Peer-To-Peer News - The Week In Review – June 26th, '04

[JackSpratts]

Quotes Of The Week

"It would help libraries achieve something that we haven't yet been able to achieve by ourselves, which is to place all of our publicly accessible digital library collections in a common pool." - Daniel Greenstein

"The RIAA's legal strategy is hopeless and smacks of short-sighted panic." - Felix Oberholzer-Gee

"What we've seen is there was an initial reaction and people are realizing there are other ways they can skirt around this tracking." - Mary Madden on continuing lawsuits













U.S. Senate Approves Antipiracy Bill

Peer-to-peer software vendors object
Grant Gross

The U.S. Senate has passed a bill allowing the U.S. Department of Justice (DOJ), in addition to copyright holders, to file civil lawsuits against alleged copyright pirates, over the objections of peer-to-peer (P-to-P) software vendors.

The Protecting Intellectual Rights Against Theft and Expropriation (PIRATE) Act of 2004, passed by voice vote Friday, would allow the DOJ to sue alleged copyright infringers, in addition to the civil lawsuits now brought by copyright holders such as the Recording Industry Association of America (RIAA). The PIRATE Act, sponsored by Senators Patrick Leahy, a Vermont Democrat, and Orrin Hatch, a Utah Republican, budgets $2 million for fiscal year 2005 toward DOJ civil lawsuits against copyright violators.

The bill, which has to be passed by the House and signed by President George Bush to become law, has drawn opposition from the Electronic Frontier Foundation (EFF) and other groups. "The PIRATE Act is yet another attempt to make taxpayers fund the misguided war on file sharing, and it's moving fast," the EFF's Web site says."It would also force the American public to pay the legal bills of foreign record companies ... Meanwhile, not a penny from the lawsuits goes to the artists."

The RIAA, in a statement Friday, praised the passage of the bill, which was introduced in March and moved to the Senate floor without a hearing. The Senate on Friday also passed the Artists' Rights and Theft Prevention Act, called the ART Act, which creates criminal penalties for videotaping movies in theaters and creates civil and criminal penalties for unauthorized distribution of commercial copyrighted works before they're released to the public.

"I commend the passage of these common sense proposals that offer flexibility in the enforcement against serious crimes that damage thousands of hardworking artists, songwriters and all those who help bring music to the public," Mitch Bainwol, RIAA chairman and chief executive officer, said in a statement. "These acts will provide federal prosecutors with the flexibility and discretion to bring copyright infringement cases that best correspond to the nature of the crime, and will assure that valuable works that are pirated before their public release date are protected."

P2P United, a trade group representing P-to-P software vendors, called for Congress to bring all stakeholders in the copyright debate together to solve the problem, instead of passing legislation like the PIRATE Act. The recording industry needs to find a way to turn the 60 million U.S. residents who have used file-sharing software into customers, instead of regarding them as criminals, said Adam Eisgrau, executive director of P2P United.

"The continued offloading onto the taxpayer of the cost of enforcing ever more draconian copyright penalties perpetrated by the PIRATE Act does nothing to compensate artists or copyright conglomerates for the peer-to-peer distribution of their work," Eisgrau said. "What it does do is force the Department of Justice into serving as free outside counsel for Hollywood and the recording industry in the same kind of private suits for damages that these conglomerates previously have been required to bring on their own dime."
http://www.infoworld.com/article/04/...Npiracy_1.html

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P2P Chief Blasts Hatch Proposal
Roy Mark

The peer-to-peer industry's most visible trade group blasted as "reprehensible" a new legislative proposal to allow P2P networks be sued for encouraging children and teenagers to commit copyright infringement.

Late Tuesday, Sen. Orrin Hatch (R-Utah) introduced the Inducing Infringement of Copyrights Act of 2004. According to Hatch, the bill permits persons or corporations to be held liable for infringing acts "that they intend to induce."

A longtime critic of the music file-sharing networks such as KaZaa and Morpheus, Hatch said in a statement, "Tragically, some corporations now seem to think that they can legally profit by inducing children to steal. Some think they can legally lure children into breaking the law with false promises of 'free music.'"

On Wednesday, Adam Eisgrau, executive director of P2P United, a file- sharing trade group representing Morpheus, Grokster, BearShare, eDonkey and Blubster, said Hatch's proposal creates a new crime that "trumps" 150 years of law and legal precedent, including a 2002 federal court decision ruling P2P software to be non-infringing.

In that case, which the music industry is appealing, the court found direct infringement of copyrighted works by some end users of P2P software but ruled the software also had significant non-infringing use. In clearing Morpheus and Grokster of copyright infringement, the court said the file- sharing companies couldn't control how people use their product.

"[The Hatch legislation] is ill-defined, ill-devised and is the product of an unbelievably flawed legislative process," Eisgrau said. "To do that in the dark of night with no hearings and no public discussion is reprehensible."

In his statement on the Senate floor Tuesday night, Hatch quoted the 2002 federal court decision that noted some P2P distributors "may have intentionally structured their businesses to avoid secondary liability for copyright infringement, while benefiting financially from the illicit draw of their wares."

Hatch added, "In other words, many P2P distributors may think that they can lawfully profit by inducing children to break the law and commit crimes. They are dead wrong. America punishes as criminals those who induce others to commit any criminal act, including copyright infringement."

Eisgrau said Hatch's bill could be interpreted that any developer of technology could be held liable for "merely inventing that technology" even when it has legal uses.

Eisgrau's comments to reporters came at the end of an abbreviated Senate Commerce hearing on P2P networks. Pending Senate floor votes limited the hearing to less than an hour. Although time was short, the session was long on fiery rhetoric and incendiary charges, particularly when Streamcast CEO Michael Weiss accused the music industry of "blacklisting" his company, which distributes the popular Morpheus P2P software.

As proof, Weiss produced a transcript of a voicemail message from Real Networks to Streamcast, which included the statement that "the labels have blacklisted you guys. So that is the problem we've got. Basically, what they're saying is you've got to denounce P2P, and/or resolve the lawsuit is what you have to do."

Weiss said he wants to the Senate Commerce Committee to direct the Federal Trade Commission or the Department of Justice to investigate the "apparently collusive, anti-competitive conduct in restraint of trade by the music industry."

John Rose, executive vice president of the EMI Group and EMI Music, denied any collusion between the music companies, but admitted EMI "will not license our work to P2P networks. We don't want to do business with them."

Rose was careful to distinguish between the P2P technology and the file- swapping networks that employ it.

"It's imperative that we distinguish behavior and technology when we look at organizations like Morpheus and Grokster," Rose said. "It's not necessarily the technology that's the problem, it's how the technology has been used and the business model that has been willfully and ruthlessly built around it."

Sen. Gordon Smith (R-Ore.) warned the warring parties, "I'd rather the industry deal with this problem, but if necessary, we'll do legislation."
http://www.internetnews.com/xSP/article.php/3372701


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Rat Out Taper, Get $500
Industry offering rewards for catching people camming films

The U.S. movie industry is enlisting theater employees to help combat piracy, offering a reward of up to $500 for every person they catch illegally recording films and report to the police.

The Anti-Camcording Rewards Program was unveiled Monday by the Motion Picture Assn. of America (MPAA), which represents the major studios, and the National Association of Theatre Owners (NATO).

Camcording has become a very potent source of piracy. A great majority of the films that show up on the Internet for download are a result of camcorders, according to MPAA spokesman Matt Grossman.

Typically, according to the MPAA, movies are filmed by camcorder during the first few days of their U.S. release, then distributed in digital form worldwide on file-sharing networks and other online outlets. Overseas labs then use the pirated films to create illegal DVDs, which are distributed en masse on street corners around the world.

In 2003, the MPAA seized 52 million discs worldwide with an estimated cost of $3.5 billion.

The MPAA is funding the program. The reward amount is up to the MPAA's discretion and is based on several factors, such as whether the suspect was apprehended and the timing of the piracy in relation to the movie's release.

"Theater employees are increasingly vigilant about individuals who surreptitiously set up camcorders in their theaters," NATO president John Fithian said. "This program will give every theater worker added incentive to take action against pirates and help protect our industry from this scourge."
http://edition.cnn.com/2004/SHOWBIZ/....piracy.reut/#


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Band Of Online Music Pirates Numbers In The Millions
Nicola Clark

PARIS - Not long ago, a friend recommended to Maria that she check out a new American electronic rock band, the Postal Service.

So she booted up Poisoned, her favorite file-sharing program, and had a look on the hard drives of millions of other people who, like her, were logged into a virtual swap meet of digital music files.

Once she found a few of the band's songs, in a few minutes they were stored away on the hard drive of her Apple iBook, ready to be played, copied to her iPod player or made available to countless other downloaders.

Maria, a 27-year-old Portuguese student living in Paris, estimated that she had copied about 300 songs this way over the past month - all without paying a cent for them. Her library of illegally downloaded tracks numbers in the region of 2,500, she said, but she does not consider herself a serious music pirate.

"I check around almost every day, although I don't always get something," Maria said. "It all depends on what's out there."

Aleix, 23, has been a regular music downloader since he moved to Paris from Barcelona two years ago. He has about 2,600 music files saved on his PC and sometimes downloads as many as 100 songs a week. Aleix declined to name his favorite file-sharing sites, most of them Spanish, for fear that they might be shut down.

"People learn about them through word of mouth," he said. "You can't find them if you search the name on Google, and if you do, that probably means it's going to disappear soon."

Maria and Aleix, who did not want their last names disclosed, are two of an estimated 7.4 million daily users of so-called peer-to-peer file-sharing networks worldwide who download a total of 410 million music files every day, compared with daily sales of CD albums and singles of just under five million units, according to Idate, a market researcher in Montpellier, France.

Last year, roughly 150 billion music files were transferred over these file-sharing networks, up nearly threefold from 55 billion in 2002. Western Europe accounts for about one-fourth of the total, Idate said, while the United States accounts for 43 percent.

Most file-sharing sites are compatible with one of five main networks - FasTrack, Gnutella, OpenNap, eDonkey and OpenFT - built around a specific family of free open source software that, when launched, connects the user's PC directly to other computers without relying on a central server, as Napster did before a music industry lawsuit shut it down in 2001.

Some programs, like Kazaa, BearShare and LimeWire, are developed by companies, many of them based in the United States, with legitimate online businesses who say they cannot police the kind of content their customers choose to download or make available to others. Others, like WinMX, Grokster and Gnucleus, were created by anonymous developer communities that exist only in cyberspace.

The overwhelming volume of music files available for free on the Internet is regularly cited by music industry executives as a primary reason for the sector's sharp downturn over the past four years.

In Germany, for example, where the incidence of online piracy is among the highest in Europe, recorded CD sales tumbled by 19 percent last year, the sixth consecutive year of decline, to 133 million. Meanwhile, sales of blank CDs used for "burning," or copying data such as music, stood at 325 million units. Sales of CD singles stood at 25 million, compared with an estimated 600 million songs downloaded over peer-to-peer networks.

Copyright and related protections apply in nearly every country. In 2001, the European Union extended protection for books, music and films to the Internet, although it gave member states significant leeway in its application. Individuals are permitted to make a limited number of copies for personal use, but this right does not extend to copyrighted material made available over file-sharing networks.

In late March, the music industry brought its battle against music pirates to Europe, targeting hundreds of "uploaders" - people who make large numbers of music files available to others via peer-to-peer networks.

As of June 9, IFPI, a London-based music trade body, said that more than 100 people in Denmark had been served with civil demand letters and that more than a dozen had agreed to pay damages averaging E3,000, or $3,600, each. A 23-year-old man from Cottbus, Germany, agreed this month to pay an E8,000 fine after police searched his computer and found 6,000 music files stored on it in MP3 format and 70 burned CDs. In Italy, criminal charges have been filed against at least 30 people since March after police seized computers and CDs containing about 50,000 music files.

More than half of music file-sharers are between the ages of 18 and 29. Most of them do their downloading either at home or, as in the United States, on university campuses. But as more households gain access to broadband services - 18 percent of Internet users in Germany, 32 percent in France and 25 percent in Britain, according to the market researcher GartnerG2 - downloading is becoming popular with older users as well.

"Today it is not rare that people of all ages and all social categories can be seen downloading over P2P," said Laurent Michaud, an analyst at Idate. "The software is free and very accessible. Anyone can learn to use it within a few minutes."

The record industry says its legal actions and the publicity surrounding them are having some effect. IFPI said that 7 out of 10 people in Britain, Denmark, France and Germany were now aware that file-sharing copyrighted music without permission was illegal, up slightly from 66 percent at the end of last year. Meanwhile, 59 percent of people polled in these countries said that criminal and civil action against file-sharers probably would be an effective deterrent to piracy, compared with 55 percent in December. The number of music files available on peer-to-peer networks also has fallen, to around 700 million today from 800 million in January and a billion in June 2003. But that still leaves a lot of unreformed song- swappers out there. Maria said she was skeptical that prosecuting a selected few Internet pirates would be effective. "It is hard to believe that is going to work," she said. "There are so many people doing it, and they can't go after everyone."
http://www.iht.com/articles/525731.html


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LaCie Bigger Disk

Four Drives in One Enclosure Equals Massive Capacity
Kristina De Nike

Even if you can't quite conceptualize how you could ever fill 1 terabyte (1,000GB) of disk space, the LaCie Bigger Disk will put that much capacity on your desktop in seconds. If you happen to know that you need 1TB to back up your network or complete your video-editing project, this drive provides it in one enclosure -- a new concept that has been very well executed.

The Bigger Disk can connect to your computer via FireWire 800, FireWire 400, or USB 2.0. The case holds four 250GB ATA/133 drives, but LaCie's custom firmware spans the four drives, so your Mac sees them as one volume. You can't see or format the individual drives, but you can partition the large volume.

Our tests revealed that the Bigger Disk's performance was equivalent to that of a single ATA FireWire 800 drive. The array writes to the first drive; when that drive is full, it moves on to the second, and so on until it has used up all four drives. The drive performed best when it was connected to our Power Mac G5 via FireWire 800. The array was around 30 percent faster on FireWire 800 than on FireWire 400. Over USB 2.0, the Bigger Disk was almost twice as slow as FireWire 400.

You can secure the drive in a locked box or use it to transport large projects, but at 11 pounds, this drive is not light -- and it's rather bulky. If you want to attach the drive to a server, you can buy a mounting kit for a 19-inch network rack from LaCie, for $78.

Macworld's Buying Advice

The Bigger Disk costs $1,199, which is approximately the same price as four 250GB FireWire 800 external drives. But if you need one huge volume to organize your data, the LaCie Bigger Disk is a clean, simple solution.
http://www.macworld.com/2004/05/revi...coebiggerdisk/


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Old Search Engine, the Library, Tries to Fit Into a Google World
Katie Hafner

Katarina Maxianova, who received her bachelor's degree in comparative literature from Columbia University in May, took a seminar last year in which the professor assigned two articles from New Left Review magazine. She found one immediately through Google; for the other, she had to trek to the library stacks.

"Everyone in class tried to get those articles online," she said, "and some people didn't even bother to go to the stacks when they couldn't Google them."

For the last few years, librarians have increasingly seen people use online search sites not to supplement research libraries but to replace them. Yet only recently have librarians stopped lamenting the trend and started working to close the gap between traditional scholarly research and the incomplete, often random results of a Google search.

"We can't pretend people will go back to walking into a library and talking to a reference librarian," said Kate Wittenberg, director of the Electronic Publishing Initiative at Columbia University.

Ms. Wittenberg's group recently finished a three-year study of research habits, including surveys of 1,233 students across the country, that concluded that electronic resources have become the main tool for information gathering, particularly among undergraduates.

"We have to respond to these new ways and figure out how to create the content that will be available," Ms. Wittenberg said, and come up with a way to make better research material available online.

That means working with commercial search engines like Google and Yahoo to make ever more digital-research materials searchable.

Undergraduates like Ms. Maxianova and her classmates are not the only ones conducting research from their computers. Faculty members also do it.

"One of the rarest things to find is a member of the faculty in the library stacks," said Paul Duguid, an information researcher who will teach a class this fall at the University of California, Berkeley on judging the authenticity of information found on the Web.

In the Columbia survey, 90 percent of the faculty members who responded said they used electronic resources in their research several times a week or more. Nearly all said it was a valuable resource.

While the accuracy of online information is notoriously uneven, the ubiquity of the Web means that a trip to the stacks is no longer the way most academic research begins.

"The nature of discovery is changing," said Joseph Janes, associate professor and chairman of library and information science at the University of Washington. "I think the digital revolution and the use of digital resources in general is really the beginning of a change in the way humanity thinks and presents itself."

A few research librarians say Google could eventually take on more of the role of a universal library.

"If you could use Google to just look across digital libraries, into any digital library collection, now that would be cool," said Daniel Greenstein, university librarian of the California Digital Library, the digital branch of the University of California library system.

"It would help libraries achieve something that we haven't yet been able to achieve by ourselves," Dr. Greenstein said, "which is to place all of our publicly accessible digital library collections in a common pool."

The biggest problem is that search engines like Google skim only the thinnest layers of information that has been digitized. Most have no access to the so-called deep Web, where information is contained in isolated databases like online library catalogs.

Search engines seek so-called static Web pages, which generally do not have search functions of their own. Information on the deep Web, on the other hand, comes to the surface only as the result of a database query from within a particular site.

Use Google, for instance, to research Upton Sinclair's 1934 campaign for governor of California, and you will miss an entire collection of pamphlets accessible only from the University of California at Los Angeles's archive of digitized campaign literature.

"Google searches an index at the first layers of any Web site it goes to, and as you delve beneath the surface, it starts to miss stuff," said Mr. Duguid, co-author of "The Social Life of Information." "When you go deeper, the number of pages just becomes absolutely mind-boggling."

Some estimates put the number of Web pages that are hidden from the view of most search engines at 500 billion.

Reference librarians are trying to bring material from the deep Web to the surface. In recent months, dozens of research libraries began working with Google and other search engines to help put their collections within reach of a broader public.

Carnegie-Mellon University, for instance, has digitally scanned 1.6 million pages of archival material from the papers of Carnegie-Mellon scientists like Herbert Simon, a Nobel Prize winner for economics and a computer chess expert. Now, a Google search for "Herbert Simon and Carnegie Mellon" turns up the Simon papers.

Google has also indexed two million book titles through the Online Computer Library Center, which manages a database of catalogs from 12,000 libraries around the world.

Other search sites are striking similar deals. Yahoo recently signed an agreement with the online library center to index its catalogs, and four months ago, it started carrying out a plan to make more of the deep Web reachable through Yahoo.

Yahoo has also signed agreements with the University of Michigan to make searchable the university's compendium of academic collections from more than 250 institutions. And it has indexed a digital repository at Northwestern University of more than 2,000 hours of Supreme Court oral arguments.

Yet for every archive that has become searchable by commercial Web engines, scores are not accessible. "There's lots of great stuff that isn't available digitally and likely never will be," Dr. Janes said. Most books published before 1995 fit into this category, he said, as do many older magazines, newspapers and journals, as well as historical maps, archives, letters, diaries, older census statistics and genealogical materials.

"We have to figure out how to adapt to a world where people will prefer digital stuff," Dr. Janes said, "yet not forgo the investment in print and analog collections and the work involved in mapping and maintaining those collections."

Research institutions are investing heavily in combining the new with the old. At Columbia's Butler Library, the stacks are not only alive and well, Ms. Wittenberg said, but have been modernized to allow for better physical access to the seven million volumes in the collection.

During the renovation, work areas with network connections were placed throughout the library.

"A student or faculty member could work for a whole day in what looks and feels like a very traditional library, while accessing either the print collection or the large and rapidly growing collection of electronic resources," Ms. Wittenberg said.

Many experts, even those who specialize in digital material, say that losing the tactile experience of books and relying too heavily on electronic resources is certain to exact a price.

"How do you know it's the appropriate universe from which to draw your research materials?" said Dr. Greenstein. "It has huge ramifications for the nature of instruction and scholarship."

At the same time, many research librarians say that the new reliance on electronic resources is making their role as guides to undiscovered material more important than ever.

Thomas Mann, a reference librarian in the main reading room of the Library of Congress, was reminded of this recently while helping a visitor who was researching a famine in Greece that occurred in 1942. A Google search had yielded little useful information.

"While he was looking at newspaper articles from the 1940's that we have digitized," Dr. Mann said, "I set up a search on the terminal next to him in another database of historical abstracts and history journals."

In less than a minute, he pulled up citations for five scholarly articles about the famine and helped the visitor put in requests for the paper copies from the stacks. "We can show people things they don't ask for," Dr. Mann said. "The historical database I got into hit it right on the button."

Some library experts welcome the change with few reservations.

"Although it seems like an apocalyptic change now, over time we'll see that young people will grow up using many ways of finding information," said Abby Smith, director of programs at the Council on Library and Information Resources, a nonprofit group in Washington.

"We'll see the current generation we accuse of doing research in their pajamas develop highly sophisticated searching strategies to find high quality information on the Web," Dr. Smith said. "It's this transition period we're in, when not all high-quality information is available on the Web — that's what we lament."

Dr. Janes said that, like many others, he occasionally pined for the days spent in musty library stacks, where one could chance upon scholarly gems by browsing the shelves.

"You can think of electronic research as a more impoverished experience," Dr. Janes said. "But in some ways it's a richer one, because you have so much more access to so much more information. The potential is there for this to be a real bonus to humanity, because we can see more and read more and do more with it. But it is going to be very different in lots of ways."
http://www.nytimes.com/2004/06/21/te...21LIBR.html?hp


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Florida to Tax Home Networks
Michelle Delio

Florida state officials are considering taxing home networks that have more than one computer, under a modified 1985 state law that was intended to tax the few businesses that used internal communication networks instead of the local telephone company.

Officials from Florida's Department of Revenue held a meeting on Tuesday to see whether the law would apply to wired households, and exactly who would be taxed. About 200 people attended, including community and business representatives.

In 1985 the state passed a law to tax businesses using their own communications networks, because otherwise the state could not collect tax revenue on the businesses' local telephone service. In 2001, that law was expanded to make "any system that is used for voice or data that connects multiple users with the use of switching or routing technology" taxable up to 16 percent.

The law is so broad that it would apply to networked computers, wireless services, two-way radios and even fax machines -- or "substitute communications systems," as the state calls them. The tax would be applicable (PDF) to the costs of operating such a substitute communications system, not to the purchase of the system's components.

In some cases, it appears the tax would be collected by the providers of communications services such as wireless companies or voice-over-IP firms. The tax would be added to the user's bill and then turned over to the Department of Revenue.

But some substitute communications services don't require a service plan. For those, the state could take the tax from the amount deducted on business, and perhaps personal, tax filings.

"According to my accountant, the way the law is written, if my tax filing includes deductions for the repair or maintenance of my two computer and one printer network, those costs will be subject to state communication taxes," said graphic artist Linda Kellman, who works from home. "Self-employed people get slammed with insane taxes everywhere, and I've sadly but grudgingly accepted that. But this tax, if they ever try to collect it, would be the last straw. Can I outsource my network to a more sensible state, do you think?"

Florida businesses and residents -- and even some officials in the Florida Department of Revenue -- agree that the wording of the law is too broad.

In May, the Florida Senate unanimously passed a bill that would have prevented collection of the tax until 2006, during which time the law could be carefully reviewed. The bill was then sent to the House, but wasn't voted on before the summer break, clearing the way for officials to begin collecting the tax.

As a result, the Florida Department of Revenue, which, according to local newspaper reports, was in favor of the bill to delay the collection of the tax, must now begin to address how the tax should be implemented.

"The tax language is so broad that virtually any communication technologies in your home or office could be subject to this tax," said Chris Hart, spokesman for ITFlorida, a not-for-profit industry organization for the state's technology professionals. "It's difficult to imagine a more anti-technology, anti-business tax. It directly attacks the efficient use of information technology."

Florida businesses aren't in favor of the tax.

It also could tax almost any Florida resident who uses any sort of modern communications technology, something that Florida's battalions of retirees on fixed incomes have just begun to become aware of, according to Hart.

"Information on this issue is starting to reach the general public, and it probably isn't widely understood just yet," he said. "However, once people do realize how this tax could impact them on a personal level, they wake up very fast."

"All my life, I've willingly paid my fair share of taxes in exchange for community services," said 73-year-old George Fedoro, a retired engineer who now lives in Boca Raton. "But this tax is not fair and could turn senior citizens into criminals, because no one that I know can or will pay it."

Florida Gov. Jeb Bush would have to approve any rule the tax department suggests. Bush has said he isn't in favor of the tax, but many fear he may be swayed by city and county government officials. The tax would go, in part, toward school construction and other projects.

Additional meetings on the proposed rules for the tax will be held in other locations around the state later in the year, Department of Revenue officials said.

If the law is implemented, Florida would have the most wide-reaching state tax on technology. But it may not be the last -- state officials estimate enforcement of the tax could bring in more than $1 billion a year in revenue for the state.
http://www.wired.com/news/business/0,1367,63962,00.html


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Tiffany Sues eBay In Counterfeit Items Suit

Luxury jeweler Tiffany & Co. has sued eBay, claiming the online auctioneer aided violations of the Tiffany trademark by letting counterfeit items be sold on its Web site.

A study of certain pieces of "Tiffany" jewelry sold on eBay this year showed that 73 percent of the jewelry was counterfeit, Mark Aaron, a Tiffany spokesman, said Monday in a statement about the lawsuit, which was filed Friday afternoon in U.S. District Court in New York.

Tiffany shares rose 21 cents, or 0.6 percent, to $37.94 on the New York Stock Exchange.

Shares of eBay fell 69 cents, or 0.8 percent, to $85.81 on the Nasdaq, down from a high of $87.24 earlier in the day.

"Since they are making the money from it, the public is being defrauded by it and Tiffany is being damaged by it, the question is who should bear the burden of policing it," James Swire, the lawyer representing Tiffany, said of eBay.

An eBay spokesman said the company has a program in place called VeRO, or verified rights owners, to help companies prevent fake goods from being sold on eBay.

"We take these concerns very seriously, which is why we have worked closely with Tiffany and thousands of other rights owners for many years through our VeRO program to help them address these types of issues," the eBay spokesman, Hani Durzy, said.

He added that he could not comment specifically on the lawsuit because eBay has not seen the complaint.

The lawsuit asks that eBay be stopped from listing any "Tiffany" merchandise that is not genuine and for eBay to account for profits it made on the sale of counterfeit Tiffany merchandise or else pay up to $1 million for each type of fake Tiffany merchandise sold on the Web site.

"We have been in correspondence with eBay for some period of time," Swire said. "A year ago, they declined to themselves police their auction sites for counterfeit Tiffany merchandise and said we should use the programs they have to police the site."

Using eBay programs like VeRO, Tiffany had two employees work full-time policing the site and forced the shutdown of about 19,000 auction sites on eBay, he said. This year, Tiffany randomly bought silver "Tiffany" jewelry on eBay and found that 73 percent of it was counterfeit, 5 percent of it was genuine, and the rest was promoted as "Tiffany-like" but not promoted as genuine.

Sales of shoddy counterfeit merchandise with the Tiffany name harms Tiffany's reputation, the company said.
http://news.com.com/2100-1038-5242722.html


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P2P telephony

Popular Telephony Unveils a New Server-Free Peer-to-Peer Telecommunications Technology for the Enterprise Market
Press Release

Popular Telephony Inc., a telecommunications middleware company, announced today at SuperComm 2004 (BOOTH #10841), the technology concept of serverless and switchless telecommunications for the enterprise market. The company's invention, Peerio(TM), is a groundbreaking, patent-pending core technology for the implementation of peer-to-peer, server-free telecommunications systems.

Peerio is a highly portable middleware application for embedded devices that seamlessly incorporates into VoIP ICs, IP phones and other telephony-enabled systems or modules. Enhancing current innovations in peer-to-peer computing, Popular Telephony's concept will enable groups of Peerio-intelligent devices to process phone calls in an interconnected manner as if served by an on or off-premises switch/server, but relying solely on the IP network infrastructure.

Expected to completely transform traditional telecommunication networks by eliminating routing through a centralized server -- node or switch -- Peerio successfully addresses scalability, security, redundancy and other system issues that are inherent in both enterprise and global telephony network implementation, while supporting all standard and advanced telephony features. Peerio is protocol-agnostic, enabling switchless and serverless communications for VoIP systems and devices running on SIP, H.323 and all other standard or proprietary protocols.

An Intellectual Property Company, Popular Telephony will be licensing Peerio on a non-exclusive basis, for integration into VoIP-enabled integrated circuits (VoIP IC's, colloquially known as "IP phone chips"), IP phones, enterprise telephone and audio/video conferencing systems and other telephony-enabled end user devices.

"We believe that Peerio technology is the next logical step in the progress of telecommunications, both from a technical and business standpoint," said Dmitry Goroshevsky, chairman and chief executive officer of Popular Telephony Inc. "This technology is very unique. Straightforward solutions like multi-cast just don't meet scalability, efficiency and security requirements, and as a result, many of our partners and beta customers did not believe the Peerio concept was possible. It is and it's here!"
http://home.businesswire.com/portal/...&newsLang =en


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Skype For Linux
Press Release

Skype Technologies S.A., the Global P2P Internet Telephony Company that offers consumers the ability to make free superior quality voice calls using their Internet connections, today launched the first beta version of Skype for Linux. The software can be downloaded for free and is available immediately for download at www.skype.com.

"We've had strong demand for a Linux version of Skype since debuting the Skype beta 10 months ago," said Niklas Zennstrom, Skype's CEO and co-founder. "Skype will continue to innovate by offering new quality telephony options, and listen to our users in setting priorities."

All Skype software; Skype for Windows, Skype for Pocket PC and Skype for Linux products is free and easy to download, simple to use, and offer superior call quality and security. Skype users control their online presence and contact lists, and have many options to customize their overall Skype experience. Skype for Linux retains the same core features of the Windows version of Skype software including free Skype to Skype worldwide calling, the ability to participate in conference calling with up to 5 people, instant messaging and access to the Global Directory.

"Part of what has made Skype such a success is the incredible participation of our users in the development of our product," said Zennstrom. "Linux itself is built on collaboration and the free exchange of comments and criticism, we look forward to hearing from this community to help us continue to improve our product."

Starting today, Skype for Linux beta software is available for download at www.skype.com. Skype for Linux requires a computer running at least a 400 MHz processor, 128 MB RAM,10 MB free hard drive disk space, sound card, speakers, microphone and an Internet connection. Skype for Linux beta has been successfully been tested on many recent distributions, including, but not limited to: SuSE 9, Gentoo 1.4, Debian ,,unstable", Fedora Core 2, Sun Java Desktop System Release 2. It should run on all distributions that have the required versions of glibc and Qt libraries available. Skype for Linux beta supports both KDE and Gnome desktop managers. A headset is recommended for optimal quality. The Skype for Linux user guide and FAQ, which includes a listing of supported Linux versions, is available at www.skype.com
http://www.companynewsgroup.com/comm...sp?co_id=89341


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SIP Hits Back At Zennstrom Accusations And Questions His Real Motives

Last week Faultline carried its thoughts and impressions from the VON (voice over networks) conference in London and focused on the difference between the instantaneous gratification of Skype for private individuals and the safe and efficient enterprise wide VoIP implementations, reliant mostly on the SIP protocol.

Swapping emails subsequently with Rohan Mahy, co-chair IETF SIP and SIPPING Working Groups, he took issue with some of the things that Niklas Zennstrom of Skype and Kazaa fame said at the conference, and although enterprise VoIP isn’t a central technology to Faultline, it is a valid and radical cost pressure on telcos and an opportunity for various vendors.

Much of the irritation that Mahy showed at the VON conference relates to the Zennstrom view that SIP is a poor protocol because of its inability to handle firewall and NAT traversal. So in Mahy’s own words we thought we’d offer the other side of the argument.

“There are very few people in the VoIP industry who understand firewall and NAT traversal well. Lots of people in the VoIP industry think that they have some technique which is new and good. Unfortunately the parts that are new are rarely good and the parts that are good are usually not new. Explaining to these people what is technically
broken with their proposals and why is an extremely time consuming process, and is repeated every time a handful of new companies start to go into the operational phase. As a result, the folks who understand these issues either go on a holy war each time a "new great NAT solution" crops or just ignore the new folks quietly.

“Implementers want a one-size fits-all solution where one does not exist. I can describe significant limitations with every approach, but by implementing a handful of these tools and applying the best tool for the situation, you can do much better than just implementing one.

When an implementer comes to me or Jonathan Rosenberg, or Jon Peterson and asks how to do NAT or Firewall traversal, most of them are frankly not willing to invest the attention and energy needed to implement real solutions to this problem for VoIP (not for SIP, but for VoIP). I believe that Niklas [Zennstrom of Skype] is in this category. He is not willing to admit that his solution is completely broken by firewalls that try to block p2p music sharing, that the algorithms which gives his product good sound quality can be implemented on any product, and that the supernode model not so occasionally results in very bizarre routing (example: a call within Europe going through Australia)

“As with anybody who has technical problems with IETF protocols, I invite them to write a description of what problem they are trying to solve which they feel is not addressed by existing protocols and provide some motivation. Zennstrom has not provided any rigorous analysis or even detailed explanation of these alleged technical problems.

“The traditional telecom folks want to reproduce an environment which is familiar to them. SIP does things differently, but many folks generally stop there and don't try very hard to understand how to accomplish their goals ‘the-SIP-way’.

“I believe that Zennstrom has a different motivation. He is providing a packaged service and I believe that he is afraid of the idea of open services and open protocols, because these things directly threaten his business model.”

Mahy thinks that eventually Skype will have to be connected to SIP, otherwise Skype users will be let unable to talk to the rest of the world.

“Sure, he ‘could’ use something else, but that would be economic suicide. When asked how he would get PSTN numbers assigned he said he would use partners who are telecom operators to provide these. These providers are already using SIP or H.323 and have no economic incentive to ‘each’ build a native-Skype interface on the thin margins that Skype is hoping to garner from its customers.”

So Faultline asked why doesn’t Mahy write a connection to Skype, using the APIs that Skype is intending to publish, after all he has 13 million users?

“He doesn't have 13 million ‘active’ users, far from it, so it is really not worth my time. I would rather spend my energy writing a free client with more functionality that is fully open.”

So does Skype need to talk to SIP clients one day or can it just talk to the PSTN and then route back out to SIP clients?

“That's missing the point, don't you think? Say a Skype user in India wants to communicate with me in California on a SIP network. He can make a basic call through 2 gateways with international toll charges. Its unlikely that I will see his correct caller ID, and dead certain that we can't exchange IM, video, presence status, or do file transfers. A pair of implementations using SIP could do this for free over the public Internet.”

Talk then turned to the security that Zennstrom says exists in Skype that doesn’t exist in SIP. Mahy thinks the Skype approach is inviting viruses, Zennstrom says this is not possible. According to Zennstrom there is little danger of a call through Skype resulting in a route for a virus because the recipient is told there is a call for him and is asked to call out to meet it.

Mahy tells us that there are rapidly appearing firewalls that are deliberately eliminating use of Peer to peer networks, including the one Skype sits on, because of security issues.

“Once my machine is infected with a virus, that virus can do lots of rude things with the Skype API. The virus could call a PSTN toll or international service from my account and leave it up for days. The virus could spam call my entire buddy list a few times an hour. The virus could turn my computer into a remote-control microphone. These are the kinds of issues that IT administrators are concerned about. Also, many administrators want to block p2p to prevent liability from the RIAA and similar groups. With at least one product the side effect is no Skype.
http://www.rethinkresearch.biz/page_...%88%97mvw% 8C


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Patents Court A First For Japan
Leo Lewis

THE Japanese Government has pushed through a law that will create Japan's first intellectual property high court, amid fears of a "tidal wave" of patent disputes.

The specialist court, sitting from next April, will be given sweeping powers to resolve disputes. It aimed to pre-empt a huge leap in the number of patent disputes expected between Japan and its Asian neighbours, government insiders said.

The Government also planned to send lawyers and judges to Britain, Brussels and the US to study recent cases, and invite overseas legal experts to teach in Tokyo, Japanese cabinet sources said.

Hidetoshi Masunaga, Japan's highest-profile intellectual property lawyer, said: "This is an extremely positive move, but it is shameful that Japan has been so far behind. Of course, it will be necessary to rapidly study the way cases work abroad, but the most important thing is that the court be both respected and feared. It has to have the experience to demonstrate it is in charge."

Proposals for the judicial reforms have been speeded up after an acrimonious spat between the electronics giant Sharp and a Taiwanese television manufacturer. Sharp, widely acknowledged as the global leader in cheap LCD screens, is seeking a ban on sales of LCD screens made by Teco, the Taiwan-based company.

The lawsuit, which alleges a string of patent infringements, risks growing into a diplomatic rift between Japan and Taiwan.

Other companies, including Sony and Pioneer, are seeking to preserve their "technological cushion" over other Asian competitors, as China and Taiwan perfect ways of copying a wide range of consumer electronic devices, like digital cameras, laptop computers and mobile phones.

Peter Godwin, a partner in Herbert Smith Japan, said: "This Sharp case is just the start ... Japan has suddenly realised that intellectual property rights are something that Japanese companies have a lot of and they need to defend them."
http://finance.news.com.au/common/st...%5E462,00.html


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Anti-Piracy Bill Would Hit P2P Networks
Out-Law.com

A draft bill due to be debated in the Senate this week would make anyone who “intentionally induces any violation” of US copyright law liable for that violation, presenting a threat to anyone who promotes a peer-to-peer network such as Kazaa.

The US entertainment industry, led by the Recording Industry Association of America, has been trying for years to counter the phenomenon of file-sharing, where users distribute and download copyrighted music over P2P services.

Legal actions against the networks, file-swappers, the creators of software that circumvents security features, and the purchasers of that software have all been filed, with varying degrees of success.

But the industry has also been lobbying hard for the introduction of laws that will more fully protect it from copyright abuses. The proposed Induce Act (otherwise known as the Inducement Devolves into Unlawful Child Exploitation Act) is the latest of these.

Likely to be introduced to the Senate this week by Senator Orrin Hatch, the bill makes it an offence to intentionally induce any violation of the existing US Copyright Act. It defines “intentionally induces” as “intentionally aids, abets, induces, counsels, or procures”, and infringers face fines or even a prison sentence.

The proposals have not yet been officially published, but have already been criticised by consumer groups and civil liberties organisations for being so broad as to attack any service or device that has the potential to be used for copyright infringement.


Jeff Joseph, vice president for communications at the Consumer Electronics Association, told CNET News.com: “It's designed to have this fuzzy feel around protecting children from pornography, but it's pretty clearly a backdoor way to eliminate and make illegal peer-to-peer services. Our concern is that you're attacking the technology."

The problem with legislating against decentralised P2P services is that shutting down the network will be near impossible. You can act against individuals who use the services; you can act against individuals or companies that make the networking software available to others; but unless you stop or sufficiently deter all these parties, you can't shut down the pure-P2P network itself.
http://www.out-law.com/php/page.php?...2775&area=news


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Smooth Internet File Sharing

Helios WebShare offers easy, speedy, browser-based access
Keith Schultz

Cost:
$6,990, 105 user licenses for WebShare only (includes $780 yearly maintenance); $24,950, 105 user licenses for WebShare, ImageServer, EtherShare, and PDF Handshake

Platforms:
Mac OS X, Linux, various Unix distributions

Methodology
Xythos WebFile Server, which I reviewed earlier this year (infoworld.com/1097), combines Web-based file sharing with impressive document management capabilities. A new alternative, Helios WebShare 1.0, lacks document management -- and even document search capabilities -- but provides easy and secure remote file access and management for any user with a browser. With the addition of optional services, WebShare even allows users to preview graphic images and PDFs without having to download the files.

WebShare is available only for Mac OS X, Linux, and various Unix platforms -- no Windows version at this point. Because it uses Apple’s WebObjects, you will need a valid WebObjects license, which is available from Apple for $699. I tested WebShare on Red Hat Linux 9, using Microsoft Internet Explorer 6 to access shared files.

WebShare organizes files in groups called Sharepoints, which are created by the WebShare administrator and provide a way to define access to files based on users and groups. For example, you can create a Sharepoint that facilitates previewing, downloading, and file copying but does not allow uploading, deleting, or renaming. To define multiple access levels to a group of files, the administrator must create different Sharepoints with different attributes for each user group. Users’ group memberships dictate their levels of access.

Before creating a Sharepoint, administrators must first create a directory structure through the host operating system. Administrators cannot create a Sharepoint and have WebShare create the underlying structure for them. Although users cannot establish Sharepoints on their own, they can create subfolders within existing Sharepoints.

User permission management is one area where WebShare could stand some improvement. User access to Sharepoints and files relies on permissions set in both WebShare and the host operating system. WebShare will pull user names from LDAP, NIS (Network Information Service), and its own user database, but to truly lock down file access, administrators will sometimes have to resort to managing permissions through the operating system. I would like to see all user access control managed through a single interface.

One nice feature is WebShare’s Zip Stream technology. When you select multiple files for download, Zip Stream will automatically compress the files into a single archive for faster transfer.

WebShare offers other cool capabilities via its ImageServer and PDF Handshake add-ons. ImageServer allows you to view various graphic formats, including TIFF, JPEG, QuarkXPress, and Adobe InDesign files, in your Web browser without having to download the file. ImageServer renders these formats into bitmaps that you can quickly resize, rotate, and otherwise manipulate in your browser. PDF Handshake extends these preview capabilities to PDF documents. For those in the graphics business, this can greatly speed up locating graphics and images.

Because WebShare is not intended to be a document management solution, it should not be looked at as such. What you get is fast, reliable Web-based file sharing, and that’s about it. User permission management and Sharepoint creation could be improved, and I would love to see a search feature added.

WebShare is easy to deploy and to use and is an effective way to bring file sharing to Internet-based workgroups. For larger deployments or any scenario in which tracking versions of documents is necessary, Xythos WebFile Server is a better choice.
http://www.infoworld.com/article/04/...Chelios_1.html


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Music Industry 'File-Sharing Pioneer'
Macworld staff

The music industry is showing the entertainment industry the way out of the "dark file-sharing tunnel", a key industry figure claims.

Universal Music eLabs business development director Dan Whiley told International Herald Tribune: "Music was the first entertainment industry to go into that dark file-sharing tunnel, so we've taken all the early bruises. Maybe we're first out of the tunnel, and maybe our solutions will set some precedents for other industries that depend on copyright and intellectual property."

Most analysts predict the biggest lesson to be learned will be that of compatibility, with Apple and Microsoft refusing to accommodate each other's digital rights management systems, something that will become even more apparent as more and more download services join the market.

The Music Industry Federation estimates that there are now more than 50 online music retailers operating in Europe. Jupiter Research analyst Mark Mulligan says: "Young people have grown up expecting online music to be free. That isn't going to change overnight. But European consumers finally have a choice of compelling, competing services."

But while competition is a good thing it also brings complications – analysts say the rivals could turn off consumers with an array of incompatible technologies and sometimes incomplete product offerings.

One analyst, who wished to remain nameless, said: "If the rivals choose to battle it out over formats and technology – rather than solve their differences by cross-licensing – they risk losing the bigger struggle against piracy.
http://www.macworld.co.uk/news/index...ge=1&pagePos=7


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Beatles Could Write Own Ticket To Ride The Internet
Daniel Rubin

The long and winding road online? Give PCs a chance?

Six years into the digital-music revolution, the Beatles are, at last, talking with online providers about offering their catalog on the Internet. Microsoft and its competitors could offer as much as $10 million for exclusive rights to sell the Fab Four on the Web, analysts predict.

But how big a market is there really? Don't digitally savvy boomers already have the songs, which started coming out on CD reissues in 1987? And won't younger fans just trade for what they want?

"Excellent band," mused Chris McManus, 18, walking down Walnut Street in Center City one day last week, earphones in place.

But no sale. "I already have all of their recordings on my iPod," explained the bass player from Roxborough. Most songs he bought. Some he borrowed.

Or ask Everett Katzen, owner of Springboard Computers in Center City: "Kids aren't going to be buying the Beatles. They're listening to Eminem."

Many music-industry insiders beg to differ. They cite the enormous multigenerational popularity of Beatles music, both sold and stolen.

Having the Beatles "would absolutely be appealing," said Bob Ohlweiler, MusicMatch's senior vice president for business development. "The three missing artists [online] are the Beatles, Garth Brooks and Led Zeppelin."

In the Nielsen SoundScan era that began in 1991, the Beatles have moved more albums than all but one act.

That's 49.7 million albums. Only Brooks has sold more.

If you want proof that the Beatles have fans among those born long after their 1970 breakup, look online.

More than one in every 300 songs traded online between May 7 and June 7 was by the Beatles, according to Eric Garland, chief executive officer of BigChampagne.com, who monitored all major file-sharing networks. In the United States, about 20 million people swap songs every month, he said.

That figure staggered Garland, a Beatlemaniac who owns every Fab Four recording, including their annual Christmas messages. "Considering that we're talking about the history of pop music that's available online, that number has to be hundreds of times what I would have guessed."

Nearly 15 percent of the nine million people worldwide who are sharing music online at any given moment offer Beatles songs, Garland said - on average, more than four songs each.

And since file-sharers tend to be young - half are under 22, according to Forrester Research - there's a potentially endless fountain of youthful fans.

Reports this month had Paul, Ringo, Yoko Ono and Olivia Harrison in negotiations with a number of online merchants. One mentioned was Microsoft, which is planning to introduce its own Internet music store. There also was talk that the Beatles were exploring selling their music online themselves, as Dave Matthews does.

Josh Bernoff, a Forrester Research analyst, sees a lot of cash in the Beatles catalog. His company estimates people will spend $300 million on downloading this year. Applying BigChampagne's numbers, that means more than $1 million of it could be for Beatles songs.

The online providers need the money more than the Beatles do, Bernoff noted. Right now, Apple's iTunes dominates the market with 70 percent of sales. Its competitors include Napster, MusicMatch, RealRhapsody and AOL.

Any of them would salivate at being able to offer the Beatles exclusively for a long period. "It could create an edge," Bernoff said.

Only one company needs to make a name for itself in online music and has lots of money - Microsoft. "If it's anybody [to win an exclusive], it will be Microsoft," he said.

Meanwhile, fans such as Daniel Mufson, 21, of Center City, are imagining fixing some serious holes in their collections:

"Sgt. Pepper," said the digital-production major at Hofstra University. His father gave him a vinyl pressing of the Summer of Love classic.

"Record playing," he says, "is... impractical."
http://www.philly.com/mld/philly/ent...8979750.htm?1c


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Music Downloads: Pirates—or Customers?
Sean Silverthorne

Professor Felix Oberholzer-Gee and co-author Koleman Strumpf floored the disbelieving music industry with their findings that illegal music downloads don’t hurt CD sales. Oberholzer discusses what the industry should do next.

Internet music piracy not only doesn't hurt legitimate CD sales, it may even boost sales of some types of music.

Those were the counterintuitive findings released in March by Harvard Business School professor Felix Oberholzer-Gee and his co-author Koleman Strumpf, of the University of North Carolina at Chapel Hill. Their paper, "The Effect of File Sharing on Record Sales," caused a ruckus in the music industry not seen since the British invasion of the Beatles.

Many recording executives were not singing "Yeah, yeah, yeah," however. Convinced that illegal downloading and file sharing has robbed them of billions of dollars after four consecutive years of falling music sales, they criticized the team's methodology, which consisted of monitoring 1.75 million downloads over 17 weeks in 2002, scouring through server logs from OpenNap (an open source Napster server), and comparing the sales of almost 700 albums as reported by Nielsen SoundScan. Oberholzer and Strumpf concluded that there was almost no relationship between the two.

How could this be? The researchers believe that most downloading is done over peer-to-peer networks by teens and college kids, groups that are "money-poor but time-rich," meaning they wouldn't have bought the songs they downloaded. In that sense, the music industry can't claim those downloads as lost record sales. In fact, illegal downloading may help the industry slightly with another major segment, which Oberholzer and Strumpf call "samplers"—an older crowd who downloads a song or two and then, if they like what they hear, go out and buy the music.

Interestingly, the first half of this year saw the release of numbers seemingly supporting this theory: The number of illegal music downloads continued to increase—but so did music sales.

If in fact the research is correct, the strategic implications for the music industry are profound. Instead of conducting a high-profile campaign against pirates, should the industry instead target "samplers" to encourage them to buy more music? Should the industry consider peer-to-peer services as marketing tools rather than the enemy? Should online pricing be different from in-store pricing? What happens when broadband makes it as easy to illegally download an entire CD as an individual track or two? HBS professor Feliz Oberholzer-Gee recently spoke to Working Knowledge about these issues.

Sean Silverthorne: The draft of your paper with Koleman Strumpf came out almost three months ago, and caused quite a stir both inside the entertainment industry and out. What are your impressions of the reactions so far?

Felix Oberholzer-Gee: Two recent developments are important. Our study provides the first serious evidence that file sharing cannot explain the decline in music sales in the last couple of years. In addition, in the last two quarters, music sales increased while file sharing has become even more popular. BigChampagne.com, an Internet monitoring firm, estimates that there are now up to 9 million simultaneous file sharers, up from about 4 million in early 2003.

In view of our evidence and these new trends, even the Recording Industry Association of America (RIAA) now states that file sharing is only "one factor, along with economic conditions and competing forms of entertainment that is displacing legitimate sales." The industry is rethinking its position, although change occurs slowly.

Q: Let's talk strategy. What have been the recording companies' strategies to date for combating their loss of property rights via illegal downloading? And how effective has that strategy been? For example, is it a good thing to sue potential customers?

A: Suing potential customers is not exactly a standard entry in the book of good CRM. More importantly, the RIAA's legal strategy is hopeless and smacks of short- sighted panic.

Our research shows that only 45 percent of music files downloaded in the United States come from computers in the U.S. More than 100 countries supply files to the U.S. file-sharing community, and many of these countries do not have strong records of protecting copyrighted materials. The RIAA does not stand a chance to implement an effective legal strategy in all these countries.

Those who dream of legal solutions do not recognize the truly global nature of the peer-to-peer (P2P) phenomenon. Even worse, the RIAA's legal strategy does not even seem to work here in the United States. Despite the lawsuits—the RIAA has sued about 2,000 individuals to date—file sharing is more popular than ever.

Q: Assuming your conclusion is right—that there is no evidence that illegal music downloads erode CD sales—and in fact might help top-selling record sales—what are the implications for the recording industry in terms of strategy?

A: Our research shows that people do not download entire CDs. They download a few songs, typically the hits that one would also hear on a Top 40 station. This suggests that P2P is much like the radio, a great tool to promote new music. The music industry has of course long recognized that giving away samples of music for free over the airwaves can stimulate sales. The same seems to hold for P2P.

The problem with radio as a promotional tool is that it can be quite expensive for labels to get radio stations to play their music. P2P networks are promising because they make the market for music promotion more competitive. From the perspective of the music industry, the more competition among P2P services, the less costly it will be to promote music.

Q: Apple's iTunes has seemingly validated the concept that people will purchase music online. But it seems the recording companies themselves have done little on their own to experiment with models here, such as tiered pricing (hits cost more) and bundling.

A: The classic business model was a teaser model: The music labels provided one or two hit songs for free by promoting them on the radio and on MTV. If consumers liked the samples, they purchased a dozen songs at a price of $15. We now have gone from one extreme to the other. While inflexible bundling was the rule, services such as iTunes now completely unbundle CDs and offer all music by the song. The difficulty with this approach is that the economics of producing music are characterized by significant fixed costs. It is not much more expensive to promote an entire album than to promote an individual song. With complete unbundling, the revenue streams generated by a new album are likely to be much lower. How many consumers will pay a dollar for song number thirteen?

Clearly, there is a profit-enhancing role for some type of bundling even with digital distribution. For example, consumers might be willing to pay full price for the core songs on an album if they get the rest at a discount. We need systematic experiments to find out which types of bundling are economically most attractive.

Q: What's the current state of your research? Where does it go from here?

A: A key uncertainty relates to our finding that file sharers do not download entire CDs. We do not know why they sample only a few songs. One possibility is that the current patterns of file sharing reflect consumer preferences. Consumers do not know the quality of new music and sampling one or two songs is good enough to assess quality and make a purchasing decision. If this view is correct, the radio model is well and alive, and P2P offers great opportunities to promote new content.

However, it is also possible that the observed behavior is due to technical difficulties. In our data, only one out of three downloads is completed successfully. File sharing is fairly cumbersome for many consumers with poor Internet connections. If this is the reason for highly selective sampling, we can expect consumers to download entire CDs when broadband connections become more common. This is a less rosy scenario for the music industry because downloads of CDs are likely to be closer substitutes for CD purchases.

If poor Internet connections explain file-sharing patterns, general access to broadband would have profound strategic implications, suggesting that music companies ought to pursue a strategy of selling complements to recorded music. We see some examples for this strategy even today: Apple sells songs to promote its iPods. Prince gives away his most recent release to promote his concerts. We need careful continuous monitoring of the effects of P2P to know which strategies are most appropriate in the digital age.
http://workingknowledge.hbs.edu/item...6&t=innovation


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Labels To Dampen CD Burning?
John Borland

The recording industry is testing technology that would prevent consumers from making copies of CD "burns," a piracy defense that could put some significant new restrictions on legally purchased music.

Tools under review by the major labels would limit the number of backups that could be made from ordinary compact discs and prevent copied, or "burned," versions from being used to create further copies, according to Macrovision and SunnComm International, rivals that are developing competing versions of the digital rights management (DRM) software.

SunnComm said a version of its new "secure burning" technology is already being tested by BMG Music Group, the world's fifth-largest record label and the most aggressive to date in pushing CD copy protection schemes in the United States. Macrovision's version is expected to be ready in the next few months.

If implemented widely, the new technology would mark a substantial change in the way ordinary people can use purchased music, possibly alienating some customers, analysts said. Given the costs of piracy, however, the labels are moving ahead cautiously in the hope of striking on a formula that works.

"There is a fine (DRM) balance that nobody has struck, especially with physical CDs," said Mike McGuire, an analyst with the GartnerG2 research group. "If there's somebody who's making 25 copies for the world and finds they can't do that, then few people will probably complain. But if someone finds they can't make a copy for their kid so he can play it in the car, you're going to have a lot of people returning broken CDs."

The trials come as record labels seek to tighten copying restrictions on CDs, a market worth more than $11.2 billion in the United States in 2003. The labels have attributed recent, significant slides in retail CD sales in part to competition from home copying, as well as online file swapping.

Consumer concerns
Record labels are seeking a way to let consumers make a limited number of copies of their music--enough for a car, a vacation home and a friend, for example--without allowing for uncontrolled duplication. Under the current system, each copied CD can itself lead to an unlimited number of additional copies, cutting substantially into sales, they say.

Consumer advocates, meanwhile, have protested against abridgments of today's unlimited freedom to copy, remix or sample from music CDs.

Record labels in the United States have been sensitive to these consumer concerns, worrying particularly about earlier versions of copy-protection technology that had difficulty playing in nontraditional CD players such as game consoles or car stereos. They've released many protected CDs overseas, but only a small number in the United States and United Kingdom, where perceived opposition has been the highest.

The new plan to lock down burns could reignite a controversy that's smoldered in the United States since the independent release of country artist Charley Pride's album in 2002 incorporated SunnComm's early copyproofing technology, prompting at least one consumer lawsuit.

In addition to adding a new layer of copy protection on CDs, SunnComm and Macrovision each say their CD burning limitations could be applied to digital download businesses such as Napster or Apple Computer's iTunes, which do not put any restriction on burned CDs. That potentially could set off a new round of skirmishes between such digital download businesses and the record labels over how consumers can use the music they buy online.

"What labels have told us is that their agreements (with the download services) are relatively short term, a year or under, and so they believe that they have the capability to require (the burning tools to be added) next time around," Macrovision Chief Executive Officer Bill Krepick said.

Record label executives, although they take very different individual approaches to the market, say they ultimately want to see the rules for CDs and digital downloads converge.

"I would say that similar values should apply," said Jordan Katz, executive vice president and general manager of BMG's distribution arm.

Digital download services say they aren't yet feeling pressure to add the "secure burning" feature, however. Some said the labels had spent more time discussing the issue as much as six months ago but that it hadn't been a priority recently.

"I think the labels have been relaxing a little in terms of usage rules," said Liz Brooks, vice president of business development at Buy.com's music division.

A checkered history
To date, the history of CD copy protection in the United States has been spotty. Though Macrovision and SunnComm each say their technology is used widely overseas, only a few albums have been publicly released using their technology here.

BMG, which has taken a lead in this area, used SunnComm's anticopying tools on last year's Anthony Hamilton disc. The release gained some prominence after a Princeton student demonstrated that the protections could be easily evaded simply by pushing a computer's Shift key while loading the CD.

Executives at SunnComm and BMG said they were aware of the issue and that they had been satisfied with the technology as a deterrent to casual copiers, rather than trying to create an unhackable protection.

BMG announced last week that it would release three more albums using the technology over the next two months, including recordings by Velvet Revolver, Angie Stone and Yung Wun.

Other labels say they are still very interested, but not quite as far along as BMG.

"EMI does use Macrovision's technology in just about every country in the world," EMI spokeswoman Jeanne Meyers said. "We're testing other forms of technology from a lot of different companies before launching in the U.S. and the U.K."
http://news.com.com/2100-1027-5224090.html


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Copy-Blocked CD Tops U.S. Charts
John Borland

For the first time, the No. 1 album in the United States is loaded with anticopying protections, marking a clear step into the mainstream for the controversial technology.

According to figures released by Nielsen SoundScan, Velvet Revolver's "Contraband" was the top-selling album in America last week, despite being prominently labeled on its cover as being "protected against unauthorized duplication."

The success of the album is likely to prompt more experiments from BMG, the band's label, and other record companies, industry watchers said.

"It's too soon to tell whether the rest of the industry is going to be heartened by this," said Mike McGuire, an analyst at GartnerG2. "But clearly, there are going to be a lot of people who are very encouraged by the fact it is out on the marketplace."

The step forward is part of a slow increase in the flow of copy-protected compact discs into the American market, after several years of stalled progress. If the pace increases without substantial consumer backlash, the technology could become as commonplace as the antipiracy technology on DVDs, ultimately changing the way that consumers use their purchased music.

For several years, the big record labels have experimented with various versions of the technology, worried by the explosive popularity of CD burners and online file trading.

However, they have been wary of releasing the technology in the U.S. market on a wide scale. Early versions of copy-protected CDs had problems playing in some CD players and computers, prompting customer complaints and even recalls.

A vocal segment of the online population has been intensely critical of the copy protection plans, leading record label executives to worry about potential consumer reaction. Some artists, such as Virgin Records singer Ben Harper, have been bitterly angry at their labels' decision to include the technology without their approval.

The test with Velvet Revolver, a group made of alumni from Stone Temple Pilots, Guns N' Roses and others, was the largest yet for BMG. The test uses MediaMax copy protection from BMG partner SunnComm International. The label says it does plan a growing number of protected releases over the course of this year, but is still choosing which CDs will include the technology on a case-by-case basis.

"We're thrilled with the results we've seen and the apparent consumer acceptance," said Jordan Katz, an executive vice president in BMG's distribution arm. The company has released a total of 12 "copy managed" discs, with more than 2.5 million units now in the market, he said.

iPods still a problem
Like other recent copy-protected albums, the Velvet Revolver disc includes technology that blocks direct copying or ripping of the CD tracks to MP3 format. It also comes preloaded with songs in Microsoft's Windows Media Audio (WMA) format, which can be transferred to a computer or to many portable digital music players.

As in earlier tests by BMG and SunnComm, the copy protection on the Velvet Revolver disc can be simply disabled by pushing the "Shift" key on a computer while the CD is loading, which blocks the SunnComm software from being installed. The companies say they have long been aware of the work-around but that they were not trying to create an unhackable protection.

According to SunnComm, few purchasers have complained about the anticopying tools, although angry postings on sites such as Amazon.com are common. The sticker on the front of the Velvet Revolver CD and a link inside the software that loads automatically on a computer, once a user has given permission, points to SunnComm's Web site.

"We hear from less than half of one percent of people who have the Velvet Revolver disc," SunnComm CEO Peter Jacobs said. "Most of those questions are related to getting the songs onto an iPod."

However, the inability to move songs to Apple's popular digital music player, as well as to other devices that don't support Microsoft's Windows Media digital rights management services, is a serious shortcoming. Jacobs says SunnComm recognizes that--and that the company's next version will go beyond the Microsoft files and be able to create multiple kinds of digital files that will be compatible with the iPod.

But for now, iPod-owning Velvet Revolver fans don't have a direct alternative.

"We are actively working with Apple to provide a long-term solution to this issue," a posting on SunnComm's Web site reads. "We encourage you to provide feedback to Apple, requesting they implement a solution that will enable the iPod to support other secure music formats."

Also on Thursday, SunnComm announced that EMI Music would begin using its technology on advance and promotional releases. That marks the second major label, following BMG, to adopt SunnComm's tools officially, although others are also testing them.

EMI Music has "been encouraged by the success that SunnComm's MediaMax product has enjoyed," Richard Cottrell, global head of antipiracy for the record label, said in a statement. "We are pleased that SunnComm is developing a product that improves our ability to protect our artists' works, especially during the prerelease phase."
http://news.com.com/2100-1027-5238208.html


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Latest Anti-Piracy Device: A Really, Really Small CD
Jo Best

Although online music is finally looking like it might be taking over the mainstream, Universal Music is hoping to win over pop pickers to a new physical format: pocket CDs.

It's smaller than the traditional compact disc, comes with a mobile ringtone thrown in, and the tiny disc has got the record labels hoping to revive the flagging sales of hard copies of music, according to the Financial Times.

The mini-CDs will be half the size of the traditional variety and are thought to be due for release later this month by a variety of pop artists. According to the report, the CD won't need any new hardware and will contain a code to let buyers download a mobile phone ringtone.

Universal might be trying to bring the CD back from the dead but it's got a long way to go. According to figures from the British Phonographic Association, the decrease in CD single sales between the first quarter of 2003 and the same period this year has been 32 per cent.
http://hardware.silicon.com/storage/ 0,39024649,39121548,00.htm