Peer-To-Peer News - The Week In Review – June 11th, ‘05

[JackSpratts]

Quotes Of The Week


"In the world of the music business, the live business is one of the best because you can't download it. It boils down to creating an environment for it to be successful." – Jim Guerinot


"When you ask teenagers today if they use file sharing, they usually say, 'duh.' " - Tristan Morris













If RIAA People Weren’t Such Assholes

Father’s day is coming up and I found the perfect album for my dad. Now retired and a master gardener - something he really loves doing - he was born in the early nineteen twenties and his teenage years, critical in the formation of lifelong musical tastes, were spent in the mid thirties. He came of age at the height of the Jazz and Swing eras, two of the most important stylistic genres to come out of the US, as important as rock and roll and hip hop were to later generations, and it’s the musical style he will always come back to. If rock is essentially the rebellious child of swing, stripped of it’s father’s moderation and suave sophistication, and hip hop the runaway son of rock, forever furious at it’s parents, swing is the urbane but distant grandparent, comfortable in its accomplishments and fully aware, even if it’s children are not, that it’s progeny are carrying on the proud family tradition of musical rebellion and maverick innovation. It may be hard to believe from our vantage point but swing was as revolutionary and as frightening to the generation that came before it as rock and rap were to ours. Ask anyone old enough to have heard Hendrix’s Star Spangled Banner when new what they felt and you’ll have some idea how people reacted to Louis Armstrong when he was laying the foundations for jazz. In the way that most people at their deepest levels couldn’t comprehend that the sounds emanating from a Hendrix performance were created by a single guitar, people of an earlier age simply had no basis to compare Armstrong’s work when he lit up his horn. Not only was the music new, the style of it and the rhythms, but the actual sounds he was able to craft seemed totally unrelated to a wind instrument many people thought of as a mere Army heralding device. But out of such creative disturbances are movements made.

So here I am, facing the annual question of what to get the old man for father’s day when to my pleasant surprise I find an album by Paul Anka that not only fits the bill it does so in a delightfully unexpected way. Anka’s new record, Rock Swings, is a collection of rock songs from the eighties and nineties done honesty and faithfully in the best of the great swing style, with integrity and joy, a touch of poignancy and most unusually, a complete lack of irony. In short it’s the musical bridge from my generation to his. Dad can dig my tunes in the flavor he loves and I can dig his with songs I’m hip to.

Before I heard the disc like a lot of people I thought, sure, another vanity piece, probably full of wheezy arrangements and creaky rhythms, not unlike those abysmal Beatles covers from the seventies that were the favorites of elevator programmers the world over. Eleanor Rigby done by a Billion and One Cheesey Strings and god-awful. I didn’t need to listen to that, let alone foist it on the poor guy on a hot Sunday in June, but soon people started talking. At first DJs, then bloggers, with genuine affection for the most part, word of mouth so positive I knew it was worth a listen. Yesterday a handy app obliged, I got the record in about 90 minutes and was instantly hooked. I knew in a flash this would make a great purchase to go with the one I’m getting for his garden, if not for one small matter: I’m boycotting the RIAA. This has come up before, though not so affectingly. Truth be told I don’t like not being able to buy music from recording artists I want to support, and over the last few years since I started my boycott there have been times when I’ve been sorely tempted to break down and pick up a shrink wrapped CD from any number of bands I may have had a soft spot for. But I won’t.

As a DJ I’m used to getting cashless product. When Miles Davis’s producer Teo Macero started a new label he sent me a dozen discs for my perusal. Right through the U.S. mail. That’s pretty typical. So the whole file-sharing thing for me was never as much about scoring free swag as it was the power to thoroughly probe the globe for some obscure object of desire, and the freedom to do so whenever the muse gripped me, which is almost always. Even if the industry didn’t know it or still refuses to admit it P2P is the best promo service yet devised.

As awash as I had been in promo copies of the physical kind I’d never handed them out as birthday gifts. Perhaps the tackiness factor stayed my hand but whatever the reason I wasn’t going to start with downloads. If the stuff was good enough for presents, it was good enough to buy. And so it was. I’d download, listen, promote it at a show then buy a copy to give away. Pretty much business as usual, what I’d been doing since the seventies and the beginning of my professional relationships with the labels.

But things change.

The record companies lost the ball, freaked out and ordered their legions of RIAA undead to respond with writs, lawsuits, legislative bills and a host of gruesome attacks on everything from the Bill of Rights to clueless teenage girls and their scared single moms to basic American decency, none of which were doing this country any favors. Their lies got to me too. The untruth that file-sharing kills sales while sales were actually increasing was repeated conspiratorially by unquestioning media outlets worldwide, by lawmakers and by Judges, and spread like a forest of vibrating Pinocchio noses. It would be one thing if P2P was actually destroying artists and the companies that exploit them, I mean only the coldest of hearts would feel nothing at all, even if the feelings were small glimmers of satisfaction that a business long regarded as evil was getting a little of what it deserved, but in point of fact the record business, and the larger media companies that own them were and are doing better than they ever have, while they hypocritically paint my friends as moral outcasts for doing the equivalent of lending someone a tomato seed, and ironically promoting their products.

Enough was enough and for me to prop up this continuing outrage and attack on America’s fundamental principles of freedom and fairness was no longer tenable and so I supported a boycott. And here I am.

You know, I would’ve really liked to have bought this record for my dad and given it to him. Maybe listen to it together and see his expression during Anka’s swinging take of Van Halen’s Jump and the very personal interpretation of Soundgarden’s Black Hole Sun and the other dozen tunes he covers so well. If RIAA people weren’t such assholes I’d be wrapping up the CD right now but that’s not going to happen, not when they’re suing even more families this year, planning even more legislation to take away even more of our rights, and not when those very rights were fought over, literally, by my father during World War Two. Buying him a copy of this disc when the RIAA will use my money to undermine American democracy would be like slapping dad on father’s day. No thanks, even if he didn’t get the connection I would, and it’s no image I’m taking with me into my old age.

So I’ll get him something cool, something positive, something we can both enjoy in the giving and receiving on Father’s day, and save the CD buying for when the RIAA stop being assholes.

There is one small consolation.

He dropped by today while my felonious promo copy of Anka was blasting out my stereo. The old man has never gotten past the whole rock and roll loudness thing. Bridges are fine as far as they go but they only go so far and some eras just aren’t spanned. Once he figured out how, the first thing he did was turn the CD player off. In an instant I knew I’d made the right decision.

To the man who bought me my first tape recorder; happy fathers day pop.














Enjoy,

Jack












Supreme Court Rejects Lexmark Petition In Toner Cartridge Fight
AP

The U.S. Supreme Court won't weigh in on a closely watched copyright lawsuit in which a printer manufacturer is trying to stop a computer-chip maker
whose parts allowed cheaper toner cartridges to be used in name-brand machines.

Lexmark International Inc. said Monday it looks forward to continuing the fight over what it says are its intellectual property rights. The printer maker wants to block Static Control Components Inc. of Sanford, N.C. from selling the computer chips.

Lexmark's appeal to the Supreme Court was filed late and rejected, a spokeswoman for the Lexington, Ky., company said, meaning that the case returns to a federal district court in its hometown. The spokeswoman, Julane Hamon, declined to estimate what Static Control's chip is costing Lexmark.

Static Control contends that Lexmark engaged in anticompetitive and monopolistic conduct and should pay damages of more than $100 million.

``We have contended that Lexmark, through a variety of their business practices, violated a number of anti-competition laws,'' Static Control general counsel William London said.

Previously, the toner cartridges had to be returned to Lexmark for replacement. Using Static Control's chips, ``remanufacturers'' can make cartridges that work with Lexmark printers and cost less than its brand-name cartridges. Lexmark says Static Control is interfering with its relationship with customers.

``We will continue to ask the courts to enforce existing laws governing contracts and intellectual property so that our laser cartridge customers can get the benefit of full and fair competition,'' Lexmark said in a statement.

Lexmark sued privately held Static Control in 2002, saying the computer chips violated the 1998 Digital Millennium Copyright Act, a federal law to prevent people from tampering with technology.

A federal appeals court in Cincinnati rejected that view last year.

Static Control has continued to sell its Lexmark-compatible chips and last year developed a new generation it said conformed to guidelines set down by the appeals court.

London declined to say how many Lexmark-compatible chips have been sold.

Static Control supplies over 3,000 replacements parts -- including replacement chips for Hewlett-Packard, Canon, Xerox and others copiers -- to more than 10,000 remanufacturers worldwide. The company employs about 1,300 people in Sanford and declares sale of more than $300 million a year.
http://www.siliconvalley.com/mld/sil...l/11831822.htm


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PSP File-sharing Explosion 'Days Away'

The release of a utility onto the web that allows anyone with a 1.0 firmware PSP to 'dump' the data from a UMD to a memory stick is about to trigger a PSP file-sharing explosion.

According to GamesRadar the files are stored on the memory stick as raw ISO files. There is currently no way of playing back such files, but hackers are hard at work attempting to write a utility that does just that and a release may be only days away.

If they succeed we will likely see a flood of illegally copied and distributed PSP games.

There are, of course, several benefits to running games off a memory stick, including improved battery life, so users of the hacks are likely to defend themselves with the claim that they are just copying games for their own use. Yeah right!

PSPs using the 1.5 firmware (so that's most of the US batch) can't take advantage of the dumping software.
http://www.sony-psp-review.com/news/316

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P2P Radio Morphing Into Free Music Search
John Borland

Music start-up Mercora is dipping its toes into the trendy world of Internet search, with a new Web-based tool aimed at finding free music being played on the company's peer-to-peer radio network.

The company is expanding quickly from its roots as an innovative streaming Net radio service, in which it has blended much of the immediate on- demand listening of file-swapping networks with the legal framework of Web radio.

The new tool is aimed at appealing to a new audience of casual Web surfers, allowing them to search the Mercora network and listen to a wide range of songs that approximates on demand. Thus, a person might search for The Beatles and have two dozen or more songs instantly at their fingertips to listen to for free.

"Our strategy comes from the fact that there is no music search site that gives people the ability to listen to music immediately," said Atri Chatterje, the company's vice president of marketing. "Either you have the 30-second clip or a 99-cent download, or you have to go sign up for a subscription service. There's no immediate gratification."

That desire for instant, on-demand music has been a dangerous one for several generations of Webcasting companies, some of which have run afoul of copyright laws as they have added increasingly advanced features. Mercora is part of a new wave of companies that is pushing the boundaries of acceptable Net streaming services, providing as much interactivity as possible while remaining within the letter of the law.

Web radio companies are allowed under law to broadcast whatever music they like without asking permission, as long as they pay copyright owners about seven one-hundredths of a cent per song streamed. But that open-ended invitation comes with restrictions: Digital DJs aren't allowed to let listeners choose specific songs at specific times, aren't allowed to let listeners make permanent copies of songs, and have strict limitations on how many songs by a single artist they can play back to back.

Mercora has adapted to these rules with a peer-to-peer network that turns all its listeners into Webcasters, streaming music from their hard drive at the same time as they're listening. The service keeps track of what song is currently playing at any given time from each member, and allows listeners to search by artist.

As with any peer-to-peer system, the power of this model is in its numbers. With between 20,000 people and 30,000 people potentially streaming music at the same time, odds are good that a song from any given popular band will be on somebody's rotation, and the network can immediately switch a listener to that person's "channel."

The new Web search tool taps into the network the same way, searching the Mercora "now playing" list through a Web browser instead of through the companies' software application. Surfers who want to listen to any of the songs found still must download the software, however.

Chatterje said the company will soon be adding Google-like text ads to the search results, bringing another potential revenue stream into the start- up's coffers. The search tool will likely be expanded to include podcasts and songs from other Web radio sources during the next few months, he added.

As it expands to search broader music offerings online, the company could run into powerful opposition. Sources have said Yahoo is developing a new music search tool, although no details on those plans have emerged.

Mercora's increasing moves toward a nearly on-demand service have drawn scrutiny from Web radio licensing authorities, but as yet there are no indications that the company has gone too far.

"We're looking at their more recent offerings to see if they're in compliance with the (law)," said John Simson, executive director of SoundExchange, the group that collects and distributes royalties from Web radio stations. "We haven't come to a conclusion yet."
http://news.com.com/P2P+radio+morphi...3-5734405.html


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Nokia Sensor Brings File Sharing to Phones

Nokia today introduced the Nokia Sensor, a phone software application that offers a new, exciting way for people to create information and share it with other phone users nearby. With Nokia Sensor, users can create personal pages on their phone, including text and graphics. Nokia Sensor users can also check out the pages of other Sensor users in their vicinity, exchange messages and share files with them. The Nokia Sensor application works over Bluetooth wireless technology, providing connectivity within a range of up to 10 meters from the mobile device. Nokia Sensor is free of charge.

The Nokia Sensor application creates a totally new way of communicating with people in the same location, for example in cafes, get-togethers, busses and trains. People are able to use their creativity and imagination to learn more about other people and their interests. It boosts the opportunities of Bluetooth wireless technology on the mobile device. Nokia Sensor is a spontaneous, sociable application for spontaneous, sociable people.

"The Nokia Sensor application allows users to express themselves and discover new things about others nearby in a novel and simple way. This means that the value of using mobile phones and devices is expanded to connecting with those who share the same space at the same time, acquainted or unacquainted," says Hannu O. Nieminen, Vice President of User Experience Unit at Nokia.

Nokia Sensor is now available for a number of Nokia products including the Nokia 3230, 6260, 6600, 6620, 6630, 6670, 6680, 6681, 6682, and 7610. Nokia Sensor can also be downloaded to PC or directly to the phone from http://www.nokia.com/sensor . A full list of Nokia Sensor's features is available on the website.
http://www.mobiledia.com/news/30968.html


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Some See Benefits of File Sharing

Independent labels use networks as a way to reach consumers, not necessarily make money.
Jon Healey

Many record industry executives think of file-sharing networks as a den of music thieves, but Brady Lahr sees a vein of gold waiting to be tapped.

Lahr, co-founder and president of Kufala Recordings, is one of a number of file-sharing advocates who argue that the networks can play an important role in e- commerce.

While the major entertainment conglomerates argue that popular file-sharing networks have no "commercially significant" use, Lahr and numerous other independent artists, labels and filmmakers are trying to sell their digital wares amid the profusion of bootlegged goods.

So far, though, the results have not lived up to many of the pioneers' hopes.

Despite the enormous number of users on the networks, sales have been slight. Labels that use the peer-to-peer networks say they generate less than 10% of the sales that industry-sanctioned outlets such as Apple Computer Inc.'s iTunes Music Store do.

The networks' ability to become legitimate sources of music, movies and other goods is a key issue for the Supreme Court, which is considering whether two popular file-sharing companies should be held liable for their users' rampant piracy. The major labels, studios and music publishers have asked the court to overturn the U.S. 9th Circuit Court of Appeals, which shielded StreamCast Networks Inc. and Grokster Ltd. from liability.

The court's ruling is expected this month.

Regardless of the low music sales, file-sharing advocates believe the networks are too good an opportunity to ignore.

"We really want to sell our material through this new sales channel," said Lahr, whose Santa Monica-based label specializes in concert CDs. "It really gives new artists or breaking artists an opportunity to expose themselves to a new audience."

To many independent labels, the main goal is simply to introduce music fans around the globe to little-known artists who have no chance of being played on commercial radio stations. The payoff they hope for in the long term is greater CD sales; any downloads they sell on the networks are icing on the cake.

"It is small, but everything starts small," Chief Executive Daniel Glass of Artemis Records said of his company's revenue from Kazaa and other popular file-sharing networks. "To not be part of it is insane."

The amount of piracy on the networks is staggering, with estimates running into the billions of files per month. Executives at four companies that distribute authorized copies of songs and games said demand for their wares was small by comparison yet growing quickly.

The four — Altnet Inc., a subsidiary of Brilliant Digital Entertainment of Sherman Oaks; Intent MediaWorks of Atlanta; Shared Media Licensing Inc. of Seattle; and Trymedia Systems Inc. of San Francisco — estimated that authorized downloads accounted for as many as 20 million files a month. Less than 5% of those downloads generate revenue, either through sales or advertiser sponsorships, according to the companies.

The iTunes Music Store, by contrast, has been selling more than 40 million tracks a month. But iTunes has a distinct advantage: It can offer music from the major labels, which have refused to let their songs be sold on virtually every file-sharing network.

That's a crucial problem for the file-sharing networks, said Chief Executive Eric Garland of BigChampagne, a firm in Beverly Hills that monitors those networks. "If you don't have any top sellers available for sale, then you are not, first and foremost, a place to buy music. I think that's the perception," he said.

President Sam A. Yagan of MetaMachine Inc. said copyright laws forced his company to keep its distance from users of its eDonkey network.

"We have virtually no information on who our users are, what their preferences are, what their tastes are, what their demographic profile looks like," he said. "So we are really shooting blind when we try to market products to them."

Executives of Artemis Records, home to Steve Earle and the late Warren Zevon, said they collected less than $10,000 a month from sales on file-sharing networks, or 3% to 5% of what they are seeing from iTunes. Still, Glass remains enthusiastic, noting the steady growth in sales and the relationships the label is building with advertisers on the networks. "We're not encouraging stealing," he said. "We're going where they want to be."

Beth Appleton, head of new media and business development for V2, the independent label whose roster includes the White Stripes and Moby, said it was important just to give users the opportunity to pay for what they copy. "The Kazaa environment is where we're converting and educating people who download music illegally into legal downloaders," she said.

Part of the process is trying alternatives to the 99-cents-per-download model championed by Apple. For example, Intent MediaWorks and Altnet are using ad revenue to subsidize downloads, and Shared Media Licensing is encouraging people to sell its files to other users by giving them some of the proceeds.

Still, to some executives, trying to sell music on file-sharing networks is a fool's errand.

"The theory that 'if you just give these peer-to-peer users an opportunity to pay for something, they will' is completely wrong," said Tuhin Roy, managing director of the Digital Rights Agency, which helps independent labels and artists sell music online. "The people who are on those networks are there because they want free content."
http://www.latimes.com/technology/la...ck=1&cset=true


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File-Sharing Law To Be Tabled Next Week: CTV
CTV.ca News Staff

The federal government will introduce new legislation aimed at toughening up copyright laws in the digital world, CTV News has learned. Still, industry stakeholders who say file sharing is stealing say the laws are not stringent enough.

About seven million Canadians download music from the Internet and the Canadian market for music downloads is estimated to be $100 million, according to The Canadian Independent Record Production Association.

"Somebody once described it as the the celestial jukebox, because you can find just about anything out there," Internet user Joey de Villa said.

Copyright holders have long been pushing for the federal government to toughen up laws. While new legislation will be tabled next week, industry stakeholders say the legal action is still not tough enough.

"Not only is it not as tough as we would like. It doesn't provide the adequate legal framework that we would like," Graham Henderson, of the Canadian Recording Industry Association told CTV News.

The new legislation will contain rules that will make it illegal to hack or break into the digital locks often used to prevent the copying of movies and software -- although it will remain perfectly legal in Canada to copy a CD for personal use.

"The digital locks themselves can be used to take away rights that users already have," University of Ottawa law professor Michael Geist told CTV News.

The legislation also sets up what is called a notice-and-notice regime to handle complaints of copyright infringement.

Under this system, an Internet service provider will receive a notice from a copyright holder complaining about violations from its provider's customers. The ISP would then send a notice to that customer.

"If a father or mother gets a notice from their ISP that they might be sued because of the activities of their teenaged son or daughter, you could be pretty well assured that that activity is going to change," said Jay Thomson of the Canadian Association of Internet Providers.

This puts the onus on a rights holder to prove a violation has occurred.

But that's still not good enough for de Villa.

"I want to be policed by the police, rather than by the record companies," he said.

This legislation likely won't become law until later this year and experts say it may only be the first of several changes to the legal environment on music downloading. They expect entertainment industry heavyweights to continue pushing to banish Internet-based file sharing.

Last month, Canadian record labels were dealt another legal blow in their quest to curtail online music sharing.

In a unanimous decision, the Federal Court of Appeal dismissed the Canadian Recording Industry Association's appeal to oblige Internet service providers to release the names and addresses of 29 people alleged to be trading music with Net surfers.

As well, the judges refrained from making sweeping conclusions on copyright laws -- specifically about whether downloading or uploading music should be illegal.
http://www.ctv.ca/servlet/ArticleNew...0/?hub=SciTech


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RIAA Targets More i2hub Users

Second Filesharing Lawsuit to Focus on Internet2 Network
Josh Hirschland

Clearly, the Recording Industry Association of America doesn't take a summer vacation.

On May 26th, the RIAA, a copyright protection agency encompassing most major American music labels, filed a lawsuit in the New York Southern District Court regarding three "John Doe" defendants accused of illegally sharing protected music filed over the peer-to-peer i2hub program from Columbia University. The subpoena was a part of a fresh round of lawsuits aimed at 91 students at 33 universities -- including Harvard, Brown, Princeton, and New York University -- on the super high- speed internet2 research network.

The lawsuit does not name the defendants. In these lawsuits, the RIAA regularly issues subpoenas to internet service providers, such as Columbia University, for identifying information regarding the defendants. The University does not monitor activity that goes over its network, but as a matter of policy does comply with the lawsuits.

The move comes just five weeks after the RIAA issued an earlier round of lawsuits at 405 i2hub users at 18 universities, including 25 at Columbia. Until that point, users had assumed that the program, which operated over the private internet2 network that services more than 200 research universities, provided a private and safe means of file sharing.

"Those sued in this round have a somewhat lower number of files [then those targeted in the first round], ... but we are still talking about very egregious and harmful conduct," Jenni Engebretsen, an RIAA spokesperson, said.

"As long as students continue to corrupt this specialized academic network for the flagrant theft of music, we will continue to make it clear that there are consequences for these unlawful actions," RIAA president Cary Sherman was quoted as saying a press release announcing the latest round of lawsuits, which also included 649 individuals who had used programs other than i2hub, including KaZaA, Limewire, and Grokster. He added that "with the multitude of legal music alternatives available to students today, there is simply no excuse for this ongoing, illegal downloading on college campuses." Included in the lawsuits are students at seven schools that employ legal file sharing services including iTunes and Napster.

The Supreme Court is currently deciding the case of Metro-Goldwyn-Mayer Studios Inc. v. Grokster Ltd., which will determine the issue of whether developing the technology behind these peer-to-peer networks is legal. A decision is expected in the coming weeks. The Electronic Frontier Foundation, an organization that fights for technological innovation, estimates that 60 million Americans share files over these networks.

To date, the RIAA has issued more than 11,000 lawsuits against file-sharers since they began issuing them in the fall of 2003. If found guilty, defendants can be held liable for damages of up to $150,000 per song; however, to date, the lawsuits have all been settled out of court for an average of $3,500 per case.
http://www.columbiaspectator.com/vne.../42a793b061fa7


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International Recording Industry Targets Parents In New Anti-Piracy Campaign
Jane Wardell

The international recording industry signed up a global children's charity Wednesday to promote its anti-piracy message to parents around the world, suggesting that many adults have no idea what their children are up to on home computers.

The International Federation of Phonographic Industries, or IFPI, will use record stores, supermarkets and schools, libraries and websites to distribute a leaflet aimed at educating parents. The organization's national subsidiary in the United States has been criticized for including children in lawsuits against people illegally downloading music from the Internet.

The pamphlet, "Young People, Music and the Internet - a guide for parents about P2P, file-sharing and downloading," has been created by Childnet International, a charity that deals with issues of child security on the Internet .

"This campaign is perfectly timed, and it is aimed exactly at the right audience," said IFPI chairman John Kennedy. "At a time when music on the Internet, both legal and illegal, is being made available everywhere, parents, now more than ever, need to be armed with knowledge about the opportunities and the pitfalls surrounding online music."

The leaflets will be distributed in 19 countries, including Germany, Italy, Spain, Singapore, the United States and Mexico.

The IFPI, which has been waging educational and legal campaigns against music pirates for the past few years, said that millions of young people are regularly downloading music from legal services.

Many others, however, are using illegal file-sharing networks, such as peer-to-peer networks that give computer users access to music files directly from the computers of other users on the network.

The London-based IFPI based the need for the pamphlet on research carried out by the London School of Economics that found while only one in 10 parents know how to download music, some 45 per cent of the 84 per cent of nine-to 19 year-olds who use the Internet regularly do so.

"Whilst children love the Internet and enjoy sharing music and other entertainment files, we believe that most parents have no idea how file-sharing works or what besides music is carried on the global file-sharing networks," said Childnet Chief Executive Officer Stephen Carrick-Davies.

The international recording industry has blamed the prevalence of illegal music downloading for severely crimping the legitimate profits due to artists and record companies.

The Recording Industry Association of America attracted criticism in 2003 when it included children in a series of lawsuits against illegal music file swappers.

The U.S. House of Representatives last year passed a bill that encourages the FBI to use Internet providers to forward warning letters to subscribers whose accounts are being used for illegally downloading music and movies. That provision is aimed largely at parents who may be unaware of their children's activities.
http://www.canada.com/technology/sto...6-8330d8ce69ff


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Record Labels Close Spanish Song Site
John Borland

One of the oldest Web sites offering inexpensive music downloads has closed, after years of legal battles with record labels.

Weblisten.com, which has operated in Spain since 1997, offered subscribers the ability to download an unlimited number of songs for about $40 a month. It also offered shorter, cheaper windows of time that lasted a week or a weekend.

The company had long contended it had permission to offer major-label songs, without any kind of copy protection, after negotiating with Spanish licensing agencies. Record labels around the world disagreed and spent years in court suing the company.

This week, the legal battle ended. The site now contains a terse note in four languages saying it has been shut down, and the trade group representing international record companies says the company finally admitted to criminal copyright infringement in court.

"Despite the long delay in the Spanish court system, this result makes it clear that you cannot offer music online without permission from all of the people that created the music," Allen Dixon, executive director of the International Federation for the Phonographic Industry, said in a statement.

The record industry has had mixed success against companies that have pointed to local licensing authorities as legal shields for unconventional business models.

Another Spanish site similar to Weblisten, called Puretunes, shut its doors not long after being sued by the record labels. However, a Russian site called AllofMP3.com, which offers downloads for just pennies per song, remains open despite pressure from the music industry.
http://news.com.com/Record+labels+cl...3-5730102.html


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UK Developer Quits DVD Decrypting
Matt Loney

The UK-based developer of DVD Decrypter, one of the most popular tools on the Internet for decrypting DVDs, has quit under duress from an unnamed company.

The famously elusive developer, who is known only by the name 'Lightning_UK', posted a resignation letter on the CD Freaks website saying that he had been forced to stop all development of the utility and hand over his own website, www.dvddecrypter.com.

On Monday www.dvddecrypter.com, which is ranked third on Google for searches on the term 'DVD' was inactive, showing only an "Error: Host Not Accessible" message.

"Ok so it has taken a while (almost 2 years), but eventually 'a certain company' has decided they don't like what I'm doing (circumventing their protection) and have come at me like a pack of wolves," wrote Lightning_UK on the CD Freaks site. "I've no choice but to cease everything to do with DVD Decrypter. I realise this is going to be one of those 'that sucks -- fight them!' kinda things, but at the end of the day, it's my life and I'm not about to throw it all away (before it has even really started) attempting to fight a battle I can't possibly win."

The developer went on to say: "If 321 Studios can't do it with millions, what chance do I have with £50?," he said, referring to the US company that in February 2004 was forced to stop producing its DVD copying products when a US judge ruled them illegal under US law.

"So anyway, from this point forward, I'm no longer permitted to provide any sort of assistance with anything that helps people infringe the rights of 'a certain company'," said the UK developer. He added the domain name will be transferred over to the 'company' by the end of the week.

Jan-Willem Aldershoff, owner of the CD Freaks site, said the UK developer was hard to track down at the best of times. "He is hardly traceable. He has hidden his identity very well for obvious reasons." Now, he said, all communication has ceased.

This episode is likely to be jumped on by the developer community as the latest instance of corporations threatening the work of developers and the rights of consumers. Norwegian developer Jon Lech Johansen became something of a cause celebre after being aquitted on charges related to alleged copyright violation after he created the DeCSS de-scrambling program.

Aldershoff said another group of developers had retreated to Antigua to produce their product, called AnyDVD.

Struan Robertson, an IT lawyer with Pinsent Masons law firm, said the developer could have been breaking the law in the UK.

"If he is offering software that decrypts the copy protection mechanisms on DVDs then he risks being found guilty of an offence even in this country," he said. The developer's liability would be under the Copyright and Related Rights Regulations 2003, which implemented the European Copyright Directive.

"In the UK our current laws are similar to some provisions in the DMCA so if you are interfering with copy protection mechanisms then unless you can say you are doing it for purposes of research you run the risk of prosecution," said Robertson.
http://news.zdnet.co.uk/software/0,3...9202135,00.htm


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Long-Playing Plans For Music Copyright Ownership
Peter Ranscombe

POP songs will receive longer protection under new plans to extend copyright laws.

It will mean Beatles classics such as Love Me Do and Please, Please Me, released in 1963, will not automatically lose their copyright in 2013.

The Rolling Stones may also benefit, with songs such as (I Can't Get No) Satisfaction having their copyright extended beyond 2015.

United States copyright law protects songs for 95 years and UK government ministers are reported to be considering a similar length of time for British products.

James Purnell, the minister for creative industries, is expected to announce the plans in a speech this week.

He thinks the extra revenue for record companies will allow them to find new acts and develop their talent.

"Finding talent and artists is expensive," Mr Purnell said. "There is a view that long-term earners are needed so that the record companies can plough money

back into unearthing talent.

"Bands like Coldplay will make enough money for their company to discover around 50 or 100 bands."

The move follows an uproar after early Elvis Presley tracks including That's All Right, Mama came out of copyright in Europe at the end of 2004.

Tessa Jowell, the culture secretary, is also planning to set up a music council, to help with cross-industry schemes. The new body would operate along the same lines as the existing film council.
http://news.scotsman.com/entertainment.cfm?id=618292005


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Lawmakers Want 'Patent Troll' Crackdown
Erica Werner

The high-tech industry calls them "patent trolls" _ people who get patents for products they never plan to make, just so
they can sue for infringement if a company does turn out something similar.

That is how critics describe the inventor from Great Falls, Va., whom Internet giant eBay wants to take to the Supreme Court over online selling techniques he patented.

Now Congress, urged on by a coalition of high-tech companies that includes eBay, wants protection against such people.

"I think patent trolls are abusing the system," said Rep. Lamar Smith, R-Texas, who wrote the bill.

The first major changes to patent law since 1999 are running into opposition from drug makers, fearful an overhaul could stifle their ability to bring innovative products to the market.

A bill introduced in the House on Wednesday would make it harder for patent-holders to get court orders to stop the sale of products that potentially infringe on their patents. Challenging a patent would become easier.

Also, the legislation would commit the U.S. to international standards on patent registration: The patent goes to the inventor who files first.

Smith, chairman of the House Judiciary subcommittee on intellectual property, co-sponsored the bill with the committee's top Democrat, Rep. Howard Berman, D-Calif. A hearing was set for Thursday.

The Information Technology Industry Council, which represents eBay and other high-tech companies, says patent lawsuits in federal court doubled from 1,200 to 2,400 annually from 1998 to 2001.

"The broken patent system right now, and the rise in lawsuits, has unfortunately discouraged our companies from innovating, and patent trolls are gaming the system," said Josh Ackil, the group's vice president of government relations.

The boom of the 1990s led to a rush to patent new kinds of technology, some of which were poorly understood at the time, the industry says.

Unlike high-tech businesses, pharmaceutical companies do not have the same problems with "patent trolls" because drug formulas generally are more difficult to develop than computer technology.

"Any attempts to change or weaken current patent laws could have a profound impact on our companies' ability to create new innovative drugs and save lives," said Ken Johnson, senior vice president at the Pharmaceutical Research and Manufacturers of America.

Representatives of PhRMA, the Biotechnology Industry Organization, high-tech groups and others failed in recent meetings to reach agreement on possible changes to patent law.

A judge now can issue an order to protect patent rights. The House bill would allow an order only if the patent-holder would suffer irreparable harm without one.

High-tech companies contend that judges grant orders almost automatically, giving too much power to patent-holders.

But lawyers and small-time inventors like Tom Woolston of Virginia, who took on eBay, say court orders are not so common and that problem of patent trolls is exaggerated.

Woolston defended his five-person company, MercExchange, as a legitimate business that, before the court case with eBay, hoped to develop online sales techniques. EBay lost in a lower court and wants the Supreme Court to take the case.

The proposed legislation would favor big companies, Woolston said. "If you didn't have your owner's right of patent _ which is the ability to stop somebody from using the invention _ how can a small company raise money to build an invention?" he asked.
http://www.washingtonpost.com/wp-dyn...060801901.html


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Senate Panel Votes To Expand Patriot Act

Forget scaling back the Patriot Act.
Declan McCullagh

Instead, the controversial post-9/11 law would be expanded to give the FBI new powers to demand documents from companies without a judge's approval, according to a vote late Tuesday by the Senate Intelligence committee.

The final text of the Senate Intelligence committee's amendments was not immediately available (here's a draft dated last month), and reporters were barred from the secret session during which the vote was held.

But the proposal appears to grant the FBI more power to seek information from banks, hospitals, libraries, and so on through "administrative subpoenas" without prior judicial oversight. The subpoenas are only supposed to be used for terrorism or clandestine intelligence cases.

One other detail: the FBI may designate that the subpoenas are secret and punish disclosure of their existence with up to one year in prison (and five years if the disclosure is deemed to "obstruct an investigation.")

In testimony in April, FBI director Robert Mueller said: "The administrative subpoena power would be a valuable complement to (existing) tools and provide added efficiency to the FBI's ability to investigate and disrupt terrorism operations and our intelligence gathering efforts."

The ACLU denounced the Senate Intelligence committee's vote. "In a move antithetical to our Constitution, the new 'administrative subpoena' authority would let the FBI write and approve its own search orders for intelligence investigations, without prior judicial approval," the group said in a statement. "Americans have a reasonable expectation that their federal government will not gather records about their health, their wealth and the transactions of their daily life without probable cause of a crime and without a court order."

In theory, the expand-the-Patriot-Act bill now goes to the Senate floor for a vote. But some negotiations are likely to take place between the Intelligence and Judiciary committee, and that could affect the final form of the legislation.
http://news.com.com/2061-10789_3-5736302.html


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Europe To Push Ahead With ISP Snooping Law
Sylvia Carr

Legislation that would require telephone companies and Internet service providers to save information about customers' communications is set to proceed despite being rejected by the European Parliament.

The legislation's draft proposal was introduced jointly by France, Ireland, Sweden and the United Kingdom to aid law enforcement in combating terrorist acts. It will require phone companies and ISPs to retain for 12 to 36 months customer data such as the time, date and location of sent and received e-mails and phone calls. The content of the communications, however, will not be retained.

The European Parliament on Tuesday rejected the proposal, partly on grounds it could be illegal.

"There are sizable doubts on the choice of the legal basis and the proportionality of the measures. It is also possible that the proposal contravenes Article 8 of the European Convention on Human Rights," the report from the parliamentary committee on Civil Liberties, Justice and Home Affairs says.

The committee also criticized the proposal because the data would be difficult to analyze and criminals could find a way around it.

"Given the volume of data to be retained, particularly Internet data, it is unlikely that an appropriate analysis of the data will be at all possible," the report says. "Individuals involved in organized crime and terrorism will easily find a way to prevent their data being traced."

The amount of data collected would be 20,000 to 40,000 terabytes or "equivalent to 10 stacks of files each reaching from Earth to the moon," the report said, and the cost to each affected company would be 180 million pounds per year.

In spite of this rejection, though, Luxembourg minister Nicolas Schmit said Tuesday that the Council of Ministers will stand by the proposal, which has now been referred back to the parliamentary civil liberties committee.

The European Commission is also getting involved. It has said it will introduce a new proposal for communications-data retention with a different legal basis by the summer.

Regardless of the European legislation, in the U.K. communication service providers already retain data on customers' phone calls, e-mails and Web behavior for one year, thanks to the Regulation of Investigatory Powers Act.
http://news.com.com/Europe+to+push+a...3-5739292.html


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China Orders All Web Sites to Register
Elaine Kurtenbach

Authorities have ordered all China-based Web sites and blogs to register or be closed down, in the latest effort by the communist government to police the world of cyberspace.

Commercial publishers and advertisers can face fines of up to 1 million yuan ($120,000) for failing to register, according to documents posted on the Web site of the Ministry of Information Industry.

Private, noncommercial bloggers or Web sites must register the complete identity of the person responsible for the site, it said. The ministry, which has set a June 30 deadline for compliance, said 74 percent of all sites had already registered.

"The Internet has profited many people but it also has brought many problems, such as sex, violence and feudal superstitions and other harmful information that has seriously poisoned people's spirits," the MII Web site said in explaining the rules, which were quietly introduced in March.

All public media in China is controlled by the state, though limits on the Internet have tended to lag behind as advances in technology and the Web's rapid spread outstripped Beijing's ability to keep tabs on users and service providers.

China has more than 87 million Internet users, the world's second largest online population after the United States.

The government has long required all major commercial Web sites to register and take responsibility for Internet content - at least 54 people have been jailed for posting essays or other content deemed subversive online.

But blogs, online diaries, muckraking Web sites and dissident publishing have been harder to police. According to cnblog.org, a Chinese Web log host company, the country has about 700,000 such sites.

Now, however, the government has developed a new system to track down and close those caught violating the rules, the ministry said.

"There's a 'Net Crawler System' that will monitor the sites in real time and search each Web address for its registration number," said one document listing questions and answers about the new rules. "It will report back to the MII if it finds a site thought to be unregistered."

The press advocacy group Reporters Without Borders protested the new rules, saying they would force people with dissenting opinions to shift Web sites overseas, where mainland Chinese users might be unable to access them due to government censorship filters.

The Paris-based group said that in May, many bloggers in China received e-mail messages telling them to register to avoid having their blogs declared illegal.

"Those who continue to publish under their real names on sites hosted in China will either have to avoid political subjects or just relay the Communist Party's propaganda," the rights group said. "This decision will enable those in power to control online news and information much more effectively."

The latest restrictions follow many others. Authorities have closed down thousands of Internet cafes - the main entry to the Web for many Chinese unable to afford a computer or Internet access.

They've also installed surveillance cameras and begun requiring visitors to Shanghai Internet cafes to register using their official identity cards - all in an effort to keep tabs on who's seeing and saying what online.
http://hosted.ap.org/dynamic/stories...CTION=BUSINESS


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Four Million Customers

Citigroup Data Is Lost
AP

CitiFinancial, the consumer finance division of Citigroup Inc., announced Monday that it has begun notifying some 3.9 million U.S. customers that computer tapes containing information about their accounts have been lost.

Citigroup, which is based in New York, said the tapes were lost by a courier in transit to a credit bureau.

The bank said the tapes contained information about both active and closed accounts at CitiFinancial's branch network. It said they did not contain information from CitiFinancial Auto, CitiFinancial Mortgage or any other Citigroup business.

The statement said that CitiFinancial "had no reason to believe that this information has been used inappropriately, nor has it received any reports of unauthorized activity."

It was the latest in a series of data losses or breaches that have forced financial institutions and other data collectors to warn customers that their personal information may be at risk.

Last month, media and entertainment company Time Warner Inc. said that computer backup tapes containing data on 600,000 individuals were lost by an outside data storage firm.

The data were on current and former employees going back to 1986, as well as some of their dependents and beneficiaries, the company said. It did not include personal data on Time Warner customers, the company said.

Also in May, more than 100,000 customers of Wachovia Corp. and Bank of America Corp., both headquartered in Charlotte, N.C., were notified that their financial records may have been stolen by bank employees and sold to collection agencies.

In all, nearly 700,000 customers of four banks may be affected, according to police in Hackensack, N.J., where the investigation was centered.

CitiFinancial issued an apology for the latest data loss.

"We deeply regret this incident, which occurred in spite of the enhanced security procedures we require of our couriers," said Kevin Kessinger, executive vice president of Citigroup's Global Consumer Group and president of Consumer Finance North America. "There is little risk of the accounts being compromised because customers have already received their loans, and no additional credit may be obtained from CitiFinancial without prior approval of our customers."

Kessinger said that beginning in July, the data "will be sent electronically in encrypted form."

Citigroup shares fell 11 cents to $47.45 in midday trading on the New York Stock Exchange.
http://hosted.ap.org/dynamic/stories...CTION=BUSINESS


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Microsoft To Grant Pirate Software Amnesty To Indonesia: Report
AFP

Microsoft, the world's largest software maker, is to grant Indonesia an amnesty on pirated versions of its Windows program used on government computers in exchange for a token payment, a report said.

Under the deal, up to 50,000 computers running illegal software would be legalized at a dollar each, Information Minister Sofyan Djalil said, according to the Jakarta Post daily. In exchange, Indonesia would promise to purchase authorized Microsoft merchandise in the future and launch a major crackdown on a pirated software racket that is believed to be one of the world's worst. Djalil said the amnesty proposal emerged from a meeting between Indonesian President Susilo Bambang Yudhoyono and Microsoft founder Bill Gates at the company's headquarters in Seattle last month. "Microsoft is being realistic. They can't force developing countries like us to solely use legal software since we can't afford it. They want us to gradually reduce our use of it," Djalil said. A study by the Business Software Alliance, an organisation of representing leading manufacturers including Microsoft, showed that 87 percent of the software on the market in Indonesia was pirated in 2004. Counterfeiting in Indonesia cost the industry millions of dollars, the study said.
http://uk.news.yahoo.com/050609/323/fksev.html


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Microsoft Antitrust Proposal Wins Over EU
David Lawsky and John Chalmers

Microsoft cleared a major stumbling block on Monday and won praise from the European Commission for finally putting forward acceptable proposals to comply with European Union antitrust sanctions.

The risk that the EU executive might hit the world's largest software company with a fine of up to $5 million a day receded because Microsoft's proposal allows non-Microsoft work group servers to interoperate with Windows personal computers and servers.

The plan will be put to industry peers for their opinion over the next two weeks of market testing before the Commission makes a final assessment, but an open-source software group that is a major rival raised immediate objections.

The Commission postponed the most troubling questions about open-source licenses until an EU court rules next year on Microsoft's broad challenge against its antitrust decision.

Open-source software is distributed freely to software developers as long as they make public any underlying source code, and Microsoft's proposal would not allow public distribution of its code.

The Commission, which polices competition in the 25-nation bloc, fined Microsoft a record 497 million euros ($609.8 million) more than a year ago and demanded changes to its business practices, which it found were an abuse of its quasi-monopoly on computer software.

"I am happy that Microsoft has recognized certain principles which must underlie its implementation of the Commission's decision," European Competition Commissioner Neelie Kroes said in a statement.

Worldwide Surprise

Microsoft Chief Executive Steve Ballmer said in a statement the company would "focus on fulfilling all our obligations in every way we can.

"In order to resolve some complex issues over the past few weeks, we've made some tough concessions," Ballmer said.

In a surprise move, the interoperability agreements will now apply worldwide instead of only in Europe as the Commission had required.

That is a two-edged sword, because the company takes the position that the worldwide obligation will also bring into play any and all patent and trademark protection it holds in countries outside the European Union.

Kroes told reporters there were no outstanding issues on Windows Media Player, the second of two antitrust violations for which Microsoft might face fines.

Microsoft was required to make its ubiquitous Windows operating system available without Windows Media Player so that computer makers can buy alternative software from RealNetworks and Apple to play films and music.

Microsoft shares were down 0.2 percent at $25.38 in New York trade at 1538 GMT.

Court Restrictions

Under the Commission's interoperability demands, Microsoft must share information with rival makers of servers used to run printers and retrieve files.

But Commissioner Kroes told reporters on the sidelines of an International Competition Network meeting in Bonn, Germany, that the Commission would have to wait until a court decision this spring to require Microsoft to provide an open-source license.

Microsoft has said it doesn't want to give free access to software code on which it could earn revenue.

A European Union judge placed temporary restrictions on information disclosure in December.

"We can't take risks," Kroes said. "We have to be aware that the Court of First Instance is watching us and rightly so."

If the Commission went too far, Microsoft could take it back to court, risking further delays.

The Free Software Foundation, which distributes open-source Samba server software, was quick to respond to the latest move.

"They set terms which exclude the only remaining competitor in the market -- Samba," said Georg Greve, president of the foundation, in Hamburg, Germany. "They obviously know that you get information but you cannot implement it."

Samba's license requires it to reveal source code to users, while Microsoft bars it from doing so.

Two lawyers -- one for Samba and a second who has represented clients against Microsoft -- said that they needed more information.

"The whole Microsoft strategy is to delay implementation of the measures until the market evolves and they are ineffective," said Samba's lawyer, Carlo Piana, in Milan, Italy.

In the view of some experts, the proposal will allow the Free Software Foundation to develop software, which it must withhold from the market until and unless the Commission wins.

At that point, they said, free software developers would be able to publish the information with their software for non-innovative protocols.
http://today.reuters.com/news/newsAr...CROSOFT-DC.XML


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MSN Site Hacking Went Undetected for Days
Ted Bridis

Password-stealing software planted by hackers was active on Microsoft's popular MSN Web site in South Korea for days before the world's largest software company learned about the break-in and removed the computer code.

Police investigators and Microsoft specialists are continuing to search for clues to the culprits behind this week's high-profile computer break-in. More details emerged Friday about the hacking, which targeted subscribers of an online game called "Lineage" that is popular in Asia.

Microsoft Corp. said it had cleaned the Web site, www.msn.co.kr, and removed the software code that had been planted on its news page. It said another company that operates the MSN Korea site apparently failed to apply necessary software patches, leaving its server computers vulnerable.

Security researchers at San Diego-based Websense Inc. discovered the break-in late Sunday during routine scans it makes against more than 250 million Web sites each week looking for sources of viruses and other infections.

A previous inspection by Websense of the MSN Korea site the evening of May 27 did not detect the dangerous software.

"Our alarms went off (Sunday). We noticed it was infected," said Dan Hubbard, its senior security director.

Hubbard said Websense researchers investigated further and quickly updated protective software to keep its own corporate customers safe. It did not successfully reach Microsoft officials to warn them about the break-in until midday Tuesday, a day after the Memorial Day holiday weekend.

Microsoft said it removed the password-stealing software from the MSN site hours later.

The chronology suggests the hackers could have harvested stolen passwords from visitors to the MSN site for up to three days. But their target - passwords to game accounts - lessened the significance of the break-in since the hacker software appeared not to collect any network or banking passwords.

The Lineage game and its successor boast more than 4 million subscribers, mostly in Asia, who pay about $15 each month, said Mike Crouch, a spokesman for the U.S. subsidiary of South Korea- based NCSoft Corp. Crouch said he was unaware of any significant increase in complaints by subscribers about stolen passwords tied to the Microsoft break-in.

South Korea is a leader in high-speed Internet users worldwide. Microsoft's MSN Web properties - which offer news, financial advice, car- and home-buying information and more - are among the most popular across the Web.

A Microsoft spokesman, Adam Sohn, said the company was confident its English- language Web sites were not vulnerable to the same type of attack.

Microsoft shares fell 36 cents to close at $25.43 on the Nasdaq Stock Market. They have traded in a range of $23.82 to $30.70 over the past 52 weeks.
http://hosted.ap.org/dynamic/stories...CTION=BUSINESS


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File-Sharing Pioneer Turns to Free Internet Calling
Jonathan Krim

About 70 miles from the U.S. border that he will not cross, Niklas Zennstrom is pondering which gets him more excited: making life miserable for entrenched monopoly businesses or making money doing it.

The answer is both, and two of the world's largest industries haven't been the same since he went to work. Neither has the Internet.

In co-creating the file-sharing software Kazaa in 2000, Zennstrom helped fuel an online revolution that music labels and motion picture studios say threatens their existence. Sued by the entertainment industry even though he sold Kazaa in 2002, Zennstrom avoids the United States as his lawyers seek to remove him from the case.

Now, the 39-year-old Swede, whom few consumers have ever heard of, is aiming the same technology at something even bigger: telephone calls.

Skype Technologies SA, Zennstrom's newest venture, allows users of its software to talk to each other, via their computers, for free. That's free, as in no cost for either the software or the calls, anywhere in the world. And with none of the legal issues that surround sharing of music or videos online.

In just 18 months, Skype has become a global telephone firm with 40 million users, making it not just the fastest-growing telecommunications company in the world but one of the fastest-growing businesses of any kind.

By contrast, other voice-over-Internet providers, which charge a monthly fee and use different technology, have fewer than 3 million customers combined. Skype is acquiring as many new customers in a week as the best known voice-over-Internet company, Vonage Holdings Corp., has in total.

Zennstrom has done this by circumventing telephone wires and making the phone call just another computer task, the equivalent of sending an e-mail or conducting an Internet search. All that is required is a high-speed Internet connection, Skype's software, and a microphone or special handset for speaking.

"Skype is a huge threat to most incumbent phone companies," said Kevin Werbach, a law professor at the Wharton School and a telecommunications consultant. "The only reason they haven't trained their guns on it is they don't realize that yet."

Some in the industry argue that the cost of a basic phone call is on a path toward zero.

"In the next 10 years, I cannot imagine a telecommunications company that will be able to charge for telephone calls," said Howard Hartenbaum, a venture capitalist whose Silicon Valley firm is backing Skype.

But Skype has limits, and some experts argue that big, traditional players such as Verizon Communications Inc. and SBC Communications Inc. still have a number of advantages.

"Skype is a good company," said independent telecom analyst and commentator Jeff Kagan. "But Skype is never going to catch up to the major service providers," the large telephone and cable companies that increasingly are offering bundles of services, including local and long-distance calling, wireless, high-speed Internet access and digital television.

Zennstrom, who seems to relish being underestimated, is neither a stereotypical underground hacker nor a nerdy geek. Bespectacled and soft-spoken, he looks every bit the preppy, mid-level executive. He believes in capitalism and is motivated to disrupt markets that operate inefficiently.

"There's a duty," he said between appearances at a recent industry conference in Canada on Internet telephony. "You should not allow big monopolies to be inefficient. . . . If you buy services from a big monopoly that doesn't care about consumers and overcharges you, most people get really upset about that."

His strategy is to use new technology to fight entrenched companies that are too big to react quickly. "Not only is it great fun," he said, "it creates huge business opportunities."

Zennstrom's gift, say those who have followed his career, is his ability to pinpoint the industries most vulnerable to attack.

"Zennstrom is the regime changer," said Timothy Wu, a visiting technology law professor at the University of Chicago. "He makes happen what economists predict would happen" when technology overtakes existing business models.

The Big Efficiency idea underlying Skype and Kazaa struck Zennstrom and his longtime business partner, Janus Friis, when they worked together in the mid-1990s at Sweden's Tele2, the first independent phone company in Europe to take on state-sanctioned monopoly carriers.

Wouldn't it make sense, they reasoned, to allow computers to share information directly with each other rather than routing traffic through centralized networks and equipment?

Watching the music world get turned upside down by the Napster file-sharing service, which still relied on some centralized components, Zennstrom and Friis worked with some Estonian programmers to build a purer, more powerful computer-to-computer system known as "peer-to-peer."

Zennstrom said his goal was not to replace Napster, which was under legal siege and ultimately shut down for facilitating the pirating of copyrighted music.

Instead, he wanted the studios to use his more efficient system to legally put music into the hands of consumers via a payment method that would be negotiated.

Zennstrom said the music studios he visited in Los Angeles, which he declined to name, refused to consider it. A spokesman for the Recording Industry Association of America declined to comment on Zennstrom.

When legal troubles shut down Napster, enthusiasts turned to Kazaa as a way to keep swapping files that was harder for authorities to disrupt because it was so decentralized. By 2001, Kazaa and similar software proved so effective for moving large files (legal or otherwise) that the technology soon accounted for the majority of all Internet traffic.

Although Kazaa withstood early legal challenges, continued battles loomed. Zennstrom did not like the idea of a life spent negotiating music and movie rights agreements, so he sold Kazaa to Sharman Networks Ltd., a firm run by Australians and incorporated in the South Pacific island nation of Vanuatu. After taking some time off, he and Friis began talking about aiming their insight about efficient networks at another big industry: telecommunications.

Today, he just smiles at questions about how Skype will make money on a strategy of giving away basic calling for free.

Yahoo and Google, he notes, never charged for someone to conduct a search. Instead, the rapid adoption of search technology by so many people made the companies hugely valuable and opened the door to moneymaking, add-on services.

So the company offers Skype Out, which charges small toll fees for Skype users to call non-Skype users around the world, at rates below traditional long-distance rates. Already, the service has about 1.5 million users, though the company declines to reveal how much money it is bringing in.

The company also is letting users sign up and test-drive Skype In, which for a fee lets non-users call Skype users and provides voice mail.

Skype backers such as longtime venture capitalists William H. Draper III and his son, Timothy C. Draper, contend that the key to Skype's success is its ability to provide services at vastly lower cost than competitors.

With no networks, lines and poles to maintain, London-based Skype operates with 171 employees worldwide yet has nearly as many users as Verizon has residential phone customers. Verizon's land-line division employs 142,000 people.

Zennstrom is plotting pushing Skype into mobile phones, and he already has cut a deal with handset-maker Motorola Inc.

As long as the mobile phone can connect wirelessly with the home computer, as many now can, Skype users can walk around their homes and talk, rather than be chained to the computer desks.

About 30 percent of Skype's users are businesses, Zennstrom said, and the company is developing a pricing plan for large corporate customers.

As for the next big industry ripe for an attack? Zennstrom just smiles again.
http://www.washingtonpost.com/wp-dyn...060301520.html


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George Clinton Wins Funkadelic Rights
Jeff Leeds

A federal judge here has given the funk music pioneer George Clinton his groove back.

In a decision issued last week, Judge Manuel L. Real of Federal District Court of Los Angeles returned ownership of the master recordings of four albums Mr. Clinton made in the 1970's with his band Funkadelic: "One Nation Under a Groove," "Hardcore Jollies," "Uncle Jam Wants You" and "The Electric Spanking of War Babies."

In winning possession of the recordings, Mr. Clinton can now control licensing and distribution of the music and lay claim to millions of dollars in past licensing fees.

"That feels real good," he said in a telephone interview on Monday. "It feels good mainly because it gives me another shot."

The ruling came as the latest twist in a 12-year legal fight over the rights to the recordings and the copyrights to the songs of Funkadelic and of Parliament, Mr. Clinton's other funk band. The most recent case centered around disputes among Mr. Clinton, several former business associates and a former manager.

Don Engel, a lawyer who represented Mr. Clinton at the trial, says Mr. Clinton may be entitled to millions of dollars in past licensing fees from record labels whose artists lifted samples, or snippets, from Parliament and Funkadelic albums while recording new music. Mr. Engel also said that Mr. Clinton now has grounds to seek compensation for the rerelease of the albums in 2002 by Priority Records, now a unit of the music giant EMI Group.

The flamboyant Mr. Clinton, who said he was 64, must now decide how hard to press for past money, and whether he still has a chance to win control of song copyrights to his old work. In 2001 he lost a court ruling in a case in which he contended that he still owned the songs. They are now controlled by his onetime music publisher, Bridgeport Music. It is not clear whether the latest ruling would provide for a new claim on that issue.

"I'm still writing the whole history of the thing," Mr. Clinton said. "I just want my stuff back."
http://www.nytimes.com/2005/06/07/ar...ic/07funk.html


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China a Weak Ally on Piracy

Country Proves to Be Problematic Partner in Cutting Theft
Peter S. Goodman

Commerce Secretary Carlos M. Gutierrez on Friday engaged in what has become a required ritual for U.S. trade officials visiting China's capital: He walked down the street and surveyed the plentiful supply of pirated Hollywood movies, finding a DVD copy of the new "Star Wars" film selling for a single dollar. Then, he told a room full of journalists that he was here to put a stop to this trade.

"We would like to see greater enforcement," Gutierrez said at an afternoon news conference, underlining that intellectual property is his major talking point on his first official trip to China. "I'll be speaking with Chinese officials. The time is now to see some results."

Most of the journalists in the room had sat through this more than once. By establishing as his primary goal delivering progress on the widespread theft of intellectual property, Gutierrez was taking on a task that has eluded many others and may be impossible, analysts said. From street vendors hawking fake Prada handbags to factories reverse-engineering designs for mobile phones, the brazen counterfeiting of goods and the stealing of patented ideas is part of the basic fiber of Chinese business.

Much like others who have held his post, Gutierrez described his Chinese government counterparts as "partners" in the effort to stamp out the theft of intellectual property, which Washington said costs U.S. companies tens of billions of dollars a year in lost sales. But the reality, say experts and foreign business leaders, is quite the opposite: Far from an ally in a joint undertaking, China's government actively tolerates and even rewards the stealing of ideas as its anointed development strategy. Local governments see the sales of pirated products as a way to keep people working.

"The goal of the government is to create an indigenous technological capacity, and the perception is that all of the technology is controlled by the United States, Europe and Japan," said Arthur Kroeber, managing editor of China Economic Quarterly. "They feel like they need to steal as much as they can for as long as they can until they produce their own technology. They have no incentive whatsoever to enforce, so most of these discussions are not very useful."

Two years ago, Cisco Systems Inc., the giant telecommunications equipment company, sued Huawei Technologies Co., a fast-growing Chinese competitor, accusing the firm of copying its software code and building it into some of its products. Last summer, Huawei settled the suit, which was widely seen as an admission of wrongdoing, though the company denied it. Only months later, the state-controlled China Development Bank extended a $1.25 billion line of credit to Huawei as the company aims to expand sales in markets around the globe.

"Huawei is a cheater, but they have the full faith and credit of the Chinese government behind them," Kroeber said.

General Motors Corp. is pressing Chinese authorities to enforce intellectual property laws in a case in which it says one of its designs was illegally copied by a Chinese upstart, Chery Automotive Co. Chery is making plans to export its cars to the United States by 2007.

Now that China is a member of the World Trade Organization, the United States cannot threaten to impose unilateral sanctions on Chinese products for intellectual property theft, as it did in the 1990s. It must pursue a lengthy case with the WTO first.

Gutierrez has declined to say whether he would support such an action.

The Chinese position is that these cases are an unavoidable part of the free-market system they are embracing as the country continues its transition from communism. Fang Xingdong, a high-technology policy expert at Tsinghua University in Beijing, argues that the government should simply allow domestic companies to develop as best they can, using whatever means available, and not shackle them with strict enforcement of intellectual property laws. Aggrieved parties can use civil courts to seek claims.

"The government should do very little and not interfere," Fang said. "They should let Microsoft and Hollywood file lawsuits against Chinese businesses."

The commonplace theft of intellectual property here is both a symptom and a cause of a dearth of spending on research and development by Chinese companies, which have typically sought fast returns by imitating successful products. Throughout the 1980s and 1990s, China's largest industrial firms devoted less than 2 percent of their sales revenue toward designing new goods and technologies, according to research by George J. Gilboy, a China expert at the Massachusetts Institute of Technology. That is less than one-tenth the level of funding for research and development typically spent by technology firms in the United States, Europe and Japan.

Chinese companies are reluctant to invest in research and development because they typically operate on very tight profit margins: A surplus of competition has driven prices for goods such as televisions and lawn mowers through the floor. Moreover, Chinese companies are intimately familiar with just how easily innovation can be stolen and imitated, with many competitors sharing the profits of whatever new development one company produces.

Tao Xingliang, dean of the school of intellectual property at Shanghai University, said the government has in recent years taken steps to stamp out violations by strengthening laws against counterfeiting. But as the U.S. commerce secretary saw on his visit here, a huge gap separates the existence of laws from real enforcement.

The most tangible area of piracy is the trade in counterfeit versions of branded goods and movies. Last year, the local government in Beijing shut down the open-air Silk Alley market, a city landmark that long nurtured a thriving trade in fakes, while opening a new, indoor market alongside the old site. Among the reasons given was that the new building would be easier to police, allowing authorities to better enforce anti-counterfeit laws.

But on Friday, the new Silk Alley market was abuzz with shoppers snapping up the same products as ever -- fake Armani blue jeans, North Face windbreakers and Louis Vuitton handbags. Merchants offered fake Samsonite suitcases and bogus Calloway golf clubs alongside counterfeit Gucci perfume. Vendors sold the fourth season of the hit television show "Seinfeld" on DVD for $10.

"The police come every now and again, but they let us keep selling," a cashier at the DVD place said.

Gutierrez noted that applications for patents by Chinese companies now exceed those filed by foreign firms, suggesting that this indicates that China is now developing its own innovations and will want to protect them.

"China is beginning to transition from a manufacturer of commodities to an innovator," he said.

But China, it is often noted, is neither simple nor small. Gutierrez is here meeting with central government officials. But their policies -- even were they to opt for stricter enforcement -- do not always filter down to the local level, where officials have their own interests in keeping trade going to keep money flowing.

"Partnership with the central government in Beijing is a good idea, but it has its limits," said Gilboy, the MIT researcher. "Due to the political strength of local interests, Beijing cannot enforce its preferred policies. Partnership has to be extended to the local level, and it has to include both sanctions and incentives to be effective."

Special correspondent Jason Cai contributed to this report from Shanghai.
http://www.washingtonpost.com/wp-dyn...060301835.html


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Shanghai Cracks Down on Pirated Movies
Christopher Bodeen

Shanghai is cracking down on pirated videos ahead of the city's international film festival, putting illegal copies of the latest "Stars Wars" movie and TV shows such as "Friends" out of reach - at least for now.

Stores have temporarily closed or boxed up unauthorized DVDs to avoid having them seized in police raids. Sidewalk sellers who peddle copies out of suitcases are also lying low.

"To crack down against the pirate DVDs is our job and duty," Lan Yiming, deputy head of Shanghai's culture inspection bureau, said in a telephone interview.

"We want to create a good cultural environment for the international film festival and give guests from home and abroad a good impression," he said.

The eighth edition of the annual Shanghai International Film Festival - the only one of its kind in China's vast entertainment market - runs for nine days starting Saturday. It will feature around 200 selections from South Korea, Germany and Japan. Hundreds of exhibitors and film industry professionals are due to attend, including Hong Kong action star Jackie Chan, Chinese director Zhang Yimou and Japanese filmmaker Yoji Yamada.

Lan said the anti-piracy sweep also aims to prevent the embarrassment of actors and film professionals attending the festival seeing pirated versions of their films for sale.

As recently as Saturday, the U.S. commerce secretary warned China of a potential political backlash in Washington amid tensions over product piracy and Chinese trade surpluses. Carlos Gutierrez, in Beijing for official talks, had said U.S. companies are telling him they have not "seen much change" despite Chinese promises to put an end to the illicit trade that they say costs them billions of dollars a year in lost potential sales.

Pirated disks, including high-quality copies of recent Hollywood releases, are usually widely available in Shanghai and other Chinese cities for less than $1. Many stores also sell authorized copies, although these are usually drawn from a narrow selection of older films that cost several times the price of pirated movies and are usually dubbed into Chinese.
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Groups Weigh In on Web Politicking

FEC Urged to Exempt Most Activists From New Regulations
Brian Faler

A raft of lawmakers, campaign finance watchdog groups, election lawyers and bloggers urged the Federal Election Commission on Friday to exempt the vast majority of -- if not all -- individual political activists on the Internet from new regulations.

The comments, submitted hours before an agency deadline, came as the FEC considers whether and how to regulate online political activities, including blogging, advertising and e-mail. The commission had proposed shielding virtually all online political activities from government restrictions. But two sponsors of the campaign finance reform legislation approved in 2002 successfully sued to overturn that and some other policies. The court's decision left it to the FEC to decide which activities to regulate.

That has worried bloggers, in particular, who fear they will have to consult lawyers to ensure they do not run afoul of any new rules. The FEC, which is scheduled to decide the issue later this year, released a draft of its proposed regulations this spring that indicated it intended to take a relatively light hand. The agency also invited public comment on its proposal.

The authors of the campaign finance reform law, Sens. John McCain (R-Ariz.) and Russell Feingold (D-Wis.) and Reps. Christopher Shays (R-Conn.) and Martin T. Meehan (D-Mass.), filed a joint statement urging the agency to ignore individuals' politicking on the Internet and focus instead on tightening rules governing online activities of unions, corporations and state political parties.

The lawmakers asked the FEC to exempt ordinary individuals and all bloggers from such regulations. They said bloggers who take money from political campaigns should not have to disclose that on their Web sites, as some have proposed. The lawmakers also said that bloggers who incorporate for liability purposes should not have to abide by rules barring corporations from contributing to political candidates.

The lawmakers complained that current rules allow state parties to use large, unregulated contributions of "soft money" to pay for federal election-related communications on the Internet while also allowing corporations and unions to buy and coordinate online ad campaigns with candidates. The lawmakers said the FEC's proposal to restrict such activities is not aggressive enough and ought to be expanded.

"The Commission must tread very carefully in this area so as not to stifle the virtually limitless potential of this exciting medium," their statement said. "At the same time, there is no reason to believe that moneyed interests will not attempt to use the Internet to influence policies and policy as they attempt to do with other modes of communications. Indeed, there is every reason to expect that they will."

Several prominent Washington-based campaign finance reform groups largely echoed the lawmakers' recommendations. The Center for Responsive Politics, the Campaign Legal Center and Democracy 21 filed comments asking the FEC to exempt most bloggers and to crack down on soft money online while not taking a position on whether bloggers should have to disclose being on a candidate's payroll.

Other election lawyers and bloggers filed remarks urging the FEC to adopt far fewer regulations. Several asked it to grant bloggers the same broad legal protections that allow traditional news media companies that are incorporated to endorse political candidates without those endorsements being equated with financial contributions to campaigns. Some suggested that the agency regulate online advertising spending only above certain thresholds.

The FEC has scheduled public hearings later this month and is slated to announce final rules in the fall.
http://www.washingtonpost.com/wp-dyn...060401042.html


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Apple's Next Test: Get Developers to Write Programs for Intel Chips
John Markoff and Laurie J. Flynn

Steven P. Jobs took the stage at Apple Computer's Worldwide Developers Conference on Monday to tell more than 3,000 of his most enthusiastic fans - and occasionally also his harshest critics - that he was giving them a new homework assignment: to rework their Macintosh programs to run on chips from Intel.

Apple's decision to shift the Macintosh microprocessor business to Intel, a longtime rival, after more than a decade with I.B.M. was the latest bold maneuver in his eight years back at the Apple helm, a period in which he has reinvigorated the Macintosh line and overseen Apple's ascendancy in the digital music business.

Mr. Jobs said the company would begin incorporating Intel chips in some Macs reaching the market next year and largely complete the changeover by 2008. For the transition, Apple will offer a new version of its operating system, Macintosh OS X Tiger, that will run on both I.B.M. and Intel chips.

One immediate challenge will be to persuade Apple customers to continue to buy Mac computers based on I.B.M.'s PowerPC chip while they wait for the Intel versions to arrive. But in an interview after his presentation on Monday, Mr. Jobs said he believed that Apple would be able to navigate around that obstacle.

To hear Mr. Jobs describe it, the switch was a logical and straightforward business decision.

"It didn't feel to me like a long march," he said, describing a moment several months ago when he realized he would end his relationship with I.B.M. He said the decision seemed obvious to his small team of top managers. "There was a day when we looked at each other and said, 'this is the right thing to do.' "

Indeed, it was a contingency he had been preparing for since he returned to Apple, he said on Monday. He showed a satellite map of Apple's corporate headquarters and pinpointed the building where a secret engineering project, code-named Marklar, had been tuning Apple's software on Intel-powered computers bought off the shelf.

"Macintosh OS X has been leading a secret double life for the past five years," he said.

Apple had been counting on a version of the PowerPC processor that required less power and produced less heat, but had not gotten one from I.B.M. and its partner, Freescale Semiconductor. In addition, several analysts said they believed that I.B.M. had refused Apple's demands for deep discounts.

No financial details of the Apple-Intel deal were disclosed.

On Wall Street on Monday, both Apple and Intel shares moved down slightly. Apple's stock closed at $37.92, down 32 cents, while Intel's stock ended at $27.17, off 16 cents.

Yet a number of Wall Street analysts said the deal made sense. "My belief is that Apple had to do it," said Eugene Munster, an analyst with Piper Jaffray. "Clearly, they needed better availability, better pricing and a better development community." Mr. Munster has an outperform rating for Apple stock.

For his part, Mr. Jobs did not ascribe his decision to any pique with I.B.M., of which Apple remains a customer for other chips. Rather, he said he had become convinced that over the next three years Intel would win the race to deliver the most computer processing power per watt. He showed a chart projecting a significant advantage for Intel, which has struggled with heat problems in its own chips in recent years.

Several analysts said Monday that they were skeptical of such claims.

"We're not sure about whether Intel is that much better than A.M.D. or I.B.M.," said Richard Doherty, president of the Envisioneering Group, a consulting firm in Seaford, N.Y. The crucial factor in the deal was probably price, he said.

If outsiders are not true believers, however, Intel is. At the event Monday at the Moscone Center here, Paul S. Otellini, Intel's chief executive, gave Mr. Jobs a bear hug and said his company held no grudges for earlier Apple advertisements that poked fun at Intel's Pentium chips.

Moreover, Mr. Otellini was blunt in pointing out that although Apple's chip purchases might not make a significant contribution to his company's income statement, Intel was eager to move its technical innovations to market more quickly.

"It's a chance to reignite innovation," he said.

Indeed, despite Apple's small share of the personal computer market, the Intel-Apple partnership could affect the balance in the industry, providing Intel's labs with a channel beyond the Windows world of Microsoft - a longtime partner but one that Intel has periodically clashed with regarding competing technologies.

In his presentation today, Mr. Jobs painted a picture of a smooth technical transition from I.B.M. to Intel chips. He mustered support from two crucial Mac program developers, Microsoft and Adobe, whose executives said they were eager to move their programs to Apple's new computers.

Moreover, Apple unveiled a technology called Rosetta, a "dynamic software translation" tool that will make it possible for a user's existing programs to run unmodified on Apple's new Intel-based computers.

Mr. Jobs acknowledged that Rosetta was based in part on technology developed by Transitive Ltd. of Manchester, England, which has a novel approach to making it possible to run programs on disparate kinds of computers.

Al Gillen, research director at IDC, a market research company, said he was skeptical that the transition would be as smooth as Apple portrayed.

"They have a history of pushing platforms that is fairly disruptive," Mr. Gillen said. He pointed to Apple's move from its original Motorola 68000-based systems to systems using the PowerPC. Though Apple had promised the transition would be smooth for Mac users, "it was basically a 'repurchase' operation," he said, requiring new software for those purchasing the new computers. "Their concept of 'fairly easy' sometimes requires buying new things."

Mr. Jobs made it clear that he had no plans to sell Apple software to run on Windows computers. But several analysts said that because the Apple and Microsoft operating systems will be running on similar hardware, he would not be able to stop users from retrofitting Apple software to run on Windows computers.

As for the third-party developers of Mac software, the audience chosen by Mr. Jobs for Monday's announcement, most seemed to feel that he had forged a workable strategy, even though it will force them to revise their programs to run on the Intel chip.

Ray Slakinski, an independent Apple developer whose company, iPodderX, makes software for podcasting on the Macintosh, said Apple's strategy would not cause him any development delays. Apple has been reliable in providing developers with tools for smoothing major transitions, he said.

"It's a good sacrifice for them in the long term," he said of Apple's shift away from the PowerPC. Still, as a Mac user, he thinks the short term may be a bit bumpy. "I think Mac sales are going to take a hit for the next few months," he said. "I was in the market for a new laptop, but I'm holding off."
http://www.nytimes.com/2005/06/07/te...y/07apple.html


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Apple Vows to Make Podcasting Easier
Rachel Konrad

Apple Computer Inc. CEO Steve Jobs called podcasting "the hottest thing going in radio" on Monday and promised to make it easier for audiophiles to create and distribute the digital recordings.

Amateur and professional disk jockeys have established more than 8,000 podcasts, downloadable audio files that focus on everything from electronic gadgets to movies and astronomy. They can be played on computers or digital music players, such as Apple's popular iPod.

Business Week, Forbes, Disney and Sirius have podcasts, as do hundreds of individuals including wine aficionados, baseball fans and political junkies.

Productions range from stream-of-consciousness rants to slick shows and, unlike conventional radio broadcasts, podcasts have no time limits, deadlines or government oversight.

At a technology conference on Monday, Jobs previewed iTunes version 4.9. The software allows users to click on and subscribe to different podcasts, then automatically delivers the shows to any connected iPod - far less cumbersome than the third-party applications many listeners now need.

The newest iTunes will include a directory of podcasts, and creators will be able to register their shows with Apple's iTunes Music Store.

"We think it's going to take podcasting mainstream, to where anyone can do it," Jobs told the gathering of software developers.

Jobs' support for podcasting could make the phenomenon more popular, particularly if the iTunes store becomes the Internet's de facto repository of podcasts. Since its launch two years ago, the store has sold more than 400 million songs.

Last month, Jobs said podcasts on iTunes would initially be free. But he's been coy about whether Apple would allow podcasters to sell premium content through iTunes - a move that would make Apple's music service compete against Audible.com and other sites that feature unique content.
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Biggest thing maybe

Limbaugh Crows About Podcasting
Frank Barnako

The nation's No. 1 radio host says Steve Jobs doesn't know what he's talking about.

In a posting on his Web log, Rush Limbaugh disputed the Apple founder's statement that podcasting is the hottest thing in radio. Limbaugh countered: "I am the hottest thing in podcasting."

Limbaugh has begun offering podcasts of programs to subscribers of his online fan club. "This program is the hottest thing in podcasting," he claimed.

He added that he's thinking about bolstering the content distributed by file downloads to include a morning update and interviews he does for his newsletter. "Raw, unedited, just to see what these things sound like," Limbaugh said.

Blog networks cater to advertisers

Web loggers are hoping there's money in numbers. And so are Henry Copeland and John Battelle, two entrepreneurs who want to make it easy for advertisers to use blogs to reach customers.

Battelle, whose publishing credits include co-founding Wired and launching the Industry Standard magazines, said his next venture, Federated Media, could start this fall.

FM will be a group of 10 to 20 "high-quality, high-authority" technology blogs, selected personally by Battelle. They will include his own Searchblog and Boing Boing, which he oversees.

At the Online Media, Marketing and Advertising West conference in San Francisco, Battelle expected to complete a round of financing for the project this week, according to MediaPost Publications.

Battelle said he wants a federation of authors who've already found an audience, according to notes of his presentation published by Jason Calacanis of Weblogs Inc. "We'll work with the agencies to place the advertising," he said.

Meanwhile, Blogads.com has plowed that field for more than a year. Henry Copeland has been placing ads on blogs that have signed up with him. He recently began offering blogs by interest group.

"The bloggers themselves build/maintain the categorical groupings," he wrote on his log. There are 17 networks, including food, baseball and gossip. An advertiser can buy some or all of a category after reviewing a blog's traffic and ad rates. Organizing networks by interest makes selling blog advertising much easier, rather than pitching an advertiser on individual Web logs, Copeland said.

ITunes as popular as free services

Apple Computer's (AAPL: news, chart, profile) iTunes Music Store was used by almost 30 percent of households that downloaded music in March, according to researchers at NPD Group.

While the free peer-to-peer file sharing network WinMX was the most popular distribution source, by 2.1 million households, iTunes and LimeWire tied with 1.7 million households each. Paid a-la-carte music offerings like Napster (NAPS: news, chart, profile) and RealNetworks (RNWK: news, chart, profile) also placed in the top 10.

One of the music industry's questions has been whether paid download stores could compete with free file-sharing networks. "That question has now been answered," said Russ Crupnick, president of NPD's Music and Movies division.

"iTunes is more popular than nearly any P2P service. Digital download stores appear to have created a compelling and economically viable alternative to illegal file sharing," he added.
http://www.marketwatch.com/news/stor...&siteid=google


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Apple Launches iPod Recycling Program
Rachel Konrad

Apple Computer Inc. launched a recycling program Friday for its popular iPod, encouraging owners to bring their digital music players to Apple retail stores for free, environmentally friendly disposal.

The company has been under siege from environmentalists, who say the company hasn't done enough to promote recycling of its products, which often end up in landfills in the United States and in developing countries.

People who bring their iPods to one of about 100 stores nationwide will also receive a 10 percent discount toward the purchase of a new iPod. The discount is only good the day people drop off their older iPod, iPod mini or iPod photo.

Apple representatives declined comment Friday afternoon but referred to a news release, which emphasized that any hazardous material would not be shipped overseas for processing.

Apple has become the darling of the technology sector for its iconic digital music player, one of the hottest gadgets of the new millennium. But scorching iPod sales have also made it the target of the Computer TakeBack Campaign, which in January spearheaded a yearlong campaign to protest Apple's recycling efforts.

The aggressive environmental group, which last year badgered Dell Inc. until it significantly bolstered its recycling initiatives, held protests at Apple's Cupertino headquarters and at retail stores nationwide, and it's championed a letter-writing and e-mail campaign against the maker of Macintosh computers.

Apple doesn't charge consumers to recycle outdated electronics in Japan, Europe, Taiwan and South Korea, but environmentalists say the company is a significant contributor to the growing problem of electronic waste in the United States. IPods cost as little as $99 but contain lead and other toxins.

U.S. consumers retire or replace roughly 133,000 personal computers per day, according to research firm Gartner Inc. Roughly 400 million gizmos will be thrown out by 2010.

Apple's newest initiative only affects its smallest devices. The limited scope of the program prompted Gopal Dayaneni, sustainable technology program director at the San Jose-based Silicon Valley Toxics Coalition, to call the move "a nice baby step" to solving the problem of electronic waste.
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Apple Offers $50 Credit for iPod Batteries
Rachel Konrad

Andrew Westley had high hopes for his iPod, when he purchased the digital music player in 2001 and loaded more than five hours' worth of music for a cross-country flight. But the music died before the San Francisco attorney reached the East Coast - despite claims by Apple Computer Inc. that a fully charged iPod would play continuously for eight or more hours. Disappointed, Westley called a consumer rights attorney and later became one of eight people who sued the computer maker in 2003 over the iPod's battery failures.

As part of a tentative settlement announced this week, Apple agreed to give $50 vouchers and extended service warranties to as many as 2 million customers whose older iPods had batteries that needed to be replaced or didn't fully charge.

"I like Apple's products. I want to own their products and have confidence they stand buy their products," said Westley, 45, who also owns an iMac and volumes of Apple software. "This settlement helps me have confidence again that if I'm going to sink a bunch of money into their stuff, they'll do the right thing."

The settlement applies to consumers nationwide who bought versions of the digital music player through May 2004. Last year, Apple changed its iPod and now advertises battery life of up to 12 hours for its 20-gig model.

Cupertino, Calif.-based Apple confirmed the settlement agreement Thursday but would not comment.

Sales of the iPod have soared since its debut in 2001. With some versions of the device costing $400, the iPod has been a windfall for Apple.

According to the settlement's terms, people who fill out a claim form are entitled to receive $50 redeemable toward the purchase of any Apple products or services except iTunes downloads or iTunes gift certificates. They can redeem the voucher within 18 months of final settlement approval at any bricks-and-mortar Apple Store or online.

Consumers who had battery troubles can also get their battery or iPod replaced. Apple sells replacement batteries for $99, and it also replaces or repairs defective products that are returned within one year. The class-action settlement, if approved by a judge later this summer, extends the warranty to two years.

Consumers who file a claim must have a receipt.

A judge in California's Superior Court for San Mateo County initially approved the settlement last month and consumers began receiving notifications by e-mail and letters this week. A judge will hold another hearing Aug. 25 to give final approval.

"We think all the terms of the settlement are going to stick," said Eric H. Gibbs, a partner at San Francisco law firm Girard Gibbs & De Bartolomeo LLP, which represented several plaintiffs.

It's unclear how many consumers will file claims. Plaintiffs' attorneys did virtually no advertising when they filed the suit, but details spread to Internet sites and blogs.

Within a year, lawyers had received e-mails and calls from more than 12,000 angry iPod owners.

Consumers will be notified of the tentative settlement in three ways: by e-mail, by letters, and through advertisements in USA Today and Parade Magazine in the next month.
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iPod Inventory Concerns Weigh on Apple Shares

Shares of Apple Computer Inc. fell about 5 percent on Friday, fueled by an Internet report of swelling inventory of its iPod digital music players.

Apple, meanwhile, is preparing for a conference next week that may see the launch of a new version of its iPod Shuffle player with more capacity, one analyst said.

The decline in Apple shares came after appleinsider.com, a Web site that discusses issues related to the company's products, said Apple is "overstocked on most iPod models with about a month remaining in its third fiscal quarter." The report cited unnamed sources.

"Apple is believed to be sitting on its most significant inventory of iPod Shuffles since the player hit the market in February," the Web site said. "According to reliable sources of information, tens of thousands of iPod Shuffles remain idle in the channels this week alongside a good number of iPod photos."

An Apple spokesman said the company does not comment on "rumors and speculation."

"I think (the Web report) is right; there is inventory there, and we are only looking for a flat quarter" for iPod unit shipments compared with the period ending in March, said Gene Munster, an analyst with Piper Jaffray.

Apple sold 5.3 million iPods, accounting for 31 percent of revenue, in the second quarter.

"But (Apple's) quarter is going to be fine. There will be an upside to revenue and more upside to earnings," Munster said, adding that growing iPod supplies are not surprising since the company did not introduce any new products during the quarter, and inventory caught up to slowing demand for the gadgets.

On Monday, Apple may discuss faster microchips for its Macintosh computers and possibly unveil an iPod Shuffle music player with more song storage capacity, said Munster. Chief Executive Steve Jobs will take the stage in a keynote at the Worldwide Developer Conference, a traditional venue for Apple product launches.

Current Shuffle models come with either 512 megabytes or 1 gigabyte of memory, enough to store about 120 songs or 240 songs, and cost $99 and $149, respectively.

Jobs could also discuss plans for a low-power version of International Business Machines Corp.'s (IBM.N: Quote, Profile, Research) PowerPC 970 processor, which Apple calls the G5, said Kevin Krewell, editor in chief of the Microprocessor Report.

"The bigger and more important challenge is building a low-power version of the 970," Krewell said. "The G4 (chip) in the notebook is getting long in the tooth."

Apple's shares slipped $1.87 to $38.17 on Nasdaq.
http://www.reuters.com/newsArticle.j...toryID=8694988


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Laptops Outsell Desktops for First Time
Greg Sandoval

In a sure sign that the era of mobile computing has arrived, notebooks have for the first time outsold desktops in the United States in a calendar month, the research firm Current Analysis says.

After tracking sales from a sampling of electronics retailers, Current Analysis says notebook sales accounted for 53 percent of the total personal computer market last month, up from 46 percent during the same period last year.

San Diego-based Current Analysis does not follow worldwide personal computer sales.

Spurring demand for notebooks is their overall price drop as quality has improved, says Sam Bhavnani, senior analyst for Current Analysis. "Just a few years ago, the performance of notebooks was nowhere near where it is today," he said.

Notebook prices fell 17 percent during the past year while desktop prices dipped only 4 percent. Some of the features common in most notebooks are longer-lasting batteries, CD burners and wireless capability.

The computing crowd is increasingly requiring mobility.

Last year, 80 percent of notebooks offered wireless; this year, it's 95 percent, Current Analysis says.

"There used to be a time when people expected a reply to an e-mail within a couple of days. Now they expect a response within 24 hours. People want to stay connected wherever they are," said Bhavnani.

Notebooks will continue to grab bigger shares of the PC market, Bhavnani predicted. "You're not going to see the desktop go away though."
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More Nursery School Children Going Online
Ben Feller

Before they can even read, almost one in four children in nursery school is learning a skill that even some adults have yet to master: using the Internet.

Some 23 percent of children in nursery school - kids age 3, 4 or 5 - have gone online, according to the Education Department. By kindergarten, 32 percent have used the Internet, typically under adult supervision.

The numbers underscore a trend in which the largest group of new users of the Internet are kids 2 to 5. At school and home, children are viewing Web sites with interactive stories and animated lessons that teach letters, numbers and rhymes.

"Young students don't differentiate between the face-to-face world and the Internet world," said Susan Patrick, who oversees technology for the department. "They were born into the age of the Internet. They see it as part of the continuum of the way life is today."

At a preschool age, children need some grown-up help to get online, said Francie Alexander, chief academic officer for children's book publisher Scholastic Inc.

One of their favorite computer activities is writing an e-mail to a grandparent, said Alexander, author of a children's guide to the Internet.

"It's great for letter recognition," she said. "Everybody likes to get mail and little kids don't have great tolerance for waiting. So the whole idea that they can write grandma and get an e-mail back a half-hour later saying, 'I got your note' - they love that."

Scholastic has a section of its Web site that is intended just for children, who go online to read, write and play with "Clifford the Big Red Dog." PBS Kids Online has more than a dozen educational Web sites for preschool children, including "Sesame Street" and "Barney and Friends."

Overall computer use, too, is becoming more common among the youngest learners. Department figures show that two-thirds of nursery school children and 80 percent of kindergartners have used computers.

At the Arnold & Porter Children's Center in Washington, 4- and 5-year-olds have the option to spend time on a computer, working in small teams. They learn basic problem-solving and hand-eye coordination, but the social component of working with classmates on computer exercises is just as important, said Sally D'Italia, director of the center, which a law firm offers for its employees.

"It helps them become more relaxed, more adventurous, and more willing to take risks as they learn," she said. "With adults, we're still afraid that we're going to blow up the computer. You never know if you're going to push the wrong button and lose all your data."

Virtually all U.S. schools are connected to the Internet, with about one computer for every five students, the government reports. Many older students are often far ahead of their teachers in computer literacy and they know their younger siblings are gaining on them.

As one high school student told Patrick recently: "You grew up with music in your blood. Well, we have technology in our blood."

Educators say such access needs scrutiny.

Beyond blocking inappropriate content, schools must be certain the lessons they choose are based on research and geared to the developmental stage of the children, experts say.

"Kids have a tremendous ability to expand their learning, and a computer is just one tool," said Mark Ginsberg, executive director of the National Association for the Education of Young Children. The potential danger, he said, is putting 3- and 4-year- olds in front of a computer lesson that demands graphic skills or word-recognition knowledge for which they are not ready.

Still, Ginsberg said, more educators are using technology creatively - and appropriately.
http://hosted.ap.org/dynamic/stories...CTION=BUSINESS


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Israel Uses Sound Technology on Rioters
Josef Federman

Israeli army on Friday unveiled a new crowd-dispersal device emitting painful bursts of sound at a special frequency to help break up a violent Palestinian demonstration, military officials and witnesses said.

Israeli military officials confirmed soldiers used a new "nonlethal" tactic in the West Bank village of Bilin, where hundreds of demonstrators rallied against Israel's separation barrier.

The officials, speaking on condition of anonymity under army regulations, said the weapon uses special frequencies to disperse crowds. No further details were immediately available.

An Associated Press photographer said a military vehicle arrived toward the end of the demonstration, which lasted several hours and became violent at times.

Located about a quarter mile from the demonstration, the vehicle emitted several bursts of sounds, about one minute in length each time. Although the sound was not loud, it caused people to cover their ears and grab their heads in discomfort.

About 400 people, including Palestinians and foreign and Israeli activists, participated in the demonstration, marching toward a site where Israel is building its West Bank separation barrier.

The crowd was prevented from reaching the site, and began rioting and throwing rocks at soldiers, the army said. One soldier was moderately wounded in the eye.

In addition to the sound machine, soldiers used other means to disperse the crowd, including clubs and stun grenades.

Israel has completed about one-third of the planned 425-mile barrier, which it says is necessary to keep out suicide bombers from the West Bank. Palestinians say the barrier is a thinly veiled land grab because it dips into the West Bank in some areas.
http://hosted.ap.org/dynamic/stories...CTION=BUSINESS


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India Gets Low-Cost Windows in Hindi
S. Srinivasan

Microsoft Corp. launched this week a low-cost, stripped-down version of its Windows XP operating system in India targeting users who don't speak English.

The U.S.-based software giant hopes to sell 200,000 Hindi copies the first year, said marketing and business operations director Ranjivjit Singh of Microsoft's Indian division. Nine other languages will be added later.

"It is aimed at first-time users looking for simple, easy and local language-capable software," Singh said.

He declined to give the price for Windows XP Starter Edition, saying it will be bundled with entry-level personal computers that cost $432. Windows XP's full version sells for about $85 in India.

India is the largest of the five emerging computer markets that Microsoft is targeting with its stripped- down operating system. The others are Indonesia, Malaysia, Thailand and Russia.

India has only 16 million computers for more than a billion people, but sales are growing 35 percent each year.

Microsoft enjoys a 90 percent market share in India. It hopes cheaper software will help reduce piracy in a country where only one in five computers use more expensive licensed software. Microsoft also faces a growing threat from the Linux non-proprietary operating system.

The XP Starter Edition can run only three programs simultaneously, lacks capabilities for home networking and multiple users and has lower-resolution graphics than more expensive versions.
http://hosted.ap.org/dynamic/stories...CTION=BUSINESS


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Lurid Anti-P2P Propaganda from Korea

Elementary Schoolkids Peddling Online Porn

Children as young as nine are displaying a lively interest in online porn. Seoul Metropolitan Police Agency recently charged a 10-year-old with merging the face of a famous actress with the body of a porn star and posting eight such pictures on a website he created. “It was because it lures a lot of people to my site,” the young pornographer explained.

Police on Wednesday also busted another elementary school student, a nine- year-old fourth grader, and four students in the first year of middle school who created their own community sites and distributed pornography. Since the suspects were all under age, criminal charges were dropped, and they were dismissed after being given a stern talking-to.

Peer-to-peer (P2P) file sharing sites are thought to be the main source of pornography for youngsters, since they do not require age verification process. The Chosun Ilbo logged on to a site and typed “elementary school student” into the search engine. The server found 146 video clips and image files. Only three of them were not of a pornographic nature. The rest bore titles like “Japanese elementary school girl prostituting herself”, “Elementary school boy and girl alone in a room.” and “Elementary school student having oral sex.” One was a two-minute, 38 second clip of two elementary school students having sex.

Chat rooms on portal sites also lure elementary school students to pornography. Around 2:00 p.m. is the “rush hour” for elementary school students on chat sites, as they have just come home from school. At 2:00 p.m. on Wednesday, on a site popular among elementary and middle school students, it was not difficult to find chat rooms under sexual titles like, “Only for elementary school students who are good at flirting,” and “Only for little girls who want sex with middle-aged men.”

According to a survey conducted by the National Youth Commission of 171 elementary school students in March 2004, 14.1 percent had uploaded or downloaded porn. Of 51 respondents who had visited porn sites, about 20 were frequent visitors, who visited them more than once a week.

Im Hye-sung, an official at the National Youth Commission, said that even though children are vulnerable to pornography on the Internet, there is neither legal basis nor technical means of stopping them from logging on to P2P and chat sites.
http://english.chosun.com/w21data/ht...506010026.html


An Internet Banking Hacking and Robbery
Jae-MyoungLee

For the first time in Korea, a bank’s Internet banking system was hacked and a large amount of money was robbed.

On June 3, the Cyber Crime Investigation division of the Seoul Metropolitan Police Agency applied for an arrest warrant against Lee (20), and Kim (19), a woman living with Lee, for allegedly withdrawing (defrauding on the Internet) 50 million won from a bank account after learning a person’s personal identification number by using a hacking program that is readily available by anyone.

In addition, Lee’s younger brother (17), who made a banknote to Lee, and his male friend Kim (17) were convicted without physical detention on the same charge.

According to the police, Lee, a high school dropout, posted an article named “money tech” in an Internet community of a well-known portal site at an Internet café in Chuncheon City, Gangwon Province at the beginning of last month, and hacked the computer of Kim (42, female), who clicked on the article.

Lee made a hacking program, “net devil,” to be automatically installed on the computer of Kim, who read his article.

“Net devil” is a program that shows the intact contents input by wording to the person who installed it and is easily available on foreign Internet sites or on P2P (Peer to Peer: sharing a file between individuals).

Lee found out Kim’s bank, account number, ID, personal identification number, certificate number, security card number, logged into Kim’s Internet banking account and transferred 50 million won to five banknotes held by Kim (male) at around 6:00 p.m. on May 10. Lee then had his living partner, Kim, withdraw the money.

Kim, who fell victim to the case, reported the robbery to the police after learning that her money had been withdrawn from her account at around 10:30 p.m., four and half hours after the incident.
http://english.donga.com/srv/service...=2005060493008


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ACLU To Challenge Utah Porn-Blocking Law
Declan McCullagh

Opponents of a Utah law that requires Internet service providers to offer to block Web sites deemed pornographic will file a lawsuit Thursday to overturn the measure.

The American Civil Liberties Union of Utah is seeking an injunction in federal district court in Salt Lake City as part of its lawsuit claiming that the Utah law violates state residents' rights to free expression and unlawfully interferes with interstate commerce.

The controversial legislation requires the attorney general to create an official list of Web sites with material that is deemed "harmful to minors" and that is "not access restricted." Under the law, Internet providers in Utah must provide their customers with a way to disable access to sites on the list or face felony charges.

Other states, including New Mexico and New York, have attempted to target sexually explicit Web sites but have been rebuffed by courts on First Amendment grounds. Because Utah's law regulates Internet providers rather than sex-themed sites, it represents a different approach that theoretically could fare better--though a similar law in Pennsylvania was rebuffed last year.

Dani Eyer, executive director of the Utah ACLU, said in a telephone interview that plaintiffs in the lawsuit will include Internet service providers, Utah content creators, local booksellers and the American Booksellers Association. The Center for Democracy and Technology, a Washington, D.C.- based nonprofit group, is co-counsel on the case. The team of lawyers will meet with the attorney general on Thursday afternoon to discuss halting enforcement of the law until a trial can be scheduled, Eyer said.

The Utah ACLU wrote a letter to Republican Gov. Jon Huntsman urging him to veto the measure "because it is riddled with constitutional infirmities." But Huntsman signed the bill in March, and a representative said at the time that the governor was not concerned about any legal challenges.

The Utah law says: "Upon request by a consumer, a service provider may not transmit material from a content provider site listed on the adult content registry." A service provider is defined as any person or company who "provides an Internet access service to a consumer," which could include everything from cable companies to universities, coffee shops and homes with open 802.11 wireless connections.

Also targeted are content providers, defined as any company that "creates, collects, acquires or organizes electronic data" for profit. Any content provider that the Utah attorney general claims hosts material that's harmful to minors must give it a rating or face third-degree felony charges.

Lobbying group NetCoalition, whose members include Google, Yahoo and News.com publisher CNET Networks, wrote a letter to the Utah Senate saying the legislation could affect search engines, e-mail providers and Web hosting companies. "A search engine that links to a Web site in Utah might be required...to 'properly rate' the Web site," the letter warned.
http://news.com.com/ACLU+to+challeng...3-5738964.html