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Old 31-07-03, 10:57 PM   #1
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Default Peer-To-Peer News - The Week In Review - August 2nd, '03

Grave Misperceptions

Archimedes was to have said, “Give me a lever long enough and I can single-handedly move the world.” While undoubtedly true in a sitting around and shooting the breeze theoretical sense, in a real sense it fails miserably on too many counts to mention, not the least of which being a lever that size wouldn’t get out the door of the biggest of Home Depots nor more to the point slip into the back of the most outlandishly oversized (but surprisingly small interior-wise) Hollywood Hummers.

This may be a problem with Hollywood Moguls in general; no matter how big and influential they think they are in reality their power is illusory - Hollywood makes shadows after all - they don’t make the waves; it’s the people who still do that. Hollywood’s lucky if they’re able to stay on top of the swells without falling off and getting drowned, but they forget and all to often fall into the trap of believing that their record or movie is so important they can leverage it into immediate social change. Would if it were ever thus.

It’s not.

That’s never more clear than today as we witness this amazing spectacle of sheer aggressive, self destructive Hollywood hubris play out across the courts and the country. Each day it becomes more apparent that some in Hollywood actually think they can stop file sharing, and do so by suing their customers. Then presumably once that’s accomplished get those same customers to support them by spending money on their products! They’ve got it backwards.

Each day this is allowed to continue creates real and lasting damage to the customer base. Hollywood is alienating customers they will never get back, some of their very best, the biggest spenders, the ones they can ill afford to lose. It’s like they tore a page out of some Stalin era playbook for the loyal party apparatchik facing a decline in the 5-year sales plan – circa 1948. “Number one, Terrorize your customers! Number two, Arrest as many as you can!” Is this anyway to run an industry? Get real people and fast, or you’re going to have as much success as the Soviets did with their system of fear. I can’t repeat this often enough to those executives responsible: You are destroying the music industry. You are dancing on the edge of a razor blade and your customers are getting this close to banning your products from their homes. Permanently.

Beware. Your lever is much smaller than you realize.



Pirates of the Internet

The bill says if you share a single tune with your pals online—as millions do every day—you are a felon. Penalty: up to five years in jail
Steven Levy

Last month I attended a hearing of the Senate Judiciary Committee with an intriguing title: “The dark side of a bright idea: Could personal and national-security risks compromise the potential of peer-to-peer file- sharing networks?”

I CERTAINLY WAS AWARE that some members of Congress wanted to snuff out the grass-roots phenomena of people’s swapping copyrighted songs on the Net. But I assumed that the crime of file-sharing, joyfully committed by an estimated 60 million pirates, was mainly a problem of lost revenues for the music industry. Sen. Dianne Feinstein, giving the opening testimony, argued otherwise, calling file-sharing networks a grave security risk to this nation. In reality, the hearing was nothing but one of several signs of a new hardball offensive against file-sharing for the same old reasons: protecting the business model of the record labels.

What was the alleged national-security issue? Strictly yellowcake. Researchers testified that because of a confusing interface in file-sharing services like Kazaa, a clumsy user could inadvertently expose private files to everyone on the network. In theory, this could even happen to a government worker using Kazaa for personal use on an official computer —thus exposing our deepest secrets. No one was able to cite an instance where a government secret was actually exposed by this method.

By the end of the session, the only committee member in attendance, chairman Orrin Hatch—himself a songwriter who sells CDs on his personal Web site—zeroed in on what really bugged him: people sharing copyrighted songs on the Internet without paying for them. Then he ran an idea by one of the panelists: what if you had a system that could detect whether people were getting songs without paying for them and could warn those infringers that what they were doing was wrong? And then, if they didn’t stop, the system would remotely “destroy” their computers.

No one’s interested in destroying people’s computers,” said the panelist.

“Well, I’m interested in doing that,” said the senator. “Warn them, do it again, and then destroy their machine! There’s no excuse for anyone violating our copyright laws.”

Fortunately Senator Hatch hasn’t yet codified his Dr. Strangelovean no-due-process piracy antidote into upcoming legislation. But in the House, Reps. Howard Berman and John Conyers have introduced a bill that encourages a different approach: jail ‘em! Among other provisions, the bill lowers the bar for criminal prosecution to the sharing of a single music file and allocates $15 million to go after copyright offenders. Representative Berman says that he anticipates that prosecutors will go only after someone who, knowing the consequences, uploads massive amounts of music. But the bill says in black and white that if you share so much as a single tune with your pals on the Internet—as millions do every day —you are a felon. Penalty: up to five years in jail. (Better fill up your iPod before you go.)

Meanwhile the Record Industry Association of America, the trade and lobbying arm of the big music labels, last week sent out hundreds of subpoenas to Internet service providers and universities to find the identities of those sharing music so it can drag them into court and sue them for thousands of dollars. Is suing your customers the best way to run an industry?

My guess is that the vast majority of those 60 million file sharers would never steal a physical object from the store. In a mixture of self-interest and rebellion they’ve taken the measure of the record industry’s karma (overpriced CDs, a history of ripping off artists), noted that stealing files isn’t like stealing stuff (maybe they’ll buy a disc later) and concluded that file-sharing isn’t that bad.

Carey Sherman, president of the RIAA, and his buddies in Congress think the time for patience is over. “We’ve reached a point where we have a legitimate marketplace for downloading music, and we want to give it a chance,” says Sherman, referring to the spiffy services like Apple’s iTunes Music Store, the new Buy.Com store and subscription services like Rhapsody. But the game is just starting, and the best way to make sure that these services come up with compelling innovations is to match them off against the Kazaas of the world, which are far from perfect (the quality is erratic, they put spyware on your computers, they’re loaded with porn). You can compete against free—ever hear of bottled water?

Ultimately the Internet is going to be great for music lovers, artists and even the record labels, if they are willing to hang loose while new business models emerge. But right now the RIAA and its congressional water carriers are hitting the wrong notes. It makes no sense to bring thousands of people into the dockets—and maybe the prison system—for turning on a friend to the fuzz tones of the White Stripes or the inspirational melodies of Orrin Hatch without a license. There are better things for prosecutors and the courts to focus on.

Like real national security.



SBC Fights Back over RIAA Subpoenas
Jay Lyman

Resistance to the subpoenas from ISPs likely will be limited to carriers such as Verizon and SBC -– companies with the deep pockets required to go the legal distance with the RIAA. After receiving nearly 200 subpoenas to turn over information about users of its Internet service, communications giant SBC has filed suit against the Recording Industry Association of America (RIAA), calling the subpoenas a misapplication of copyright law.

In a U.S. District Court complaint, filed by SBC's Pacific Bell Internet Service in San Francisco, the communications company claimed the RIAA is wrongly using the subpoena powers of the Digital Millennium Copyright Act (DMCA).

The RIAA rejected the complaint and reiterated its intent to use the subpoenas to seek out individuals who are allegedly engaging in copyright infringement over the Internet.

Yankee Group senior analyst Mike Goodman told TechNewsWorld that while larger Internet carriers, such as Verizon and now SBC, are the only ones to have challenged the RIAA subpoenas, none of the Internet providers involved wants to provide the names and information of its customers.

"The bottom line is that no ISP wants to be in the policing position they've been put into," Goodman said.

In an effort to discover the identities of peer-to-peer (P2P) file-sharing users, the RIAA has sent out an estimated 1,000 to 2,000 subpoenas to ISPs across the country.

The RIAA would not comment on the number of subpoenas served or ISPs contacted, but indicated it will continue to seek user identities through ISPs.

SBC spokesperson Joe Izbrand told TechNewsWorld that the company has received about 200 subpoenas from the RIAA in the past two weeks.

SBC said it filed the complaint -- which seeks a court declaration that the RIAA subpoenas are overly broad and were issued from the wrong district -- to protect the privacy of its customers.

"We're making the argument that the DMCA subpoena power is being misapplied," Izbrand said. "Anyone can request private information of someone over the Internet [using the subpoenas]. We believe it's a threat to the privacy rights of our customers."

SBC said the intent of the lawsuit is to "put the issue before the appropriate court so the safety and privacy rights of customers and the interest of copyright owners can be balanced."

The RIAA, meanwhile, rejected the SBC claims and stood firm on its intent to pursue the names of copyright infringers who use P2P applications and networks, including Kazaa, Grokster and Morpheus.

"We are disappointed that PacBell has chosen to fight this, unlike every other ISP, which has complied with their obligations under the law," the RIAA said in a statement. "We had previously reached out to SBC to discuss this matter, but had been rebuked.

This "procedural gamesmanship," the RIAA concluded, "will not ultimately change the underlying fact that when individuals engage in copyright infringement on the Internet, they are not anonymous and service providers must reveal who they are."

Electronic Frontier Foundation senior staff attorney Fred von Lohmann told TechNewsWorld that ISPs must respond to the subpoenas under current DMCA law. The courts recently sided with the RIAA when Verizon challenged the subpoenas, but that case has been appealed.

Von Lohmann expressed concern that Internet users, who might not be notified that their ISP has been subpoenaed, are "essentially presumed guilty until proven innocent."

He also said the RIAA apparently is issuing more subpoenas than it actually needs for potential legal cases against Internet users.

"The dragnet is being cast much more widely than the actual lawsuit is going to be," he noted.

How Far, How Much?

Yankee's Goodman said the Internet file-sharing battle highlights the conflicting set of laws that cover copyright protection and privacy.

He noted that resistance to the subpoenas from ISPs likely will be limited to carriers such as Verizon and SBC -– companies with the "deep pockets" to go the legal distance with the RIAA.

"I wouldn't anticipate this triggering a slew of lawsuits," Goodman said. "But from the RIAA side -– how many cases can they run simultaneously? At what point can the RIAA continue to support its legal position? How good is winning all of it if you end up bankrupt?"


Earth Station 5 Declares WAR Against the Sex Industry
Press Release

FREE Music, FREE Movies, FREE Software and Now FREE Sex Being Beamed By Earthstation 5 to the Humans for Free

Earthstation 5 today declares war against the sex industry for all the sex located on the internet. "One way to put these sex companies out of business is by giving it away for FREE," said Ras Kabair, president of Palestine based EarthStation 5.

Effective immediately, Earthstation 5 will give away ten FREE sex channels of live sex and the naked news for FREE to the world. There will be no CREDIT cards, no phone dialers, no pop-up ad's, no spyware and there will be no other form of payment required by any user.

Earthstation 5 has grown from a simple P2P network to the largest P2P portal in the world with an average of 11,536,240 simultaneous users online at any given moment of the day or night. Currently, new users are downloading Earthstation 5 software located at http://www.earthstation5.com/ on a average of 500,000 times per day in the 18 languages that Earthstation 5 currently offers.

One-reason users are using Earthstation 5 instead of the other peer to peer (P2P) programs is because of our stealth technology. Other P2P company's claim to have security, but in the end we are the only ones that can't be breached! We wrote our software with security as our top priority. On top of that, all the other P2P companies have to worry about being sued by the Motion Picture Association of America (MPAA) and the Record Industry Association of America (RIAA). At the Jenin Refuge Camp, we don't worry about those kinds of problems.


Copying Is Theft - And Other Legal Myths
Mark Rasch

Opinion As the war over P2P downloading heats up, and the record companies launch the novel marketing technique of suing their customers, I think it is an appropriate time to settle some of the pervasive myths about U.S. copyright law which fuel both sides of the debate, writes Mark Rasch, SecurityFocus columnist and former head of the Justice Department's computer crime unit.

The current state of the battleground is that the RIAA, having lost a lawsuit against Kazaa, Morpheus and others for copyright infringement, and having won a lawsuit against Verizon, is actively pursuing subpoenas against various ISPs to force them to pony up the names and addresses of the uploaders and downloaders themselves.

Several universities have invoked a federal law aimed at preventing the release of student academic records (and significantly narrowed by both the USA-PATRIOT Act and the U.S. Supreme Court last year) to refuse to provide information on their students' downloading activities to the RIAA. Meanwhile, the P2P providers, large and small, in an effort to provide "customer service," are utilizing a variety of anonymizing techniques -- including proxy servers, encryption, and various UDP ports -- to help prevent the RIAA from successfully subpoenaing these records. Undaunted, the RIAA has vowed a full- scale assault -- even against those who share a single copyrighted song.

All of these battles are against the backdrop of U.S. copyright law, which provides some protection to the "author" of an original work that is fixed in any tangible medium of expression. But there seems to be a great deal of confusion about the scope of protection under this law.

The U.S. Constitution permits Congress "to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." Under intensive lobbying by the movie, publishing and recording industries, Congress has nudged that "limited" time from the original 17 years in 1789, to the publisher's life plus 75 years today -- a time limit that the U.S. Supreme Court recently approved.

For this "limited" time, Copyright law essentially grants the author the exclusive rights to copy or reproduce the work, make derivative works, distribute copies of the work (sell, give away, lease or license), and to perform the work, and, of course, to keep others from doing the same.

Simple enough? Not hardly.

The RIAA, MPAA and copyright holders describe P2P users as "pirates" - invoking images of swashbuckling pre-teens hauling up the Jolly Roger and stealing intellectual property in the dead of night. New ads announced by MPAA President Jack Valente impress the idea that "copying is stealing" and that someone who burns MP3s is no different from those who slip a CD under their shirt at the local Tower Records.

But technically, file sharing is not theft.

A number of years ago, the U.S. Supreme Court dealt with a man named Dowling, who sold "pirated" Elvis Presley recordings, and was prosecuted for the Interstate Transportation of Stolen Property. The Supremes did not condone his actions, but did make it clear that it was not "theft" -- but technically "infringement" of the copyright of the Presley estate, and therefore copyright law, and not anti-theft statutes, had to be invoked.

So "copying" is not "stealing" but can be "infringing." That doesn't have the same sound bite quality as Valente's position.

Complicated matters further, copying is not always infringing. If the work is not copyrighted, if you have a license to make the copy, or if the work is in the public domain, you can copy at will. Also, not all "copies" are the same. Say you buy a CD and play it on your computer -- technically, you have already made a "copy" onto the PC in the process of playing it, but that's not an infringement.

Making an archive copy is okay too, as long as your retain the original. What about a transformative copy -- say, making an MP3 out of a CD? You can do that, so long as you retain the original work. If the original CD get scratched, damaged or lost, you can probably burn the MP3 back to a CD (sans the really "sucky" titles), but this is not entirely clear.

So the RIAA and MPAA's claims that all "copying" is "stealing" are much overhyped.


Consumer Alert: Copy Controls Crackdown

Battle rages on several fronts, but technology offers answers for both sides.
Frank Thorsberg

Multimedia lovers find themselves caught in a digital vise these days, as Hollywood tightens its copyright controls on movies, games, and music on DVDs and CDs--most recently squeezing customers accused of copyright infringement in court. But even well-meaning consumers are feeling pressured (and baffled) by conflicting messages about what is allowed. Meanwhile, the courts and Congress mull legal answers to the ongoing digital rights struggle.

The ISP Verizon Online recently buckled and gave the Recording Industry Association of America (RIAA) the names of four customers suspected of downloading large quantities of music from file-sharing sites in violation of the Digital Millennium Copyright Act. More than 40 privacy groups and ISPs are joining Verizon in fighting procedural aspects of the copyright holders' demands. But it is clear that customer privacy has sustained a hit.

The RIAA also recently settled with four university students who ran Napster-like file-sharing networks campuswide. Each agreed to pay $12,000 to $17,000, although the trade group had originally sought up to $150,000 per song. The RIAA warns that it may not settle on such lenient terms in the future.

For the moment, peer-to-peer networks sporting a copy-for-free business model continue to thrive despite being mired in lawsuits. But the line demarcating the lawful use of file-sharing technology may be shifting.

In April, a federal judge in Los Angeles dismissed an RIAA suit against file-sharing services Grokster and StreamCast Networks (maker of Morpheus), holding that peer-to-peer services are not liable for illegal file-trading over their networks. The RIAA is appealing the decision.

"That's the most important victory of the last three or four months," says Cory Doctorow, outreach director for the Electronic Frontier Foundation. Doctorow notes that it reinforces the Supreme Court's so-called Betamax decision of 1984, in which the court refused to ban legitimate products or services simply because they could also be used for illicit activities.

Even the act of copying DVD movies has a chance to prevail in court: 321 Studios is taking on Hollywood by claiming the right to market its DVD copying software. Its preemptive lawsuit against the major movie studios challenges the Digital Millennium Copyright Act's constitutionality. At the heart of the case--taken under advisement by a federal judge in May--is consumers' right to make back-up copies of DVDs.

Congress offers the public little hope of quick action, but copy-control legislation is nevertheless in the spotlight.

Several pieces of legislation would require labeling of CDs or DVDs that use digital rights management technology (also known as DRM). Other proposed measures would affirm consumers' right to back up digital material or to donate it, and try to balance fair use and copyright.

Also, the DMCA is undergoing its periodic review, facing several complaints about its regulation of copyright.

Ultimately, technology provides new opportunities for both vendors and users. Only 20 years ago, Hollywood feared piracy with the advent of VCRs--but instead prerecorded videotape has become a lucrative market.


Keeping Up With The Digital Revolution

The European Commission's Information Society DG has published a report containing recommendations on how heritage institutions, such as museums and art gallieries, can keep up with the demand to view their collections in digitised electronic form. National governments are advised to develop a coordinated appraoch to digitisation, while the Commission is encouraged to facilitate the participation of smaller institutions in relevant research programmes.


File-Sharers Fight Legal Moves

File-sharers can find out if they are being targeted by the US record industry via a website created by civil liberty activists. The Electronic Frontier Foundation, (EFF), has set up an online database which allows people to check if a subpoena has been issued for them by the Recording Industry Association of America, (RIAA).

"We hope that EFF's subpoena database will give people some peace of mind and the information they need to challenge these subpoenas and protect their privacy," said the group's senior lawyer Fred Von Lohmann.

Hundreds of subpoenas have been sent to suspected file-sharers as part of the industry's battle to stop people swapping songs over the internet. Using the EFF site, people can check the name they used for file-sharing against a list of subpoenas issued in a Washington court. If someone finds their name in the database, they can look at an electronic copy of the subpoena. This includes the name of the internet service provider, a list of songs pirated and the internet address of the user. The EFF site takes its information from a US justice system called Pacer. Its online database lets people to gain a wide range of information about ongoing cases.

By the end of last week almost 900 subpoenas had been issued, with the courts granting more than 75 every day. The subpoenas are part of the industry's battle to clamp down on music piracy, spearheaded by the RIAA. They will force telecommunications companies to identify file-swappers, who are usually only known by their online user names. People charged with piracy could face lawsuits for damages ranging from $750 (£480) to $150,000 (£96,100), which are applicable under US copyright laws.

"The recording industry continues its futile crusade to sue thousands of the more than 60 million people who use file-sharing software in the US," said Mr Von Lohmann.

The EFF is also offering advice to file-sharers who are facing legal action. Together with the US Internet Industry Association, it has set up a website called subpoenadefense.org which has details of lawyers and other legal resources. The civil liberties group is also providing tips on how to avoid being sued by the record industry.


Experts Sharing Tips To Help Defend Against File-Sharing Lawsuits
Benny Evangelista

As the recording industry tries in unprecedented fashion to enforce copyright laws against individual consumers, legal experts say people can take several steps to try to avoid costly litigation.

For starters, legal experts advise file-sharers to stop sharing any unauthorized files. That action could, though not necessarily, eliminate the need for more costly legal steps if a file-sharer learns he or she has been caught in the Recording Industry Association of America's copyright infringement dragnet.

It's possible the courts could one day rule file-sharing is legal or a consumer backlash could force Congress to change current copyright laws. Before that happens, however, the legal costs for an individual battling the powerful RIAA could be devastating.

"What I think they're going to do is start suing moms and dads and families across America," said San Rafael attorney Ira Rothken. "They could lose their house or lose their ability to send their kids to college. That is not the intent of copyright statutes, to bankrupt a middle-class family."

The RIAA, the Washington trade group that represents the world's biggest record labels, has filed more than 900 subpoenas since June 26 to gather information to file civil lawsuits against hundreds of users of file-sharing programs.

Legal experts say this is the first time copyright law has been used to crack down on average consumers. Previously, copyright battles have typically pitted companies against other businesses, or against people who have intentionally tried to make money pirating copyright-protected material.

Millions of people around the world use programs like Kazaa, Grokster, Limewire or eDonkey to swap free copies of entertainment files via the Internet, including songs and movies.

Surveys have estimated about 60 million Americans have downloaded music into their computers. Proponents of file-sharing defend the practice, arguing a greedy music industry is ignoring its own customers and not taking advantage of a lucrative new revenue source.

But the $14 billion U.S. recording industry labels file-sharing as theft and blames the practice for a 14 percent drop in CD sales in the past three years.

Music industry critics say the RIAA's latest tactic will ignite a consumer revolt.

RIAA spokeswoman Weiss said that while her group expects a consumer backlash, it will press ahead because the record industry believes it has no other choice.

"We won't win any popularity contests. We don't really care what people think, except we want them to know that it (file-sharing) is illegal," Weiss said. "It's unpopular, it's not pretty, but it's the right thing to do for all the people involved in the music industry."


GOP Staffer Chosen To Head RIAA
John Borland

The Recording Industry Association of America has tapped a former Republican Senate staffer to replace Hilary Rosen as chief executive, firming up the group's leadership during one of the most controversial moments in its history.

The big record labels' trade group said Monday that Mitch Bainwol, former chief of staff to U.S. Senate Majority Leader Bill Frist, will replace Rosen at the RIAA's helm. Rosen left the group several months ago, after announcing her planned departure in January.

Although Bainwol has little experience inside the music industry, he brings deep connections to the Republican Party, something the RIAA has largely lacked under Rosen's leadership.

"Mitch brings to the RIAA the consummate insider's understanding of political nuance in Washington," Roger Ames, CEO of Warner Music Group, said in a statement. "I'm confident he has the ability to clearly communicate the issues and challenges the music industry faces and to partner effectively with the computer, consumer electronics and music publishing businesses to help us address those issues in all appropriate forums."

Bainwol joins the RIAA at a critical moment in the group's history, as it plans to launch what could be thousands of lawsuits against individual music consumers who have allegedly traded large numbers of copyrighted songs online. The controversial drive, already under way, has threatened to further compromise the industry's relationship with online consumers.

The new RIAA head has moved in GOP political circles for most of his professional life. He began his career as a budget analyst in President Reagan's Office of Management and Budget and has variously served as a Senate staffer, as chief of staff for the Republican National Committee and as executive director of the Republican National Senatorial Committee.

"I'm delighted to take on this role," Bainwol said in a statement. "What could be more rewarding than helping to promote two great American traditions: music and property rights?"

Bainwol will begin his duties Sept. 1, the RIAA said.


BSA Plays Good Cop, Bad Cop
Iain Thomson

The Business Software Alliance (BSA) has built itself a reputation of being heavy handed in its quest to eliminate illegal software use since its inception in 1988.

Tactics include bombarding companies with mail threatening jail sentences for directors, even though the organisation has no legal force, and offering up to £10,000 to whistleblowers whose information leads to offenders being uncovered.

Opponents have criticised the BSA's approach, maintaining that it uses a trawling system to pressure often innocent companies to open their books, despite a lack of evidence of any wrongdoing.

They claim that companies refusing to answer the BSA's letters were treated as guilty of running illegal software until proven otherwise.

Mark Floisand, who was elected chairman of the BSA in the UK in January, explains how the organisation is trying to shift its focus from prosecution to education.

Most IT professionals associate the BSA with threatening letters and the prosecution of software pirates. How accurate do you feel that is?
We are best known for enforcement, but that's really only a third of what we do. The rest of the time is spent raising awareness within companies about what constitutes good practice, and helping them make sure they are legal. The rest of our activities revolve around lobbying on a government level.

Nevertheless, your naming and shaming policy, aggressive audit requests and payments to whistleblowers have won your organisation a bad reputation in the business.
We don't name and shame just for the sake of it. If a company calls us and works with us then they'll have nothing to fear. Don't stay in contact and ignore our mails and you may end up in the papers.

As for whistleblowers, nearly two-thirds don't want any money for reporting; they just have moral problems with what is going on or are disgruntled ex-employees.

The Federation Against Software Theft and the BSA both seem to do the same job, so why are you competing with each other?
The perception is that we fight each other, but that won't be going on during my watch.

Ultimately we've got a lot in common in both aims and methods and you're going to see us working a lot more closely in the future. Matching up our audit procedures would be a good start.

Is there really a need for one organisation, let alone two, when piracy in the UK is the lowest in Europe? Isn't the BSA redundant?
I hope not. Rates are low here but one in four pieces of software in use in this country is still illegal. Rates in the US and Canada are lower still so there's still something to aim for.

It's going to be a lot harder to knock 10 percentage points off our figures than it would be in eastern Europe, for example, but there's still work to be done.

Has the increasing use of peer-to-peer (P2P) networks made your job harder?
To an extent; and we're monitoring the traffic on those networks carefully. But if you're downloading software over such networks it's useless without a key, and it's key trading that's a bigger threat.

We're certainly not spamming P2P networks with useless data; we're in enforcement, not counter-insurgency.

Doesn't the high price of some software encourage piracy in the first place?
It is popularity rather than price that determines how likely it is that software will be targeted. Demand is the key driver in piracy. If someone's pirating software they are already making a huge margin so they'll follow the buyers.


Digital Freedom Campaign Publishes Safe Peer-To- Peer Guidelines
Simon Aughton

An organisation that campaigns for 'freedom in the digital world' has published a set of guidelines for peer-to-peer file sharers wishing to avoid legal action from the record industry.

The Electronic Frontier Foundation recommends several measures designed to repel the RIAA's scanning software, including changing 'potentially misleading' filenames or disabling entirely the sharing or uploading feature of your file sharing software. The full list of guidelines and instructions of disabling features is available at www.eff.org/ IP/P2P/howto-notgetsued.php.

Of course, this defeats the very object of peer-to-peer networks and will not appeal to a great many users. Or, as the EFF puts it, 'Don't like the idea of turning off file-sharing or changing your file names to prevent stupid robots or RIAA employees from mistaking your files for infringements? Neither do we!' The organisation is urging file sharers to join its campaign to both legalise file sharing and find a new system to 'compensate musicians and copyright holders.

The EFF has also set-up a page - www.eff.org/IP/P2P/riaasubpoenas - for anyone concerned that their details may already have been subpoenaed by RIAA lawyers.

Last month the major record labels - in the form of the RIAA - announced they would be seeking legal redress from individual and organisations who made copyrighted music files available over the Internet via peer-to-peer networks such as Kazaa and Grokster.

It should be noted, however, that the RIAA represents only the major record companies and does not have industry wide support, as we reported last week.


BuyMusic's Downloads Strike A Sour Note
Posted by xix

Last week Buy.com tried to take a bite out of Apple's successful iTunes Music Store by rolling out a low-priced song-download service said to be simple and reliable.
But in an example of the technological trickiness involved in offering users the freedom they desire while giving music labels the protections they demand, early customers have found they can't transfer the tunes they buy on BuyMusic.com to digital portables.

The Mac-only iTunes has won raves for ease of use, both in burning CDs and transferring songs to Apple's iPod players. But BuyMusic's tracks have started out as unplayable, even on portables lent to the press in a promotional blitz.

"We're working on this," says Buy.com's Scott Blum, who says the company will have the glitch fixed today and that customers who have bought tracks will receive an e-mail offering free re-downloads.

The problem: Unlike MP3 music tracks plucked from the Net from pirate sites such as Kazaa, music on BuyMusic is encoded in Microsoft's Windows Media Audio format. The "digital rights management" coding limits what can be done with the files. The files will be recoded to allow for transfers, Blum says.

More in this issue – js.


Secret Networks Protect Music Swappers
Powell Fraser

They are the country clubs of the file-sharing world, exclusive Internet networks that require knowing the right people and having a wealth of
content on your hard disk to get into the clique.

These private file-swapping networks have surfaced just as the music industry has been granted dozens of subpoenas seeking the names of those who trade copyrighted material on popular services such as Kazaa, Imesh, and Gnutella.

The private networks are open to smaller groups of perhaps 20 to 30 people who liberally share music, television shows, movies and computer programs. Members of such networks believe they can avoid legal consequences because their identities and actions are masked with the same technology used to protect online credit card transactions.

"You've got the right set of early adopters, people that are involved in the community who are evangelizing it," said Travis Kalanick, whose MP3 search engine Scour was sued and shut down by the music industry. "It's going to be there if and when there is a mass exodus from networks like Kazaa and Gnutella."

Kalanick and others say the private networks are the future of online music swapping.

Not if the music industry can help it, said Jonathan Lamy, a spokesman for the Recording Industry Association of America (RIAA).

While he would not reveal specifics of which services would be targeted, Lamy offered a warning for private network users.

"If users think that any particular service guarantees their anonymity, they're wrong," he said. "There are ways to determine a user's identity."

But Jim Lowrey, an expert in network encryption, said it would be difficult for outsiders to break through the encryption to see who is using the private sharing services.

"You'll know they're talking, but you won't know what they're saying. It's quite impossible to crack the algorithms," said Lowrey, whose company, Endeavors Technology, is designing a file-sharing system for corporate clients.

The rise of one of the private networks earlier this year shows how eager people are to trade media files online and to do so with impunity.

When wildly-popular Napster was ruled illegal by a judge in 2001, users flocked to other public file-sharing services. However, those services are mired with problems.

Aside from the threats of lawsuits from the music industry, groups such as MediaDefender have begun flooding Kazaa and Gnutella with "spoofed" files, which claim to be songs but turn out to be blank or filled with anti-piracy messages.

Users of Kazaa and Gnutella also are stymied by others in the network who choose not to share the files in their collection. A study done by the Xerox Palo Alto Research Center in August 2000 concluded that 70 percent of Gnutella users engaged only in downloading, providing no files of their own for their peers on the network.

Private networks such as Waste, DirectConnect, and even basic chat clients promise to remedy all these issues. The difficulty is finding them.

Some message boards help users find each other and set up networks. Others turn to chat rooms or recruit friends on college campuses to form a network.

And even when a user finally charms his way into getting an encryption key, giving him access to a network such as Waste, other members' identities are not revealed until they also decide they trust the newcomer, Kalanick explained.

"You essentially will have to 'socialize' your way into a network," Kalanick said.

Kalanick said the extreme focus on security is meant to keep outsiders -- and copyright lawyers -- out.

"RIAA may be better off penetrating al Qaeda," he said.

Click To See Our Very Own P2P-Zone Waste Thread.


Labels Charged With Price-Fixing – Again
Ashlee Vance

A pair of major music labels have been hit with another round of price-fixing charges courtesy of the FTC - a decision which raises the question as to who exactly is to blame for falling music revenue.

In a unanimous decision, members of the U.S. FTC (Federal Trade Comission) chastised Vivendi Universal and Warner Communications for restricting competition in the sale of "The Three Tenors" - Jose Carreras, Placido Domingo, and Luciano Pavarotti - audio and video products. It seems that PolyGram (a company later bought by Vivendi) conspired with Warner "to curb discounting and advertising to boost sales of recordings that the two companies jointly had distributed based on the tenors' concert in Paris during the 1998 soccer World Cup."

Based on these practices, the FTC has arrived at a stunning ruling.

"The Commission's order bars PolyGram from agreeing with competitors to fix the prices or restrict the advertising of products they produced independently."

The labels deny any wrongdoing, which should not come as a shock. The labels also denied earlier charges from the FTC of a much larger price-fixing scandal that cost consumers an estimated $480 million. The pigopolists agreed to settle that little incident by paying 41 suing states $67.4 million in cash and offering $75.7 million in CDs.

How many price-fixing scandals will it take before the government begins to question how serious the labels' losses to P2P file trading really are? Do grandparents and children pose more of a threat to the music industry than its own executives?


RIAA Will Take 2191.78 Years To Sue Everyone
Sum hope

READER MICHAELA STEPHENS says that if the Electronic Frontier Foundation (EFF) is right and that 60 million US folk are file sharing, it's going to take the Recording Industry Association of America (RIAA) a mighty long time to get round to them all.

She said: "I pulled out my calculator to see just how long it would take the RIAA to sue all 60 million P2P music file traders at a rate of 75 a day. 60,000,000/ 75 = 800,000 days to subpoena each person or 800,000 days/365 days in a year = 2191.78 years to subpoena each person".

Michaela points out that it's unrealistic to suppose that the RIAA will have any money left in 2191 years, and she even wonders whether the trade association will exist then.

Plus, she points out, given the rate of tech advancement, it's likely that we'll have moved on to many different types of music media in even a hundred years.

She continues: " So let us consider more realistic numbers. The RIAA plans to sue thousands of file sharers. Working in increments of 5000: 5,000 people/75 subpoenas a day = 66 days How are they going to keep track of all these lawsuits going on? 10,000 people/75 subpoenas a day = 133 days or about 2/3 of a year.

"Keep in mind suing 10,000 people is still only going to impact only one six thousandth (1/6000) of the file traders out there. And who is getting rich off of this? The lawyers. Betcha not a single musician will see a cent of this money.

"15,000 people/75 subpoenas a day = 200 days (1 out of every 4000 affected) 20,000 people/75 subpoenas a day = 266.6 days (1 out of every 3000 affected)

"When might this actually start affecting us? When 1 out of every 10 is affected? That would mean they'd have to sue six million people. That would take,...(6,000,000/75 = 80,000)... 80,000 days.. or 219 years! They'd have to sue our great grand children!"


Everyone Is a Target in Music Subpoenas

Move over, college kids. Grandparents and roommates may be the first ones to pay for downloading songs on the Internet.

The music industry's earliest subpoenas, issued as part of a high-stakes campaign to cripple online piracy by suing some of music's biggest fans, are aimed at a surprisingly eclectic group: a grandfather, an unsuspecting dad and an apartment roommate.

"Within five minutes, if I can get hold of her, this will come to an end," said Gordon Pate of Dana Point, Calif., when told by The Associated Press that a federal subpoena had been issued over his daughter's music downloads.

The legal papers required an Internet provider, Comcast Cable Communications Inc., to hand over Pate's name and address.

Pate, 67, confirmed that his 23-year-old daughter, Leah Pate, had installed file-sharing software using an account cited on the subpoena. But he said his daughter would stop immediately and the family did not know using such software could result in a stern warning, expensive lawsuit or even criminal prosecution.

"There's no way either us or our daughter would do anything we knew to be illegal," Pate said, promising to remove the software quickly. "I don't think anybody knew this was illegal, just a way to get some music."

The president of the Recording Industry Association of America, the trade group for the largest music labels, said lawyers will pursue downloaders regardless of personal circumstances because it would deter other Internet users.

"The idea really is not to be selective, to let people know that if they're offering a substantial number of files for others to copy, they are at risk," Cary Sherman said. "It doesn't matter who they are."

Over the coming months this may be the Internet's equivalent of shock and awe, the stunning discovery by music fans across America that copyright lawyers can pierce the presumed anonymity of file-sharing, even for computer users hiding behind nicknames such as "hottdude0587" or "bluemonkey13."

In Charleston, W.Va., college student Amy Boggs said she quickly deleted more than 1,400 music files on her computer after the AP told her she was the target of a subpoena. Boggs said she sometimes downloaded dozens of songs on any given day, including ones by Fleetwood Mac, Blondie, Incubus and Busta Rhymes.

Since Boggs used her roommates' Internet account, the roommates' name and address were being turned over to music industry lawyers.

"This scares me so bad I never want to download anything again," said Boggs, who turned 22 on Thursday. "I never thought this would happen. There are millions of people out there doing this."

In homes where parents or grandparents may not closely monitor the family's Internet use, the news could be especially surprising. A defendant's liability can depend on their age and whether anyone else knew about the music downloads.

Bob Barnes, a 50-year-old grandfather in Fresno, Calif., and the target of a subpoena, acknowledged sharing "several hundred" music files. He said he used the Internet to download hard-to-find recordings of European artists because he was unsatisfied with modern American artists and grew tired of buying CDs without the chance to listen to them first.

"If you don't like it, you can't take it back," said Barnes, who runs a small video production company with his wife from their three-bedroom home. "You have all your little blonde, blue-eyed clones. There's no originality."


How to Tell if the RIAA Wants You

File sharers can check a new online database to see if they are wanted by the recording industry.

The Electronic Frontier Foundation has created a site where users can plug in their file-sharing user names. That name is checked against the list of those subpoenas filed in the Washington, D.C., district court.

The group, which is gleaning its information from the publicly available Pacer database, said it will be an important resource for those who are concerned that the recording industry might be seeking their identities.

"The recording industry continues its futile crusade to sue thousands of the over 60 million people who use file-sharing software in the U.S.," Fred Von Lohmann, senior attorney with the EFF, said in a statement. "We hope that the EFF's subpoena database will give people some peace of mind and the information they need to challenge the subpoenas and protect their privacy."

The EFF said the database includes 125 subpoenas issued through July 8. The group will update the tool as the records become available.

If a user name is located in the database, this does not confirm that the Recording Industry Association of America has issued a subpoena against that person, since user names on file-sharing sites are sometimes shared by multiple individuals.

But if a person's user name is in the database, the EFF site provides a link to a PDF file of the actual subpoena, which includes the name of the ISP, a list of representative songs pirated and the IP address of the user.

For those who have been subpoenaed by the RIAA, a list of attorneys and other legal resources are available at the Subpoena Defense Alliance website, a joint effort between the EFF and the U.S. Internet Industry Association.


Music Services Jump On Itunes Bandwagon
John Borland

In a rush to market that's reminiscent of the dot-com bubble's headiest days, a stampede of companies is following Apple Computer pell-mell into the online music sales business.

Napster's new owner, Roxio, is scheduled to launch a legal version of the service by Christmas. Musicmatch said Monday that it will soon sell songs through its jukebox application. RealNetworks, America Online, Amazon.com and potentially even Microsoft are planning to sell digital downloads.

For consumers torn for years between downloading music illegally through file-swapping services or signing up for complicated monthly subscription services, the impending flood of available music may be little short of overwhelming. And having hundreds of thousands of songs just a mouse-click away from listeners could dramatically change the distribution and consumption of music, and potentially even alter recording practices, music industry insiders say.

But even before most of the new services launch, analysts are saying the online market is looking a little too crowded for comfort.

"In 10 years, the market might be able to support this many (stores)," Yankee Group analyst Ryan Jones said. "Right now, there are more than can really survive over the next few years."

The near-daily announcements of new music services that have followed the April launch of Apple Computer's iTunes music store are a sign that the logjam of music label licensing restrictions has finally burst, creating what some analysts are calling a genuinely new stage for online music.

Still, the new services are experimental at this point, with few having actually opened their doors yet and most operating on still-unconfirmed assumptions about consumers' likely online music-buying habits. And projections for the market aren't entirely rosy.

According to new estimates from Jupiter Research, spending on online music will total less than $1 billion in 2003. The analyst firm downgraded earlier projections but said spending would rise to $3.3 billion, or about 26 percent of all U.S. music spending, by 2008.

The current stampede was largely prompted by the release and the seeming success of Apple's iTunes service. The combination of an elegant interface, simple 99-cent-per-song pricing and unprecedented cooperation from music labels in providing songs without obvious restrictions on their use allowed iTunes to stand head and shoulders above anything that had previously hit the market.

MP3 jukebox company Musicmatch, which said Monday that it would launch its own digital download service though its software by the end of the year, may be the company following most closely in Apple's footsteps. Musicmatch said it would use the jukebox music player as the gateway into the music store--as Apple has--and, at least for now, the company is avoiding the kind of all-you-can-eat monthly subscription plans that Listen.com, America Online and Roxio's new Napster will offer.

"We think generally people want to own music," Musicmatch senior vice president Bob Ohlweiler said Monday. "An a la carte service has a lot more to offer to the masses, and the potential for a much higher adoption rate."


Online Music Sales To Be Muted

Online music sales are expected to be weaker than analysts earlier forecast because of overall sluggishness in the industry and lackluster digital services, according to Jupiter Research.

The research firm, however, still expects Net music sales to grow to $3.3 billion in 2008 from less than $1 billion in 2003. Jupiter, which released its updated estimates Monday, said it expects Internet sales to account for just over 25 percent of U.S. music spending by 2008.

Sales of CDs over online outlets will remain flat in 2003 at about $750 million, according to the study.

"The industry is suffering from competition for entertainment dollars, changing demographics, the end of the CD upgrade cycle, and piracy," Jupiter analyst Lee Black said in a statement.

Services such as Apple Computer's iTunes and BuyMusic--launched last week by Scott Blum, the founder of Internet retailer Buy.com--have created some new buzz for digital download services by offering songs from major labels and independent recording companies.

However, "while Apple has rekindled interest in digital downloads, total digital sales--downloads and subscriptions--will not surpass $80 million this year," Black said.

Jupiter has repeatedly lowered its online music forecast over the past few years, each time citing an under-performing market and the failure of digital music services to meet consumer expectations. Last year, the research firm projected that the online music market would grow to $5.1 billion in 2007, a downward revision from the $5.5 billion it expected in 2006.

Legal issues are proving to be a stumbling block for online music services. The recording industry last month said it would step up its efforts to crack down on individual file-swappers who illegally trade songs online.

BuyMusic's Blum last week said his goal is to have 1 million downloads a day by the end of the year. In contrast, Apple's iTunes service soared when it was launched in April, selling 5 million songs in the first eight weeks of operation.

The picture for Europe is no better, according to Jupiter Research. "Europe's online music market has been stuck in the starting blocks for the last few years, but the tide is finally beginning to turn," Jupiter Research analyst Mark Mulligan said in a statement, citing EMI Recorded Music's decision to make most of its catalog available online.


New Napster Gets Set To Rock And Roll

Roxio says its revamped online music service, Napster, will debut in time for the holiday season and will give people access to music through a subscription or via an a la carte option.

The new service, Napster 2.0, will likely debut with the largest legal music catalog in the world with close to half a million songs, Chris Gorog, chief executive of CD- burning software company Roxio, said Monday.

He declined to comment on the price of a subscription or of the per-song option for the relaunch of Napster, the song-swapping pioneer shut down by copyright infringement lawsuits in 2001.

The details of the launch come amid plans later this year for online music services from several other players including AOL Time Warner's America Online and services from retailers such as Amazon.com.

People who use Napster's new service will be able to search for music, listen to preprogrammed radio customized to their tastes, and burn CDs and download music to devices, Gorog said.

"It will be very reflective of the key characteristics of the original Napster...independence, innovation and freedom of choice," Gorog said.

Roxio bought the assets of Napster last year for about $5 million at bankruptcy auction and bought the Pressplay music service this year.

Gorog said about 97 percent of online music users recognize the Napster brand, and half of those have indicated they would be interested in paying for a service.

Industry players have said that music labels have been more receptive to recent digital music plans but that some artists are still resistant to the online movement.

"We have found the labels have been much more liberal in terms of usage rules. Certainly there are some artist holdouts, but we are finding the holdout artists to be very receptive to the new Napster," Gorog said, adding that it has not yet started testing the new service.

He also declined to comment on when Roxio expects to make back its investments in Napster and Pressplay.


Record Industry Trade Group Names New Chief

The music industry's leading trade group on Monday named Mitch Bainwol, a former top congressional aide with contacts in the Republican party, as its new chief executive and top lobbyist in Washington.

Bainwol, a former chief of staff to Senate Majority Leader Bill Frist, will start Sept. 1 as head of the Recording Industry Association of America, the trade group said in a statement.

Bainwol is also a former executive director of the National Republican Senatorial Committee. Music industry executives had said the association was looking for a well-connected Republican to increase its leverage with Congress as it battles digital piracy.

The RIAA represents the major music companies, including the music arms of Sony Corp., Vivendi Universal, AOL Time Warner, Bertelsmann AG and EMI Group .

Speculation on the replacement for Hilary Rosen, who stepped down earlier this summer, had centered on a number of high-profile Republican names, including members of Congress like Mary Bono and Billy Tauzin, and former Pentagon spokeswoman Victoria Clarke.

The RIAA has been increasingly in the public eye in the last few years, as the music industry's fight against digital music piracy has spilled into courts of law and the court of public opinion.

The record industry has seen CD sales slump for three years, a decline it blames on online file-sharing sites where music can be traded freely and sometimes before it is even released.

"What could be more rewarding than helping to promote two great American traditions: music and property rights?" Bainwol said in a statement.


Cyber Sleuths Hunt File-Swappers
Maggie Shiels

They have been described as Hollywood's digital detectives and they have a warning for anyone illegally trading music or movies:
"You can run but you can never hide."

Mark Ishikawa, a former hacker, is the CEO of BayTSP, arguably one of the most recognised and biggest companies working in the business of patrolling the web to unmask violators of copyrighted music. From his Silicon Valley base he told BBC News Online: "There is no lock that can't be picked and our technology ensures that there is not a rock in the world you can hide under if you are sharing files.

"If you have an active internet address or connection and you are actively sharing files, our spiders will find you." With the Recording Industry Association of America (RIAA) turning up the heat on illegal file-sharing and issuing hundreds of subpoenas, the role of these copyright cops is central in that fight. "We are very successful at what we do," said Mr Ishikawa, who says he is not working directly for the RIAA but does have three of the top five record labels as clients. "We find between 1.5 million to two million copyright infringements a day and we have a very high effectiveness rate. About 85% of the people we send notices to go away and we never see them again."

The RIAA claims that around 57 million people have downloaded music in the United States alone and as a result sales in the last four years have fallen 14% to $12.6bn

The process of finding the pirates is down to what the BayTSP's CEO calls "matching technology" and some old-fashioned electronic gumshoe work.This involves launching robotic searches across the internet, on all major peer-to-peer networks, in 65,000 newsgroups, FTP sites, Internet Relay chat channels and auction and retail sites. "Using our matching technology, we identify the user name, the protocol they're using, which file-sharing protocol if it's just a web protocol or not. But the most important piece of information we detect is their IP address," explained Mr Ishikawa. "The IP address is unique at the given point of time that they're connected to the internet."

He says once BayTSP has collected all this information, the copyright holder can use the Digital Millennium Copyright Act to force an internet service provider (ISP) to reveal who is on that particular IP address.

Users charged with piracy, or ISP's refusing to reveal the identity of an IP address, could face lawsuits for damages from $750 to $150,000 under US copyright law.

Thinking of hiding behind nicknames like "hottdudeXXX" or "bluemonkey13" or even installing new software to cloak your identity? Think again, says Mr Ishikawa.

"We got an e-mail last week from someone saying 'How did you find me? I used Peer Guardian' and he thought that would save him from our spiders. There is nowhere to hide."

Mr Ishikawa says the company's "digital fingerprinting" enables BayTSP computers to identify songs and movies, even bad copies made with camcorders, based on 30 second snippets.

While most of the focus has been on trading music, Hollywood is becoming increasingly concerned about the number of movies now being shared illegally. Two of the industry's top seven movie studios have engaged the sleuthing services of BayTSP, but because of contractual arrangements they can't be named.

A snapshot of illegal movie downloads by BayTSP's chief technology officer Evelyn Espinosa was revealing.

"This is just over a few hours and I have almost 14,000 records with a variety of different titles ranging from Daddy Day Care to Anger Management and Charlie's Angels." She says the growing availability of broadband connections is the main reason movies are being targeted for illegal swapping. "These connections are now so fast that you can download a whole movie in just a few hours."

Software infringement has also been described as ripe for abuse and the Business Software Alliance says it has increased by 20% the number of notices and warnings it issues.

For BayTSP's Mark Ishikawa, the illegal file-swapping sector has been good for his business. He says the privately traded firm is "cash- positive, venture-backed and doubling its revenue every quarter". As well as making money, Mr Ishikawa's vision for BayTSP is to become a hi-tech version of Pinkerton, the legendary detective agency that protected presidents like Abraham Lincoln and hunted outlaws like Jesse James. "We are just like a private detective firm. We have no law enforcement capability. What we do is capture the information to help bring down the bad guys," he said.


Former Zeus entrepreneurs raise $2m from Pentech and Gateway
Press Release

Saviso Group, which is focused on developing solutions for the Internet infrastructure market, has raised its first institutional round of $2 million from early stage technology specialists Pentech Ventures and the Cambridge Gateway Fund.

Pentech led the round, which also included investment by the company’s existing angel investors.

The funding will allow Saviso to further develop its position as one of Cambridge’s leading technology start-ups and specifically provide funding for CacheLogic, the group’s intelligent routing and caching subsidiary.

CacheLogic’s flagship product, the Cachepliance, is currently in advanced field trials by many of the Tier-1 Internet Service Providers (ISPs) and is positioned to be the most compelling solution available to one of the most immediate concerns for the ISP community.

It greatly reduces the financial challenges created by network usage resulting from the meteoric growth in Peer-to-Peer (P2P) usage.

Bryan Amesbury, Saviso’s chief financial officer said: “We are delighted to have such a strong group of investors supporting Saviso in its next phase of growth.

“This round of funding will allow us to further capitalise upon the market opportunities that we continue to develop.”

Alasdair Greig of The Cambridge Gateway Fund, added: “The Saviso team provides a wealth of expertise in the development of technology businesses and we are confident that our investment will allow them to make CacheLogic a success.”


Pentagon Deploys GridNode for RosettaNet B2B Process Automation
Press release

GridNode, the leading provider of trading partner enablement solutions, today announced the successful RosettaNet implementation for Pentagon Technologies Inc., a leading provider of process yield enhancement products and services for the semiconductor fabrication and manufacturing equipment industries.

Pentagon Technologies' continued adoption of cutting-edge technology demonstrates the company's drive to exceed total quality requirements and achieve greater operational efficiencies. It implemented the GridTalk for RosettaNet business-to-business integration software to automate order management with the company's key customers.

Leveraging GridTalk's Linux-based version, Pentagon maintained the company's stringent network security using the Apple's OS X Server. Pentagon was also able to expand the suite of processes automated and achieve backend connectivity by using GridMapper, GridNode's any-to-any mapping tool, to convert XML document formats to SPARKY, Pentagon's Filemaker-based home-grown Enterprise Resource Planning (ERP) System. "Pentagon requires an integration solution capable of supporting our evolving strategic business initiatives. GridNode's GridTalk software provided the flexibility and reliability to enhance our operational efficiencies, with minimum disruption to our existing network environment. Pentagon has reaped significant return on investment through streamlined business processes, improved data quality and improved customer service quality," said Ross Lindell, Chief Information Officer of Pentagon Technologies. Through our support of open-standards, GridNode's suite of business process automation software provides companies with the ability to increase efficiencies throughout the organization without disruptive changes and increases in the total cost of ownership," said CheeTong Leow, Managing Director of GridNode. "This allows for more scalability and generates greater implementation value quickly."

GridNode provides businessware for extended enterprise management and web services. Using a highly-optimized, distributed architecture for B2B integration and collaboration, GridNode's peer-to-peer (P2P), XML-based product suite enables critical supply chain data to be exchanged, synchronized and analyzed in real-time via the Internet infrastructure, reliably and efficiently. http://www.prnewswire.com/cgi-bin/st...2003,+10:24+AM


Fur To Fly Over File Sharing
Nathan Cochrane

Music lovers from both sides of the copyright divide will be ringside for a knock-down battle of wits when the recording labels square off against the man they regard as a modern- day Blackbeard at an industry conference next month in Sydney.

Stephen Peach, chief executive of the Australian Record Industry Association (ARIA), will face down his bete noir, Australian entrepreneur Kevin Bermeister, the man rumoured to pull the strings of music file-sharing phenomenon Kazaa.

Bermeister, who established the Sega-Ozisoft software distribution company (which was later acquired by the French entertainment software maker Infogrames), returned to Australia this month after spending five years in California. Kazaa chief executive Nikki Hemming declined the initial invitation to speak at the Australian Music Business Conference, which is sponsored by Apple Computer, because of pending US litigation.

Conference organiser Phil Tripp, an outspoken critic of the recording labels' slowness to embrace digital distribution of music, says it is time for compromise. The labels have to move into the 21st century but consumers must also be honest, he says.

"The music industry has to face tough questions in challenging times," Tripp says.

"The consumer doesn't realise that sharing is illegal and they don't care because they believe it's their God-given right to sonically shoplift. Hopefully they will grow up and realise
it is valuable and not musical toilet paper they can wipe across their computer."

Tripp is critical of research released this month by ARIA that says, based on a sample of 1000 phone interviews, that 3.6 million Australians illicitly burnt music in the second half of last year. Tripp says the figures are flawed because they most likely include people who have paid for CDs but copied them as a back-up or downloaded the music onto a portable music player.

The analyst at Quantum Market Research in Melbourne who conducted the survey admits that burning for personal and otherwise non-infringing uses was lumped with piracy. Those who compose and perform their own music but burn it to CD will also have been trapped by the question's ambiguity.

Peach says it's "undoubtedly the case" that music buyers making personal back-ups or downloading to devices have been lumped in with pirates. But even though ARIA touts these figures as justification for further crackdowns, the more important statistic, Peach says, is that just 20 per cent of consumers who receive a burnt disc ultimately buy the music from a legitimate source.

The revelation that innocent consumers could be classified as pirates places further pressure on the international recording industry to justify its claims that wholesale piracy threatens its economic base.

Studies of the US music industry conclude that an increase in the price of CDs, the economic downturn and the reduction of labels' stables of artists have contributed to the decrease in sales. ARIA further acknowledges that stiffer competition from DVD movie and music sales as well as game consoles, pay TV and mobile phones has contributed to the fall in CD sales.

Music producer turned industry whistleblower Moses Avalon says the labels have ripped off artists for years.


Napster, the RIAA and File-Sharing
Thomas Mennecke

Thoughts of Napster reflect the early golden age of file-sharing. If you were part of the original P2P revolution, you'll remember when the RIAA was just a bunch of letters, Napster was about the only thing around, and most downloads chugged along at 56K!

Those days are long gone. Now, the RIAA and its agents of evil are stalking Internet users, Napster has been replaced with dozens of P2P networks, and we demand nothing less than a 500K high speed connection.

Napster died a long time ago, and there's nothing that will ever recreate that experience. Its death was a slow and agonizing process, being shut down initially, then remaining on life support until its final deathblow in late 2000.

Leave it to corporate America, however, to figure out how to resurrect the dead.

So now we have Roxio, who bought the intellectual property rights to Napster back in 2002 (hypocrisy aside). Now they are set to dig up this fossil for release by Christmas. The situation calls for their current purchase of PressPlay to be renamed Napster. The great debate remains whether or not Roxio can make this project work.

According to Chris Gorog, CEO of Roxio, they will attempt to recreate the Napster experience to the greatest legal extent possible. That translates to a limited catalog (500,000 songs) and the most critical aspect of all, a fee based service.

In the arena of free P2P networks, the ability of fee-based services to compete is virtually non-existent. MusicMatch and PressPlay are prime examples of this failure. The exception in a limited sense is Apple's iTunes, which has witnessed a healthy reception by music fans. However, its long-term success remains to be seen as major record labels refuse to allow their big named artist to be cataloged.

The big question is whether the 'legitimate' music world's umpteenth attempt to crack free P2P's shell will work. If the RIAA can change the climate of the current online music world with continued legal persecution, then perhaps. They very well may be able to frighten and bully the populace into legitimate alternatives.

However, that scenario is counting on the RIAA's success. The very real possibility exists that their witch-hunt can backfire terribly, and further alienate the online population. Considering the initial public reaction, this may already be underway. This latest battle is the most critical for both sides. We have reached the climax of the online copyright war, and both sides have a tremendous amount at steak. If the RIAA's last-ditch attempt succeeds, then much of file-sharing as we know it may collapse. Conversely, if P2P weathers the storm and the RIAA's legal pursuit backfires, then file-sharing's greatest victory may be only months away.


Sweden To Outlaw Peer-To-Peer File Swapping

The implementation of EUCD will have staggering consequences to Swedish computer users. Not only will it limit the consumers' rights to make copies of CDs and DVDs for personal use, but it will also criminalize peer-to- peer file sharing.

The Swedish government is proposing a law which would require the permission from the copyright owner before any music, video, photo or text material can be spread on the net. P2P software, such as Kazaa will be outright outlawed, as will software intended for bypassing copy protection on movies and audio CDs.

Also the right to make personal copies will be further limited, but it will still be legal to make copies for personal use.

According to the minister of justice Thomas Bodström the new legislation doesn't radically change the current attitude towards copyrights.

"The new law has not been tailored to satisfy the needs of large record companies. Essentially it retains the earlier views on copyrights. As technology develops, the legislation must also be kept up to date," Bodström commented.

Distributing or downloading illegal copies on P2P networks can lead to a sentence of up to two years in prison. Usually only those sharing illegal files have been made liable in court. The Swedish law will also prohibit downloading.


Leave P2P Users Alone, Says Publisher
Iain Thomson

Concentrate on the organised pirates and release better albums

A leading music publisher has claimed that internet file sharing could actually improve the quality of music in the long term. Ellis Rich, chairman of the Independent Music Group, suggested that the music industry is making a mistake by equating piracy with downloading by peer-to-peer users.

"Ultimately this could be good for the music industry," he told an industry roundtable.

Genuine piracy, which involves organised syndicates making multiple copies of music for resale, is causing direct damage to the music industry, said Rich. Downloaders, on the other hand, hurt the industry less but are more high profile.

"Songwriters will have to produce albums full of good songs rather than a few good tracks and filling the rest of the album with padding," stated Rich.

"As for piracy most small MP3s [on the internet] are too low quality to be used in pirated media. I'm more concerned with attacking pirates than students."

At the roundtable, security access company Clearswift warned that companies should protect themselves against litigation, in case content providers turn their attention from individuals to companies that allow staff to download copyright material from the internet.

"The biggest threat to companies these days is copyright infringement," warned Paul Rutherford, chief marketing officer at Clearswift.

"Spam and viruses are offensive tactics and are highly visible, but IP isn't seen this way. But wait until you see the first executives in handcuffs and that attitude will change."


Windows XP Peer-to-Peer Design Finalized
David Worthington

A stealth distribution on Windows Update let loose the final version of Microsoft's P2P designs for Windows XP late last week. The update has also been released as a standalone download, with the plumbing of a software development kit in close quarters.

The upgrade for Windows XP Service Pack 1 repositions the operating system's Internet underpinnings to the next generation IPv6 networking stack. The download also bridges together legacy network standards through NAT traversal technology known as "Teredo."

Service Pack 2 for Windows XP will include the technology, and close ties have also been cited with Microsoft's Live Communications Server -- formerly code-named Greenwich -- product team.

February saw the release of a beta peer-to-peer update for Windows XP, coinciding with the release of Microsoft's threedegrees IM client, intended to connect people to do "fun things together."

The premise behind threedegrees is to enable social interaction within a group of friends or family by extending standard instant messaging with music, group chats, digital photos and personal desktop animations that Microsoft calls "winks."

In order to bypass the myriad of networking issues caused by firewalls and routers hampering peer-to-peer connectivity, Microsoft turned to IPv6, which features enhanced traffic management.

However, the beta caused a flood of problems that Microsoft engineers worked to iron out, including restricting some customers from being able to access certain Internet sites.

The Advanced Networking Pack for Windows XP, which includes the updated IPv6 stack and new IPv6 firewall may be downloaded via FileForum.


UK P2P Users May Face Legal Action
Dinah Greek

BPI waits for European law to come into force before deciding on legal action

The British Phonographic Industry (BPI) is waiting until the new European Union copyright directive is implemented before it decides whether to take legal action against UK peer-to- peer (P2P) users.

The BPI has no current plans to follow the actions of the Recording Industry Association of America (RIAA) and sue individuals who download music from P2P sites, saying that it prefers to educate people rather than take a heavy handed approach.

But it has warned that the legal route has not been ruled out.

A BPI spokesman told vnunet.com that, although it felt able to issue legal proceedings against file sharers under current law, it preferred to wait until the directive is enforced so that copyright laws are clarified.

The directive came into force in June 2001 and is expected to be implemented sometime in October.

It follows heavy lobbying by the film, TV and recording industries, which are concerned about the effect of digital technologies on their ability to profit from intellectual property rights.

"Our position from the outset has been to educate and inform. But there is one misconception that needs clearing up," a BPI spokesman said.

"People have this perception of P2P users as poor students, but there are some people who download seriously large amounts of files.

"While it is not our intention to sue it is not something we would rule out once the directive is enforced. The heavy users are the ones we would go after."

Ellis Rich, chief executive of the Independent Music Group, is against the idea of suing individual P2P users because, he argues, piracy and downloading music from these sites are not the same thing.

If the industry made online music buying easier the problem could be solved, he said. He said record companies need to realise what they own is the copyright, not the manufacturing rights.

"I hope the BPI doesn't start legal actions against P2P users. People don't mind paying, but it's about access," he explained.

"The industry could easily put every recording ever made online and it would be much better for everyone if the industry just dealt with it."


Quality Will Beat Illegal File Sharing - Apple
Macworld staff

The only way to tackle illegal file-sharing networks is to provide legitimate, quality competition, an Apple executive said yesterday.

Speaking at Jupiter Research's Plug.IN music conference yesterday, Apple director of marketing for applications and services Peter Lowe said: "The way to go after illegal file- sharing services is to compete with them – go after their weaknesses.

"People use these services for instant gratification: for most people who use file sharing it is more about flexibility and not about it being free. We aim to take advantages of the weaknesses of illegal sharing services: unreliable encoding; bad connection; no previews; wrong music; no album cover art; and at the end of the day it is stealing – which is bad karma!"

Lowe said Apple iTunes Music Store is aiming to create a legal service that offers simplicity and consistency. Looking at other emerging music services,such as BuyMusic.com, he explained that Apple does not believe the Web "is the best interface to enjoy music".

Lowe confirmed Apple is "on track" to launch a Windows version of iTunes by the end of 2003, adding that 46 per cent of sales so far have been entire albums: "The disintegration of the album has not happened, contrary to what people are saying."

Apple added a host of new artists to its online catalogue yesterday, including Junior Senior, Diana Ross, Billie Holiday, David Bowie, Peter Gabriel, New Order, Aerosmith, Alice Cooper, Beyonce, Bob Marley and the Wailers, Black Uhuru, and David Holmes.

An exclusive Moby track was also added to the roster – Love of Strings, a remix of a track from the artist's album, 18.

Marketing experts expect that Apple's determination to develop the best digital-music download service will help it consolidate its position before other services appear.

An article in AdAge warns that the "competitive landscape for online subscription music services is likely to heat up over the next six to nine months because of Apple's success so far".

Senior Jupiter Research analyst Lee Black said that Apple's success "proves if you give consumers the rights to the downloads they want, they'll buy them". he added: "Consumers have said as long as they can own it and copy it to other devices, they'll pay for it. Give them usage rights and they'll buy it."


Canadians Look At U.S. Litigation Against Music File Sharing
Sandra Abma

As the American recording industry steps up its fight against the illegal sharing of music online, Canadians are starting to look at the U.S. model.

Peer-to-peer file sharing, or downloading, of music has cost the North American recording industry billions of dollars. In Canada, CD sales have dropped 20 per cent in the past three years.

The American recording industry's latest attempt to squash music piracy is a two- pronged approach: sanctioning a number of online music services and intensifying litigation against what they call "music pirates."

Americans can legally download music online - paying from US $0.79 per song on sites like Buymusic.com and Apple's iTunes music store - but those who continue to do so illegally are being singled out by harsh legislation.

A new bill before the House of Congress proposes a five-year prison sentence and a fine of US $250,000 for the sharing of just one music file on a peer-to-peer network.

The Canadian Recording Industry Association has so far taken a softer approach to online music sharing, choosing an education program aimed at young music fans. However, the apparent success of U.S attempts has prompted CRIA president Brian Robertson to look into the American model.

"There's been quite a substantive drop in peer-to-peer activity," Robertson said. "Particularly young people, who possibly didn't know it was illegal before, now know it's illegal and now are getting a little bit intimidated by subpoenas being served and penalties."

And now Canadians will be able to legally download music too. This fall, both Buymusic.com and the Apple iTunes service will be made available to Canadians. A Canadian service, called Puretracks.com, is also being introduced.

Customers have been eagerly looking forward to this, said Puretracks.com co- founder Alister Mitchell. "Technology moves like lightning. It takes a lot longer to work through the labyrinth, the copyright ownership, that's involved in any one particular track, in any one particular CD."

Music lovers will pay for online music if the service is easy, the music of high quality, and the process legal, Mitchell said.


NPD Group: Apple ITunes Successfully Translates Brand Awareness Into Usage
Press Release

According to The NPD Group, there is strong consumer awareness for paid music download sites, but convincing consumers to actually use them appears to be a more difficult proposition. Among companies that have entered the paid download arena, Apple‚s iTunes has been the most successful so far at translating consumer awareness into actual usage. On the other hand, companies like Rhapsody and Pressplay that boast a longer history in this arena and a broader base of potential users have less awareness and very low usage rates.

NPD reports that Apple iTunes reached 20 percent awareness among all consumers aged 13 and over based on a survey conducted in June of this year. Among Apple Macintosh users, the initial target for the iTunes Music Store, consumer awareness jumped to 46 percent. In addition, six percent of Mac users have actually paid for a song or album via iTunes. Conversely, Pressplay and Rhapsody, which have been in the market much longer than iTunes, both showed a 14 percent awareness among all consumers. Less than one percent of individuals age 13 and older reported downloading music from either site; future usage intent was not any higher.

"Obviously Apple iTunes has struck a chord among consumers - especially Mac users," said Russ Crupnick, VP of The NPD Group. "Half of this audience is aware of the Apple Store, which is borne out by the fact that iTunes's usage is higher only two months after launch than that of other music sites that have been around for over a year. It remains to be seen whether existing fee-based sites can leverage their offerings to meet or exceed the success enjoyed by iTunes as well as whether they can begin to pull users from free file sharing services like Kazaa and Morpheus."

The business model for Apple iTunes may provide clues as to what other paid sites can do in order to raise awareness, build consumer equity and convert browsers into buyers. They include the following:

- Rethinking the subscription model - A case can be made that Apple‚s higher conversion rate might speak to consumer preference for a fee-per-song/album model as compared with subscription offerings.

- Ability to purchase full albums at a discount - By providing consumers the choice of downloading single tracks or full albums, iTunes provides greater breadth of offering and ease-of-use.

- Built-in portability - By leveraging the success of its successful iPod music player, Apple has leveraged a group of users that are ready to download and go. "NPD research shows that music buyers increasingly demand file portability, and that‚s something early music buying services didn‚t address very well," Crupnick said.


Dividing The Spoils
Guy Dixon

Those in charge of music copyrights don't mince words when it comes to music file sharing.

''You mean theft?'' said David Basskin, president of the Canadian Musical Reproduction Rights Agency Ltd., a group that collects royalties for songwriters in Canada.

For Basskin, there's no murkiness, no room for the argument that file sharing can help promote an artist or create something decidedly more far out, like free music as a new form of communal free love.

No, the facts are these. The right to copy a recording belongs to the owner of that recording. Usually, that's the record company. The right to the song itself as a composition belongs to the music publisher. Not paying for those rights is an infringement of copyright.

"So there is no doubt," Basskin explained, "that every day a large volume of illegal activity goes on. It is both a criminal offence and a civil matter. There is no point trying to dress it up with a name that it is not -- it's on-line shoplifting." (Actually, in the U.S. it’s not theft, according to the Supreme Court, - js.)

So forget the idea of music belonging to the people. It belongs to the people who own it. But as long as a teenager plugs into an amp and plays Blitzkrieg Bop, a conductor overindulges with Beethoven's Symphony No. 9 or a programmer finds a new way to download music anonymously, there will always be rule-breakers. The only solution then, some say, is to legitimize the new technology, just as old record- copying technologies have been legalized, and to license file sharing itself, while also offering pay services that are far superior to peer-to- peer networks such as Kazaa.

"The trouble right now is that technology companies like Kazaa have been trying to get licences for this music. They want to do it legitimately. They want to pay artists. The trouble is that the five multibillion-dollar record companies have refused to give them licences for the past five years," said Ren Bucholz, a grassroots activist on staff with the San Francisco civil-liberties organization Electronic Frontier Foundation.

The EFF is among those trying to push for collective licences for file- sharing services, either through voluntary licences or compulsory licences mandated by governments. It's not hard, argues the EFF. Every medium, from radio to player pianos, has been able to come up with some form of licence to compensate the rights owners for publicly performing or copying music.

The issue gets more complicated with digital distribution since, as is the case with Internet radio, music is being, in a sense, broadcast to listeners on the Web, but it is also being copied on computer servers. Still, licensing issues for Internet radio broadcasts are being addressed, particularly in the United States. File sharing, so far as the industry and licensers are concerned, remains taboo.

No matter how hard free-speech advocates and the tech community push for peer-to-peer licensing, the recording industry only sees it as a last resort, said Michael Geist, technology counsel based in Ottawa for the law firm Osler, Hoskin & Harcourt.

"In a sense, that kind of licensing scheme is an admission that the current set of legal rules and the current marketplace is not able to adequately create the compensation schemes that copyright law is in part based on," he said. "But if we are still debating this issue three, four or five years from now, it may be that the best way for compensation is through a compulsory licence."

One of the things needed to satisfy rights-holders is a way to measure roughly how many times a song is distributed over peer-to-peer networks. Blanket agreements allow for licences in effect to be replicated over and over again depending on how many times the song gets played, but there has to be some kind of accounting process. "Of course the devil is in the detail, but those issues can be addressed," Geist said.

Meanwhile, record companies are slowly coming up with on-line alternatives to file sharing that are beginning to catch on. Apple's successful iTunes service in the United States charges per song or per album, although it limits the number of times a user can copy songs to other devices in order to prevent outright piracy. PC-based imitator BuyMusic.com has also now come on to the American market, and services are expected in Canada by the fall.

Their major selling point is convenience. While file sharers swear by Kazaa, peer-to-peer networks can be a Class-A hassle. They are strewn with poor-quality music files and intrusive spyware that monitors users' movements and bombards them with pop-up ads, along with decoy files that artists and record companies put out to trick downloaders. For many, the idea of spending time negotiating through peer-to-peer networks is pure hell. The more popular Kazaa gets, the more it could become its own worst enemy.

The industry sees another solution, but it's proving to be unpopular. A number of major releases, such as Radiohead's Hail to the Thief, have come out on copy-protected discs that also limit the ability to copy the music. Audiophile formats such as Sony's SACD and DVD-Audio also have copy-protection technology embedded into the discs. The strategy so far has been to see whether consumers will accept this, although Toronto's independent label Arts & Crafts used it, but then regretted it when they initially put it on the Toronto collective Broken Social Scene's latest widely acclaimed album.

"It was our first release as a label, and our distributor used copy protection. They talked to us about it and in theory we went, 'It sounds like a good thing. Let's put copy protection on the record.' And we regretted it almost immediately after doing it," said Jeffrey Remedios, the label's co-owner.

"If someone has gone out and bought the record, you are then saying to them you can't go put that on your iPod [portable music player] or you can't take that and make an extra copy for your car. You actually penalize the wrong person, whereas you can go download those songs off the Internet and they're not copy protected."

And that's precisely what many believe the industry has to get away from -- blame, intimidation and the idea of limiting consumers. Think of it: Legitimizing file sharing and creating better on-line alternatives could have a world of benefits.

It could entice labels to put even more effort into the mastering and presentation of the CDs they sell, following the example of Columbia records and its outstanding Legacy series. It could even push record companies to make available entire back catalogues on the Internet in order to compete with the vast selection on peer-to-peer networks.

It could mean allowing musicians to record what they want, when they want, creating music that depends less on business and distribution decisions and more on talent and audience tastes. It could eliminate the nagging feeling that record buyers live with that the industry is ripping them off by limiting selection. It could move the recording industry into the unimaginable -- a pure heaven for audiences.

As Geist said, "This is too big of a marketplace and too big of an opportunity for the recording industry to completely ignore or treat only as an avenue for lawsuits."
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Is RIAA Targeting You?
Mark Joseph Edwards

The Recording Industry Association of America (RIAA) is hot on the heels of file swappers, namely those who trade music files with popular programs such as KaZaA. If you, or someone on your network has been swapping loads of music files, the RIAA might deliver a subpoena in an attempt to force network operators (including colleges, businesses, and ISPs), to disclose who was using a particular IP address or screen name while logged on to a peer-to-peer (P2P) file-sharing network.

RIAA has either obtained, or is trying to obtain, hundreds of subpoenas in an effort to stop the file swappers who trade the most files. The company is seeking damage payments from people who obtain artist's music without paying for it.

The Electronic Frontier Foundation (EFF) thinks RIAA has gone overboard in its attempts to litigate a solution. EFF is monitoring RIAA to detect any invasions of privacy through misidentification. The foundation has also provided a database so people can try to determine whether RIAA might be targeting their networks or find people using similar screen names.

"The recording industry continues its futile crusade to sue thousands of the over 60 million people who use file sharing software in the U.S.," said EFF Senior Intellectual Property Attorney Fred von Lohmann. "We hope that EFF's subpoena database will give people some peace of mind and the information they need to challenge these subpoenas and protect their privacy."

"EFF is also documenting the scope of privacy invasions committed by the RIAA," explained EFF Staff Attorney Jason Schultz. "EFF's subpoena database will help document the damage done to innocent people misidentified as copyright infringers in the RIAA's overzealous campaign."

An EFF spokesperson said in a press release that "a username appearing in the database does not confirm absolutely that the RIAA has issued a subpoena seeking the name of a particular person, since file sharing services support duplicate usernames as well as allow multiple people to use the same account or same computer. Nor do the records in database reflect all subpoenas issued, due to lags between issuance and entry into the court's electronic record system by court employees. The EFF subpoena database also permits people to check if the recording industry named their Internet address, known as an IP address, in a subpoena."

EFF has also partnered with the US Internet Industry Association and other organizations to help develop what they call the Subpoena Defense Alliance, which is designed to assist ISPs and consumers who are faced with RIAA subpoenas.

People who wonder whether their IP address or screen name might be in the EFF database can visit the foundation's Web site to perform a search.


Study Finds Most Youngsters Surf The Web Unsupervised

More children are being allowed to surf the internet without adult supervision despite repeated warnings of the dangers.

The majority of boys and girls in the age groups 12-13 and 14-15 said they went online without ever being supervised by an adult, new research has found. The last three years have seen the proportion of girls aged 12-13 who said they were "never" supervised while browsing the Internet jump from 33% in 2000 to 53% in 2002. And 71% of boys aged 14-15 said they were never supervised by an adult while using the internet.

Dr David Regis of the Schools Health Education Unit, which carried out the research, said the results were "striking".

"I would hope that people are aware of the dangers - predatory paedophiles, swindles and scams and all the rest of it," he said.

The full study, entitled Young People in 2002, is expected to be published later this year.

One side anyway…

White Paper –

The Impact of Peer-to-Peer File Sharing on a Service Provider Network - by Sandvine Inc.


Nero 6 Recode Introduces 'Bug' That Could Wipe Hard Drive
Posted by Jan Willem

An Chang used our news submit to tell us that the German online magazine PCwelt.de reports that Nero 6 contains a 'bug' that could delete your entire harddrive. The bug is introduced with the Nero 6 Recode project. Bug might even not be the correct word for it, it seems more that Ahead forgot to limit the feature to empty the destination folder for temporarily files.

If this destination directory is set to the root of a disc (e.g C : ) and if the question: "Destination folder is not empty, do you wish to clear it" is answered with yes, all files will be deleted.

Description (badly translated withBabelfish):

Who clicks now over-hurried on "Yes" and had selected as goal file a root listing, short time experiences later its blue miracle: not only a "Video_ts" file put on in the goal file in former times is deleted, but also all other files and file on the partition concerned are deseamed within seconds by the plate. The user is nevertheless asked still whether he wants to delete the files.

A "Design error" is not however nevertheless. Because actually the user should assume "Nero Recode" means the existing "Video_ts" file in under "the target folder" indicated drive assembly and/or listing.

For now we would advise visitors to be carefull with this feature and to make sure to answer no on this question. There is no doubt Ahead will release a fix for this nasty feature soon. More information can be found on PCwelt.de .

Update: Ahead has posted on their website that it will release an update that will make sure this will no longer be possible.


Buymusic.com Misses The Point
Sandy McMurray

Apple's iTunes Music Store, launched in April of this year, provides a hassle-free way to preview, buy and download music on-line. Each song costs 99 cents (U.S.), and can be downloaded with a single click by U.S. customers. There are no subscription fees.

Since the service was launched, Mac users in the U.S. have downloaded more than six million songs. The iTunes Music Store debuted as a Mac-only service, but a Windows version is planned for this fall.

This week, a new download service called BuyMusic.com was introduced in the U.S. Like the iTunes Music Store, BuyMusic.com lets you download songs legally without a monthly subscription fee. Like Apple's store, BuyMusic.com makes high-quality previews of many songs available, so you can try before you buy. And just as iTunes works with Apple's iPod music player, BuyMusic.com is designed to work with digital music players from Creative Labs.

(Both services are US-only for now. Canadian record labels and musicians have to work out a host of legal details before the services can be launched here. BuyMusic.com prohibits sales outside the U.S.; Apple officially prohibits non-U.S. sales, but will sell to anyone with a U.S. billing address.)

Although BuyMusic.com advertises lower prices than Apple's service ("from 79 cents per song"), actual prices vary. Most tunes cost 99 cents (US) just like the iTunes Music Store, but longer songs like Don McLean's American Pie sell for $1.99 (U.S.).

Neither Apple nor BuyMusic.com uses standard MP3 files. Apple uses a format called AAC, which is part of an industry standard called MPEG-4. BuyMusic.com uses Microsoft's Windows Media 9 format. Each system offer better compression than MP3 files, which results in better sound quality in a smaller file.

More significantly, both AAC and Windows Media files also support digital rights management (DRM). In a major concession to music labels and other copyright holders, both the iTunes Music Store and BuyMusic.com restrict what you can and can't do with the music you download.

Apple's "FairPlay" rules attempt to strike a reasonable balance between the desires of the music industry ("No copying!") and customers ("No copy restrictions!"). Apple limits the number of CDs that can be burned using the same playlist, and prevents users from storing downloaded music on more than three Macs at one time.

BuyMusic.com has left the DRM decisions up to each label and copyright holder, which complicates the buying process. Some songs can be burned to CD just once; others can be downloaded, transferred or burned to CD an unlimited number of times. This is bound to create confusion when people attempt to make "mixed" CDs that combine music purchased from different labels.

Ironically, despite its name, BuyMusic.com does not actually let you "buy" music. The system's "Terms and Conditions" note that content is "sublicensed" to users, "and is not sold, notwithstanding use of the terms 'sell,' 'purchase,' 'order,' or 'buy.'"

Furthermore, this "sublicence" is limited to just one PC. The digital download can be played an unlimited number of times "on the same registered personal computer to which the digital download is originally downloaded." The music you download is chained to the PC used to make the purchase. The music you download is also your responsibility. If Windows crashes and wipes out your tunes, BuyMusic.com is not responsible for replacing it.

The iTunes Music Store has another significant advantage over BuyMusic.com: Apple's iTunes software. iTunes keeps track of purchased music, organizes tunes into handy playlists, balances music levels, and links with digital music players, including Apple's iPod.

BuyMusic.com offers Windows users an alternative to subscription-based services, but it fails to match the simplicity and consistency that make the iTunes Music Store an attractive alternative to other download services.

The iTunes Music Store introduced a new system that makes it easy, legal and affordable to download and use digital music files. Like the PC companies that responded to the iMac with egg-shaped PCs wrapped in blue plastic, BuyMusic.com fundamentally misses the point.


Downloading Wars: The Audience

15-year-olds think buying music is for suckers. Middle-aged men can't remember the last time they purchased a CD. As the music industry begins its crackdown, GUY DIXON talks to fans who get their fix from their computers. The first in a three-part series
Guy Dixon

Canadian copies of Jane's Addiction's new album Strays, hitting stores this week, come with a small flyer thanking those who bought the CD. ''On behalf of the creators of this recording, we thank you for making this investment and hope you enjoy this music for years to come!''

It's a pleasant message, if a little stiff, and part of the industry's Value of Music campaign intended to remind buyers of the more than 40,000 people who earn their livelihood from the Canadian recording business. Implicit in the message is a big thank you for not copying the disc for free off the Internet.

But in a Toronto suburb, Mike, a 47-year-old father who can't remember the last time he bought a CD, has already been listening to the album for a month. He burned it from the Internet after someone, probably countless people, loaded it onto the hugely popular, free file-sharing service Kazaa. His copy of Strays is just another of the hundreds of albums he has made by downloading music and then recording it onto blank CDs using technically illegal peer-to-peer networks.

The qualifier "technically" is apt here. Canadian laws, some argue, are a little fuzzier than they are in the United States when it comes to the culpability of computer users of Kazaa and similar networks who access music directly from other users for free, without the record companies getting a cent.

Mike's 14-year-old daughter Rachel also uses Kazaa, although she tends to download singles. Recent choices included R&B and rap hits Baby Boy by Beyoncé and P.I.M.P. by 50 Cent. Does she consider it stealing? "I guess technically it is. But personally I think everybody is far too rich already, so if I want to download their song, it's not really killing them," she reasoned.

Like her dad, she doesn't buy albums either, but as she sees it, "if there weren't still people buying CDs, there wouldn't be music made any more. I don't personally any more, but someone has to." That's the message the industry is trying to get to teens through its flyers, a Web site and most of all with TV ads showing their peers enjoying music as if it were as central to life as eating and sleeping. Rachel says she has seen the ads, but doesn't think much of them.

The problem is that, to many, the message rings hollow. Katie, 15, who downloads songs and TV shows regularly from her home in Chatham, Ont., says that some of her friends believe that only suckers buy music. Leaning toward singer-songwriters such as Michelle Branch and James Taylor, Katie limits herself to two downloaded singles before going out and buying the album.

But she doesn't repent for the few songs she does download. "I don't feel bad about it or anything. If I'm just getting the one song, it's as if I was listening to the radio 24-7, only I don't have time to do that."

Habitual file sharers don't just consider the legal and business rationale. Talk to them, particularly older file sharers, and you hear them enthuse about finding pure treasure -- songs not yet released or long out of print or simply too hard to find at HMV. Many simply want to explore music they would never have bought. To talk to file sharers is to hear about the pure joy of music. There's an excitement in their voices. Their justification for doing it may sway between idealism and hedonism. But for those who file share, the huge selection of free music on offer is astounding. It becomes a drug, and to the industry's powers that be, it's just plain illegal.

The Recording Industry Association of America has thrown down the gauntlet and is in the midst of a major push to gather evidence against those who are sharing "substantial amounts" of copyrighted music. No one outside the RIAA is really sure just how much a "substantial amount" is, although the RIAA has issued close to 900 federal subpoenas in the United States this month as it unleashes its first rounds of suits directly against file sharers.

Already parents of children using the family computer to file share and college students in the United States are being issued subpoenas. The Associated Press found a 50-year-old grandfather who was given a subpoena for downloading what he admits are hundreds of files of hard-to-find European artists.

Ultimately, the draw is the ability to tap into an infinitely larger selection of music, downloaders say. It means circumventing the demoralizing world in which listeners are pulled to their local record chain store, only to find the same uninspiring selection of hit records.

But on the Internet, "everything's available. You can get what you want, when you want it," said Chris, a 42-year-old computer consultant in Toronto with a taste for 1970s jazz-fusion ranging from Jeff Beck to Allan Holdsworth and Chick Corea. The fact that this seems so utterly at odds with his love for Soundgarden's 1994 grunge-drenched Superunknown album only shows the kind of musical eclecticism that feeds file sharing.

He added: "With most of the stuff I've downloaded, I've bought it all once before, so I don't feel bad about downloading it." One study last year by polling company Ipsos-Reid found that 81 per cent of downloaders surveyed in the United States report buying the same amount or more music since they began downloading.


Grooving In Digital
Ian Johnson

In my last column, I mentioned that more and more people are connecting their stereos to computers so that they can listen to digital music beyond the confines of the desk. The result was a slew of letters asking how to transfer old vinyl, tape and CD collections to MP3 or WMA files, and what the benefits would be.

Well, the benefits are easy. At the top of the list: Instead of a mass of vinyl moldering away in the basement or a stack of hundreds of cassettes and CDs sliding around in a drawer, you can store an entire music collection on a few CD-R discs or a single hard drive the size of a paperback book.

For example, a basic 60GB hard drive that sells for less than $125 (Canadian) at the moment can hold roughly 15,000 songs - a month and a half of continuous music - when recorded at the popular 128 Kilobits per second (Kbps) setting. You can store all your music on your desktop or notebook computer's drive, or invest a couple of hundred bucks in a Firewire or USB hard drive so that your collection can be moved easily between machines. For those with a multi-gigabyte MP3/WMA jukebox player, the entire collection can go with you anywhere in a unit smaller than a personal CD player.

Besides portability, it's also quick and easy to find the songs you want when they're stored as MP3 and WMA files. My vinyl, compact disc and cassette collection is quite large, and it used to take me forever to track down the right album when I wanted to hear a specific song (usually because I'd gotten lazy and put the recording back in the wrong sleeve). When files are digitized, they suddenly become searchable by artist or album name, song title, type of music, and so on. You can have the computer or MP3 jukebox comb through a database of thousands of songs in about a second and start playing the track you want.

Durability is also a factor. Tapes get snarled and the quality steadily degrades the more they are played, while vinyl is prone to warping and to music-massacring scratches, and CDs are easily damaged. MP3s and WMAs are digital, so they don't wear out and the only way to hurt them is to hurt the hard drive or player itself.

Yes, hard drives are delicate and they don't last forever - in fact, I had a hard-drive based player fail on me just a few weeks after I bought it. But once you have all your music digitized, insurance is a simple matter of backing your tunes up on a second hard drive or a stack of CD-R discs in case of emergencies. Hit a few keys on your computer, back up the files and you can stop worrying. I've digitized my entire CD collection for disaster-recovery purposes. I have young children who can reach the CD player now and who think CDs are really cool, shiny Frisbees, so I like being able to keep my music collection safely out of the way inside a computer and backed up.

With everything digitized, I can also build my own custom playlists. At a dinner party, I can put on a playlist of several hundred songs that fit the mood of the evening and not worry about hearing Tom Cochrane's Boy Inside the Man or Big Country's Ships 20 times throughout the evening as I used to when my five-disc CD player was set to random-play.

Load the digital files onto a portable player and you get the added benefit of skip-free mobile music, even if you're listening while practicing your latest trampoline routine.

OK, so how's that for a quick outline of the benefits? Now for the caveat.

There is a quality argument that MP3/WMA files are inferior to original commercial recordings. There is some truth to this, but you have to make sure you're comparing apples to apples.

CD quality, and especially DVD-audio quality, is FAR superior to most MP3 or WMA recordings when you look at the raw numbers — the sampling rate, frequency response, and so on. This is because most of the MP3s on file-swap and download services are crummy digital copies or "rips" made on slow computers with bad software. They also tend to be recorded at 64-, 96- or 128-bit rates, which are sub-CD quality.

But MP3 and WMA can offer CD-like quality if you boost the bit-rate and make the files with a fast computer that can keep up with the data throughput load. If you crank the recording bit rate up to at least 160 Kbps (near CD quality), or even 256 Kbps or 320 Kbps, the difference is pretty much nil as far as the average listener is concerned. The tradeoff is that higher quality recordings mean larger files sizes.

Some may notice a difference between a CD and a 160-bit MP3 when wearing headphones, but there are very few people with ears sharp enough to notice the difference with higher bit-rate recordings - or even when you play 128-bit music back over a home stereo system's speakers for that matter, as long as the file is clean. I've got a midrange home theatre system - Yamaha amp, Paradigm speakers and subwoofer - and when I've got a clean 128-bit or 160-bit MP3 file, I honestly can't tell you whether I'm listening to the song on CD or MP3.

It really comes down to personal taste — sonic beauty is in the ear of the beholder. If you prefer CDs, vinyl and tape and can honestly hear the difference between them and high-bit-rate MP3/WMA audio, stick to traditional music formats and enjoy your collection as it was originally recorded. If digital files meet your listening needs, then they're an option with some benefits that traditional recording media don't have.


China Plans Rival Format To MPEG
Posted by xix

The Chinese government is supporting an effort to develop a homegrown standard for compressing digital audio and video, in its latest attempt to assert its technological independence from the rest of the world.

The competing Chinese standard, known as AVS, will be proposed as a national standard in 2004, the China Daily newspaper reported, citing Huang Tiejun, secretary-general of the Audio Video Coding Standard Workgroup.

Chinese manufacturers licensing that technology would pay fees in the order of one yuan ($1=CNY8.28) per device, much lower than those for MPEG, the report said. If it becomes a national standard, products of foreign companies sold in China could also have to use AVS.



By 2004, CableLab’s latest standard, Docsis 2.0, will be available in both cable modem and head-end equipment, and that will have a dramatic impact on the amount of bandwidth customers can access. 1.0 and 1.1 equipment is capable of a maximum upstream rate of 10 Mb/ s (and in practice, usually 5 Mb/s), compared to 30 Mb/s downstream. Docsis 2.0 equipment will enable 30 Mb/s rates in both directions, though for entire neighborhoods not individual customers. The improvement stems from better signal modulation and error correction.

While Docsis 1.1 helps enable real-time services, Docsis 2.0’s greater upstream bandwidth will make those services available to more customers, because there will be more bandwidth to share. 2.0’s new symmetric bandwidth—the same bandwidth in both directions—will let cable companies offer high-speed two-way services to businesses, which usually need to uplink as much or more information as they need to download.

Docsis 2.0-improved equipment will not only provide greater absolute upstream bandwidth, but it will also pack more information into signals in both directions. According to Rouzbeh Yassini, senior executive consultant at CableLabs and founder and CEO of YAS Broadband Ventures LLC (Andover, Mass.), Docsis 1.0 and 1.1 can transmit a maximum of 10 Mbps over a signal that spans six MHz. Thus, the 30-Mb/s downstream capacity of Docsis 1.1 systems requires a total of 18 MHz bandwidth (obviously, the bandwidth is not necessarily adjacent on the radio-frequency spectrum). With Docsis 2.0, one six MHz band can transmit 30 Mb/s—a tripling of capacity. That opens up huge opportunities for new Internet cable services, such as niche entertainment Web "channels" that cater to small audiences (like our fictional All-Scottish Sports Channel).

Cable companies expect to start deploying Docsis 2.0 equipment and services sometime in 2004. "Going from Docsis 1.0 to 1.1 is a big change, but 2.0 is extraordinarily important," says Craddock. "I can’t wait for it."


Radio Days: World Radiocommunication Conference Concludes Work in Geneva
Giselle Weiss

Spectrum is allocated for wireless local-area networks, high-altitude base stations

Geneva, 9 July 2003—Roughly every three years, expert delegations representing virtually every country of the world meet under the auspices of the International Telecommunication Union (ITU) to re-divvy and re-allocate the radio spectrum to reflect changing needs. This time around, the World Radiocommunication Conference 2003—an important but rather arcane diplomatic event— took place from 9 June to 4 July in Geneva, with 2506 participants and 151 delegations attending. It was even more widely representative than the previous one, WRC-2000, which took place in Istanbul, and the number of agenda items this year was more than twice as large as three years ago. That made the job of getting work accomplished more challenging than ever [see "How the WRC Gets Things Done"].

The Istanbul conference, as IEEE Spectrum reported [link "reported" to http:// http://www.spectrum.ieee.org/special...00/index2.html] at the time, was dominated by a single huge issue, allocation of new frequency bands for use in IMT2000 third-generation (3G) cellular telephony systems. This year, in contrast, "there are many more issues, and many of them are small," observed Alan Jamieson, a spectrum allocation consultant based in Auckland, New Zealand, who managed the 3G negotiations in Istanbul. Still, some of the items on this year’s agenda also attracted considerable interest because of their commercial potential, as this reporter for Spectrum learned, pacing the corridors, dropping in on sessions, and button-holing delegation leaders as the opportunity arose.

Though security initially was rather tight, as the conference wore on precautions largely boiled down to a couple of guards checking badges. Delegates and the rare technically-minded reporter could move easily in and out of the conference headquarters, during what was the hottest June in Switzerland since 1753. As it happened, adjusting radio regulations for security and emergency relief—be it terrorism, heat and drought, flooding or earthquakes—was one of the more prominent conference themes.

Probably the most important decision making at WRC-2003 was in these areas:

· Harmonizing public protection and disaster relief radio services

· Readying spectrum for high-altitude platforms—for example, balloons—to serve, in effect, as cellular base stations

· Giving airline passengers broadband Internet access

· Getting more spectrum for wireless local-area networks like Wi-Fi (IEEE 802.11)

How important are the treaty-force decisions adopted at the radio conferences? Do they actually make things happen, or merely set the stage and open possibilities? Asked about the 3G cellular bust that set in right after Istanbul, where negotiators were much influenced by a momentary 3G boom prompted by the runaway success of Japan’s iMode system, Jamieson emphatically rejected any notion that the WRC-2000 spectrum allocations for 3G were premature. If spectrum hadn’t been identified then, he argued, "We’d just be going through it now."

Even in India, where 3G is still considered a distant prospect, cellphone subscriptions are increasing at a rate of 800,000 per month, noted Bharat Bhatia, a member of the Indian delegation to WRC-2003. And it was India, Bhatia emphasized, which first got the subject of emergency relief added to the WRC agenda, in 2000—though it was an uphill battle—another example, he felt, of the radio conference anticipating important emergent needs.


Senator Calls For Reports On Gov't Data Searches

Civil liberties groups throw their support behind the legislation.
Grant Gross

Civil liberties groups including the Electronic Frontier Foundation and the Center for Democracy and Technology are throwing their support behind a piece of legislation that would require U.S. agencies to report to Congress about the personal information they collect.

Senator Ron Wyden, a Democrat from Oregon, introduced the Citizens' Protection in Federal Databases Act of 2003 on Tuesday. The bill would require federal law enforcement and intelligence agencies to disclose when they subscribe to commercial databases of personal information.

Wyden's legislation would require reports from U.S. agencies including the U.S. Department of Justice, U.S. Department of Homeland Security, U.S. Department of Defense, and U.S. Federal Bureau of Investigation. The reports would have to disclose agency contracts to obtain commercial data, how the agencies analyze the data and the privacy guidelines used by the agencies.

The bill also prohibits all federal agencies from conducting searches of commercial data to create hypothetical scenarios of future terrorist attacks.

Wyden argued that no comprehensive privacy laws now exist that regulate the federal government's access to, or use of, public or private databases. "This legislation would hold the government accountable to Congress and the American people when federal agencies seek to dig through an American’s most personal information," he said in a statement.


Conference Shows Doubts Still Plague Online Music

Divided music industry cannot even agree what the market's biggest problems are.
Marc Ferranti

Despite the fact that major music companies have finally joined Internet services to offer a much greater variety of authorized online music than a year ago, market growth is sputtering as the industry remains mired in legal and business problems, judging from what entertainment and Internet insiders had to say at the Jupiter Plug.IN Conference & Expo in New York this week.

Contention over publishing contracts, debate over how restrictive to make DRM (digital rights management) copy controls, continuing use of unauthorized file-swapping sites, and failure to capitalize on new marketing techniques made possible by the Web continue to curb growth, according to speakers here.

Jupiter kicked off the conference announcing that online CD sales in the U.S. will remain flat in 2003, at $750 million, or 7 percent of the entire recorded music market in the country. Less than $75 million of those sales will be for music that is downloaded, according to Jupiter, based in Darien, Conn.

Part of the problem is that difficulty over obtaining necessary publishing contracts is forcing online services to put a variety of restrictions on the ability of paying consumers to download songs and burn them onto CDs, some panelists here said.

"We want to give music to the people the way they want to have it, but the question is will the licensing and the lawyers get out of the way," said Jonathan Potter, executive director of the Digital Media Association (DiMA), a Washington, D.C.-based trade group.

Several panelists and conference attendees cited restrictions on Apple's iTunes Music Store, which allows consumers to burn songs onto CDs, but makes that service available only to users who can supply a valid U.S. billing address.

Looming over the debate, as it has been for years, is the specter of file-swapping services that let Web surfers trade unauthorized copies of copyright music. The extent to which copy controls should be implemented is still the subject of raging debate in the industry, and several heated conversations during panel discussions illustrated this.

"What would you do if your livelihood was threatened? Technology has to be part of the solution -- when cable companies made it more difficult for people to steal cable [TV], then the amount of people stealing cable went down. We don't need to eliminate piracy altogether, we could live with 5 percent, but technology needs to be part of the answer," said Ron Stone, co-founder and president of Gold Mountain Entertainment, based in Los Angeles, and a veteran manager of the careers of rock stars such as Neil Young.

But some industry insiders here said that attempting to stop piracy with legal controls on copying may be fruitless or at best a waste of time and money.

Rather than target ISPs with subpoenas and lawsuits in an effort to root out users of file-swapping services like Kazaa, the recording industry should work with network operators to come up with a fair flat fee that the service providers would pay for the file-swapping traffic, according to Jim Griffin chief executive officer of Cherry Lane Digital, a consulting company.


Seizure Of Business Records Challenged

The measure has provoked strong objections from booksellers and librarians, who view it as an unwarranted intrusion into citizens' reading habits
Dan Eggen

The American Civil Liberties Union joined several Islamic and Arab American groups yesterday in filing a legal challenge to a key provision of the USA Patriot Act, which allows the government to seize business, library and computer records in terrorism investigations without publicly disclosing that it has done so.

The ACLU lawsuit, filed in federal court in Detroit, argues that the law violates free-speech rights and constitutional protections against unreasonable searches and seizures. The plaintiffs, including a Michigan Islamic group and an Oregon mosque, also allege in the lawsuit that they have been targeted for investigation by the FBI because of their ethnic and religious characteristics.

"Ordinary Americans should not have to worry that the FBI is rifling through their medical records, seizing their personal papers, or forcing charities and advocacy groups to divulge membership lists," said Ann Beeson, the ACLU's lead attorney in the lawsuit.


Vivendi Remains Firm On Price And Fit
Tim Burt and Peter Thai Larsen

When Jean-Bernard Levy met Vivendi Universal investors recently, the chief operating officer of the French media and telecoms group was blunt. "The dream of creating a global content and communications empire has collapsed," he said. "We are engaged in a methodical process to divest assets, but they will be sold only at the right price."

This week, Metro-Goldwyn-Mayer decided the price was wrong. The US film studios group withdrew an $11.5bn offer for Vivendi's US entertainment assets, saying: "The seller's current price expectation would not be consistent with our valuation of the assets."

MGM is the latest casualty in the auction of Vivendi Universal Entertainment (VUE), comprising Universal Studios, cable networks and theme parks.

Vivendi, which has embarked on a ?16bn ($18.3m) disposal programme, has rejected an approach from Universal Partners, a consortium led by Marvin Davis, the US oil billionaire. And it has warned the remaining bidders - Liberty Media, NBC, Viacom and a group led by Edgar Bronfman, the Vivendi board member - that it values VUE at about $14bn.

Vivendi is thought to favour a deal with General Electric, which would merge its NBC television unit with VUE to create a new media group, leaving Vivendi as a minority shareholder.

The NBC transaction is unlikely to include upfront cash, but it may be Vivendi's best hope of achieving the valuation it wants. As it involves merging two unlisted subsidiaries, bankers could tailor the valuations to help Vivendi claim a full price.

The issue is complicated by a $2.4bn liability for preferred interest shares in VUE, held by Barry Diller, the veteran US media executive, and his InterActive technology company. That liability dates to Mr Diller's sale of his USA Networks to Vivendi last year.

Concerns over such obligations prompted one adviser to warn: "The process is going a little sideways; a gap is emerging on valuations."


Internet Use Is Not Harmful to Kids' Health, Say Researchers
Mike Martin

Despite its dark reputation as a haven for porn-peddling pedophiles, the Internet may actually be good for kids - - very good, in fact, claim researchers with a National Science Foundation-sponsored project at Michigan State University (MSU).

Not only does Internet use have no negative effect on users' social involvement or psychological well being, it increases children's grade-point averages and standardized test scores, says MSU psychology professor Linda Jackson, the principal investigator on a recently completed three-year study aptly called HomeNetToo.

"We found no evidence that using the Internet at home reduces social contacts or undermines communication with family or friends," said Jackson. "Adult participants who used the Internet more were no more likely to communicate less with family and friends, participate in social groups, become depressed or to experience hassles or stress due to time conflicts than those who used it less or not at all."

Surprisingly, however, children -- not adults -- may experience the biggest net gains from Internet interactions, Jackson explained.

"HomeNetToo children who spent more time online using the Web performed better in school after one year than those who spent less time online," Jackson told NewsFactor. "It appears that the text-based nature of most Web pages is causing children to read more, resulting in improvements in grade-point averages and performance on standardized tests of reading achievement."

The researchers examined how the design of Web pages makes it easier or more difficult to understand and remember content. Their study focused on health information -- in particular on content about high-blood pressure, a serious problem in one study cohort -- the African American community.

Working with MSU's Media Interface and Networking Design (MIND) laboratory, the research team created interfaces adapted to users' preferred mode of information processing and used experiments to examine whether learning information about high blood pressure was easier with user- adapted interfaces or standard "magazine-style" Web page interfaces.

"Culturally adapted interfaces resulted in more favorable attitudes than the typical magazine-style interface," said Frank Biocca, Ameritech professor of telecommunication at MSU. "Learning was enhanced when interface adaptation matched the users' cognitive style.”


Internet Song Swappers Say Legal Threats Won't Stop Them

Online song swappers say the fear of getting hammered with a hefty lawsuit has had little effect on their habits -- at least for now.
Edward C. Baig

Just 17% of swappers ages 18 and over say they have cut back on file sharing because of the potential legal consequences, according to a survey released by Jupiter Research at the company's annual Plug.IN digital music conference Monday. And 43% see nothing wrong with online file trading; only 15% say it's wrong.

The survey was completed after the recording industry began issuing a flood of subpoenas in an attempt to discover the identities of illicit song traders. Measurements have since shown traffic slowing on some of the most popular file-swap services on the Net.

But conference participants expect it will take a number of tactics to make a difference. "There should be a combination of a stick and a carrot," says Tsvi Gal, chief information officer at Warner Music. "The likes of [Apple's] iTunes proved that there is a market for people who want to be honest."

Adds Jonathan Potter, executive director of the Digital Media Association, a trade group: "Cable service theft stopped when you saw your neighbor walking down the street with silver handcuffs and an orange jumpsuit. How many subpoenas will they have to [serve] to grandparents and parents until the parent says to the kid, 'What are you doing on my computer?' They'll shut it off fast."

Overall, Jupiter remains bullish on the state of online music in the long haul, though it has slashed its forecasts because of industry doldrums. The "digital channel is still in its infancy," Jupiter analyst Lee Black says. The online music market is expected to reach $3.3 billion in 2008, about a fourth of the total U.S. consumers will spend on music that year, and quadruple the amount consumers are currently spending online.

Other predictions:

· CDs will not be replaced anytime soon. But offline sales will continue to sag as consumers increasingly move online to shop and retailers make room on store shelves for DVDs and video games at the expense of compact discs.
· File sharing will become marginalized as consumers are put off by poor quality, "spyware" and ads.
· Online sales will slowly shift from discs to digital downloads. That's because downloads are cheaper and more immediate, and buyers can pick individual tracks.


Top 10 D/Ls - Singles


Backlash Predicted in File-Swapping Wars

James Maguire

Yankee Group analyst Mike Goodman told NewsFactor that "this is going to make a lot of people unhappy. And who do you think these people will turn to? Their congressman. At that point, all the PAC [political action committee] money in the world won't save you."

Responding to the music industry's threats of legal action against a mass of individual P2P users, the Electronic Frontier Foundation has created a Web page where users can check to see if they are being targeted by the RIAA, the industry trade group bringing the suits. The EFF's Web page enables users to check for their user names before a subpoena reaches them. At least two ISPs say that if a user responds within seven days, the ISP can deny the RIAA's subpoena and refuse to turn over personal contact information.

The move by the EFF followed a new offensive by the RIAA; the group has sent out over 900 subpoenas to ISPs since July 26th to gain the information necessary to file civil lawsuits against individual file swappers.

Although some industry observers say the RIAA's targeting of individuals will create a backlash, RIAA spokesperson Jonathan Lamy told NewsFactor the group's efforts are working. "If you look at the lawsuits we filed against four college students who were running mini-Napster networks, within days of that announcement nearly two dozen similar networks across the country came down."

But Yankee Group analyst Mike Goodman told NewsFactor that "this is going to make a lot of people unhappy. And who do you think these people will turn to? Their congressman. At that point, all the PAC [political action committee] money in the world won't save you.

"I would love to see the first time a senator's or a congressman's kid gets a subpoena," Goodman said.

At the EFF site, users can enter their file-sharing moniker to see if they are being subpoenaed. The site queries a database that includes a list of subpoenas filed in the Washington, D.C., district court.

If an individual's moniker is in the database, that does not necessarily mean they are being subpoenaed. Many file-sharing nicknames are used by more than one person.

For each nickname used, the EFF lists a link to the PDF file of the subpoena. This includes the ISP name, the IP address of the individual, and the list of songs an individual has distributed.

For those individuals involved, the Subpoena Defense Alliance lists attorneys and additional legal information.

The RIAA's new wave of subpoenas is intended to target heavy P2P users, according to the trade group. But what precisely constitutes a heavy user is unclear.

Experts say the action is most likely to target users who have a T-1 connection, keep their systems on continuously, and share thousands of files. Also most likely to be targeted are supernode P2P users, individuals whose systems are used as major network connection points for services like Kazaa.

Although such users are most commonly found in universities, any user with a high-speed connection may fit these profiles.

The RIAA will begin filing these suits in late August or early September, coinciding with the start of the new school year. As for the penalty, "we'll leave it up to the court to decide" dollar amounts, RIAA's Lamy said.

The RIAA's court filings show the organization is likely to use snapshots of a P2P user's shared file folder as evidence in lawsuits.

Under the 1998 Digital Millennium Copyright Act, a copyright owner can issue a subpoena to force an ISP to turn over the name of suspected copyright infringer.

Verizon, an ISP, has been attempting to overturn this law. Verizon, along with another ISP, SBC Communications, has informed users that they seven days to challenge a subpoena. If the ISP does not hear from the user's attorney in that seven-day period, it will turn over the information to the RIAA.

"This is one of those wars where they're going to win every battle and lose the war," Goodman said of the RIAA's efforts to combat P2P piracy. "P2P networks are like cockroaches. As soon as you eliminate one, a dozen new ones come scurrying forth."


FTC Warns Against File-Sharing And Spyware

The US Federal Trade Commission issued an alert yesterday, warning consumers about the risks of file-sharing and spyware. The alert came only days after a bill was introduced into Congress requiring that spyware could only be used on a computer if the computer user had granted permission.

Using file-sharing software like KaZaA involves risks – and the music and movie industries will be only too pleased to hear the FTC warnings consumers about the increased risk of exposure to viruses, of unwittingly sharing private files with others, and of becoming "mired in legal issues" if downloading copyright-protected material.

The Recording Industry Association of America made clear late last month that it plans to sue thousands of individual users of file-sharing services. According to Nielsen// NetRatings, this had an almost immediate effect on the level of file-sharing activity: KaAaA and Morpheus, two of the most popular file-swapping services, had 15% fewer users during the week ending 6th July, according to the analysts.

The FTC also called for parents to discuss file-sharing with their families, to ensure that everybody is aware of the risks involved – because, it cautions, users "may unwittingly download pornography labelled as something else.”

The FTC also warned consumers about spyware.

Spyware is the term for software that is used to collect information about an individual or organisation without their knowledge. It can be deposited as an e-mail attachment or as a download.

According to the FTC:

“Spyware monitors a user's browsing habits and then sends that data to third parties. Sometimes the user gets ads based on the information that the spyware has collected and disseminated. Spyware can be difficult to detect and remove. Before you use any file-sharing program, you may want to buy software that can prevent the downloading of spyware or help detect it on your hard drive.”

In June this year AOL subsidiary Netscape Communications agreed to pay $100,000 and delete user data under a settlement over a feature of the company's browser that New York Attorney General Eliot Spitzer considered to be spyware.

The browser had a function which tracked web pages accessed by users, albeit there was no suggestion that Netscape used, or intended to use, the information gathered.

A bill was recently introduced into Congress that requires companies to inform PC users of their intent to install spyware, and to obtain permission before loading it onto a computer.

The FTC consumer alert is available here.


Sales Of Pirated Music CDs Top One Billion Units

Global sales of pirate CDs have more than doubled in the last three years and now generate an illegal international business worth more than $4.5 billion, according to a new report published by the IFPI today.

Sales of pirate CDs are estimated to have risen by 14%, exceeding one billion units for the first time last year - meaning that one in three of all CDs sold worldwide is a fake - while the total value of the pirate music market, including cassettes, was $4.6 billion, up 7% on the previous year.

The figures mean that the global pirate music market, at $4.6 billion, is of greater value than the legitimate music market of every country in the world, except the USA and Japan.

Much of the proceeds from music piracy are funding organized crime syndicates, and the legitimate music industry in several of the worst-hit countries is threatened with collapse, says the report on Commercial Music Piracy 2003. The report, naming a list of top ten priority countries (with China as worst offender).

According to the IFPI's report, enforcement activity seized 50 million units last year, significantly more than ever before; but this is still only one in 20 of all the pirate discs sold worldwide.

The report also points to the huge losses piracy causes to investment, economies, cultures and tax revenues and calls for government reforms in three key areas: stronger copyright and enforcement rules; regulation of CD plants; and more aggressive prosecution of copyright crimes.


Trade Marking HotSpot

Deutsche Telekom has made applications to register the word “HotSpot” as a trade mark, according to a report by Computing magazine – albeit the term is widely used as a generic word for an area where the internet can be accessed using wireless technology.

This won't deter Deutsche Telekom, which previously registered the colour magenta as a trade mark in the telecom and on-line services sector. In July 2001 the German telco warned book publishing web site my-favourite- book.com over the use of the colour on its site.

Computing notes that applications have been made to the World Intellectual Property Organisation and the Office for Harmonisation in the Internal Market; but the only results appearing in the search engines of both bodies are for figurative marks – where the word HotSpot is displayed as part of a logo, in Deutsche Telekom's distinctive magenta and grey colouring, which seems much more reasonable.

It is less clear if the company has separate pending applications for the word in isolation, as Computing implies. If so, it could face objections from Telefonica: the Spanish telco already does have a registration with the Office for Harmonisation in the Internal Market for the two-word variant "HOT SPOT" as a trade mark when used in connection with telecommunications or communications by computer networks or services. The registration was granted on 20th March this year.


Greplaw Interview with Electronic Frontier Foundation Chairman Brad Templeton

Brad Templeton on Usenet Policy, Spam and Reinventing the Phone

Mr Brad Templeton should be no stranger to the long-time Greplaw readers. Still the chairman of the board of the Electronic Frontier Foundation might be a new acquaintance to many Greplawers, and this CDA fighter's strong opinions on subjects ranging from spam, copyright policy and Internet regulation demand quite an audience. Greplaw is therefore happy to provide you with a fresh pick of Mr Templeton's brain.

# Who is Brad Templeton?

Well, with luck the web page explains that. My foundation is as a technologist. I've been lucky enough to play at the start of many of the recent technology revolutions. I was shown a mainframe computer for the first time as a teenager in 1976, and within a couple of years I was deep into early PCs and sold a game to Personal Software, the company that sold Visicalc. I joined on as their first employee and got to write more games, work a tiny bit on Visicalc and demo it at its launch. Then they hired me to write VisiPlot, the companion product for the PC. Funny thing is, to do all this, we needed Arpanet accounts, and I quickly realized that networking people was going to be the real application for these computers. In the 80s I played around a lot with that, wrote compilers and other tools, including many of the popular system tools for Commodore computers.

# Looking at the world around us, it seems like we're getting more filters, more censorship, more patents, more copyright and less freedom on the Internet. Has the EFF failed?

We've won a number of significant victories, some of which have been talked about in this interview, and many more recent ones which are outlined on our web site. We've also had significant losses, such as the 2600 case where the court ruled an online magazine could not publish the results of important reverse engineering of how to play a DVD.

But all these cases are coming because of a tremendous explosion of freedom that has been going on around us, thanks to the computer. This is a rare juncture in history. We're in the middle of a revolution and we know it. The main tide, in spite of the setbacks is still towards victory. I admit to getting a little more scared of late, after the Patriot Act and the DMCA. What we're doing is vitally important. Even those who would be champions of those laws would agree that it's vital to have a healthy campaign to oppose them and provide checks and balances. However, some of these laws and proposed new ones are so scary that we need to do more than provide balance. That's how we spend our member's money.

# Being around the Internet for so long - what is your greatest fear for the future?

I fear people will buy into the idea that there is an inherent tradeoff between fundamental rights and safety, so that everything that frightens us shifts that balance and takes away rights. A lot of people seem to believe this and say it. It's a scary world and it's going to get nastier for a while. Rights lost take a long time to come back, indeed they usually only come back in revolutions.

So many times when people make this tradeoff it's just because they didn't think hard enough how to keep rights and increase safety at the same time. We need a force in society to push for that, and it's a daunting task. Many people don't worry about lost rights or privacy until after they are taken away.

# And your greatest hope?

In spite of all these forces, great new media of freedom keep flourishing. Bloggers and WiFi and tunnels through the great Firewall of China. The opponents of freedom are on the defensive. It's nasty, because they tend to over-react and work to protect their established turfs. 9/11 showed them taking a forward leap, grabbing new powers when the opportunity arose. But mostly, these bad laws and bad situations are happening because some new freedom has sprung on the landscape that frightens certain powerful interests.

My great hope is that new things I haven't yet imagined will continue to bloom.



Abit Throws Gauntlet Down To RIAA, Governments

"Keep the RIAA away from your Kazaa files"

A RELEASE FROM motherboard company Abit has made the strange claim that security technology on its motherboard will "keep the RIAA away from your Kazaa files".

And in a further fit of either bravado or an attempt to be crazily cool, the firm says that its Secure IDE technology will "keep government supercomputers busy for weeks".

Secure IDE, says Abit, has a special decoder without a special key, and that means hard drives can "never be opened by anyone".

That means that even "hackers and information thieves" cannot access the data, even if it's removed from a PC.

It claims that passwords can be cracked in hours but Secure IDE is a different kettle of fish altogether.


UK 'Bans' iPod Radio Add-On
Tony Smith

Griffin Technologies' iTrip iPod add-on is illegal in the UK, British distributor A M Micro has said.

The iTrip connects to an iPod and transmits songs by FM radio to any radio receiver in the vicinity. While its operation in the US is permitted by the Federal Communications Commission, over here the device contravenes the UK Wireless Telegraphy Act of 1949.

Unlike the 2.4GHz band in which 802.11b Wi-Fi operates, or 802.11a's 5HGz band, for example, the 87.7-107.9MHz band used by the iTrip is not licence-exempt spectrum, according to the WTA. As such broadcasters hoping to use that part of the spectrum need the permission of the UK's Radio Agency.

The rules state that UK broadcasters have unique access to the frequencies they have licensed, and that, say the RA, means the iTrip can't transmit on frequencies already taken in the FM band. A M Micro can't license a section of the band and dedicate it to iTrip users because all the available FM frequencies have already been licensed.

Cost isn't an issue - it's only £339 ($548) a year for VHF stations with under 100,000 listeners. That said, anyone using the iTrip would also need to cough up £500 ($808) a year to the Performing Rights Society to cover royalty payments to artists whose music is broadcast.

Of course, the iTrip broadcasts at very low power - the device itself draws all the power it needs from the iPod itself - but it's still enough to intrude on a broadcaster's licensed frequency, potentially interfering with listeners who have tuned into a specific station.

The bottom line, says A M Micro, is that using iTrip is an offence akin to operating a pirate radio station. If caught, the user faces prosecution, as does the dealer for selling him or her their iTrip. Not surprisingly, A M Micro wants to avoid that.



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Senator Launches Investigation Into RIAA Piracy Crackdown
Frederic J. Frommer

The chairman of the Senate's permanent subcommittee on investigations Thursday began an inquiry into the music industry's crackdown against online music swappers, calling the campaign "excessive."

"Theft is theft, but in this country we don't cut off your arm or fingers for stealing," said Sen. Norm Coleman, a Minnesota Republican who was a rock roadie in the 1960s.

The Recording Industry Association of America announced plans in June to file several hundred lawsuits against people suspected of illegally sharing songs on the Internet. Copyright laws allow for damages of $750 to $150,000 for each song.

In a letter to RIAA President Cary Sherman, Coleman criticized the group for issuing subpoenas to "unsuspecting grandparents whose grandchildren have used their personal computers" and others who may not know their computer is being used to download music.

"The industry seems to have adopted a 'shotgun' approach that could potentially cause injury and harm to innocent people who may simply have been victims of circumstance, or possessed a lack of knowledge of the rules related to digital sharing of files," Coleman wrote.

He asked the RIAA to furnish him with a list of its subpoenas; its safeguards against invading privacy and making erroneous subpoenas; its standards for issuing subpoenas; and a description of how it collects evidence of illegal file sharing.

"I recognize the very legitimate concerns about copyright infringement," Coleman said in a conference call with reporters. "This is theft. But I'm worried that the industry is using a shotgun approach."


Sony Wins Australian Mod-Chip Case

Original verdict overturned by appeal judges

JAPANESE GIANT Sony has managed to overturn a decision by an Australian court last year which said it wasn't illegal to sell mod chips for the Playstation 2.

According to Australian IT, the decision by a federal court could hike up the cost of computer games and music CDs.

The original case found that Eddy Stevens hadn't acted illegally by distributing mod chips for the Playstation. Mod chips allow copy protection measures to be avoided and also break region codes used by Sony to sell Playstations.

But at Sony's appeal yesterday, the judges overturned the original verdict. Lawyers in Australia believe that the implications of the success for Sony could mean copyright owners can enforce DVD encoding and CD copy protection.


Subpoenas Sent to File-Sharers Prompt Anger and Remorse
Amy Harmon

A blizzard of subpoenas from the recording industry seeking the identities of people suspected of illegally swapping music is provoking fear, anger and professions of remorse as the targets of the antipiracy dragnet learn that they may soon be sued for hundreds of thousands of dollars in damages.

The Recording Industry Association of America has obtained close to 1,000 such subpoenas over the last four weeks to more than a dozen Internet service providers, including Verizon, Comcast and Time Warner Cable, and several universities, including Boston College and the Massachusetts Institute of Technology, demanding the names of file swappers. Most Internet providers are notifying the unlucky subscribers by mail that they are legally required to turn over their contact information.

Those on alert include several college students, the parents of a 14-year-old boy in the Southwest, a 41-year-old Colorado health care worker and a Brooklyn woman who works in the fashion industry.

"They could have used some other way to inform people than scaring the bejiminy out of them," said a mother who received a copy of the subpoena last Wednesday, listing several songs that her 14-year-old son had made available for others to copy from his computer. "If someone had sent me a letter saying `this is wrong,' you can bet your sweet potatoes that would have gotten my attention. This just seems so drastic."

The ominous letters and a list of screen names culled from court filings that is circulating on the Web underscore the unusually personal nature of the industry's latest effort to stamp out online piracy, which it blames for a 25 percent drop in sales of CD's since 1999. Under copyright law, the group can be awarded damages of $750 to $150,000 for each copyrighted song that was distributed without authorization.

Some of the targeted Internet users expressed shock that they were singled out for an activity that tens of millions of Americans are believed to engage in. Others said they were unaware they were doing anything wrong. Most of those interviewed refused to be identified by name, citing privacy concerns and the potential impending legal action against them.

The mother of the 14-year-old boy said she had assumed that her son's file-swapping was all right because she knew that Napster, the company that drove the original wave of online music piracy, had been shut down after the record companies sued. Any other company whose software is used by so many of her son's friends, she reasoned, must have done something different to be allowed to continue operating.

After receiving a copy of the subpoena in the mail on Wednesday, the mother said she did some research and learned that though the software itself might be legal, the way her son was using it was almost certainly not. The 150 songs her son had on his computer have been deleted, along with his computer privileges for the rest of the summer.

"We've had extensive discussions about why it was wrong, and how it's kind of like plagiarism, taking someone else's words or someone else's music and not giving them credit for it," she said. She added that her son stayed in his room all day, while her older daughter worried that her parents would not be able to pay for college next year.


Tim O'Reilly interview: Digital Rights Management is a Non-starter

At last year's Apple World Wide Developer Conference (2002) I was lucky enough to attend a very informative talk by Tim O'Reilly (of O'Reilly Publishing) in which he spelt out his theory of watching 'alpha geeks' in order to spot future trends and how web services, open standards and always on connectivity mean that the internet is replacing the desktop operating system. Just over a year on from that talk, Tim was kind enough to answer a few of our questions here on stage4.

We are going through a major paradigm shift in terms of the distribution of music and other digital content. What is your view on the future relevance of DRM technologies, Peer2Peer networks, and traditional media companies?

In the end, I think that DRM is a non-starter, at least as currently conceived. It's baffling to me that the content industries don't look at the experience of the software industry in the 80's, when copy protection on software was widely tried, and just as widely rejected by consumers. As science fiction writer William Gibson said, "The future is here. It's just not evenly distributed yet." The software industry was the first to face the issue that bits are easily copyable. It was also the first to try to create artificial boundaries to that copying. But because copy protection greatly inconvenienced customers, it slowed the adoption of any software that used it. We're seeing exactly the same thing now with music, where copy protection schemes have caused consumers to reject the crippled offerings of the commercial online music services.

And it's just foolish, because we have many counter examples of free services being replaced by higher quality paid services. A good example is the ISP industry. In the late 80's, many of us in the computer industry got our email and usenet news via a cooperative dialup network called UUCP. Users agreed to have their computers call each other at specified times to exchange mail and news; it took about 3 days for a message to propagate from one end of the network to another. But as soon as Uunet, the best connected site on the usenet, started to offer higher quality commercial connectivity, the free uucpnet vanished in a matter of months. And of course, once Uunet switched to offering TCP/IP networking, the commercial internet was born.

This isn't to say that some mild access controls might not be appropriate. For example, ISPs require you to have a subscription account, and to identify yourself by logging in. But there are no cumbersome controls on what you can do after that point.

For this reason, I believe that the content industries will flourish online once they stop fighting their users and start offering them what they want at a price they think is fair. That's the way it works in every other field of commerce! And we're already seeing this with Apple's music service, the closest yet to a system that users feel is fair and usable. As soon as Apple rolls it out on Windows (or as soon as competing vendors learn the lessons Apple is teaching), we're going to see a whole new ballgame.

And as the content industries are discovering, existing copyright law is quite enough legal protection for them to put a stop to the most serious of copyright infringers. This is much the same lesson learned by software vendors.

I'm also quite clear that the question isn't whether P2P networks will spell the end of media companies. The question is whether the companies that succeed on the new medium will be upstarts or existing players. We saw this same dynamic on the web, where folks like Yahoo! and Gooogle and MSN, and even AOL despite its troubles, built substantial businesses because they learned the rules of the new medium rather than trying to force users into their old business models.

I strongly believe that publishing, as a role, is driven by the sheer math involved in millions of potential producers reaching hundreds of millions of potential consumers. As a result, I believe that the new medium will eventually drive the development of new intermediaries who help people to find the content they want. (Think google and the web.) I also believe that the new medium will at worst place a small "tax" on the sales of the top artists, while producing far greater opportunities for mid-list and new artists. I wrote about this idea in a piece entitled "Piracy is Progressive Taxation."

Rather than let go of traditional revenue models - the Entertainment Industry seems determined to keep coming up with new copyright protection schemes and going after individual file traders. Who will be the eventual winners and losers of this trend and why? e.g. consumers, content providers or technology manufacturers?

Ultimately, the consumers will win, and the companies that discover how best to serve them. Along the way, there will be a lot of money for technology manufacturers. The only losers are going to be companies that try to play King Canute, holding back the tide.

That being said, they may also create some pain for users and innovative companies in the meantime. It's a real shame that Napster was shut down. It was a truly innovative company that should have been allowed to find its way to a partnership with the music industry. Now, the fruits of Shawn Fanning's innovation will go to others, as the music industry slowly gets over its heebie-jeebies.

Like off-shore banking, will we see off-shore web, file and webcast serving in an attempt to avoid new anti-piracy legislation. Will this lead to pirate internet radio?


Network Effects: Stan Liebowitz and the MP3 Debate
Miriam Rainsford

The past month has been one in which the attention of the music industry has focused with renewed interest on digital downloads, beginning with the success of Apple's iTunes Music Store and finishing on a sour note with the RIAA's announcement that they will now be pursuing lawsuits against individual file-sharers. In light of these developments, it is worth re-examining Stan Liebowitz's analysis of the impact of MP3 downloads on the music industry. Can we in fact ascertain whether actual damage has been done through the rise of peer-to-peer file sharing systems, or is the record industry simply afraid of change and too slow on the uptake of new formats?

Stan Liebowitz, professor of Economics at the University of Dallas, Texas, became a controversial figure during the Microsoft anti-trust trial, when he testified that "network effects," the phenomenon where market saturation determines consumer choice, were more likely to have been responsible for Microsofts' dominant position than anti-competitive practises.

He later found himself to be an unlikely ally of the file-sharing community, when he released a study commissioned by the Cato Institute asserting that file- sharing "should be causing the industry a lot of harm. But we're not seeing it". However, with his latest paper, "Will MP3 Downloads Annihilate the Record Industry? The Evidence So Far", he concludes that we are beginning to see an undetermined, yet detrimental effect of file sharing on music sales. On examination I am concerned by several obvious flaws in Liebowitz's logic and would suggest a revision: that there is as yet no clear evidence that can prove beyond reasonable doubt that MP3 downloads are solely responsible for the current downturn in CD sales.

I cannot categorically say that MP3 downloading has no effect on CD sales. Nor do I support the RIAA's claims that file-sharing is "killing the music industry." What I wish to emphasize, through analysis of Liebowitz's paper, is that we lack the proof to convict beyond reasonable doubt. And if we cannot convict MP3 downloads of this "crime" against the music industry with the same burden of proof that we would expect of a trial in a court of law, then it is unethical and indeed unconstitutional to pursue lawsuits against individuals for a crime which cannot even be established to exist.

If there is no body, one cannot be convicted of Murder One. Yet Jesse Jordan and the Princeton Four were charged with "killing the music industry," and gave their life savings in settlement fines, money which was to have paid for their studies. Perhaps it would be more accurate to say that the RIAA are obtaining wrongful convictions in their drive to sue students and now even children for compensation against monies that they cannot even prove they have lost.

And so to Exhibit One (PDF), the expert analysis of Prof. Liebowitz. Even from the start, concern should be raised regarding the sources Liebowitz has used to obtain his data. Rather than commissioning an independent survey, Liebowitz takes his data straight from the RIAA (p.4), an institution which he himself admits manipulates sales figures to show "the picture they wish to portray about the conditions of the industry." However, Liebowitz does present the various biases that may be read into this data.

Liebowitz attempts in his work to take an impartial position, his stated preference as an academic being "to let the data tell... what's actually happening." But despite these attempts, and his healthy skepticism of industry hype, he cannot escape letting his personal opinions show below the surface, and through the channels who commission his work. In letting the data "speak for itself," Liebowitz opens his statistics to many possible interpretations, yet he chooses to dismiss these quite plausible alternatives one by one through methods which are somewhat less than rigorous.

These arguments would be better strengthened by using a combination of both pure data and opinion polls, in the manner in which Tempo, an independent industry analysis group, has demonstrated [see link below]. This gives a more accurate picture of where sales may have been lost -- or indeed, gained -- rather than the conjecture which Liebowitz employs.

The RIAA's figures present a clear decline in sales over the period 1999 - 2002. Yet Liebowitz fails to mention Tempo's analysis demonstrating a growth in CD sales through MP3 file sharing, as users are introduced to new repertoire and eventually purchase the CD. Indeed CD sales did rise during Napster's first year, a phenomenon Liebowitz does attribute to increased exposure through downloading. It's noteworthy that his study does not include statistics on "legitimate" MP3 purchases, focusing only on the drop in CD sales during this period. Given that he later refers to "media change" and "librarying" (where consumers duplicate purchases in a new format) as being a source of revenue during the introduction of cassette tapes, it seems implausible that he could fail to incorporate data collected through the many licensed MP3 download services.

One of the key arguments in favour of MP3 file sharing is that such librarying does occur, when P2P users download new songs, decided that they like them and then buy the album. Dave Rowntree, drummer with UK "Britpop" band Blur, confirmed this in an interview with the BBC's Breakfast program. He claims that figures on the effect of music "piracy" given by the BPI (British Phonographic Institute, the British equivalent of the RIAA) show a definite bias, and that independent studies support the theory that downloaders, like home tapers before them, are using the service on a "try before you buy" basis. He feels that it is inaccurate for industry associations to tar downloaders with the same brush as professional CD duplicators, and that while allegations of links to organised crime may be true for professional "piracy" rings, it is somewhat far-fetched to apply the same claims to students swapping files.

Perhaps it is the RIAA themselves, through their latest offensive against music lovers, who are driving their own audience away. Any parent knows that the harder one continues to push and push in an effort to discipline an unruly child, the more they will rebel. It is better to invest trust, in the knowledge that it will produce tenfold returns in mutual trust and respect for the parent.


Snapster 2.0
This Time I Really Mean It

Robert X. Cringely

There was a moment toward the end of last week when I was receiving an average of one e-mail message per minute about Snapster -- the plan I had described to change the music distribution business and become obscenely rich in the process. That one-per-minute pace continued for several days, and I am still 1,200 messages behind. So I am sorry if you haven't yet received an answer to your message, and there is a real possibility you will never receive one.

I have a different idea I'm calling Snapster 2.0. This Snapster is still roughly organized the way I described last week as a mutual fund, and it still spends $1.4 million buying one copy of every CD. Here is where the lawyers tend to say that Snapster's millions of shareholders could copy or play that CD, but only one shareholder per song could be active at a time. Bummer.

Snapster 2.0 separates the concept of ownership from that of playing music or copying it. While those 100,000 CDs are still owned by all the shareholders, they really exist only as a central repository to simplify the sharing system from both a logistical and a legal standpoint. We are no longer claiming that fair use rights can be transferred in parallel to millions of users.

Instead, Snapster 2.0 shareholders gain the right to download music -- not only by buying a share of stock, but because they also have to contribute to the mutual fund usage rights for the CDs they already hold at home.

This concept works exactly the way that investors short stocks, betting that they will go down in value and making a profit from that decline. When you sell a stock short, it means that you sell it today expecting it to go down tomorrow. Then, when you buy the stock back for less money in a week or a month, the price difference represents your profit (or loss). But how do you sell a stock that you don't already own? By borrowing it. Stockbrokers borrow shares from their customers -- from you and me -- and these are the shares that are sold by the short investor who pays the broker a little fee for arranging the loan of stock. We get nothing for the use of our shares. If you turn up wanting to sell your shares that the short has already sold, the broker just borrows them from yet another customer, allowing you, too, to sell borrowed shares though you don't know that at the time. This is possible because one share looks pretty much like another -- they are a commodity.

For Snapster 2.0, then, the purchased copies act as masters that can be copied under fair use. But there can only be one copy in use at a time for every physical disk in the system. If 10,000 shareholders wanted to play the same song at the same time, we'd need to buy 10,000 CDs OR borrow 10,000 CDs. To do this (borrowing not buying), Snapster would have to be a big database that includes both music and ownership rights to that music.

Every time a shareholder wants to download or play a song, he or she must ensure that their download is matched on a one-for-one basis with a physical CD somewhere in the system. The database does that by locking and unlocking access records to the physical CD. The CD doesn't have to be in the possession of the shareholder, just under his or her control. The Snapster 2.0 database handles that by effectively borrowing control of the physical CD for a period of time, during which it is agreed that particular physical CD can't be played by anyone else. It is a token passing scheme, and only the shareholder with the token can play the song.

It is legal to loan your CDs and also legal to loan control of your CDs, thereby justifying possession of a fair use copy at a remote location. There is a cost for all this borrowing of ownership rights, and that is a transfer of some of the borrowing fee to the owner of the physical CD. In our $0.05 per song model from last week, perhaps a penny would go to the physical CD holder. Remember, these fees have to do with possession and control of the CD, not performance of the music, so it isn't technically a commercial system, just a system of ownership with associated overhead.

But is this automated scheme really fair use? I maintain that it is. The goal is not to deprive record companies of revenue, but to save money for music consumers. This is a critical point. Aiming to save money for people by making the system more efficient does not violate fair use. It does not violate the intellectual property rights of the artists or record companies. It just takes some friction out of the system. Automation is being used to make easy something that would otherwise be very difficult. If you wanted to play a copy of a song, you could run across town and make sure that the original was not being used by anyone else OR we can save the running and just do it electronically by locking access to the physical CD that sits far away. The more simultaneous users there are, the more CD copies there have to be in the system, but the CDs don't have to be centrally held, just centrally controlled.

Until next week,

- js.

The Onion

Recent WIRs -

http://www.p2p-zone.com/underground/...threadid=17051 July 26th
http://www.p2p-zone.com/underground/...threadid=16975 July 19th
http://www.p2p-zone.com/underground/...threadid=16893 July 12th
http://www.p2p-zone.com/underground/...threadid=16830 July 5th

Jack Spratts’ Week In Review is published every Friday. Please submit letters, articles, and press releases in plain text English to jackspratts at lycos.com. Include contact info. Submission deadlines are Wednesdays @ 1700 UTC.

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Old 02-08-03, 09:43 AM   #3
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Thumbs up Excellent issue!

Excellent digest as usual!

Pirates of the Internet

Ultimately the Internet is going to be great for music lovers, artists and even the record labels, if they are willing to hang loose while new business models emerge. But right now the RIAA and its congressional water carriers are hitting the wrong notes. It makes no sense to bring thousands of people into the dockets -and maybe the prison system- for turning on a friend to the fuzz tones of the White Stripes or the inspirational melodies of Orrin Hatch without a license. There are better things for prosecutors and the courts to focus on.
Orrin Hatch?!? People share his crap? Orrin_Hatch_the_Senator@kazaa?

Digital Freedom Campaign Publishes Safe Peer-To- Peer Guidelines

Of course, this defeats the very object of peer-to-peer networks and will not appeal to a great many users. Or, as the EFF puts it, 'Don't like the idea of turning off file-sharing or changing your file names to prevent stupid robots or RIAA employees from mistaking your files for infringements? Neither do we!' The organisation is urging file sharers to join its campaign to both legalise file sharing and find a new system to 'compensate musicians and copyright holders.
I have no problem with people compensating musicians but copyright holders [in general]=publishers=RIAA=EVIL!!! Is the EFF on our side or not?

Leave P2P Users Alone, Says Publisher
"As for piracy most small MP3s [on the internet] are too low quality to be used in pirated media. I'm more concerned with attacking pirates than students."

Quality Will Beat Illegal File Sharing - Apple

Senior Jupiter Research analyst Lee Black said that Apple's success "proves if you give consumers the rights to the downloads they want, they'll buy them". he added: "Consumers have said as long as they can own it and copy it to other devices, they'll pay for it. Give them usage rights and they'll buy it."
This is IMO overly optimistic. Legal services won't be as successful as P2P! Maybe in 1999 they could have thrived, but not now. The only reason for iTunes' success is that Mac users have only really had Limewire up until now. P2P has failed the Mac, so iTunes fills the need and customers are willing to pay. The same isn't true for the PC market though.

Buymusic.com Misses The Point

Neither Apple nor BuyMusic.com uses standard MP3 files. Apple uses a format called AAC, which is part of an industry standard called MPEG-4. BuyMusic.com uses Microsoft's Windows Media 9 format. Each system offer better compression than MP3 files, which results in better sound quality in a smaller file.

Conference Shows Doubts Still Plague Online Music

Contention over publishing contracts, debate over how restrictive to make DRM (digital rights management) copy controls, continuing use of unauthorized file-swapping sites, and failure to capitalize on new marketing techniques made possible by the Web continue to curb growth, according to speakers here.
Good god! RIAA spam here we come...

Internet Song Swappers Say Legal Threats Won't Stop Them

· File sharing will become marginalized as consumers are put off by poor quality, "spyware" and ads.
· Online sales will slowly shift from discs to digital downloads. That's because downloads are cheaper and more immediate, and buyers can pick individual tracks.
We'll soon see about that! And until you can buy unrestricted WAV tracks at about a 1/2 the current price, the "value" of digital downloads is even less than that of a CD.

MAXimum Security

For MAX3, the ABIT Engineers listened to users who were asking for information security. SecureIDE connects to your IDE hard disk and has a special decoder; without a special key, your hard disk cannot be opened by anyone. Thus hackers and would be information thieves cannot access your hard disk, even if they remove it from your PC. Protect your privacy and keep anyone from snooping into your information. Lock down your hard disk, not with a password, but with encryption. A password can be cracked by software in a few hours. ABIT's SecureIDE will keep government supercomputers busy for weeks and will keep the RIAA away from your Kazaa files.
This is an extremely vague and misleading description! How is the private key protected? Smart cards only require access to the card itself. If the key's managed by the user, there's a very high probability that he/she will write it down on paper (they're very long numerical strings), thus defeating the purpose. If it's managed by Windows, you may as well be putting a post-it on you monitor : "Hello RIAA! Key is xxx. Have a nice day!" If the process is automated by the BIOS, and a password unlocks it, it could be a better solution than a windows password. The only way this could be foolproof is if some sort of biometric authentication device is involved, but somehow I doubt it! {P.S. TankGirl what happened to that Telepathic Synaptic Plugin Interface you were working on? )

Stan Liebowitz's study is indeed a thorough examination of the situation, perhaps more so than any other presently available. But despite the strength of his conclusions, when one examines the deep flaws in his logic, and the incomplete or biased nature of the evidence he presents, it is impossible to consider his study as admissible evidence in the trial of MP3 file sharing.
Yes! An excellent expose, and although hardly as rant-filled as Courtney Love's classic piece in Wired, it thoroughly and objectively presents both sides of the issue from a musician's standpoint. I'd say it's required reading, just like Janis Ian's insightful essays.
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Old 04-08-03, 07:24 PM   #4
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Default Re: Excellent issue!

Originally posted by SA_Dave
The only way this could be foolproof is if some sort of biometric authentication device is involved
Biometric authorization is way overhyped. Used alone, it is very easy to spoof. The most common implementation, a fingerprint scanner, can be attacked by anyone who can lift your finger print, and has even a modestly stocked kitchen. At least with a good password and a secure crypto scheme you can refuse to give out the password (you'll be in jail for contrmpt of court, but oh well); OTOH the cops will already have your fingerprints.

But retinal scanners sure look sexy in the movies!
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Old 07-08-03, 01:16 PM   #5
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Maybe "foolproof" was the wrong word. I didn't mean to imply that it's completely reliable on its own. However I feel that retinal images/fingerprints/other pattern combinations would be preferable as an authentication mechanism compared to the SecureIDE system. Using a combination of such biological patterns would provide protection as least as strong as standard encryption, without leaving the user in the position of being able to easily give away the keys!

Originally posted by pod
The most common implementation, a fingerprint scanner, can be attacked by anyone who can lift your finger print, and has even a modestly stocked kitchen.
My dad has almost 30 years experience in access control, including biometric authentication, and whenever he sees a movie or tv show where fingerprints are lifted using sticky-tape or plastic film and flour (or what have you ) he starts ranting about how impossible that is with modern systems. Sophisticated pattern recognition systems can match thermal scans and even the arrangement of blood vessels (allowing for normal variances as caused by alcohol consumption, illness etc.) to only one living candidate. Maybe these systems aren't widely available or cheap enough yet, but I was always lead to believe that such scenarios were merely Hollywood fantasy!? I could be wrong though...
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Old 07-08-03, 02:47 PM   #6
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I don't doubt the scanners are getting more sophisticated and reliable. The particular one I have references for was the regular end-user or office building/airport type fingerprint scanner. Not only are they not reliable (fairly high false positive/negative ratios), but the guy lifted someone's print, etched it and took a gelatin mould, and put it over his finger. Biometric auth is convinient, as you always have the necessary info on you but it can also be used easily without your permission.

A pretty cool password-based solution is something we use at work to authorize to systems and network devices. They're little key-chain fob-thingys, SecurID, and it works like this:

- The fob changes a passcode on a regular basis (every minute) using an algorithm that is based on some seed known to the fob and the authenticating system.
- The auth server's time is synchronized with the fob's, so at any given time the passcodes on both ends are the same.
- When you log in, it asks for your username and passcode. The auth server knows that this user name has a SecurID token, and what its current passcode is, so it can authenticate you.

The neat thing is that it's like a constantly changing password, and it can't be brute forced. If it is (you can also give it to someone over the phone) it expires in few seconds anyways. It works with system authentication systems that use a plug-in architecture (Linux, Solaris, Cisco, NT, etc), so you don't need any special hardware to scan your eye ball or something like that. It's still the 'something you have' variety of authentication, so it can be taken away or used without your permission, but it's not too bad a compromise.
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