Peer-To-Peer News - The Week In Review - December 3rd, ’05

[JackSpratts]

"One-to-one community building, tape trading, is something we've always been about. The idea of a massive one-stop Web site that does not build community is not what we had in mind. Our conclusion has been that it doesn't represent Grateful Dead values." – Dennis McNally


"The idea that they could stop people from trading these files is absurd. It's no longer under anyone's control. People have gigabytes of this stuff." – David Gans


Cyber Monday "is actually taking place." – Tom Burke


"The people in the countersurveillance industry come from the surveillance community. They know what is possible, and their equipment needs to be comprehensive and needs to counteract any form of surveillance." – Jude Daggett


"It is not considered an issue within the F.B.I.." – Catherine Milhoan


"If the federal government announced plans to directly collect the sort of data Google does, there would be an uproar - in fact there was in 2003, when the Pentagon announced its Total Information Awareness program, which was quickly shut down." – Adam Cohen


"When enough people feel that it’s OK to do a thing, that thing ceases to be wrong in their own cultural context. You can complain about moral relativism all you like, but the facts are inescapable: that’s how people behave." – Ernest Adams






























Turn Off The Tap When You’re Done

Using commonly found off the shelf equipment a group of researchers say most widely used forms of analog wiretaps can be fooled by simply pressing a button at home. The low tech remote shut-off device signals government recorders the parties are done with their calls and fools even digital high-tech F.B.I. "CALEA" systems.

Although the Bureau knows about this and doesn’t seem too worried publicly, there are reports of unexplained "gaps" in surveillance logs, suggesting that at least some citizens have been onto this particular chink in Big Brother’s armor for a while now.

Depending on your level of comfort with a government that increasingly sees the right to privacy as their right to invade yours, this could either be bad news or good.

History shows powerful states abuse individuals. Americans saw it in the 60’s and 70’s. We’re seeing it now with smears on political opponents and police selling personal info to the highest bidders. Maybe it’s not the worst thing in the world if a massive data sucking, privacy annihilating machine has a few cracks the people themselves can exploit.

Thanksgiving Platters

This week researchers announced the development of a new high capacity disc capable of holding some one thousand, six hundred gigabytes of data (1.6 TB) with a playback speed of one hundred and sixty megabits per second. Prototypes like this new DVD-style platter have been announced before but haven’t escaped the lab. When they do they'll usher in a new era of file sharing, on a scale almost unimaginable to those of us who find 150k downloads fast.

A little math: 160 megabits per second equals (apx) 16 megabytes per second, and since 1.6 terabytes equals 1 million, six hundred thousand megabytes, these proposed discs have one hundred thousand seconds or 27 hours of playback time (1.6 million divided by 16). Now if the discs can be written at the same rate they play (which seems unlikely – it probably takes much longer), then one hundred thousand seconds is one very long burn time for commercial pirates, unless they go with expensive photo-lith stamping machines, also I’m somewhat skeptical of a practical business application that would interest players like the movie studios, who really won’t need that kind of disc space anytime soon.

On the other hand, since it’s nearly a gigabyte per-minute stream, getting such fully loaded (and encrypted) discs in the mail from one’s friends - and dubbing them at home over the course of a few days – well that’s a different story. They would run circles around any existing filesharing systems to date. With the added benefit of freeing up bandwidth for such important activities as cybering strangers and badmouthing bosses - they might even find favor with ISPs.

Even if dubbing takes a week, swapping discs that each contain 5000 TV shows or 25,000 CDs (!) will make distributing the world's digital culture a snap for nearly everyone. Sign me up Scotty.

If You Don’t Like Your Weather, Change It

I’ve had a weather gathering program on my PCs for years. As a matter of fact on this particular box I have an early, pre-spyware version of WeatherBug, and I’m still irked I lost the original executable in a data dump. It means I can’t share the pgm with friends anymore, but this week I found something even better than a pristine early exe. I installed a weather app from an outfit called Tropic Designs that in the few days I’ve been using it seems to outperform my old WeatherBug in many ways and does so without spyware or those blaring banner ads. It’s called Weather Pulse. It’s a fast set-up, easy to use program that runs unobtrusively in the toolbar, with configurable radar, satellite imagery and danger alerts for your area. All that and it’s free. It’s a nice little find.



















Enjoy,

Jack



















December 3rd, ’05





Deadheads Outraged Over Web Crackdown
Jeff Leeds

The Grateful Dead, the business, is testing the loyalty of longtime fans of the Grateful Dead, the pioneering jam band, by cracking down on an independently run Web site that made thousands of recordings of its live concerts available for free downloading.

The band recently asked the operators of the popular Live Music Archive (archive.org) to make the concert recordings - a staple of Grateful Dead fandom - available only for listening online, the band's spokesman, Dennis McNally, said yesterday. In the meantime, the files that previously had been freely downloaded were taken down from the site last week.

Dissent has been building rapidly, however, as the band's fans - known as Deadheads - have discovered the recordings are, at least for the time being, not available. Already, fans have started an online petition, at www.petitiononline.com/gdm/petition.html, threatening to boycott the band's recordings and merchandise if the decision is not reversed. In particular, fans have expressed outrage that the shift covers not only the semiofficial "soundboard" recordings made by technicians at the band's performances, but also recordings made by audience members.

To the fans, the move signals a profound philosophical shift for a band that had been famous for encouraging fans to record and trade live-concert tapes. The band even cordoned off a special area at its shows, usually near the sound board, for "tapers" - a practice now followed by many younger jam bands.

But more broadly, it suggests that a touchstone of baby-boomer counterculture - the recording made by and shared, sometimes via mail, among hard-core fans - may be subverted in a digital era when music files can be instantly transmitted worldwide.

The move comes as the group, which disbanded after the 1995 death of its leader and ringmaster, Jerry Garcia, has begun selling downloads of its live concerts through its own official Web site. The band (whose surviving members - the guitarist Bob Weir, the bassist Phil Lesh and the drummers Mickey Hart and Bill Kreutzmann - have since played together under the more compact name the Dead) sells album-length recordings of the shows at prices that can run from about $8 to roughly $16 a copy.

Unlike the digital files sold at popular music services like Apple Computer's iTunes or Real Networks' Rhapsody, the band sells its music as files that can be copied and transferred without restriction.

The independently operated Live Music Archive evidently posed unwelcome competition.

"These folks assembled a Deadhead's dream collection and made it available," Mr. McNally said. "When we discovered it, we decided to take a wait-and-see approach. Eventually, it was the band's conclusion, after a long discussion with them, to request that they change their policies" and make the live recordings available only as streams.

The contretemps makes clear that the band's decades-long support of fan recordings and trading did not anticipate the popularity of music online.

"One-to-one community building, tape trading, is something we've always been about," Mr. McNally said. "The idea of a massive one-stop Web site that does not build community is not what we had in mind. Our conclusion has been that it doesn't represent Grateful Dead values."

Most fans, he continued, "understand they were being granted an extraordinary privilege, and they responded by taking it very seriously" by respecting the band's wishes not to sell their live recordings. "This is not the same situation," he added.

David Gans, who is the host of a syndicated radio program, "The Grateful Dead Hour," said in an interview yesterday that the battle is rooted in the band's "historically lackadaisical attitude toward their intellectual property." He added: "When they were making $50 million a year on the road, there wasn't a lot of pressure to monetize their archives." Now, however, it may be difficult to put the genie back in the bottle. While the move to revise the Live Music Archive may deal a blow to what many fans considered an organized library of material, "the idea that they could stop people from trading these files is absurd," Mr. Gans said, adding: "It's no longer under anyone's control. People have gigabytes of this stuff."
http://www.nytimes.com/2005/11/30/ar...ead.html?8hpib





Grateful Dead Members Change Mind About Downloads
UPI

After the Grateful Dead's biggest fans protested the band's decision to stop downloads of their gigs from a nonprofit web site, they've had a change of heart.

The band's surviving members -- Bob Weir, Phil Lesh, Mickey Hart and Bill Kreutzmann -- pulled the Internet plug on the Deadhead bootleg network on Internet Archive last week.

Deadheads -- widely regarded as rock's most loyal bunch -- responded with an online petition calling for a boycott of anything related to the group until GDM reversed its position.

The band changed their position Wednesday and has agreed to make audience recordings available for download again, but not live recordings made directly from concert soundboards.
http://www.kget.com/entertainment/mu...D-0C048D050BD1





Canadian Government Falls On No-Confidence Vote

A corruption scandal forced a vote of no-confidence Monday that toppled Prime Minister Paul Martin's minority government, triggering an unusual election campaign during the Christmas holidays.

Canada's three opposition parties, which control a majority in Parliament, voted against Martin's government, claiming his Liberal Party no longer has the moral authority to lead the nation.

The loss means an election for all 308 seats in the lower House of Commons, likely on Jan. 23. Martin and his Cabinet would continue to govern until then.

Opposition leaders last week called for the no-confidence vote after Martin rejected their demands to dissolve Parliament in January and hold early elections in February. Monday's vote follows a flurry of spending announcements in Ottawa last week, with the government trying to advance its agenda ahead of its demise.

Martin is expected to dissolve the House of Commons on Tuesday.

The Conservative Party leader Stephen Harper joined with the New Democratic and Bloc Quebecois parties to bring down the government — prompting the first Christmas and winter campaign in mostly Christian Canada in 26 years. Recent polls have given the Liberals a slight lead over the Conservatives, with the New Democrats in third place.

The same surveys suggest the Bloc Quebecois would sweep the French-speaking province of Quebec, making a majority government unlikely no matter which party wins the most seats.

Harper would become prime minister if the Conservatives receive the most seats in Parliament. He favors tax cuts and opposed Martin's successful bill to legalize same-sex marriage throughout Canada.

The opposition is banking on the public's disgust with a corruption scandal involving the misuse of funds targeted for a national unity program in Quebec.

An initial investigation absolved Martin of wrongdoing, but accused senior Liberal members of taking kickbacks and misspending tens of millions of dollars in public funds.

The government ran into peril this month when it lost the support of the New Democratic Party, whose backing earlier this year helped Martin escape a previous no-confidence motion by a single vote.

New Democrat leader Jack Layton said he hadn't received enough assurances the Liberal Party would fight the increased use of private health care in Canada. Martin made the deal for support from Layton's leftist party last spring by pledging $3.6 billion in social spending and promising to delay billions in corporate tax cuts.

Martin appears prepared to take his chances with a holiday campaign and blamed his opponents for any inconvenience to the predominantly Christian electorate.

He had promised to call an election within 30 days of the release of a follow-up report on the corruption scandal. The document is expected Feb. 1, which would have meant elections in the first week of April, a time that suits Canadians better than the bitterly cold and busy holiday season.

Although no formal agreement is in place, all the parties are likely to agree to a pause in the campaign around the Christmas and New Year holidays. The campaign is expected to start Tuesday, after Parliament is dissolved.

Grace Skogstad, a political science professor at the University of Toronto, said she believes Canadians will pay little attention to the election until after the New Year, so Martin's opponents are unlikely to face a backlash for forcing a holiday campaign.

"It's going to be those last three weeks after Jan. 1 that are going to matter," said Skogstad, who believes the Liberals will win another minority government. "For the Liberals, they are going to try to put all the focus on the economy which is doing phenomenally well."

Unemployment in Canada is at a 30-year low and Canada runs a budget surplus.

Andrew Stark, a political science professor at the Rotman School of Management at the University of Toronto, also maintained that the campaign would not be decided until the final days. Stark, however, believed the Conservatives will win a minority government if Canadians view another Liberal and New Democrat coalition as being unaccountable with tax money.

The last time a Canadian political campaign coincided with the holiday season was in 1979, when Joe Clark's minority Conservative government was toppled just weeks before Christmas. That vote was delayed until February, however, when Pierre Trudeau and the Liberals took back Parliament.

The latest collapse comes 17 months after an election that turned a Liberal majority into a fragile minority on June 28, 2004.
http://www.usatoday.com/news/world/2...tm?POE=NEWISVA





No `iPod Tax' For Now
AP

Japan yesterday abandoned a planned revision to copyright laws -- dubbed the "iPod tax" -- that would have imposed a royalty payment on purchases of digital music players, after a government panel failed to agree on how to police violations.

The Cultural Agency committee's decision followed a yearlong debate over how to update the nation's system for levying extra copyright fees on gadgets, given dramatic changes in recent years in the digital content business, government official Hiroyuki Suzuki said.

Under the current system, the charge -- generally 3 percent of the product's wholesale price -- is included in the price of recording devices and other gadgets that can be used to duplicate copyrighted material, and most shoppers aren't even aware they're paying it.

Since last year, recording companies and other lobbyists have said the same system should be applied to recording devices with hard drives, including music players like Apple Computer Inc's iPod, as well as flash-memory players.

The panel's members, including academics and consumer-rights activists, have been so divided on where to draw the line on what constitutes copyright infringement that many had speculated they would not be able to agree by the December deadline.

Although the media here calls the system the ``iPod tax,'' the money goes to recording firms, composers and artists so it's technically not a tax. Similar systems exist in some European nations.

Opponents say the current system is an obsolete way of monitoring digital music purchases, while others contend that consumers would be doubly charged under the proposed change because they often already pay royalties on digital purchases.

Apple in Japan had no comment yesterday on the decision.

Apple's iPod, controls about 70 percent of the global market, with its market share in Japan growing to 60 percent recently.
http://www.taipeitimes.com/News/worl.../02/2003282668





Dutch Firm Releases P2P Media Player

A Dutch company has introduced a Linux- based media player designed to give Internet users easy access to content from a variety of peer-to-peer networks.

A Dutch company has introduced a Linux- based media player designed to give Internet users easy access to content from a variety of peer-to-peer networks, reports News.Com.

The LamaBox is a VCR-size player that enables users to choose from a collection of audio and video as well as burn downloads to DVD.

The report says the LamaBox's ability to access networks where copyrighted material is routinely shared raises legal issues.

However, LamaBox has shifted the responsibility to content providers and users, saying the device only makes such material accessible.
http://mybroadband.co.za/nephp/?m=show&id=1354





EU, U.S. Pledge Zero Tolerance on Fakes
AP

The European Union and the United States will take a "zero tolerance" approach to counterfeiting around the world, senior officials said Wednesday.

EU Trade Commissioner Peter Mandelson and U.S. Secretary of Commerce Carlos Gutierrez said they had agreed to work together closely to share information and coordinate activities to crack down on product piracy.

The global trade in counterfeit goods is worth up to 360 billion euros ($424 billion) a year, ranging from fake medicines and pirated movies to toys that don't meet safety standards, Mandelson said.

"What we need more than anything is to pool our intelligence, share our analysis, plan our activity coordinated where appropriate," said Mandelson.

Gutierrez said fighting piracy was a major priority for President Bush.

Gutierrez said on Tuesday that the EU and United States had mutual interests in protecting intellectual property rights and would encourage other countries to step up enforcement.

"These are the two most innovation intense economies in the world ... a lot of our economy, a lot of our jobs are tied to things like patents, copyrights, trademarks," he said. "We are going to ensure together that there is a global trading environment that respects those things."

He told Dow Jones Newswires that he was prepared to share with European authorities customs information and corporate complaints against Chinese manufacturers.
http://hosted.ap.org/dynamic/stories...stom wire.htm





Europeans Still Dig Illegal File Sharing

Though the International Federation of the Phonographic Industry (IFPI) has been cracking down on overseas file-sharing, a new study shows that more Europeans use illegal Web sites to download music than legal sites. The new report, from Jupiter Research, says that illegal file sharing networks are used three times more throughout Europe than legal downloading sites. Only five percent of all Internet users pay for their music, compared to 15 percent who illegally download copyrighted material. The report also warns that file-sharers, particularly young people, have little concept of music as a paid commodity.

"The digital youth of today are being brought up on a near limitless diet of free and disposable music from file-sharing networks," said Jupiter analyst Mark Mulligan, according to the BBC News. "When these consumers age and increase spending power they should become key music buying consumers. Unless the music industry can transition these consumers whilst they are young away from free consumption to paid music formats, be they digital or CDs, they may never develop music purchasing behaviour and the recording industry could suffer long-term harm."

On the bright side, the report did find a solid demand for paid music downloads from sites such as iTunes, with 10 percent of Europeans willing to pay for tracks, says the BBC. Sweden reported the highest demand with 31 percent prepared to pay.
http://www.fmqb.com/Article.asp?id=149317





Illegal File-Sharing Prevalent Despite Thwarting Efforts
Keith Regan

"Unless the music industry can transition these consumers whilst they are young away from free consumption to paid music formats, be they digital or CDs, they may never develop music purchasing behaviour and the recording industry could suffer long-term harm," Jupiter analyst Mark Mulligan said.

Young people in Europe are three times more likely to illegally swap songs than they are to download them from legitimate sites such as Apple's (Nasdaq: AAPL) iTunes Music Store, according to new data that suggests the music industry has yet to solve its lingering digital conundrum.

Jupiter Research said file-sharers outnumbered those who paid to download music by a margin of three-to-one. In addition, a third of all 15- to 24-year-olds have illegally shared copyrighted music at least once.

Though the report focused primarily on the UK and European markets, analysts say it holds important lessons for the music industry as a whole and serves as a reminder that extensive work remains to replace illegal file-sharing with legitimate download options for good.

Jupiter analyst Mark Mulligan said the high-profile victories for the music industry against the likes of Grokster and other P2P sites are only driving users further into the Web underground, or to other means. For instance, the research found that 43 percent of young consumers would rather copy a friend's compact disc than buy their own.

"By its very nature, music file-sharing can't be stopped down by taking out a single entity," Mulligan said. "Users simply move to other networks to stay ahead of the music industry."

Accustomed to Access

Mulligan said the problem in Europe in particular is that young people have become accustomed to having nearly unlimited access to free digital music. That culture has become so ingrained that users see little benefit -- beyond avoiding lawsuits -- to moving to legitimate sites where they have to pay.

Because young users are critical to the music industry, record labels still face a crisis if they are not able to convince more of them to abandon illegal swapping.

"Unless the music industry can transition these consumers whilst they are young away from free consumption to paid music formats, be they digital or CDs, they may never develop music purchasing behaviour and the recording industry could suffer long-term harm," Mulligan said.

One reason the industry has been slow to evolve, analysts say, is that they are reluctant to encourage free music, even though some studies show that giving away songs can encourage purchasing of music.

Continued Crisis

The talk of a continued crisis seems to fly in the face of some recent positive news for the music industry.

Its most recent win came when it reached a settlement that resulted in the shutdown of peer-to- peer network Grokster, which had emerged as a next-generation heir to the legacy of Napster -- which the industry also shut down with legal action. But Mulligan said while the industry touted that win, Grokster was never one of the most significant swapping sites in terms of volume, especially for music.

Meanwhile, Apple's iTunes has continued to grow rapidly, with other sites, such as the new Napster and RealNetworks' (Nasdaq: RNWK) subscription offerings also catching on with consumers and more legitimate options being rolled out all the time -- including options to have songs downloaded or streamed to mobile phones and other hand-held devices. .

But various reports have suggested that while lawsuits may scare away some casual file-sharers and despite the rise of iTunes and other sites, those hooked on swapping songs will continue to find new venues to carry it out.
http://www.technewsworld.com/story/G...-Efforts.xhtml





Young 'Prefer Illegal Song Swaps'

The music industry could be facing a crisis because of the number of young people still illegally downloading from the internet, a report has warned.

The report by Jupiter Research suggests European consumers who download music from illegal file-sharing websites outnumber those using legal services.

It says illegal networks are used three times as much as legal ones.

It also warns that file-sharers, particularly young people, have little concept of music as a paid commodity.

The UK music industry has been cracking down on illegal file-sharing.

The BPI recently stepped up its campaign by launching 65 new legal cases against those it accuses of large-scale file-sharing.

Free consumption

Jupiter analyst Mark Mulligan said: "The digital youth of today are being brought up on a near limitless diet of free and disposable music from file-sharing networks.

"When these consumers age and increase spending power they should become key music buying consumers.

He added: "Unless the music industry can transition these consumers whilst they are young away from free consumption to paid music formats, be they digital or CDs, they may never develop music purchasing behaviour and the recording industry could suffer long-term harm."

The research suggests only five per cent of all internet consumers pay to download music while 15% share the music without paying.

In the 15-24 year age group, 34% admitted to sharing music online without paying for it.

However, the report did find a solid demand for paid music downloads from sites such as iTunes, with 10% of Europeans willing to pay to download tracks.

Sweden reported the highest demand with 31% prepared to pay.
http://news.bbc.co.uk/go/pr/fr/-/1/h...nt/4478146.stm





The Effect of P2P File-Sharing Depends On Popularity

A fascinating paper from David Blackburn, a Harvard PhD student, on the economics of P2P file-sharing concludes that it does indeed depress music sales overall. But the effect is not felt evenly. The hits at the top of the charts lose sales, but the niche artists further down the popularity curve actually benefit from file-trading.

Blackburn does a little mathematical magic to simulate what would happen if file-trading were reduced by 30%.

In this counterfactual world with 30% less file sharing, the lower 75% of the distribution of sales is shifted further to the left, while the top of the distribution increases its sales. This is what should be expected given the estimates from above. Artists who are unknown, and thus most helped by file sharing, are those artists who sell relatively few albums, whereas artists who are harmed by file sharing and thus gain from its removal, the popular ones, are the artists whose sales are relatively high.

This conclusion leads to further questions regarding the impacts that file sharing has had and will have on the recorded music industry. In particular, if file sharing essentially shifts sales away from established acts toward unknown acts, this has potentially very important implications for how talent is developed and distributed in the industry. As with the simple short-run effects of file sharing on sales, the direction of the impact is not clear. While one might guess that increasing the sales of new acts would lead to more investment in developing new talent, it is also possible that the investment in new acts is done as a fishing expedition to find artists who will sell millions of records. File sharing is reducing the probability that any act is able to sell millions of records, and if the success of the mega-star artists is what drives the investment in new acts, it might reduce the incentive to invest in new talent. This is, at its heart, an empirical question which is left to future work.

The data follows, but first a little explanation. The 1% line refers to the sales of the least popular albums; the 99% line is the sales of the most popular. The third column is the calculated sales if file-sharing were reduced by 30%. As you can see from the below, that would help the sales in the top 25% of popularity, and hurt those below. Which is another way of saying that file-trading seems to help those in the bottom three-quarters of popularity, probably for the reasons stated above.

Percentile | Actual Sales | Sales with 30% less file-sharing
1% 73 70
5% 170 166
10% 281 277
25% 757 745
50% 2,852 2,851
75% 10,110 9,831
90% 26,531 26,934
95% 45,255 47,357
99% 133,983 165,054

The Long Tail implications of this are pretty clear. For the majority of artists further down the tail, free distribution is good marketing, with a net positive effect on sales. Which is yet another reminder that the rules are all too often made to protect the minority of artists at the top of the curve, not most artists overall.
http://www.thelongtail.com/the_long_...fect_of_p.html





Napster Users 'Giving Up On CDs'

Music fans are giving up buying CDs in favour of downloading music, according to download service Napster's UK arm.

Some 150,000 of Napster UK's 750,000 members say they no longer buy CDs, the company has revealed.

And Napster UK manager Leanne Sharman said it was "a matter of time" before downloading overtook high street shops as the most popular way to buy music.

CD sales have dipped slightly so far in 2005 compared with last year's record high when 163 million albums were sold.

Some 55 million songs have been downloaded or streamed since Napster UK launched in May 2004, with James Blunt the most popular artist.


NAPSTER USERS' TOP 10 ARTISTS

1. James Blunt
2. Mario
3. Gorillaz
4. 2Pac
5. Tony Christie
6. Coldplay
7. Jem
8. Green Day
9. Nelly
10. Gwen Stefani


Napster began life in the late 1990s as an illegal download hub, becoming the scourge of the music industry.

But it relaunched as a legal service and this is the first time the company has revealed details about its users and their tastes.

"I think it's only a matter of time until consumers are wanting digital platforms as their number one method for music consumption," Ms Sharman said.

"We believe we're in a transitional period. And we believe we will see an increased demand for online personalised music services because it's all about
how much time do people have these days?

"People want music one click away - one click away from all the music you could ever want, which is what Napster offers."

She said record companies should not worry because the overall demand for music had increased and fans were just buying their music a different way.

Napster also revealed 80% of its users were over 25 and 75% were male.

High street battle

The figures come days after high street giants HMV and Virgin announced plans for new download services to ensure they are not left behind in the sales battle.

More than 13 million songs have been legally downloaded in the UK so far this year - compared with virtually zero in 2003.

In June, market leader Apple revealed that more than 50 million tracks were bought in the first year of its European iTunes service, across 17 countries.

Apple says it has sold more than 500 million songs worldwide in total.

Napster president Brad Duea recently told the BBC News website the online music industry would become an "exploding multi-billion dollar space in the next two years".
http://news.bbc.co.uk/go/pr/fr/-/1/h...ic/4216400.stm





Watch Out, Napster, Here Comes Nareos
Galya Yemini

There are many players at the starting line in the race to provide file-sharing services to the world and they are all planning for their big break. These are critical times: Record companies are involved in major lawsuits and pledge that they will not surrender to free, peer-to-peer, file-sharing services on the Internet. As a result, the Grokster file-sharing service was recently forced to shut down its activities, for instance, and the BitTorrent site promised not to provide links to copyrighted files. While the battle rages, everyone is trying to find solutions to allow both sides to collaborate successfully.

Shawn Fanning starred in a colossal article in The New York Times last week. The inventor and founder of Napster (a file-sharing software program and service that was ordered to close down four years ago by the United States Supreme Court) described a new software program, which he will soon launch on the Internet, entitled Snocap. Snocap will make it possible to create a community of paying file sharers. Everyone will share with everyone else - major record companies, minor labels, artists and surfers in their homes. The network will permit users to download files from computers owned by other users, just as in conventional peer-to-peer file-sharing, but users will not be able to download a song before they have paid for it. If the downloading user decides to share the song thereafter with others, they too will be obligated to pay.

It is safe to assume that Fanning cannot imagine that the tempestuous Middle East might offer the source of a solution, now entering the market, which resembles his new "baby." The solution in question comes from the Israeli Nareos startup company, which developed a program that makes it possible for record companies to legally distribute songs, for a price, on all existing file-sharing networks. The technology allows the companies to encrypt and control their own files: to charge a fee, to block downloads, or to permit limited listening, providing only a few replays. Record companies may distribute encoded files using all file-sharing programs and protocols on the Internet - and there are dozens of these.

Nareos' technology prompts legal files to appear before the illegal files do in response to a search. When a surfer indicates a desire to download a file, the program causes a pop-up window to appear requesting a fee of 99 cents per song. The listener will able to hear the song once before payment by credit card. The typical surfer may be perturbed by this new development - those who choose to pay for songs now surf sites like iTunes or MSNmusic. But, on the other hand, the errant surfer is now presented with an opportunity to clear his conscience and embark on a righteous path, perhaps despite his initial dalliance with the free, peer-to-peer sharing network.

Starting big

Founded in 2004, Nareos has begun selling its services in recent weeks and has already signed contracts with three, major American digital music distributors: INgrooves, CD Baby and the Digital Rights Agency (DRA). All three collaborate with hundreds of record companies. Thus, Nareos will soon begin distributing millions of legal songs in file-sharing networks.

The company's headquarters, in Petah Tikva, looks exactly like every other joy- filled startup did in the salad days of the high-tech bubble: a grayish office building in the Ramat Siv industrial zone, third floor, no elevator. But inside, the walls are painted orange and yellow, the kitchen is crammed with refreshments and the crowded offices are occupied by computer entrepreneurs and experts of Russian extraction, female marketing managers of Anglo-Saxon origin and programmers with twinkles in their eyes. There are now 16 employees in the company, but CEO Alexander Lazovsky promises that there will be 20 employees by the end of 2005.

Three young former computer students founded the company: Lazovsky, Jhanna Proger-Lazovsky and Alexander Zaidelson. They found private investors who invested a few million dollars - and went to work.

"We saw the demand for digital files. It can't be stopped," Lazovsky says. "Four- hundred million people in the world already share files in a general way. At any given moment, 10-15 million people are downloading files. We developed a platform, which makes it possible to distribute digital content - now mainly music, but also movies and books in the future - on all the existing file-sharing networks. Downloading files this way is much quicker because the files are legal. This distribution system makes it possible for smaller record companies to also distribute music by less well-known singers and to offer legitimate songs with no initial payment."

In other words, a legal file will work on all file-sharing networks. For example, if a surfer downloads a song on Kazaa and pays for it, and then uploads the song on eMule, a pop-up window calling for payment will also appear when someone tries to download the song using the new program. Lazovsky promises statistical analyses pertaining to the downloading of songs, including geographic distribution, to record companies that employ Nareos technology. Data supplied by Nareos will not only reflect songs that the company distributes - it will document everything that is happening on file-sharing networks.

Lazovsky is aware that competition from online stores and file-sharing programs is fierce, and that some also offer downloading files for pay on their sites. "The difference is that I am present throughout the Internet, on every file-sharing program and protocol. I don't work with only one of them," he says.

The CEO's ambition is boundless. In the future, he wants to open his own online store, which will be advertised in the pop-up payment window that appears in file- sharing networks. Lazovsky promises that it will also be possible to use this technology to purchase songs on a mobile phone and charge it to a mobile phone account using a credit card, and he dreams of becoming a major player in this arena.

Will a seemingly anonymous entrepreneur in Israel successfully compete with the legendary Shawn Fanning? It has already been proved that in the crazy world of the Internet, anything is possible. On the other hand, Lazovsky and his friends are embarking on an uphill climb.
http://www.haaretz.com/hasen/spages/650615.html





Connecting

Flock Founder Hopes New Browser Will Fly

'Social browser' integrates RSS, blogging, photo- and file-sharing, plus bookmark options.
Elizabeth Montalbano

Startup Flock has released a Firefox-based browser meant to enhance the user experience by incorporating some of the Web's most social features, such as file sharing, RSS feeds, and Web logging, according to the company's co-founder.

Bart Decrem, who in the past helped develop the business model for the Mozilla Foundation and its Firefox browser, is CEO and a founder of Flock. The Palo Alto, California startup is developing what Decrem calls a "social browser" that will let users take advantage of the full next-generation Web experience.

Browser Evolution

"The Web has evolved very dramatically from a big library to a library, shopping mall and increasingly a social space where people exchange information, communicate with each other and share information," Decrem said Friday from Camden, Maine, where he was attending the Pop!Tech 2005 conference.

The evolution of Web browsers, however, have not been as significant, he said. Though Firefox is different because it puts the user experience first and offers more security in comparison to Microsoft Internet Explorer, current browsers are still very similar to ten years ago, Decrem said. IE faced little challenge in the browser market until recently and so did not evolve much in the way of feature innovation.

Flock hopes to change that by integrating more functions into the browser, giving users easier access to the Web's social aspects. The developer preview of Flock Browser available Friday showcases the inclusion of the "low-hanging fruit" of that experience, according to Decrem.

The preview includes technology for more efficient bookmarking and bookmark-haring through the online service del.icio.us; automated RSS feed sign-up and organization; and technology that "takes the headaches out of blogging," he said, such as the capability to highlight text on a Web page and immediately have it appear in a new entry in a user's blog.

Flock also will support podcasting, and photo- and other file-sharing technologies as it evolves, Decrem said. Developers are putting out a new build of Flock Browser every one to two days, with the hope of having a consumer-ready beta of Flock Browser available before December 15, he said.

Heat Up Competition

Michael Gartenberg, analyst with Jupiter Research, said Flock's focus on offering features that are popular with the most contemporary Web users--those who are more apt to switch browsers--will likely put pressure on Microsoft, as well as bite the hand that is feeding the startup, Mozilla's Firefox.

"This seems to be about a feature-driven Web experience for users who are interested in going beyond just generic browsing," he said. "Microsoft had enough pressure responding to Firefox, much less responding to something that adds even more features than the generic browsing experience."

Still, though consumers today have more choice of browsers between Firefox, Apple's Safari for Macintosh, and Opera than they have had in years, it remains to be seen whether the organizations that own those browsers will make any money on them, Gartenberg added.

Like its technology, Flock's business model also reflects the Web's evolution, Decrem said. The company will offer its browser free and plans to partner with companies such as Yahoo and Google to include search boxes that hook up with their search engines, and with other online services such as Amazon.com and Six Apart's Typepad blog- hosting service.

Partnerships Eyed

In a partnership scenario with a company such as Amazon.com, Flock would build a link to Amazon.com right in the browser and earn commission fees if users use that link to go onto the site and make a purchase, he said. Flock also will offer subscriptions to blog-hosting sites for users who lack such subscriptions, and will earn fees from companies such as Typepad for sending users to such services.

However, Decrem said Flock wants to be careful not to try to pigeonhole users into certain services on the Web and hopes to provide them with as much choice as possible.

"We believe there are additional opportunities for us to make money and to do so in a way that respects users' privacy and doesn't affect the user experience by always giving users choice," he said. "You ought to be able to use whatever blogging platform you like, whatever photo-sharing services you like."

At the same time, Flock will offer default services, such as Typepad and several others for blogging, in case users haven't already made decisions about which services to use, he added.
http://yahoo.pcworld.com/yahoo/artic...,123165,00.asp





Musician Who Tangled With Bush to Run
AP

A year after tangling with the Bush campaign over the use of a pop tune he penned in the 1970's, Democrat John Hall now wants to take on Rep. Sue Kelly.

Hall, a former county legislator who lives in Dover Plains, announced Tuesday he is running for Congress.

A co-founder of the band Orleans, Hall criticized the Bush re-election effort last year for using "Still the One," a song he co-wrote, at campaign rallies.

The campaign insisted it had legal right to use the song, but stopped playing it after Hall complained.

Westchester, and Rockland counties.

Hall is not the only Democrat seeking to unseat Kelly.

Lawyer Judy Aydelott has raised over $100,000 for her effort.

Kelly also faces a potential primary challenger in Jeff Cook, an Orange County resident who worked with the Log Cabin Republicans before deciding to challenge Kelly.
http://hosted.ap.org/dynamic/stories...TAM&SECTION=US





NBC Stuck to Sunny Rebroadcast of Last Year's M&M's
Andy Newman

NBC did not interrupt its broadcast of the Macy's Thanksgiving Day parade yesterday to bring viewers the news that an M&M balloon had crashed into a light pole, injuring two sisters.

In fact, when the time came in the tightly scripted three-hour program for the M&Ms' appearance, NBC weaved in tape of the balloon crossing the finish line at last year's parade - even as the damaged balloon itself was being dragged from the accident scene. At 11:47 a.m., as an 11-year-old girl and her 26-year-old sister were being treated for injuries, the parade's on-air announcers - Katie Couric, Matt Lauer and Al Roker - kept up their light-hearted repartee from Herald Square, where the parade ends.

"Will these classic candymen get out of this delicious dilemma?" Mr. Roker asked, referring not to the accident but to the premise of the attraction, a red M&M's attempt to save his yellow counterpart, who had been blown from the basket of a hot-air balloon.

Ten minutes later, the upbeat broadcast ended without mention of the accident in Times Square. CNN carried a flash about the accident at 11:51, while the parade telecast was still going on. NBC's cable news network, MSNBC, followed two minutes later. And WNBC, the New York affiliate, carried the news at 12:30 p.m.

But Cameron Blanchard, a spokeswoman for NBC's entertainment division, which broadcast the parade, said that the anchors did not deviate much from the script because it was not clear at the time what had happened. "We had been alerted that there had been an incident," she said. "But no further details had been conveyed to us."

When the balloon failed to arrive at Herald Square at the appointed time, she said, "we rolled with some previously recorded footage."

That said, the situation made for a jarring confluence of scripted and unscripted reality.

At 11:47 a.m., about 7 minutes after the accident, the screen image faded from live coverage of a high school marching band from Kennesaw, Ga., to last year's tape of the M&M balloon. Ms. Couric, advising the audience that it was now looking at old tape, riffed on the balloon's concept of M&M's in distress.

"Now, because of today's windy conditions," Ms. Couric told viewers, "these characters are on video, and if we told you they were not in a panic, we'd be full of hot air."

Mr. Lauer, Ms. Couric's co-anchor on the "Today" show, chimed in: "You may be thinking 'color us clueless' as they flirt with trouble, with Yellow hanging on by a thread and Red struggling to keep his best buddy from flying off into the blue."

Mr. Roker then spoke his lines: "Will these classic candymen get out of this delicious dilemma? Hard to say, but when it comes to sweetness, Yellow and Red continue to melt your heart, but not in your hand."

Ms. Blanchard said she did not know what the announcers knew about the accident at the time.

After that, it was on to the Pillsbury Doughboy, and, bringing up the rear, Santa and his wife. "Old Saint Nick and Mrs. Claus, his wife of, what, 200 years?" Ms. Couric said. "What a marriage. What a team!"

With that, the parade was over.

"It's obvious the three of us have had a great time today," Mr. Lauer concluded, "and we hope all of you did as well."

Patrick LaForge contributed reporting for this article.
http://www.nytimes.com/2005/11/25/ny... ner=homepage





Turn On. Tune In. Take Over.

Viewers, light your torches! The television revolution is at the gates.
Adam Sternbergh

Before we discuss how everything we know about television has changed forever, let’s start with three recent, apparently unrelated, and essentially mundane anecdotes:

(1) Last month, Apple unveiled yet another new iPod, this one capable of playing video. At the time, it seemed underwhelming—little more than another Bravo, Steve Jobs! moment and a chance to watch U2 videos on a screen three inches high. As an ancillary benefit, however, Apple started selling commercial-free episodes of Lost and Desperate Housewives on its iTunes Website, along with select music videos, for $1.99 each. Three weeks later, iTunes had sold its 1 millionth such video.

(2) This summer, Universal did something kind of weird: It released Serenity, a sci-fi movie based on a poorly rated TV show, Firefly, that had been canceled after eleven episodes. Making movies of hit TV shows has a self-explanatory logic, but there aren’t too many movies based on TV flops. But I saw Serenity and liked it a lot, so I went out and bought the entire run of the Firefly TV series on DVD, watched it, and liked it a lot as well.

(3) Last week, Fox announced that, owing to scheduling conflicts, it planned to put its new series Prison Break—which spends the whole season following one man’s compelling, if slightly absurd, effort to break himself and his brother out of prison—on hiatus until late May. The show’s fan base howled all over the Internet, and for good reason: Prison Break is premised on a puzzle that takes all season to solve, with each episode a mini-cliff-hanger. One fan-generated suggestion to Fox was, why not move the show to a less-competitive time slot, such as Friday, where die-hard fans can still find it? I’ve been recording the show on my DVR (TiVoing it, you might say, except the folks at TiVo don’t like you to use that word unless you own, you know, a TiVo) and enjoying each episode at my leisure. So naturally, my first reaction to this debate was, Wait a minute. Prison Break airs on Monday nights?!

What do we know about TV? Here’s the basic model: Networks air particular shows at particular times on particular nights; say, Commander in Chief on ABC, every Tuesday at nine. These shows are available to viewers for free, subsidized by intrusive blocks of ads—a leftover from the days when TV was magically plucked from the air by your rooftop antennae, like radio with pictures. A TV show’s ratings determines both its sustainability (on the network schedule) and its profitability (in terms of how much its advertisers can be charged). These ratings are calculated by following the habits of a small number of representative viewers, tracked by the Nielsen company, whose preferences are then extrapolated for the entire audience. The prime economic directive of TV, therefore, has always been, TV doesn’t sell shows to viewers: It sells viewers to advertisers.

It’s an interesting business model, one that came about by accident, and one that is now entirely obsolete. If you have a DVR—and in New York city, 20 percent of Time Warner’s digital customers do—you can watch shows whenever you like; the shows are, in effect, untethered from their time slots. (Exhibit A: the recently redesigned TV Guide, retooled around the assumption that no one uses a TV Guide anymore.) So she watches Prison Break on Monday at nine, he watches it Monday at midnight, and I watch it Wednesday morning at eight, before work, over a bowl of oatmeal.

But what if she, he, and I aren’t enough viewers to keep a show alive on the network? No problem: We’ll just buy the DVD. Fox’s critically praised 24 was nearly canceled after a disappointing first season in 2002—its low ratings owing, in part, to the difficulty for the audience of jumping into the high-concept show midstream. So, Fox released the first season on DVD just before the second one premiered (the first time anyone had released a DVD of a show that early on), and it sold so well that it renewed Fox’s commitment to the show, which went on to become a hit. Fox’s Family Guy actually was canceled, then the DVD came out and sold about 2 million copies, and Fox did something no network had done before: It revived the canceled show. Of course, networks are quick to point out that DVD sales still pale next to ad revenue (which, in turn, pale next to syndication, TV’s pot of gold at the end of the rainbow), but the precedent’s been established: People are paying directly for shows. And the popularity of DVDs, both culturally and as a source of found money for studios, is not only rescuing faltering shows but altering the content of new ones: It’s one reason we’re seeing so many new “arc” shows that follow a single storyline over a whole season, à la Lost, Prison Break, or the recently ordered NBC show Kidnapped, about a single abduction.

As long as shows were reliant on ads for their revenue, the total number of viewers mattered. Now, not so much. In fact, whereas broadly popular shows prospered under the old model, niche shows with hard-core fan bases prosper under the new one. Shows like 24 and Firefly sell a lot of DVDs. Shows like Yes, Dear and Two and Half Men do not. Studios (which make the shows) and networks (which buy and air them) are still fond of traditional, mass-appeal programs such as Two and a Half Men because of their high ad rates and lucrative afterlife in syndication. But both of those markets seem in jeopardy. Once you’ve got an overflow of your favorite shows stored up on your DVR (and your iPod and your DVD shelf), why watch reruns of Home Improvement on TBS?

Okay, so maybe you don’t have to watch a show at a particular time anymore. And maybe a show doesn’t need a huge audience to be financially viable. It’s still TV, right? It’s still half-hour- and hour-long shows that came through a box in your living room? Sure—for now. That’s assuming you don’t download the latest episode through the BitTorrent Website or buy it from iTunes to watch on the subway to work. For years, networks have trembled at the idea of selling individual episodes because it fundamentally undermines the way TV works—or used to work. But after the success of ABC’s bold toe-in-the-pool partnership with iTunes, NBC and CBS last week announced plans to sell their own shows through video-on-demand services for 99 cents an episode. And suddenly it’s not so hard to envision a future (by which I mean two years, not twenty) in which you buy most of your TV shows the way you do, say, magazines —subscribing to some, picking and choosing others. At which point there’s no more need to stick to the half-hour/hour-long model on TV than there is for magazines to publish each issue at precisely 100 or 200 pages.

Before we venture further, this might be a good time to point out that, when it comes to technology, I’m not an early adopter. I fit more comfortably in the category known as “late majority” (iPod, yes; BlackBerry, no). So the fact that I can now DVR my way to my own private TV schedule and download ad-free episodes to my computer (a machine I barely understand) says something about the future of TV. Specifically, that pretty soon I, and he, and she, and you, won’t need one. Sure, there will be a big screen on your wall and sometimes you will watch shows on that. There will be a little screen in your pocket and sometimes you will watch shows on that. And there may be a medium-size screen you carry in a handbag, and sometimes you will watch shows on that. (And maybe, someday, there will be a holo-chip in your head, beaming shows right into your brain.) Connected to them all will be a small box into which you download, and store, the shows you’ve decided to buy.

TV came to us like a kind of visual cookie dough, dull but pleasant. We could take it or leave it, but we’ve had very little control over the recipe.

Of course, tech evangelists love to trumpet brave new futures—Buy all your dog food at pets.com! Purchase clothes worn by your favorite stars while you watch them on TV!—assuming that, just because we’re able to do something, we will. (This argument is proved fallacious by that unused ab exerciser you once bought because “you can use it while watching TV.”) Each new technology takes a while to find its use, as we, the actual users, pick it up, consider it, and figure out what it’s really good for. The Internet has proved great for uniting geographically disparate people with common interests (eBay collectors, MacGyver fanatics, balloon fetishists) and not so good as, say, an Alpo clearinghouse.

We’re living in just such a murky moment—stepping into the future, even as we try to find our footing. And while this has led to all sorts of tedious arguments about how TV producers will make their money—a question of interest primarily to TV producers—the matter of how it affects you and me is one of more pressing relevance. This is especially true given that, in the old model, the viewer was little more than the last stop in an assembly line: the “end user,” in the jargon of the suits. TV came to us like a kind of visual cookie dough, dull but pleasing, and extruded into our living rooms. We could take it or leave it, but we’ve had very little control over the recipe.

In the new model, the audience is right there in the kitchen. The Internet already provides gathering places for fans to praise or rant about their favorite shows—sites far more influential than, say, the letter-writing campaign to save Cagney & Lacey, because they happen in real time, interactively, often with TV producers responding or lurking all the while. (Why not, given that the sites are, in essence, the world’s largest focus groups?)

All of which leads to an enticing possibility: Let’s say that Joss Whedon, creator of Firefly, wanted to bring the series back to air. (Though “back to air” is a TV phrase now as anachronistically quaint as “switching the dial.”) Let’s say he found a million Firefly fans online—and, trust me, they’re not hiding—who were willing to pay, say, $39.99 each for a sixteen-episode season of Firefly. (Not an unreasonable price, given how many people pay about that amount for full seasons on DVD.) Suddenly, Joss Whedon’s got roughly $40 million to play with—and he doesn’t need a network. Or a time slot. Or advertisers. He can beam the damn shows right to your computer if he wants to. There’s even a mini-precedent for this: The online phenomenon of “ransom games,” in which a board-game developer sets a price (usually something minuscule, like $1,000), then, once he’s received that amount in pledges from strangers, creates the game and releases it for free.

But the idea of TV funded by the audience conjures another, less sunny scenario. After all, there’s already an entertainment-delivery system that funds itself through mini-contributions from millions of viewers: It’s called the movies, which aren’t exactly undergoing an artistic golden age. Furthermore, wherever democracy blooms, mob violence is only one step behind: How happy will Joss Whedon be when the $39.99-paying legions, assembled at wesavedfirefly.com, demand that a killed character be resurrected or that an irritating plotline be written out of the show?

Either way, TV’s days as a benign dictatorship—a little bread, a lot of circuses—are over, and the revolution is nigh. TV studios may still milk the old sources of revenue, but the fundamental economic law has been abolished—TV is selling shows to viewers—which, in TV terms, is like saying that the law of gravity is null and void. Everything’s up in the air. Including you, O Viewer, finally freed from your easy chair, ready to march into the streets and maybe—just maybe—drag your TV along with you.
http://www.newyorkmetro.com/nymetro/...038/index.html





Netflix Presents at Lehman Brothers Small Cap Conference
Davis Freeberg

This post should not be construed as financial advice. Davis Freeberg is both a shareholder and current customer of Netflix.

Barry McCarthy, the Chief Financial Officer of Netflix gave one of the best investor presentations I've ever heard at the Lehman Small Cap conference earlier today. If you've never listened to a conference call or an investor presentation, this is the one to catch. In the call, he made a strong argument for why Netflix will make it to 20 million subscribers by 2010 - 2012.

During the presentation he gave great statistics about past growth and indicated that they believe they will hit 4 - 4.2 million subscribers by the end of this year. He also said that "our objective through the end of next year is to finish with at least 5.65 Million Subscribers." An amazing accomplishment considering that they had less then 2.6 million subscribers a year ago.

He pointed out that a key driver to their growth will be the superiority of their website design and proprietary algorithms. In the presentation he points out that "among online retail businesses we have been rated the best website on the internet and as we grow, our objective is to become an iconic brand." He sees brand loyalty, strong customer satisfaction and personalization as being key components to their growth.

The personalization of their site is really what makes their service so unique. At this point Netflix has now collected over 1 billion ratings for moves. They use these ratings to make recommendations of longtail content for their consumers.

"we help you find movies you've never heard of. By the way of example there were 554 movies released theatrically last year and I bet most of us can't name 20. A lot of those movies you would enjoy, if you knew that they existed. If you don't know that they existed then they might as well have not been invented. Our goal is create demand for content and own the gross margins associated with owning demand."

He later goes on to compare this approach with Blockbuster.

"Historically Blockbuster has reported that about 90% of the movies they rent are new theatrical releases. They do a great job of fulfilling demand, created by the studios who spend $4 billion per year marketing new theatrical releases and the studios own the gross margins associated with creating that demand . . . Now they have a slightly different mix online. A couple of quarters ago they said that about 70% of what they rent online is new releases and about 30% is back catalog. That's not true in our business and it's never been true in our business. The day we came public and in the most recent quarter about 30% of what we rent is new releases and about 70% is back catalog and it's not because we have a different subscriber. It's because we create demand for content and we help you find great movies that you'll really like, we do it algorithmically and we do it with recommendations and ratings."

You can argue that the concept of the longtail is merely theoretically or that it's nothing more then a fad, but to me this is proof that the longtail is not only relevant, but will revolutionize Media as we know it today. I don't believe that I have ever rented a new release from Netflix, simply because there are currently 216 movies in my queue that are highly relevant to my interests. I want to see all of the movies very badly and only on a very rare occasion have I wanted to see a movie as soon as it's released to DVD.

While their rental mix has not changed their demographics certainly have. In the call he said that when they went public 80% of their customers were high income, educated males. Today 54% of their subscribers are women and 40% of their customers didn't go to college.

Later in the presentation he talked a lot about the upcoming High definition DVD's that are coming out.

"As many know there's been a format war. Two formats have been proposed as a successor to DVD, one sponsored by Warner primarily and one sponsored by Sony. Warner is HDDvd and Sony is Blu-Ray. I think it's pretty clear that Blu-Ray has won. Even Warner has agreed to license and to release technology to Blu- Ray, only Universal hasn't made a commitment at this point, so I think the format wars are a thing of the past and I think it's going to be Blu-Ray. I think the content will get priced at a 20% premium. I think it's going to roll out slowly over time."

If the content does get priced at a premium this will benefit Netflix tremendously because it will extend the life of their current inventory dramatically.

The two biggest bombshells during the presentation were the possibilities of lower prices and the inclusion of advertising on their website. While both of these issues are still in an experimental phase, it's clear that the company is continuing to experiment with the business model that they have created.

"Along the way we are going to test lower prices, some of you may already be in a test cell, if you're not a subscriber and you've recently come to the site and you may have seen some initial testing of lower prices. The reason why we're testing it is because we think that the market is price elastic. We want to get bigger, the bigger we get I think the more video stores we put out of business."

If they decrease prices, they don't expect it to impact their gross profits because they expect to reduce marketing expenses to offset the loss of profits.

On the advertising front McCarthy pointed out that they are currently test marketing ads to different "cells" and are trying to gauge it's impact on churn. While as an investor I think the idea of creating alternative revenue streams is great the thought of paying to look at banner ads does not sit well with me as a consumer. One thing that I really enjoyed about Netflix when Netflix took over for Walmart was that they gave me an opportunity to opt out of the Walmart ads on the site. My question to them would be that given that you have great personalization tools, why not create an advertising model where consumers can choose to opt out of ads if it bothers them? This way Netflix could have their cake without it impacting churn or customer satisfaction.

While these conferences are rarely exciting and compelling, I felt that this was a very impressive overview of what Netflix has accomplished to date and a great layout of their strategies going forward. I highly recommend listening to the entire call for anyone who is interested in their company.
http://thomashawk.com/2005/11/netfli...-brothers.html





Questions on the Legality of Campaign Fund-Raising
Carl Hulse

The American system of underwriting political campaigns is often derided as legalized bribery. Now the Justice Department is contending that it can amount to illegal bribery as well.

In pursuing a case that threatens to envelop Congress in an election-year lobbying scandal, federal prosecutors are arguing that campaign dollars and other perks routinely showered on lawmakers by those with legislative and political interests on Capitol Hill can reach the level of criminal misconduct.

The prosecutors say that among the criminal activities of Michael Scanlon, a former House leadership aide who pleaded guilty on Monday to bribery conspiracy, were efforts to influence a lawmaker identified in court papers only as Representative No. 1 with gifts that included $4,000 to his campaign account and $10,000 to a Republican Party fund on his behalf.

Lawyers and others who follow such issues say the case against Mr. Scanlon amounted to a shift by the Justice Department, which, they say, has generally steered clear of trying to build corruption cases around political donations because the charges can be hard to prove.

"The department has rarely charged campaign contribution cases," said Joseph E. diGenova, a defense lawyer and former federal prosecutor. "It would be a surprise that a contribution that has been lawfully reported" would lead to a criminal charge.

The case against Mr. Scanlon, who became wealthy in a partnership with the lobbyist Jack Abramoff, reaches far beyond the contributions to Representative No. 1. Court documents filed by prosecutors lay out an extensive conspiracy in which Mr. Scanlon and Mr. Abramoff, identified in the documents only as Lobbyist A, sought to defraud clients - mainly Indian tribes with gambling interests - and win legislative help from lawmakers in exchange for campaign donations, trips, dinners, greens fees and jobs.

Watchdog groups and some lawmakers say the emerging details of how at least one set of well-connected lobbyists operated should help build momentum for changes in lobbying rules. And, they say, the case demonstrates that the Justice Department shares their longstanding contention that campaign contributions can be used to game the system.

"I think the Justice Department wants to show that there is a line that can be crossed," said Larry Noble, executive director of the Center for Responsive Politics.

Others say a vast majority of lawmakers are committed to operating within the rules that already exist and in any event would not be easily swayed by the attentions of special interests, no matter how generous.

"Contributions can only take you so far," said former Senator John B. Breaux, a Louisiana Democrat who has relocated to a K Street law firm and is now advising clients on lobbying strategy. "I tell them, 'Look, you can give to an elected official and take them to lunch, dinner and breakfast. But if you are asking them to vote yes on an issue and they have 2,000 letters from home telling them to vote no, then you have a problem.' "

Representative Bob Ney, an Ohio Republican who has acknowledged being Representative No. 1, dismisses any suggestion that he was persuaded to do Mr. Scanlon's bidding because of campaign aid or perks like meals, entertainment or overseas travel.

"Whenever Representative Ney took official action," a statement from his office said, "actions similar to those taken by elected representatives every day as part of the normal, appropriate government process, he did so based on his best understanding of what was right and not based on any improper influence."

But the scrutiny of Mr. Ney has caught the attention of anxious lawmakers who have lobbying relationships of their own. It has also spurred advocacy groups. The campaign finance watchdog Democracy 21, for instance, is calling for inquiries by the House and Senate ethics committees into whether three dozen other members of Congress received contributions in exchange for intervening on behalf of a client of Mr. Abramoff.

The Associated Press reported this month that various lawmakers of both parties had asked the Interior Department to reject a casino application from a tribe that was a rival to one of Mr. Abramoff's clients. The lawmakers later received campaign aid from the tribe and Mr. Abramoff. Among the beneficiaries was the Senate Democratic leader, Harry Reid of Nevada, who received a $5,000 contribution to his political action committee shortly after sending a letter to the department in 2002.

Jim Manley, a spokesman for Mr. Reid, said Mr. Abramoff and the donation had had nothing to do with the position of the senator, who Mr. Manley noted was an author of Indian gaming laws and an opponent of new Indian casinos. "There was absolutely no connection between the letter and the contributions," he said.

Federal law requires that to prove bribery, the government must establish that a "thing of value" was provided in a direct effort to obtain a specific official act - the essential quid pro quo. A more vague expectation that something like a contribution might influence a public official has been deemed insufficient.

Mr. diGenova and others said that as a result, the Justice Department had been reluctant to try to link official actions to political donations, leaning instead toward cases in which public officials had been personally enriched.

Those watching the current case see Mr. Scanlon's decision to cooperate in the continuing investigation of Mr. Abramoff and others as a crucial link to the possibility of further charges: as an insider, he could conceivably provide evidence of a strong tie between efforts to influence lawmakers and their official actions.

Criminal charges aside, some watchdogs and members of Congress say they hope that public exposure of lobbying abuse stirs the Congressional ethics committees to police lawmakers more aggressively and that it simultaneously builds support for tighter lobbying restrictions.

"I think most Americans play by the rules and expect their leaders in government to do the same," said an author of one such proposal, Representative Martin T. Meehan, Democrat of Massachusetts. "It is time for Congress to clean up its act."
http://www.nytimes.com/2005/11/25/politics/25memo.html





Placing Ads in Some Surprising Spaces
Stuart Elliott

THE parade of mainstream advertisers starting to use nontraditional media is growing almost as long as that march through Manhattan yesterday sponsored by a certain department store.

Joining the throng are the Budget Rent a Car unit of the Cendant Corporation and the toy maker Hasbro. Budget turned to blogs to promote a contest with a scavenger hunt motif, buying advertisements on 177 blogs bearing names like BuzzMachine, Gizmodo, Jossip, Largehearted Boy, Overheard in New York, Stereogum and The Superficial.

And beginning next week, Hasbro will sponsor an unconventional series of make-believe classified ads to promote a new version of its Monopoly board game.

The classifieds will appear in newspapers read by consumers shopping for cars, houses and boats.

Although the ads will resemble those that sell cars, houses and boats, the "merchandise" is actually in the form of tokens from the new Monopoly 70th anniversary edition.

The campaigns from Hasbro and Budget are a sign of the increasing appeal of nontraditional media to once-conservative mainstay marketers as they seek to reach bombarded consumers. The growing willingness to consider alternatives to television commercials, billboards and print ads is one of the most significant changes in marketing in decades.

"I've got to be smart and make my brand feel smart to the consumer," said Scott Deaver, executive vice president for marketing at the Cendant Car Rental Group in Parsippany, N.J., which oversees Budget and Avis.

"I can't outspend Hertz," Mr. Deaver added, "but I can outsmart them."

What is most valuable about nontraditional media like blogs, Mr. Deaver said, is their ability to "actively engage the consumer" compared with "passive TV spots" and other traditional choices.

That assessment was echoed by Mr. Deaver's counterpart at Hasbro.

"When you do something unusual, unexpected, with something so well known as Monopoly, you can get a lot of talk value," said Mark Blecher, senior vice president for marketing at the Hasbro Games division of Hasbro in Longmeadow, Mass.

"We're not going to shift all our money into this," Mr. Blecher said, "but using innovative advertising you can generate some word of mouth for a fraction of the cost of a commercial on a major network TV show."

John Staffen, executive creative director of the Hasbro Games agency, the New York office of Arnold Worldwide, estimated that the budget for the make-believe classified ads was "a couple of thousand dollars." That sum is buying space in publications like Deals on Wheels and Yacht Trader, interspersed among the classifieds from actual sellers.

Reading those publications is "what middle America does to live out its dreams," said Mr. Staffen, whose agency is part of the Arnold Worldwide Partners division of Havas. That matches the dream-big theme of Monopoly, he added, as symbolized by its brand character, once known as Rich Uncle Penny Bags and now called Mr. Monopoly.

The Monopoly ads feature photographs of the tokens from the new game rather than real houses, boats or automobiles. They are written in the typically terse prose of classifieds, the better to blend in with their prosaic surroundings.

The car-token ad reads: "1935 classic. Just upgraded. Low mileage. Mint cond. Chrome finish. Runs like a dream in Monopoly 70th Anniversary Edition. The best Monopoly board game money can buy. Call 877-MONOP70 or go to monopoly70th.com."

The blog campaign for Budget cost about $20,000, Mr. Deaver said. The ads appearing on the 177 blogs asked readers to visit a blog sponsored by Budget (upyourbudget.com) and enter a treasure hunt being held for four weeks in 16 cities with cash prizes of $160,000. The final contest, in San Diego, ended this week. "Blogs seemed an appropriate fit for Budget's young, tech-savvy audience," said Jay Arnold, president and chief executive at the Impax Marketing Group in Philadelphia, which created the blog campaign for Budget.

"And fortunately, some of the people who won the contests were Budget users," Mr. Arnold added, laughing. The Budget ads were simple, presenting cartoon characters urging blog readers to visit the Budget blog and enter the contests.

The blogs were selected, Mr. Arnold said, with the help of a consultant, B. L. Ochman, using criteria like how frequently they are updated and how interesting they are to the so-called technorati. In fact, Mr. Arnold said, the tracking service technorati.com was used to help pick the blogs.

Among some of the other blogs on which the ads appeared were Blurbomat, BoingBoing, CityRag, Coolfer, Daily Heights, DCist, Gothamist, IndieWire and This Is Broken.

As online diaries, most blogs are by their nature candid and uncensored. As a result, "you don't have the same kind of control of or ability to know the content as with mainstream advertising," Mr. Arnold said, adding: "There's no question about the fact it's a little riskier. We want to push the envelope, but not be inappropriate."

The blogs were screened to cull those with content like "naked body parts," Mr. Arnold said, adding that he and Mr. Deaver received no complaints during the month the campaign ran.

Mr. Deaver said he was pleased enough with the results of the campaign to have decided "we'll certainly be back in this space." (The Budget blog tells readers the next contest will be "sometime in spring 2006.")

Even so, "the jury's still out on the metrics," Mr. Deaver said. "I'd be lying if I said I know what to measure to determine success."

By a preliminary count, Mr. Deaver said, the blog pages on which the Budget ads appeared had 19.9 million impressions, which generated about 60,000 click-throughs to the Budget blog. That accounted for about half the total traffic to the Budget blog, he added.

"I'm happy about those numbers," Mr. Deaver said, "but the real determination is, what do we learn? Are we smarter when we do it next time?"
http://www.newscoast.com/apps/pbcs.d...446/BUSINESS19





As Corporate Ad Money Flows Their Way, Bloggers Risk Their Rebel Reputation
Louise Story

When Anita Campbell started her Web log about small-business trends two years ago, she thought it would simply be a service for her clients and help her consulting business grow.

Instead, she said, the blog "just took off," attracting more readers than she had dreamed of. Then, companies offered to pay her to post advertisements and product mentions on her site. There were enough offers, she said, that she could choose to work with only the ones relevant to her readers. And so, her blog, once just a marketing tool, became a money generator on its own.

"I never try to hide the fact that I am writing about an advertiser," she said in an e-mail statement. "But I also don't apologize for accepting advertising, and I make it clear that just like everyone else I have to earn a living and pay the expenses of keeping the site going."

After beginning as a vehicle for anti-establishment, noncommercial writers, many Web logs have laid out welcome mats for corporate America in the last couple of years. No one tracks how much advertising money is flowing to Web logs. Nor is it clear how many bloggers, like Ms. Campbell, disclose their sponsors. But when writers have not been completely open, their fellow bloggers have been quick to criticize.

Businesses have noticed the growing readership and influence of these Internet postings and are spending $50 million to $100 million this year on blog advertising and marketing, said Charlene Li, an analyst at Forrester Research, a company that looks at the impact of technology on business and consumers. Recognizing that blogs have become more mainstream, companies are paying for advertisements or mentions on blogs, courting blog writers with public relations efforts and inviting writers to come blog on one of their corporate sites.

The blogosphere, companies said, is an important place to have a presence, and blog writers are not shying away from the attention.

"The attitude has completely changed from where it was two years ago and even a year ago," said Jim Kukral, the publisher of ReveNews, a site about making money from Web logs. "People have started to realize that, hey, this is fun; we've proven it's fun; I enjoy doing it; now let's apply a few advertising techniques and make some money."

There is now an annual Blog Business Summit and several books on how to make money blogging.

Many blog writers have signed up for Google's AdSense program, which started in 2003 and pays Web publishers based on how many times advertisements on their sites receive clicks. Google places the ads on participating Web sites using contextual word matching, in an attempt to ensure that the advertisements relate to the content on the page.

Bloggers are also making money through "affiliate networks," which, in contrast to Google's automated system, allow blog writers to choose which advertisements to put on their pages. They also can be paid based on how often ads on their sites lead to sales rather than how often the ads receive clicks. Shareasale, Commission Junction and LinkShare are three such network companies.

"You have all these self-publishers, people like the bloggers, who suddenly become business partners with Fortune 500 companies," said Heidi S. Messer, the president and chief operating officer of LinkShare, which connects Web writers with companies like Dell, Wal-Mart and Apple Computer.

Sometimes blog writers make money by simply linking to companies' home pages. Companies come up higher in Google, Yahoo and other search engines when they are frequently linked to and mentioned on many sites, including blogs.

USWeb, an online marketing firm, has run campaigns this year that pay people $5 to mention a company or link to its site. Most of the companies USWeb works with do not allow the company to identify them, said Ed Shull, the chief executive of USWeb, but some that he can mention include Lussori.com, a watch and jewelry company; Dot Flowers; and Terra Entertainment.

Currently, USWeb is asking people with personal profile pages on myspaces.com, a social networking site, to include a trailer from Terra Entertainment's coming release of the film "One Perfect Day" on their pages. In exchange, these Web users will have their names listed on the end of the credits on the film's DVD, Mr. Shull said.

USWeb has been criticized by some blog writers for not requiring its network of about 5,000 blog writers to disclose payments. It is currently completing guidelines on how bloggers should disclose that they were paid to mention products, Mr. Shull said.

"We are still leaving this as an option to bloggers," he said in an e-mail statement, "but we do recommend that they disclose to readers that advertisers do support the site through paid mentions."

To be sure, most blog writers do not make any money, and those who do often make only enough to pay their site fees. There are now at least 21.5 million Web logs worldwide, according to Technorati, a company that tracks blog postings. Many blogs remain primarily personal postings that Internet users pursue purely because of their own interests.

Still, large numbers of online writers are interested in making money.

Large blog Web sites like Gawker Media and Weblogs have offered blog writers another opportunity to cash in. These sites display their postings alongside that of many other writers, increasing bloggers' abilities to attract readers and advertisers.

So far, the idea seems to be working. Jason McCabe Calacanis, chief executive of Weblogs, a site acquired by the America Online unit of Time Warner this fall, said the site would generate a few million dollars this year. Weblog's 140 bloggers are paid based on how often they write, he said. A Forrester Research survey found in February that 64 percent of national marketers are interested in advertising on blogs.

Audi, for example, paid for about 70 million ads about its A3 compact model on 286 Web logs in the spring. Many of the blog ads featured links to other blogs that mentioned Audi's campaign for the A3, not to Audi's site, said Brian Clark, chief executive of GMD Studios, an experimental media firm that worked with Audi's advertising agency to create the campaign.

"It was a substantial buy, and it was a really effective buy for the campaign in terms of the response," Mr. Clark said. "You find that blogs are these series of citational records of what bloggers read. People with blogs read blogs. You get a feedback cycle."

Web logs also give advertisers the chance to aim at specific readers. If you want to advertise to New York Mets fans, for example, you can easily find blogs that cater to those readers, Mr. Clark said.

Last spring, Volvo spent several million dollars to sponsor Microsoft's MSN Spaces, a site that offers free Web logs and personal pages. The blog investment was worth it, said Anna Papadopoulos, the interactive media director at Euro RSCG 4D, a division of Havas that is running Volvo's Web log campaign. Since April, about five million pages have been set up by individuals, and a million people have visited Volvo's home page directly from the blog site, she said.

"These are people that we wouldn't have gotten through other marketing efforts," Ms. Papadopoulos said.

SBC Communications, which adopted the AT&T name on Monday, has found that advertisements on the blog site it started last fall, ProjectDU.com, have a higher click- through rate to its home page than its advertisements have had on other Web sites, said Michael Grasso, associate vice president for consumer marketing at AT&T.

Companies are also starting Web logs on their sites written by their employees. General Motors, for example, created two within the last year. Blogs may eventually replace many of the company's news releases, said Michael Wiley, director of new media for General Motors.

General Motors has also started to treat some Web log writers as it does traditional journalists, and is deciding which bloggers to invite to media showings of its new cars.

"It's very similar to media relations, but it's a little more grass roots," Mr. Wiley said. "The level of respect for certain influential bloggers is certainly growing."

When Piaggio USA, the makers of Vespa scooters, decided to include a Web log on its site, the company recruited Vespa customers who were already blogging about scooters. The two Vespa blogs, which started posting last summer, do not pay the writers and ask the writers not to sell later the material they write for Vespa.

One Vespa writer, Neil Barton, said he was willing to blog on Vespa's site free because of the visibility it would give his blogs, formerly published only on his own site, UrbanNerd.com.

"I just thought, well you know, no one really knows about UrbanNerd, but a lot of people know about Vespa, so it will be a cool way to get what I'm writing out there," said Mr. Barton, who lives in New Jersey. "The only limit I could see with Vespa is if I wanted to write about a competitor's scooter. I probably would post it on my blog as opposed to Vespa's."
http://www.heraldtribune.com/apps/pb...47/1018/NEWS02





Great for Craigslist but Not for Newspapers
Maria Aspan

The number of users of online classified advertising services increased 80 percent this year, according to a report released yesterday by the Pew Internet and American Life Project based on data gathered by comScore Media Metrix.

In 2005, almost nine million of those visitors went to Craigslist.org, a 165 percent increase from 3.4 million last year. "It was a huge increase on top of a pretty large base to begin with," said Lee Rainie, director of the Pew project. Mr. Rainie said that Craigslist, which offers free listings for everything from apartments to furniture and personal ads, attracted more patrons by opening 15 city- or region-specific sites this year.

The report is bad news for classified advertising sources like newspapers, which have historically dominated the market. Mr. Rainie cited Craigslist's relief services after Hurricane Katrina as an example of its ability to meet the needs of a large, diverse consumer group. "One of the most appealing things to users of Craigslist is how adaptable it is," he said.
http://www.nytimes.com/2005/11/28/te...y/28drill.html





Universities Say New Rules Could Hurt U.S. Research
Scott Shane

American universities are warning that rules proposed by the Defense Department and expected soon from the Commerce Department could hurt research by limiting the ability of foreign-born students and technicians to work with sensitive technology in laboratories.

One target of the proposed rules is believed to be China because more than 60,000 Chinese citizens are studying in the United States and Chinese intelligence officials are strongly seeking American technology for military use, experts in the field said.

Universities have submitted hundreds of comments criticizing the proposed rules, and they argue that tight restrictions on research by foreigners could backfire and actually hurt national security by hindering scientific progress.

"The impact on research could be very serious," Barry Toiv, a spokesman for the Association of American Universities, said Friday. "The bottom line is that research that benefits both our economy and our national security just won't happen."

The rules govern the use of software, equipment or technical data that has military applications and therefore cannot be exported to certain countries without a license. A similar license, called a deemed export license, is required when the same sensitive technology is used by a foreign citizen in an American laboratory, on the ground that such a foreigner might return home and reproduce the technology there.

In practice, many foreign researchers are exempt from the licensing requirement if they are conducting basic research and their work is intended for publication, on the ground that the information they are producing will be shared widely to advance science.

The Commerce Department, whose inspector general last year recommended tighter regulations, is expected to propose the new rules by the end of this year.

The Defense Department proposed new regulations in July and is expected to produce final rules early next year, say lobbyists who follow the matter.

In a report last year, the Commerce Department's inspector general, Johnnie E. Frazier, warned that existing regulations were not protecting secrets from potential spies in American laboratories. The report proposed tightening the rules, including using the country of birth of a foreign laboratory worker, not his current citizenship, to determine whether a license is needed.

The report said, for instance, that an Iranian-born Canadian citizen who held dual citizenship would be considered a Canadian under the current regulations and would therefore not be subject to the licensing requirement.

But Tobin L. Smith, a senior federal relations officer for the Association of American Universities, said a person's country of birth often gave no clue to his allegiance. Moreover, the report's recommendations would cost universities millions of dollars to inventory sensitive equipment, determine students' birthplaces and study which foreigners were using which machines.

"Our faculties don't want to say, 'Before you can work on this equipment I need to know where you were born,' " Mr. Smith said.

The proposed Defense Department rules would require contractors, including universities getting research financing, to create separate security badges for foreign citizens and "segregated work areas" for research using export-controlled technology.

"That's not really realistic in a campus environment," where students and researchers must share laboratories, equipment and information, Mr. Smith said.

According to the Institute of International Education, 565,000 foreign students were enrolled last year at United States colleges and universities. The largest number of them, 80,466, came from India, with China in second place at 62,523.

Larry M. Wortzel, a former military intelligence officer who worked in the American Embassy in Beijing and at the Pentagon, said he believed that the rules should be tightened and that a foreign researcher's birthplace should be considered.

"You have to recognize that Chinese intelligence does target ethnicity," said Dr. Wortzel, a member of the U.S.-China Economic and Security Review Commission, which was created by Congress in 2000 to monitor the security implications of trade with China.

Noting that American jet engine technology is superior to China's, he said: "I don't see any reason why we should make it easier for China to build supersonic jets they could use to attack Taiwan, Japan or the U.S. They're not an ally."

At the same time, Dr. Wortzel said, "if this is done clumsily, it really will hurt university research."
http://www.nytimes.com/2005/11/26/ed...6research.html





Designer of Supercomputers Leaves Cray to Join Microsoft
John Markoff

Burton Smith, a longtime supercomputer designer and chief scientist at Cray, has resigned to take a position at Microsoft.

Mr. Smith was a founder of Tera Computer, which in 2000 acquired Cray Research from Silicon Graphics. The company, which was based in Seattle, was renamed Cray.

A Microsoft spokesman said Friday that Mr. Smith would work for Craig Mundie, one of Microsoft's chief technology officers and formerly chief executive of Alliant Computer Systems, a maker of an early minisupercomputer.

Microsoft announced two weeks ago that it planned to introduce a new version of its Windows software for scientific and engineering users, and that Mr. Smith would be involved.

"He's a really smart guy and an innovator," said Steven Wallach, a founder of the Convex Computer Corporation, and currently a venture investor. "The designs he developed were milestones in computer architecture."

While at Tera and previously at a Denver start-up supercomputer maker, Denelcor, Mr. Smith was a pioneer of an innovative computer design called multithreaded architecture, or MTA, which allows several programs to run simultaneously in computer hardware.

The approach was an alternative to Seymour Cray's "vector" style of computing, which was optimized for quickly performing calculations on long arrays of numbers.

Although the MTA idea was adopted in Intel's microprocessors, Mr. Smith's supercomputer designs were not commercially successful and are no longer offered as products by the supercomputer maker. The company does continue to support the design for a government intelligence agency.

Cray, which lost $204 million last year, has continued to offer the vector style of computer as well as a second series of machines based on the Opteron microprocessor of Advanced Micro Design.

Cray has stated that its design direction is toward a heterogeneous approach, which will combine features of vector processing and microprocessor-based massively parallel supercomputing designs.

In addition to being Cray's chief scientist, Mr. Smith has been head of the company's Cascade supercomputing initiative, which is one of three competitions supported by the Defense Advanced Research Projects Agency as part of an effort to design computers able to process at a petaflop, or a thousand trillion mathematical operations a second.

At this year's supercomputing show Microsoft's entry was greeted by some skepticism. The company is trying to persuade technical computing users to adopt its software, but that community still relies heavily on Unix and related types of software.
http://www.theledger.com/apps/pbcs.d...1260425/-1/APN