony BMG, Warner and Festival Mushroom - who said that Kazaa technology helped copyright infringement on a huge scale. The defendants in the case argued they had no control over how people used their technology, comparing it to a photocopier or tape recorder.

Two months to change

In his ruling, Federal Court Judge Murray Wilcox said the owners of Kazaa had "long known that the Kazaa system is widely used for the sharing of copyright files". He went on to say that the effect of the Kazaa website was "to encourage visitors to think it 'cool' to defy the record companies by ignoring copyright constraints". The judge dismissed as "overstated" accusations that Kazaa's owners were infringing copyright themselves. "The more realistic claim is that the respondents authorised users to infringe the applicants' copyright in their sound recordings," he said.

Kazaa's owners were ordered to modify the software within two months to include filters designed to stop the sharing of copyright material. A fresh round of hearings will now be held to determine the level of damages, which could run into the millions of dollars.

"The court has ruled the current Kazaa system illegal," said record industry spokesman Michael Speck said outside the court. "These people have crowed for years about the downloads, 270 million downloads of somebody else's work each month. We will ask the court when it comes to damages to reflect the value of the music these people ripped off."

Lawyers for Kazaa said they would appeal against the decision.

Moving target

The victory for the record industry may be too little, too late. Research shows that file-sharers have already moved from Kazaa to other peer-to-peer software. "It just isn't as big a player as it once was, as BitTorrent and eDonkey are now far more important to file sharers," said Professor Michael Geist, an e- commerce expert at Ottawa University. "This has been a common trend for years as file sharers move between services."

According to internet analysis firm CacheLogic, 60% of the traffic on the net by the end of 2004 was made up of peer-to-peer activity. It found that eDonkey has become the dominant peer-to-peer file-sharing network in countries such as South Korea, Italy, Germany and Spain. In Australia, BitTorrent accounts for more than half of all file-sharing, followed by eDonkey, CacheLogic figures show. FastTrack, the network used by Kazaa, makes up about 10% of all peer-to-peer traffic.
http://news.bbc.co.uk/go/pr/fr/-/1/h...gy/4214810.stm





Music Industry Up-Beat Over Down-Under Victory
William Knight

Record companies have won Australia's largest ever copyright infringement case against Sydney-based Sharman Networks, owners of the Kazaa peer-to-peer file sharing application.

The case took nine months and reviewed a mountain of documents, but the Federal Court found the defendants liable for authorising Kazaa users to infringe copyrighted recordings and for entering into a common design with each other to "carry out, procure or direct" the authorisation to infringe.

The recording industry has been dastardly clever. So clever you might think they were carrying on as normal, but peer-to-peer file sharing has been a very successful loss leader and brought much needed vitality back into the music business.

Loss leading is a sales strategy by which a product is sold at a knock-down price so that other products are purchased at the same time, or the consumer returns and pays a more profitable price later on. The technique is commonly used by the pushers of addictive substances when forging new markets.

Before file sharing the recording industry was in decline. When world sales of recorded music fell by 7.6 per cent in 2003, it was the fourth consecutive year of falling revenues affecting virtually all major markets. Sales in Germany were down 19 per cent, and 30 per cent lower than 1999. Most of Europe experienced similar falls.

Despite the protestations of the International Federation of the Phonographic Industry, which stated: "Internet piracy remains a very significant factor in the decline in world music sales" - the decline was actually due to increased competition among retailers, and boredom among consumers.

With supermarkets stocking only the top ten hits and ruthlessly cutting prices, other retailers resorted to slashing margins to compete. For many retailers – echoing the book publishing industry after the collapse of the net book agreement – it was only viable to stock best-sellers, and the record labels responded with greater emphasis on far fewer, but more famous artists.

The drive for instant profit stifled the rise of new talent and shortened the life of all but the most successful artists. The recording industries back-list of old songs could not find the shelf space it needed and was losing value fast. Meanwhile the public were fed up with processed pop, and slowly they stopped buying.

And that remained the case until file-sharing emerged in force. Suddenly the old, forgotten artists could compete for listeners on level terms with the highly- marketed boy bands and manufactured acts. It was time to download all those albums and singles you failed to buy when you were younger and that you wouldn't, or couldn't, buy at the full price.

But the record companies have slowly turned the screws on illegal file sharing, craftily allowing it to create demand and then moving in on the territory. Single- song downloads have escalated, and music-for-lease is a being pushed as a subscription service. The consumer doesn't even get to own the music in some of these marketing models.

Napster in the UK yesterday reported 55 million downloads and streams in just 15 months from 750,000 members, and one in five of those members no longer purchase CDs. This may sound fabulous, but Napster also report 80 per cent of their clients are over 25, and 75 per cent are male; not really a mixed demographic, and they are probably all IT staff as well.

Yet this mix of users only really points to the growth that is to come from legal music downloads, and there is no wonder the recording industry is cock-a-hoop over winning in Australia. Their loss leading strategy would seem to be paying off, and with subscription services being the favoured model – with new entrants almost daily – they can look forward to big revenues without even producing a CD.

Like the drug pusher, a record company executive reported in Business Week said, "The music industry wants to get people hooked on subscriptions and then increase prices."

And illegal downloading has been a shot in the arm for a beleaguered industry.
http://www.contractoruk.com/002276.html





Day The Music Died
Simon Hayes and wires

SHARMAN Networks chief executive Nikki Hemming wasn't in court to see the music industry deliver its body blow to file sharing, but there's no doubt Justice Wilcox's ruling on the Kazaa peer-to-peer network is a major win for the big record companies.

It was quickly clear to those crowding court 21C in Sydney's Queen's Square complex that the judgment represented a victory for the record labels, which have been fighting peer-to-peer around the world.

Justice Wilcox found the respondents - Sharman Networks, management company LEF Interactive, chief executive Nicola Anne Hemming, business partners Brilliant Digital Entertainment and Altnet, and BDE chief executive Kevin Glenn Bermeister - had authorised copyright infringement.

They have been given two months to install filters to stop traffic in pirated tracks on their system, and face a large damages bill, to be assessed at a later hearing.

Justice Wilcox said the respondents had not installed filtering to stop piracy, and had encouraged piracy through an advertising campaign.

"They also sponsored a Kazaa Revolution campaign attacking the record companies," he said. "To a young audience ... the effect of this web page would be to encourage visitors to think it cool to defy the record companies."

The Australian decision follows a July US Supreme Court judgment that found peer-to-peer networks Grokster and StreamCast were liable for copyright infringement.

The judge in that case argued the two network operators could be sued because they encouraged users to share pirated material in order to build up their audiences.

Kazaa solicitor Mary Still said the company was "confident of a win on appeal".

"Sharman Networks is disappointed that we have not been completely successful,' she said. "But we will appeal those parts of the decision where we were not successful."

Brilliant Digital Entertainment chief executive Kevin Bermeister said he would not comment until the company had time to "fully assess the ruling".

The music companies were pleased with the decision. Music Industry Piracy Investigations spokesman Michael Speck said the case would have a "global impact".

"This was an important case for not only the record companies but for anybody who wants to make a living from creating music," he said. "It's increasingly difficult for online businesses to do anything other than be legal."

Observers said the decision had major implications for digital music.

Anne Flahvin, a senior associate with law firm Baker and McKenzie, said Kazaa could continue to operate, but would have to change its business model.

"Certainly the business model insofar as its use of infringing music goes, it's over," she said. "This decision knocks it on the head."

Ms Flahvin said the decision was good news for peer-to-peer, however, because it did not stop the use of the technology.

"The judge in this case has bent over backwards to give some direction as to what they need to do to keep on the right side of the law," she said. "We may very well see more non-infringing uses of this software." Australian National University senior law lecturer Matthew Rimmer said the case would not necessarily set a precedent for the US.

"The US law is slightly different in some respects," he said. "There are more limited defences in Australia than in the US."

Success in the Kazaa case is also likely to be huge boost for the global music industry, which has been hanging on by its fingernails, blaming music piracy for a huge drop in CD sales.

According to the International Federation of Phonographic Industries, peer-to-peer was partly to blame for a 25 per cent drop in record sales since 1999. In Australia, the value of record sales fell 6 per cent in 2004 to $607 million.

In a statement accompanying the figures, music industry lobby group ARIA said peer-to-peer was one of the major reasons for the sales decline. "The industry attributes the overall decline in both the volume and value of the market to various factors, including ... the significant growth over the past 12 months in the uptake of high-speed internet access in Australia, which more easily enables the illegal downloading of music."

Yesterday ARIA was hailing the decision as a "victory for common sense".

Kazaa's owner, Sharman Networks, had tried to pitch the case as a David and Goliath battle, with an underweight Sharman facing a hulking opponent backed by millions of music industry dollars.

That picture to a large extent reflected the reality of a Sydney North Shore minnow taking on the sheer size and wealth of the global music industry.

The essence of the industry's argument was that Sharman could stop illegal file trading on the network, but chose not to do so.

Indeed, the music giants argued, it encouraged piracy through advertising and promotion, and had "knowledge and awareness of rampant copyright infringement".

"Rather than get asked what's your licence number and told here's a termination notice, they got a biscuit and sent on their way," music industry counsel Tony Bannon SC argued.

Sharman's argument was that it could not control file trading on its network, and that there were no reasonable steps it could take to do so.

Sharman counsel Anthony Meagher SC referred to the Amstrad precedent, in which CBS Songs failed to convince the British House of Lords that the computer maker was implicated in piracy, even though its machines could be used for copyright violation.

Mr Meagher said Sharman's position was not materially different to Amstrad's.

"We provide them with the software to search and download files - we don't control what they put in their MyShare folders," he said. Ironically, while the court has been hearing the case, the world may well have moved on. While Kazaa claims 317 million registered users, experts say it is no longer the largest of the filesharing networks, having ceded that title in the middle of last year to the likes of BitTorrent and eDonkey.

Research released last week by British firm CacheLogic showed eDonkey was the most popular filetrading network, followed by BitTorrent. CacheLogic warned that peer-to-peer was now the largest element on traffic on the networks of major ISPs.

In the wake of Napster, Grokster, StreamCast and now Kazaa, peer-to-peer operators are looking for legitimacy. The most recent entry to the market, BitTorrent, is negotiating with key coyright owners and even seeking venture capital funding.

Kazaa founders Niklas Zennstrom and Janus Friis, meanwhile, have shifted peer- to-peer technology into another sector, and are well advanced on their latest venture, the Skype internet telephone service.
http://australianit.news.com.au/arti...nbv%5E,00.html





Kazaa Ruling Too Late to Stop Downloading
Susan B. Shor

"You're not going to stop people from writing code," said Michael Goodman, senior analyst with Yankee Group. "Unlicensed file sharing will migrate to these countries that don't care." He added that file-sharing networks will just use the model of offshore casinos, which operate in countries that don't prohibit them and whose owners also live in those countries.

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File-sharing network Kazaa must alter its software to try to stop illegal music sharing, a federal judge in Australia ruled Monday, but one analyst said the ruling won't change peer-to- peer file-swapping at all.

"In the end it's about as relevant as anything else these industries have done. Trying to pin down file sharing is like grabbing sand slipping through your fingers," Michael Goodman, senior analyst with Yankee Group, told TechNewsWorld. "Is [the ruling] the final nail in coffin for Kazaa? Who cares?"

"The court system and legislation can't keep up with technology. They're always fighting yesterday's battle," he added.

Users Have Moved On

Much of the music downloading that violates copyright laws now happens on BitTorrent and eDonkey, he said, adding that file-sharing networks will just use the model of offshore casinos, which operate in countries that don't prohibit them and whose owners also live in those countries.

"You're not going to stop people from writing code," he said. "Unlicensed file sharing will migrate to these countries that don't care."

Thirty record companies had joined together to file the lawsuit against Sydney, Australia-based Sharman Networks, which owns Kazaa. Sharman Chief Executive Nikki Hemming and Sharman software partner Altnet were also found guilty of copyright infringement and ordered by Judge Murray R. Wilcox to pay 90 percent of the record industry's costs for the lawsuit. Kazaa said in a brief statement that it will appeal the decision.

Similar US Ruling

In June, the U.S. Supreme Court ruled that file-sharing companies could be held liable for any copyright infringement that occurred over their networks. That case involved Grokster and StreamCast Networks' Morpheus .

Goodman said he has been arguing for years that both record labels and musicians should embrace file-sharing and create new business models around it, but from the Recording Industry Association of America's reaction to the decision, it is clear that that is a long way off.

"This decision reflects a growing, international chorus: those who promote theft can be held accountable no matter how they may attempt to escape responsibility," an RIAA statement said. "A corrupt business strategy of attempting to hide offshore is not off limits to the enforcement of rights by creators or law enforcement."

Kazaa's network operated from the island nation of Vanuatu off the Australian coast, but its executives lived in Sydney and Los Angeles, leaving them open to lawsuits in nations with laws against copyright infringement.
http://www.technewsworld.com/story/H...nloading.xhtml





Court Blocks Free File-Sharing Services
Kim Tong-hyung

A local court Wednesday ruled in favor of the music industry in a dispute with Internet companies providing file-swapping services, touching off a heated debate on balancing consumer rights and intellectual property.

The Seoul Central District Court gave the Korean Association of Phonogram Producers (KAPP), a music industry lobby, further protection against the unauthorized downloading of music when it ruled that Internet company Soribada (www.soribada.com) should abandon its current free service model in accordance with copyright protection laws.

Soribada runs the country’s largest peer-to-peer network with more than 5 million subscribers and 400,000 users.

The KAPP filed a lawsuit last November for an injunction to bar Soribada from providing about 67,000 songs on its network that are copyrighted by the music lobby’s member labels.

In the ruling, the court went a step further by announcing that it will now be illegal for Internet users to distribute Soribada’s file-sharing software and share music files with existing peer-to-peer programs, basically ordering a complete halt to the Internet company’s current services.

``The defendant admitted that it is impossible to control individuals from uploading and downloading music files on its network. We order a suspension of Soribada’s services and the distribution of its programs to guard against the infringement of copyrights,’’ the court said.

The court ruling stands in line with the intentions by policymakers to strengthen the protection of copyrights.

In February, the government enforced a new law that bans individuals or companies from sharing copyrighted music without the consent of record companies, barring the trading of music files through peer-to-peer software, e-mail or web logs.

However, the court’s decision is likely to spark controversy over how much Internet companies should be held responsible for the actions of individual users.

A Soribada employee told The Korea Times that the company is considering appealing the court’s ruling.

``Soribada is no longer a separate program running through a single server. It is now more of a technology that is spread over the Web. It’s hard to say if anybody should acquire full control over such activities,’’ he said.

The local recording industry has been arguing that the unauthorized downloading of files has been hurting sales.

It pointed out that the advent of online file-sharing is co- related with a decrease in music sales. But critics say that the causal link does not exist.

Online file-sharing through peer-to-peer networks has become an increasingly contentious issue in Korea, where more than 70 percent of households have an Internet connection.

According to the Samsung Economic Research Institute, the digital music market first overtook the size of the offline market in 2003, when it reached over 190 billion won.

However, critics are skeptical of how far record companies could push their campaign to reduce illegal music downloads.

They point out that the demise of the CD-based music market has more to do with a loss of market share than to individual peer-to-peer activities, with sales from Web sites and telecom operators replacing a large part of the traditional market.

And with major Internet portals and mobile-phones operators, such as SK Telecom, providing customers unlimited access to music files for just 5,000 won per month, some question why recording companies are trying to pin most of the blame on random individuals using peer-to-peer sites.

``I personally think that the court went too far. The advancement in peer-to-peer technology has given consumers more power to distribute products, which is a new environment that the music industry must adapt to,’’ said Lee Dong-san, an official from the civic group Cultural Action.

The KAPP, of which members include major record companies such as Yedang Entertainment and Doremi Media, has been involved in a similar dispute with Bugs Music (www.bugsmusic.co.kr), an Internet site that allowed users to listen to music for free but not download it.

After a series of legal disputes, Bugs Music ended up selling 60 percent of its company to a group of recording companies and gave up its management rights with a KAPP senior official stepping in to head operations.
http://times.hankooki.com/lpage/nati...7362711960.htm





Prosecution Indicts Web Site Operators Of Music Sharing

The prosecution yesterday indicted the chief executive of popular music file-sharing service Soribada on charges of copyright infringement.

The Seoul District Prosecutor's Office said the fee- based music service violated intellectual property laws by servicing music for profit without gaining permission from musicians, officials said yesterday.

Chief executive Yang Chung-hwan and the company itself were indicted on charges of operating a profit- seeking business while using 10 unauthorized Korean pop-music files. Yang was not arrested.

Last month, Seoul Central District Court ordered the company to stop offering Soribada 3 music software to netizens which allows the transfer of MP3 files between users through the company's Web site.

Soribada, the country's largest Internet music-sharing site with an estimated membership of five million, is charged with gaining illegal profits amounting to 318 million won ($300,000) through subscriptions to its downloading and music-streaming services, said the prosecution.

"According to the copyright laws, servicing profitable music requires the consent of three parties - composer, performer and music producer, - involved in a music piece. But, Soribada operated its business without obtaining permission from the first two," the prosecutor said. Under the law, music-sharing websites should get agreements from the Recording Industry Association of Korea, an incorporated organization representing the copyrights of composers and the Federation of Korean Art Performers Organization, a group that advocates for performers' royalties.

In a response to yesterday's indictment, Soribada (www. soribada.com), the nation's largest Internet music-sharing site with an estimated membership of five million, said it hasn't decided yet whether to appeal the case to a higher court, said a public relations manager of Soribada. The company's head, Yang has insisted that Soribada should be regarded as any other search engine on the Internet.

Under the new law adopted last February, online music distributors such as Bugs Music and Soribada have been forced to abandon their free-service model and are currently providing new services that charge subscriber fees to cover royalty fees due to the record companies.

Bugs Music, the nation's biggest online music streaming site (www.bugs.co.kr), has started to provide paid music-streaming services. Soribada also started to adopt payment systems and says their system was designed to protect copyright holders if they ever want to operate such fire-sharing services.
http://www.koreaherald.co.kr/SITE/da...0509090014.asp





Myanmar To Enact Intellectual Property Protection Law

Myanmar is finalizing a draft intellectual property protection (IPP) law for promulgation by next January to provide legal basis for artists in their undertakings, legal sources said on Thursday.

The law, drafted under guidelines of the World Intellectual Property Organization (WIPO), would cover intellectual property rights in terms of literature, arts, trade mark, mechanical design and invention, it said.

Artists of respective fields including literature, music, drama and film industry have expressed welcome over the move, saying that the law would help provide protection for art creators.

Myanmar's drafting of the law began in 2004 and the country is the last among member countries of the Association of Southeast Asian Nations to promulgate such law, the sources added.

The move constitutes part of the implementation of the World Trade Organization (WTO) and Trade-Related Aspects of Intellectual Property Rights Agreement reached in January 2000.

Myanmar became a member of the WTO and WIPO in 1995 and 2000 respectively and was set to complete drafting of the IPP law by the end of 2005 along with other least developing countries.
http://english.people.com.cn/200509/...01_205768.html





Game Piracy Outlook Bleak For Near-Term

The video game industry is especially vulnerable to piracy because there is only one revenue window for a title. Electronic Arts' "Madden NFL '06" came out in July, but is already available on so-called "back-up" sites selling steeply discounted copies.
Paul Hyman

When Electronic Arts released its hugely popular "Madden NFL 06" in August, stores sold it -- and continue to sell it -- for $49.95. Today, however, the football game can be had for $6.95 from any number of Web sites that sell "backups" (a euphemism for "copies") of dozens and dozens of hot titles. It's also free for the download from a wide assortment of peer-to-peer sites (P2P) where gamers enthusiastically post and "share" files.

It's all highly illegal, of course. And this growing piracy threat to the video games industry is thought to be more dangerous than the theft of music and films is to those industries because of the tiny commercial window in which game software is released.

According to the Entertainment Software Association (ESA), 60% to 80% of the total revenue a video game earns comes from sales during the first few months after release. There is no secondary market. And so, any piracy that occurs during that initial period has a huge impact on potential sales.

The problem can't all be blamed on the Internet, of course. Piracy of "hard goods" alone -- games that are illegally replicated onto physical media like CDs and DVDs - - is said to cost $3 billion annually. Add online piracy to the mix and the losses to publishers and retailers balloons to -- well, no one really knows.

"We just don't have a good sense as to how much additional money online piracy (represents). I've seen estimates as low as $1 billion annually and as high as $3 billion," says Ric Hirsch, the ESA's senior vp for intellectual property enforcement. "The problem is that measuring activity on the Internet -- legitimate or otherwise -- is much more difficult than measuring the loss due to hard-goods piracy. When a hacker cracks a game's protection code and puts the game on the Web, it's impossible to determine how many downloads will result."

Until last year, Mark Litvack was the vp and director of legal affairs worldwide anti-piracy for the Motion Picture Association of America (MPAA). Today, he is a partner with LA-based Mitchell Silberberg and Knupp LLP, a law firm that focuses on intellectual property matters and piracy, among other things, in the video game, film, and recording industries. Litvack half-jokes that "the only way to totally secure and make something pirate-proof is to never distribute it."

"In this country Internet bandwidth will continue to expand and access to it will become cheaper, making it simpler and more cost-effective for the video games industry to distribute content online," predicts Litvack. "It's so much less expensive than pressing a disk, replicating it, packaging it and driving it to the store, especially with today's gas prices. But, as my former boss [at MPAA], Jack Valenti, once said: 'Bandwidth is an ever-shrinking mode of protection.' "

At the Washington-based ESA, the trade association of the video games industry, Ric Hirsch concurs that the problem will get worse before it gets better.

"The Internet as a vehicle for downloading digital copies of games has accelerated the spread of pirated product globally," he reports. "As hackers have continued to succeed in breaking through copyright protections and putting out unprotected versions of games onto the Internet, we're seeing a lot of the piracy migrate to peer-to-peer environments where games are being copied exponentially. And that, I think, is having an impact overall on putting pirate versions of games into the hands of people a lot sooner than they might otherwise have been because, obviously, hard goods distribution trickles out much more slowly."

To crack down on piracy, Litvack maintains that there needs to be parallel efforts that he likens to "five legs of a multi-leg stool."

"To achieve a balanced effort, all five legs -- legislation, litigation, education, public relations and technology -- must progress together," he says.

But it's an uphill battle to be sure. A survey in February by Santa Clara, Calif.- based Macrovision reveals the extent of the piracy problem in the video games industry. Of 2,219 PC gamers polled, 42% said they have copied PC games from friends and 59% said they have downloaded patches or free copies from the Internet; 46% admitted to obtaining at least one pirated game in the last 24 months; and 15% admitted to acquiring 15 pirated games or more in the past two years. Of the PC gamers, 66% said they have looked for and acquired "cracked" games online, and 18% of them were found on peer-to-peer sites.

Additionally, of the 6,000 Xbox and PlayStation 2 console gamers surveyed, about 21% admitted to playing pirated games and 20% copied games from their friends. About 19% downloaded patches or free copies.

Macrovision develops copy protection products such as SafeDisc, which embeds security measures right into the game's software, and Hawkeye, which aims to reduce the number of illegal downloads on peer-to-peer networks. According to the company, SafeDisc has been added to about 3,000 PC game titles and has shipped on about 300 million disks.

Reducing peer-to-peer activity frequently involves what's known as "spoofing," or posting bogus files which carry the same name as popular games. The object is to fill the P2P sites with unplayable games in order to raise the frustration level of gamers seeking to download a particular file.

The challenge, says Tom DuBois, senior director of business development and marketing at the company's Trymedia Games Business Unit, is to protect the multiple "attack points" at which a game can be copied -- while it is still being created at the developer, while it is in transit between studios, just before it gets replicated and, of course, after it is released.

One popular misconception is that this "hacking" is done casually by gamers with too much time on their hands. According to Todd Basche, senior VP and general manager of Macrovision's Trymedia Group, "there are actually active teams of hackers -- known as "warez" groups -- that compete with each other to be the first to release a hacked version of a major game. The groups have names and brands and they go after the top titles for bragging rights. It's very much an ego thing."

It's also a money thing. There is reportedly plenty of evidence, according to the ESA, that many hackers within the warez groups are in it for the profit too, and that the hacked versions of games are the ones used by the mass replicators in Southeast Asia to make thousands of digital copies for global sale.

While technology hasn't yet found a way to keep the best hackers from cracking a game, Basche maintains that there's a lot to be said for just slowing them down.

"We've done surveys that have shown that every day of protection will buy the publisher more customers," he explains. "Many gamers are looking for the latest, hottest games right away and, if they have to wait two weeks, a fairly large percentage of them will actually go out and buy the title rather than wait. Our studies have shown that about 75% said they would purchase the game if they can't find it for free within a month."

As companies like Macrovision support the "technology leg" of the five-leg anti- piracy stool, the ESA involves itself in the other four, namely legislation, litigation, education, and public relations.

One of the real challenges for the ESA and for law enforcement officials is that many of the warez sites are set up overseas where it is difficult, if not impossible, to shut them down.

"In the U.S., the enforcement environment from an IP standpoint is very good," explains the ESA's Hirsch. "We have an active criminal law enforcement community -- thanks to the Justice Department, the FBI, and Customs -- that is working on elevating IP as a criminal offense priority. But overseas we're really hurt by countries that have not updated their copyright laws. As a result, there are certain countries that are hosts for a lot of pirate activity. Malaysia would be at the top of that list, then China and some countries in Eastern Europe, like the Ukraine and Russia. Those are all countries where, hopefully, through a combination of international pressure and growing recognition by their governments, they will become self-interested in better IP enforcement."

The fear, however, is that because none of this will happen overnight, an unknown number of video game companies will become increasingly adversely affected by piracy, says Hirsch. "Obviously our goal is to minimize that."

In the meantime, the ESA has an active campaign to educate gamers, particularly the children, "who used to be our future consumers but, these days, are our current consumers," adds Hirsch. "They need to know that the games they enjoy are protected by copyright and, if they continue to abuse them through their use of computers and the Internet, ultimately they are doing harm to themselves. I mean, obviously, the ability to produce games is totally dependent on publishers getting a return on their investments."

Hirsch wouldn't speculate on whether the release of next-generation consoles this year and next, all of which will be hooked up to the Internet, will fuel additional pirating activity.

"A lot will depend on the security technologies that the console makers incorporate into their new products, and how quickly those protections are hacked -- if they're hacked at all," he says. "It was a number of years before the security technology on Nintendo's GameCube was broken. There's nothing I know of today that indicates to me that Internet connectivity on consoles will increase piracy. It's possible. We can only hope not."
http://biz.gamedaily.com/features.as...llywood&email=





DVD Jon Hacks Media Player File Encryption
Gavin Clarke

Norway's best known IT export, DVD Jon, has hacked encryption coding in Microsoft's Windows Media Player, opening up content broadcast for the multimedia player to alternative devices on multiple platforms.

Jon Lech Johansen has reverse engineered (http://nanocrew.net/ index.php?s=microsoft) a proprietary algorithm, which is used to wrap Media Player NSC files and ostensibly protect them from hackers sniffing for the media's source IP address, port or stream format. He has also made a decoder available.

Johansen doesn't believe there is a good reason to keep the NSC files encrypted, because once you open the file with Media Player to start viewing the stream, the IP address and port can be revealed by running the netstat network utility that is included with most operating systems.

The hacker hopes his move will make content streamed to Media Player more widely available to users of alternative players on non-Windows platforms.

Johansen achieved notoriety when he was tried and re-tried in a Norwegian court for creating a utility that enabled him to play DVDs on his Linux PC. Prosecutors, acting in the interests of the beloved US Motion Picture Association of America (MPAA), argued he had acted illegally by distributing his DeCSS tool to others via the internet. This, the prosecution, claimed, made it easier to pirate DVDs.

However, the court ruled in his favor, saying he had not broken the law in bypassing DVD scrambling codes that had stopped him from using his PC to play back DVDs.

Earlier this year Johansen developed a work around to bypass digital rights management (DRM) technology in Apple Computer's iTunes.

His latest hack was done to make Media Player content available to the open source VideoLAN Client (VLC) streaming media player. VLC is available for download to 12 different operating systems and Linux distributions and has seen more than six million downloads to Mac. Apple is even pre-loading VLC on some Macs destined for high schools in Florida.

Johansen told The Register he'd acted following requests for NSC support in VLC. One developer (http://sidequest.org/weblog/archives...cast_from.html) is already hard at work integrating Johansen's decoder into the VLC.

Johansen said: "Windows Media Player is not very good and Windows and Mac users should not be forced to use it to view such [NSC] streams."

The NSC file contains information about the stream, such as the name and address of the stream server. When the file is opened in Media Player, the file is decoded and then connected to the stream server specified.

Johansen said claims made by companies like Cisco Systems, who ship products with NSC support, that the encoding he cracked protects the media don't make much sense. "It's more likely that the purpose is to prevent competing media players from supporting the NSC format," he observed.
http://www.theregister.co.uk/2005/09...n_mediaplayer/





Next GPL To Protect Free Software From Lawsuits?
Ingrid Marson

The next version of the General Public License may contain a clause to penalize companies that use software patents against free software.

GPL version 3, a draft of which will be released in January 2006, may contain a patent retaliation clause, Georg Greve, the president of the Free Software Foundation Europe, said Tuesday. Such a clause would mean that if a company accused a free-software product of infringing its software patents, that company would lose the right to distribute that product.

Joachim Jakobs from FSF Europe said such a clause would only affect companies that used their software patents against free software. "We don't want to hinder people from using free software if they merely hold software patents," Jakobs said.

The GPL may also contain a clause to penalize companies that use copy-restricting technologies. "There could be something that addresses this if we can find a sensible way to put it," Greve said.

It is not currently certain whether clauses opposing software patents and digital rights management will actually make it into GPL 3, Greve said.

"These are things that are being tossed around, but whether, how and in what form it will take place, we don't know," he said. "Even (GPL author) Richard Stallman hasn't sat down to work it out yet."

The next version of the GPL is also expected to offer improved compatibility with other free-software licenses and improved internationalization.
http://news.com.com/Next+GPL+to+prot...3-5851365.html