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Old 10-08-06, 01:16 PM   #1
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Default Peer-To-Peer News - The Week In Review - August 12th, '06

"My goodness, it’s my whole personal life. I had no idea somebody was looking over my shoulder." – Thelma Arnold

"I was shocked, and I think other people will be shocked, to learn the information they've been handing over. What we're doing is implicitly trusting a handful of companies with a tremendous amount of our personal information." – Greg Conti

"I want to scream. My information is floating everywhere." – Susan Johnson

"We all have a right to privacy. Nobody should have found this all out." – Thelma Arnold

"Was it the greatest security ever? Well it just got hacked so, no." – Dan Geary

"We ownz u site." – Message left on Sen. Joe Lieberman’s website (D-CT)

"Fire the incompetents. Losing veterans' most sensitive personal information must have consequences." – Sen. John Kerry, D-MA

"I have managed to get a fiber connection to my house, so I kind of dig into that speed on the Internet." – Michael Dell

"The problem with Sweden is that it is a very rational country. This makes the organized pirates both rational and effective." – Geraldine Maloney

"Over the weekend, I hoisted the Jolly Roger, cleared a partition on a test machine, slid the CD into the drive, and prepared to join the ranks of Windows pirates." – Ed Bott

Batten Down the Hatches

What the hell is happening at the VA? Every month brings news of massive data losses, of privacy invasions on war-like scales. Not long ago US senators prodded by big media pointed angry fingers at peer-to-peer for data theft of "strategic proportion." This was their most powerful argument against file-sharing, that the programs would destabilize America’s security by allowing anonymous transfers of her most sensitive information. The problem was it wasn’t true. It was pure hyperbole. A crass manipulation of the public’s trust for the benefit of a handful of international media giants, and their political games opened the biggest backdoor of all, leading directly to this catastrophe.

I’m somewhat encouraged by the senators’ intense if belated spotlight on actual data breaches, and on the media’s reporting of real losses elsewhere. We should by now be fully aware that the greatest threat to information security is not from the programs file-sharers use, but from the very tools the government gives its workers: laptops that contain the personal information of hundreds of thousands of individuals, data on ever expanding hard drives that is inexplicably unencrypted and allowed to be removed from secure locations and taken into vulnerable private homes.

Had Washington not frittered away its resources cynically demonizing file-sharing we wouldn’t be in this dangerous situation now.

The solution is straightforward: tighten up the rules for bringing work home and encrypt the data on these laptops.

Leave P2P alone. It’s a wasteful distraction that takes away much needed focus from the genuine threats facing America’s digital security.



August 12th, '06

CSI: BitTorrent

How'd They Know I Downloaded Meet the Fockers?
Daniel Engber

Download the MP3 audio version of this story here, or sign up for The Explainer's free daily podcast on iTunes.

A wealthy software executive named Shawn Hogan has vowed to fight a copyright-infringement lawsuit in court rather than settle with the Motion Picture Association of America. According to the MPAA, Hogan made the film Meet the Fockers available for download through a BitTorrent file-sharing network. Hogan denies that he did anything of the sort. How do investigators find their targets?

They join the networks. In general, the movie and recording industries search out illegal file-sharers by hiring security firms to monitor popular file-sharing communities and report back on any activity that appears illegal. A company like MediaSentry, for example, will hop on to a file-sharing network and start searching for specific files. (The client provides a list of copyrighted material to check up on.) Investigators use customized versions of standard torrent trackers to sniff out the IP addresses of anyone who makes a given file available. Then they'll take snapshots of all the other files those users offer. They may also try to connect to one of these targets to see if they can make an illegal download.

At this point, the security firm will have the screen name and the IP address of the person they suspect of trading copyrighted material. An IP address is a unique identifier that your computer gets whenever you log on to the Internet. The only entity that knows which user goes with which IP address is the user's Internet service provider. That's why groups like the MPAA have tended to gather a bunch of IP addresses and then file a series of anonymous lawsuits. Once they've done that, they can ask a judge to subpoena an ISP for the names that go along with those addresses. With the names in hand, they can swap out the John Does in the lawsuits for real people.

Critics of this name-gathering approach say these sorts of network trawls can make mistakes. For example, the Recording Industry Association of America threatened to sue a Penn State professor named Peter Usher when investigators mistook a file bearing his name for a song by the artist Usher.

Some file-sharers claim that media-security firms also seed networks with dummy torrents to trick potential pirates into revealing themselves. (One file-sharing company says the MPAA hired a hacker to steal its trade secrets.) A couple of years ago, a pair of young hackers started circulating their own fake downloads that displayed a "Bad Pirate!" message and broadcast your IP address when you opened them up.

The Shawn Hogan case seems to have involved a different sort of investigation. Hogan's lawyer says the complaint against him comes from "Operation D-Elite," a government investigation of the Elite Torrents file-sharing network that resulted in a series of FBI raids in May of last year. The MPAA says its evidence against Hogan consists of a hash file—data that help users coordinate and verify their downloads.

Explainer thanks Seyamack Kouretchian of the Coast Law Group and Seth Schoen of the Electronic Frontier Foundation.

Software Mines Internet To Identify Music Piracy
Laurie Sullivan

Identity Systems will soon roll out software that lets media companies from music to movies search through unstructured text on the Internet to identify piracy.

The software called "Unstructured Data Module" applies analytics and algorithms to scan for hidden relationships in streams of digital data. Beyond information found in traditional databases and spreadsheets, the software digs into e-mails, file directory listings, search results for peer-to-peer (P2P) sites, and lists of top downloaded songs on Web sites, a company executive said Wednesday.

Today, the music industry and movie studios work mainly from neatly organized structured data files. But as the move to digital music accelerates and opens new channels, the industry must work in nontraditional formats to find the slightest variation in song titles and artist names as part of copyright compliance.

"The music industry has a pervasive challenge because song titles and artists' names can be among the hardest to match when the data set is large," said Ramesh Menon, Identity Systems' North American operations director. "We're finding more and more that music societies and publishers are seeking this type of solution as a critical part of copyright compliance."

EMI Music Publishing's copyright system, written in the COBOL programming language, runs on an AS400. The Identity Systems software runs separately on a standalone server.

The two platforms are used to manage royalties and monitor piracy by matching a list of songs received from music associations and music download sites, explains Alec Malyon, IT Director of Royalty & Copyright Systems at EMI. "I extract the master file from the AS400, add an algorithm for the titles, and use the Identity Systems software to match writers against the file we receive," he said.

Music download sites, such as Loudeye, which Nokia acquired this week for $60 million, sends EMI a file of roughly 5 million song titles to match against the music labels master file, for example. The record label has been working with Identity Systems to build a platform. What once took up to six days to process the data, now takes one.

EMI also has copyright watchdogs monitoring Internet sites to verify licenses and rights, taking action when necessary, such as last week's lawsuit brought against file-sharing site LimeWire LLC by some of the world's biggest record labels, including EMI Group Plc.

The complaint filed in Manhattan federal court claimed LimeWire's software allows users to download music without paying for it. It is the latest in a string of lawsuits the music industry has filed in an attempt to slow Internet piracy since the U.S. Supreme Court ruled last year that content companies can take legal action against technology firms that encourage copyright infringement.

"In the case of an infringement, if there's a settlement or ruling, the company sends us a file," Malyon said. "Say the judgment is for $2 million. We match the list with our database to determine which artists and songs we represent, and that's how much they need to pay us."

Typically companies are growing their own, but its' an opportunity for the software vendors to help companies mine and secure the music so it can't be passed around, said Susan Feldman, research vice president of content technologies at IDC. "The Identity Systems software enables companies to identify variations in the data by doing a fuzzy match," she said.

Founded in 1986 as Search Software America (SSA), Identity Systems became a wholly owned subsidiary of Nokia in 2006.

Lessig Seeks Legal Ground For Content Exchange
Martin LaMonica

High-profile legal scholar Lawrence Lessig on Friday called for an initiative to create compatible content licenses as a way to exchange content and promote "free culture."

Lessig spoke at the Wikimedia 2006 conference here, where he heaped praised on the people who contribute to the Wikipedia online encyclopedia.

He said that free exchange of information, particularly in digital form, is enabling a free culture that invites more participation from people.

Lessig said Wikipedia is one of the most visible examples of what he called "read-write culture" where people not only "consume" content, such as movies and books, but also make contributions to cultural works as well. For example, he demonstrated Japanese anime videos that had been "remixed" with different music.

Wikipedia is an online encylopedia where anyone can make edits to pages. The guiding philosophy behind Wikipedia is to give all people access to as much knowledge as possible, according to its co-founder, Jimmy Wales.

"More than anything else in the world, you have ignited this belief" in read-write culture, Lessig said. "Use the great capital you have created to go far beyond where you have demonstrated the success of freedom."

To avoid "islands" of online content, Lessig proposed that licenses that allow people to redistribute and use content in derivative works become interoperable.

He noted that there are licenses that are similar to the Creative Commons license, which Lessig helped create, that allow people to redistribute and reuse creative works.

Lessig proposed that the Software Freedom Law Center, which provides legal advice for free to open-source software organizations, certify equivalent content licenses.

Thus far, no agreement has been reached to bridge the Creative Commons licenses and the GNU Free Documententation License, said Eben Moglen, counsel for the Free Software Foundation, on Friday. He said bridging the two could be the step to broader content licenses.

Lessig said the idea would be that a content creator could say that a derivative work can be used freely using a choice of equivalent licenses, which ultimately will promote exchange of content and thwart digital-rights management schemes.

"If we don't solve this problem now, it's an environmental problem we'll be faced with three, five, eight years for now. As islands of creativity, we now have no simple ways of interoperating," Lessig said.

The Web returns to health

'The Last Frontier' on Internet Draws Big Names and Their Money
Annys Shin

Ninety-five million Americans -- about 80 percent of online adults -- have searched the Web for health information in the past year, and the overwhelming majority have been disappointed.

More than 70 percent of those searchers either did not find what they were looking for or had a hard time knowing what to believe, according to market research studies by Jupiter Research and Yankelovich Inc.

That frustration has attracted some famous deep pockets, including America Online co-founder Steve Case, his former employer Time Warner Inc., the Carlyle Group and Allen & Co. Together, they have put more than $100 million into building virtual destinations that offer consumers something beyond disease encyclopedias.

Some want to make it as easy to choose a doctor as a restaurant. Others eventually hope to offer "virtual assisted living" by monitoring medicines or pacemakers remotely, so the elderly can stay in their homes longer.

"The health category is the last frontier where the Internet has not yet transformed that industry, the way it has done for travel, finance, and commerce," Wayne T. Gattinella, chief executive of WebMD Health Corp., said.

Harnessing the Web to make health care more user-friendly has been a holy grail for entrepreneurs since the earliest days of the dot-com boom. But like many online content businesses, they failed because they could not figure out how to make money.

"The mistake that's been made by a lot of entrepreneurs who have pushed those approaches was an 'if we build it they will come' philosophy," said Jay Savan, a benefits consultant in the St. Louis office of Towers Perrin.

Some sites, such as Drkoop.com relied too heavily on advertising revenue. Named for the former U.S. surgeon general C. Everett Koop, it was worth more than $1 billion at one point, but went out of business in 2001 not long after going public. Its assets -- mainly Internet domain names -- were later sold for $186,000 in bankruptcy court. It is now owned by the HealthCentral Network, an Arlington-based company that is part of the second wave of health information Web businesses.

The dominant player in the field, 10-year-old WebMD, survived by merging with Healtheon, founded in 1996 by Netscape co-founder Jim Clark. He saw the Internet as the best way to bring doctors and patients together and "get all the other [jerks] out of the way." The combined company, which also delved into insurance claims processing, physician practice management software and plastics, did not post a profit until 2003.

The nearly $2 trillion health-care industry remains as fragmented and frustrating as ever. But the market for online health information and services has changed enough to make it a viable business, investors, entrepreneurs and analysts said.

A May 2005 Pew Internet & American Life Project study -- which reported that about 95 million people have searched the Web for health information -- found more people were turning to the Web for information about diet, exercise and over-the-counter drugs. They also do more "health homework" online, such as comparing physicians and hospitals.

"The consumer is starting to expect the same information with respect to a health provider as they expect with an airline or investment vehicle," Gattinella said. "Those are the big forces that will accelerate changes in our industry in the next five years."

It will still be a while yet before finding a heart surgeon is as easy as booking an airline ticket on Orbitz or Travelocity.

"I don't see we're at an inflection point because there is still major limitation on quality information available . . . [and] still limitations on cost information. Those limitations on data are not about to disappear," said Paul Ginsberg, president of Health System Change, a non-partisan research organization in Washington.

But with out-of-pocket medical expenses rising faster than family income, and a small but rapidly growing number of the insured turning to health-savings accounts and high-deductible health plans, consumers have begun shopping around, if not for the best hospital for coronary bypass graft surgery, then at the very least for prescription drugs.

Just as important as changing consumer habits, advertisers are also spending more money on Web ads.

WebMD spun off last year in a successful initial public offering and has seen its ad revenue grow. Last week, it reported a narrower second-quarter loss of $1.16 million, down from $1.5 million a year earlier. Advertising contributed to a 38 percent revenue increase.

As a result, big-name investors are once again bankrolling health information Web sites.

Time Warner has sunk money into Waterfront Media, a four-year-old Brooklyn publisher of self-help information founded by Ben Wolin and Michael Keriakos, two former executives with spirituality and faith Web site Beliefnet.

Unlike three years ago, when money for Internet start-ups was harder to come by, the company this past year raised $6 million from several sources, including Time Warner, to build EverydayHealth.com. The site, set to launch later this year, will deliver personalized health information, even by phone or personal digital assistant, to more than 11 million people who have created profiles on one of Waterfront's existing health-related sites.

The Carlyle Group, Allen & Co., and Sequoia Capital last year invested in HealthCentral Network, formerly ChoiceMedia Inc., which bought a collection of sites created during the dot-com boom and revamped them into a network of 25 condition-specific destinations that offer physician-reviewed information and the ability to connect with ordinary people who have experienced the same illness.

Both HealthCentral Network and Waterfront rely on advertising, and could benefit from a shift among pharmaceutical companies away from television and toward the Web, where they have unlimited time and space to relay such information as side effects.

Revolution Health, probably the most ambitious of WebMD's would-be competitors, is backed by Case and board members/investors such as Carly Fiorina, former chief executive of Hewlett-Packard Co., Franklin D. Raines, former chairman and chief executive of Fannie Mae, and Stephen Wiggins, founder of Oxford Health Plans.

Its Web portal, Revolutionhealth.com, is slated to launch in the fall. Revolution Health plans to offer, in addition to the usual searchable encyclopedia of disease information, tools for finding doctors, making appointments and managing health-related expenses.

What sets Revolution Health apart is its offline investments in walk-in retail clinics at places such as Walgreens and Wal-Mart for minor medical issues, and in insurance providers that offer high-deductible plans directly to consumers.

"It's best to attack this problem through multiple prisms and build a set of services that can attract an audience and can aggregate benefits to those consumers as well as those who want to provide services to those audiences," Case said.

RevolutionHealth.com plans to make money by selling customized services to employers and health plans, selling advertising and charging membership fees for a suite of premium services, which may include access to better-quality doctors.

"We don't want to be the place you go to when you're not feeling well. We want it to feel more like your buddy list and your portfolio, a service that engages you because it's personalized, several times a day, not several times a year," Case said.

There were rumors earlier this year that Google was also looking into the delving into the online health information business, a development that does not surprise any of the current players.

"I think you'll see several other companies coming into this space because it is such a huge marketplace and so underpenetrated at this point," Martin J. Wygod, chairman of WebMD, told analysts during a May conference call.

AOL Posts 20 Million User Queries

'Research' document later removed after hundreds download data file

America Online posted on the Internet – for a brief time – all of the search requests made by more than half-a-million customers, setting users in a rage.

"The utter stupidity of this is staggering," one comment on the website TechCrunch.com said today.

The data released includes all the searches submitted by an estimated 650,000 users over a three-month period, the results of the search, whether the users clicked on the result and where it appeared on the result page.

The file, was posted over the weekend and quickly removed, and TechCrunch said that means someone at AOL realized the damage that was being done and "is also an admission of wrongdoing of sorts."

Either way, the website noted, the information, a file of 439 megabits compressed and about 2 gigabits in standard file formation, now is available because of the estimated 1,000 copies made during the time it was up.

Later seekers of the posting were given an "Error – Bad Request" response.

While the AOL usernames had been changed in the file to a random ID number, TechCrunch said analyzing all searches listed by a single user often can lead people to determine the identity.

"The most serious problem is the fact that many people often search on their own name, or those of their friends and family, to see what information is available about them on the net," TechCrunch said. "Combine these ego searches with porn queries and you have a serious embarrassment.

"Combine them with 'buy ecstasy' and you have evidence of a crime," the website said.

For example, user Number 39509 searched for "oklahoma disciplined pastors," "oklahoma disciplined doctors," and "home loans."

Number 545605 searched for "transfer money to china" and "capital gains on sale of house."

The AOL file included information about 20 million total searches, and logged User IDs, questions, question times, rank of the clicks and destination URLs.

"The goal of this collection is to provide a real query log based on users," the page said. "It could be used for personalization, query reformulation or other type of search research."

The AOL page also provided two warnings.

"This collection is distributed for non-commercial search only. Any application of this collection for commercial purposes is STRICTLY PROHIBITED."

The second was: "Please be aware that these queries are not filtered to remove any content. Pornography is prevalent on the Web and unfiltered search engine logs contain queries by users who are looking for pornographic material."

One of the first comments in response to the posting was from a graduate student working on PageRank algorithms. She wanted to know if further details of the queries were available.

The posting comes just a few months after a judge rejected a blanket subpoena from the Department of Justice to Google, another major Internet presence. The DOJ had sought two month's worth of users' search queries, but Google resisted the subpoena, and Judge James Ware excluded search queries and limited the government's demand for URLs to 50,000.

At the time, Google called it a victory.

"While privacy was not the most significant legal issue in this case (because the government wasn't asking for personally identifiable information), privacy was perhaps the most significant to our users," the company's statement said.

"We believe that if the government was permitted to require Google to hand over search queries, that could have undermined confidence that our users have in our ability to keep their information private."

Google said the judge's ruling in that case meant "that neither the government nor anyone else has carte blanche when demanding data from Internet companies."

Microsoft also has considered releasing similar data to researchers, although not the part that would allow data to be associated with an individual user.

AOL's website did not address the posting.

A Face Is Exposed for AOL Searcher No. 4417749
Michael Barbaro and Tom Zeller Jr.

Buried in a list of 20 million Web search queries collected by AOL and recently released on the Internet is user No. 4417749. The number was assigned by the company to protect the searcher’s anonymity, but it was not much of a shield.

No. 4417749 conducted hundreds of searches over a three-month period on topics ranging from “numb fingers” to “60 single men” to “dog that urinates on everything.”

And search by search, click by click, the identity of AOL user No. 4417749 became easier to discern. There are queries for “landscapers in Lilburn, Ga,” several people with the last name Arnold and “homes sold in shadow lake subdivision gwinnett county georgia.”

It did not take much investigating to follow that data trail to Thelma Arnold, a 62-year-old widow who lives in Lilburn, Ga., frequently researches her friends’ medical ailments and loves her three dogs. “Those are my searches,” she said, after a reporter read part of the list to her.

AOL removed the search data from its site over the weekend and apologized for its release, saying it was an unauthorized move by a team that had hoped it would benefit academic researchers.

But the detailed records of searches conducted by Ms. Arnold and 657,000 other Americans, copies of which continue to circulate online, underscore how much people unintentionally reveal about themselves when they use search engines — and how risky it can be for companies like AOL, Google and Yahoo to compile such data.

Those risks have long pitted privacy advocates against online marketers and other Internet companies seeking to profit from the Internet’s unique ability to track the comings and goings of users, allowing for more focused and therefore more lucrative advertising.

But the unintended consequences of all that data being compiled, stored and cross-linked are what Marc Rotenberg, the executive director of the Electronic Privacy Information Center, a privacy rights group in Washington, called “a ticking privacy time bomb.”

Mr. Rotenberg pointed to Google’s own joust earlier this year with the Justice Department over a subpoena for some of its search data. The company successfully fended off the agency’s demand in court, but several other search companies, including AOL, complied. The Justice Department sought the information to help it defend a challenge to a law that is meant to shield children from sexually explicit material.

“We supported Google at the time,” Mr. Rotenberg said, “but we also said that it was a mistake for Google to be saving so much information because it creates a risk.”

Ms. Arnold, who agreed to discuss her searches with a reporter, said she was shocked to hear that AOL had saved and published three months’ worth of them. “My goodness, it’s my whole personal life,” she said. “I had no idea somebody was looking over my shoulder.”

In the privacy of her four-bedroom home, Ms. Arnold searched for the answers to scores of life’s questions, big and small. How could she buy “school supplies for Iraq children”? What is the “safest place to live”? What is “the best season to visit Italy”?

Her searches are a catalog of intentions, curiosity, anxieties and quotidian questions. There was the day in May, for example, when she typed in “termites,” then “tea for good health” then “mature living,” all within a few hours.

Her queries mirror millions of those captured in AOL’s database, which reveal the concerns of expectant mothers, cancer patients, college students and music lovers. User No. 2178 searches for “foods to avoid when breast feeding.” No. 3482401 seeks guidance on “calorie counting.” No. 3483689 searches for the songs “Time After Time” and “Wind Beneath My Wings.”

At times, the searches appear to betray intimate emotions and personal dilemmas. No. 3505202 asks about “depression and medical leave.” No. 7268042 types “fear that spouse contemplating cheating.”

There are also many thousands of sexual queries, along with searches about “child porno” and “how to kill oneself by natural gas” that raise questions about what legal authorities can and should do with such information.

But while these searches can tell the casual observer — or the sociologist or the marketer — much about the person who typed them, they can also prove highly misleading.

At first glace, it might appear that Ms. Arnold fears she is suffering from a wide range of ailments. Her search history includes “hand tremors,” “nicotine effects on the body,” “dry mouth” and “bipolar.” But in an interview, Ms. Arnold said she routinely researched medical conditions for her friends to assuage their anxieties. Explaining her queries about nicotine, for example, she said: “I have a friend who needs to quit smoking and I want to help her do it.”

Asked about Ms. Arnold, an AOL spokesman, Andrew Weinstein, reiterated the company’s position that the data release was a mistake. “We apologize specifically to her,” he said. “There is not a whole lot we can do.”

Mr. Weinstein said he knew of no other cases thus far where users had been identified as a result of the search data, but he was not surprised. “We acknowledged that there was information that could potentially lead to people being identified, which is why we were so angry.”

AOL keeps a record of each user’s search queries for one month, Mr. Weinstein said. This allows users to refer back to previous searches and is also used by AOL to improve the quality of its search technology. The three-month data that was released came from a special system meant for AOL’s internal researchers that does not record the users’ AOL screen names, he said.

Several bloggers claimed yesterday to have identified other AOL users by examining data, while others hunted for particularly entertaining or shocking search histories. Some programmers made this easier by setting up Web sites that let people search the database of searches.

John Battelle, the author of the 2005 book “The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture,” said AOL’s misstep, while unfortunate, could have a silver lining if people began to understand just what was at stake. In his book, he says search engines are mining the priceless “database of intentions” formed by the world’s search requests.

“It’s only by these kinds of screw-ups and unintended behind-the-curtain views that we can push this dialogue along,” Mr. Battelle said. “As unhappy as I am to see this data on people leaked, I’m heartened that we will have this conversation as a culture, which is long overdue.”

Ms. Arnold says she loves online research, but the disclosure of her searches has left her disillusioned. In response, she plans to drop her AOL subscription. “We all have a right to privacy,” she said. “Nobody should have found this all out.”

Saul Hansell contributed reporting for this article.
http://www.nytimes.com/2006/08/09/te... ner=homepage

Google to Keep Storing Search Requests
Michael Liedtke

Although he was alarmed by AOL's haphazard release of its subscribers' online search requests, Google Inc. CEO Eric Schmidt said Wednesday the privacy concerns raised by that breach won't change his company's practice of storing the inquiries made by its users.

"We are reasonably satisfied ... that this sort of thing would not happen at Google, although you can never say never," Schmidt said during an appearance at a major search engine conference in San Jose.

The security breakdown, disclosed earlier this week, publicly exposed about 19 million search requests made by more than 658,000 AOL subscribers during the three months ended in May. Time Warner Inc.'s AOL intended to release the data exclusively to researchers, but the information somehow surfaced on the Internet and was widely copied.

The lapse provided a glaring example of how the information that people enter into search engines can provide a window into their embarrassing - or even potentially incriminating - wishes and desires. The search requests leaked by AOL included inquiries seeking information about murder techniques and nude teenage girls.

AOL's gaffe hits close to home for Google because the two companies have extremely close business ties.

Mountain View-based Google owns a 5 percent stake in AOL, which also accounted for about $330 million of the search engine's revenue during the first half of this year. AOL also depends on Google's algorithms for its search results.

Schmidt told reporters Wednesday he hadn't had time to contact AOL executives to discuss the problems underlying the release of the search data, but questioned his business partner's judgment.

"It's a terrible thing," he said during his conference remarks. "Maybe it wasn't a good idea to release it in the first place."

AOL already has publicly apologized for its handling of the search requests, calling it a "screw up."

In response to a reporter's question, Schmidt said some good could still emerge from AOL's error by raising public awareness about the issue. "It may be positive because we want people to know what can happen" to online search requests, Schmidt said.

Google keeps its users' search requests as part of its efforts to better understand what specific people are looking for on the Internet.

But by storing the search requests, Google and its competitors are creating an opportunity for the material to be mistakenly released or stolen, according to privacy advocates.

Schmidt said he is less concerned about those possibilities than the governments of countries around the world demanding to review people's search requests. "I have always worried the query stream is a fertile ground for governments to snoop on the people."

The U.S. Justice Department last year subpoenaed Google for millions of its users' search requests as part of a court case involving protections against online child pornography.

Google refused to comply, resulting in a high-profile court battle earlier this year that culminated in a federal judge ruling that the search engine didn't have to hand over individual search requests to the government.

In his meeting with reporters, Schmidt also covered familiar ground, including Google's plans to develop more advertising channels and form more revenue-sharing partnerships with content providers.

Toward that end, Google during the past week announced new business alliances with The Associated Press, Viacom Inc.'s MTV Networks and News Corp.'s rapidly growing social networking Web site, MySpace.com. The search engine also plans to start distributing radio ads within the next few months.

Google continues to negotiate with other potential partners, although Schmidt indicated nothing is likely to come to fruition during the next few weeks. "The highest priority right now is not (making) more deals, but implementing the ones we have announced," he told reporters.

Govts Pose Greatest Threat To Web Privacy: Google

Web search leader Google, which stores vast amounts of data on the web-surfing habits of its users, sees government intrusions rather than accidental public disclosures of data as the greatest threat to online privacy, its chief executive has said.

CEO Eric Schmidt told the Search Engine Strategies industry conference that Google had put all necessary safeguards in place to protect its users' personal data from theft or accidental release.

His remarks followed last weekend's discovery by online privacy sleuths that AOL, a key Google search customer, had mistakenly released personally identifiable data on 20 million keyword searches by its users.

Mr Schmidt said a more serious threat to user privacy lay in potential demands on Google by governments to make the company give up data on its customer's surfing habits.

"You can never say never," Mr Schmidt said during an onstage interview with web search industry analyst Danny Sullivan.

"The more interesting question is not an accidental error but something where a government, not just the US Government but maybe a non-US government would try to get in (Google's computer systems)," Mr Schmidt said.

Google won kudos earlier this year from privacy advocates for going to court to block a US Government request for data on Google users. Mr Schmidt warned that such intrusions could occur again.

Google operates one of the world's largest collections of computer databases at its California headquarters. It asks users for permission to store personal data, which it uses to speed web searches to help advertisers target ads.

But Google also operates computer data centres in other countries, including China, where its entry into the market earlier this year stoked controversy over the risks of doing business under China's censorship laws.

Mr Sullivan asked Mr Schmidt why Google does not purge its users' data from its computers every month or two to guard against building up too much history of any web user's search habits.

"We have actually had that debate," Mr Schmidt said, adding that security protections Google has put in place would make it very difficult, if not impossible, to steal customer data. He said keeping users' trust was Google's most essential mission.

AOL, the online unit of media conglomerate Time Warner, apologised on Monday and said it had launched an internal probe into how a research division of the company mistakenly released the data on its website two weeks ago.

The trove of personal data continues to circulate on the web, where it can be downloaded and probed for details on user interests.

Release of the data on searches by about 658,000 anonymous AOL users over a three-month period has provoked a firestorm of criticism over the risks created by collecting vast stores of personal data as many online companies do, including Google, Microsoft, Yahoo, Amazon.com.

Even though the users' names are not attached to the data, they can be identified by the personal nature of many web searches.

"It is obviously a terrible thing," Mr Schmidt said of the AOL data breach. "The data that was released was obviously not anonymised enough."

Patient information Stolen From Vassar Brothers Medical Center

Vassar Brothers Medical Center has received a deluge of calls since officials revealed that a laptop containing personal information identifying 257,800 patients was stolen.

The laptop was stolen in late June, but Poughkeepsie police have no leads, Detective Lt. William Siegrist said.

All of the patients who had personal information compromised have been notified, said President and Chief Executive Officer Dr. Daniel Aronson.

But some patients did not receive a letter of notification until Thursday, and have not had the opportunity to place a fraud alert with any of the three national credit bureaus.

"I want to scream. My information is floating everywhere," said Susan Johnson, who received a letter Thursday.

The hospital was forced to bring in additional staff to field calls from concerned patients.

The information in the laptop dated back about 20 years, said Nick Christiano, the hospital's chief information officer.

"Patients and former patients were calling in who did not receive a letter concerned about their private information," Aronson said. "They don't have to worry."

Hospital officials said the laptop was kept secured to a mobile cart in a secured room in a restricted area.

"The room is normally locked and the room is secured so the public usually can't get in and medical personnel need a card," Aronson said.

Security videos did not reveal any suspects, police said.

The laptop served as the backup database for admissions to the emergency department in case of an outage. It was also used in two disaster drills.

Patient information was not encrypted, but protected with a password, spokeswoman Jeanine Agnolet said.

The hospital has adopted a new system for storing personal patient information, storing it on a server in a secure location. Laptops are locked and secured in data management sites on the medical center campus.

"You would need to be a high-level, tech-oriented person to get through," he said.

The hospital has notified police and necessary state agencies of the theft, hospital officials said.

Officials at the state Consumer Protection Board indicated the agency had not received a report.

"We take this very seriously," Aronson said. "We take the health of the community very seriously and the trust they entrust us with very seriously. We intend to make sure, through various means, that something like this never happens again."

Oregon Sailor Who Deserted Charged With Espionage; Held In Brig
Michael Felberbaum

A sailor accused of taking a Navy laptop computer loaded with classified information and peddling its contents to a foreign government is being held for possible court-martial, the Navy said Wednesday.

The Navy said in a statement that Petty Officer 3rd Class Ariel J. Weinmann was successful in giving the classified information to an undisclosed foreign government before he destroyed the computer.

The classified information was described as "relating to the national defense of the United States of America ..."

Weinmann, 21, Salem, Ore., was held at the brig at Norfolk Naval Air Station on six charges returned at a July 26 Article 32 hearing, the military equivalent of a grand jury, the Navy said.

The charges include three counts of espionage, including a March 2005 visit to Bahrain to "attempt to communicate, deliver or transmit" the classified information to "a representative, officer, agent or employee of a foreign government," the Navy said.

Months later, the Navy said, Weinmann deserted the submarine USS Albuquerque for more than eight months to travel to Austria and Mexico to "communicate, deliver or transmit" the information to a foreign government.

In March, near Vienna, the Navy alleges, Weinmann used a mallet to destroy the computer's hard drive.

U.S. Fleet Forces Command spokesman Ted Brown would not comment on which government or governments Weinmann is charged with spying for, what he was asking for in exchange for the information, or how he obtained the computer.

Weinmann was picked up at the Dallas-Fort Worth International Airport on March 26 and transferred to Norfolk, the Navy said.

The Virginian-Pilot of Norfolk reported his confinement last week and on Wednesday detailed the charges against the sailor.

The Navy also charged Weinmann with failing to properly safeguard and store classified information, making an electronic copy of classified information, communicating classified information to a person not entitled to receive it, and stealing and destroying a government computer.

Weinmann, a fire control technician previously assigned to the submarine based at New London, Conn., faces a maximum punishment of death if his fleet commander decides to press for a court-martial.

Weinmann's Naval attorneys have declined to comment.

In Oregon, Ariel Weinmann's father, Rob, said FBI agents and Navy intelligence officers twice searched the family's house.

"I know his values, that in a lot of ways he was very naive, gullible. I definitely don't want him to be a scapegoat," Rob Weinmann said in an interview with KGW-TV.

He said his son joined the Navy in 2003 and was "really gung ho, really excited. He was going to make a career out of being in the Navy."

He said his son had become disillusioned with his mission when he disappeared in 2005.

"Eight months we never heard anything from the Navy about him, they never inquired about him, nothing, until the one day the FBI showed up at our door," he said.

Rob Weinmann said authorities told the family about the sensitive information on the laptop.

He said the family now communicates with their son through censored letters.

2 Teens Accused In Theft of VA Computer
Brian Westley

Two teenagers were arrested Saturday in the theft of a laptop and hard drive containing sensitive data on up to 26.5 million veterans and military personnel, authorities said.

The equipment was stolen May 3 during a burglary at the Maryland home of a Veterans Affairs employee. The laptop and hard drive were turned into the FBI June 28 by an unidentified person in response to a $50,000 reward offer.

The equipment contained the names, Social Security numbers and birth dates of veterans discharged since 1975, in what was the worst-ever breach of government data.

Jesus Alex Pineda, 19, and Christian Brian Montano, 19, both of Rockville, Md., were arrested early Saturday, Montgomery County police said.

Pineda was charged with first-degree burglary and theft over $500. Montano was charged with first-degree burglary, conspiracy to commit first-degree burglary, theft over $500, and conspiracy to commit theft over $500.

Police said charges were pending against a third male suspect who is a juvenile.

"I commend the FBI, Montgomery County Police, VA's Office of Inspector General and other law enforcement agencies for their professionalism and diligence throughout this investigation," Secretary of Veterans Affairs R. James Nicholson said in a statement. "Today's announcement that arrests have been made is good news."

Authorities said the suspects did not specifically target the VA employee's home in Aspen Hill, Md., and did not realize the hard drive contained veterans' information until the case was publicized.

Police did not have any information about attorneys for the suspects. A bond hearing could be held Monday at the earliest, officials said.

The VA announced last month that the FBI has determined with a high degree of confidence that the files were not compromised.

"While this arrest is good news, we were lucky that the data belonging to veterans was not accessed and misused," Steve Buyer, chairman of the House Veterans Affairs Committee, said in a statement.

"The vulnerability is real and with the help of Congress, VA must move forward with information security reform," said Buyer, R-Ind.

Congress is investigating the steps leading up to and after the theft. It also is pondering legislation to improve information security.

Credit Protection Due Vets In Data Theft
Hope Yen

Millions of veterans and active-duty troops whose sensitive personal information was lost by the Veterans Affairs Department will receive some form of credit protection against identity theft, the government said Wednesday.

Separately, the Transportation Department inspector general's office said that one of its laptop computers containing names, birth dates and Social Security numbers for 132,955 Florida residents was stolen July 27 from a government vehicle in suburban Miami.

Transportation officials were helping police investigate the theft of the laptop, which was stolen in Doral, Fla. It is believed to contain data for about 80,667 people issued commercial driver's licenses in the Miami-Dade County area; 42,792 Florida residents holding airman certificates; and 9,496 individuals who obtained personal or commercial driver licenses in Largo near Tampa.

The laptop was protected by a password, and there was no evidence the data has been used illegally, the department said.

VA Secretary Jim Nicholson said his department had arranged for a data analysis company to detect potential patterns of credit misuse for up to 26.5 million veterans whose names, birth dates and Social Security numbers were on a laptop and hard drive taken last May from a VA data analyst's Maryland home.

VA subcontractor Unisys Corp. also agreed to provide one year of free credit monitoring for as many as 38,000 veterans after the company last week lost a desktop computer containing their data at its offices in Reston, Va.

Letters will be sent in coming days to veterans affected in the Unisys case describing how to sign up for the free credit monitoring.

"Protecting veterans from fraud and abuse remains an important priority for VA," Nicholson said in a written statement. "Data breach analysis will provide VA with additional assurances that veterans' personal information remains unharmed."

The VA said ID Analytics, of San Diego, will provide the extra level of protection for those whose records were taken in the May 3 burglary.

In that case, the FBI recovered the laptop and hard drive and determined with a "high degree of confidence" that the data wasn't accessed or copied. Two teens were arrested last Saturday in what now appears to have been a routine burglary.

The VA had offered free credit monitoring for millions of veterans after the theft but withdrew the offer when it was determined the data had not been compromised. Instead, the agency said it would provide some form of credit analysis.

ID Analytics will provide an initial analysis of several industries to determine if there has been any suspicious activity involving the veterans' information. It will then provide follow-up reports every three months for an unspecified period at no cost to veterans or the government, the VA said.

The VA is struggling to repair its image following the high-profile theft last May, which prompted more than a dozen congressional hearings and a blistering VA inspector general's report faulting both the VA employee and his superiors for poor judgment and lax security policies.

Nicholson pledged to make the VA a model for information security. But the VA's announcement on Monday that Unisys had lost data for veterans who received care in Philadelphia and Pittsburgh prompted fresh criticism.

"VA remains unwavering in its resolve to become the leader in protecting personal information, training and educating our employees in best practices," Nicholson said.

Senate's top Democrat Urges VA's Nicholson to Resign After Latest Data Loss

The Senate's top Democrat says Veterans Affairs Secretary Jim Nicholson should resign, calling his leadership a threat to national security after the VA lost another computer containing veterans' personal data.

``Enough is enough,'' Senate Minority Leader Harry Reid, D-Nev., said Tuesday. ``Less than a month after promising to make the VA the 'gold standard' in data security, Secretary Nicholson has again presided over loss of the personal information of thousands more veterans.''

Reid is the third Senate Democrat -- joining Sens. Patrick Leahy of Vermont and John Kerry of Massachusetts -- who has called for Nicholson's ouster following high-profile data thefts at the government's second largest agency.

``Unfortunately, this dangerous incompetence has become all too common in the Bush White House, and it has made America less safe,'' Reid said.

A VA spokesman did not immediately return a phone call seeking comment.

On Monday, the VA announced that one of its subcontractors, Unisys Corp., had lost a desktop computer containing personal data for as many as 38,000 veterans who received care at VA medical centers in Philadelphia and Pittsburgh. The computer was located at Unisys' offices in Reston, Va.

Federal and local authorities were investigating the incident, which is believed to involve veterans' names, addresses, Social Security numbers, dates of birth, insurance carriers and claims data including medical information.

The disclosure came two days after authorities said they had arrested two teens in connection with the May 3 theft of a laptop and external drive containing the personal data of 26.5 million veterans at a VA employee's home in suburban Maryland.

On Tuesday, lawmakers from both parties criticized the latest data loss, which they said needlessly put veterans and active-duty troops at risk of identity theft.

In recent weeks, the VA has also acknowledged losing sensitive data for more than 16,000 veterans in at least two other cases in Minneapolis and Indianapolis.

``We clearly appear to have a systems problem with VA data security that needs to be fixed,'' said Sen. Larry Craig, R-Idaho, who chairs the Senate Veterans Affairs Committee.

Leahy said it was time for Bush to hold Nicholson accountable. In May, White House press secretary Tony Snow said Bush had ``full faith and confidence'' in Nicholson's leadership.

``Each week seems to bring another alarming example of incompetence by the Bush administration to protect the personal information of Americans,'' Leahy said. ``Certainly, our nation's veterans -- who have been willing to make the ultimate sacrifice for their country -- deserve better.''

Kerry agreed. ``Fire the incompetents,'' he said. ``Losing veterans' most sensitive personal information must have consequences.''

Cyber-Thieves Steal $700K Via ATM Hacking
Chris Preimesberger

Cyber-thieves who hacked into the ATM information of at least 800 retail customers in California and Oregon have stolen as much as $700,000 from personal accounts during the last two months, according to police reports.

People who used ATM cards to purchase items at Dollar Tree, a national retail toy store chain, in Modesto and Carmichael, Calif., and Ashland, Ore., have turned in reports of unauthorized withdrawals in the computer-based scam.

Federal and local investigators would not discuss with eWEEK how the thieves stole the information. How many shoppers have been victimized is also an open question.

Brady Mills, supervisor of the Sacramento field office of the U.S. Secret Service, confirmed to eWEEK Aug. 4 that the agency is investigating the thefts and that the bureau has been on the case for about two months.

But Mills would only say that the case is "ongoing" and wouldn't offer any more details about possible suspects or about the process in which the money was stolen.

Dollar Tree Stores is a U.S.-based chain of retail stores headquartered in Chesapeake, Va. Every item sold in the stores is offered for either $1 or less, thus making it a true dollar store. As of July 29, 2006, Dollar Tree operates 3,156 stores in 48 states.

Dollar Tree customers in Modesto began reporting unauthorized ATM withdrawals from their bank accounts on June 12, a report in the Modesto Bee newspaper said.

Local police said that more than 600 accounts were drained of approximately $500,000, according to the report.

On Aug. 1, police in Ashland confirmed that at least 200 people lost more than a total $200,000 due to unauthorized bank account withdrawals after shopping at Dollar Tree stores in the Rogue Valley region of southern Oregon.

In the Sacramento suburb of Carmichael, a shift manager at the Dollar Tree store told eWEEK on Aug. 4 that there hadn't been any ATM-related theft reports for "about two or three weeks" but did confirm that there were "a number of ATM theft claims filed at the store in June and July."

She referred eWEEK to Dollar Tree Store headquarters, which was closed for the day.

Possible Scenarios

Although the details of how the cyber-thieves actually pulled off the Dollar Tree scam are not publicly known, there are some common scenarios that have been known to be troublesome for the ATM/credit card companies and their customers, Dr. David Taylor of enterprise data security specialist Protegrity in Stamford, Conn., told eWEEK.

"I'd say it's most likely that an insider's information was compromised somehow," Taylor said.

Taylor mentioned that there are plenty of federal and state regulations about how encrypted financial data is transferred from location A to location B through a corporate network via the Internet, wireless and phone lines.

"But what about all that unencrypted data [for the day's receipts and for backup purposes] that's still sitting around at the point of sale? That's the [identity and credit card] information that's ripe for the picking," Taylor said.

National chains like Dollar Tree are often franchised to individual owners who often don't have the money to fully secure their sales data as well as a corporate data center.

Click here to read about an insurance company that lost 540,000 employee records.

"If a company has 100, 200 or more stores, that starts getting pretty expensive to completely secure each location," he said. "Generally, local store systems are poorly protected."

Taylor said that the main problem is in the passwords that applications use to communicate with servers.

"The passwords that apps use to link up with servers are often not changed for long periods of time—and they certainly are not as easy to change as a person's PIN," he said.

All a hacker has to do once he or she has compromised a system—through phishing, pharming or some other method—is to know where the right logfiles are on the system during a batch job, and the personal information is easy to obtain, Taylor said.

According to Taylor, IT security administrators are loathe to take down systems more than a few hours at a time every year to change application passwords because so many businesses rely on 24/7 online and ATM purchase systems.

"Business people don't want to see the system down for maintenance like this because they have made commitments to keeping it up for customer service on a round-the-clock basis. It's a real problem," Taylor said.

The bad guys already know all this information, and "what we need is for more of the good guys to know this and do something about it," he added.

Black Hat Takes Vista to Task
Sean Michael Kerner

Microsoft spent a whole day here at the Black Hat conference extolling the security enhancements in its upcoming Vista operating system.

Joanna Rutkowska, a security researcher with security firm Coseinc, spent a day picking it apart.

Then again, what else would you expect from a session at a hacker convention titled: "Subverting Vista Kernel For Fun And Profit"?

Rutkowska took the stage in front of a capacity audience and proceeded to explain how to get around Vista.

She demonstrated two potential attack vectors. One could allow unsigned code to be loaded into the Vista kernel. The second vector involved taking advantage of AMD's Pacific Hardware Virtualization to inject a new form of super malware that Rutkowska claimed to be undetectable.

Rutkowska's Vista kernel attack did not rely on any known bugs in Vista, which is still in beta testing. She stressed that her demonstration did not rely on any implementation bug nor any undocumented Windows Vista functionality.

She characterized her approaches as "legal," using documented SDK (define) features.

One of the new features in Vista Beta 2 is that it requires all kernel mode drivers to be signed. The general idea is to prevent malware from being injected. Rutkowska's effort suggested that Microsoft still has some work to do on this feature.

Rutkowska's method for injecting unsigned (and therefore potentially malicious) drivers into the Vista kernel involved taking advantage of paged memory to bypass Vista security.

In her demo, the shellcode used disabled signature checking, thus allowing any unsigned driver to be subsequently loaded. Taking her attack a step further, she implemented a one-click tool, which she called "Kernelstike" to execute her Vista kernel exploit.

Call it fresh meat for sharks: The audience erupted into spontaneous applause, followed by whoops and woo-hoos throughout her demonstration.

"The fact that this mechanism was bypassed doesn't mean Vista is insecure. It just means it's just not as secure as advertised," Rutkowska said.

Rutkowska brought suggestions that could potentially prevent the subversion of the Vista kernel. One of them involves denying raw disk access from usermode, though she said that approach would likely break many applications.

Rutkowska said she disabled kernel memory paging on her own machine and is just using physical memory instead. She did admit, however, that her machine had 4 GB of RAM and as such paging makes little sense.

Rutkowska also demonstrated a new form of super malware that she said she could use against Vista. The attack involved compromising chipmaker AMD's 64 SVM hardware virtualization features with a tool she called "Blue Pill."

It creates a hypervisor that can control the operating system. A network backdoor can then be inserted onto a compromised Blue Pill machine. Rutkowska developed such a backdoor. She named it "Delusion." She said it was undetectable.

When she connected to it, the remote shell on the compromised Blue Pill machine greeted Rutkowska with the following response: "Hi this is Delusion. Where do you want to go today?"

Hacking the hackers

Defcon Aims To Thwart Counterfeit Badges
Dan Goodin

The thousands of people who waited an hour or more to get into Defcon drove home what a hot ticket this 14-year-old computer-hacking event has become.

In years past, when would-be attendees couldn't afford the admission price, they put their hacking skills to work by creating counterfeit badges. This year, organizers turned to Joe Grand, a designer of consumer electronics hardware, to come up with something that couldn't be easily duplicated. Admission this year costs $100.

"This particular badge, because it's electronic, is hard to counterfeit," Grand said as he pointed to a circular plastic badge with two blinking lights at the top. "To make something like this in a few days could cost a lot of money."

The circular badge's deceptively simple design features the Defcon logo of a skull and crossbones and a smiling face. Two light-emitting diodes designate the eyes, and a tiny microprocessor inside causes them to blink in four different ways.

But the processor isn't something sold at Radio Shack or other electronics stores, said Grand, whose San Diego-based company, Grand Idea Studio, licenses hardware designs to electronics manufacturers. Trying to embed the processor into plastic less than 1/8-inch thick would also be a difficult undertaking.

Grand has added other features to the circuitry in the hopes that attendees will give the badges new capabilities. He said he wouldn't be surprised if someone figures out a way to make the processor act as a remote control that can turn hotel televisions on and off.

In past years, attendees have managed to counterfeit badges anyhow, despite designs meant to thwart copying. A shiny gum wrapper was once used to replicate a badge's holographic icon, Grand said. Another time, hackers were able to duplicate badges even though they had liquid pulsing through them.

"Every time they've taken steps to stop counterfeiting, and every time somebody always figures out a way to counterfeit the badge," Grand said.

Grand's design, and the inevitable attempts to circumvent it, are part of the spirit of Defcon, where some of the world's best-known hackers gather to share ideas and try to one up each other in their endless crusade to get machines to act in ways they weren't designed to behave.

Defcon is also an opportunity for computer-security experts to air some of the latest research.

Greg Conti, a computer science professor at the United States Military Academy, prepared a report that shows just how much information free Web services such as Google Inc. and Yahoo Inc. have about typical Internet users. He wrote a program that allows anyone to see the kind of personal details - including a complete list of every search item ever entered, every location surveyed on a map, and entries put in electronic calendars - routinely stored by such sites.

"I was shocked, and I think other people will be shocked, to learn the information they've been handing over," Conti said in an interview ahead of his presentation. "What we're doing is implicitly trusting a handful of companies with a tremendous amount of our personal information."

Stocks Fall After Apple Computer Delays

Stocks fell Friday on news that Apple Computer would delay its latest quarterly report because of irregularities related to past stock-option grants.

A widening scandal around the backdating of options, which has already resulted in five indictments and a series of restatement announcements at other companies, could roil Wall Street. UnitedHealth Group Inc., the nation's No. 2 insurer, on Wednesday said it would delay filing its quarterly report while it evaluates its stock options granted since 1994.

Apple said it expects to make ''significant changes'' to results for the third quarter because of irregularities related to past stock-option grants.

Every sector fell except for consumer discretionary stocks, which were buoyed by cheery retail sales numbers reported by the Commerce Department. Retail sales rebounded in July, by 1.4 percent, the biggest gain in six months. June's revised sales numbers were down 0.4 percent, much weaker than the 0.1 percent dip originally reported.

In morning trading, the Dow Jones industrial average fell 34.82, or 0.31 percent, to 11,089.55.

Broader stock indicators also dropped. The Standard & Poor's 500 index fell 5.05, or 0.40, to 1,266.76, and the Nasdaq composite index fell 13.11, or 0.63 percent, to 2,058.63.

Bonds fell, with the yield on the 10-year Treasury note at 4.96 percent, up from 4.93 percent Thursday. The U.S. dollar was higher against other major currencies and gold prices also rose.

Crude oil futures rose. A barrel of light crude was quoted at $74.15, up 15 cents, in trading on the New York Mercantile Exchange.

Apple's stock fell 86 cents to $63.21. In a filing with the Securities and Exchange Commission, Apple said it expects to have to restate past results to take non-cash charges for compensation costs related to stock option granting practices.

Canadian resort operator Intrawest Corp. rose $7.73, or 29 percent, to $34.24 after it agreed to be acquired by private equity firm Fortress Investment Group LLC for about $1.81 billion cash. The $35-per-share cash offer represents a 32 percent premium over Intrawest's Thursday closing price of $26.51 on the New York Stock Exchange.

The Russell 2000 index of smaller companies was down 7.29, or 1.06 percent, to 678.98.

Decliners led advancers by roughly 2 to 1 on the New York Stock Exchange, where volume was 144.54 million, down from 188.30 million Thursday.

Overseas, Japan's Nikkei stock average fell 0.42 percent. In afternoon trading, Britain's FTSE 100 was down 0.32 percent, Germany's DAX index was down 0.29 percent, and France's CAC-40 was up 0.14 percent.

FCC Reaffirms Commitment To Broadband Over Power Lines
Nate Anderson

The FCC has reaffirmed its rules (PDF) governing broadband over power lines (BPL) after challenges from the broadcasting industry and from amateur radio operators sought to derail the BPL train. The rules were passed in 2004, but immediately stirred up opposition among groups worried about potential interference. The television industry wanted to exclude BPL from all frequencies above 50MHz, while amateur radio operators wanted FCC approval withdrawn until it could be conclusively demonstrated that BPL posed no interference issues. The aviation industry also had a complaint, and it wanted the FCC to exclude BPL from certain frequencies that it used. All the claims were denied.

The decision means that BPL deployments can go ahead as planned. The FCC is a booster for BPL because it fits with their current strategy of encouraging broadband competition between types of service rather than among providers of the same service. If BPL trials go well, the service could offer an alternative to cable and DSL. Commissioner Kevin Martin points to BPL's ease of deployment as one of the reasons for his optimism about the technology's future. "BPL has unique advantages for home networking because consumers can simply plug a device into their existing electrical outlets to achieve broadband connectivity," he said. "Promoting the deployment of broadband continues to be one of our top priorities and today's action is another step towards reaching that goal."

Commissioner Copps, one of the two Democrats, issued a separate statement in which he talked up BPL's potential to break up the broadband "duopoly." "We all have high hopes for Broadband over Power Line and I think we would all like to see some non-duopoly pipes bringing broadband access to, particularly, hard to reach Americans," Copps said. "We are behind the game in putting high-speed, high value bandwidth to work for all our citizens. You know something is wrong when the best case scenario is that a consumer has a choice between two broadband connections, both of which are more expensive and considerably slower than what consumers in other industrialized nations enjoy. And that's how it works in our wealthy metropolitan areas. Over much of the rest of America, it just gets worse."

BPL has had a rocky road to market, though recent trials across the country have shown that the technology can work. Whether it ever achieves the market penetration necessary to challenge cable and DSL remains to be seen, but with both BPL and WiMAX on the horizon, Internet providers might at last be spurred into making the kinds of upgrades necessary to bring America up to par with other world broadband leaders.

PBS Firing of Host of ‘The Good Night Show’ Draws Protests
Elizabeth Jensen

When it comes to outrage, parents of toddlers know how to make themselves heard.

The Public Broadcasting Service has weathered recent criticism from free-speech advocates saying that the network is being overly cautious in a new policy to censor foul language in nonfiction programs by digitally obscuring the mouths of speakers. But the outcry has been dwarfed by the thousands of complaints, mostly from parents, over the PBS Kids Sprout network’s firing of Melanie Martinez, the host of “The Good Night Show,” after learning that she appeared years ago in two videos spoofing public service announcements advocating teenage sexual abstinence.

As the controversy has escalated, Ms. Martinez, a 34-year-old New York actress who is married and the mother of a 3-year-old, has become for many a symbol of political expediency run amok. On Thursday PBS’s own ombudsman, Michael Getler, tackled the topic for a second time and wrote that Ms. Martinez’s firing had “too much of a whiff of after-the-fact loyalty oaths and purity checks on performers who do lots of different things.”

Ms. Martinez, who has largely kept silent since her firing was made public on July 20, said in a telephone interview that while she was grateful for the support, she did not relish her new role. Above all, she said, “I’m sad that I don’t have a job and also sad I don’t have that job.”

As host of “The Good Night Show,” a block of evening series that includes “Dragon Tales,” “Bob the Builder” and “Thomas & Friends,” Ms. Martinez introduced cartoons and demonstrated arts and crafts between the segments. “I had the best time making it,” she said. “It was two glorious seasons that I filmed.”

The 30-second videos that led to her firing, made in 2000 and 2001, graphically satirized abstinence programs but were not pornographic. They were downloaded some two million times from a Web site called technicalvirgin.com that was once lauded by Maxim and Howard Stern but has since been dismantled.

David Mack, the co-writer, producer and director of the videos, said in an interview that he removed them in 2004. “When we heard Melanie was auditioning for a PBS kids show, we thought it was not the sort of thing that we would want out there,” he said, adding that “it was an old joke that had run its course.”

But pirated copies of the videos were still ricocheting around the Web, on youtube.com and Google Video, neither of which existed when the videos were made. “We did not conceive of that coming back to haunt us,” Mr. Mack said, adding, “I feel terrible.”

According to both Ms. Martinez and Sprout, she became aware that the videos were still online and told her bosses in mid-July. But Ms. Martinez said she had also disclosed the work, which she called “smartly written,” when she applied for the job at Sprout, a digital cable and satellite channel that broadcasts reruns of shows like “Barney and Friends” and “Sesame Street” and is seen in about 20 million homes. “I’ve never hidden anything on my résumé as far as my acting career,” she said, but “it never came up.”

Asked about Ms. Martinez’s contention that she disclosed the work on her résumé, the president of Sprout, Sandy Wax, said in a statement released through a spokeswoman that “the first time we learned of Ms. Martinez’s appearance in the Technical Virgin video was when she disclosed this information to PBS Kids Sprout on July 14, 2006. Prior to this date, we had no knowledge of the existence of these videos or Ms. Martinez’s role in them from the information we were provided at the time she was cast in the role of ‘Melanie’ a year ago.”

The president of PBS, Paula Kerger, told The Los Angeles Times last week that Ms. Martinez would probably not have been hired had executives known of the videos because “she’s not an actress — she really is supposed to embody the service itself.”

In a statement to parents posted on its Web site, sproutletsgrow.com, Sprout says that “the dialogue in this video is inappropriate for her role as a preschool program host and may undermine her character’s credibility with our audience.”

That didn’t sit well with many parents, who deluged the network with complaints and started two petitions to have her reinstated. Many messages noted that toddlers were unlikely to be surfing the Internet and stumble across the past work.

Sprout is a joint venture of PBS, the cable system operator Comcast Corporation and the producers Hit Entertainment and Sesame Workshop. But PBS has taken the brunt of the ire, with some Internet posters suggesting that protestors withhold donations.

PBS and Sprout would not say how many complaints they had received. Mr. Getler wrote that he had received about 250 e-mail messages, with just one supporting Sprout’s decision. PBS Viewer Services, he wrote, received some 1,700 e-mail messages, about 6 in favor of the Sprout decision, while some 5,000 people have signed the petitions against it.

“It struck me as ironic that at the very time PBS is fighting against new Federal Communications Commission rulings about indecency that the network argues will inhibit documentary filmmakers and freedom of speech, it delivers a subjective punishment to a popular performer for something done seven years ago that was clearly a spoof,” Mr. Getler wrote.

PBS representatives declined to comment. Jenni Glenn, a Sprout spokeswoman, said: “We understand that some viewers are going to be disappointed, and we know that change is difficult for viewers, especially children.” But she said there was no possibility that the decision would be reversed. Sprout hopes to have a new host by the end of the year, she said.

Ms. Martinez said that as a classically trained actress, who has toured with the National Shakespeare Company and appeared with many downtown theater companies, “I’ve done lots of roles and worn many costumes. I did not think a spoof P.S.A. would come up like this again.”

Now, after a visit to her parents in Texas, “where I got that parent hug I needed,” she said she was back in New York, “auditioning and taking meetings, and we’ll see.”

Lily Allen, Britain’s New Pop Star, Has Cheek, and Bite, to Spare
Sia Michel

Lily Allen is a newly minted British pop star, a MySpace hero with 57,000 virtual friends, and the symbol of a new, swaggeringly confident young woman. But that doesn’t mean that this 21-year-old gets any special treatment at home, where she lives with her mom and a baby brother she has immortalized in song as a stoner wastrel in a “stupid fitted cap.”

“I was doing international phoners this morning, and my mum kept clomping around in her big black shoes,” Ms. Allen complained. “I was like, ‘Mom — I’m on Australian radio, leave me alone!,’ and she didn’t even care.” Last week Ms. Allen’s ska-inflected, sharply written and hilariously bratty debut album, “Alright, Still,” entered the British pop chart at No. 2, with a healthy 73,000 copies sold. (It has since gone gold, with more than 100,000 sold.)

The album followed a No. 1 single, “Smile,” a lilting reggae confection that sounds so sunny on first listen that it is shocking to realize that it is a vengeful goodbye to a contrite cheater. “At first when I see you cry/ Yeah, it makes me smile,” Ms. Allen sings in her bright, innocent soprano. In the video she hires thugs to beat up the lad, trash his apartment and — horror of horrors — scratch his vinyl records. When he becomes a sniveling mess, she tenderly consoles him. Then she doses him with laxatives.

Compared with other characters on the album, he gets off easy. Woe is the man who inspired “Not Big,” a slam against a lover who is “rubbish in bed.” Ms. Allen has apparently mined a lot of material from what she calls “two major relationships and one not-so-major relationship.”

“No boy’s ever done anything that crazy to me,” she said, speaking via cellphone as she rode to a hotel in Belgium. “I think I do all the crazy things, and that’s why they end up leaving me.” She giggled hysterically.

Ms. Allen is one of the oddest female artists to emerge in years. She is obsessed with black music, from rock-steady to Jay-Z, but she seems blithely unconcerned with issues of authenticity and appropriation. She sings of shoving girls around at clubs, but has pictures of cute puppies on her blog. She is a pretty, petite woman whose trademark outfit — a vintage evening dress accessorized with flashy sneakers, a 60’s updo, heavy eyeliner, door-knocker earrings and gold chains — recalls Gwen Stefani in the way it stylishly synthesizes a dizzying array of influences. She looks so traditionally feminine that her foul mouth and bellicose nature are amusing surprises.

Like a cross between Oasis in its trash-talking heyday and a beef-starting American rapper, she loves to needle bigger stars. She saves most of her vitriol for male rockers, who cannot fire back without looking like lass-bashing bullies. She recently raised hackles by declaring guitar rock boring, and mocks old ladies in “Nan, You’re a Window Shopper,” a reggae spoof of a 50 Cent song.

“I just can’t keep my mouth shut,” she said. “I don’t really mean to offend anyone. I think I say things that, if I weren’t in the public eye, no one would bat an eyelash at.” During the interview she seemed shy and unconfrontational, bursting into nervous laughter at innocuous questions like “Why are you in Belgium?”

Her feud-mongering has generated loads of news media coverage, which has helped spur her success in Britain. Now Capitol Records has announced that it will release her album in the United States this February. “Lily is compelling on so many levels,” said Andy Slater, the label’s president and chief executive. “She clearly has a point of view, and she’s the first artist I’ve seen this year that offers a sort of rally cry for women under 25.”

In their MySpace “friends comments,” Ms. Allen’s female supporters have praised her rebelliousness (she says she shared her demos on the site despite her label’s concerns); her accessibility (she maintains her own page and often e-mails fans); and her regular-girl problems (she is not as skinny as Kate Moss).

Catchy and timelessly summery, “Alright, Still” lacks the voice-of-a-generation heft of the Arctic Monkeys’ “Whatever People Say I Am, That’s What I’m Not,” another recent British smash built on MySpace buzz. She offers a milquetoast social critique on the calypso track “LDN” (text-message shorthand for “London”): In her hometown, “Everything seems nice/ But if you look twice/ It’s all lies.”

But Ms. Allen does capture a sense of universal teenage angst with her cinematic tales of bad breakups, club spats and backstabbing friends. She symbolizes a new blogging-age, middle-class girl: cockily ambitious, skeptical yet enthusiastic, technically savvy, musically open, obsessed with public expression and ready to fight back.

“She appeals to so many different people,” said Malik Meer, an editor at NME, the British music weekly, which recently featured her on its cover. “She’s young and female, a bit urban and street, but also fashiony. She’s very now.”

Ms. Allen’s revenge-crazed frontwould grow insufferable if it were not relieved by her lost-girl sadness. Songs like the sarcastic swinging 60’s romp “Everything’s Just Wonderful” relay a sense that darkness lurks below every cheery surface. Ms. Allen has alluded to a chaotic childhood in interviews, which might explain her hellfire response to rejection. “Everything was quite comfortable, but everyone was mental,” she told a British newspaper.

She is the daughter of a film-producer mother and a comedian father (Keith Allen, a scenester friend to many rock stars). They split when she was 4. She has said that she changed schools more than a dozen times, became a raver, dropped out and ended up selling Ecstasy in Ibiza when she was 15. On the island she met an A & R representative who introduced her to the duo Future Cut, who later helped write and produced half of her debut.

This past November, while signed to the Regal/Parlophone label, she started her MySpace page and uploaded some demo tracks and party-ready mix tapes (one seamlessly incorporates Ol’ Dirty Bastard, Rod Stewart and yodeling). She says that she did not have a grand strategy, that she was mostly impatient for people to hear her music.

“I knew who Arctic Monkeys were and that they had grown a following through the Internet, but I didn’t know it was on MySpace,” Ms. Allen said. “I didn’t even really know what it was.”

The response was so immediately overwhelming that the label moved up her album release date. Now Ms. Allen is too busy even to update her blog. “My page is in a really bad state at the moment,” she said with a sigh. “There are 15,000 people waiting to be approved as friends. It’s just too much.”

“Alright, Still” has a broad appeal: to people who like sugary, well-made pop, and to people who won’t admit they love sugary, well-made pop unless it comes with a veneer of cutting-edge cool. Ms. Allen’s instant success has earned the inevitable backlash. A rapper recorded the “Smile” parody “Vile” (the video involves sock puppets). And Ms. Allen has been slammed for coasting on her father’s fame, for gentrifying reggae, for being anti-male, for aping the British rapper Mike Skinner of the Streets and for feigning a working-class, East London accent.

“It’s stupid, because I lived in London my whole life,” she said irately. “Other people from England sing in an American accent, and that’s 3,000 miles away. I have a more real accent than they do. East London is five miles down the road.”

When asked what she thinks of another white girl reggae singer — Paris Hilton, the “Stars Are Blind” diva — Ms. Allen was uncharacteristically cautious: “Um... no comment.”

Vindication: Police Drop Wiretap Charges
Andrew Wolfe

Police won’t prosecute a man for using his home security system to record detectives on his front porch, Nashua Police Chief Timothy Hefferan announced Friday.

Michael Gannon was arrested June 27 after he made the videotape to record conversations among detectives who were at his door looking for his 15-year-old son, who was being investigated in connection with a mugging downtown. When Gannon brought the videotape to a police station to complain that a detective was rude to him, he was arrested on felony wiretapping charges.

The case attracted attention around the world, as news spread via the Internet. The Telegraph and city police received scores of phone calls and e-mails condemning the charges.

In addition to dropping the case against him, Nashua police also have concluded that Gannon’s complaint about the detective was justified, although the chief added that Gannon himself was “provocative” and “disrespectful.” The chief declined to say what discipline the detective might face.

Hefferan also commended detectives for their “tenacity and initiative” in investigating Gannon’s 15-year-old son, who was later charged in connection with the mugging. Police also found a stolen handgun inside the house, they reported, but it’s not clear who had possession of it, Hefferan said.

Gannon, 39, expressed relief.

“Glad to hear some good news finally,” he said. “I’ve been worried, a little scared, because they said they were going to hold 21 years over my head.”

After the case became public, the chief had said he would ask a prosecutor, First Assistant County Attorney Roger Chadwick, to review the case against Gannon.

On Friday, after conferring with the prosecutor, Hefferan said he decided to drop the matter.

“It’s the same sense that I had early on when I first learned of this, the morning after it occurred,” Hefferan said. “It wasn’t a real good feeling that I had for it . . . . We felt it would be extremely difficult to convince a jury of this.”

While police believe Gannon had violated state wiretap laws, Hefferan wrote in a statement announcing his decision, police and prosecutors concluded the case wasn’t strong enough to bother prosecuting.

Gannon’s cameras recorded both audio and video, and a sticker on the side of his Morgan Street home warned that persons on the premises were subject to being recorded. Police had charged that Gannon violated state wiretap laws by recording officers without their knowledge while they were standing on his front porch.

It is a crime under state law (RSA 570-A:2) to use any sort of electronic device to eavesdrop or record conversations without the consent of everyone involved. It’s a felony to record other people’s conversations, and a misdemeanor to record one’s own conversations without the other person’s consent.

Gannon said detectives came to his home late at night and refused to leave when he asked them to do so. He took a videocassette to the police station as evidence, saying he wanted to file a complaint against Detective Andrew Karlis, whom he said was rude.

Police have investigated Gannon’s complaint and concluded it was founded, Hefferan said. Hefferan said some action would be taken, but he couldn’t discuss it because the detective has already been publicly identified.

“I have sustained the complaint, and believe one of our detectives did not afford a member of the public the level of courtesy that they expect and deserve, regardless of how provocative, uncooperative or disrespectful that individual may have been to the officer during the same encounter,” Hefferan wrote.

Gannon disputed that he was rude to police, saying he simply asked them repeatedly to leave and used vulgarity only when they ignored his request.

“I told them get the eff out of my house,” Gannon said, adding, “I don’t see how me saying ‘Goodnight, gentlemen’ about 40 times is rude.”

“All I did is file a complaint, and I end up going to jail . . . They put my family through hell,” Gannon said. “I’m not saying my kids are perfect, but the way they came on, they acted like my kids killed the president or something.”

Gannon was released after his wife posted $10,000 bail. Before opting to drop the case, police offered a plea deal, Gannon had said: a 30-day, suspended jail sentence if he admitted to a single misdemeanor charge of evidence tampering.

Gannon refused.

“I felt that I did nothing wrong, so I wasn’t guilty,” he said Friday.

After Gannon turned down that deal, a prosecutor said his case would be sent to the Hillsborough County Attorney’s office for further prosecution. But Hefferan’s decision Friday ends the case.

Gannon appreciated the numerous phone calls he received from people offering their support, “people saying they backed me and all that.”

“But at the same time, I’m facing all these trumped charges, running scared,” he said. “I was more worried about the 21 years than anything else.”

Gannon said he hopes police will return and reinstall the security cameras, which they seized from his home during a search after his arrest.

“They broke them off the mounts and ripped the wires right out of the wall,” Gannon said. “They took it, they can return it, that’s my feeling.”

Hefferan said police will return Gannon’s equipment. He has yet to determine whether police can make public a copy of the videotapes, however. Because the recording is technically illegal, he said, it would be a crime to distribute it.

“I’m not sure whether I can do that,” Hefferan said.

The state wiretap law notwithstanding, Hefferan said citizens and businesses have the right to set up security systems that include audio recording, but they must post clear, obvious notice to warn anyone within range. The “obscure little sticker” Gannon had posted on the side of his house wasn’t enough, Hefferan said.

The case is being discussed in a forum on the Telegraph Web site, at www.nashuatelegraph.com/gannon.

Despite Protest, Hong Kong Surveillance Law Passes
Keith Bradsher

Pro-Beijing lawmakers approved legislation here today giving broad authority to the police to conduct covert surveillance, including wiretapping phones, bugging homes and offices and monitoring e-mail.

The bill passed the 60-member Legislative Council on a vote of 32 to 0 soon after pro-democracy lawmakers walked out of the chamber in protest early this morning. The Democratic Party and its allies had tried to introduce nearly 200 amendments to the bill through four days of marathon debates, but all were defeated or ruled out of order.

Ambrose S.K. Lee, the secretary for security, welcomed the legislation, saying it was necessary to fight crime. “I wish to assure the residents of Hong Kong that the law now is a good balance between effective law enforcement on the one hand and the protection of privacy on the other,” he said.

But James To, the Democratic Party lawmaker who is the chairman of the legislature’s security committee, said the law gave too much discretion to the police and to the chief executive. He contended that the law would make it too easy for the government to monitor political opponents.

He objected to the law’s broad authorization of covert surveillance for the sake of public security and to the creation of a three-judge panel chosen by the chief executive to review such surveillance.

The government has said that it would not apply a political litmus test in choosing the panel’s members from among the two dozen judges eligible for it. But Mr. To was skeptical.

“We don’t know whether it’s a political vetting or not,” he said.

The government also promised not to use covert surveillance for political spying, but blocked efforts by democracy advocates to write an explicit ban on political surveillance into the law.

Since long before Britain returned Hong Kong to China in 1997, the police here relied on a section of the city’s telecommunications ordinance for their authority to conduct covert surveillance.

But a Hong Kong court ruled early this year that the section did not comply with the Basic Law, Hong Kong’s mini-constitution. The court effectively gave a deadline of Aug. 8 for the adoption of new legislation. The territory’s highest court, the Court of Final Appeal, upheld the decision and the deadline two weeks ago,

The police have said little about the extent of covert surveillance here. Prosecutors seldom introduce evidence in court based on covert surveillance partly to avoid having to answer questions from defense lawyers about the surveillance and about whether any exculpatory evidence was also gathered.

The new law sharply limits the ability of defense lawyers to ask such questions during trials, a provision that was opposed by the Hong Kong Bar Association.

Recent court cases have provided hints that the surveillance is extensive. Some experts said that establishing a clear legal framework for the surveillance represented an improvement.

“It’s going on anyway — it’s a lot better to have something on the statute books even if it is fairly draconian,” said Stephen G. Vickers, a top police intelligence official during British rule here who is now the president and chief executive of International Risk Ltd., a security consulting firm.

The bill was particularly controversial because it does not prohibit covert surveillance of journalists and because it imposes only a few restrictions on covert surveillance of lawyers. Lawyers are subject to surveillance, but while they are in their homes and offices they can only be monitored if they are personally suspected of committing serious crimes or posing a threat to public security.

The government promised to review the legislation in 2009. Its allies in the legislature defeated a sunset provision introduced by pro-democracy lawmakers that would have required the government to reauthorize the bill for any new covert surveillance warrants to be issued after Aug. 8, 2008; the pro-democracy lawmakers walked out in protest after the defeat of the sunset provision, clearing the way for final passage.

Chinese state security agencies maintain very extensive operations here that have reportedly expanded considerably following the huge democracy protests that filled the streets in 2003 and 2004. The legislation approved today would theoretically cover these agencies’ activities as well, but Chinese agencies have tended to operate with considerable independence from the Hong Kong government and its institutions.

Debate over the covert surveillance bill raised a broader constitutional issue for the courts. Rita Fan, the pro-government president of the legislature, ruled that a series of opposition amendments were not permissible because of longstanding rules in the legislature barring members from introducing amendments to government-sponsored bills if the amendments would affect government revenues or spending.

Leung Kwok-hung, an independent lawmaker and the legislature’s only avowed Trotskyite, filed a legal challenge on Saturday to the legislature’s rules, contending that they limited powers granted to the legislature by the Basic Law. The executive branch of government here has been insistent on controlling public revenues and spending.
http://www.nytimes.com/2006/08/06/wo...n er=homepage

Judges Consolidate Suits Over Bush Telecom Spy Program In San Francisco

A federal panel of judges has consolidated 17 lawsuits throughout the United States filed against telephone companies accused of assisting the Bush administration monitor Americans' communications without warrants.

The Judicial Panel on Multidistrict Litigation transferred the cases to U.S. District Judge Vaughn Walker, who last month declined to dismiss one of the lawsuits brought against the federal government and AT&T Inc., according to an order released Thursday.

The consolidated lawsuits also target Verizon Communications Inc., Bellsouth Corp. and their affiliates. The panel ruled 26 other lawsuits with similar allegations also may be moved to Walker, who took the bench in 1990 after being nominated by the first President Bush.

Last month, Walker rejected government assertions that the AT&T case had to be dropped because it could expose state secrets and jeopardize the war on terror.

Walker ruled July 20 the warrantless eavesdropping has been so widely reported there's no danger of exposing secrets. No hearing has been set, and the Justice Department has asked Walker to halt the case pending appeal.

The lawsuits challenge President Bush's assertion that he can use his wartime powers to eavesdrop on Americans without a warrant. The suits accuse the companies of illegally making communications on their networks available to the National Security Agency without warrants.

A five-judge panel of federal judges consolidated the cases because they dealt with similar allegations, choosing Walker because the AT&T case was the most advanced.

The case is In Re National Security Agency Telecommunications Records Litigation, 1791.

Holographic Storage A Reality Before The End Of The Year
Peter Pollack

While a few consumers have dived headlong into the war over over HD-DVD Blu-ray HD-DVD I mean Blu-ray dang it, there are those of use who have elected to avoid that particular religious issue until we figure out which format is likely to offer the better afterlife. Should any real market success take long enough to occur, our procrastination may be rewarded with what could turn out to be the real next-gen optical media. Long-promised but rarely seen, commercially available holographic storage devices will become a reality before the end of the year, in the form of a system developed by InPhase Technologies and built by Hitachi Maxell.

Holographic storage has been Three-to-Five Years AwayTM for some time now. While we here at Ars may only have been talking about it for around 5x10-2 centuries, the idea was originally proposed at least as early as 1963 by Polaroid researcher Pieter J. Van Heerden. Lucent later did some work on the concept, then in 2001, the company spun off InPhase with the goal of developing a commercial application for the technology. In a nutshell, holographic storage increases density in an optical medium by storing the data in three dimensions instead of two.

How much greater data density? In the Hitachi Maxell device, a single disc about 1cm larger in diameter than a CD will buy you 300GB. By way of contrast, HD-DVD currently offers a maximum of 30GB on a 2-layer disc, and Blu-ray tops out at 50GB. Although upgrades are in the works that promise to increase the capacity of both of those formats, even the most pie-in-the-sky predictions fall short of what is planned for merely the first commercial generation of holographic storage. Future plans for that medium include boosting the capacity to 800GB in two years, and 1.6TB per disc by 2010.

Don't get too excited, though. First generation systems tend to be expensive—on the order of US$15,000 for the reader/writer and between US$120-$180 for the discs. Also, the media is write-once, meaning that the system will be targeted at enterprise users who need a high-density backup solution. Even then, IT departments may need assurances that the photopolymer medium will remain stable over time.

Still, the real money lies in coming up with a product that can be sold in the mass market. With that in mind, InPhase and Hitachi Maxell have been discussing what form a consumer version of the technology might take. One possibility that has been mentioned is a disc around the size of a postage stamp, which would probably hold about 75-100GB.

SCO Stock Continues Downward Spiral
Bob Mims

"This is now no more than a case study, albeit a very important one, for the software industry," said Stuart Cohen, CEO of the pro-Linux Open Source Development Labs. "It shows that Linux and open source software are bigger than any one company. Linux has won in the courts and is winning in the marketplace. SCO . . . is dead."

In the months after the SCO Group's Linux-related lawsuit against IBM (NYSE: IBM) was filed nearly three and a half years ago, the tiny Utah software company saw its stock soar tenfold.

On Tuesday, though, the Lindon company's stock was a long way from its October 2003 high of US$20.50 per share. After a sustained slide fed by poor earnings results and courthouse reversals, SCO shares closed Tuesday at $2.28 per share.

That was 2 cents per share lower than the company's stock sold for on March 25, 2003. That was the same day SCO, alleging IBM had transferred SCO's proprietary Unix code into its Linux releases, filed its $5 billion complaint against Big Blue in Salt Lake City's U.S. District Court.

Bigger Than Both of Us

On June 27, the day before U.S. Magistrate Brooke Wells gutted two-thirds of SCO's nearly 300 allegations against IBM, shares traded at $4.17. Coming on the heels of SCO's more than doubling its second-quarter losses, to $4.7 million, investors apparently began to lose heart. Prices -- stable for some weeks around $4 -- resumed their tumble.

SCO spokesperson Blake Stowell declined comment. Investors contacted either refused to go on record about the company's market woes, or in the case of SCO's two largest stockholders -- Ralph Yarro, also board chairman, and Glenn Krevlin of Glenhill Capital -- did not immediately return calls.

Market watchers said Tuesday that unless SCO succeeds in getting U.S. District Judge Dale Kimball to review and overturn Wells -- a rare occurrence -- it appears the company's future will be dismal.

"This is now no more than a case study, albeit a very important one, for the software industry," said Stuart Cohen, CEO of the pro-Linux Open Source Development Labs. "It shows that Linux and open source (freely distributed) software are bigger than any one company. Linux has won in the courts and is winning in the marketplace. SCO . . . is dead. This plan (litigation) didn't work at all, and now they are paying the price."
You Should See the Other Guy

Gordon Haff, Illuminata analyst, agreed, saying SCO's strategy appeared to have been one of "throwing out a wide range of claims and allegations in the hope that at least one will stick." He, too, saw Linux -- increasingly seen as an alternative to Windows -- as having grown only stronger from SCO's challenge to its programming integrity.

"It's always hard to prove a negative, to state categorically that Linux adoption wasn't hurt in some way and to some degree," Haff said. "But Linux's continued popularity and adoption certainly suggest that any harm was relatively limited and temporary."
George Weiss of Gartner (NYSE: IT) observed that SCO's stock slide, at least in part, may be linked to lagging interest in the Unix-based products SCO offers in favor of improved applications emerging from various flavors of Linux.

"It's nothing definitive, but one [information technology] manager told me that their application vendor is abandoning SCO and leaving the user in the lurch," Weiss said. "Effectively, he will be forced to migrate, most likely to Linux."

Such doubts, if widespread, "could be a factor influencing stock analysts who like to monitor the vendor's channel," he added.

Google: We Won't Sell Music

Don't look for Google to get into digital music sales anytime soon.

The Internet search giant used a keynote slot at the annual NARM (National Association of Recording Merchandisers) conference to quash rumors of a so-called "Gtunes" store--much to the delight of retailers attending the confab.

"We are not going to be selling music," Chris Sacca, head of business development for Google, said in a Thursday address to music merchants and distributors during the August 2-5 event in Kissimmee, Fla.

Talk of a Google digital music solution has been swirling for more than a year. A Bear Stearns analyst predicted in January that a Google rival to Apple's iTunes Music Store could come in as little as six months. And speculation intensified as the company branched into selling music videos from Sony BMG via Google Video, and offering a new dedicated music search function.

But in the wake of a cool reception to Google video sales, and in the face of a challenging environment for digital rights management and device compatibility, the company appears to be putting the brakes on expectations for a retail play in music and other areas of digital entertainment.

Instead Sacca stressed the need for partnerships and innovations to NARM attendees.

Sacca says the big opportunity in digital music is in developing the ecosystem: one that allows consumers to move content from the home to the car and between devices with ease.

"Once again there is an opportunity (to improve) ease of use," Sacca said, likening it to the way Napster transformed search and discovery, and Apple revolutionized portability and shopping. "But to really grasp this takes a certain amount of humility to look beyond your walls."

Sacca didn't say how, if at all, Google plans to play a role in this. He noted the need for open source systems and protocols to drive collaboration among companies.

He did tout Google's ability to be used as a predictive tool for the success of albums and singles with its trends feature, which tracks the popularity of search terms over time.

"We're already in the music business, because we're the complement to the offline life," he said. "After people hear the name 'Gnarls Barkley' their next move is to go and check on Google for it."

So Google Is No Brand X, but What Is 'Genericide'?
Frank Ahrens

Last month, we noted that "google" had entered Merriam-Webster's Collegiate Dictionary. It was a landmark for the search engine -- going from nonentity to common usage in only eight years. One would think that a company that existed only in the minds of two college dudes a few years ago would be happy that a major publication such as The Washington Post prominently marked the occasion.

One would, that is, until one got a letter from Google's trademark lawyer.

Google, evidently, took offense to this passage in last month's article: "Google, the word, now takes its place alongside the handful of proper nouns that have moved beyond a particular product to become descriptors of an entire sector -- generic trademarks."

This characterization of Google, the letter warned, is "genericide" and should be avoided. Such letters are cranked out every day by companies keen on protecting their trademarks. Wham-O Inc. wants writers to eschew "Frisbee" for "plastic flying disc," for instance. I'll note that in my Palm. Excuse me -- my "personal digital assistant."

Google, however, goes the extra mile and provides a helpful list of appropriate and inappropriate uses of its name. To show how hip and down with the kids Google is, the company gets a little wacky with its examples. Here's one:

" Appropriate: He ego-surfs on the Google search engine to see if he's listed in the results.

Inappropriate: He googles himself."

But this one's our favorite:

" Appr opriate: I ran a Google search to check out that guy from the party.

Inappropriate: I googled that hottie."

It's a matter of debate whether it's appropriate or inappropriate for a market-leading company worth $113 billion to use the word "hottie" in official correspondence. What is beyond debate is the eye-popping fact that Google's trademark complaint arrived via a hand-addressed letter in the actual mail.

Wonder if they Google(TM)-d me to get the address.

Devices That Bridge a Music Gap
Rob Pegoraro

The Internet can bring a radio signal or a recording from the other end of the country to your house, but getting that music from your computer to your stereo can take a little more work.

Computers are a natural at downloading music off the Internet, but most have terrible speakers and don't even occupy the living room in the first place. Stereo systems provide all the volume and sonic fidelity you'd need, but they don't connect to the Internet.

Several years ago, computing vendors started selling a new type of gadget, the wireless media receiver, to fix this problem. It plugged into your stereo but connected to your computer via a wireless network to allow playback of your Web radio feeds and music files: no need to string audio cables from laptop to stereo, or burn audio CDs of each new set of MP3s.

Unfortunately, most of these things did little to smooth over the hassles of home networking and file-sharing.

Now, though, enough time has passed to see the worst contenders swept out of the market, while the survivors have managed to craft some attractive, useful devices. The only thing that's holding them back now may be the online music services that help make their existence necessary in the first place: Each of three receivers I tested from Roku, SlimDevices and Sonos did fine with Web radio and MP3s, but balked at downloads from one or more of the big online stores.

Roku's SoundBridge M1001, at $200 ( http://www.rokulabs.com/ ), was the cheapest of the bunch. This slim cylinder connected to a wireless network with minimal fuss -- once I'd entered the network password by selecting its 26 characters, one at a time, with the remote control's buttons. (Roku supports WEP passwords, not the newer, more secure WPA encryption.)

Unlike the SlimDevices and Sonos hardware, the SoundBridge doesn't need any special software. If you use iTunes, turning on that Apple program's music-sharing option makes your music library available to the receiver; if you use Windows Media Player, Microsoft's free Windows Media Connect software does the same.

You can browse your computer's music by the usual categories of artist, album, song and composer, cue up a set of songs and then shuffle their playback. The SoundBridge's two-line, fairly low-resolution LED display, however, can be hard to read from the couch.

The SoundBridge played standard-issue MP3 and Windows Media Audio files as well as WMA files bought off the MSN Music store and songs rented from the Rhapsody music service. But it couldn't do anything with songs downloaded from the iTunes Music Store -- and instead of skipping to the next track, the SoundBridge halted playback until I responded to this error message with a tap of the remote: "Can't play protected content. [OK]" No, it's not OK!

The blame for that incompatibility falls on Apple, which won't license its FairPlay copy-control system to Roku or other wireless-receiver vendors, even though Apple doesn't sell a true wireless media receiver of its own. (Apple's AirPort Express can play iTunes purchases but lacks a remote control and display.)

SlimDevices' Squeezebox v3, at $299 ( http://www.slimdevices.com/ ), had the same trouble with iTunes downloads but also couldn't play WMA purchases -- the firm says it hasn't seen enough demand for that option to justify the cost of adding it. Entering a wireless password wasn't much more fun with this trim, rectangular device (though it accepts both WPA and WEP encryption), and then I had to install extra software.

And yet the Squeezebox might be the best receiver of them all, considering the creative features it bundles.

It helps that its open-source SlimServer software, available for Windows 2000 and XP, Mac OS X 10.3 and 10.4 and Linux, takes seconds to install and then stays out of your way. It will re-create an iTunes or Windows Media Player library on the Squeezebox, including all your custom playlists and Web radio presets, and can play Rhapsody streams too (though I couldn't get that feature to work).

But the Squeezebox can also connect to SlimDevices' SqueezeNetwork, a free Internet service that features a goody bag of extras. You can play an archive of concert recordings, tune into a customizable set of Web-radio broadcasts, relax to a "Natural Sounds" collection of soothing sonic backdrops (surf, rivers, rain and so on) and subscribe to RSS Web-site feeds (though you see only the briefest summary of them on the Squeezebox's display). And you can get a 90-day free trial of the fascinating Pandora music-recommendation service, which plays music similar to the work of the artist of your choice.

The Squeezebox's display, larger and more legible than Roku's, taxes your eyes less. Its remote, however, needs work; I had to look in the manual to figure out that I had to hold down the left-arrow button for a few seconds to point the SoundBridge to a new music server.

The Sonos ZonePlayer system ( http://www.sonos.com/ ) provides the same basic service as the SoundBridge and Squeezebox, but it's aimed at people in a higher tax bracket -- the entry-level Sonos bundle costs $999. If you need to broadcast different feeds of your computer's music to separate locations around your house, Sonos can do the job quite nicely. But if you just want to hear your computer's music in the living room, this constitutes massive overkill.

That $999 bundle includes two ZonePlayer 80 receivers, $349 sold separately, and a handheld controller, $399 by itself. Because this hardware sets up its own wireless system instead of piggybacking on your WiFi signal, the first ZP80 needs a wired Ethernet connection to either your network's router or the PC or Mac holding your music (running Win 2000 or XP, or Mac OS X 10.3 or 10.4).

Sonos offers about the same compatibility with online music stores as SlimDevices; its clean, simple server software supports Rhapsody streams (with this system, they played on the first try) but not iTunes or WMA purchases.

The Sonos controller provides a much better view of your music -- album art included -- thanks to its color LCD, but it was also a little sluggish to operate. And it drained its rechargeable battery at a frightening rate; a day of moderate use left it with only half a charge.

All these devices have one strange thing in common: They're most practical if you avoid buying music online, instead copying it off your CDs -- or those of friends -- or grabbing it off file-sharing services. Is that really what the online-music industry wants people to do?

News From The North

The TankGirl Diaries


MPAA: "Nordic Pirate Movement 'The Big Threat' to Movie Industry Right Now"

"Net pirates are organizing themselves in Europe", writes Göteborgs-Posten in its fresh story, published in newspaper's Economy & Politics section. "While filesharing debate is raging in North it is still fairly new elsewhere in Europe. But filesharing is advancing also there. Both the pirates and the industry are eager to share their best tips to their colleagues in other countries."

The newspaper goes on to describe how the political pirate movement has been spreading to ever new countries both in the form of Piratbyrån-style lobby organizations and as new sister parties to the Swedish Piratpartiet. Besides quoting various media company representatives from around Europe Göteborgs-Posten also interviews Tobias Andersson from Piratbyrån. "The idea is that we will inspire freshly started groups in the rest of the world. There is a need for an international lobby. We believe we have knowledge to share, and to some degree we can also give economical help", says Tobias.

A particularly interesting quote in the story comes from Geraldine Maloney who works for the MPAA in its European office. She considers the Nordic pirate movement as 'the big threat' against movie industry right now: "The problem with Sweden is that it is a very rational country. This makes the organized pirates both rational and effective."


Michael Moore Fest Ignores Plea To Pull Film
Gregg Kilday

Ignoring a request to remove the documentary "Jesus Camp" from its lineup, Michael Moore's Traverse City (Mich.) Film Festival plans two screenings of the film, one Friday and one Saturday.

The documentary, directed by Heidi Ewing and Rachel Grady, looks at a summer camp for born-again Christian children, and has won top jury awards at this year's Tribeca Film Festival and AFI SilverDocs Film Festival.

After Magnolia Films acquired North American distribution rights last week, the company asked festival organizers to drop the film because it was concerned that any association with the polarizing director of "Fahrenheit 9/11" could damage its prospects in conservative circles.

"The reality of the world we live in today is that if Michael Moore endorses it, tens of millions will automatically reject it," said Magnolia Films president Eamonn Bowles.

Because the film presents the material in a manner that is considered by many who have seen it as fair and objective, Bowles considers it "a Rorshach test. It's very neutral, right down the middle, and different people take away different things from it."
He plans to release "Jesus" in more conservative Christian markets where art films aren't commonly shown, in addition to the indie company's traditional art house venues.

The film's producers originally gave the festival permission to screen the film several weeks ago, before Magnolia became involved. Magnolia sent a formal letter to the festival a week ago asking that it cancel its scheduled screenings but did not hear back, Bowles said late Thursday.

A festival staff member confirmed that the movie is scheduled to screen Friday and Saturday afternoons at the two-year-old festival. Calls to festival directors seeking further comment were not returned.

Facing Voters, Georgia Congressman Gets an Assist From Documentary
Brenda Goodman

The money, endorsements and opinion polls favor her opponent, but Representative Cynthia A. McKinney, who represents Georgia’s Fourth District, has been counting on a movie for last-minute help with the Democratic primary runoff vote here on Tuesday.

The movie, “American Blackout,” is a documentary that embraces Ms. McKinney as a progressive heroine while chronicling the alleged disenfranchisement of black voters in Florida and Ohio in the 2000 and 2004 presidential elections.

After winning prizes on the festival circuit, including a special jury award at this year’s Sundance Film Festival, the movie, directed by Ian Inaba, was headed for commercial release on cable television until Ms. McKinney’s scuffle with a Capitol police officer last March helped put a damper on that plan. Ms. McKinney, who is black, was accused of striking the officer, who is white, after he tried to stop her from entering a House office building. A grand jury declined to indict Ms. McKinney.

But “American Blackout” was rushed to Atlanta last week, where it opened on Friday at the Landmark Midtown theater, and instantly became a factor in Ms. McKinney’s fight to ward off a challenge from Hank Johnson, a former DeKalb County commissioner.

Ms. McKinney has been promoting the movie on her campaign Web site. And though she is famous for letting reporters’ questions ricochet cleanly off her wide smile, she has made herself available to the news media in recent days to talk about film, which she says spotlights issues the mainstream media have ignored.

“I’m not going to talk about myself, personally,” Ms. McKinney said during a phone interview last week, “but the larger disservice is being done to the American people who rely on the press to provide the facts.”

Whether political documentaries affect the outcome of elections is an open question. Michael Moore released his anti-George W. Bush film “Fahrenheit 9/11” in the heat of the 2004 presidential campaign, but Mr. Bush was re-elected. Earlier this year Robert Greenwald announced distribution plans for the movie “The Big Buy: Tom DeLay’s Stolen Congress,” which he produced, during a primary. Mr. DeLay, a longtime Republican representative from Texas, eventually resigned his seat and left Congress, but the documentary was only a tiny factor in the media storm following his indictment on money laundering charges last year.

“I think they do reinforce and intensify people’s feelings,” Michael Cornfield, who teaches political strategy and message at George Washington University, said of political documentaries. Do movies influence how or if people vote? “That’s more aspirational than empirical,” he said.

Still, they try. In late July the producers of “American Blackout,” which was made by the Guerilla News Network, a nonprofit group with operations in New York and California, announced plans to release the film on DVD, including as a special feature interviews with four men, their faces and voices disguised, identified only as black officers with the Capitol Police. The officers, who call the Capitol Hill “the last plantation,” say their white colleagues often made a sport of stopping black members of Congress at security checkpoints, thus bolstering contentions that Ms. McKinney’s troubles with the police were the result of provocation.

“I’m so happy that filmmakers are taking on the role of investigative journalists,” Ms. McKinney said. “And I’m so happy that we have an alternative media that has arisen as a result of the public’s craving for fact rather than faction.”

To make “American Blackout” Mr. Inaba trailed Ms. McKinney for three years, beginning in 2002, as she became the subject of a number of negative news reports because of a quote extracted from a California radio interview. Taken out of context the paraphrased statement seemed to suggest that Ms. McKinney believed the Bush administration was involved in a conspiracy that led to the Sept. 11 attacks.

Mr. Inaba restores the two sentences that preceded her infamous “What do they have to hide?” query, showing that she had asked why both President Bush and Vice President Dick Cheney placed phone calls to Senator Tom Daschle, Democrat of South Dakota, then Senate Majority Leader, urging him not to investigate the disaster. “What do they have to hide?” Ms. McKinney asked.

Mr. Inaba’s cameras were still recording later that year, when Ms. McKinney was placed in the crosshairs of a successful “Anybody but Cynthia” campaign to get Republicans to cross party lines for the 2002 primary to vote her out of office.

“American Blackout” is Mr. Inaba’s first feature-length film. He left careers in investment banking and software development to pick up a camera because, he said, he “wanted to make something.” Before he plunged into documentary filmmaking, he directed a politically themed music video called “Mosh” for the rapper Eminem and a video for the rock group Nine Inch Nails, which, Mr. Inaba said, wasn’t distributed because the group was afraid it would be too controversial.

Ms. McKinney, for her part, was able to reclaim her seat in 2004 after running a largely grassroots campaign. It was a victory she called “one of the greatest political comebacks of all time.”

Two years later, though, after a rash of public criticism over her run-in the Capitol Police officer, the portrayal of Ms. McKinney’s phoenix-like career in “American Blackout” looks eerily familiar.

Republicans have endorsed and funded her relatively unknown challenger, Mr. Johnson, and the Web site that championed her ouster in 2002, goodbyecynthia.com, is once again up and running.

“Voters are very energized and tuned in and believe this is a very important race,” said Deb McGhee Speights, press secretary for Mr. Johnson. “We believe the voters will make their decisions in this election based on something closer to home than a movie.”

Remake ‘The Wicker Man’? Now That’s Scary
Charles Lyons

WE don’t commit murder up here,” Christopher Lee, as Lord Summerisle, says about midway through the 1973 British cult film “The Wicker Man.” “We’re a deeply religious people.” The line is delivered with just the right genteel inflection to unnerve viewers, who until this point have been watching a movie that feels more like a musical, drama or mystery than a horror film.

But almost nothing about the “The Wicker Man” — which co-starred Edward Woodward as a smug Christian policeman, Sergeant Howie, who travels from the Scottish mainland to a remote island to investigate the mysterious disappearance of a young girl — was by the numbers.

A folksy musical score, composed by Paul Giovanni, created a feeling of merriment and innocence, even as Sergeant Howie encountered a shockingly lustful, secret society. The unlikely islanders, celebrating May Day with naked dancing among their Celtic-inspired rituals, included a gyrating Swedish beauty, Britt Ekland. Then came veiled suggestions of human sacrifice, during a slow descent toward trouble.

Such idiosyncrasies of style and content were part of the charm that lured the writer and director Neil LaBute into making a contemporary “Wicker Man,” which will be released in the United States by Warner Brothers on Sept. 1. But it has been no simple matter to honor the film, which was written by the late Anthony Shaffer, while upgrading it for a new audience, even as fans and at least one of the original filmmakers watch warily from the sidelines.

Reached in London recently, Robin Hardy, who directed the original, sounded annoyed by the idea that his picture was being remade at all, and said he was waiting impatiently for a copy of the new script. “The simple fact is that I asked to see the script last August, and they said they would send it to me within two weeks,” he said.

When they finally catch up with the remake, Mr. Hardy and devotees of the original will learn that Mr. LaBute — the 45-year-old playwright whose debut film “In the Company of Men” examined male cruelty toward women — has rediscovered the gender wars in his new version.

Set off the coast of Washington State (and shot near Vancouver), Mr. LaBute’s film stars Nicolas Cage and Ellen Burstyn, along with Kate Beahan, Molly Parker and Leelee Sobieski in an ensemble cast. It transforms Sergeant Howie (Mr. Cage) into a suave, right-leaning California motorcycle cop, while changing the original’s weird community from patriarchy to matriarchy. With the exception of Mr. Cage’s character, the men live at the beck and call of their calm leader, Sister Summerisle, played by Ms. Burstyn.

In a telephone interview in mid-July from Los Angeles, where he was overseeing the final mix of sound elements (the music was composed by Angela Badalamenti), Mr. LaBute said he was interested in probing the assumed white male authority position that Mr. Cage’s character represents, and the inevitable power struggle between men and women. As for the original, Mr. LaBute expressed admiration for its “singularity” but made no apologies for his departures. “It’s like a child leaving home,” he said. “There’s a certain amount of, ‘I’ve come to this as a fan of what you’ve done, but I am going to have to depart from it.’ ”

He added: “There are people out there who say, literally, ‘I don’t care if it’s good or bad, I hate the fact that they are doing it.’ So, that’s a difficult audience to work with. You have to forge yourself ahead and say, I’m making something which, if people are fair with, I think they’ll see that you’re coming to this with good intentions, and trying to retain the spirit of the thing without being slavish to it.”

Mr. Hardy said he had nothing in principle against movie remakes but insisted that “The Wicker Man” was not the most inspired choice for source material, given its unique qualities. “The main thing is that under European law, and also under the rules of simple courtesy, when you remake somebody’s film, you are supposed to give them an idea of how you are going to do it,” he said.

Andrew Hurwitz, a founding partner of New York law firm Epstein, Levinsohn, Bodine, Hurwitz & Weinstein (who does not represent anyone involved with either version), said the laws to which Mr. Hardy referred, known as Droit Morale, or Moral Rights, are distinct from the economic rights that come with owning a copyright. Mr. Hardy said he would be entitled to pursue an injunction against the film in Europe if he doesn’t get to read or see the film before it is released, though he stressed that he would not do so. A spokesman for Lionsgate, which is among the film’s distributors abroad, declined to comment on the potential effect of an injunction.

Mr. Hurwitz said that while it is true that European courts, particularly in France, give greater respect to the moral rights of authors than do American courts, he does not think an injunction would be likely, “unless the remake,” he said, “once viewed, radically distorted the integrity of the underlying film, the way colorization of a black and white film has been found to do.”

Norm Golightly — a partner in Mr. Cage’s Saturn Films, which is one of the movie’s producers — said in any case that he would be delighted to show Mr. Hardy the film prior to release.

In a separate telephone interview, Mr. Cage said there would have been no reason to remake “The Wicker Man” if Mr. LaBute hadn’t approached it from a new vantage point. “I think it’s a homage,” Mr. Cage said of the new film. “It’s a way of us saying this is a wonderful film. It’s not us saying that we are better. If anything, it is a tip of the hat, and perhaps it will inspire people to look at the original again.”

The new movie is likely to bring additional viewers to the original: Anchor Bay Entertainment expects to re-release “The Wicker Man” on DVD on Aug. 22.

Mr. Cage said seeing the original for the first time several years ago left him with a profound feeling that he couldn’t shake for weeks. And Mr. LaBute, who first saw the film while working at the Magic Lantern theater in Spokane, Wash., in the 80’s, said he set out to do “exactly what I felt like the first one had done to me: it took me to a place that felt entirely new, and also entirely worth it.”

Mr. Shafer, who before writing the script had immersed himself in accounts of Druids and their sacrifices, and Celtic fertility rights, once called “The Wicker Man” an “anti-horror film,” for it was conceived as a reaction to the tongue-and-cheek Hammer horror films including “Scars of Dracula,” “Dracula A.D. 1972,” and “Frankenstein Must Be Destroyed” that were made in England from the 50’s through the 70’s.

“We thought it was time to make a film based on a lot of the real background to those Hammer films,” Mr. Hardy explained. “We wanted to turn it on its head and have a real pagan society.” The appeal of that world, he added, was as responsible as the suspense for the movie’s continued impact.

“I personally think it is because we were able to create a society, an imaginary society, which was very attractive to people,” he said of the success of “The Wicker Man.’’ “These people were classless and happy in their religion and their lives, able to express themselves through music and song and dance, and that was very beguiling to the audience.”

Mr. LaBute said the new film probably has a number of scenes that are bloodier than anything in the original. Still, he said, he deliberately exercised restraint in using special effects that, as he put it, provide only a “moment’s pleasure.”

“Even if there are a few people who are pushing you in saying, ‘We would love it if this movie was “Saw” for the first weekend, and it was “The Sixth Sense” for the next five weeks,’ ” he said, “you ultimately have just one film that you can create.”

The movie he finally created, he said, will echo its forebear’s intelligence, even if that means making the contemporary audience work a little harder than usual: “If ‘The Wicker Man’ is a thinking person’s horror film, that’s great.”

For Big Media Players, Bold Moves Are Back
Richard Siklos

IT’S late in the day and it’s 100 degrees outside — our normal patience quotient is at the fraying end,” Richard D. Parsons, the chairman of Time Warner was saying into the phone the other day during an interview. His executives had just presented the latest strategy for improving the fortunes of the company’s AOL division, basically making it a free service.

The test of Mr. Parsons’ unflappability was the incessant baying of reporters and analysts about whether the profit forecast by the company was realistic.

Much of the Street is skeptical of AOL’s plan to phase out most of its declining Internet access business — which accounted for 75 percent of AOL’s $2 billion in revenue in the latest quarter — in favor of the growing business of selling ads to people who could now use the AOL portal and e-mail services free over broadband connections.

While the boldness of the strategy was laudable, it was less clear how the company could offset the loss of mountains of revenue with a combination of increased ad sales and cost-cutting.

But — blame a different kind of heat — the AOL plan does reflect a new audaciousness that is returning to Rupert Murdoch, Robert A. Iger and other masters of Big Media as they grapple with the unending technological upheaval of the day.

After the wave of big mergers that shaped the industry in the 1990’s and early part of this decade, and the dot-com debacle (chief among them the AOL-Time Warner merger itself), many of these companies were understandably gun-shy about changing their business models and embracing the Web. But then a second wave of digital excitement took hold — led by Google’s initial public offering — and many traditional media stocks went into a malaise.

What has become clear is that something had to give. Financial engineering — mergers, breakups, stock buybacks and the like — has not been enough by itself to get investors excited in these companies. Whether it works or not, the new AOL gambit shows the prevailing belief that no one ever dug themselves out of a hole by playing cards at the two-dollar table.

This may explain why two big media stocks in particular have broken out of the doldrums that stalled the sector this year: the News Corporation and the Walt Disney Company.

At the News Corporation, maverick thinking is de rigueur for Mr. Murdoch, the chairman. But what is new is that the company’s shares, after a long slump similar to what Time Warner has endured, have risen 34 percent from a two-year low last October. No wonder Mr. Murdoch pulled out all the stops at a retreat for his top executives last weekend in California, where the likes of Bono, Tony Blair and Bill Clinton served as motivational speakers.

Mr. Murdoch has proved time and again that he will do the unexpected — even if it contradicts not only the conventional wisdom but his own past wisdom. How else to explain his recent musing in an interview on “The Charlie Rose Show” about possibly merging DirecTV, in which News Corporation owns a controlling share, with its archrival EchoStar? “Well, we’d have to get through the negotiating stage, which would be very painful,” Mr. Murdoch said with some understatement.

After all, an attempt a decade or so ago to go into the satellite business with Charles W. Ergen, EchoStar’s chairman, ended in acrimony. Then, in 2002, Mr. Murdoch played his part in helping to scuttle Mr. Ergen’s own deal to merge with DirecTV — setting the stage for Mr. Murdoch to swoop in and add it to his global media empire.

In one tactic back then, News Corporation’s Washington lobbyists distributed a thick binder of analyses and letters decrying such a merger as anticompetitive, in advance of the various regulators turning it down. It was called “The Essential Guide to the EchoStar/DirecTV Deal.”

Mr. Murdoch insists that he and Mr. Ergen are friends, and there are some signs of détente. DirecTV and EchoStar emerged last week as partners in a group that may bid for broadcast spectrum they could use to offer a broadband Internet service to their customers.

But Mr. Murdoch is now arguing that a merger is viable because the world has changed with the advent of Internet video and the nascent entry of telephone companies into the video business. “I think it would be much harder for the government to turn it down today,” he said.

Once again, the analysts are not exactly falling in line with this thinking. Douglas S. Shapiro of Bank of America Securities says that a focus of scrutiny in the earlier merger attempt was the impact in the vast rural markets, where there is little alternative to the satellite companies. “That is sort of the definition of an antitrust no-no,” Mr. Shapiro said. “The idea that Internet video is going to change the dynamic in the near term is pretty far-fetched.”

The point is that Mr. Murdoch revels in the far-fetched. This is the Australian national who became an American citizen in order to buy TV stations here. Now that they have served their purpose, he is looking to sell some of those stations. And while some American publishers have sweated the decision to reduce the size of the broadsheets they print, Mr. Murdoch switched the vaunted Times of London to a tabloid format two years ago with hardly a second thought.

Disney, meanwhile, sharply changed course under Mr. Iger, its new chief executive, who acquired Pixar Animation for $7.4 billion earlier this year. He then went further and scaled back Disney’s own feature film production.

As the analyst Richard Greenfield of Pali Capital noted in a report last week, Pixar’s “Cars” has earned less overseas than the last Pixar hit, “The Incredibles,” trailing it by an average of 54 percent in five countries, including Britain and Japan, after several weeks of box-office results.

While it may be too early to judge the ultimate success of the Pixar acquisition, “it is certainly worth considering how much lower Pixar’s stock would be today” because of “Cars,” Mr. Greenfield wrote. It was a polite way of asking: Just how much did Disney overpay?

For now, at least, it may not matter. The market applauded Mr. Iger’s aplomb in grabbing Pixar and bringing its leaders, John A. Lasseter and Steven P. Jobs, into the Disney fold. Since the Pixar deal was announced, Disney shares have climbed 15 percent, adding $8.7 billion to the company’s market capitalization.

Everything turns in cycles, of course. The list of former chieftains and moguls now on the sidelines because of their flights of visionary thinking is a long one. Whatever its outcome, the new strategies unfolding at AOL, the News Corporation and Disney are shining examples that bold is back and staying the course is no longer an option. Hold on to your hats.

"Love Me, Love My Blog," as Netorati Couple-Surf
Sara Ledwith

A man and a woman sit side-by-side in a New York cafe, drinking beer, sharing food, and not saying a word. Instead of chatting, they are typing on a laptop about the tunes played through a shared iPod.

"Realising that communicating via typing was far more comfortable ... we conducted ... our date without speaking. We traded headphones back and forth and typed and ordered beer and wine and more food ... The waitress thought we were crazy," wrote singer Amanda Palmer at http://www.dresdendolls.com/diary.

As the Internet evolves -- with its webcams, iPods, Instant Messaging, broadband, wi-fi and weblogs -- its image as a relationship-wrecker is changing.

Now a sociable habit is emerging among the Netorati: couple-surfing.

Coined by bloggers responding to a column on the online version of "Wired" (http://www.wired.com/news/columns/0,71074-0.html), couple-surfing describes "netaholics" or "infomaniacs" who surf alongside each other -- doing together what used to be seen as a solitary activity.

It can make cyber-love more playful and informative than the caches of steamy emails left in the late 1990s.

"It's difficult to communicate things like images, sounds and URLs through speech," writes Stanley Lieber (I'm not really Stanley Lieber... and I'm not really from NYC) on the blog.

Started by Nick Currie, alias iMomus, at http://imomus.livejournal.com/199557.html, the blog has attracted over 200 contributions, showing a vast array of ways couples use the Net.

Couple-surfing can apparently be as mundane as telling each other to take the trash out, as intimate as sharing a book by a blazing log fire, or as showy as a masked ball.

"Our new relationship was often the subject of my LJ (blog) entries and I would often say things in there that I wouldn't tell him to his face," writes Kathryn. Another couple -- married for 12 years -- say that for a while they communicated through weblogs without ever discussing their feelings face to face.

"Tender Electroverts"

The Net is a boon for people who are verbally shy, and provides a great way to resolve disputes about facts, say some fans. Some couples play online games together, and computing seems to be a zone where men can be manly.

"For my birthday, he upgraded my RAM and I thought it was incredibly romantic," writes Jess.

But in the same way as real-life interests may diverge, couples who do not share what one blogger called "common geekdom" can find surfing divisive.

A mother from Sweden calls for breakfast tables to be redesigned to accommodate computers, "as it is kind of sad for a son not to see his own father at the table ignoring him and everyone else while he reads the news ..."

And even between geeks -- or "tender electroverts", as blogger Tim H dubs them -- questions of privacy and secrecy raise tensions. Amanda Palmer published the entire typed "conversation" she had with her friend in memoriam, saying he had recently died.

Relate, Britain's largest relationship counselling body, says about one in 10 couples who seek its help cite some sort of computer-related problem, and the trend is on the rise.

"Increasingly, people are saying that time spent on the computer -- not necessarily chat rooms or sexy or suggestive sites -- is an issue," said Denise Knowles, a Relate counsellor.

Her organization has a fact sheet (http://www.relate.org.uk/mediacentre...rrelationship/) to help couples at risk from Internet addiction or extramarital cybersex. It also runs an anonymous email-a-counsellor service.

But Knowles points out that the Net itself is often the medium, not the root, of problems.

"The Internet has highlighted or exposed difficulties in relationships that might have gone unnoticed had there not been a computer in the house," she said.

Currie agreed. Like any absorbing activity, "couple-surfing" only works if both partners are equally enthusiastic, he said.

"After listening to what everybody had to say (on the blog) and thinking about my own relationship, I came to the conclusion that surfing doesn't damage relationships -- as long as both partners are equally into the Internet," he said by e-mail.

"The question then is whether one of them is just faking it!"

Survey: Online Sexual Solicitations Down
Anick Jesdanun

Fewer youths are receiving sexual solicitations over the Internet as they become smarter about where they hang out and with whom they communicate online, researchers said Wednesday.

The findings, from a telephone-based survey sponsored by the government-funded National Center for Missing and Exploited Children, run counter to recent media reports and congressional hearings suggesting a growing danger of online predators as more youths turn to social-networking sites like MySpace.com.

"It may be signs people are paying (attention) to warnings they receive about online dangers," said Janis Wolak, one of the study's authors and a professor at the University of New Hampshire's Crimes Against Children Research Center. "They are being more cautious about who they are interacting with online."

But the study found that aggressive solicitations - the ones involving requests for contact by mail, by phone or in person - remained steady compared with a similar study five years earlier. And the report found growth in online harassment and unwanted exposure to pornography.

The report defines solicitation broadly as any request to engage in sexual activities or sexual talk or give personal sexual information - as long as it was unwanted or came from an adult. Not all requests were deemed by the youth as distressing.

In the latest study of online youths ages 10 to 17, conducted from March to June 2005 as MySpace began its rapid ascent, 13 percent of respondents reported a sexual solicitation, compared with 19 percent in a 1999-2000 survey. In both studies, about 4 percent reported aggressive solicitations.

Many of the contacts came from other teens rather than adults, and few rose to the level of predation, the survey found.

"A significant portion of what they are calling sexual solicitation is merely teens being teens," said Nancy Willard, an online safety expert who helps schools develop programs and who was not involved in the study.

She said the drop should demonstrate to parents and policymakers that "the dangers are real but they are not as significant as they have been hyped in recent months."

Parents, school administrators and law-enforcement authorities have been increasingly warning of online predators at sites like MySpace, whose youth-oriented visitors are encouraged to expand their circles of friends through messaging tools and personal profile pages.

Lawmakers have responded by trying to restrict access to MySpace and other social-networking sites from schools and libraries that receive certain federal funds. A bill the House overwhelmingly passed last month is pending in the Senate.

Driven largely by word of mouth, MySpace has grown astronomically since its launch in January 2004 and is now the second-busiest site in the United States, according to comScore Media Metrix. The site, owned by News Corp., registered its 100 millionth user Wednesday; about 20 percent are registered as minors, according to the company.

MySpace's usage was much smaller when the latest survey was conducted, but Wolak said she did not believe the conclusions would be different today. She said solicited kids had been engaging with strangers the same way, be it through a chat room, instant messaging or a social-networking site.

"People have fears that these crimes involve offenders and predators who look at these (social-networking) sites and then seek to identify these kids," Wolak said. "That's not really what's going on."

Researchers did find that in more than a quarter of the solicitations, youths were asked to submit sexual photographs of themselves, some of which may be a crime under federal child-pornography laws.

In general, youths responded to solicitations simply by leaving a Web site, blocking solicitors or ignoring them. Relatively few incidents, however, were reported to law enforcement or school administrators.

The survey of 1,500 children who had used the Internet at least once a month during the previous six months has a margin of sampling error of plus or minus 2.5 percentage points. Nearly 55,000 households were reached to find enough participants.

Microsoft Releases 12 Security Fixes

Microsoft Corp. on Tuesday released 12 security fixes for its Windows operating system and Office business software.

Seven of the patches are to fix Windows flaws that carry the company's highest danger rating.

In its monthly security bulletin, Microsoft also said that two of the fixes are for vulnerabilities in some versions of its Office software that carry the highest "critical" rating. One of those fixes also applies to the 2004 version of Office for Apple Computer Inc.'s Macintosh systems.

All of the patches are to fix weaknesses that could allow an attacker to take complete control of a person's computer.

Homeland Security: Apply MS06-040 Patch
Ryan Naraine

Less than 24 hours after Microsoft shipped security fixes for 23 serious software vulnerabilities, the U.S. government's Department of Homeland Security issued a firm notice to Windows users: immediately apply the patches in the MS06-040 bulletin.

In a somewhat unusual move, the DHS warned that the patches cover a remote code execution vulnerability that could be used in a network worm attack similar to Blaster, Slammer of Sasser.

"Windows users are encouraged to avoid delay in applying this security patch. Attempts to exploit vulnerabilities in operating systems routinely occur within 24 hours of the release of a security patch," the agency said in an public advisory.

The department warned that a successful attack could be launched remotely to take control of an affected system and install programs, view, change or delete data, and create new accounts with full user rights.

"This vulnerability could impact government systems, private industry and critical infrastructure, as well as individual and home users," the DHS added.

The DHS recommended that home users opt for Microsoft's Windows Update to automatically download and apply all the appropriate security fixes.

The MS06-040 bulletin addresses a buffer overflow in Server Service, which is used to provide RPC (remote procedure call) support, file print support and named pipe sharing over a network.

Because the flaw presents a remote, unauthenticated attack vector, an anonymous attacker could send specially rigged network packets over the Internet to launch malicious code on vulnerable systems.

A worm attack exploiting this bug would affect unpatched versions of Windows 2000, Windows XP (SP1 and SP2) and Windows Server 2003 (SP1 inclusive).

The use of the built-in Internet Connection Firewall in Windows XP and Windows Server 2003 would help block network-based attempts to exploit the vulnerability.

Microsoft also recommends that TCP ports 139 and 445 be blocked at the firewall.

The US-CERT (U.S. Computer Emergency Readiness Team) has already warned that the flaw has been used in active attacks, even before Microsoft released the patch.

Immunity, a New York-based security company that sells penetrating testing tools, on Aug. 9 released proof-of-concept exploits for MS06-040 to customers in its Partner Program.

Windows Defense Handcuffs Good Guys
Joris Evers

A protective feature in Windows is locking out the good guys, but letting in a lot of bad guys, according to security software makers.

Microsoft designed PatchGuard to safeguard core parts of Windows, including Vista, against malicious code attacks. But some security companies say that the feature makes it harder for them to protect Windows PCs, as it locks them out of the kernel, the core of the operating system.

"PatchGuard is hurting security vendors more than it is hurting malware writers," Bruce McCorkendale, a chief engineer at Symantec, told CNET News.com in an interview Wednesday. "There are types of security policies and next-generation security products that can only work through some of the mechanisms that PatchGuard prohibits."

Symantec is not alone in its complaints, but it is the largest security company to speak out publicly. Sana Security and Agnitum, two smaller vendors, said they share its concerns, but giants Cisco Systems and McAfee declined to comment for this story.

Microsoft defends the technology, which applies only to 64-bit versions of Windows. Cybercrooks have found ways to exploit the kernel for malicious purposes, making the protection offered by PatchGuard key to securing the operating system, said Stephen Toulouse, a program manager in Microsoft's Security Technology Group.

"It is more important to prevent the installation of malicious software than it is to allow third-party vendors, no matter what the software, to extend the kernel," Toulouse said. "This is not specific to security software. This is a global change to 64-bit Windows to provide a more security computing experience."

Microsoft's push into the security market has put many defense providers on guard. Symantec, especially, looks wary; it has said it will compete with Microsoft as long as there is a level playing field. Now, for the first time, Symantec is saying that Microsoft is limiting the security choices of consumers--which could be interpreted as anticompetitive behavior.

"PatchGuard will make it harder for third parties, particularly host intrusion prevention software, to function in Vista," said Yankee Group analyst Andrew Jaquith. "Third parties have two choices: continue to petition Microsoft to create an approved kernel-hooking interface so products like theirs can work, or use 'black hat' techniques to bypass the restrictions."

Barriers to the kernel
PatchGuard debuted a year ago in Windows XP x64 Edition, but the technology was never broadly adopted. That's set to change when Windows Vista hits store shelves in January, analysts expect. As people buy PCs with 64-bit processors use of the 64-bit edition of Windows will increase.

In particular, PatchGuard inhibits host intrusion prevention products, security vendors and analysts said. These "HIPS" products are an upcoming class of security software that determines whether a program is malicious by looking at its behavior, rather than using the classic signature-based approach, which checks a program against a database of known threats.

On top of this, PatchGuard blocks features to protect against tampering with security tools, McCorkendale said. Malicious programs increasingly try to disable security software, and the tamper-protection features aim to prevent that.

"There is a whole bunch of companies out there that have pioneered next-generation security, that are limited by PatchGuard," McCorkendale said.

There's another "disturbing side effect," according to a Symantec blog posting. While legitimate security vendors can no longer make extensions to the Vista kernel, attackers have already found ways to disable and work around PatchGuard, it says.

Sana Security and firewall maker Agnitum sounded a similar alarm.

"Bad guys can bypass PatchGuard today," said Vlad Gorelik, chief technology officer at Sana Security, which makes host intrusion prevention software. "Microsoft has this assumption that if you put a shield in, the bad guys will stay out. That is not the way it works. But now they force security vendors to bring a knife to a gun fight."

The barrier to the Windows kernel forces security companies to adopt hacker tactics, Gorelik said. "We will have to come up with alternative mechanisms for doing the same thing," he said. "In some cases, we can actually take a page out of the bad guys' text book and bypass PatchGuard."

With PatchGuard, Microsoft is effectively taking control of security for the Windows core, Gorelik said. Previously, third parties could also provide defenses for that part of the operating system, he said. Now, if PatchGuard breaks, it will be up to Microsoft to fix the flaw and make Windows PCs secure.

"They would have to patch the kernel if someone bypasses PatchGuard," Gorelik said, noting that the kernel is the toughest thing to fix in the operating system.

Security vendors are calling on Microsoft to allow exceptions in the kernel shield for trusted third parties.

"There is definitely a legitimate need to lock down the kernel," McCorkendale said. "I don't suggest they eliminate PatchGuard. What I am asking for is an exception. There are less restrictive means available, and we have proposed many solutions to Microsoft. But it has fallen on deaf ears."

Microsoft opposes the idea of making exceptions, as it would increase the number of entry points that miscreants could take advantage of, Toulouse said.

"When you get into the concept of exceptions, you get on a slippery slope," he said. "What made a lot of sense to us is simply to restrict the kernel without exception, creating a level playing field that all of the vendors, including Microsoft, can then operate by." Toulouse's argument is that Microsoft's security software is also unable to touch the kernel.

Dropped ball
With the advent of threats such as rootkits, which that nestle deep inside the operating system, Microsoft should protect the Windows core, analysts said. However, the company has dropped the ball on letting other software makers in on what the new kernel protections mean for them, said John Pescatore, an analyst at Gartner.

"This is a complex issue, but Microsoft has definitely been deficient in including the impacted software makers early on," Pescatore said. "That definitely does work to their advantage from a competitive viewpoint. However, the rootkit issue has to be fixed, and kernel protection has to be stronger for all operating systems."

Indeed, Symantec is playing the anticompetitive card for the first time. The Cupertino, Calif.-based company had said it would beat Microsoft by using its security wits as long as the competition is fair. Now the fairness seems to be gone, McCorkendale said.

"It seems a bit disingenuous of Microsoft. They are getting into the security market and are disallowing this whole class of security products that they don't have," McCorkendale said. "It does not feel like a level playing field at that point."

McCorkendale stopped short of saying that Symantec would sue Microsoft or complain to antitrust authorities. However, Yankee Group analyst Jaquith believes that step is getting closer, especially if Microsoft were to give its own security products a way to bypass PatchGuard.

"Microsoft's anti-kernel hacking feature could conceivably create a formidable barrier to entry to their competitors in the security market," Jaquith said. He expects Microsoft to deliver host intrusion prevention capabilities in its Forefront products next year.

"I think you'll see the larger security companies run to the Department of Justice and the European Union faster than you can say 'Penfield Jackson'," Jaquith said, referring to Thomas Penfield Jackson, the judge who oversaw the landmark U.S. antitrust case against Microsoft.

Microsoft Piracy Check Draws Complaints
Allison Linn

When Microsoft Corp. said it planned to begin checking for pirated copies of its Windows operating system using the method it set up to send people security fixes, even some of the company's traditional critics could sympathize.

After all, although Microsoft rakes in billions, piracy of its flagship products remains a huge, costly problem, particularly in developing countries such as China and Russia. The Business Software Alliance estimates that 35 percent of software installed on PCs worldwide is pirated.

Nevertheless, 18 months after announcing the Windows Genuine Advantage piracy check, Microsoft faces controversy and backlash, including two lawsuits. Some say the company clumsily handled several elements of the program, including a key privacy issue.

"They have a right to say, `If you want patches from Microsoft, you know, you should let us make sure you're not running a pirated copy of Windows,'" said Gartner analyst John Pescatore. "That's a valid claim, and with the Windows Genuine Advantage tool, I think, they tried to go a little too far."

Microsoft introduced the piracy check in mid-2005 as a condition for downloading security fixes and other software, such as anti-spyware technology, from its Web site.

Now the anti-piracy check is also being sent to customers whose computers receive security updates automatically. For now, users can take extra steps to opt out of the piracy check. But Microsoft strongly encourages people to run it, calling it a "high priority update," and says the check might become mandatory at some point.

Once installed, the program checks whether it believes the user's version of Windows is legitimate. It gathers information such as the computer's manufacturer, hard drive serial number and Windows product identification.

Microsoft still offers important security fixes even if the company alleges the version of Windows is pirated, although those users can't get non-security downloads, such as a test version of the new Internet Explorer browser. Those users also receive a barrage of notices that they are running an illegal copy of Windows.

While Microsoft had told users the new software would gather information related to piracy, some people became alarmed when they discovered that the software also was performing a daily check-in with the company.

Microsoft said the daily "call home" was a safety measure designed to let the company shut the program down quickly if something went wrong. But critics saw the undisclosed communications as a breach of privacy and trust.

Marc Rotenberg, executive director of the Electronic Privacy Information Center, said the concern is that users did not know about or control the interaction.

"It feels very much like a digital trespass - you know, someone is getting access to your system without your consent," he said.

Microsoft conceded that it should have told users it was making the daily connection. It has since discontinued the daily check and revised its disclosures. The system will, however, continue to occasionally check in with Microsoft to make sure it still believes a person's software is legitimate.

Even so, although many had sympathized with Microsoft's original anti-piracy efforts, to some this misstep was enough to call into question the entire program.

"To use the security mechanism to install marketing software that is designed to increase Microsoft's revenue but actually interferes with some people's use of their PCs is a real breach of faith with customers," said Brian Livingston, editor of Windows Secrets, a newsletter and Web site that offers tips for using Microsoft software.

He thinks the episode will have a long-term, negative effect on how well people regard the software maker.

"The trust has been broken," he said.

Microsoft faces two federal lawsuits over the software, both of which accuse the company of violating laws that seek to combat spyware. The lawsuits seek class-action status.

Microsoft spokesman Jim Desler insists the piracy check is not spyware.

"These lawsuits are without merit and they really distort the objective of our anti-piracy program," he said.

Pescatore, the Gartner analyst, said he thinks Microsoft has found a good middle ground by backing off on the daily checks, and he doesn't think most users will be affected by the controversy.

But for those who were already suspicious of Microsoft, this adds more fuel.

"I definitely think that there's paranoia - I would argue unwarranted paranoia," said Russ Cooper, a security researcher at Cybertrust Inc. who approves of the privacy check.

Microsoft has taken great pains to improve its privacy policies since it came under intense fire about five years ago for a system called Passport that sought to store all sorts of personal information under one log-on. The program was scaled back considerably and, despite some ongoing concerns, Rotenberg said Microsoft has come to play a leading role in privacy issues.

"Since that time you can say simply, they got privacy religion," Rotenberg said.

But he thinks Microsoft has misstepped with the piracy check, and should separate it from the system for sending security updates.

Because the piracy check isn't mandatory - for now at least - Microsoft is using incentives to try to get people to download it. One short-lived offering, called Private Folder, gave people a special place on their computers to password-protect data they didn't want to share with family members or co-workers. The company was forced to pull that product amid complaints that the secret folders would create headaches for corporate technology experts trying to manage big computer systems, and raise other problems if consumers forgot their passcodes and couldn't get at their data.

Despite such flubs, Microsoft appears if anything to be redoubling its commitment to crack down on illegal Windows copies, part of a larger push to increase profits from the highly lucrative franchise.

Microsoft takes legal action against those it believes are distributing pirated copies - and it says it has used data from the piracy check to help track down some sellers. The company also is working with government officials in places like China to try to make piracy less acceptable.

But in a meeting with financial analysts in late July, Microsoft also made clear it is counting on the individual check as part of its overall bid to grow sales by slashing piracy.

Kevin Johnson, co-president of the Microsoft division that includes Windows, said: "We're really trying to amplify the fact that being genuine enables a set of benefits and value."

Another WGA Failure
Ed Bott

I just experienced a Windows Genuine Advantage failure. Only it’s not a false positive, like the horror stories I’ve been hearing for nearly two months now. No, this one was a false negative. The whole story says a lot about how Microsoft is approaching the WGA issue.

A few weeks ago, I spoke to some of the folks on the WGA team and asked them to send me a pirated version of Windows XP. I'm reluctantly running a pirated version of Windows and can't get caught no matter how hard I try. According to Microsoft, 80 percent of the 60 million people who have been nabbed by the WGA validation tool are running versions of Windows with stolen or pirated volume license keys. These versions of Windows are supposed to be available only to corporate customers and only as upgrades. Unlike retail versions, they don’t require activation, which makes them an ideal target of pirates and bootleggers.

According to Microsoft, many of the people who end up with these “non-genuine” copies of Windows are themselves victims. The unauthorized OS might have been installed by a repair shop, or they might have purchased what they thought was a legitimate copy of Windows from an unscrupulous reseller. I wanted to install a pirated copy so I could experience exactly what these customers go through and report the results to you. I still can’t quite believe how difficult it’s been. Here’s the story so far.

On July 18, Microsoft's WGA team promised to send me a disk with a product key from their blocked list. It was supposed to arrive via overnight service, but it was never sent. After several follow-up messages, I was assured on July 26 I would have something by the end of that week. The package finally arrived the next week, on August 1. It contained a CD-R with a handwritten label that read “Windows XP SP2 – VLK,” and a 25-character product key on a small slip of paper.

Over the weekend, I hoisted the Jolly Roger, cleared a partition on a test machine, slid the CD into the drive, and prepared to join the ranks of Windows pirates. Unfortunately, the product key that Microsoft had sent me didn’t work. Instead of a smooth installation, I got an error message: "The Product ID which you entered is invalid. Please try again." I fired off a request for assistance to my contacts at Microsoft. Nearly 72 hours later, I still haven’t received a response other than a note that confirms my message was forwarded to the correct person.

No problem, I thought. I’ll just do what any red-blooded pirate would do and Google for a working product key. It took me about 15 minutes to find a web page containing five volume license keys that had reportedly been posted on September 9 2004. Surely if I can find a leaked VL key on a search engine, Microsoft can too, right? If these keys have been floating around the Internet for two years, surely they’ve been tagged as stolen by Microsoft, and I’ll get a WGA failure that I can show the world.

I restarted the installation using the VL media Microsoft had supplied me and entered one of the bootleg keys I found. It worked. After installation completed, I set up an Internet connection and downloaded a slew of updates, including the WGA Validation tool and the WGA Notifications utility. I then restarted, fully expecting to see a series of stern messages telling me I’d been busted.

Only that’s not how it worked out.

My bootleg key worked perfectly. I went back to Windows Update and downloaded a series of Optional Updates and drivers that are only available to Genuine Windows users. I went over to the Internet Explorer homepage and downloaded the latest beta of IE7, passing a validation test twice – once on the download and again on the installation. And five minutes ago I went over to the Windows Defender page – this is another free utility that’s only available to Genuine Windows users – and the validation check waved me right through.

That’s where I stand right now. The folks who are running the WGA program are having troubles getting the little stuff right, like putting a CD in the mail and proofreading the product key they sent with it. They haven’t managed to identify a stolen product key that’s been floating around the Internet for nearly two years. I'm reluctantly running a pirated version of Windows and can't get caught no matter how hard I try.

But these same people want us to believe that the WGA software they’ve developed is nearly foolproof. They claim that all but “a fraction of a percent” of those 60 million people who’ve been denied access to Microsoft updates and downloads are guilty, guilty, guilty.


Google to Distribute MTV Clips With Ads

In a further reach for online video, Google Inc. will begin distributing clips from MTV Networks' shows to other Web sites through its budding video service in a model that offers content creators a new source of distribution and revenue.
The deal announced Sunday will begin as a test later this month, offering 100 hours of programming from clips of "Laguna Beach: The Real Orange County," "SpongeBob SquarePants" and MTV's Video Music Awards. The partnership will expand video through Google's advertising network to a variety of sites and is likely to spawn further such deals, making video a far more integral element of online advertising.

Video has become one of the fastest-growing formats online as new delivery mechanisms, faster computers and wider broadband adoption make the medium more accessible to a broader audience.

"Collaborating with Google gives us a terrific opportunity to take our content and distribute it even more widely on the Web in a seamless and targeted way," said Tom Freston, president and chief executive of Viacom, MTV's parent.

Officials declined to say how the revenue would be appropriated, citing confidential terms of the deal. Viacom will receive more than two-thirds of the revenue from the ad deal, The New York Times reported Sunday on its International Herald Tribune Web site, citing an unnamed executive involved in the deal.

Viacom spokespeople said it was not yet clear how many sites in Google's network would be selected for the partnership's test phase.

The companies also will sell episodes from 17 Viacom Inc. programs for $1.99 each through Google Video. MTV also sells its programs through Apple Computer Inc.'s iTunes Music Store for the same price.

The video deal comes less than a week after Google disclosed that it has agreed to pay The Associated Press for news stories and photographs. That content will become part of Google's news offerings.

AOL Likely to Tap Video, IM to Seek Edge
Anick Jesdanun

Giving high-speed Internet users its services for free may help AOL stop an erosion of customers, but analysts say that alone won't be enough to draw new visitors and break into the Web's top three.

Key to AOL's success will be how well it taps its strengths in video and instant messaging and introduces new services, like this week's offering of a free online storage bin for music, photos and other digital memories.

Not that AOL was wrong in deciding to give away e-mail accounts and software once reserved for paying subscribers, analysts said. The company needed to stop its customer exodus and the defection of potential eyeballs to rivals like Yahoo Inc., Google Inc. and Microsoft Corp.

Now, Time Warner Inc.'s Internet unit needs to shed its image as a has-been dial-up access provider stuck in the '90s.

"Are they going to keep that yellow dude, whatever his name is?" asked Gartner research analyst Allen Weiner, referring to AOL's "running man" icon. "It's what people recognize as AOL, but to me it represents all those unwanted discs."

In making the drastic strategy shift Wednesday, AOL executives showed a willingness to let go of the company's legacy access business and accept larger declines in subscribers, who pay as much as $26 a month. AOL expects at least 6 million, or one-third, of its U.S. subscribers to stop paying within the year.

AOL also braced for drastic cuts in payroll - as many as 5,000 jobs - in a quest to find more than $1 billion in savings from marketing, network and other costs, such as the promotional trial CDs that AOL infamously has stuffed into mailboxes. Some were fetching $5 on eBay on Friday.

The changes will "better position AOL to fully take advantage of compelling online trends," namely the boom in Internet advertising, Time Warner's chief executive, Richard Parsons, told analysts Wednesday.

Only time will tell whether he's right.

The numbers do show promise. In the second quarter, AOL saw a 40 percent jump in advertising revenue.

But that's largely because it's making more money per page viewed - an increase of 58 percent from last year. According to comScore Media Metrix, page views - a key figure because it reflects the number of ads displayed - decreased 26 percent in June. Subscriber defection is to blame, because they account for 80 percent of page views.

AOL believes it will stop the declines, essentially by no longer sending its subscribers to rivals with free e-mail.

The company also is counting on winning back people who have left within the past two years by letting them reclaim their old AOL.com e-mail addresses. E-mail is a particularly important driver of traffic to other ad-supported services because it's something people check regularly.

But David Hallerman, a senior analyst with research company eMarketer Inc., doesn't expect many returns. Former AOL subscribers, he said, already have spent the time giving friends and family new e-mail addresses when they decided to ditch AOL.

"It's not like you look cool to have it, so you wouldn't want to have to change it again," he said.

Even tougher will be AOL's ability to draw new users entirely.

Time Warner and AOL executives offered few specifics Wednesday, although Jupiter Research senior analyst David Card points out that AOL has been rolling out new services steadily, including those tied to its popular AIM instant-messaging platform.

In recent months, AOL introduced a social-networking site called AIM Pages, the ability to receive free incoming calls through AIM Phoneline and a business version of the AIM software with free Web conferences - all designed to keep users viewing AOL content and ads.

AOL also has the potential to tap the archives of other Time Warner units for video, as it already has with old Warner Bros. television shows like "Welcome Back Kotter" and "Growing Pains."

Beyond TV, Time Warner has magazines and movie studios, and AOL's success will be guided by "how it chooses to leverage that content," said Jennifer Simpson, an analyst with the Yankee Group.

On Friday, AOL launched a test version of a new video portal the company envisions as a television guide for the Internet. The idea is to present dozens of video-on-demand channels, just like cable TV, while allowing visitors to search for video located elsewhere on the Internet, including rivals like YouTube.com.

AOL also is looking beyond content with free services like virus protection and parental controls. The storage service it announced Thursday beat what rivals offer, with enough room for 1,250 songs or 2,000 photos.

Executives hinted more will come.

Adam Sohn, a director in Microsoft's online services group, acknowledged AOL's strengths with Time Warner content and with instant messaging, particularly in the United States. But he said he's not worried.

"They clung to the past a little longer than everyone else," he said. "They are embracing a model that the rest of the industry has already made traction on. They have some assets, but I don't think they have any assets that are runaway victories."

In the all-important category of search, AOL is fourth, behind Google, Yahoo and Microsoft's MSN, according to Nielsen/NetRatings. AOL benefits from a 5 percent ownership by Google, which provides AOL's search results and keyword ads. But for routine searches, many users go directly to Google, denying AOL the opportunity to distract visitors with an ad-supported video or two.

AOL also trails those three in unique visitors. It held steady in June, even as its rivals all grew - Google by 23 percent.

Meanwhile, fast-growing sites like YouTube and News Corp.'s MySpace are looking to capture ad dollars, too.

AOL's strategy shift will make it harder for rivals to pull share from AOL, but won't necessarily help AOL grow, said tech analyst Rob Enderle.

"In this business you are either growing or shrinking," he said. "Treading water is probably not going to cut it here."

Besieged Lebanese Turn to Internet
Zeina Karam

Like many of her compatriots, artist Zena el-Khalil has turned to blogging on the Internet to express her longings and fears amid the fighting in Lebanon.

Writing from Beirut, the 30-year-old tells of wanting to have children and worries about Israeli air raids on the capital.

"Word on the street is that Israel is threatening to hit Beirut now. I feel so helpless," she said in a recent entry in her online diary. "I called my husband and told him to come home right away. If I die, I want to be in his arms."

Another blogger, 27-year-old Jamal Ghosn, bemoans the casualties among Lebanese children. "Lebanese children don't hug teddy bears when they sleep, they sleep with Katyushas in their beds, in case you didn't know," he wrote with bitter sarcasm.

Young Lebanese, feeling increasingly hemmed in by the siege of their country, are turning to the Internet to vent anger about the war and express private longings intensified by the death and destruction.

But widespread electricity cuts caused by fuel shortages and Israel's bombardment of power stations have at times shut off even this outlet.

Operating his computer by battery late one night after the neighborhood generator went off, blogger Mazen Kerbej, a 30-year-old musician, quipped: "It's quite funny to write on a laptop connected to the world with a candle next to the keyboard to see the letters."

Lebanese bloggers burst onto the Internet in unprecedented numbers last year following the assassination of former Prime Minister Rafik Hariri and the subsequent "Cedar Revolution" - the mass anti-Syria demonstrations that preceded the Damascus regime's withdrawal of its troops from Lebanon after an 18-year presence.

But the bloggers' enthusiasm had subsided as politicians became mired in squabbles over relations with Syria and other issues. But the Web musings have surged again since Israel launched its offensive against Hezbollah guerrillas in southern Lebanon.

Besides blogging, Lebanese at home and abroad are using e-mails, text messages and other communications to share their feelings and ideas for ending the conflict. Anti-war petitions, cartoons and articles have been flying around the Internet since hostilities erupted July 12.

One e-mail making the rounds in Lebanon carries a picture of an "Israeli checklist" with check marks next to the words bridges, power plants, airports, children and the economy. "Hezbollah" is the only word on the list left unchecked.

Another that has circulated to thousands contains photos of wounded Lebanese infants and children juxtaposed with photos of Israeli children writing "greetings" on artillery shells.

Hanady Salman, managing editor of the As-Safir newspaper, said she never had the time or interest to keep a diary. But when Israeli missiles struck a convoy of Lebanese villagers fleeing the southern village of Merwaheen on the third day of the war, killing at least 15 people and blowing children into nearby ravines, the 38-year-old mother was galvanized.

She began e-mailing pictures of the death and destruction to everyone she knew, hoping to gain attention for what was happening. Sending pictures quickly turned into diary-style e-mails that have become hugely popular.

"It's a great way to get across your side of the story, to reach out to people. I thank God every day that there is the Internet to do that," Salman said. "It makes me feel like I'm somehow contributing, I'm doing my share."

Salman now has about 200 people on her mailing list.

On a recent morning, she wrote: "Last night the air raids were so close, I was almost out of my mind. Israeli fighters were flying so low, I couldn't wait to go home and hug my little baby (we live on the 12th floor, remember?)."

A popular Web site, Electronic Lebanon, is publishing the diaries of Salman and others from across Lebanon, written in English. The site has had more than 479,000 visits and 2,250,000 pages viewed since the start of the war.

While the devastation has fired the desire of bloggers to tell the world of Lebanon's pain, witnessing it firsthand proved too powerful for one.

"I so want to write, but I still have no words," blogger Muzna al-Masri wrote of her Aug. 2 tour of southern Lebanon. "This was Tyre, after all, the lovely city and its beach that I always wanted to call home.

"I still haven't cried, I feel I am not entitled to. If I were to cry, what would I leave to the people that have lost loved ones and houses full of memories?"

Reuters Pulls Doctored Photo

Photo from Beirut freelancer represents "a serious breach of Reuters standards."
Miki Johnson

Reuters pulled a photograph of burning buildings in Beirut yesterday after a post on the Little Green Footballs blog outed it as digitally manipulated.

The photo, filed on Saturday by freelance photographer Adnan Hajj, ran with the caption "Smoke billows from burning buildings destroyed during an overnight Israeli air raid on Beirut's suburbs."

That smoke bore "repeating patterns" and came from at least two buildings that appeared to be identical, according to Little Green Footballs editor Charles Johnson. These repetitions were "almost certainly caused by using the Photoshop 'clone' tool," the post concluded.

Reuters issued a "picture kill" immediately after being notified of the manipulation along with a statement that "photo editing software was improperly used on this image," and replaced it with a corrected version of the photo.

Hajj, who has freelanced for Reuters since 1993 and has been suspended pending an internal inquiry, "denied deliberately attempting to manipulate the image, saying he was trying to remove dust marks and that he made mistakes due to the bad lighting conditions he was working under," according to the Reuters statement.

"This represents a serious breach of Reuters standards, and we shall not be accepting or using pictures taken by [Hajj]," the statement continued.

Other blogs and online forums, including the SportsShooter web forum, Left & Right, and Ace of Spades, have joined Little Green Footballs in criticizing Reuters for letting a photo so "obviously doctored" pass through its editing regiment and have questioned the veracity of other photos by Hajj.

Storied Photo Agency Finding Focus
Adam Goldman

Magnum Photos has long been one of the world's most revered photo agencies: Its photographers have captured iconic images of James Dean and Che Guevara and helped define the art of visual story telling.

But as the Internet emerged as a dominant force over the last decade, Magnum was slow to embrace change, leaving its future and role in the photography business in doubt.

"I think it's fair to say that Magnum was still functioning on a dying business model," said Mark Lubell, director of Magnum's New York office. "There were fractious debates inside of Magnum about where the agency should be going."

But Lubell believes Magnum Photos Inc. is finally starting to find its focus. Lubell has embarked on an ambitious turnaround since taking over in 2004, despite having a limited photography resume.

He updated Magnum's business roadmap, and has launched an effort to sell more pictures online while cutting costs and the agency's longtime dependence on selling photos to primarily newspapers and magazines. Those licensing fees have been instrumental in keeping Magnum afloat.

"Mark has probably saved Magnum in a way and Magnum has enabled Mark to reach his full potential as a person," said Burt Glinn, 81, Magnum's second-oldest living member.

Magnum, which currently represents 60 photographers and 10 estates and has four offices around the world with 93 employees, is on track to make money this year, Lubell says.

Every year, agency members review the portfolios of aspiring Magnum photographers and those who pass muster are invited to become nominees. If they continue doing high-level work, they can eventually become associates and ultimately full-fledged members.

The agency essentially acts as the agent for Magnum photographers, getting a fee from each assignment generated - mostly from magazines but also from corporate clients. Magnum also has a publishing division. The photographers own Magnum and control its fate.

Arguably the most famous photo agency in the world, Magnum was founded in 1947 by such giants as Robert Capa and Henri Cartier-Bresson to protect the lucrative copyrights to their pictures.

Magnum photographers distinguished themselves not only using their cameras but also their courage. Three of Magnum's photographers, including founders Capa and David Seymour, were killed while on assignment.

"For a young photographer, it's a mythical place," said photographer Chris Anderson, 36. "Something you always dreamed you might be a part of."

War, though, wasn't the only story Magnum shooters covered. They have captured indelible moments like Dennis Stock's 1955 picture of James Dean in Times Square and Steve McCurry's 1985 portrait of a young Afghan refugee that landed on the cover of National Geographic.

But managing a cooperative and the inevitable internal conflicts was not easy. Magnum eventually became well-known for reasons other than its notable pictures.

The biggest clash happened in 2001. One of Magnum's most famous photographers, James Nachtwey, left and formed another collectively owned agency called VII.

Magnum stumbled as other companies responded to the rapid shifts in technology, like the Bill Gates-owned Corbis Corp., and Getty Images Inc., both located in Seattle.

Getty dominates the industry and reported more than $730 million in revenue in 2005, while Corbis said it generated $228 million last year.

Lubell declined to give out financial information but compared Magnum as the Rolls Royce of the automotive industry - small but equal in prestige and influence.

Early on, Corbis and Getty both recognized the power of the Internet and quickly moved to digitize their photo archives so people could search for images online. People bought more images because they were readily available. That created more volume and bigger profits and drew a lot of traffic to their Web sites.

The capital investment was enormous, but the payoffs were substantial, said Patrick Donehue, vice president and chief photographer at Corbis.

"It really required a complete transformation," Donehue said.

About three years after Nachtwey departed, Magnum gambled on its future, deciding to take a chance on Lubell, hoping the young, albeit savvy, businessman could change its fortunes.

Lubell, 36, was not a photographer. He helped take a company public after graduating from Syracuse University, and he later worked for a dot-com near ground zero that closed after Sept. 11.

Without a job, he was asked to run a popular but chaotic photography exhibit called "Here is New York" that sold images related to the attacks, donating the money to charity.

One of the exhibit's creators, Gilles Peress of Magnum, was impressed with Lubell and his handling of the show's unexpected popularity.

Peress asked Lubell to come to Magnum as a consultant in November 2003. After initially resisting, Lubell agreed to a three-month stint. Shortly afterward, the director of the New York bureau, the most important among the four, resigned and Lubell took over in January 2004.

Lubell came into the New York office with a three-year plan that involved increasing revenue 20 percent each year while decreasing expenses by 10 percent.

"This was my turnaround project with an incredible brand name and legacy," Lubell said. "I was a little worried about whether people would allow change."

Lubell said Magnum's business strategy hadn't changed since the 1960s, and the agency had slowly begun to lose its position in the market. Lubell recognized that one-off events - like a successful book about 9/11 - disguised a fragile bottom line.

"If you take those spikes out, you started to see there was some real weakness in this business model," he said.

Lubell turned to the Web to increase brand awareness.

Lubell, along with his Internet team, created Magnum in Motion, an interactive photo essay, late last year to lure people to the site, and he inked a deal with the online magazine Slate in December 2005 to feature Magnum's photos and the essays. The section, called "Today's Picture," logs 9 million to 10 million unique visitors a month, Lubell said.

Lubell also says he's currently exploring plans to move Magnum's cramped New York offices to a new location and start a foundation to fund photography projects. A redesign of the Web site is expected soon.

Magnum can still compete against behemoths like Getty and Corbis because its photographers, Lubell believes, are some of the best in the world. That will always give Magnum an edge, he says.

"Content is king as Barry Diller says. We have the content. We have a million plus images in our archive," Lubell said. "Getty and Corbis don't have the name recognition we have. We have a competitive advantage. Magnum is an amazing asset that hasn't even been tapped."

Glinn, who famously covered Fidel Castro's 1959 march on Havana, has seen a lot. He's witnessed war. He's witnessed revolution. He's witnessed Magnum's ups and downs. He thinks Magnum photographers have plenty more to witness.

"We've lost a lot of money over the years but we've persevered," he said.

Wired News Pulls Freelancer's Stories
Rachel Konrad

Online technology publication Wired News removed three articles from its Web site Wednesday after editors couldn't confirm the authenticity of at least one source.

All three stories were written by freelancer Philip Chien, a Florida author and space enthusiast who quoted and cited Robert Ash. In the articles, published in June and July, Chien described Ash as a "space historian" and an "aeronautical engineer and amateur space historian."

When a Wired News senior editor telephoned Ash to verify the quotation, Ash said he was not a space historian and never conducted an interview with Chien.

Ash is a professor in the aerospace engineering department of Old Dominion University in Norfolk, Va., and had been involved in numerous NASA projects. He did not respond to telephone calls and an e-mail Wednesday from The Associated Press.

Chien, a freelance writer who has worked for online, print and television news outlets, is the author of a book on the Columbia space shuttle disaster. He wrote two stories for Wired News in 2004 and five in the past several months.

Chien said Wednesday that Wired News editors didn't give him an adequate opportunity to defend his sourcing before pulling his articles.

"They informed me they were going to do it but didn't give me any notice," Chien said in a phone interview with The AP. "Things have been distorted and taken out of context, but I don't want to say anything more than that."

Wired News requires all freelancers to provide e-mail addresses and phone numbers for everyone quoted or cited in stories. The contact information Chien provided for Ash was a free Hotmail account that included the name Robert Stevens in the address.

Editors became suspicious when they realized that Chien had quoted a man named Robert Stevens in at least three articles he wrote for newspapers, referring to him variously as a retired engineer, a NASA engineer and an amateur astronomer.

Wired News editors were also suspicious about another of Chien's sources in the space industry, a man named Ted Collins. Editors traced Collins' ostensible Hotmail account to an Internet forum about the space shuttle, in which Collins praised Chien's book, "Columbia: Final Voyage."

"I've seen a bunch of Phil Chien's stories online and always enjoyed his insightful questions in the press conferences, but hadn't heard that he had written a book," the posting read. It included a link to Chien's Web site and inquired whether the accompanying CD-ROM would be available through Amazon.com.

In an explanation e-mailed to Wired News, Chien acknowledged he created the Ted Collins' Hotmail account and used it in an attempt to mislead editors. Chien said Collins died in 1997, but said he liked his quotes so much he wanted to use them posthumously in the past three months.

The incident comes just over a year after another sourcing problem for Wired News.

In May 2005, Wired News acknowledged it could not verify the accuracy or authenticity of roughly 160 news stories by freelance journalist Michelle Delio of New York City. Editors said they could not prove the existence of more than 40 people quoted in Delio's articles, which covered subjects ranging from computer viruses to the Sept. 11, 2001, terrorist attacks.

That episode resulted in strict sourcing policies for Wired News freelancers, who must now turn in contact information for anyone quoted or cited in any article.

"It's regrettable, obviously, that this happened," said Wired News editor-in-chief Evan Hansen. "But at the same time it speaks to the processes we've put in place."

2 Editors Resign at Web Site Linked to Journalism Review
Katharine Q. Seelye

The managing editor of CJRDaily.org, an online adjunct of The Columbia Journalism Review, and his deputy both quit yesterday after the dean of Columbia University’s Graduate School of Journalism told them he was cutting the site’s budget nearly in half.

The dean, Nicholas Lemann, said in an interview that the amount of money raised for the Web site could not sustain the online staff, and he was using a portion of the magazine’s discretionary money for a direct-mail campaign to try to increase subscriptions to the print magazine. The journalism review, which comes out six times a year, has a circulation of 20,000.

Mr. Lemann said he was faced with the same quandary confronting most news organizations today — how to pay for an online staff when the site is free to readers.

The Web site will soon start to sell advertising, hold conferences and sell archival material, he said, but even that revenue will not support the cost of the staff. He said he had been “out fund-raising every day,” but had not scraped together enough to finance the site at full strength.

As a result, he said, he has decided that a campaign to gain subscribers for the print magazine, while expensive, will result in more income, which will help maintain an online staff that he said would still be bigger than that of most other magazines.

“I have the same issue that everyone else in journalism has, and this is our best lunge toward a solution,” Mr. Lemann said.

The decision prompted the site’s top editors to quit, reducing the staff from eight to six.

Both Steve Lovelady, 63, the managing editor, who had been managing editor of The Philadelphia Inquirer and deputy Page 1 editor of The Wall Street Journal, and Bryan Keefer, 28, the assistant managing editor, resigned in protest yesterday.

“It’s a fundamental policy dispute about the allocation of resources,” Mr. Lovelady said. “Nick has decided to spend the money on a direct-mail campaign for the magazine, in hopes of saving subscription revenue. To me, that sounds like something out of the 19th century. He’s taking the one, fresh, smart thing he has and gutting it.”

Mr. Lovelady said the size of his staff could not be compared with those of many other magazine Web sites, because CJRDaily produces its own original content, while many other such magazine sites simply put print content online. Mr. Keefer said that, like Mr. Lovelady, he did not want to preside over the shrinking of something that he helped build.

“I appreciate the position Nick is in,” Mr. Keefer said, “but I don’t want to be a part of the direction he’s taking things in.”

The journalism school started the Web site in 2004, with the help of foundation grants, to scrutinize the mainstream media’s coverage of the presidential campaign.

The site, which was originally named campaigndesk.org, was supposed to last for the duration of the campaign. But its cheeky tone and its quick, often-incisive analysis of political news proved so popular that Mr. Lemann and others decided to extend its life and broaden its scope to cover the entire media landscape. Thus was born CJRDaily.org.

(The journalism review has its own Web site, CJR.org, which essentially reprints the magazine. Mr. Lemann said he planned to merge CJRDaily with the magazine’s Web site, making them one brand.)

In 2005, CJRDaily.org received an honorable mention from the National Press Club in the category of “distinguished contribution“ to online journalism. It now receives nearly 500,000 page views a month, Mr. Lovelady said, up 30 percent from the beginning of the year.

Mr. Lemann’s decision to transfer money from the site to a small-circulation print magazine would seem to run counter to some of his own writings on the importance of the Web.

He wrote recently in The New Yorker, “As journalism moves to the Internet, the main project ought to be moving reporters there, not stripping them away.”

In the interview, he said redirecting money to the magazine did not contradict that view because he was still maintaining a relatively large online staff.

“We’re making a powerful commitment to the Web because we really believe in it,” he said. But he said he also believed in print.

“I don’t think print is going away,” he said. “Keeping the print magazine brings in revenue, and print can do some things that the Web can’t.”

Jay Rosen, a blogger and journalism professor at New York University, said the move was a “strategic error” and that the review should drop its print version to reduce costs and go entirely online.

“I’m sure their current subscribers want it in print, but you have to look at your potential subscribers,” he said. “Since the profession is going toward the Web, in the long run, that’s the smarter move.”

It only hurts when I surf

Hospitals Now Offer High-Speed Internet
Kelley Schoonover

Feel like watching a movie? Need an extra blanket or some food? For years, guests at hotels have gotten these amenities with a phone call or a few clicks of the TV remote.

Now this instant gratification is available to patients in hospitals across the nation through interactive television, high-speed Internet and other comfort-oriented perks designed to make them feel like hotel guests.

LodgeNet Entertainment Corp. has installed interactive TV systems in 10 hospitals in New Jersey, Missouri, Alabama, Washington state, Texas and South Dakota, and has contracts with twice that many, said Gary Kolbeck, the Sioux Falls, S.D.-based company's vice president of health care business development.

LodgeNet, whose customers include major hotel chains such as Hilton and Ritz Carlton, has been offering the hospital services for about a year and a half.
Kolbeck said the trend is driven in part by baby boomer patients with high expectations and the need to generate revenue in a competitive market.

"To me it was just a no-brainer," said Albert Pilkington III, chief executive of Fairmont General Hospital in Fairmont, W.Va. "It puts more time in my employees' hands and it improves the quality of service."

Fairmont General's system, which Pilkington expects to be online within 90 days, will include a numeric keypad that can be used for everything from choosing a movie or a video game to ordering items from the gift shop or requesting room temperature changes.

Pilkington said the system also can provide educational programming that is specific to a patient's condition and treatment. These programs can be viewed as many times as the patient wants.

The system also includes a real-time patient satisfaction survey that allows staff at the 207-bed hospital to address concerns or complaints immediately.

"We're a very patient-oriented hospital," he said. "Service is a big deal for us. It's probably our main focus."

Pilkington declined to disclose the system's price, except to say, "it'll be a six-digit purchase." He said there will be no additional cost for patients.

The cost to install a similar system in 400-plus patient rooms at West Virginia University Hospitals' Ruby Memorial is estimated at $600,000, said spokesman Steve Bovino. He could not say when the system will be in place.

"When it comes to health care, or any other service for that matter, consumer expectations continue to rise," said Randy Bury, chief administrative officer for Sioux Valley Hospital USD Medical Center in Sioux Falls, S.D.

Bury said Sioux Valley's system creates a more homelike environment for patients or visitors who often feel stuck "with nothing else to do."

Sioux Valley officials initially planned to phase in the system in the 500-bed hospital over four months, but Bury said positive feedback from patients spurred them to implement it all within a couple of weeks.

"What was happening, we'd have a patient in a unit with the system who got used to it, then that patient would be transferred to another unit without the system and would be dissatisfied," he said. "We started hearing that loud and clear."

Some hospitals have taken the concept of creating a hotel-like atmosphere even further.

Interactive TV is just one of many perks available at Baylor Regional Medical Center at Plano in Plano, Texas, which offers room service from 7 a.m. to 7 p.m.

"Guests can have breakfast at 2 p.m.," as long as it's within their dietary requirements, said Deanne Kindred, vice president of finance. Each patient can order from a menu that has been specifically created for him or her.

"It's not like the old Jell-O in the plastic cup," she said.

Besides wireless Internet access for laptop users, Baylor also has a "business center" on each floor, equipped with personal computers so that visitors can have access to the Internet and e-mail.

Other amenities offered at the 96-bed medical center include a Starbucks, a terraced garden, valet parking and toiletries for patients or family members. Staff refer to patients as "guests" and information is obtained from the "concierge desk," said Kindred.

Bury said guest-oriented hospitals will soon be the norm rather than the exception.

"If you don't have it, you might as well start planning," he said, "because consumer expectations are going to be there."
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How To Crack 128-bit Wireless Networks In 60 Seconds

Just for fun (since I'm a dork), I was looking for a wireless stumbler for Macintosh that supported a GPS unit because I thought it would be interesting to map how many wireless networks there are in my neighborhood (I usually can see 15-30 unique wireless networks from any given point). In my search, I ran across one called kismac that does exactly what I wanted (it even generates the maps for you, so I didn't need to code something to plot the GPS coordinates on a map):

I download it and start playing around with it. It turns out it also has security testing functions within it (although I would guess that most of the people using the cracking functions are just trying to gain access to "secured" networks... which is beside the point I suppose).

Anyway, so I start monkeying around with those functions to see if I could learn something about WEP encryption on my own 2 wireless networks (I have a Linksys WRT54G and an Apple Airport Express which I use for beaming iTunes music to the living room stereo), both are currently secured with 128-bit wireless security and I did not change anything in them for the purpose of this video. My "word list" is just the standard dictionary word list that comes with most any UNIX distribution (like Mac OS X) and resides in /usr/share/dict/.

So here's the scary part, from the time it started scanning for wireless networks to the time I was able to crack both wireless network keys (which is all you need to gain access to the wireless network), it took right around 60 seconds. Check out this video...

Okay, so what just happened here? I just cracked my two 128-bit wireless networks in roughly 60 seconds from start to finish.

Even as a relatively knowledgeable tech guy, this seems like utter insanity to me. Okay, obviously I didn't have some crazy, ultra-secure password for my networks, but I would guess 90% of all the wireless network passwords out there are based on simple (easy to remember) word(s). After doing some reading, an "ultra-secure" password/MD5 seed would be relatively useless anyway... all it would do is force the attacker to spend 10 minutes on it instead of 10 seconds, all of which is easily done from the kismac Network menu. It doesn't even matter if you setup your wireless network to be public or not, because kismac can see it even if the base station isn't showing the SSID publicly.

I'm going to poke around and see how secure RADIUS authentication is for a wireless network, but even if RADIUS is more secure, what normal person is going to have the technical knowledge and an extra few thousand dollars to setup and run a RADIUS server for their wireless network? I'm not even sure if I want to run a wireless network anymore to be honest... or maybe shut them down except for the times I'm actually using them (talk about annoying though).

Twenty Five Years of the IBM PC

Computer firm IBM made technological history on 12 August 1981 with the announcement of a personal computer - the IBM 5150.

Costing $1,565, the 5150 had just 16K of memory - scarcely more than a couple of modest e-mails worth.

The machine was not the first attempt to popularise computing but it soon came to define the global standard.

It altered the way business was done forever and sparked a revolution in home computing.

"It's hard to imagine what people used to do with computers in those days because by modern standards they really couldn't do anything," said Tom Standage, the Economist magazine's business editor told the World Service's Analysis programme.

"But there were still things you could do with a computer that you couldn't do without it like spreadsheets and word processing."

Global impact

Everything from automated spreadsheets to desktop publishing and the rise of the internet have since become possible.

The term PC had been in use long before IBM released its machine - but the success of the 5150 led to the use of the term to mean a machine compatible with IBM's specifications.

The machine was developed by a team of 12 engineers, led by Don Estridge, who was known as the "father of the IBM PC".

Development took under a year and was achieved by building a machine using "off the shelf" parts from a variety of manufacturers.

The machine had an "open architecture" which meant other firms could produce compatible machines. IBM banked on being able to charge a license for using the BIOS - the software which controls the heart of the machine.

But other companies reverse engineered the BIOS and were able to produce clones of the machine without having to pay IBM a penny.

That open architecture sparked an explosion in PC sales and also paved the way for common standards - something business had craved.

Since then the PC has come to dominate the home and the office and led the move to the online era with cheap global communication, e-commerce and for consumers the ability to find the answer to almost any question on the web.

Roger Kay, president of computer consultancy firm Endpoint, said the impact of the PC on all aspects our lives cannot be over-stated.

"I have for example an archive of correspondence from people that I diligently wrote letters to and all of a sudden that just stops," he said.

"I don't think I've got a personal letter for five years."

Moving this revolution forward are the one billion PCs that are now in use around the world.

In many ways, the PC has become in the developed world, an essential tool in our everyday lives.

End of an era?

But for how much longer?

Ray Ozzie, Microsoft's chief software architect, told the firm's shareholders last month the PC era was coming to an end.

"We're now in a new era, an era in which the internet is at the centre of so much that we do now with our PCs," he told them.

"And it's important to start then from a different vantage point."

With the lion's share of the Microsoft global software empire founded on the success of the PC, Mr Ozzie's statement was a significant admission.

Mr Standage said Microsoft has come to recognise that it will inevitably have to move with the times.

He said: "The problem is that Microsoft has most to lose from the shift towards internet-based software and that means it has the least incentive to do anything about it because it likes the status quo.

"But if it doesn't switch to this new model other people will."

PC supremacy

The move towards internet based software calls into question the supremacy of the PC itself.

Vying to knock the PC off its pedestal are a new generation of media PCs that hook up to televisions and hand-held computer devices, from phones to pocket PCs.

With all this small mobile technology and the growth of wireless internet, will people on the move bother owning a PC at all?

Reports of the PC's demise may be a little premature. While the market may not be growing anymore, it remains an industry generating some $200bn a year.

In developing countries such as China and Latin America, the PC market is still expanding at double digit growth rates.

But the development of mobile technology may enable the developing world to leapfrog the PC era altogether.

Mr Standage said mobile technology is key to sharing the benefits of the PC age with developing countries.

"I think that adding features to mobile phones is probably a better way to democratise computing," he said.

Investors, Including Bono, Buy a Piece of Forbes
David Carr

SINCE the death in 1990 of the legendary publisher Malcolm S. Forbes, his four sons and a daughter have sold his cherished assets here and there — his private jet, the collection of Fabergé eggs, a handwritten copy of Lincoln’s last address. The father suggested in his memoir that it was only natural and proper that his children do so, but even he might have been taken aback by the most recent divestiture.

On Friday, the family sold a significant minority stake in a newly formed company, Forbes Media, which includes the 89-year-old Forbes magazine started by their grandfather, B. C. Forbes; the Forbes.com Web site; and a number of smaller media properties, to Elevation Partners, a private equity group.

Malcolm Forbes, whose tastes in music ran to Scottish bagpipes, may have been even more surprised that among the new owners of the company is Bono, the singer in U2 who is one of six partners in Elevation.

“My father and grandfather would approve,” said Steve Forbes, who spoke by telephone from the offices of Forbes in Manhattan along with Roger McNamee, a managing director and co-founder of Elevation. “No one is the master of their own universe. Time and circumstances change. We wanted the wherewithal to pursue the enormous opportunities in front of us, and Elevation understands technology, media and print. They are not just a source of capital; they are a source of insight.”

Mr. Forbes emphasized that the company was looking for operational flexibility rather than familial liquidity, but it was clear that a business model that had been “blasted by the Web,” as Mr. Forbes put it, had taken a toll on the Forbes family. The magazine, swept up in the optimism of the digital boom in the late 90’s, paid dearly in terms of credibility and advertising pages when the market collapsed. Two runs for president by Mr. Forbes also proved costly.

There are bright spots: the company’s own aggressive investment in digital technologies is showing significant profits, and advertising sales at the magazine appear to be rebounding a bit. But the Forbes brothers have struggled to maintain profits at their business magazine, which is unaligned with a large media company, at a time when advertising continues to flee print.

The Forbes company and Elevation circled each other for several months — Mr. Forbes and Mr. McNamee both described it as a mating ritual — before getting down to serious negotiations in the last several weeks, concluding Friday with the signing of documents. Terms of the transaction were not disclosed, but some people said that the deal gave Elevation a stake of more than 40 percent at a cost of $250 million to $300 million.

Those people, however, did not have firsthand knowledge of the transaction, and no one directly involved in the deal would confirm those numbers. Even though Forbes has now taken on partners, it continues to be an exceedingly private enterprise.

Proceeds from the sale will be used both to invest in the business and to pay out money to members of the family.

Mr. McNamee called the alliance with Forbes a “brand-defining moment” for Elevation, a relatively new partnership conceived by a rock star and guided by some of the more successful venture capitalists on the West Coast.

“It says that we are in the business of helping content creators in the traditional media world manage the transition imposed by the Internet,” he said. Bono was not directly involved in the Forbes meetings, but Mr. McNamee said that the singer was attracted to the magazine because it “has a point of view,” adding that Bono “drove this part of the discussion and likes the fact that there has been a consistent philosophy throughout its history.”

But it was clear from talking with Mr. McNamee that his group was buying into a Web site with a magazine attached, as opposed to the other way around. Forbes.com had 10 million unique visitors worldwide, a very robust number, in June, according to comScore Media Metrix.

During the boom, Forbes invested tens of millions of dollars in its digital endeavors with an eye toward an initial public offering. That strategy did not pan out in the near term, but it left the company positioned for growth once the Web became a viable advertising proposition. With few hopes that the magazine would return to its glory years of the 1990’s as the largest magazine in terms of pages in the business news category, much of the value of the deal is built on potential profits from the Web site.
“The Web has disrupted traditional business models in the print world, and Forbes is poised to take advantage of a huge opportunity,” Mr. McNamee said. “What is not to like? We are like a kid in a candy store.”

While the magazine has not seen much in the way of investment or editorial impact in the last few years, the Web site is growing, with plans for a new travel site. It outdraws competing sites like CNN Money and BusinessWeek Online. Competitors complain that the site has used pay-for-click alliances to build traffic artificially and has deployed editorial gimmickry, like a feature on “Top Topless Beaches,” to increase traffic in unbusinesslike ways.

Mr. McNamee said that Forbes’s edge over its competition in the digital realm was very real, in part because the family came to understand the nature of opportunity on the Web more quickly than its competitors.

“The Web undermines the advantages of scale,” he said. “It is our view that the distribution model that used to dominate in media is largely unsustainable. We are in the first inning, and Forbes has really trusted content, a history of innovation on the Web and a very vibrant business.”

A share of the company had been shopped for months by J. P. Morgan, so the sale of part of the company was not unexpected, but the people on the other side of the table did come as a bit of a surprise. Elevation Partners is a two-year-old fund formed by veterans of the digital economy that raised $1.9 billion to invest in media and entertainment deals. This is the third deal for the fund, after investments in a video gaming partnership and a real estate Web business.

No one in the group has any significant experience in print properties, although they have abundant digital and finance expertise. The other managing directors include Fred Anderson, former chief financial officer of Apple Computer; John Riccitiello, former president and chief operating officer of the video game publisher Electronic Arts; Marc Bodnick, founding principal of the private equity group Silver Lake Partners; and Bret Pearlman, former managing director of the Blackstone Group. Mr. McNamee, who founded Silver Lake Partners and Integral Capital Partners, and Mr. Riccitiello will take seats on the Forbes board.

They now have a hand in a storied brand that has been buffeted by its status as an unaligned, independent magazine. Forbes’s competitors have significant corporate backing — Fortune is owned by Time Warner, BusinessWeek by McGraw-Hill, and Condé Nast will soon introduce a magazine to be called Portfolio.

There has been speculation that the rough going for most business magazines in the last five years — Forbes has a little more than half the ads it had at the height of the technology boom — combined with Mr. Forbes’s two runs for president (costing north of $70 million) left the family in need of additional liquidity. But Mr. Forbes said the partnership with Elevation was driven by ambition, not financial weakness.

“We have investment needs for real opportunities,” he said. “The whole world has opened up again, and we don’t want our children to think we just sat our hands. Yes, it has increased family liquidity — we do have estate-planning to do — but we are now poised to go against the behemoths.”

A media brand seeking cachet and capital could do worse than signing up Paul Hewson, a k a Bono. For the last 25 years, Bono has stayed atop a fickle business by embracing the latest technology in order to build global reach, constantly renewing the creative product and engaging in public stewardship along the way, including work on trade issues and global poverty.

Of course, Bono’s investment in a magazine that celebrates wealth and consumption is bound to raise eyebrows. But Mr. McNamee said the stake in Forbes did not necessarily clash with his politics and his rhetoric, saying, “The way you solve poverty is giving people the tools to overcome it.” Bono could not be reached for comment.

Timothy C. Forbes, chief operating officer of Forbes Media, is actually the music fan in the family, but Steve Forbes, whose hobbies run more toward flat-tax advocacy, said that “One” is his favorite U2 song. It begins somewhat portentously with a plaintive pair of questions: “Is it getting better, or do you feel the same? Will it make it easier on you, now you got someone to blame?”

With a name like Bono on the letterhead, Elevation is not-so-private equity, but Mr. McNamee said that Elevation — the word is a U2 song, the name of one of its tours and an equity fund — was Bono’s idea.

“He looks at this as a great opportunity to get involved in traditional media and move it forward,” Mr. McNamee said.

The deal has some specific benefits to the Forbes family. Those who know the brothers say that they are completely engaged in running the company and have little idea what they might otherwise do. So selling out, as was briefly discussed when Condé Nast was first contemplating getting into business publishing, was never really an option.

Steve Forbes said that the company had been looking for a partner on and off since 1999.

“This was a very good time to get the kind of wherewithal we need for the kind of expansion we need to have,” Mr. Forbes said. “This is a natural step for the company with right people. Forbes as always been about entrepreneurial capitalists.”

History for the boob tube?

Picture Tubes Are Fading Into the Past
Eric A. Taub

The bulky, squarish, heavy picture tube, the standard television technology for more than 60 years, is heading for the dustbin of history much faster than anyone expected.

This year, the number of TV models in the United States that use glass cathode-ray tubes to produce an image has been reduced sharply. By next year, even fewer C.R.T. televisions will be made, and fewer retailers will sell them.

“After the holidays, the days of picture-tube TV’s are gone,” said Geoff Shavey, the TV buyer for Costco. “One year from now, we will not sell picture-tube TV’s.”

Costco, a discount warehouse chain, , has already cut its picture-tube offerings to three models this year, from 10 in 2005.

Instead, Costco and other retailers are selling growing numbers of wide-screen plasma and liquid-crystal display flat-panel TV’s, which are more expensive than traditional TV’s. But prices for both types continue to drop: 42-inch plasma TV’s can be bought for less than $2,000, and the smallest flat-panel sets will soon be fairly close in price to their tube counterparts.

Mr. Shavey said that a 32-inch wide-screen L.C.D. television was available for $700 at his stores, within striking distance of a tube set of similar size. But he added, “The demand for picture-tube TV’s is far off from what it was one year ago.”

One reason is that flat-panel TV’s make a strong design statement, prompting women to want to swap their old sets for sleeker ones, said Mike Vitelli, a senior vice president at Best Buy.

“For the first time in history, women care about the TV that comes in the house,” Mr. Vitelli said. “Men are not just getting permission to buy a flat-screen TV — they’re getting directed to do so.” Soon, he said, Best Buy will sell picture-tube TV’s only under its Insignia house label.

Consumer electronics companies also want out of the tube TV business, in part because profit margins have become so thin. The government has mandated that all TV’s eventually include a built-in digital tuner to receive over-the-air digital broadcasts, and while even picture-tube sets are being made compliant, manufacturers would rather switch to selling thin-panel TV’s, which can generate bigger profits.

“The end of picture-tube TV’s is accelerating faster than a lot of us expected,” said Randy Waynick, a senior vice president for Sony Electronics. The company, which offered 10 tube models two years ago, will pare that number to two next year, both of them wide screens. “Picture-tube TV sales reductions were far greater than forecast,” Mr. Waynick said.

Even if the profit margins were healthy, picture-tube TV’s would be ill-suited for a market that wants ever-larger screens. Picture-tube TV’s were once made as large as 40 inches corner to corner, but the units were the size of baby elephants, sometimes weighing hundreds of pounds and protruding several feet from the wall.

Panasonic is getting out of the picture-tube business altogether. A year ago, the company offered 30 picture-tube models in the United States; now it sells one, a 20-inch analog set. “This year will be the last year for Panasonic picture-tube TV’s,” said Andrew Nelkin, a Panasonic vice president.

Toshiba has cut its picture-tube models to 13 — from 35 last year — and expects the number in 2007 to be “significantly reduced,” said Scott Ramirez, a vice president of marketing. “Beyond 2007, the picture-tube business is very questionable for any company,” he said.

Picture-tube TV’s represented 78 percent of the market in 2004 but will account for only 54 percent this year, according to the Consumer Electronics Association, a trade group. In the same period, sales of flat-panel units have jumped from 12 percent of all TV’s sold to an expected 37 percent this year. Front- and rear-projection TV’s will account for about 9 percent of sales in 2006, according to the group.

“C.R.T. as a technology is fading out of the market,” said Sean Wargo, director of industry analysis for the association.

The ascendance of flat-panel TV’s signals another sea change for the TV industry: the switch from somewhat square screens to wide rectangular ones. The vast majority of flat-panel TV’s are built in a wide-screen shape that allows movies to fill all or most of the screen. More television series are being produced for this format, and consumers are growing more accustomed to viewing programs this way, electronics executives say. “A wide screen gives a much more impressive picture,” Mr. Shavey said.

New technologies seldom replace their predecessors entirely, and picture-tube TV’s will still be available for those who prefer them. But they will increasingly be available only in discount stores, where they will be sold under house brand names and by less prominent manufacturers like Funai, which owns the Symphonic, Sylvania and Emerson brands.

“We think there is a continual business for us in C.R.T. TV’s,” said Greg Bosler, executive vice president of the TTE Corporation, which owns the RCA brand. Mr. Bosler, who counts Wal-Mart as a key customer for its TV’s, noted that a 27-inch L.C.D. TV was still priced around $800, while an RCA digital picture-tube set of the same size could be bought for $350; an analog version was $240.

Even so, the company expects to double its flat-panel offerings next year. It will reduce its tube models to about 15 in 2007, from 26 this year.

More Than Ever, Hollywood Studios Are Relying on the Foreign Box Office
Laura M. Holson

In 1998 the director Bryan Singer was asked to give a speech at the Tokyo International Film Festival to introduce his movie “Apt Pupil.” Mr. Singer, who often traveled to Japan, decided to surprise the crowd by speaking in Japanese.
After a brief greeting, Mr. Singer hoped to say, “I look forward to seeing you after the film.” But instead he bungled the translation, suggesting that he was looking forward to having sex. The crowd gasped. “It was,” he said in an interview on Thursday, “a disastrous mistake.”

So before he returned to Tokyo last week to promote “Superman Returns,” Mr. Singer said, he practiced his Japanese — a lot.

Much has changed since, besides Mr. Singer’s mastery of Japanese, as Hollywood increasingly looks to global markets to bolster the bottom line. Movie attendance has declined in the United States over the last decade, forcing studios to cultivate a wider audience. And combined with the increasing cost to make and market films, many here agree that having an overseas strategy is more important than ever.

Industry analysts predict an increase in worldwide movie attendance over the next five years, with Asia and Central and Eastern Europe the fastest-growing regions. According to PricewaterhouseCoopers, global spending on film entertainment from 2006 to 2010, including movie tickets and DVD’s, is projected to grow at an annual rate of 5.3 percent.

But the rules that apply to movie marketing and distribution in the United States — a barrage of talk-show interviews and television advertising — do not necessarily translate in Hamburg, Tokyo or Moscow. In France, for instance, American studios are barred from advertising movies on television. Japanese audiences are notoriously fickle, and marketers appeal to women by stressing a movie’s romance. (At the “Superman” premiere in Tokyo, Mr. Singer said they gave away prizes.) And don’t even try to release a film anywhere in the world during a major sports event like the World Cup.

“People just won’t show up,” said Mark Zoradi, who runs worldwide marketing and distribution for the Walt Disney Motion Pictures Group, which produced “Pirates of the Caribbean: Dead Man’s Chest.”

This summer, “The Da Vinci Code” was the standout overseas, surprising even the producers who relied on the international cast to generate interest in the film. “Pirates” turned out to be a hit, but even Disney knew it would be no match for the World Cup. As for “Superman Returns,” there are 13 territories yet to open, 3 of them top international markets. For now, it is unclear how much of a profit the movie, which cost $209 million to make, will take in.

•“The Da Vinci Code”

Domestic box office so far: $217 million

Foreign box office so far: $528 million

At the premiere of “The Da Vinci Code” at the Cannes Film Festival on May 17, the producer Brian Grazer watched in awe as Tom Hanks’s limousine was swarmed by a horde of eager fans.

“People were throwing their bodies on the back of his car; they were this close to getting run over,” Mr. Grazer recalled in a recent interview, holding his thumb and index finger an inch apart. “It felt like guerrilla warfare. Fans in foreign countries are excited when they see a third-rate actor. If they get someone like Tom Hanks, they go batty. It is like seeing Elvis.”

Casting an A-list movie star almost ensures a worldwide hit these days. But in the case of “The Da Vinci Code,” Mr. Hanks’s appeal was also a valued marketing tool because his nice-guy reputation was an antidote to the movie’s controversial subject matter.

Few movie stars, Mr. Grazer said, can get away with saying, “It’s only a movie,” as Mr. Hanks did when asked about the plot. (In the film, the Roman Catholic Church covers up the idea that Jesus and Mary Magdalene had children.)

Mr. Grazer relied on Mr. Hanks and the film’s similarly good-natured director, Ron Howard, to appeal to scathing critics. “I thought we needed someone kind of forgiving around the world,” Mr. Grazer said, noting that he had canceled 27 interviews in Cannes to avoid the hostile media.

“The Da Vinci Code,” based on the best-selling book, was conceived as a global endeavor from the start. The book, though, “would attract only so many people,” Mr. Grazer said.

So, he and executives at Sony Pictures Entertainment hired well-known actors from France and Britain, where the movie was filmed. These included two British actors, Ian McKellen, who starred in the “X-Men” franchise, among many other projects, and Paul Bettany as well as the French actress Audrey Tautou. In choosing them, Mr. Grazer said, he read articles and reviews to make sure that the actors were “culturally relevant.”

Sony did not wait until Cannes to bring out Mr. Howard and Mr. Hanks. In February and March, Mr. Howard traveled to several countries to show 30 minutes of film to reporters, said Jeff Blake, chairman of Sony’s worldwide marketing and distribution. Mr. Hanks went to Japan twice to promote the movie. And the press junket was conducted on an 833-mile train ride from London to Cannes, a journey chronicled by 250 journalists.

People apprised of the marketing budget said Sony spent about $70 million to market the movie abroad. It paid off. “The Da Vinci Code” brought in double the amount at the box office abroad than in the United States.

•“Pirates of the Caribbean: Dead Man’s Chest”

Domestic box office so far: $380 million

Foreign box office so far: $392 million

When Mr. Zoradi met last year with his boss, Richard Cook, who is Walt Disney Studios’ chairman, to discuss the studio’s 2006 release schedule, they had a problem. Disney was distributing two expensive movies in the summer, the animated “Cars” and a sequel to “Pirates of the Caribbean.” But unlike earlier summers, it faced tough competition from the unlikeliest rivals — 20 sweaty men chasing a ball around a grassy field.

The World Cup soccer championships were scheduled to begin in Germany on June 9, just as the summer movie season moved into high gear. Both Mr. Zoradi and Mr. Cook knew that even the savviest marketing campaign was unlikely to coax fans from their television sets. So, Disney decided to release “Pirates of the Caribbean” over several weeks instead of on the same day worldwide.

Disney opened “Pirates” in the United States on July 7, two days ahead of the World Cup final match between France and Italy. That was not a problem. Among Americans, soccer is not as popular as it is overseas, and the American team had been eliminated early. Industry analysts pointed out, too, that the morning matches did not cut into evening movie attendance.

Europe proved more challenging. The international campaign for “Pirates” began on July 6, with releases in Britain, Australia and New Zealand. “We took a bet that England and Australia wouldn’t be in the World Cup finals,” Mr. Zoradi said.

It was a good guess. But there were other factors working in the movie’s favor. Not only was it a sequel, but the cast, including Keira Knightley and Orlando Bloom, was largely British.

“Pirates” opened No. 1 in all those markets, bringing in $25.3 million in Britain, $8.4 million in Australia and $1.2 million in New Zealand that first weekend. The studio then waited until July 12 — three days after the World Cup ended — to continue releasing “Pirates,” first in Scandinavia, then in the Netherlands, most of Asia, Latin America, Japan, Germany and, finally in August, France and Spain. The rollout ends in Italy on Sept. 13 because many movie theaters there are not air-conditioned and families are on vacation in August.

So what does Disney plan for its last installment of “Pirates?” With no major sports events planned, Disney is expecting a global release the last weekend in May 2007.

•“Superman Returns”

Domestic box office so far: $190 million

Foreign box office so far: $146 million

How do you make a superhero fly? That was the challenge for Warner Brothers this year when it reintroduced “Superman” after a 20-year absence. Superman, unlike characters in the “X-Men” or “Pirates” franchises, is distinctly American, and that made it a challenge to market abroad. “The problem with Superman was that he was Midwestern, not a cultural fit,” said Sue Kroll, president of international marketing at Warner Brothers.

After the release of “Batman Begins” in 2005, Ms. Kroll said Warner held discussion groups to understand, among other things, why the critically acclaimed film did not perform as well as expected overseas. (It brought in $372 million worldwide, only $167 million of that from the international box office.) Ms. Kroll said the studio learned that Batman’s character was too dark.

Warner also studied how Superman was perceived abroad. In Germany, audiences wanted his personality to have more dimension, Ms. Kroll said. In Japan, the groups responded to Superman’s physical strength but sought a more complicated character. “Everything we learned was not surprising,” she said. “He was one-dimensional. There was a huge cheese factor. He felt old and outdated.”

Ms. Kroll and her team were charged with updating the superhero’s image. But each country had its own rules to market films. France, for instance, barred American movie studios from advertising on television. So, Warner’s French marketing team came up with an outdoor campaign based on The Daily Planet, where Clark Kent and Lois Lane worked. The ads, one with the headline “Superman Est de Retour!” (Superman is back!), were plastered on the back of buses beginning in May, as well as in bus shelters and in transit stations.

Con Gornell, Warner’s executive vice president for European marketing, said French staff members proposed the idea last November. The studio began its French campaign in May at the Monaco Grand Prix, where a team of drivers wore Superman-style jumpsuits.

Then, too, the studio began giving away three million copies of a French edition of The Daily Planet on the streets of Paris and 10 other cities. Like many studios these days, Warner heavily promoted Superman on the Internet. On a Daily Planet Web site, French speakers could post photos of Superman, track Superman on a map, watch a video blog from the director or play a game. Mr. Gornell said executives in other countries modeled aspects of their campaigns after the French effort.

How successful was it? Since July 12, “Superman Returns” has brought in a respectable $10.5 million in France. But in the weeks ahead, Superman is facing a foe mightier than Lex Luthor: Johnny Depp in “Pirates.” That movie earned $18 million in France over the weekend, its debut.

Movie Transfers to DVDs to Become Easier
May Wong

A film industry group is set to remove some of the procedural hurdles that prevented the legal recording of movies onto blank DVDs in a further sign that Hollywood studios are preparing to expand what consumers can do with downloadable movies.

Under rule changes expected to be finalized soon by the DVD Copy Control Association, retailers could create movie jukebox kiosks with which customers can select, say, an obscure title and burn it to a DVD on the spot.

Online merchants, like Apple Computer Inc.'s iTunes Music Store, could start to allow video downloads to be transferred onto DVDs.

The impending technical and policy changes involve the copy group's proprietary technology known as the Content Scramble System, or CSS. The association, an arm of Hollywood studios, licenses the encryption technology to makers of DVD players and other electronics companies and applies it widely to movies on DVDs to restrict illegal copying.

The association said it will soon expand licensing to movies that are digitally distributed on demand or a la carte - and not just for movies that are mass produced on DVDs.

The group also is working with disc makers to produce CSS-compatible blank DVDs.

Hollywood studios have been experimenting more with digital distribution. But until recently, they have been reluctant to allow consumers to transfer online purchases onto DVDs, limiting playback largely to computers or entertainment systems that are linked to a computer network.

Last month, online movie service CinemaNow became the first to allow customers to transfer mainstream films onto DVDs using an alternative encryption method, but users complain the movies sometimes can't be played on standard DVD players.

That problem should disappear when CSS is available for digital downloads, said Jim Taylor, a general manager at digital video software company Sonic Solutions.

"It'll open the floodgates for a lot more premium content to be burned onto DVD," Taylor said of the changes.

Sonic has already teamed with online movie provider Movielink to provide burn-to-DVD offerings that will be CSS-compatible.

The Many Voices of Wikipedia, Heard in One Place
Robert Levine

As hard-core Wikipedia contributors gathered here during the weekend to consider the next phase of the online encyclopedia’s life cycle, Jimmy Wales, the site’s founder, said that the emphasis going forward would be on quality, not quantity.

With 1.2 million entries in Wikipedia, “there’s a sense in the English community that we’re going from the era of growth to the era of quality,” Mr. Wales said in an interview. “That could mean quality control — making sure the information is accurate — and it could mean a clearer presentation, or more information.”

Wikipedia has become known as the online encyclopedia that anyone can edit, but in practical terms, it is mostly a cadre of devotees who contribute to the site and obsess over it.

About 400 of them paid to attend the second annual Wikimania conference, an event that showed far more professional trappings than the first. It was held at Harvard Law School rather than a German youth hostel, the organizer was paid for her work and the corporate sponsors included Amazon.com, Nokia and Coca-Cola.

“This has a different scale,” said Delphine Ménard, the organizer, who planned Wikimania 2005 as a volunteer. “We have a public we need to reach.”

Although there have been some well-publicized errors — some intentional, some not — published on Wikipedia, the site has also earned some good marks for accuracy. A survey in the science journal Nature found four errors in Wikipedia for every three in the Encyclopaedia Britannica.

Then again, as several contributors at Wikimania acknowledged, the site could be judged more harshly on other criteria. Entries can ramble, and there are times when the idiosyncratic enthusiasms of contributors rule the day. (The “wiki” name is derived from a Hawaiian term meaning quick or fast, according to the site.)

“One of the running jokes is that there are better articles on Pokémon than on certain kinds of science,” said Alex Schenck, 19, a volunteer site administrator who delivered a presentation on the factors behind Wikipedia’s success. “That could be true.”

Mr. Wales said that the frequency of changes could decrease, suggesting that, as time passed, the Wikipedia product would become more important than the collaborative process supporting it.

For instance, he said, the German-language Wikipedia will soon begin creating some “stable entries,” good enough to publish in a textbook or other traditional media. Most likely, he said, these entries will exist in two versions, one of which can still be changed by the public.

If that experiment goes well, Mr. Wales said, the English-language version of Wikipedia could follow suit in the next year.

“Stability is important not in itself, but in the sense of feeling more comfortable that we’re presenting our best work,” he said.

Mr. Wales said he expected less of a free-for-all atmosphere as the site grew up. “There was a time when you could come to Wikipedia and there was a red link to Africa, and you could write that Africa was a continent,” he said. “Now the links that are left are less and less famous, less and less big.”

Angela Beesley, a board member of the Wikimedia Foundation, the nonprofit entity that supervises the site, said in an interview that she was less concerned with the sprawling nature of some Wikipedia entries than with “accuracy, then balance.”

As for the sometimes choppy writing, “it’s difficult to organize whole articles, so people don’t edit them as a whole,” she said. “That’s something we need to encourage.”

At times the conference itself seemed to be dealing with the same issues. One member of the foundation’s board, Florence Nibart-Devouard, stormed out of a news conference because she had not been told about the announcement being made. And on Thursday afternoon, signs concerning registration had the opening time crossed out, replaced by the word “later.”

“It’s a funny thing,” Mr. Wales said. “I had no idea that anyone was putting up signs. Someone somewhere said there should be signs, and someone did it. It’s effective.”

“But,” he added, “it’s chaotic.”

Dell Reflects on 25 Years of PCs
Tom Krazit

The man who founded the world's largest PC company thinks the best is still to come after a quarter-century of the IBM PC.

Twenty-five years have passed since IBM launched its version of the personal computer. Apple may have captured the attention of early computer hobbyists with its first products, but IBM's PC made the business world sit up and realize that personal computers could be much more than toys.

Michael Dell started off using PCs to create homework shortcuts, the way many young people at the time discovered the new devices. Few people, including Dell's parents, realized exactly how large the potential was for the personal computer. More than 20 years after he founded PC's Limited, he admits his parents never quite embraced his decision to leave the University of Texas at Austin to start the company that would eventually bear his name and record $56 billion in revenue during its last fiscal year.

Michael Dell
As the PC industry looks back on 25 years of growth and success, CNET News.com spoke to Dell about his early experiences with the PC, the factors that led to its rapid acceptance among home and business users, and the future of the device. Here are excerpts from that conversation, and videos can be found on the right side of the page.

Can you start off by telling me a little bit about what your first-ever PC was?
When I was in junior high school, I started playing around with--at the time they were RadioShack PCs--so they were the first PCs that I was able to play around with.

Do you remember how much that cost or what the specifications were?
They were probably $800 or something like that, not super expensive and not very powerful either. They had cassette drives instead of hard-disk drives. It was even before the floppy disks. (I'd) largely do programming with Basic. I was kind of fascinated with the computing power and what that could do and what that would mean. It was just an enchanting device for me.

What were you doing with it? Were you playing simple games or...?
Just my math homework, playing around writing programs. (I was) just fascinated with the machine that could do so many computations so quickly. At the beginning of the genesis of the PC industry, it seemed like there was going to be a lot of excitement with the device like this, as it went into medicine and business and education and entertainment. Of course, nobody knew exactly what would happen, but it was a very exciting time.

When do you think you realized that this device was going to go from more of a niche device to something that almost everyone would have at some point?
I dropped out of college because that's what I thought would happen. So, that for me was in 1984 and I started a company around that idea, believing that more and more people would know how to use PCs, that they would become easier to use, that even people could buy them without going to a store. We had a sense for it in the early '80s but certainly couldn't say we imagined it. It is just the way it happened.

Do you recall any specific event or anything that dawned on you in back around that time? I mean, you must have had to sell the idea of dropping out of college to your parents.
I didn't really sell them on it. They weren't really in favor of it. So I was, you know, rebellious--an 18, 19-year-old and just did what I wanted to do and all worked out OK.

It seems to have. So to ask you to speculate a little bit, one of the things that helped the rise of the PC 25 years ago was the way that IBM gave up control over certain parts of the PC to other companies, allowing Microsoft to license the operating system. Can you sense what the world might be like if that hadn't happened, if IBM had maintained very tight control of that device?
Yeah, it's kind of interesting. I mean, that was clearly a big factor because what it developed was an ecosystem which became and is still today incredibly important in the evolution of computing, not only in the personal computer sense, but even in the enterprise. Before that time you actually had all sorts of proprietary or semi-proprietary PCs, and the cry out from the community of users was, "Hey, how do we get a standard so that we can develop applications one time and they work on any kind of device?"

I think you could argue that the market would have been much smaller, would have developed much more slowly. Parts would have been much more expensive and computing would have never had the impact that it's had now. You could also say that if IBM and Microsoft hadn't done that, somebody else would have come along and did it, so I would believe that as well.

That original PC in 1981 was certainly a pivotal moment because it caused this ecosystem to start to flourish and allowed all sorts of companies to participate, whether they were developing add-in cards or software applications or chipsets or extending the architecture in new ways and bringing products to market that provided value, provided an alternative.

What kind of changes do you see in store for the PC over the next 20 to 25 years? Are we going to see something radically different or an evolution of the thing that we now know?
I remember about 10 years ago somebody said we were in a post-PC era. I said, "That's kind of interesting. Well, tell me about the post-PC era--what does that all

It turns out, the unit volumes for PCs have continued to grow, so now this year roughly 240 million PCs are sold all over the world. What you are going to see is that there are all sorts of new devices, but the PC has had an amazing ability to adapt and evolve and it's not really just one PC. You have all these different shapes and forms and sizes and workstations and portables, big ones and small ones and multiple processors and single processors and handheld machines and all sorts of varieties.

The physics that underlie the hardware are not slowing down at all, so the rate of improvement there is tremendous. I think there are still enormous opportunities in the user interface to make it an easier or simpler device.

I still believe the industry is in its early innings in terms of its development and (rate of) change, and certainly the pervasiveness of very high-speed broadband connections, fiber, very high-speed wireless, which will change where and how computing occurs around the world. But the PC is an indispensable part of how productivity and entertainment, education, medicine works today in society.

When you look back now and you see how far the PC has come, can you pick a couple of things that you think were instrumental in getting that device to where it is today?
I think you have a foundational element, which is the semiconductor revolution, which provided enormous improvements in power and integration and scale in being able to combine large numbers of transistors together into increasingly smaller and less-expensive packages, so that the functionality was improving at a very, very rapid rate, across all aspects of the system, whether it was processor performance or graphics performance or IO performance, network, bandwidth, all those things. That's the foundational element that's been absolutely critical.

Then, you have this ecosystem effect, which was kicked off by the famous IBM decision with Intel and Microsoft. So you have this ecosystem of literally tens of thousands of companies that are participating and billions of users. Dell has sold over 200 million PCs worldwide and this year over 40 million of them, so that ecosystem of users and companies contributing makes it much more powerful than what any single company could do themselves.

We certainly, I think, helped make PCs more affordable, (have) driven the technology transitions and reduced the time period from when technology was introduced to when it's actually available. We made the whole supply chain in the industry much more efficient; that drives efficiency, drives costs down and certainly that makes the market much larger.

The one other thing I want to ask you is what you currently use, right now at home, as your home PC.
I am using a Dell Precision 690, which is our high-end workstation. It's a two-socket system and it's got two dual-core Woodcrest (Xeon 5100 processors) in there. It's got a port with 64 (gigabytes) of memory, but I have only got 32 (gigabytes) in there.
Come on.
And I have got two of our 30-inch monitors, so it's 8.2 million pixels of resolution, which is kind of nice. And I have managed to get a fiber connection to my house, so I kind of dig into that speed on the Internet.

State of the Blogosphere, August 2006

Three months have passed since my last State of the Blogosphere report, so time for an update on the numbers. For those of you who just want the most interesting tidbits, I've tried something new this time around - I've put in boldface the most significant information. There's also a summary at the bottom of the post for those of you who just want the significant details.

50 Million Blogs and Counting.

On July 31, 2006, Technorati tracked its 50 millionth blog. The blogosphere that Technorati tracks continues to show significant growth. The chart below (click to get a full-sized version) has the details:

Technorati has been tracking the blogosphere, or world of weblogs, since November 2002, and I'm constantly amazed at the growth over the years. The blogosphere has been doubling in size every 6 months or so. It is over 100 times bigger than it was just 3 years ago.

Whenever I write about these statistics, I'm always asked by people, "Can it continue to grow this quickly?" Frankly, I can't possibly imagine it continuing to grow at this pace - after all, there are only so many human beings in the world! It has to slow down.

Rather than just postulate on this, we now have enough data to actually look at the real numbers - The rate at which the blogosphere has doubled over time, as shown in the chart below:

As this chart shows, back in November of 2003, the blogosphere had doubled in size in 40 days - probably because Technorati was new and was just picking up all of the blogs that were out there in the world. In January of 2004, the blogosphere was doubling at a rate of once ever 120 days, which is about once every 4 months. By July of 2004, the blogosphere was doubling every 180 days, or about once every 6 months. Today, the blogosphere is doubling in size every 200 days, or about once every 6 and a half months. That means things have slowed somewhat - the rate of doubling has increased by about half a month to once every seven months.

What I found so interesting in these numbers is that the graph has stayed so flat in the range of 150-200 day doublings for so long. From January 2004 until July 2006, almost two and a half years later, the number of blogs that Technorati tracks has continued to double every 5-7 months.

Can this possibly continue? Will I be posting about the 100 Millionth blog tracked in February of 2007? I can't imagine that things will continue at this blistering pace - it has got to slow down. After all, that would mean that there will be more bloggers around in 7 months than there are bloggers around in total today. I shake my head as I am writing this - the only thing still niggling at my brain is that I'd have been perfectly confident making the same statement 7 months ago when we had tracked our 25 Millionth blog, and I've just proven myself wrong.

Let's look at the number of new blogs tracked each day, to get another look at the numbers:

As of July 2006, about 175,000 new weblogs were created each day, which means that on average, there are more than 2 blogs created each second of each day.

Surely some of these new blogs in Technorati's index are Spam blogs or 'splogs'. The spikes in red on the chart above shows the increased activity that occurs when spammers create massive numbers of fake blogs and try to get them into our indexes. This is going to be a fight that is going to continue as long as people find the web useful, and there's really no way to make sure that we catch every single spam blog before it goes into our indexes. We've been working extremely hard on understanding these spam patterns, and eliminating the spam from our indexes as quickly as possible, and making sure that these identified sources of spam (and spam creation patterns) never even make it into the index when they attempt to do so in the future.

What we have found, after lots of analysis and spam elimination, is that we see about 8% of new blogs that get past our filters and make it into the index, even if it is only for a few hours or days. In other words, we're always going to pay a price to make the blogosphere as open a place as possible, and Technorati will always have some results that are spammy. We're going to have to continue be extremely vigilant to make sure that new attacks are spotted and eliminated as quickly as possible. About 70% of the pings Technorati receives are from known spam sources, for example, but we're able to drop them before we even send out a spider to go and index the splog.

Of course, we're also going to make some mistakes - so if you think your blog is possibly misclassified, go and have a look at your blog profile (here's mine, for example)- simply type in your blog homepage URL to see what Technorati thinks it knows about your blog. If you don't see your newest posts showing up, make sure that you've claimed your blog. If all else fails, please let us know about it, and we'll try to fix it for you. Please note that if you have multiple URLs for your blog (e.g. Typepad users often have multiple URLs for their blogs, as do some other services) to please try the alternative URLs as well before dropping us a support ticket.

OK, back to the fun. Here's a look at the daily posting volume in data that Technorati tracks:

First off, the total posting volume of the blogosphere continues to rise, showing about 1.6 Million postings per day, or about 18.6 posts per second. This is about double the volume of about a year ago. Along with the aggregate posting volume information, we've put in some annotations of the events that occurred at the time of the spikes, showing that the blogosphere continues to react strongly to various world events. It is important to note that it is the relative increase in posting volume rather than the absolute increase that is most relevant here. In other words, because more people are blogging now, the total number of posts on a particular day don't tell the whole tale of the impact of an event - For example, The National Spelling Bee was not as large an event in the blogosphere as Hurricane Katrina. What is important to note in these charts is the relative size of the spike in relation to the posting volume at that time.

Another interesting item to note is the level of influence that blogs are having, especially compared with the mainstream media (MSM). This chart is somewhat biased towards western sources of the MSM, and if you see a source that is missing from this (or the next) chart, please let me know.

What is interesting is that some of the most influential weblogs are being treated in much the same way as traditional MSM, as measured by the number of bloggers who are linking to them, as shown in the chart below:

The blogs are in red, MSM in blue. What becomes more interesting to me, however, is that as you continue down the long tail of media sites, the number of blogs starts to grow - to 11 of the top 90 sites, or 12.2% of the total, especially given the budget differentials, as shown below:

Next, let's look at the language distribution of the blogosphere. One of the most interesting statistics that has changed since the last State of the Blogosphere is that English has retaken the lead as the #1 language of the blogosphere. However, it's not by much - the Japanese blogosphere has grown substantially as well.

In April, English edged out Japanese with 34% of all postings to 33% of all postings, with Chinese taking the #3 spot with 14% of all postings.

In May, English extended its lead to 41% of all postings in the blogosphere, to 31% in Japanese and 10% in Chinese.

In June, Chinese caught up somewhat, with 39% of all postings tracked by Technorati in English, 31% in Japanese, and 12% in Chinese. It is important to note that, as in the report in April, that there are some significant underreporting issues, especially in Korean and in French, as described in that report.

Finally, I thought it would be interesting to look at what times of day show significant posting volume by language. The chart below shows this information using Pacific time (Technorati is located in San Francisco, so we're biased towards that time zone) as our base:

It is interesting to note that the most prevalent times for English-language posting is between the hours of 10AM and 2PM Pacific time, with an additional spike at around 5PM Pacific time. Japan, which is 17 hours ahead of San Francisco, shows a different pattern - more posting occurring during the evening hours into the night, as well as the early morning hours before work begins. I'm not entirely sure what to make of these numbers, but it would appear that English-speaking people are more likely to blog during work hours and early evening in the USA, while they are more reluctant to blog during work time in Japan. More research is definitely needed to understand when and where people are blogging. Perhaps a more experienced cultural anthropologist or sociology researcher can provide better insight here, if you're interested, drop me a line at dsifry AT technorati DOT com.

In summary:

• Technorati is now tracking over 50 Million Blogs.
• The Blogosphere is over 100 times bigger than it was just 3 years ago.
• Today, the blogosphere is doubling in size every 200 days, or about once every 6 and a half months.
• From January 2004 until July 2006, the number of blogs that Technorati tracks has continued to double every 5-7 months.
• About 175,000 new weblogs were created each day, which means that on average, there are more than 2 blogs created each second of each day.
• About 8% of new blogs get past Technorati's filters, even if it is only for a few hours or days.
• About 70% of the pings Technorati receives are from known spam sources, but we drop them before we have to send out a spider to go and index the splog.
• Total posting volume of the blogosphere continues to rise, showing about 1.6 Million postings per day, or about 18.6 posts per second.
• This is about double the volume of about a year ago.
• The most prevalent times for English-language posting is between the hours of 10AM and 2PM Pacific time, with an additional spike at around 5PM Pacific time

As always, I'm very interested in your comments and feedback.

Nokia Agrees to Buy Loudeye for $60M
Jari Tanner

Nokia Corp. said Tuesday it has agreed to buy U.S.-based digital music distributor Loudeye Corp. for about $60 million as the world's No. 1 cell-phone maker seeks to grab a larger share of the growing digital mobile music market.
Under the deal, Nokia will pay $4.50 for each share of Loudeye, a provider of digital music platforms and digital media distribution services.

"By acquiring Loudeye, Nokia can offer consumers a comprehensive mobile music experience, including devices, applications and the ability to purchase digital music," the Finnish company said.

Loudeye shares rose $2.56, or 145 percent, to close at $4.33 on the Nasdaq Stock Market. Nokia's U.S. shares fell 10 cents, or 0.5 percent, to finish at $19.46 on the New York Stock Exchange.

Analyst Ben Wood at Collins Consulting said the acquisition shows that Nokia is taking the offensive in its music strategy in the face of strong competition, particularly from Sony Ericsson's popular Walkman phones.

Nokia has previously cooperated with Loudeye in enabling mobile operators to provide a music download service over mobile phones such as Nokia's high-end N91 handset.

The company now aims to provide a music download service under its own brand sometime in 2007, possibly putting it in direct competition with its own operator customers.

Operating in over 20 countries, Seattle, Wash.-based Loudeye employs 130 people and had sales of around $20.3 million in 2005.

Loudeye has deals with all the major record companies and provides a music distribution "engine" that is then branded by third parties who want to set up an online music store. Companies using Loudeye include Microsoft Corp.'s MSN and Coca-Cola Corp.

Michael Brochu, Loudeye president and chief executive, said his company and Nokia can together "deliver a comprehensive mobile music experience" to Nokia mobile device owners.

Nokia, which sold 15 million music-enabled devices in the second quarter, claims to be the biggest seller of digital music players in the world. In the same period Apple Computer Inc. sold 8.1 million iPods.

Many of Nokia's handsets include music players, but only in March did it start sales of its first music optimized phones, the 3250 and the N91.

The deal with Loudeye is expected to close in the fourth quarter, pending approval from shareholders' and regulatory authorities, Nokia said.

UC Libraries Join Google's Book Project
Michael Liedtke

The University of California is joining Google Inc.'s book-scanning project, throwing the weight of another 100 academic libraries behind an ambitious venture that's under legal attack for alleged copyright infringement.

The deal to be announced Wednesday covers all the libraries in UC's 10-campus system, marking the biggest expansion of Google's effort to convert millions of library books into digital form since a group of authors and publishers sued last fall to derail a project launched 20 months ago.

"We think this is a pretty significant step forward," said Adam Smith, the group product manager overseeing Google's book-scanning initiative.

UC joins three other major U.S. universities - Stanford, Michigan and Harvard - that are contributing their vast library collections to Google's crusade to ensure reams of knowledge written on paper makes the transition to the digital age. The New York Public Library and Oxford University also are allowing portions of their libraries to be scanned.

The project is expected to last years and cost tens of millions of dollars - a bill that Google is footing. It's something Google can easily afford, given the nearly 8-year-old company has already amassed nearly $10 billion in cash.

Google's motives aren't entirely altruistic. The Mountain View, Calif.-based company wants to stock its search engine with unique material to give people more reasons to visit its Web site, the hub of an advertising network that generates most of its profits.

The endeavor has riled authors and publishers because Stanford, Michigan and Harvard are all allowing Google to create digital copies of books still protected by copyright. UC also is giving Google access to the copyrighted material.

Only so-called "public domain" books no longer protected by copyrights will be shown in their entirety. Google doesn't plan to show anything more than a few snippets from copyrighted material - a "fair use" approach that the company believes is allowed under U.S. law. Latest News
UC libraries join Google's book project

Both the Association of American Publishers and Authors Guild, the two trade groups suing Google, contend the company shouldn't be allowed to stockpile digital versions of copyrighted material without permission.

Although the lawsuits aren't directly targeting the university libraries, UC's alliance with Google irritated the publishing community.

"It's a curious decision to make, given the pending litigation and legal uncertainties" surrounding the project, said Allen Adler, vice president of legal and government relations for the Association of American Publishers.

UC's move also disappointed the Association of Learned and Professional Society Publishers, a group representing not-for-profit publishers. "We are concerned and we aren't happy," said Nick Evans, member services manager for the group. "There are no guarantees how this information might be used in the future."

The lawsuits are expected to remain in the evidence-gathering stage through the remainder of this year.

Google's arguments in the dispute received a recent boost in Germany earlier this summer after a publisher in that country abandoned its effort to prevent its copyrighted works from being copied.

UC's libraries already have been involved in another book-scanning initiative called the Open Content Alliance that's spearheaded by Yahoo Inc. and Microsoft Corp., two of Google's biggest rivals. That project, which continues, focuses exclusively on books without copyright protection.

The decision to link up with Google to widen the scope of UC's book scanning was made by university president Robert Dynes without a vote by the board of regents. "There are so many benefits to this," said Jennifer Colvin, a spokeswoman for UC's library. "We respect copyrights, but we also want to give full access to our public domain material."

Airwaves Auction May Bring In Billions
John Dunbar

High-speed Internet access, streaming video, music downloads and other special new features may soon be in store for mobile phone owners thanks to an unprecedented airwaves auction.

The auction, conducted by the Federal Communications Commission, has attracted 168 interested bidders, each hoping to offer the next generation of wireless services.

The Congressional Budget Office estimates the sale will raise between $10 billion and $15 billion for the U.S. Treasury. Already, it has brought in $4.3 billion from bidders who made payments simply to qualify to participate.

The auction, which was beginning Wednesday, will add badly needed capacity to the maturing cellular telephone market and allow for clearer connections and sharper pictures in addition to a host of new services.

Bidders are competing for the right to use portions of the radio spectrum - a publicly owned, extremely valuable highway in the sky that allows sound, data and pictures to be transmitted from one place to another.

The FCC, in addition to conducting the auction, is responsible for making sure spectrum licensees do not interfere with one another's signals and that they use the airwaves in the public interest.

The auction, to be conducted via telephone and online, may go on for weeks.

Companies will be bidding for 1,122 licenses, good for an initial term of 15 years. The licenses can then be renewed every 10 years.

While it is impossible to say who the big winners in the auction will be, the FCC's qualification process, which requires bidders to provide money up front depending on how many licenses they plan to bid on, provides a list of front-runners.

The top qualifier is Wireless DBS LLC, an alliance that includes two competing direct broadcast satellite providers: EchoStar Communications Corp. and the DirecTV Group. The bidders paid $972.5 million.

Second was SpectrumCo, a consortium of Comcast Corp., Time Warner Inc., Sprint Nextel Corp., Cox Communications Inc. and Bright House Networks, with $637.7 million. Third was T-Mobile License LLC, at $583.5 million. T-Mobile is expected to be among the most aggressive bidders.

Analysts say EchoStar and DirecTV are investing in the future. Increasingly, cable television operators and telephone companies are offering bundles of services to customers that include high-speed Internet access, phone service and video while satellite companies have been limited primarily to video.

"The DBS (direct broadcast satellite) guys need a viable triple-play strategy," said Harold Feld, senior vice president of the Media Access Project. Triple play means video, voice and broadband.

The new spectrum could allow the satellite companies to offer wireless phones and broadband access. However, the costs of the auction are just the beginning.

If EchoStar and DirecTV were to build a new national cellular phone network from scratch, for example, it would require billions of dollars and take years. The joint bid has helped to fuel rumors of a potential merger between the two companies.

The cable industry, while it offers a greater menu of consumer services, needs wireless capability to be able to field a full range of services.

Feld said the cable companies may also be getting into the auction simply to drive up the cost to the satellite companies, their primary competitors.

"But if they win, certainly they'll be able to put the spectrum to good use," he said.

Wednesday's auction is the most high profile since late 2000 and early 2001, when a spectrum sale attracted $16.9 billion in bids.

The total amount of spectrum for auction is 90 megahertz, more than twice the amount occupied by Verizon Wireless Inc. The amount of spectrum, combined with the fact that the licenses for sale span the nation means a major new player could emerge.

"If someone wanted to put together a national footprint they could do that in this auction," said former FCC Commissioner Harold Furchtgott-Roth.

While there is enough spectrum available to create a new network, a more likely result will be an upgrade and expansion of services for wireless customers.

T-Mobile probably is the most motivated bidder in the auction. Compared to other wireless companies, the cellular phone service provider is starved for bandwidth. Other wireless carriers, like No. 1 Cingular and No. 2 Verizon, have also made large upfront payments and are expected to be active.

Sony to Launch a New Wireless Handheld
May Wong

Hoping to tap into the growth of wireless networks across college campuses, other public spaces and within homes, Sony Corp. will announce Tuesday a new pocket-sized gadget for instant messaging and other Internet-based communications.

The Sony mylo, slated for availability in September at a retail price of about $350, is a first-of-its-kind product that uses Wi-Fi networks, analysts say. It is not a cellular phone and thus doesn't carry monthly service fees. And though it could handle Web-based e-mail services, it doesn't support corporate e-mail programs.

Instead, the slim, oblong-shaped gizmo that has a 2.4-inch display and slides open to expose a thumb keyboard is specifically geared toward young, mainstream consumers for messaging and Internet-based calls, commonly known as VoIP (Voice over Internet Protocol) calls.

As long as a Wi-Fi network is accessible, a mylo user could chat away or browse the Web.

The mylo - which stands for "my life online," - will be marketed toward 18- to 24-year-olds, the multitasking generation that relies heavily on instant messaging and is already viewing e-mail as passe, Sony said.

The consumer electronics giant has partnered with Yahoo Inc. and Google Inc. to integrate their instant-messaging services, and is looking to expand mylo's support to other services as well, most notably the leading messaging provider, Time Warner Inc.'s America Online.

Sony has also teamed with eBay Inc.'s Skype VoIP service, which offers free voice chats for its registered users.

The so-called personal communicator doubles as a portable media player. It can play music, photos and videos that are stored on its internal 1 gigabyte of flash memory or optional Memory Stick card. It also can stream songs between mylo users within the same network, as long as the users grant permission to share their music files.

Danielle Levitas, an industry analyst at market researcher IDC, called the mylo a "unique, compelling" product, but said it might fare better at a lower price of $299 and with added partners such as AOL.

In addition, though Wi-Fi is spreading across colleges, coffee houses, airports and even entire cities, Levitas said the wireless technology isn't ubiquitous enough yet to help Sony break mylo out of a niche market.

"You need enough Wi-Fi out there to make this a compelling product to reach a wider audience," Levitas said.

Still, Sony is betting that mylo will draw great interest not just among college students but also among households where youngsters might be fighting over the use of a computer just for chatting or Web surfing.

"Our mylo personal communicator lets you have the fun parts of a computer in the palm of your hand," said John Kodera, a director of product marketing at Sony.

Sony said the new gadget will be sold only in the United States. It will be available through Sony's online store and at select retailers in college towns.

Wi-Fi for the Masses
Martha Baer

It looks like a large Styrofoam takeout container. The 14-pound box would fit into a backpack were it not for the two antennas, set well apart. It can withstand subfreezing temperatures and 165-mph winds; it's even lightningproof. With the lid bolted down tightly, the box offers no clue as to what's inside. But disassembled, it reveals intricate innards that look like nothing so much as a city viewed from a plane: A million tiny wires crisscross like streets and weave among square parks the size of your thumbnail.

The magic of the box occurs when you mount it on the horizontal arm of a city lamppost, so that its long ears reach up to the sky. Install 30 of them per square mile (which isn't hard, since an installer using a single tool can put up a unit in 15 minutes) and they immediately begin communicating with one another via radio waves. Data, the same information that flows through the wired Internet, begins traveling between them. Establish some hub connections to usher the data back onto the Net and you've created a wireless network that can transmit signals all over real, life-size cities -- into parks, schools, juice joints, bars, offices, playgrounds, and homes.

The boxes, known as routers or nodes, are made by Tropos Networks, a Silicon Valley upstart that's landed in the middle of a burgeoning movement among U.S. cities to create municipal wireless networks, or metroscale Wi-Fi -- essentially, an effort to deliver wireless bandwidth to the masses. Since Tropos began selling its equipment in 2002, dozens of municipalities have signed up. The Twin Cities suburb of Chaska, Minnesota, built a wireless network to cover its 16 square miles and serve all 18,000 of its residents. Corpus Christi, Texas, bought 300 Tropos nodes to cover 24 square miles and has since decided to expand to 147 square miles. As it rebuilds in the wake of Hurricane Katrina, New Orleans plans to cover the whole town with a Tropos network. This summer, Anaheim, California, will hit the switch, giving 325,000 citizens across 50 square miles ubiquitous broadband Internet access. Tropos-powered networks also are in the offing in Philadelphia and San Francisco.

Launched with what Bill Gurley, a Silicon Valley venture capitalist and early Tropos investor, calls "four guys under 30 and an algorithm," the Sunnyvale-based company spent less than $3 million getting its first product to market. Since then, it has grown into the leading equipment provider in this incipient market, with more than $15 million in revenue in 2005 and a projected $45 million in 2006. It has had roughly 350 customers to date--including some in far-flung locales such as Bangkok, Kuala Lumpur, and Doha, Qatar -- and partnerships with EarthLink, Google, Motorola, IBM, and others. Given its recent contracts, the company is well ahead of competing equipment makers.

Yet Tropos faces some difficult tests before it can realize its vision. The new, large-scale projects in San Francisco and Philadelphia will get the technology out of dress rehearsal and in front of a major audience. These launches will be key to the company's fate. As hundreds of other cities look on, contemplating whether to install their own cheap broadband, and as a phalanx of massive data carriers like Verizon and Comcast glower over what may be a new threat, Tropos will march out onstage. Says CEO Ron Sege: "The best thing we can do is make sure the big cities do well, for everyone to say, 'Oh, my God, it works.'"

What Stops the Internet From Being Everywhere?

In San Francisco, there is a new cafe every year that has "the best coffee in town." At the moment, it's Ritual, a chic place in the Mission District with leather couches, wireless Internet, and PowerBooks on every table. The two founding engineers of Tropos -- Narasimha Chari, who goes by "Chari," and Devabhaktuni "Sri" Srikrishna -- are sitting at a small table, drinking lattes and reflecting on recent news. About a year ago, the mayor of San Francisco put out a request for proposals, looking for the optimum plan for "unwiring" the city -- that is, for creating a citywide Wi-Fi network. Just the day before, out of a half-dozen contenders, the selection had been announced -- and Sri and Chari's list of big wins had gotten one municipal contract longer.

But the two men, both 32, scarcely stopped to rest. That's because each successive contract brings them closer to answering a question that's intrigued them since they met as undergraduates at Caltech about 15 years ago: "What stops the Internet from being everywhere?"

The inquiry arose out of mutual concerns about India and other developing countries. As a brainy boy growing up in Calcutta, Chari would take long excursions through the city searching for textbooks containing just the kind of math and science materials you can download in seconds today from the Internet; he knew that connecting people in poor and remote regions could be a profound form of change. Sri, for his part, had a deep desire to be useful and an appetite for solving engineering problems. So while attending graduate school in the late 1990s (Sri at MIT, Chari at Harvard), the two men would hang out in the bars around Cambridge and talk about how to get the Internet everywhere on the planet.

The intellectual challenge soon became as enticing as the moral one. It was a problem of cost efficiency: How could you bring the power of computer networks to villages hundreds of miles from the nearest cable TV, places where people can't even afford phones? It was a technical problem, of bouncing signals around in the air over large areas and then back to the nearest data wires. And finally it was a problem of overcoming natural physical limitations: the distance transmitted signals could travel, for one, and the amount of stuff that can be sent simultaneously. "It's just a very fascinating subject," says Sri. "We never really set out to start a company."

Any solution had to be dirt cheap. Even in the United States, broadband is so expensive, both to provide and to purchase, that its growth has not kept up with consumer appetites. Today many rural areas around the country have no high-speed data services, simply because it costs so much to dig up the streets and lay wire. Jupiter Research, a market research firm, estimates that 35 percent of Internet users in exurban or rural areas can get only dial-up connections. In some cases, the necessary conduits reach town, but jackhammering the last bit of pavement to serve a smattering of houses is more of a burden than it's worth. "There are some places where the economics are prohibitively expensive," says Brian Blevins, a Verizon spokesperson.

For Chari and Sri, the alternative to digging would have to be radio, and while drinking beer and poring over dense technical books, they came across a radio technology developed in the 1970s for military uses. The technology worked on battlefields, but its inventors and the engineers who came after assumed that it wouldn't scale. Sri and Chari thought otherwise. They suspected that if you could program the nodes of these radio networks cleverly enough, teaching them to move information around quickly, you could make the network as big as you wanted.

Their idea was a variation on the principle of the bucket brigade or steppingstones. If you can't get the signal to reach all the way to the wired Internet, make it hop from one transmitter to another until it does. And give it some basic rules for finding the most efficient pathway there.

Here at Ritual, for instance, e-mail data comes in over wires to a base station or router somewhere in the room and then heads through the air to the nearby laptop. Everyone in the cafe is just one hop from the wired Net. This configuration requires every user to be within about 100 feet of the device that's plugged in, and it's why wireless broadband is generally limited to offices and cafes. But what if you told that router to select another router for passing along its message, and told that router to select yet another after that? If you taught those routers to make efficient choices that wouldn't require arduous processing, eventually the Internet would spill out into the streets.

Sri and Chari got hold of some Wi-Fi gear -- a cheap type of radio technology recently introduced to the enterprise market for office environments--and started playing with their routing ideas. They mounted antennas on cars and tooled around Cambridge, testing the performance of nodes programmed to obey their new steppingstone rules. "When we started doing this," Chari says, "people laughed at us, saying Wi-Fi is an indoor technology. But our approach has always been, don't take anyone's word for it."

The two men soon realized that they were no longer solving a math problem: They were developing a product. So they picked up and left Boston for northern California. They hooked up with two friends of friends who understood finance and formed a company. It was not a particularly opportune time. "In 2001, we were out there looking for funding. It was awful," says Chari. But Bill Gurley, whose firm, Benchmark Capital, invested early in companies such as eBay and Red Hat, liked their ideas. "I don't think anyone at that time was thinking about municipal wireless," Gurley recalls. "But what was keeping Wi-Fi from going outside?"

Well, nothing. In the United States, most towns already own the infrastructure for suspending 14-pound boxes in the sky: lampposts, traffic lights, telephone poles, city buildings. The Tropos routers themselves cost only about $3,500 each. So with 30 per square mile installed in a city like San Francisco, you'd spend about $5 million on boxes to serve more than 700,000 citizens. According to a report by PricewaterhouseCoopers, building a fiber network costs $2,000 "per home passed," in the industry's argot; providing DSL costs a few hundred dollars. Compare both with Philadelphia's estimate that the cost per home passed of its Wi-Fi network will be $30. On the user end of the equation, the hardware economics look even better. The Wi-Fi cards that early adopters were sliding into their laptops in 1999 went for about $2,000 apiece. Today the devices are preloaded into nearly all new computers and cost less than $10 each. Right now, as Chari and Sri drain their lattes at Ritual, there are an estimated 50 million Wi-Fi-ready computers out there.

So Bill Gurley got onboard. He liked the open standards of Wi-Fi technology and how quickly the price on the user's side was dropping. He loved Chari and Sri's vision of teaching routers with limited range and capacity how to build bucket brigades and choose the most promising pathways, based on the condition of the network. "It's very elegant," Gurley says. He also liked the growth potential of the market and the focus on software. "As a venture capitalist, I love everything about the Tropos model," he says.

In January 2002, Benchmark Capital ponied up $2.2 million for the young company to work with. Other VC firms followed, including the Intel Communications Fund and Siemens Venture Capital. And so did Ron Sege.

Good Enough Beats Best

Ron Sege (pronounced seh-gee) is a tall stick of a guy with blue eyes and blond eyelashes, whose elaborately stitched jeans were meant for a younger man. At 49, he is on his second wife, his second batch of kids, and the fourth small company he intends to make large. In a sense, Sege is a Web 2.0 guy all around, bringing hard-earned experience to a young company with a still-unproven business model. As he puts it, "I've seen this movie before."

Sege began working in technology in the 1980s, but really hit his stride in the '90s, as a manager at 3Com, the company that spawned Ethernet technology. 3Com had a few hundred employees when he arrived; by the time he left in 1998, he had 4,000 employees under his leadership alone. He learned a lot about growth in his 10 years at 3Com, but more interesting was what he learned about the power of lowering your standards. "From a tech perspective, good enough beats best," he says. Ethernet, the protocol that allows office PCs to share databases and printers and storage in a small local network, was far from perfect. "But it was inexpensive, easy to use, and anybody could design to it." Sege learned the beauty of this approach to business -- float a quick and dirty product, let users and other product developers improve on it, and push it as a dominant shared platform. "Wi-Fi has many of the same attributes," he says.

After 3Com, Sege took a job as executive vice president of Lycos, one of the first Internet portals, where he helped engineer an Internet-bubble buying spree that included acquisitions of Matchmaker.com, Quote.com, and Wired Digital. "That was my media mogul period," Sege says with a laugh. He left Lycos in 2001 and joined Ellacoya Networks, a company based in Merrimack, New Hampshire, that creates software to help broadband providers ease congestion in their networks.

Bill Gurley, tipped off by a Benchmark partner who'd worked with Sege in the past, saw in the Ellacoya CEO someone who'd ridden small companies through significant growth and who understood a good deal about data networks. He contacted Sege and told him about Tropos. The company made sense to Sege. Taking off-the-shelf indoor base stations and sticking them up on power poles--that was a formula he understood. Sri and Chari had already come up with the tricks, the proprietary algorithms for handling data traffic and monitoring the system from one main PC, which would set Tropos apart from its direct competitors. (The company has 30 software patents and patents pending.) In 2004, Sege came onboard -- "to do all the stuff not involved with writing software."

At first, that meant selling Tropos boxes and software to a small but eager market the start-up had identified: police and fire departments. After September 11, the consequences of poor emergency communications became painfully clear to city leaders nationwide, and many municipalities were attempting to do something about it. What few civilians realize is that their heroes with hoses and their men and women in blue have always relied on only one of their senses for passing information: their ears. They use the same two-way radio technology today that police departments adopted in the 1930s. Some forces have introduced computers into their cruisers for searching DMV or criminal databases, but these hookups are as slow as your first dial-up modem. Forget about downloading a mug shot. Maps, surveillance videos, traffic updates, real-time messaging? Impossible. What emergency responders need is broadband. And it has to be broadband that's everywhere, broadband that moves.

Tropos could deliver that. Sege traveled the country, giving presentations to police and fire departments, steadily signing up customers. Oklahoma City bought Tropos technology to build a network for its police department covering 620 square miles. In Milpitas, California, about 10 miles from the Tropos headquarters, a 40-node Tropos mesh allows police to look up DMV photos and monitor video surveillance of high-crime areas.

So Sege and his team were surprised in the spring of 2004 when they got an order from Chaska, Minnesota, a Twin Cities suburb that wasn't looking to serve its police force. The town's city council wanted cheaper connectivity -- for all of its residents, who were stuck paying $45 per month for high-speed access from Sprint and Time-Warner Cable. The goal was to provide broadband access for all of its citizens for no more than $20 a month. "Tropos was selling a system for public safety departments. Our IT guys thought, 'Why couldn't you do 3,000 connections instead of 300?'" says Chaska's city administrator, Dave Pokorney.

For Tropos, this was exhilarating. Chaska had come up with this plan on its own, with no help from Tropos, which was focusing its efforts on public safety. The company had helped create networks designed to serve the general public, but only in parks or other circumscribed areas. Chaska was out ahead of them--and within three months, the city had a real-life metroscale network available to anyone in town.

Sleeping Giants

Everyone at Tropos agrees on what made the company take off. It happened in August of 2004, when Philadelphia, the largest municipality to date to do so, announced plans to blanket the city with Wi-Fi. The idea was to deliver cheap, and possibly free, broadband Internet access to the 1.5 million souls -- digital haves and have-nots alike -- who lived within the city's 135 square miles.

This was a bold, pioneering step, lauded by civic groups and techies around the country. But the news hit one party particularly hard: Verizon. At the time, the vast majority of Philadelphians who wanted fast connections to the Web had been coming to Verizon for DSL. Now the company would have a new competitor. The proverbial sleeping giant was caught off guard.

Verizon's lobbyists marched straight to state lawmakers in Harrisburg and demanded action. And they got it. A telecommunications bill that had been lingering around the capital for more than a year suddenly came up for a vote, and it had a brand-new provision attached to it. The measure said that Pennsylvania cities intending to create high-speed data networks must give the dominant local phone company the right to build first. If the incumbent proceeded within 14 months, the city would be required to drop its plans. For the leaders of Philadelphia, that meant doing nothing for more than a year before getting their project under way. It also meant that cheaper service -- some subsidized for the poor -- would happen only at the whim of Verizon.

But the prospect of an Internet cloud floating through every park and into the city's overlooked neighborhoods had already intrigued many Philadelphians, and the state legislature's intervention galvanized people to protect the idea. "The school district, the nonprofits that wanted to serve poor neighborhoods, even our tourism organizations saw the potential," says Dianah Neff, Philadelphia's chief information officer and a 14-year veteran of Silicon Valley businesses. "When the legislation came up, we put the pressure on. We had 3,000 people call, write, and e-mail the governor."

Tropos, which already had been tapped to install two pilot projects in public parks, watched the events unfold. Sege hired a Washington lobbying firm, which showed up in Harrisburg, attempting to sway leaders to spare local governments from restrictions. In late November 2004, just as the bill was approved, Philly's Wi-Fi enthusiasts got a break. "It was almost like diving to get the catch in the end zone," says Sege. The state agreed to exempt Philadelphia from the requirements. (All other Pennsylvania municipalities remain bound by it.)

The way Sege sees it, Verizon's in-your-face tactics were the best thing that had ever happened to the start-up. The giant telecom's reaction made dozens of other cities take notice. If Verizon was so ruffled, people seemed to think, then Philadelphia must have been on to something interesting; the technology's potential must be real. "The phone was ringing off the hook," says Sege. Cities around the country, from Minneapolis to Tempe, Arizona, began announcing plans for wireless networks. Several months later, the technology was validated by another waking giant when Cisco announced it would begin building routers for muni Wi-Fi. Tropos sales went from 90 municipal clients in all of 2004 to 75 in just the first half of 2005.

The next step in the Philadelphia project was to respond to the city's RFP, and Tropos now had to get down to details. The company had the gear and the software for monitoring and troubleshooting the network, but there was a lot the small company was lacking. Customer service for one thing. And billing. And consumer sales. Rather than build those capabilities in-house, Sege began searching for an established Internet service provider with which to partner. EarthLink fit the bill. The ISP, based in Atlanta, had thrived as a middleman, buying wholesale dial tone, wrapping it up in an attractive brand, and selling it to Internet surfers. But as the world shifted to faster wires and fiber optics, EarthLink had little to offer. Unlike the phone companies, it owned no connections into the home.

In January 2005, Bill Gurley paid a visit to EarthLink's board of directors. He presented his case for a partnership, in which Tropos would provide infrastructure -- the actual broadband network -- and EarthLink would handle customer support and sales. In response to Gurley's presentation, EarthLink sent a team to visit Chaska to see for themselves if the new technology worked. The group toured the town and climbed under tables testing the network's reliability. They interviewed folks in bars. And they were sold on it. "Municipal Wi-Fi is really important for us," says Donald Berryman, EarthLink's president of municipal networks. "It's one of the top three investments we're making in future products. It can help us control our destiny because we'll own the network." Tropos and EarthLink have since landed deals with five cities and have proposals out to five more.

But Will It Really Work?

Not surprisingly, the Bells and other data-access providers haven't backed down. Since the maneuver in Pennsylvania, giants like BellSouth and Comcast have fueled a fight against muni Wi-Fi across the country. Lawmakers in Ohio, Virginia, Kansas, and Oregon, among others, have proposed legislation to keep local governments from building their own networks or at least make it more difficult for them to do so. Fourteen states, including Florida and Colorado, have already passed restrictions. "We have not supported a ban on municipal networks," says Verizon's Brian Blevins. "But we've felt where there's vibrant competition, the networks can undercut and disrupt a market that's working very well."

Critics of muni Wi-Fi argue that if local governments participate in building broadband networks, they'll exploit unfair tax and regulatory advantages, irresponsibly drain public coffers, and mismanage the services. To counter the legislative gambit, Sege and others have taken to evangelizing in Washington, D.C., and state capitals. They've made some progress. In June 2005, Republican Senator John McCain of Arizona and Democratic Senator Frank Lautenberg of New Jersey introduced a federal bill in answer to the activity in the states. The Community Broadband Act of 2005, still in committee, would "preserve and protect the ability of local governments to provide broadband capability and services." Says one Lautenberg staffer: "The senator doesn't think there should be obstacles -- we're 16th in the world in terms of broadband penetration." A bill awaiting a vote by the House, on the other hand, would create barriers -- for instance, requiring cities to partner with a private company. A restriction like that, though seemingly innocuous, would have prevented Chaska from building its network.

These policy struggles are not the only hurdles Tropos is facing as it lunges for profitability in 2007. There are big technical questions. It's one thing to build a wireless network for 8,000 households in the suburbs of Minnesota. But it's something else entirely to do so in one of the nation's biggest metros. "Nobody's demonstrated that you can have 135 miles of Wi-Fi," says Julie Ask, a research director at Jupiter Research. Radio signal is notoriously unpredictable. When your cell phone drops out every time you round the corner of Elm Street, that's because the mobile provider didn't predict a problem there. Home devices from cordless phones to baby monitors might cause interference. Tempe, Arizona, where Tropos competitor Strix Systems provided 500 wireless routers, discovered that signal wasn't getting through house walls beyond 150 yards from the routers. Many Tempe users found they needed an additional $100 device to receive and send data from indoors. Tropos could face similar problems.

Dozens of municipalities have joined in, but there is not much of a record. "As a mayor, why wouldn't you say, 'I want to bridge the digital divide'?" says Ask. "EarthLink wants to point to Philadelphia and say, 'Hey, it works,' but until there's proof ..." After a city government invests $20 million, no users will be happy if their connections go down or their webpages load slowly. The last thing Tropos needs is for annoyed customers to head back to Verizon.

Another looming question is what business models will work. Will consortia like the EarthLink-Tropos team for San Francisco prove easy for cities and profitable for the participating companies? Will the Bells hedge their bets and start offering their own systems? Will cities build their own public Internet utilities, just as many today deliver power without the help of private entities? In any of these scenarios, Tropos' business doesn't change. The Bells, the city governments, the ISPs--they'll all need to buy boxes from someone. As experiments are made and the best models emerge, Sege insists that Tropos will stay relevant.

First, of course, he has to deal with Philadelphia, which is building its 15-square-mile test area this summer and plans to roll out the full network in 2007. "I honestly believe that a lot of people are waiting to say, 'We told you it wouldn't work,'" Sege says. Philadelphia CIO Dianah Neff doesn't seem to mind that tension. "There's a lot of pressure on Tropos and EarthLink. But that's to our benefit because they're trying really hard," she says. "It's like you live in a fishbowl. It's not just other cities, but the world that's watching."

Martha Baer is co-author of Safe: The Race to Protect Ourselves in a Newly Dangerous World. This is her first story for Inc.

Wi-Fi al fresca

Nature Without The Poison Ivy

A public-private partnership will result in Connecticut's first state park to have wireless internet access.

Farm River State Park, a 57-acre waterfront parcel with nesting osprey, owls and other wildlife in East Haven, will soon be a center for environmental study and education, an outdoor classroom for a regional magnet school and a base for boating programs. The state, with the U.S. Fish and Wildlife Service and the Trust for Public Lands, bought the parcel, along with a 15-acre marina, for $1.75 million in 1998. It will be managed by Quinnipiac University, in Hamden. An $86,000 state grant was used to make the park internet accessible.

The idea is to electronically bring the park's wildlife directly into the Quinnipiac classrooms. A Web camera will be placed near nesting ospreys, so students can view the birds' activities on computer screens.

Students can use the wireless park to do "real-time environmental monitoring," such as water temperature, quality and salinity. Farm River is the first state park to be managed by a private entity. Quinnipiac will pay the state $1, and will finance improvements, including restoring utilities to the marina and renovating a former home to be used as a base for research and educational programs. In exchange, Quinnipiac will have use of the park for its educational programs and will collect money from slip rentals. That money will be used for park improvements and upkeep.

Managing the park ties in with the University’s desire to get involved with primary and secondary science education. Some essential but unglamorous details have yet to be worked out, including the park’s lack of parking and rest rooms.

Source: Connecticut Town & City, the newsletter of the Connecticut Conference of Municipalities. V. 34 - No. 3, Pgs 28 & 29.

Disney Profit Beats Wall Street's Expectations

Strong DVD sales and continued growth at domestic theme parks drove higher third-quarter profit and revenue at The Walt Disney Co.

The Burbank-based media conglomerate on Tuesday reported gains in all four business divisions, including its movie studio, which had been lagging of late and last month laid off 650 people in a worldwide restructuring.

Results also benefited from a one-time gain related to its acquisition of Pixar Animation Studios.

Shares of Disney rose 86 cents, or 2.9 percent, to $29.84 in late morning trading on the New York Stock Exchange.

Disney also said it would sell its 50 percent stake in US Weekly magazine for about $300 million. Disney bought its share of the magazine for $40 million in 2001 as the magazine expanded from monthly to weekly publication. The gain will be reported next quarter.

Disney reported net income of $1.13 billion, or 53 cents per share, for the quarter ended July 1, compared with net income of $811 million, or 39 cents per share, in the same period last year.

The results handily beat analysts' estimates of 44 cents per share, as surveyed by Thomson Financial.

Revenue grew 12 percent to $8.62 billion in the most recent quarter from $7.72 billion in the year-ago period.

Revenue at the company's movie studio division grew 17 percent to $1.7 billion on strong DVD sales of its hit film, ''The Chronicles of Narnia: The Lion, the Witch and the Wardrobe,'' and theatrical revenue from the Pixar film ''Cars.''

The company also spent less in the quarter to release films under its Miramax label.

Last month, Disney announced a restructuring of its studio to concentrate more on Disney-branded films and to consolidate worldwide marketing and distribution. Disney said it expected to take an after-tax charge of $25 million for employee termination benefits, most of which will be incurred in the fourth quarter.

Disney will book profit from its blockbuster, ''Pirates of the Caribbean: Dead Man's Chest'' in the fourth quarter. The film has already pulled in nearly $800 million worldwide.

Increased attendance and spending at Disney's domestic theme parks boosted revenue at that division by 11 percent to $2.7 billion.

The company said it expects attendance to be flat in the fourth quarter because of tough comparisons with turnout for last year's Disneyland 50th anniversary celebration.

Strong growth at the company's ESPN television network and continued success of Disney Channel shows, including ''High School Musical,'' resulted in a 10 percent increase in revenue to $2.7 billion at Disney's media networks division.

Revenue fell at ABC because of heavy spending on new fall programming. But Disney said it saw strong growth in ad sales as last season wore on. It expects continued growth as it expands its Internet delivery of shows.

The company continued to be disappointed in sales of its ESPN-branded mobile phone service. Disney recently lowered the price of calling plans and added a new handset. Executives declined to say how long they would stick with the service before possibly pulling the plug.

''The results at least initially were disappointing, and we're monitoring this carefully,'' Chief Executive Robert Iger said in a conference call with analysts.

The company just launched a Disney-branded mobile phone service.

The success of ''Cars,'' a film aimed squarely at young boys, fueled a 6 percent rise in revenue to $445 million at Disney's consumer products division.

The company said it will continue to invest in its video game business in coming years.

For the first nine months of its fiscal year, Disney reported net income of $2.592 billion, or $1.28 per share, compared with $2.154 billion, or $1.03 per share, in the same period last year.

Revenue grew to $25.5 billion from $24.2 billion in the same period last year.
http://www.nytimes.com/aponline/busi... tner=homepage

European Panel Investigates DVD-Standards Rivalry
James Kanter and Ken Belson

European investigators are in Hollywood with questions about whether studios have been pressured by rival manufacturers of next-generation DVD’s to favor one standard over another.

Several companies, including Sony and Toshiba, are engaged in a battle that could shape the future of home cinema and determine which movie companies make the biggest profits. Sony, along with Panasonic, Samsung, Dell and seven major studios, are backing a technology called Blu-ray; Toshiba, Microsoft, Intel and others support a rival standard called HD DVD.

Some studios like Disney and Universal are making DVD’s in only one format.

But since each format, which promises sharper pictures and enhanced audio, is incompatible with the other, consumers who buy one technology might not be able to play DVD’s made for rival equipment.

The European Commission is investigating whether the technology giants are stifling competition through exclusive contracts with studios and computer makers. The Hollywood studios have been asked to reveal any dealings about high-definition DVD’s with technology companies contained in e-mail messages, faxes, PowerPoint presentations, meeting notes, internal reports and even conversations.

Some analysts said that the inquiry could end up focusing more on Sony because it potentially has more leverage to persuade studios and manufacturers to back Blu-ray. Sony runs a movie studio, makes PlayStation video game hardware, and sells and makes DVD’s.

“The Sony PlayStation guys are highly secretive about what will and what won’t be in the box, while the movie company guys are highly secretive and somewhat justifiably paranoid about piracy,” said Paul Jackson, a principal analyst with Forrester Research in Amsterdam.

As a result, “Sony will probably be looked at most closely,” said Mr. Jackson, adding that Europe would “want to make sure Sony is not justifying an exclusionist policy” intended to tip the market in its favor, or lock customers and consumers into a single technology.

Sony, in an e-mailed statement, said that it was cooperating with the commission and that “there are no indications of any complaint, nor of any antitrust concerns on the part of the commission or anyone else.”

Keisuke Ohmori, a spokesman for Toshiba, said it was also cooperating but highlighted that its format was a “really open standard defined democratically.”

Mark Gray, a spokesman for Europe’s competition commissioner, Neelie Kroes, declined to comment.

But Sony deserves particular scrutiny, said Guy Marriott, the chairman of the International Optical Disc Replicators Association, which represents units of European media companies like Bertelsmann and EMI that pay companies like Sony and Toshiba to use DVD technology to produce discs.

Mr. Marriott complained to European regulators last year, accusing the technology companies of abusing their ownership of patents for manufacturing and formatting DVD’s by refusing to lower their fees enough to match the drop in prices of DVD’s on world markets. Many of those technology companies are also creating the next generation of discs.

He said he believed that Toshiba was more prepared than Sony to negotiate with his group.

“With Sony, we can’t get anyone to talk with us,” Mr. Marriott said.

The exhaustive inquiry seems to be an indication that regulators in Brussels, fresh from their battle to force Microsoft to open up the computer software market, are set to remain more aggressive than their American counterparts in seeking to prevent technology companies from locking up standards markets.

In the last three years, Europe has stung Microsoft with fines totaling hundreds of million of euros. The regulators have also imposed conditions on Microsoft that went beyond those of American regulators.

Europe can fine companies caught violating antitrust laws up to 10 percent of their global annual sales. But fines in any case involving DVD formats seem less likely than a settlement, under which companies like Sony agree to lower their prices as the revenues earned by other DVD manufacturers tumble in the future.

There is also the possibility that studios now working in one format may decide to make DVD’s in both standards to avoid further scrutiny from regulators. Warner Brothers and Paramount, for instance, make DVD’s in both high-definition formats.

So far, neither the Department of Justice nor the Federal Trade Commission has asked questions about the next-generation DVD formats, and antitrust specialists cautioned against leaping to the conclusion that Europe would take action against Sony, the studios, or other companies, just because an investigation was under way.

Stephen Kinsella, a Brussels-based antitrust partner with the law firm of Sidley Austin, suggested that European investigators had learned important lessons during a bruising, seven-year struggle to impose changes on the way Microsoft does business. Mr. Kinsella said investigators were more wary than in the past about intervening in the fast-changing technology industry.

Mr. Kinsella said he “didn’t get the impression that the regulators have formed a view yet” on whether Sony or Toshiba were acting anti-competitively.

He said that regulators might be aiming their questions at the Hollywood studios to try to nip any anti-competitive behavior in the bud, rather than punish them later.

“The E.U. seems to be saying, ‘You’re all on notice that we’re looking at this,’ and that could bring out of the closet any other potential complainants,” Mr. Kinsella said.

Mr. Kinsella also cautioned that regulators might take several months, perhaps longer, to wade through the data they requested from the studios, making any imminent crackdown highly unlikely.

In the questionnaire, which was sent to the studios and technology companies in July, investigators are mainly concerned that the technology companies are using unfair means to force the studios to favor one format.

European investigators ask for specific evidence that may show technology companies are extending to Hollywood studios offers they cannot refuse by using direct payments or valuable incentives like the free use of patented technologies, promotional funding, and offers to manufacture the next-generation discs at below-cost prices.

The investigators ask the movie studios to reveal “whether you made any promise or entered into any agreement” to release movies exclusively in one of the two competing formats. The investigators also turn the heat directly on the studios, by asking if they have been working in concert to help one of the two formats to succeed.

Several other questions concern the potentially crucial neighboring markets for devices to play video games.

Mr. Marriott, the chairman of the European disc replicators’ group who brought the original complaint, said he was disappointed that the questionnaire concentrated exclusively on next-generation DVD formats rather than on current formats of most concern to his members.

James Kanter reported from Paris for this article and Ken Belson from New York.

Bloggers Drive Inquiry on How Altered Images Saw Print
Katharine Q. Seelye and Julie Bosman

As of yesterday afternoon, Adnan Hajj was the most-searched term on the Technorati Web site, which tracks what is being discussed in the blogosphere. And a rendering of his work was one of the most viewed videos on YouTube.

Mr. Hajj, a Lebanese photographer based in the Middle East, may not be familiar to many newspaper readers. But thanks to the swift justice of the Internet, he has been charged, tried and convicted of improperly altering photographs he took for Reuters. The pictures ran on the Reuters news service on Saturday, and were discovered almost instantly by bloggers to have been manipulated. Reuters then announced on Sunday that it had fired the freelancer. Executives said yesterday that they were still investigating why they had not discovered the manipulation before the pictures were disseminated to newspapers.

The matter has created an uproar on the Internet, where many bloggers see an anti-Israel bias in Mr. Hajj’s manipulations, which made the damage from Israeli strikes into Beirut appear worse than the original pictures had. One intensified and replicated plumes of smoke from smoldering debris. In another, he changed an image of an Israeli plane to make it look as if it had dropped three flares instead of one.

Still, Reuters officials said they were unaware that any American newspapers had run the two pictures in question, although dozens of papers, including The New York Times, have printed his pictures over the years.

The Times, which ran a picture of his as recently as Saturday on its front page, has published eight of Mr. Hajj’s Associated Press and Reuters photographs since March 2005. Times editors said a review of those pictures found none that appeared to have been changed improperly.

Still, his activities have heightened the anxiety photo editors are already experiencing in the age of digital photography, when pictures can be so easily manipulated by computer.

These advances, made broadly available to the public and professional photographers alike through Photoshop or similar software, may have made readers more skeptical of what they see in newspapers.

“They doubt the media because they understand what digital photography is,” said Torry Bruno, the associate managing editor for photography at The Chicago Tribune. “Everyone who plays with that knows what can be done.”

As a safeguard, he said, any pictures that The Tribune considers for its front page are printed out in color, 8-by-10 hard copies and displayed on the wall of the Page 1 conference room so that editors can review them throughout the day.

“I really think editors have to be diligent at looking carefully,” Mr. Bruno said. “Sometimes you can miss it on the first glance.”

But even as technology makes it easier to manipulate photographs, the blogosphere is making it easier to catch the manipulators.

Mr. Hajj’s picture ran on the news service on Saturday. The first inkling of a problem came in the form of a tip that morning to Charles Johnson, who runs a Web site called Little Green Footballs. Mr. Johnson had been among the first in 2004 to question the authenticity of documents that CBS News used to suggest that President Bush had received favorable treatment in the National Guard.

It is not clear where the tipster first saw the photos, but they were available on the Internet. Mr. Johnson, who has a background in graphic design, said that as soon as he saw the pictures, he could tell they were fake. He posted the news on his Web site on Saturday at 3:41 p.m. California time (he is based in Los Angeles), which was early Sunday morning in Beirut.

The post was spotted by a Reuters photographer in Canada, who quickly notified the editors on duty, and they began an investigation.

Paul Holmes, a senior Reuters editor who is also responsible for the agency’s standards and ethics, said the agency dealt with the matter within 18 hours.

“By the time I checked my e-mail at 10 Sunday morning, we had killed the doctored photo and suspended the photographer,” he said. The agency subsequently stopped using the photographer and has removed the 920 digital photographs of his in its archives. It is reviewing them to see if any others have been improperly altered.

The agency is also investigating how the photo slipped through its editing process.

“On Saturday, we published 2,000 photos,’’ Mr. Holmes said. “It was handled by someone on a very busy day at a more junior level than we would wish for in ideal circumstances.’’ He said this aspect of the problem was the result of “human error,” not malicious intent.

Mr. Hajj told Reuters he was merely trying to remove a speck of dust and fix the lighting in the photos, Mr. Holmes said. Several bloggers have contended that Mr. Hajj was driven by a political agenda, critical of Israel. Mr. Holmes said Reuters was trying to contact Mr. Hajj but he was not responding to messages.

The agency has tightened its procedures so all photos from the Mideast are now reviewed by senior editors.

Other news outlets have also tightened their procedures after learning the hard way about the heightened risk of photo manipulation. Last month, The Charlotte Observer fired a photographer who enhanced the color of the sky in a local photo to make it more dramatic. The Los Angeles Times fired a photographer in 2003 after he altered an Iraq photo that it ran on the front page.

Santiago Lyon, director of photography for The Associated Press, said his agency fired a photographer “in the last year” for changing a picture; he gave no further details.

The volume of photos that cross news desks and the speed with which they must be handled adds to worries of photo editors.

Mick Cochran, the director of photography for USA Today, said the paper screens about 4,000 photos every day, looking for more than digital manipulation, especially in war zones where many American outlets hire local photographers because they can travel more easily than Americans.

“We wonder, is he behind enemy lines?” he said of the kind of scrutiny that goes into examining pictures to make sure they have not been staged. “Is he getting access that isn’t normal? How did he get there?”

Jonathan Klein, the chief executive of Getty Images, said the only way to avoid such problems was to “employ people of integrity, and if you find infractions, not only take action, but take visible action.’’

CEA Attacks RIAA 'Audio Flag' Demand
Nate Mook

The Consumer Electronics Association (CEA) this week issued a harsh rebuke to the Recording Industry Association of America's efforts in lobbying Congress to force on the industry an "audio flag" in all digital broadcasts that would prevent them from being recorded.

The RIAA is fearful that the advent of digital broadcasts enables individuals to make near-perfect recordings of content streamed over the airwaves. For example, satellite and HD radio offer customers CD-quality sound, which could pose a threat to music sales if people are able to save individual tracks for later listening, the RIAA claims.

As a result, the RIAA has demanded that Congress mandate a special "flag" be included with all digital radio that would tell a hardware device the content could not be recorded. The television and movie industries are pushing for a similar feature be included in digital TV broadcasts, but the effort has met fierce resistance.

The problem, the CEA explains, is that the RIAA is arriving late and refusing to take part in the Copy Protection Technical Working Group, which was established to help prevent mass redistribution of copyrighted works over the Internet. The RIAA is attempting to push through its own agenda, CEA president Gary Shapiro says, which threatens "fair use" and the consumer electronics market at large.

One major stumbling block is that these digital technologies are already on the market, without an audio flag. If Congress were to legislate such a requirement, current devices could become illegal and companies forced to pull products from stores at cost of billions of dollars.

The CEA is also concerned that the right of consumers to make limited copies and recordings for their own private listening would be squashed if the RIAA has its way. The RIAA sued XM Satellite Radio in May over a device that lets users save songs, demanding $150,000 for every song recorded by customers.

"As we have repeatedly said, we are prepared to discuss ways to limit the mass indiscriminate redistribution of music over the Internet. Instead, the RIAA wants to ban 'disaggregation,' which it now calls 'cherry picking' in the hope that it can give legitimacy to its policy ideas by using a sweeter name," said Shapiro.

"In short, the RIAA wants to stop consumers from doing what they've been doing since a tape recorder was first used to capture a song played over the air for private use. The recording industry's campaign over disaggregation is nothing but a thinly veiled attack on lawful, private, noncommercial, in-home consumer recording practices."

The CEA adds that the RIAA hasn't even proposed any technical specification for an audio flag, and chides the music industry for what it calls "misguided lawsuits and overly broad legislation."

"The RIAA's interest lies solely in preserving its existing ways of business, with the hope that it can maximize profits by limiting innovation and undermining long-standing consumer rights," said Shapiro, noting that, "the RIAA should not be surprised that we will continue to fight its legislative efforts on Capitol Hill, and that we expect to prevail by defending innovation and consumer rights."

The RIAA vs. John Doe, a Layperson's Guide To Filesharing Lawsuits
Grant Robertson

Ray Beckerman of Recording Industry vs. The People put together an article that explains how the RIAA's militant enforcement arm legal team find, obtain records on and sue ISP account holders who may or may not have ever been users of P2P applications. It's a great reference, but (no offense intended to Ray) it's dry like a bread-sandwich.

I decided to take a stab at rewriting it in something closer to English than lawyer. In hopes that it would be more accessible.

So, with thanks to Ray Beckerman, let's take a look at The RIAA vs. John Doe, in what I hope serves as a layperson's guide to filesharing lawsuits.

The RIAA vs. John Doe, a layperson's guide to filesharing lawsuits

The RIAA lawsuits pit a very few, very large record labels (sometimes referred to as "The Big Four") against average people who are customers of an Internet Service Provider. These average people are also mothers, grandmothers, dialysis patients and university students. In some cases they're even deceased. In one very highly publicized case, the person was actually not-very average at all; they didn't even own a computer.

The RIAA does not involve musicians in the lawsuits it files. For example, if you're sued for the alleged swapping of a song by Puff Daddy, Sean "P. Diddy" Combs name isn't on the lawsuit in the place where it says "Plaintiff". The Plaintiff in these cases are one or more of the very large record labels or their subsidiaries that are members of the RIAA (i.e. Warner Music Group, Sony BMG, etc).
The person being sued may have never shared a file, or logged on to a P2P network. They haven't been convicted of any crime involving copyright protected material, nor have they been charged with one. They've simply been sued in a "civil" action. In the United States, anyone can sue anyone else for anything at any time. It's quite possible (and maybe even more likely than not) that these average people didn't violate anyone's copyright.

In any event, the burden of proof for a civil suit is much lower than that of a criminal prosecution. There is no possible way that anyone who has been sued by the RIAA could be convicted of any crime with the evidence the RIAA collects.

In fact, to clear up a point of media confusion, often the defendants in these suits are incorrectly referred to as "downloaders". In actuality the RIAA has no ability to show, and has done no investigation to prove that anyone downloaded anything at all.
So, what is the RIAA suing these people for, if not for downloading music? This is where things get just a tad bit technical, but hang with me and I'll try to explain.

How the RIAA identifies the people they sue

First, a techie, working on behalf of the RIAA, searches a peer to peer network for say, "Avril Levine" just like any other P2P user would. Search results are returned, and the techie then sifts through them and focuses in on a single "file".

The "file" in question may have the name "Avril Levine - Sk8r Boi.mp3", and in many cases on P2P networks, there may be several files that carry that same file name. I should point out, just because a file has the name "Avril Levine - Sk8r Boi.mp3", that it's just a name. I could rename "resume-Grant_Robertson.doc" to "Avril Levine - Sk8r Boi.mp3" and, unless you downloaded and listened to the file with an Mp3 player, you'd never know.

As Rumsfeld put it, "absence of proof is not proof of absence." The RIAA holds fast to that philosophy; when they present evidence to the court, they don't play the judge the song they claim you downloaded. The RIAA only shows the judge a screen capture of the filename, along with a username from the peer to peer network

The techie, working on behalf of the RIAA, uses another program -- separate from the P2P software -- to find the Internet address (IP address) from which it appears the file they've searched for can be downloaded. They take a screenshot of the peer to peer software on the techie's computer, with the peer to peer "username" and the filename they searched for, and they attempt to link the "username" to the IP address.

This is where the investigation portion of the RIAA's campaign ends, and the lawsuit portion begins. If you're a really sharp reader you may be asking yourself how the RIAA can sue an IP address, or a peer to peer "username" in a court of law. Well, the short answer is, they can't. Don't worry, the RIAA has very smart, very well paid lawyers who have figured out a way around that problem.

The Lawsuit Begins

The RIAA sues "John Doe" in state court. They can't sue in the state court of the person who is paying for Internet access (and therefore, the IP address), because at this point they aren't even sure in what state that IP address might be. Instead they sue John Doe in the state where the Internet Service Provider's main offices are located. In most cases, this isn't the state where the IP address (or John Doe) lives.

This is a legal gray area. In most cases the RIAA lawyers know that the IP address (and therefore John Doe) isn't in the state in which they are filing suit. That means John Doe isn't actually subject to the laws of the state in which they've been sued (after all, I can't sue you in New Jersey for something you did in Florida when I'm in California.. it just doesn't work that way). That being the case, John Doe has no real way to argue that he isn't subject to the laws of the state in which he's been sued (John Doe doesn't even know he's been sued yet.. in fact, no one knows who John is yet)

The RIAA doesn't just sue one "John Doe" at a time. They instead sue hundreds of John Does at a time, all at the same ISP. This is another legal gray area, because under the "Federal Rules of Civil Procedure", there is no reason to sue all these separate people in the same lawsuit. If the courts required the RIAA to adhere to the letter of the law, they would be forced to sue each John Doe individually, which would greatly increase the amount of effort and paperwork required. Unfortunately, most ISP's can't waste the time and resources that it would require to argue against the way the RIAA is suing their customers. Since the ISP can't argue on behalf of "John Doe", the RIAA wins this stage.

John Doe gets a letter from his ISP, along with paperwork from the court case against him. The paperwork tells him (in legal speak, and -- in many cases -- in a way he does not understand) that a legal order has already been granted against him. So, instead of getting a letter telling John Doe that he needs to do something to protect himself in the courts, John Doe is sent a letter stating he is no longer protected.

At this point, John Doe isn't even given documents that brought this whole process to bare. These documents include:

• the summons and complaint
• the order that was filed without John's knowledge
• the court rules needed to defend himself

So, John Doe now knows he's being sued, or at least that something is rotten in Denmark. What john doesn't know is what the case is about, what the RIAA is basing the case on, or why the court has already ruled against him.

Regardless, John is given days to file a motion to stop the subpoena of his account information. John's not a lawyer, but he needs one, fast! Unfortunately he won't be able to tell the lawyer what he needs to do. Lawyers are smart, but they aren't magic. A lawyer can't make an informed decision about a clients' case unless he has all the facts. Because the ISP has only informed John that he's lost some sort of motion to discover who he is, John's lawyer doesn't have the information about why he's lost the motion, or what they told the court John did.

John's lawyer is at a disadvantage. In many cases, the time John has to defend against the court order is lost in trying to figure out what any of this mess is about. Unless John's lawyer is aware of the tactics the RIAA uses to keep the defendant's lawyer on his toes, John's lawyer is really unable to tell John what is the smartest thing to do. Lawyers went to law school; when they give advice, they don't give it half-assed. TA lawyer will either tell you what they are sure of, or they tell you they aren't sure. In this case, John's lawyer isn't sure, so he can't tell John what to do.

What's maybe even worse is, if John's lawyer could figure out what has already happened, he'd need to file a motion to dismiss the order. John's lawyer would be happy to do that, and it's likely that his motion would win, and the whole thing would stop right here because, let's face it, the evidence the RIAA has against John is really, really flimsy. Unfortunately John's lawyer probably can't. Lawyers are given the ability to practice law state by state. To practice law in all US states, John's lawyer would have to take 50 bar exams and keep up with 50 states worth of ongoing requirements to practice law. Most lawyers are only admitted to practice in a handful of states, and in the case of really expensive lawyers, in federal jurisdictions and maybe in front of the Supreme Court. John's lawyer would have to refer John to a lawyer that can practice in the state his ISP's main offices are in, and that takes time.

If you can't defend yourself in court, you lose. Remember that time that your friend decided to show up in court to contest that speeding ticket? The Police Officer who wrote your friend the ticket didn't show and, your friend walked away victorious. Tthe judge threw that ticket right out the window. The same thing happens to the RIAA when John doesn't show up for court. The judge does the only thing he can do under the law, he rules against John because John didn't show up to defend himself.

Homer Simpson once said "The two sweetest words in the English language.. De Fault". John probably doesn't agree with Homer Simpson on that one, but the RIAA lawyers do.

The RIAA asks the court for "immediate discovery" but, John still isn't in court. Typically in the US justice system if one party in a trial asks the court for something the other party has to be made aware that they've asked. That gives both sides an equal opportunity to argue in front of a judge over whether the motion should or should not be granted. Once upon a time it was rare that the court would grant a motion without the defendant present (or "ex parte"), now it seems to be regular practice to grant "ex parte" discovery orders, which puts John (once again) at a big disadvantage.

For what it's worth, courts in both Canada and the Netherlands have routinely balked at this stage in similar cases. They've refused to grant the motion that would allow the RIAA to find out who John Doe is, stopping the RIAA (or the IFPI) dead in its tracks. In both countries the courts claimed that the information presented to them is way too flimsy to warrant extreme action like making the private account information of John Doe a public matter.

John probably wishes he was in one of those two countries right about now. The judge grants the RIAA's motion for "immediate discovery", which, in English, means that the RIAA can subpoena the ISP for John's account information. The subpoena is legally binding, and unless the ISP wants to fight each subpoena individually (which is crazy.. and would cost millions when dealing with hundreds at a time) the ISP has to give the RIAA all the information they have on John Doe.

What the RIAA does isn't illegal, but it does exploit the law to its edges to take advantage of the courts and the ISP. Nevertheless, the RIAA now has the information it needs.

The RIAA, now having our John Doe's real name and address, drops its suit against John Doe.

Since the case has been dropped, there is no appeal. No other judge gets a crack at interpreting the questionable tactics and strategy that the RIAA used to win the motion.

Where one lawsuit ends, John's trouble begins in earnest. The RIAA now knows who he is, and where he lives. They don't send two jackbooted thugs to John Doe's house in the night to make a "point". That would be far too brutish and, as a society we've mostly grown beyond bashing each other with sacks of oranges in the middle of the night and running away. The RIAA uses the modern equivalent of the midnight raid; the settlement offer.

The RIAA Settlement Offer

The RIAA drops a U.S. postal stamp on John Doe and sends him a settlement demand. Two people can enter into just about any contract for any purpose in the United States (well, unless they're gay and want to marry.. but that's for another time) and the RIAA asks John to enter into a contract with them.

The contract states that the RIAA won't sue John, which is pretty attractive when you're John Doe facing all the legal might the multi-billion dollar recording industry can muster. We don't hold people at gun point (or hit them with bags of oranges in the middle of the night), we hold them at the point of a lawsuit.

The contract, that same one that says that the RIAA won't sue John if he signs it, says John agrees that the RIAA is right when it says he owes them $3,750. It also says that the RIAA doesn't plan to negotiate with John, and contains several one-sided provisions that place restrictions on John and what he can do if he wants to keep from being sued while not placing any restrictions on the RIAA and what it can do. The contract also says that John agrees that peer to peer filesharing is copyright infringement (which isn't actually true.. sharing copyrighted files is copyright infringement, but there are other uses for peer to peer filesharing that aren't infringing).

The settlement contract also doesn't keep John from being sued by other interested parties. Remember when we told you that if you were sued for sharing Puff Daddy that Sean Combs wasn't the Plaintiff? Well, when you sign the settlement, you agree that you did what the RIAA says you did. If the artist wants to sue you next, they still can. The RIAA settlement makes it clear that they aren't protecting (indemnifying) you against other lawsuits.

So, John can give the multi-billion dollar recording industry and its team of lawyers almost $4000 and they'll go away. Four thousand dollars is a used car, and not a very nice used car at that. On the other hand, if John doesn't settle, and if the RIAA takes him to court and wins, they could get as much as $750 per song. The list of songs they say John shared is really long, and at $750 each it's way more than that $3750 they're asking for. Plus, if John loses his court case He'll still have to pay his lawyer, plus pay the RIAA, and maybe even pay the RIAA's enormous legal fees.

You begin to understand why most people, when presented with an RIAA lawsuit, just settle. Losing a legal fight with the RIAA could mean John loses his house, his retirement, his kids college fund, everything he has worked for. Winning will probably still be more expensive than settling, unless John can get the court to force the RIAA to pay his legal fees when he beats them.

Beating the RIAA would be really sweet. But, it's a big gamble if John doesn't. What happens if John refuses to settle (or just doesn't respond)?

What Happens When The RIAA Files Suit After Offering A Settlement

John says, "No deal" and the RIAA says, "See you in court". The RIAA sues John in the district where he lives.

When the RIAA files the complaint against John, it's just a boilerplate filesharing complaint they use every time someone fails to settle with them. They don't customize each one, which makes this a cookie cutter process for them. They simply go back to the start of this process, subpoena hundreds more names, and send out new settlement letters.

The complaint accuses John of "downloading, distributing, and/or making available for distribution". The RIAA also attaches to the complaint two lists of files they accuse you of sharing. The long list, "Exhibit B" contains, in essence, a list of every possible thing they think you might have even been capable of sharing at the time. This is the same list they sent you when the settlement offer was given. The short list, "Exhibit A" is a list of files they will ask for damages for. The RIAA is claiming that these files were shared via an IP address that, when subpoenaed, the ISP mapped to your Internet connection.
What the complaint doesn't contain is any detail on how, when or where the alleged copyright infringement took place.

What if our John Doe just ignores the whole thing? Remember that "default judgment" when he wasn't able (or aware) to show up? The RIAA makes a motion for (and usulally gets) a default judgment against John Doe for $750 per song listed in Exhibit A (the short list).

Songs on iTunes are 99 cents, and 65-70 cents of that goes to the record company according to most estimates. At $750 per song, you're on the hook to the RIAA for over 1000 times the value of their alleged loss. The RIAA is claiming, without any evidence, that you kept over 1000 people from buying legal copies of the song by giving them a free copy.

The huge dollar figure the RIAA claims you've cost them has come under quite a bit of attack. A current case in Brooklyn, NY may ask the court to rule that $750 per song in damages is unconstitutional.

If our John decides to go to court, what are his legal options and how does he defend himself? Again, this gets complicated and, there are no easy answers. John is being given a baptism by fire in the US legal system.

Some defendants have tried challenging the "boilerplate" complaint the RIAA has been using. So far, challenging this boilerplate complaint has met with mixed success. A great number of these cases are still in "litigation", (the process of filing motions, hearing arguments and running up big legal bills for each side) so it's very hard to say with any certainty what strategy our John Doe and his lawyer should adopt. The only way for us to look at the options John has is to look at the path other cases have followed.

Widely celebrated victories are few, but they do exist. They include Candice Chan, the mother of Brittany Chan who has been made famous as the 13 year old Jane Doe from Michigan, and just recently, Debbie Foster and her daughter Amanda from the state of Oklahoma.

These two cases took very similar paths. The attorney's for both Foster and Chan made what's called a "motion for summary judgment." This is similar to playing cards with your buddies and "calling" the other player's cards. It's the legal version of saying "put up, or shut up".

In both cases, the RIAA, when asked to "put up" and show the evidence they had against the defendant, withdrew their complaint.

In the case of Debbie Foster, the judge ruled that even though the RIAA had withdrawn the complaint, they are still potentially liable for the attorney's fees that Foster incurred by defending herself. The court has asked Ms. Foster and her attorney to come up with a dollar amount for legal costs, and will quite possibly force the RIAA to pay the fees for which Ms. Foster would otherwise be liable.

In the case of Chan, the first known victory in one of these complaints, the RIAA was rather upset after withdrawing the complaint. The RIAA went back to court and sued the 13 year old girl directly (rather than through her parents). The RIAA asked the judge to appoint a "Guardian ad litem" (like a surrogate parent for the purposes of trial), and the judge refused. The judge's reasons for not appointing a guardian were technical, and related to the fees a guardian would accrue during a long case. Still, the RIAA was sent home packing in a very public display of sour grapes.

It might seem that asking for "summary judgment" (that legal version of "put up or shut up) is the way to win against the RIAA. Unfortunately it isn't so simple.

In three other recent cases, when a motion was made for summary judgment, judges declined. The reason given by the judges in all three cases? They didn't know enough about peer to peer technology to make a ruling. One judge speculated that the RIAA may have the ability to show the court that the defendant really did download or upload something, and thus that the complaint's basis of "making available" copyrighted material may be invalid.

In all three of those cases, the common factor is that the judge has declined to decide up front if "making available" actually constitutes copyright infringement.

In any event, being sued by the RIAA is not an enjoyable way to spend your time. The burdens placed upon our fictional John Doe are pretty steep, especially considering the fact that the RIAA may not be able to prove that John himself actually did anything wrong. This scenario is being repeated all over the United States, in courtroom after courtroom.

What happens to the $3750 (or the $750 per song) when you pay the RIAA? The artist you allegedly ripped off doesn't see a dime of compensation. The proceeds from the RIAA lawsuits are rolled back into the legal fund the RIAA uses to pay its legal costs. So, in essence, every person who settles for the $3750 only feeds the machine, so it can be unleashed on another person.

The best advice if you are sued by the RIAA is to quickly retain a lawyer who has some experience dealing with RIAA cases. Having knowledgeable council early on won't stop the process from being difficult, but can give you a better chance of protecting your rights.

EFF, ACLU, American Association of Law Libraries, Public Citizen, ACLU of Oklahoma, Come to Aid of Deborah Foster, File Amicus Brief in Support
Ray Beckerman

In a landmark legal document, the Electronic Frontier Foundation, the American Civil Liberties Union, Public Citizen, the ACLU of Oklahoma Foundation, and the American Association of Law Libraries have submitted an amicus curiae brief in support of the motion for attorneys fees that has been made by Deborah Foster in Capitol Records v. Debbie Foster, in federal court in Oklahoma. This brief is mandatory reading for every person who is interested in the RIAA litigation campaign against consumers. I tried to edit the brief, and to pick out selected passages, but found it such compelling reading that I decided to reproduce it in its entirety. So here it is. For a copy in *pdf format, with pagination, table of contents, caption, and table of authorities, go to : http://www.ilrweb.com/viewILRPDF.asp..._foster_amicus at Internet Law & Regulation or http://www.eff.org/legal/cases/Capit...rt_of_fees.pdf at Electronic Frontier Foundation.
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The American Association of Law Libraries (AALL) is a nonprofit educational organization with over 5,000 members nationwide. AALL's mission is to promote and enhance the value of law libraries to the legal and public communities, to foster the profession of law librarianship, and to provide leadership in the field of legal information and information policy.

The American Civil Liberties Union (ACLU) is a nationwide, nonprofit, nonpartisan organization with over 500,000 members dedicated to the principles of liberty and equality embodied in the U.S. Constitution. The ACLU of Oklahoma Foundation is one of its regional affiliates. The protection of principles of freedom of expression as guaranteed by the First Amendment is an area of special concern to the ACLU. In this connection, the ACLU has been at the forefront in numerous state and federal cases involving freedom of expression on the Internet. Although this case was pled purely as a copyright case, its resolution has clear implications for the development of free speech on the Internet.

The Electronic Frontier Foundation (EFF) is a member-supported, nonprofit public interest organization dedicated to protecting civil liberties and free expression in the digital world. Founded in 1990, EFF represents over 11,000 contributing members. Part of EFF’s mission has been protecting the public from the abuse of copyright laws by copyright owners. As such, EFF has opposed the Recording Industry Association of America (RIAA) in its broad dragnet of lawsuits against small-scale individual file sharers that sweeps up the guilty and the innocent alike. EFF’s interest in this case is ensuring that the court is adequately briefed on the facts related to the RIAA’s mass litigation program and its effects on innocent people ensnared within its nets before ruling on whether Deborah Foster is entitled to attorneys fees.

Public Citizen is a national consumer advocacy organization with approximately 100,000 members, including about 900 members in Oklahoma. Its Internet free speech project is devoted to protecting the right of consumers and others to communicate freely over the Internet. Along with fellow amici EFF and ACLU, Public Citizen has successfully argued in several cases that when a party believes that it has been wronged by Internet speech, it is obligated to show wrongdoing on an individual basis by each proposed defendant, rather than lumping hundreds of otherwise unrelated defendants together and taking advantage of guilt by association. The RIAA and its member companies must comply with this rule like any other plaintiffs. A concomitant of the rule is that, when confronted with a substantial claim of innocence by an individual defendant, the plaintiff must respond reasonably and responsibly, and dismiss the action promptly if that is appropriate, instead of simply proceeding with the litigation in the hope that the defendant will run out of money and agree to a standard settlement. Because awards of attorney fees when music industry plaintiffs fail to behave responsibly are a necessary incentive to reasonable behavior in a litigation program which is itself intended to "send a message" to the general public to induce responsible use of the Internet, Public Citizen joins this brief.


This is an important case. While it may appear to many as just one woman defending herself against several large corporate copyright plaintiffs, as the court is undoubtedly aware, this lawsuit is but one battle in the broader war the RIAA is waging against unauthorized internet copying. As a result of this war, the RIAA has wrought havoc on the lives of many innocent Americans who, like Deborah Foster, have been wrongfully prosecuted for illegal acts they did not commit for over a year despite their clear innocence and persistent denials. Using questionable methods and suspect evidence, the RIAA has targeted thousands of ordinary people around the country, including grandmothers, grandfathers, single mothers, and teenagers. In its broad dragnet of litigation, the RIAA has knowingly entangled the innocent along with the guilty, dragging them through an expensive and emotionally draining process of trying to clear their names.

In deciding whether or not to grant defendant Deborah Foster’s Motion For Attorneys Fees, the court should consider the broader context of the RIAA lawsuit campaign—especially the positive effect that a fee award would have on encouraging the RIAA to be more diligent in conducting its pre-suit investigations, more prompt in dismissing suits when a defendant asserts substantial claims of innocence or mistaken identity, and more responsible in asserting its legal theories. Moreover, a fee award would encourage innocent accused infringers to stand up and fight back against bogus RIAA claims, deter the RIAA from continuing to prosecute meritless suits that harass defendants it knows or reasonably should know are innocent, and further the purposes of the Copyright Act by reaffirming the appropriate limits of a copyright owner’s exclusive rights.


This case is of critical importance to thousands of people throughout the country. Though Deborah Foster is just one woman, her battle is one that many others hope that they too can fight. The RIAA has sued over 18,000 individuals (and counting) for allegedly sharing music through file sharing networks. Using questionable methods to identify individuals it believes are violating its rights, the RIAA has carelessly cast a broad net of litigation that ensnares both the guilty and the innocent.

Yet the innocent rarely get a chance to clear their names. When the RIAA threatens suit against an individual, it makes sure to offer her a carefully chosen sum that is substantially smaller than the legal fees required to fight the accusations, even for defendants that are completely innocent non-infringers. Faced with the threat of costly litigation to defend their names and the possibility that hundreds of thousands of dollars in damages might be wrongly assessed against them by a jury, many innocent people accept these unfair settlement offers because they cannot afford the legal costs to fight back. Wielding the threat of copyright lawsuits as a club, the RIAA has already bullied thousands of average Americans into settling. Though the RIAA has the right to enforce its copyrights through lawsuits and settlements, it does not have the right to do so against people it knows or reasonably should know are innocent.

The inequities that Ms. Foster and her fellow wrongfully-accused have faced do not end there. The RIAA is not only continuing to prosecute the innocent in spite of clear evidence to the contrary but also attempting to expand the scope of its copyright protections beyond what the statutes provide. This copyright “grab” stems from the plaintiffs’ erroneous theories of secondary liability in copyright law. These theories, which the RIAA knows are wrong, attempt to put parents, employers, teachers, and other internet account holders on the hook for third-party computer activities—even when the defendant has no knowledge or ability to supervise the actual alleged infringers. Because of the vast differential in resources between plaintiffs and defendants and the strict liability and statutory damages regime of copyright law, these cases often settle, sending the message that these erroneous theories are actually correct. Unless individuals like Deborah Foster can afford to take a stand and fight back, the public may eventually believe that they have fewer rights when accused of responsibility for improper file sharing by others than they do, thus inflicting irreparable harm to the purposes of copyright law. Thus, an award of attorney’s fees helps defend the public’s legal rights and furthers the proper administration of copyright law.

In sum, this court’s decision will help determine whether defendants like Ms. Foster, who have proven their innocence to the RIAA, can afford to take a stand against their much larger foe. Equity demands that these fees be awarded in order to compensate Ms. Foster for the costs of defending against the RIAA’s unwarranted prosecution, to prevent the RIAA from knowingly continuing such erroneous prosecutions in the future, and to encourage future innocent defendants to stand up for their own innocence and advance meritorious defenses that will clarify the scope of copyright law. Thus, for equitable, compensatory, and deterrence reasons, the court should award fees to Ms. Foster.

A. The RIAA’s Campaign Against Individual Filesharers

Three years ago, the RIAA began a campaign of mass-produced lawsuits against consumers and music fans accused of sharing files on peer-to-peer (P2P) file sharing networks. Hoping to make examples out of thousands of ordinary Americans, the RIAA commenced investigations of individual file sharers in June 2003 and filed its first round of lawsuits in September 2003, suing 261 individuals for copyright infringement. Recording Industry To Begin Collecting Evidence And Preparing Lawsuits Against File "Sharers" Who Illegally Offer Music Online, Jun. 25, 2003, http://www.riaa.com/news/newsletter/062503.asp; Recording Industry Files Copyright Infringement Claims Against P2P Service, Sept. 19, 2003, http://www.riaa.com/news/newsletter/091903.asp. From this beginning, the RIAA gradually expanded its program, ramping up its monthly rounds of lawsuits to as many as 800 per month. To date, over 18,000 lawsuits have been filed against individuals. See generally RIAA v. The People: Two Years Later (2005), http://www.eff.org/IP/P2P/RIAAatTWO_FINAL.pdf.

In order to identify file sharers from P2P networks, the RIAA enlists a set of procedures that are of questionable accuracy. The RIAA’s investigators sign into file sharing networks hoping to identify users who are sharing particular songs. However, users on P2P networks are difficult to identify. Each user has a “screenname” that represents her presence on the network. This screenname is usually some kind of vague or anonymous nickname, e.g. “musicfan21”. Moreover, on many systems, multiple users can have the same screenname, further obfuscating association with a particular identity. Thus, neither that screenname nor anything else available from the P2P network alone can tie a virtual-world user directly to a specific real-world person.

Faced with this situation, the RIAA has turned to another source of information to try to match users with identities. Specifically, it records the Internet Protocol (IP) address (a sort of street address on the information superhighway) of the allegedly infringing computer logged into the P2P network and then subpoenas the Internet Service Provider (ISP) that issues the IP address for the identity of the account using that IP address at the time of the alleged infringement. However, this sort of identification is inaccurate and prone to errors is some circumstances. In order to understand why, one must first understand some technical details about IP addresses.

B. IP Addresses as Inadequate Identifiers

As noted above, an IP address is an identifier, much like a street address or telephone number, that is assigned to an internet access point so that other computers on the internet can locate it when they need to send it information, such as a website, a picture, or a music file. However, IP addresses differ from street addresses and telephone numbers in several significant ways. First, IP addresses are often dynamic (as opposed to static), meaning that every time a particular computer signs onto the internet, it can receive a different IP address than the previous time. ISPs also often share IP addresses back and forth between separate access points to maximize their availability at any given time.

Second, an IP address is not necessarily limited to a single computer or a single user. Often, a group of computers can share the same IP address, much like in a household, where multiple people can share a single telephone number. For instance, some ISPs provide home internet service subscribers with only a single IP address. Families who want to set up a wireless home network so that multiple computers around the house can access the internet can use what is called a wireless “router” to share that IP address among the computers. The router acts like a mailroom in a large company building. All messages get sent to the same physical address (the street address or the IP address) and the mailroom (router) makes sure the message gets to the right person. However, from the point of view of someone outside the building, all the people within the building share the same address. Knowing only the address from which a message originated tells nothing about who in the building sent or received the message. Similarly, knowing only the IP address tells nothing about which computer was using the IP address at the time.1

Finally, even if it could identify a particular computer that used a particular IP address, the RIAA still would not know what person was using the computer. At most, an ISP can tell the RIAA the name and billing address associated with the account. This information alone is not enough to accurately identify the person who actually engaged in the alleged file sharing. Many homes, business, and universities allow multiple people to use multiple computers throughout the day or night. Many do not even log in under a separate username

1 In fact, even store-bought devices such as the TiVo Digital Video Recorder can use a home internet network to log into www.tivo.com and download TV schedules for home recording. When the TiVo device does this, it would appear to an outside observer as if one of the family members is logging onto the internet because it would use the same IP address as the family members use when they log in.

and password. So even if a given IP address does identify a particular account or computer being used, there is no way to know which actual person is using it. This is much like identifying the street address of a restaurant or other business and trying to use that information alone to identify a specific customer who might have been shopping or snacking at a particular time and date. While such a system may occasionally yield an accurate result, the possibilities for false positive identifications are serious and significant.

C. The RIAA’s Drift Net Litigation

Because of its suspect investigation methods, the RIAA’s vast legal campaign against file sharers acts as a blunt instrument, battering both the innocent and the guilty in broad and indiscriminate strokes. The RIAA itself has likened its campaign to drift net fishing, admitting that “[w]hen you go fishing with a net, you sometimes are going to catch a few dolphin.” Dennis Roddy, The Song Remains the Same, Pittsburgh Post-Gazette, Sept. 14, 2003, available at http://www.post-gazette.com/columnis...oddy0914p1.asp. One of the first innocents caught in the RIAA’s net was Sarah Ward, a grandmother in Massachusetts who was accused of using a Windows program to download hard¬core rap music, even though her computer was a Macintosh that could not possibly run the program. RIAA v. The People, supra, at 4. Another, Marie Lindor, was sued even though she did not own a computer at the time of the alleged infringement. Download Suit Defense: ‘No PC,’ Red Herring, Feb. 3, 2006, available at http://www.redherring.com/Article.aspx?a=15592. The RIAA even sued an 83-year-old deceased grandmother, Gertrude Walton, who was accused of sharing files under the user name “smittened kitten” even though she hated computers even when she was alive. See Toby Coleman, Deceased Woman Named in File-sharing Suit, Charleston Gazette, Feb. 4, 2005, at P1A.

Yet despite being faced with clear evidence of innocence, the RIAA often delays dropping lawsuits against these innocent defendants, causing further unnecessary financial and emotional harm to these defendants until pressed by legal fees and the threat of summary judgment. Ms. Foster first informed the RIAA that she was not involved with the filesharing and that her husband or daughter might have done it in October 2004. (Koransky Decl. ¶ 2). Nevertheless, the RIAA still filed suit against her in November 2004, at which time she again denied any involvement. (Gerber Decl. ¶¶ 2-3). Even when Ms. Foster’s daughter offered to admit liability in April 2005, instead of dropping the case against Ms. Foster, the RIAA amended the complaint to allege a frivolous claim of secondary liability. (Cooper Decl. ¶ 2). The RIAA continued to string Ms. Foster along until this court finally granted a voluntary dismissal over a year later. These sorts of tactics unnecessarily burden innocent defendants with undue legal costs and emotional distress, especially when the plaintiff is in possession of uncontested evidence of their non-infringement. Furthermore, by refusing to immediately dismiss frivolous suits, the RIAA also unnecessarily burdens the courts and clogs up judicial resources.

D. Innocent Defendants are Forced to Settle

Because of the disproportionate financial and organizational power exhibited by the RIAA in its lawsuits, most defendants have settled rather than go to court. The settlements have ranged from $3,000 to $11,000. RIAA v. The People, supra, at 6. Yet these settlements mask the scope of the problem of wrongfully-accused defendants. As a preliminary step in its litigation process, once the RIAA has identified the account holder, it will contact that person offering a settlement. Faced with the Hobson’s choice of either settling now or facing large legal costs and potential uncertainty over recovering their attorneys fees, innocent defendants may find themselves making the logical though unsavory choice of settling.

However, some individuals like Deborah Foster have been brave enough to take a stand against the RIAA’s litigation machine and defend their innocence. For these individuals, the costs of mounting a defense can be astronomical, limiting this option to those who have sufficient resources. One person who can afford to mount a defense with his own funds is Shawn Hogan, a millionaire software developer who made his fortunes as CEO of Digital Point Solutions. David Goldenberg, Shawn Hogan, Hero, Wired Magazine, available at http://wired.com/wired/archive/14.08/start.html?pg=3. Hogan was accused by the Motion Picture Association of America of downloading a movie (one he claimed he already owned on DVD) from a file sharing network. Id. Hogan has dedicated himself to fighting the accusations, regardless of the cost, which he expects to surpass $100,000. Id.

While millionaires like Hogan can afford these exorbitant legal fees, the majority of those wrongly targeted by the RIAA cannot. Thus, where wrongly-targeted defendants are successful in their defense and the record demonstrates that the plaintiff knew or, had an adequate investigation been conducted, should have known that the defendant was innocent, the court should award them attorney’s fees, not only to undo some of the harm the RIAA has imposed and encourage future innocent defendants to stand up for their innocence, but also to further the purpose of the Copyright Act by providing incentives for the RIAA to limit its campaign to meritorious suits that involve actual copyright infringement and to promptly drop suits against those individuals it knows or reasonably should know are innocent.


The RIAA’s driftnet litigation campaign unfairly exploits the economic position of an untold number of innocent individuals who cannot afford to defend themselves against its legal machinery. Absent the promise of an award of attorney’s fees when the copyright holder unreasonably persists, innocent defendants have little incentive to risk the turbulent and uncharted waters of a protracted legal battle. Congress gave the court the power to alleviate this imbalance of power. Section 505 of the Copyright Act enables a court to award attorney’s fees based on equitable discretion. Where, as here, one of these innocent defendants prevails in clearing her name and the plaintiff knew or should have known that she was innocent but continued to harass the defendant, the court should award attorney’s fees to compensate the victim, to deter the legal assailant, to encourage future innocent defendants to fight back, and to maintain the proper administration and balance of copyright law.

A. Courts Must Exercise Equitable Discretion in Deciding Whether to Award Attorney’s Fees to Prevailing Parties.

In civil cases arising under the Copyright Act, § 505 of the Act provides that “the court may . . . award a reasonable attorney’s fee to the prevailing party as part of the costs.” 17 U.S.C. § 505. The decision of whether to award attorney’s fees is completely up to the discretion of the court, which must apply the same standard for awarding fees to both prevailing plaintiffs and defendants. Fogerty
v. Fantasy, Inc., 510 U.S. 517, 534 (1994). “There is no precise rule or formula for making these determinations, but instead equitable discretion should be exercised in light of the considerations . . . identified.” Id. (internal quotation marks omitted). Among the factors a court should consider in using its equitable discretion are “frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.” Id. at 535 n.19 (citing Lieb v. Topstone Indus., Inc., 788 F.2d 151, 156 (3d. Cir. 1986)).

In Fogerty, the Court acknowledged that awarding fees to prevailing defendants in copyright cases could be just as important to furthering the purposes of copyright law as awarding fees to prevailing plaintiffs.

Because copyright law ultimately serves the purpose of enriching the general public through access to creative works, it is peculiarly important that the boundaries of copyright law be demarcated as clearly as possible. To that end, defendants who seek to advance a variety of meritorious copyright defenses should be encouraged to litigate them to the same extent that plaintiffs are encouraged to litigate meritorious claims of infringement. Id. at 527. Thus, the Supreme Court has recognized the importance of providing the right incentives to both plaintiffs and defendants to ensure that they will proceed with meritorious claims or defenses without worrying about potential attorney’s fees.

One circuit court has also singled out the particularly important incentives awarding attorney’s fees to a prevailing defendant can create. The 7th Circuit in Assessment Technologies of Wi, LLC. v. Wire Data, Inc., 361 F.3d 434, 437 (7th Cir. 2004), held that “[w]hen the prevailing party is the defendant, who by definition receives not a small award but no award, the presumption in favor of awarding fees is very strong.” There, the plaintiff “was rather transparently seeking to annex a portion of the intellectual public domain” and the defendant needed to be encouraged to fight in order to clarify the boundaries of copyright law. Judge Posner, writing for the majority, worried that “without the prospect of such an award, the party might be forced into a nuisance settlement or deterred altogether from enforcing his rights” because the party “could not obtain an award of damages from which to pay his lawyer—no matter how costly it was for him to defend against the suit.” Id.

B. Equity Favors Awarding Attorney’s Fees for Deborah Foster’s Successful Defense.

In the present case, equitable discretion and “the considerations of compensation and deterrence” both strongly favor awarding Deborah Foster attorney’s fees for her successful defense. First and foremost, an award would provide much needed compensation to Ms. Foster for her personal expenses in defense of the RIAA’s meritless copyright suit against her. This is particularly noteworthy because Ms. Foster defended herself without any assurance that such fees would be forthcoming, even though she had communicated her innocence early and often to plaintiffs and plaintiffs continued to prosecute her case.

Moreover, it would be equitable to do so because, as the record shows, this is a prime example of the RIAA’s inadequate investigation into whether the defendants it names are actually the ones doing the file sharing, instead relying on the questionable methods described above. Though the RIAA has a right to sue those who actually infringe on its copyrights, it does not have the right to carelessly target innocent defendants and subject them to the costs of defending against baseless accusations. Where the RIAA does net an innocent “dolphin” in its drift net, it must release it as soon as possible. Where, as here, it continues to harass the defendant for over a year in spite of clear evidence of innocence, the court should provide restitution using the tool Congress envisioned for this purpose—Section 505.

Awarding attorney’s fees here also provides the necessary incentives for the RIAA to exercise greater care in its mass litigation campaign and avoid bringing similarly frivolous suits in the future. Plaintiffs are multi-billion dollar corporate copyright holders who can easily afford to bring innumerable suits in their efforts to stamp out all possible sharing of their music on the internet. Defendant, on the other hand, is an innocent individual with severely limited resources. Unless the court awards Ms. Foster her fees, plaintiffs will continue their campaign unchecked and undaunted. They will simply continue to subpoena and sue anyone whom they even remotely suspect might be an alleged infringer, refusing to walk away even when presented with plain and unequivocal evidence that they were wrong. Only a strong fee award can deter such behaviors and prevent future Ms. Fosters from having to subject themselves to this same expensive and draining ordeal after they have put forth prime facie evidence of innocence.

Moreover, the RIAA’s mass-produced lawsuits, numbering in the hundreds each month, allow it to take advantage of economies of scale. The marginal cost of each additional lawsuit is minimal for the RIAA, while the return of each settlement is quite high. The economics of this situation provide the RIAA with strong incentives to sue as many people as it can, without regard to actual guilt. Awarding attorney’s fees in cases where the RIAA knowingly and wrongfully prosecutes someone would cause the RIAA to more thoughtfully consider the merits of its case before proceeding with the suit and to immediately drop cases against those it knows are innocent.

Innocent defendants like Deborah Foster, on the other hand, cannot take advantage of the RIAA’s economies of scale. Only those with significant resources and fortitude will be able to take a stand against the RIAA’s juggernaut litigation campaign. Failure to award fees to a prevailing defendant would work a grave injustice, not only upon the present defendant, but also upon all future innocent defendants who want to mount a defense but cannot afford the legal costs.

C. Awarding Deborah Foster Attorney’s Fees Would Further the Policies of the Copyright Act.

Awarding attorney’s fees here would also further the policies of the Copyright Act by encouraging innocent defendants to fight against erroneous legal theories rather than settle. As the Court recognized in Fogerty, “a successful defense of a copyright infringement action” could help further the policies of copyright law by demarcating the boundaries of copyright law “as clearly as possible.” Fogerty, 510 U.S. at 527. The RIAA’s drift net legal strategy blurs rather than sharpens the boundaries of copyright law by sending misleading messages about the scope of secondary infringement doctrines. Such overenforcement tips the balance of copyright in favor of the copyright owners and allows them to steal away from the public a set of rights that legitimately belong to them.

The core of copyright law is a balance between the rights of copyright owners to exploit a limited monopoly as an incentive to create new works and the rights of the public to have access to those works created. Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 429 (1984). This balance must be accurately communicated to the public so that the public can take full advantage of the rights to which it is entitled. Copyright owners and courts can communicate such a message through litigation. By indiscriminately suing parents like Ms. Foster and other account holders as part of its mass litigation legal strategy, the RIAA knowingly sends a distorted message to the public—that any account holder is secondarily liable for the actions of anyone who uses her account to download music. Though this message about secondary liability is wrong and would not hold up in court 2, it can only be corrected if defendants successfully defend themselves. If innocent defendants cannot recover attorney’s fees by successfully challenging the RIAA’s baseless claims, the majority of defendants will settle rather than fight. As a result, the public may take the RIAA’s incorrect message as the truth. Instead, courts should use attorney’s fee

2 In order to be held liable, the account holder must either have knowledge and materially contribute to the infringement, Ellison v. Robertson, 357 F.3d 1072, 1076 (9th Cir. 2004) or have the right and ability to supervise the infringing activity and a direct financial interest in it, A&M Records v. Napster, Inc., 239 F.3d 1004, 1022 (9th Cir. 2001).

awards to encourage legitimate defenses of copyright infringement against clearly erroneous theories advanced by plaintiffs to help affirm the correct boundaries of copyright law and send the correct message to the public. Fogerty, 510 U.S. at 527.

Overenforcement of copyrights also cuts against the primary purpose of copyright law and steals from the public the set of benefits copyright law was intended to provide it. “The copyright law . . . makes reward to the owner a secondary consideration. . . . Creative work is to be encouraged and rewarded, but private motivation must ultimately serve the cause of promoting broad public availability of literature, music, and the other arts.” Sony, 464 U.S. at 429, 431¬32. In Assessment Technologies, the Seventh Circuit recognized that harms to the public would occur where a copyright owner used “an infringement suit to obtain property protection . . . that copyright law clearly does not confer, hoping to force a settlement or even achieve an outright victory over an opponent that may lack the resources or the legal sophistication to resist effectively.” 361 F.3d at 437. Here, the RIAA is attempting to do just that. If the RIAA is allowed to misinform the public about the scope of secondary liability law, the public will refrain from behaviors that are actually encouraged by copyright law. Fearing secondary liability, parents may restrict their children’s internet access. Hotels, public spaces, and businesses may stop providing public internet access to their patrons. Access to creative works may be chilled.

Unless innocent defendants can recoup their fees after a successful defense against copyright claims holders that unreasonably persisted in claims that they knew or should have known were fallacious, the RIAA will be able to expand its control over behavior beyond what is sanctioned by copyright law. Therefore, to support the strong copyright public policy of access to information, the court should award fees in this case.


For the reasons discussed above, the defendant Deborah Foster should be
awarded attorney’s fees.

Dated: August 9, 2006 Respectfully submitted,
By: /s/ Patrick E. Carr Patrick E. Carr, OBA #1506
A. Laurie Koller, OBA #16857
Attorney at Law
4416 South Harvard Avenue Tulsa, OK 74135 918-747-1000 918-747-7284- fax
Jason M. Schultz (CA Bar # 212600) Electronic Frontier Foundation 454 Shotwell Street San Francisco, CA 94110 415-436-9333 415-436-9993 Fax

Baseball Appealing Fantasy Legal Victory
Jeff Douglas

Major League Baseball says it will appeal a federal court ruling allowing an online fantasy baseball business to use names and statistics without paying for a licensing agreement.

MLB and its players' union also said Wednesday they expect to win back the right to demand money from fantasy sites like St. Louis-based CBC Distribution and Marketing Inc., which prevailed in its lawsuit in a federal court's summary judgment issued Tuesday.

CBC, which runs CDM Fantasy Sports, sued MLB Advanced Media last year, claiming the statistics and names used in fantasy baseball should be free.

"We are disappointed by the Court's decision yesterday. ... We expect to appeal the decision, and remain confident that we will prevail in that effort. We continue to believe that the use of the players, without their consent, to create this type of commercial venture is improper," MLB Advanced Media and the MLBPA said Wednesday in a statement.

The ruling has been called a defining moment for millions of fantasy sports players and the more than 300 online leagues that run them. But it is unknown who will ultimately win or how it will impact the growing fantasy sports industry, which players spend about $1 billion on annually.

Big time fantasy sports league providers such as Yahoo, ESPN and CBS Sportsline are trying to sort out what Tuesday's federal court ruling could mean for their current MLB licensing agreements reported to be worth roughly $2 million a year to use names, statistics, team logos and images on fantasy sites.

None of the three companies were willing to comment on the lawsuit.

Yahoo Inc. is a leader in the fantasy sports market, with more than 6.7 million registered players. The company said the ruling changes nothing from a consumer standpoint.

"We've been a leader in fantasy sports and will continue to be," said Yahoo spokesman Dan Berger.

Charlie Wiegert, a former newspaper advertising salesman who helped start his cdmsports.com fantasy sports empire in a basement in 1992, said they have a 90 percent chance of winning the appeal and closing the case.

"I would hope that Major League Baseball will look at this decision and say 'OK, we lost that one and let's move on.' They don't need to be antagonizing their fantasy fans anymore," Wiegert said.

Jon Karelitz, who has been playing fantasy football and baseball since 2003, says he can understand arguments on both sides.

"It is illegal to use someone's name for financial gain," said the 26-year-old Chicago lawyer, who wins or loses games with his friends based on the statistical success of the actual players on the field. "However, when the name is simply being used to identify statistics, the line is much grayer."

MLB Advanced Media spokesman Jim Gallagher said the league has distinguished that gray area from the beginning.

"We've agreed that the stats and names are in the public domain," Gallagher said. "But when you start to use teams logos and other images as CBC did, you need a license, it's that simple."

Like many other fantasy baseball leagues, CBC had a licensing agreement with the MLBPA from 1995 through the 2004 season and paid royalties to the association.

"I could have bought a really nice house with all the money we gave them," Wiegert said, adding that the 9 percent royalties they paid MLB over 10 years reached seven figures.

MLB Advanced Media scaled back the number of license agreements with fantasy leagues from 19 to seven in 2005 after working out a $50 million licensing deal with the MLBPA. CBC and other smaller fantasy businesses did not get license agreements renewed with the league. That's when CBC sued.

This summer, the MLBPA sent cease and desist orders to about 20 or 30 smaller online fantasy baseball league operators that were operating without agreements.

CBC has continued to operate without an agreement along with others as fantasy sports has grown at a rate of up to 10 percent each year, according to the Fantasy Sports Trade Association.

Study: Marketers to Blame For Pop-Up Ads
Anick Jesdanun

Marketers appeared to be directly responsible for more than half of the pop-up and other online advertisements run through so-called adware networks, reducing the companies' ability to plausibly deny knowledge of that connection, a report has found.

Critics say adware has become one of the top scourges of Internet use because it can degrade computer performance, track a user's browsing habits and mysteriously appear on computers without a user's full knowledge. Major companies often blame an intermediary when they are found to advertise through such programs.

But the Center for Democracy and Technology, a nonprofit group that has conducted research on such programs, said Wednesday that 55 percent of the ads, particularly those coming from smaller companies, used no intermediaries at all.

"There are a lot of companies that are clearly working directly with adware companies," said Ari Schwartz, deputy director for the center.

The report did not name the advertisers.

Researchers studied the patterns by loading two computers with adware and installing a packet logger to track the Web addresses accessed.

When there is an intermediary, the software would visit one site, which would pull information from another site, which would possibly retrieve the actual ad from a third location. When adware gets the ad from the first site, there likely isn't an intermediary.

Schwartz acknowledged, however, that the finding is possibly inflated because the study does not take into account intermediaries that pass along ads via e-mail. In such cases, the ad would appear to come directly from the company, even when an intermediary was used.

Mme. Amanpour Sets Us Straight
Virginia Heffernan

Christiane Amanpour has several enlightening docs coming up on CNN, including “In the Footsteps of Bin Laden,” which will appear on August 23, and “Where Have All the Parents Gone?,” about AIDS orphans, which will appear sometime in September.

She’s also been collaborating in interesting ways with CNN’s online news service, Pipeline.

I asked her what’s good about broadband news. Her responses — and my annotations — follow.

“Pipeline has the time and space not just for short stories and reports, but to play archive reports, to play entire interviews with newsmakers, rather than short snippets and soundbites.”


“I think this is a good service, albeit a little strange sometimes: a couple of weeks ago, for instance, I was on the Northern Israeli front waiting to talk live with the Pipeline anchor, while in my ear (ifb) I was hearing an archive report of mine from Lebanon 1993!!!”

I heard that time-warp report too. It’s called “Beirut Rises from the Ashes.” The lesson is, “Lebanon: Not the Same As It Was in 93.”

Hey, come to think of it, why is that archived report — you have to join Pipeline to see it — getting so much play on Pipeline these days? Are people listening to other counterfactual old news reports? How’re “Tsunamis: They Just Don’t Happen Anymore” (1997), and “Gore: A Landslide in the Offing?” (2000) doing?

“I still believe that while broadband news and the Internet and dotcom news sites, etc. are very practical, I do not think they yet, and may never, carry the same weight, journalistic heft and emotional, or serious social or cultural impact as great TV news. Why? Because “it’s the pictures stupid. And the storytelling.” Simple as that. Of course there are pictures online, but it’s nowhere near the same as watching a magnificently shot TV news report on a big screen with proper sound quality.”

The screen-size question is always a live one, but this makes me think about sound. Do most televisions in people’s houses have “proper sound quality”? Do explosions or cries have to sound a certain way to spur people and governments to action? Not sure.

“Added to that, it does not have the same “community effect” as TV news. In other words, everyone sitting in their own little corner watching only the news they want to watch on small computer screens does not change the world! At least not yet. I know from personal experience what solid TV (and print) reporting did during the Bosnia war for instance (1992-95). It finally helped end the genocide there. I am not sure that kind of impact is possible from the current state of alternative media.”

Not sure about this either. The watch-comment-post-read-forward-contribute-upload-downl oad system of involvement online has turned the broadband news people, in my experience, into a regular 4H club. I’m not sure there’s less community — and less world-change potential — on hypothetical BNN than on CNN.

“I also believe that the field is overcrowded and it works both ways: on the one hand some amateurs occasionally have great access and can provide special insight and pictures. But in my opinion it’s quite rare and you cannot easily afford to replace the experience, and judgement of professionals who have been out there doing this for years. This is not a snobbish comment nor a put down, it’s just a fact and any profession would say the same. People often ask me how I manage to keep my emotions in check in the face of all the terrible things I have witnessed in the last 16 years on the road, and I always liken myself to an ER doctor. (You just have to get the job done, without losing your humanity and without falling apart.) So I use the same medical metaphor in this case: who do you really want to get your news from?”

Batty Mott Street herbalist or mean surgeon at Mass General?

“I reject and try to hold the line — my line at least — against the inclination by some to turn news reporting into a “happy-camper war-and-disaster-zone travelogue.” I am uncomfortable watching deadly serious places and moments treated as the latest in extreme-adventure playgrounds for your own heroics or Petri dishes for examining your own feelings! Reporters notebooks are great, until they start replacing hard news.”

Yes yes yes and absolutely.

Attention Scenesters!

A Head Start on the Future of High-Def

HIGH-TECH projects often take longer to complete than anticipated; just ask Microsoft’s Windows team.

But it seems as if we’ve been hearing about high-definition video since the Eisenhower administration. The Federal Communications Commission’s mandatory cutoff of old-fashioned analog TV broadcasts, now scheduled for 2009, has been delayed, what, 500 times?

Part of the holdup is the extent and expense of the switch to the new, better-looking format. To achieve HDTV nirvana, you have to replace every element of your video setup: the TV set, cable box, DVD player, DVD movie collection — and even your camcorder.

Next month, Canon will release the world’s smallest and least expensive high-definition tape camcorder, a one-handable beauty called the HV10. Its list price is $1,300. As any gadget freak can tell you, however, that’s an inflated, fanciful figure provided for — well, for no good reason. The online price, once the camcorder is on store shelves, will be lower.

The HV10 is not the first high-def consumer camcorder by any means; Sony began blazing this path at the beginning of 2005. In fact, Sony’s third HD camcorder, not counting pro models, has been available for months: the HC3 ($1,500 list price; under $1,200 online), the previous price and size champ.

As Canon rolls out its HV10, Sony’s HC3 seems to be squarely in its cross hairs. Both camcorders produce video in the 1080i format, which you can edit in Apple’s iMovie or many Windows programs (Premiere, Vegas, PowerDirector and so on). Both have built-in, automatic lens caps but lack headphone and microphone jacks.

Both are HDV camcorders, which means that they record onto standard, easy-to-find, inexpensive MiniDV cassettes. The eyepiece viewfinder is immobile and nonextendable on both. And both cameras are so compact, the other parents at the baseball game will have absolutely no clue that you’re filming in high definition.

OF course, they’ll also have no idea that you paid more than $1,000 for your camcorder, compared with as little as $300 for a standard-def model — at least until they see the result on a high-definition TV.

That’s when they’ll see what all the fuss is about. The clarity, color fidelity and detail of good high-def video is absolutely astonishing, and its wide-screen shape makes even home movies look like Hollywood movies. With four times the resolution of a standard TV picture, high-def movies look like the view out a window.

This image-quality business, as it turns out, is the new Canon’s specialty. Talk about being blown away the first time you play back your recordings — let’s hope you have a sturdy couch.

Several advances are responsible for the brilliant picture quality. First, Canon has paid extra attention to two of the most important aspects of HD recording: focus and stability. Because the high-def picture is so sharp and so wide, moments of blurriness or hand-held jitters are far more noticeable and disturbing than in regular video.

So the front of the HV10 bears a special external sensor that, when you change your aim, handles the bulk of the refocusing extremely rapidly. A standard through-the-lens focusing system does the fine tuning after that. Together, these two mechanisms nearly eliminate the awkward moment of blurry focus-hunting that mars other camcorders’ output. (Take care to avoid covering the focus sensor with your fingers as they wrap around this vertically oriented, chunky camera.)

The HV10 also aims to iron out camera shake with a true optical stabilizer. A gyroscope inside the lens mechanism sends real-time feedback to the sensor itself, resulting, Canon says, in a more stable picture than you’d get from electronic stabilizers like the one in Sony’s HC3.

In practice, the Canon’s stabilizer works fantastically when you’re zoomed out; if you use two hands, the picture is indistinguishable from a tripod shot. As you zoom in, however, camera shake becomes more noticeable; at the 10X maximum, keeping the video rock-solid requires either a tripod or nerves of steel.

Now, depending on where the Canon’s street price winds up, Sony’s HC3 may be slightly more expensive. But it offers some goodies that the Canon lacks: a minutes-remaining readout for the battery; a “nightshot” mode for filming in total blackness, infrared-style; and an accessory shoe for video lights and microphones (proprietary Sony accessories only).

The Sony model also has an HDMI jack. HDMI is a single cable that carries high-definition video and audio — a common, extremely convenient connector on high-def equipment. Connecting the Canon to a high-def TV, on the other hand, requires plugging in five connections: left and right audio, and three component-video jacks.

But the Canon offers some perks of its own. In addition to its superior stabilizer and focusing system, it does better in low light, with fewer of the dancing, grainy pixels that mar the HC3’s dim-setting work. It also has a built-in video light that’s a real help — at least within interview range — at nighttime parties, postconcert wrap-ups and “Blair Witch”-style memos to posterity.

Neither camera takes very good still photos. But for what it’s worth, the Canon’s photo-shutter button works even while you’re filming. When you consider how often you might want both stills and video in life — the wedding kiss, the baseball swing, the diploma handshake — this is a great feature.

The Canon even counts to 10 every time you begin filming — a small “1 sec, 2 sec” counter appears on the very bright, very sharp flip-out screen. It’s an ingenious idea because it alerts you, even more effectively than the red REC dot, to when you are, and are not, recording.

Finally, the HV10 can convert all your old analog video, like VHS and 8-millimeter tapes, into digital form (not high definition), for ease in computer editing and reassurance in longevity.

The HV10’s only serious drawback, in fact, is one that it shares with recent Sony models (including the HC3): a really pathetic wide-angle view. Even at the most zoomed-out setting, these camcorders are zoomed in, if that makes any sense; in camera terms, its zoom range is 43 to 436 millimeters. Fitting a whole six-foot person into the frame involves backing up 15 feet, which often puts you into the street, the sea or the restroom.

Now, you could argue that it’s too soon to be buying any high-def camcorder. How, for example, will you show off your finished high-definition masterpieces? High-def DVD recorders are still on the drawing boards, and high-def VCR’s are an expensive oddity. At the moment, the only way to play back your high-def work is to connect the camcorder to your TV.

But the world’s eventual switch to high definition is inevitable. Meanwhile, time is passing. If anything is worth filming, isn’t it worth filming in the best possible quality starting right now? (My infant son, for example, had the good sense to take his very first steps while I was rolling with a high-def camcorder. I’ll always be grateful for that piece of video.)

True, a high-def camcorder is still much more expensive than a standard-def one. But if that’s not an obstacle, remember that you’re actually buying two camcorders in one; you can film in either standard or high-definition video on the same tape. And you can play back either kind of video on either kind of TV set, too (standard or HDTV), which makes these camcorders exceptionally versatile.

In the meantime, by entering the high-def camcorder market a year and a half after its rivals, Canon has played the same conservative waiting game it once used with digital cameras and camcorders. Its goal, of course, is to watch and learn as the pioneers get all the arrows in their backs.

If the HV10 is any indication, the company is off to a very good start.

It Has Come to This: Computer Orders Restaurant Workers Around
Bill Christensen

Hyperactive Bob, the kitchen production management computer system from Hyperactive Technologies, is now being licensed to Zaxby's, a fast-food restaurant chain with locations in the Southern states. Zaxby's has 330 counter-service chicken specialty restaurants. This artificially intelligent computer system not only takes orders, it gives them as well.

Hyperactive Bob makes use of different forms of robotics technology to help manage fast food restaurants:

Sensing the environment:
The system uses robotic vision to count the cars in the parking lot, gathers feedback from employees and collects point-of-sale information in real time.

Artificial Intelligence:
Hyperactive Bob analyzes historical and real-time data to learn about each restaurant individually. Hyperactive Technologies claims that HB is more accurate than most seasoned employees.

Taking Charge:
Hyperactive Bob uses touch screens to tell employees what to do. Employees are instructed how much of which foods to cook; when the food is ready, they tell HB.

Hyperactive Bob operates on practical PC hardware and Windows .Net, Winnov Videum 4400 VO (4 channel video capture card), ELO Touch Screen Displays and Color 380 TV Line Cameras . According to the company, HB "leverages existing QSR infrastructure to offer a very low total cost of ownership, with little maintenance or support, and provides an accelerated return-on-investment that is realized in less than one year."

Hyperactive Bob is frighteningly close to Manna, a science-fictional system proposed by Marshall Brain in his novella-length story of the same name. In the story, Manna is a PC-based system that makes use of sensors around the restaurant to gain information; it then instructs employees.

Manna was connected to the cash registers, so it knew how many people were flowing through the restaurant. The software could therefore predict with uncanny accuracy when the trash cans would fill up, the toilets would get dirty and the tables needed wiping down. The software was also attached to the time clock, so it knew who was working in the restaurant...

Manna told employees what to do simply by talking to them. Employees each put on a headset when they punched in...

If you think that going through your day with a computer telling you what to do every minute sounds creepy, it gets much worse. In the story, human workers are really just the remote "manipulators" and "sensors" of the system. Hopefully, no one will tell the makers of Hyperactive Bob about the Manna story; it has too many practical suggestions for the enslavement of humans.

Lieberman Defeat a Win for 'Netroots' Politics?
Caroline McCarthy

It may have been frequently described as a referendum on the war in Iraq, but last night's Connecticut Democratic primary battle could also be considered an indicator of the Internet's future as a political tool.

Buzz about the political blogosphere and its potential power reached the national scene during the 2004 presidential race, when former Vermont governor Howard Dean made a name for himself with a campaign that was largely run online. Dean's defeat in the primaries, however, led many to believe that perhaps the Internet's potential as a campaign tool was overrated.

But now that 18-year incumbent and one-time vice presidential nominee Joseph Lieberman has failed to win the Democratic nomination for Connecticut's Senate seat thanks to millionaire cable-TV executive and political novice Ned Lamont, candidates from across the political spectrum may be looking at the "Netroots" more seriously.

Lamont's campaign had an official blogger, regular support from liberal mega-blog DailyKos, and a YouTube group called "Nedheads" that currently ranks 13th in membership on the popular video site. And most Lamont supporters are eager to paint Lieberman as quite the technophobe, a task made easier when the senator's official Web site mysteriously crashed on primary day. Lieberman's campaign suspected the work of malicious Lamont followers; liberal bloggers laughed it off and suggested that perhaps Lieberman's staff hadn't anticipated the amount of bandwidth they'd need to handle election-day traffic.

A Netroots turning point?
According to Lowell Feld, the official "Netroots Coordinator" for Jim Webb, the Democrat who will be challenging incumbent Republican Senator George Allen in Virginia this November, last night's primary was a sign that the blogosphere (or Netroots, a truncation of "Internet grassroots") has established itself as a powerful force in electoral politics.

"The enthusiasm and interest in (the Lieberman-Lamont primary) was incredible," says Feld, a Lamont supporter, citing the various blogs as well as major news sources that experienced bandwidth problems during the primary as a consequence of Internet users trying to find out the race results. "That shows you something right there."

"The Lamont campaign is the best example to date of a tech-savvy campaign," says Zack Exley, who worked at liberal political action committee MoveOn.org when it first emerged during the 2004 elections and later did work for John Kerry's unsuccessful presidential bid before branching out into nonprofit work. A tech-savvy campaign, he says, is one that "understands that the purpose of technology in politics is to get boots on the ground in the real world, and to actually sway voters and turn out voters in reality," a point sometimes missed by campaigns grounded in the online realm.

Lamont's best online tactic, according to Exley, was his first one: The Greenwich businessman's initial campaign announcement said that he would run only if 10,000 volunteers and donors pledged their support. "I think that was the most innovative thing that he did online," Exley observes, "and it really allowed his campaign to start so much faster than it otherwise would have. It allowed him to almost immediately generate powerful grassroots and financial support for his campaign." Exley thinks we'll see other politicians adopt that model, including those in the 2008 presidential primaries.

Besides the blogosphere's strength as a recruitment tool, it can help a candidate by simply being loud enough to attract the attention of the mainstream media, Feld said. "The interest (within traditional media) was enormous," he said. "Why was the interest so enormous? Sure, Lieberman was Al Gore's running mate in 2000, but was it that interesting of a race inherently? Once the Netroots really got in there and started publicizing it and getting enthused about it, it certainly ratcheted it up a few notches."

Yankee Group analyst Jennifer Simpson describes the Netroots as an emerging strategy for bringing together and publicizing already-existing political sentiment. "What we are beginning to realize about blogs is that they represent some feelings that are already out there. By making those feelings available on the Net, you are able to spread them." Prominent blogs, such as DailyKos on the left and RedState on the right, "can really begin to influence who's doing what." But Simpson is reluctant to make assumptions. "It can be very hard to assess the exact power of blogs," she said.

When asked about future implications, Simpson maintains that it's too early to tell, and stresses that a statewide primary election is very different from a national election like the presidency. The "blogosphere" represents "an ongoing and expanding array of tools" for political campaigns, she says, but national campaigns will need to reach a much wider audience and consequently will have to rely on both traditional and new media.

But that won't diminish the enthusiasm among the pro-Lamont crowd, excited over not only their victory but also the potential to further shake up the establishment. On both sides of the political spectrum, Lowell Feld says, "the Netroots is very difficult to control. It's a force, an independent force. You can try to guide it and shape it, but it doesn't necessarily succumb to that at all."

Officials Probe Lieberman Web Site Crash
Pat Eaton-Robb

U.S. Sen. Joe Lieberman's campaign Web site remained offline Thursday, and federal and state authorities were investigating why it crashed on the eve of this week's defeat in a high-profile primary.

The site, Joe2006.com, appeared to have suffered from a so-called "denial of service" attack, in which computers overwhelm a site with fake traffic, preventing real visitors from getting through or, in this case, causing it to crash, said Richard M. Smith, an Internet security consultant in Brookline, Mass.

Lieberman said the outage is hindering efforts to raise campaign money.

"But of course that's the world we live in, that anybody, anywhere in the world, if able to, can hack into another site anywhere else in the world," Lieberman said Thursday while visiting Waterbury.

The Lieberman campaign denied speculation among liberal Web pundits that the centrist Democrat's Web site had simply crashed because it used a low-budget Web host unable to handle the volume.

Web hosting can cost anywhere from a few dollars a month for a personal Web site to thousands of dollars for large corporate sites.

The campaign spends about $100 to $150 a month on Web hosting services with MyHostCamp, said Dan Geary, who administers the site for the campaign. Geary said that MyHostCamp, which is owned by a friend of Geary's, gave the site more than enough bandwidth - 200 gigabytes a month - to handle a crush of visitors.

He said an analysis of the server suggested an attack that focused on specific components of the Web site such as internal files and e-mail.

But Smith said that even if there's enough capacity, as important is the amount of security it has to keep intruders out.

"There are measures that can be implemented to protect against this type of attack," Smith said. "I think they went a little cheap here. This kind of looked like a low-budget hosting service."

Geary insists security was adequate, saying MyHostCamp's servers are monitored by a larger company, Server Matrix, and administered by a major Web hosting company, The Planet.

"Was it the greatest security ever? Well it just got hacked so, no," Geary said. "But we had industry-standard security. We could stop bows and arrows and bullets, but not a tank, and that's what this attack was."

Joseph E. Horzepa, general counsel for The Planet, said he could not comment on specific customer issues, but said the company was "very sensitive to security."

Connecticut Attorney General Richard Blumenthal said the state is investigating, along with the FBI.

"The state has computer forensic expects, both in the state police and elsewhere," he said. "We have some expertise and federal authorities have very impressive resources. I am very optimistic that ultimately any wrongdoer will be apprehended."

Denial-of-service attacks are hard to trace, though, because they often commandeer computers infected with certain viruses. Owners usually have no idea their computer is even accessing the Web site.

Geary said the campaign is moving the site to another server and working on increasing security. He could not say when the site might be back online.

He added that online donations were run by another company and that donor information was not compromised.

Lieberman is running as an independent after losing Tuesday's Democratic primary to Greenwich businessman Ned Lamont by about 10,000 votes.

Visitors to the site Thursday received a message that read in part: "We call on Ned Lamont to make an unqualified statement denouncing this kind of dirty campaign trick and to demand whoever is responsible to cease and desist immediately."

Lamont and his campaign have already done that, said Liz Dupont-Diehl, the campaign's spokeswoman.

"We also offered our assistance to the Lieberman campaign to help them resolve their technical problems and even offered to host their site so it would not remain down," she said.

Geary acknowledged that he has no idea who hacked into the site.

Late Thursday afternoon, the message on the site had been changed to, "Watch for our re-launch - and thanks for coming by!"

The site also was attacked by hackers a month ago. They were able to replace Lieberman's page with one that said, "We ownz u site."

Until next week,

- js.

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