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Old 21-01-09, 09:49 AM   #1
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Join Date: May 2001
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Default Peer-To-Peer News - The Week In Review - January 24th, '09

Since 2002

"Two thousand nine should be the year when the music industry stopped worrying and learned to love the bomb." – Feargal Sharkey

"At the end of the day, we are not going to stop piracy, so let’s embrace it." – Ron Berry

"Fact is, radio itself is a bad business to be in right now, as even terrestrial radio suffered its worst year since 1954 in 2008. So if things are that bad when the radio is free, imagine how bad it is when you have to pay for it." – Daniel Kreps

"If you’re looking for a digital Pearl Harbor, we now have the Japanese ships steaming toward us on the horizon." – Rick Wesson

January 24th, 2009

Online Video of Inauguration Sets Records
Ashlee Vance

Millions of cubicle dwellers across the country helped set records for Internet traffic on Tuesday as they watched online video of the inauguration ceremonies — or at least tried to. The overwhelming demand meant that some Web sites and data networks had trouble keeping up, forcing many people to turn to less cutting-edge forms of media.

“It was really frustrating to have this great technology and still not be able to watch the speech,” said Dan Robinson, who runs the box office at the Julliard School in New York. “I had to use this TV from the early ’80s and some rabbit ears to watch it.”

Internet traffic in the United States hit a record peak at the start of President Obama’s speech as people watched, read about and commented on the inauguration, according to Bill Woodcock, the research director at the Packet Clearing House, a nonprofit organization that analyzes online traffic. The figures surpassed even the high figures on the day President Obama was elected.

“The peak is the highest measured to date, and it appears to be mostly a U.S. phenomenon,” Mr. Woodcock said, adding that it did not appear that global records would be set.

When people are checking for election results or the score for a big game, they tend to produce smaller bursts of traffic spread out over several hours. On Tuesday, everyone wanted to watch video, and that produced bulky streams of data traveling from media companies’ data centers out to people at work and in their homes.

Data from CNN.com captured the uniqueness of the online surge. CNN said it provided more than 21.3 million video streams over a nine-hour span up to midafternoon. That blew past the 5.3 million streams provided during all of Election Day. At its peak, CNN.com fed 1.3 million live streams simultaneously, according to Jennifer Martin, a spokeswoman for the site.

Akamai, which helps companies meet demand for their online offerings, worked with media companies like The New York Times, The Wall Street Journal and Viacom to stream live video. It reported a record-breaking day, feeding up seven million video streams at one time.

While the raw figures look impressive, people unable to access the videos felt less than ecstatic about the state of Internet technology. The snags highlighted one advantage that is still held by old-fashioned television: its viewers are not forced to compete with one another for the right to watch a particular channel.

“I really didn’t get to see any of it,” said Daniel Wild, a Web site editor at the New York University School of Medicine. “Ultimately, I just saw frozen images of sections of what happened.”

CNN tried to assuage those who could not access its live feed by posting a note to visitors saying they were in line to receive a working stream.

“We built capacity for CNN.com Live to handle well above and beyond what was, to our knowledge, the most-viewed live video event in Internet history,” Ms. Martin said.

A spokeswoman for The Times, Stacy Green, said its site served more video viewers than expected, and that there had “not been any major problems.”

The viewing troubles may have been more a result of the limited Internet capacity coming to offices and houses, rather than a lack of overall bandwidth from the media companies, according to Mr. Woodcock. The United States continues to suffer from less-than-robust bandwidth, which Mr. Woodstock attributes to inadequate government attention and limited competition between Internet service providers like AT&T and Comcast. President Obama, in fact, mentioned the issue in the very speech that people were trying to watch.

“We’ve had eight years of stagnation and need to get to work solving problems like this,” Mr. Woodcock said.

Can CNN, the Go-to Site, Get You to Stay?
Brian Stelter

K. C. ESTENSON, the new general manager of CNN.com, has a thought or two about most news sites on the Web: they’re predictable and homogeneous. Seen one, seen ’em all.

Even his own site, he says, could use more of a “unique signature.”

While traffic to the home page of CNN.com is higher than ever, “my hunch is that people go to it more out of habit than they do out of love,” he says. Love, in fact, is exactly what Mr. Estenson is pursuing.

Online ardor will get a test on Tuesday, with the inauguration of Barack Obama. Because millions of Americans will be at their desks for the noon-hour swearing-in, the event is expected to set new records for live Web video watching — a moment that CNN.com is well positioned to exploit.

As newspaper revenue collapses and television revenue stagnates, every media company is rushing to reformat news for the digital generation. To that end, they are placing expensive bets in the hope of answering two pointed questions: How will news organizations continue to sustain themselves? And what will the digital newsroom of the future look like?

To a greater degree than most other media companies, CNN, the cable news channel of record, has figured it out. Using page views as a metric, Nielsen ranked CNN.com as the No. 1 current events and global news Web site last year, with a monthly average of 1.7 billion — half a billion views more than its nearest competitor, MSNBC.com.

Analysts say the Web site represents the fastest-growing part of CNN’s revenue, reflecting the sharp increase in online consumption.

For decades, “What channel is CNN?” was a recurrent query when a jury reached a verdict, when the towers burned, and when war broke out. Now, people also ask: “Where do I log on?” In fact, the emergency landing of an airliner last week in the Hudson River generated one of the biggest traffic spikes ever for news Web sites.

This transition, of course, has been happening for years, and it continues today, a headline at a time. Last year, for the first time, more Americans said they received most of their national and international news from the Internet than from print, according to the Pew Research Center.

Television remains the leading outlet for news, but the trend favoring the Internet is undeniable. Richard D. Parsons, the former chief executive of CNN’s parent Time Warner, alluded to it in 2007 when he told investors, “I worry more about CNN now than I do about CNN.com.”

Television continues to account for a vast majority of CNN’s revenue. But the Web is becoming more than just another ancillary revenue stream for CNN, according to Greg D’Alba, the company’s head of ad sales.

Until early 2008, most online ads were sold in conjunction with television advertising packages, adding incremental revenue.

“What we saw early last year was an appetite for digital-only,” says Mr. D’Alba, acknowledging that the shift surprised him. “We knew then that our digital product could stand on its own.”

WHEN people boot up their computers in the morning or browse Web sites while at work, they tend to check one of a handful of sites for news headlines. While news choices on the Internet are seemingly endless, the “Web news wars” are concentrated among a few top competitors.

Mr. Estenson says that in addition to CNN.com, he focuses on four other sites: those of MSNBC, Yahoo News, AOL News and The New York Times. Of those, MSNBC is his primary challenger.

For a decade now, MSNBC and CNN have traded places at the top of the online news heap. To win bragging rights and a bigger share of online advertising revenue, the two sites are constantly seeking the No. 1 spot. On a monthly basis during 2008, MSNBC.com’s network of sites received more visitors than CNN.com’s network, according to Nielsen — though CNN.com’s visitors still viewed substantially more pages.

“Neither is the No. 1 cable news network, which is ironic,” notes Merrill Brown, a former editor in chief of MSNBC.com who now consults for Internet companies. (That honor belongs to Fox News.)

Indeed, popularity on TV and in print has not necessarily translated to the Web. Fox News draws more viewers than CNN and MSNBC, but it lags far behind both online. Other TV news organizations, including ABC News and CBS News, are essentially also-rans on the Web.

CNN got a head start. The site, which made its debut in 1995, “wasn’t a promotional site for TV; it was actually a news platform for a news-consuming audience,” says Susan Grant, the executive vice president of CNN News Services, an umbrella for the company’s Internet businesses. And Time Warner has lavished attention and money on the site. Years ago, while other media companies treated the Web as a distraction, CNN’s executives set the network on an interactive course. Tom Johnson, a former chairman of the CNN News Group, said in 2000 that the Web would be “one of the most — if not the most — important parts” of the brand’s future. “We will be a ubiquitous service,” he said.

Traffic grew gradually for CNN.com. On Election Day in 2000, CNN.com recorded 100 million page views, a monumental number at the time. On the same day last year, the site had 282 million page views, also setting a record.

CNN now is as close as any news entity is to achieving ubiquity, with an array of television channels, Web sites, a radio network, airport TV sets and magazines. It is even signing up newspapers for a wire service — fed by CNN.com — that will compete with The Associated Press.

The challenge, for Mr. Estenson and others, is to make CNN.com more distinctive. At the end of a long day recently, he showed a visitor screen grabs of four Web pages on his Macbook Air.

“When you look at the top news sites, they often look almost identical,” he says, gesturing to the home pages of CNN, ABC News, The Wall Street Journal and Yahoo News. Down to photo choices and color schemes, the four sites look practically interchangeable and utilitarian, he says — hence his emphasis on the power of “unique signatures.”

An unusual choice for his new job, Mr. Estenson was tapped to run CNN.com in July after spending seven years at the Walt Disney Company, where he oversaw entertainment sites.

Propelled by what he calls the “constant positive dissatisfaction” of his bosses, Mr. Estenson is acting as CNN.com’s in-house optometrist, constantly trying to improve the site’s vision.

To that end, he wants to ensure that CNN.com’s success doesn’t cripple innovation. “Fear of change can send you to a very conservative place,” he says, rolling up his shirt sleeves. “We want to redefine the news experience.”

Already, CNN.com is a well-oiled news machine. With headquarters in Atlanta, the site has about 125 staff members. Producers on the news desk post “breaking news” banners and select stories to highlight on an ever-changing home page.

The site is well known for sometimes offbeat headlines. A recent sampling included “Teen sends 14,528 texts in one month” and “Co-ed’s virginity selling for over $3.7M.” A T-shirt icon next to some stories lets users order a shirt with the headline on it.
On the more traditional side, CNN.com holds morning meetings to discuss the day’s priorities and to divvy up assignments. The work is coordinated with CNN’s television channels and other platforms, allowing the company’s journalists to “produce in parallel,” says Rena Golden, the executive producer of CNN.com.

Creating such collaboration wasn’t easy. For years, the site was largely independent of the television network. CNN.com would receive video from TV crews, for instance, but only after the made-for-TV segment had been pieced together.

All of that has changed. Now, production is concurrent for each platform and stories often appear first online. Alex Wellen, an editor on the politics site of CNN.com, said that integration was a struggle.

“It’s a very complicated thing to integrate newsrooms, to change people’s job descriptions, and to establish trust across multiple platforms,” he says. “The challenge is herculean.”

While CNN’s various platforms haven’t completely converged, they are far more integrated than they once were.

Tracking audience sweet spots is also a juggling act. CNN’s television arm exerts much of its pull during the prime-time hours of 8 to 11 p.m., when advertising rates and audience levels are highest. But for the Web news desk in Atlanta, prime time is the lunch hour, when users log on during work breaks.

More broadly, Ms. Golden defines “Web prime” as 8 a.m. to 4 p.m. During those hours, the home page will feature six or seven lead stories, on average, so no one headline lingers too long.

Feeding the home page are a growing number of reporters who are assigned to the Web, and pointedly not to television or radio. CNN.com counts two Pulitzer Prize winners on its staff.

In October, CNN.com posted a memorable story about Ann Nixon Cooper, a 106-year-old in Atlanta who intended to vote for Mr. Obama. He ended up referring to her in his victory speech on election night. Mr. Estenson said that to his chagrin, that story was highlighted on the home page for only two hours.

Mr. Estenson says he wants CNN’s most distinctive content on the home page because he believes those stories keep readers on the site longer. Every week, he studies a pie chart that shows the “bounce rate” for CNN.com. It measures how many users view one Web page and then leave the site, akin to a shopper who browses without buying.

Right now, more than half of CNN.com’s visitors are just browsing. Last year, MSNBC drew more users but CNN kept them on the site longer. If Mr. Estenson can lower the bounce rate, he can further increase page views, potentially reaping millions more in ad dollars.

WHICH brings us to a pivotal issue: money. While audiences for online news sites are growing, “revenue is everyone’s billion-dollar question,” Mr. Brown says.

CNN.com formally achieved profitability eight years ago, the company said; Time Warner doesn’t break out separate revenue figures for the unit. In an era when “monetization” is a buzz word among news organizations migrating to the Web, CNN.com has been able to capitalize on its traffic surge by keeping visitors on the site longer, thus exposing them to more ads.

It’s also trying to make money from more experimental forays. During the inauguration coverage on Tuesday, for the first time, CNN.com Live, the Web site’s video arm, will include TV-style commercial breaks. Until now. the only ads on the streaming service have been snippets that play before the main clip, and small sponsorship banners.

Amid a recession, advertising sales are sluggish on television and online, putting a damper on CNN’s growth plans. But CNN.com is expected to remain flush; while Web revenue doesn’t match TV’s, the costs aren’t nearly as high.

Mr. Estenson and other executives expect that the digital operation will one day surpass television in revenue, echoing predictions of other executives confronting the Internet revolution.

And his estimate of when that day might come is sobering, despite CNN.com’s financial buoyancy: 10 to 20 years from now.

EXTENDING CNN.com’s reach, in part through partnerships with other Web brands, is a priority for Mr. Estenson. In Washington last week, he huddled with staff members at YouTube, the Google platform that is the world’s biggest video-sharing Web site, to discuss a collaboration.

The week before, CNN announced a deal with another Web darling, Facebook, to allow users to update their Facebook status messages while watching CNN’s video stream of the inauguration. CNN.com’s coverage of the event is now marked on the online calendars of hundreds of thousands of Facebook users.

Still, success has its burdens, as the inauguration will test. While television easily digests a sudden swelling in its audience, the Internet isn’t as stable.

Mr. Estenson notes that one of the Web’s biggest live streams occurred last March, when an Oprah.com event was streamed by more than 500,000 users. It was plagued by technical problems.

For Inauguration Day, CNN has reserved racks of extra server space. Not knowing how many people will watch the swearing-in online, Mr. Estenson says, “is nerve-racking.”

Fox News Primes Itself for a Shift
Brian Stelter

When the White House changes occupants this week, it may also change channels.

Barack Obama’s inauguration on Tuesday marks the end of an era for the Fox News Channel, the cable news network of choice during the George W. Bush years.

Scott McClellan, the White House press secretary from 2003 to 2006, said in an interview last week that “a number of people viewed Fox as an outlet that would be more favorable” than other media groups to the Bush administration. He emphasized that this feeling applied to the network’s conservative commentators, not its correspondents.

But the network is showing no concern about the new administration; if anything, it seems re-energized. With a series of program changes this month, Fox News is doubling down on the programming strategy that has made it the No. 1 cable news network for seven years.

Some of the network’s prominent conservative hosts seem invigorated about being back on offense; Sean Hannity, one of television’s foremost voices of opposition to Mr. Obama, introduced a “liberal translator” on his prime-time program last week.

The media world will watch carefully to see whether Fox receives the same treatment from an Obama White House that it received from Mr. Bush’s. And it will wait and see whether Fox can stave off its two primary competitors, CNN and MSNBC, in the 25- to 54-year-old demographic that matters most to advertisers.

Fox easily leads the other cable networks in that demographic on a total day basis. But for a couple of important hours, the gap has narrowed. On at least 10 days since the election, Fox’s 9 p.m. program “Hannity & Colmes” has been surpassed in the competition for viewers in that demographic by Rachel Maddow, the new MSNBC host.

The stiff competition may reflect a surge of interest in Mr. Obama. Nevertheless, Fox still commands a larger audience than its competitors, making it an important pulpit for many politicians. And as Mr. Obama’s supporters flood this city for the inauguration, they may notice an outsize reminder of Fox’s reach. “No. 1 for 7 years,” proclaims a billboard promoting Greta Van Susteren’s 10 p.m. program along a busy avenue here.

Next month another billboard, this one featuring Bret Baier, will appear in the nation’s capital. Mr. Baier, a veteran correspondent for Fox, recently replaced the anchor Brit Hume on the news program “Special Report,” the first of three major changes to the network’s weekday schedule.

One week ago, Mr. Hannity bid adieu to his liberal co-host of 12 years, Alan Colmes, and started hosting a more pointedly conservative show, named “Hannity,” in place of the left-versus-right format. On Monday, Glenn Beck, a right-leaning commentator who left CNN’s Headline News channel last year, will start hosting Fox’s 5 p.m. hour.

By tweaking the lineup and improving the production values, Fox appears to be trying to shore up its base of viewers and reasserting itself for the next four years. Bill O’Reilly, the top-rated host in cable news, Mr. Hannity and Roger Ailes, the chairman of Fox News, signed new contracts last year that will continue through the end of Mr. Obama’s first term. Mike Huckabee, the former Republican presidential candidate, now hosts a weekend talk show, complete with a studio audience.

Both Mr. Hannity and Mr. O’Reilly honed their talk show skills during Bill Clinton’s presidency. During the Bush years, the network’s high-octane mix of news and views started to draw more viewers than CNN, creating a new leader in cable news.

Will the ratings remain steady with a Democratic president? “That’s kind of the million-dollar question,” Bill Shine, the senior vice president for programming at Fox, said in an interview Friday. “I get asked it a lot.” Expressing optimism, he said, “All I know is that over the course of the next four years, we’re going to do what we do really well — cover the news in a fair and balanced way and put on a very good product.”

John Moody, executive vice president for news editorial, disagreed with the notion of Fox as a voice of the opposition to Mr. Obama. He said that the network’s news correspondents would cover Mr. Obama objectively, just as they had Mr. Bush.

“Will we give this incoming administration a Greek chorus of exaltation? No,” Mr. Moody said, “but that speaks more about the other networks than about us.” He seemed to be referring to MSNBC, whose hosts have been criticized by Fox moderators for their praise of Mr. Obama.

Fox News reported its highest ratings ever in 2008, with almost 1.1 million people watching at any given time, 35 percent more than the second-highest-rated cable news channel, CNN. But the gains came primarily from older viewers who are less appealing to advertisers.

In the 25- to 54-year-old demographic that Fox sells advertising for, Fox’s audience was 12 percent bigger than CNN’s during an average hour last year, the narrowest it has been in seven years. (CNN’s audience, to a greater degree than Fox’s, was inflated by debates and primary nights.)

Among younger viewers, Fox does not have as much momentum as CNN and MSNBC. Last year, compared with the previous election season in 2004, Fox’s 25- to 54-year-old audience declined by 7 percent.

Nonetheless, Brad Adgate, the senior vice president for research at Horizon Media, said the network is on a firm financial footing heading into 2009. Mr. Adgate said that Fox News has created appointment viewing on slow news days, ensuring that viewers tune in each day and lift the network’s ratings. Audience loyalty allows Fox to charge higher rates, both to advertisers and to cable companies that want to carry the channel.

Surely, the coming years will have no shortage of compelling news. In an interview, Mr. Beck said some of the most important stories now — including the widespread economic woes — are broader than any political party.

“The philosophy of the new show is, how to eat an elephant, one bite a time,“ he said, in a reference to the giant problems the country faces. When it was observed that he cited a symbol of the G.O.P., he added, “I think we’ll do our eating and feasting on both of them — a little donkey and a little elephant.”

Even some of Fox’s vocal critics think that Fox will thrive in the coming years. “Fox is in a much better position with a liberalish Democrat in the White House than they were with a Republican,” said Eric Alterman, the media columnist for The Nation magazine.

He contends that Fox sells a simple message to its audience. “The things that Obama faces are very complicated and very large, and a lot of things are going to go wrong, especially with the spending levels we’re seeing,” he said. “There’s going to be a lot of things that you can point your finger at and say, ‘Yeah, we were right,’ ” he said, referring to critics of Mr. Obama.

“That’s a much simpler thing for them to do,” Mr. Alterman added, “than to defend a failed war and a failed president.”

Mr. Moody said the Obama administration would decide whether the network would receive the same level of access the Bush administration granted. He said that Fox’s Washington bureau had worked diligently to break news. “We had good sources, we had good contacts, and we made the most of it,” he said.

Under a new president, Fox may lose a handful of influential viewers. Mr. McClellan, who voted for Mr. Obama, said that TVs in the White House tended to be tuned to Fox in the Bush years.

While Mr. Obama did sit for interviews with Mr. O’Reilly and Chris Wallace, host of “Fox News Sunday,” last year, Mr. Obama’s team did not display the same viewing preference during the nearly two-year-long campaign.

“They’re certainly going to lose some market share at the White House,” Mr. McClellan said.

New York Times May Find Benefactor in Slim
Robert MacMillan and Noel Randewich

The New York Times Co has heard more than its share of opinions on what it must do to survive. Mexican billionaire Carlos Slim appears ready to let his cash do the talking.

The 68-year-old telecoms tycoon, ranked by Forbes magazine as the world's second-richest man with $60 billion, may pump hundreds of millions of those dollars into the Times Co, with the newspaper company's board expected to meet this week on the matter, a source familiar with the talks said on Saturday.

Slim has fought accusations in Mexico of anti-competitive and monopolistic business practices. More recently, he is known for giving away millions to charity.

His intentions for the Times could be similarly philanthropic.

Some media watchers say Slim is unlikely to try to force the Ochs-Sulzberger family, which has run the New York Times for more than a century, to sell it or make drastic changes. Slim himself said, when he disclosed a 6.4 percent in the Times Co last September, that his interest was purely financial.

"That does make him something of an ideal investor," said Alex Jones, a Harvard University professor and author of "The Trust," which is widely considered the definitive biography of the Sulzbergers and The New York Times.

"This is a man who already has made his fortune and is in his own way an entrepreneur like Adolph Ochs was," Jones said. "That's different from some financiers looking for an opportunity to make a killing."

Slim, currently the fourth-largest shareholder in the Times Co, is near a deal to invest another $250 million via 10-year notes with warrants convertible into common shares, the New York Times reported on Sunday.

While he would not get a board seat or shares with voting rights like the Sulzbergers have, Slim would get a special annual dividend as high as 10 percent or more. He would also become the largest shareholder with about a third of the common shares once he exercises his warrants, the paper reported.

The Sulzbergers would retain control through a special class of shares.

Odd Partners

Slim, who has faced accusations of running state-sanctioned monopolies, may seem an odd coupling with The New York Times, seen by many readers as a paper with a strong liberal voice.

In Mexico, Slim is not only the wealthiest man but also the most powerful. His America Movil is the largest cellphone operator in Latin America and provides service to seven out of every 10 mobile users in Mexico.

A probe by Mexico's Federal Competition Commission into monopolistic practices in the mobile industry was launched last April. At the time, it was the eighth such probe. Six other probes are looking into dominance issues involving Slim's Telefonos de Mexico, or Telmex, the country's largest fixed-line phone company.

Despite years of insinuation that he won Telmex because of his friendship with then-President Carlos Salinas in the 1990s, Slim has said he does not have political partners.

He has maintained good relations with Mexico's governments in recent years and even worked to restore old buildings in Mexico City with former mayor Andres Manuel Lopez Obrador, a leftist firebrand who often criticizes big business.

"He has accumulated so much wealth in Mexico that at the end of the day his power could easily translate to that of a political kingmaker, which is why all the aspiring politicians strive to have a certain closeness to him," said Armand Peschard-Sverdrup, a Mexico expert at the Center for Strategic and International Studies in Washington, D.C.

Slim stands to gain from maintaining a close but passive involvement with the Times. The 157-year-old paper is one of the world's hallowed journalistic institutions and is considered a premiere newspaper brand in the United States.

To invest and not seek influence would bolster Slim's reputation outside Mexico, said Todd Gitlin, a journalism and sociology professor at Columbia University.

"I think it would be foolish of him actually to meddle with the paper," he said. "He would benefit from a global reputation of being above mere meddling."

Buying Time

While falling advertising sales threaten all U.S. papers, including many published by the Times Co, the New York Times is considered one that will persevere -- it's just not clear how.

The Times Co's problem is that it has $46 million in cash, $1.1 billion in debt, and a $400 million credit facility that expires in May.

To deal with that, it is holding a $225 million sale-leaseback on its share in its headquarters building in New York and may sell properties like its stake in the Boston Red Sox and papers like The Boston Globe.

On a more fundamental level, the company's 70 percent stock drop from a 12-month high of $21.14 last April is testing the Sulzberger's stomachs and putting pressure on those who live off dividends to cash out before their inheritance dwindles.

Thus, a cash infusion by Slim -- who is known for making heavy bets on hard-hit companies -- should be welcomed by the board. The Times and Slim declined to comment.

"It gives them needed cash, and it may strengthen, not weaken, management's hold by giving them a strong ally," said Tom Rosenstiel, director of the Project for Excellence in Journalism and a former media critic at the Los Angeles Times.

(Editing by Tiffany Wu & Ian Geoghegan)

Layoffs at O'Reilly Media in Sebastopol
Scott Manchester

O’Reilly Media laid off 30 employees on Thursday in a restructuring effort intended to help the influential Sebastopol tech publisher weather the economic downturn.

“We’re being hit by the economic malaise,” said Sara Winge, a spokeswoman for the company.

The layoffs included 21 employees at its Sebastopol headquarters. The rest were staff from its Cambridge, Mass., office and remote workers. The cuts affected almost 14 percent the company’s 222 employees.

O’Reilly Media made a name for itself as a publisher of high-tech books and an early advocate of the Internet.

Its 1992 book “The Whole Internet User’s Guide,” was named one of the most significant books of the 20th century by the New York Public Library. In 1993, it created the world’s first commercial Web site, Global Network Navigator, which it later sold to AOL.

More recently, it expanded its operations to include online publishing, conferences and its traditional print publishing business. Those three areas comprised the bulk of its about $70 million in revenue in 2007.

The layoffs occurred throughout the company’s divisions, and in the midst of an economic recession hitting both technology and publishing companies, Winge said.

Just this week, for example, both tech giant Google and book retailer Barnes & Noble announced their first layoffs ever. Other publishing houses, including HarperCollins, Houghton Mifflin Harcourt, Random House and Simon & Schuster have frozen salaries or cut jobs, or both.

O’Reilly customers will not notice major changes to the company, Winge said.

On the social networking tool Twitter, people passed their condolences to O’Reilly employees.

Derrick Story, a well-known photographer who worked at O’Reilly, revealed his layoff on Twitter with the comment, “Hey, those of you who connect with me via O’Reilly Media, don’t use that e-mail address. Most of us in Digital Media were laid off today.”

Responding to an outpouring of condolences, Story wrote, “I’m doing well. Need to figure out healthcare and all the usual stuff for the fam, but, I have projects too.”

The Digital Media branch was restructured into one publishing division along with the company’s Missing Manual group, O’Reilly Technology Exchange and its Head First series, Winge said.

O’Reilly Media suffered a series of layoffs following the dot-com bust, with the first coming in March 2001. The company announced another round of layoffs in October 2001 — about a 10 percent reduction. In total, the company had at least four rounds of layoffs that extended into 2003.

Although O’Reilly Media surpassed its 2000 revenue of $60 million in recent years, it never surpassed its high of 336 employees reached during the peak of the dot-com boom.

Tim O’Reilly, the company’s chief executive and co-founder, is a well-known prognosticator of Internet trends and the future of high-tech. Recently, he has been advocating for entrepreneurs to work on problems that make a difference, such as alternative energies and the threat of global warming.

His fellow co-founder, Dale Dougherty, coined the now popular term “Web 2.0” and also started the popular do-it-yourself magazines “Craft” and “Make,” which are published in Sebastopol.

The company produces several tech conferences throughout the year. The most prominent is its Web 2.0 Summit, which draws influential business and political leaders such as Rupert Murdoch, Al Gore and Mark Zuckerberg, the founder of Facebook.

The company sees a strong future in the tech sector.

“We are certainly bullish on technology,” Winge said.

The Popular Newsweekly Becomes a Lonely Category
Richard Pérez-Peña

And then there was one.

Not long ago, three truly mass-market newsmagazines came out every week to tell Americans about world and national events, and it was a hugely lucrative business. Media empires were built on the idea.

But with readers and ads melting away, and more media outlets available to get the same information faster, U.S. News & World Report took itself out of that competition in 2008, and Newsweek may be poised to step back from it this year, leaving Time as the one playing something closest to the traditional newsweekly game, and making money at it.

But in fact, the entire category, Time included, has already transformed itself. The business of telling people what happened in the last week is just about gone, in favor of telling them how to think about the news — much like a rising competitor, The Economist — and the magazines resemble one another less, each having chosen a distinct direction.

People have asked for a generation whether newsweeklies would survive — but that is a more pressing question than ever, as the recession pummels the magazine industry. Magazine advertising pages fell 11.7 percent in 2008, and the categories that newsmagazines relied on most heavily — cars, pharmaceuticals and financial services — posted much steeper declines. Industry analysts predict that 2009 will be worse.

But for now, the answer may be that newsweeklies are already gone, having evolved into something else.

“We’re not in the business of telling people the news,” said Richard Stengel, managing editor of Time, a product of Time Warner’s Time Inc. division. “News has become a commodity. They already know the news.”

Among the big three, only Time seems content where it is. While U.S. News and Newsweek struggle financially, Time generated a profit of near $50 million in 2008, in part by sharply cutting costs, according to Time Inc. executives who are privy to the finances but who asked to remain anonymous to discuss data that was not made public.

Time and Newsweek each had about a third fewer ad pages in 2008 than they did in 2004, but Time sold more pages, and at higher prices, according to media buyers. As part of a much larger chain, it has advantages over its competitors in combining ad sales efforts and back-office costs with other magazines.

Unable to compete with the immediacy of television, cable and then the Internet, newsmagazines have been moving for decades in the direction of analysis, commentary and news-related feature articles. That trend has accelerated in recent years, driven by financial pressures. The magazines’ editorial staffs are about half as big as they were in the 1990s, and they have shuttered many of the bureaus they once had around the world.

They still produce some deep, original reporting. But these days, they are more likely to offer a comprehensive survey of a subject to present an argument or offer a prescription — like Newsweek’s recent cover article on why President-elect Barack Obama may come to embrace Vice President Dick Cheney’s view of executive power, or Time’s on how a trillion-dollar stimulus package should be spent.

“Time and Newsweek have definitely become more about views,” said Victor Navasky, a journalism professor at Columbia University, and a former publisher and editor of The Nation. And as a strategy, he said, “I think that makes sense.”

“I don’t see the audience going down, so the question is how much of it will continue to be on paper versus online,” he added. “And no one can say yet.”

Newsweek, owned by The Washington Post Company, is planning a major overhaul this year. It has not made its new vision public, but executives have said it will strive to be a “thought leader,” competing more with The Economist than with Time — in other words, a big stride in the direction it was already headed. The strategy includes a major reduction in circulation and operating costs and a focus on an elite audience to attract advertisers.

“I think a weekly magazine is a standing dinner date, or the fourth person in your bridge game,” said Jon Meacham, editor of Newsweek. “Sometimes they’re the most delightful person in the world, sometimes they get drunk and throw up on you. But enough times in a year, when something happens, that’s the first place you want to go to hear what they have to say.”

To that end, Newsweek has bet heavily on the writing of name-brand journalists, familiar presences on television as well as in print, like Fareed Zakaria, Mr. Meacham and Christopher Hitchens.

Time has done some of the same, with writers like Joe Klein and Michael Kinsley, but it has not staked its identity on those stars to the same extent. (The Economist represents the opposite extreme; its writers’ names do not appear with their articles.) Playing catch-up on TV exposure, Mr. Stengel said Time was talking with another Time Warner property, CNN, about creating a Time program.

Newsweek has tried harder to be controversial; its cover article in December, “The Religious Case for Gay Marriage,” generated hundreds of thousands of e-mail messages, and leading bloggers weighed in on it for several days.

But it can be tough to stand out in the crowded field of magazines offering opinion, analysis and well-known writers. As a weekly, Newsweek can be more topical than monthlies like The Atlantic, but it remains to be seen if the new strategy will work.

Each issue of Time still includes several pages in the front of the magazine with an overview of the week’s events. Newsweek and The Economist offer much less of that.

“That kind of being all things to all people is culturally tough for Time and Newsweek to get away from, because that is what they were,” said Steven Kotok, general manager of The Week, another kind of newsweekly. “Personally, I think they’re improving their products with the directions they’re going.”

Last year, U.S. News, the perennial third-place competitor owned by Mortimer B. Zuckerman, became as much about consumer advice and ranking products and services as about news. It went from publishing weekly to biweekly, and then announced that it would become a monthly and lowered its rate base — the circulation promised to advertisers — to 1.5 million, from 2 million.

It does not disclose financial information, but executives at other magazine companies say U.S. News loses money.

Newsweek also loses money, the Post Company has acknowledged, though it has not said how much. Through the first nine months of last year, the company’s magazine division — Newsweek and a group of smaller properties — reported an operating loss of $27 million on $176 million in revenue.

Two British-owned upstarts have cut into the audience for the domestic newsmagazines. The Economist has United States circulation approaching 800,000, a number that has roughly doubled in seven years. Its ad pages actually rose last year, and it charges premium prices to both readers and advertisers.

The Week, which began publishing in this country in 2003 and has circulation over 500,000, has taken a radically different approach. It has an editorial staff of just 15, and almost all of its content consists of greatly condensed versions of news and opinion pieces that have appeared in other publications — material it does not pay for.

At Time and Newsweek, the traditional competition for circulation has essentially ended. Newsweek dropped its rate base to 2.6 million, from 3.1 million a year ago, and people briefed on its plans said it was likely to go below 2 million by next year. Time lowered its rate base two years ago, to 3.25 million, from 4 million, and is standing pat at that level.

The newsweeklies have cut back sharply on spending for advertising and telemarketing to chase new readers — customers they were able to win over only by charging steadily less for subscriptions.

Still, Time’s leaders insisted that despite the trends around them, the current circulation was sustainable.

“The future of a mass, general-interest newsmagazine is still a very good proposition,” Mr. Stengel said. But, he added, there may not be room for more than one.

Online Pornography Law Appeal Denied
James Vicini

The U.S. Supreme Court let stand on Wednesday a ruling that a federal law designed to keep Internet pornography away from children violated constitutional free-speech rights.

The high court rejected a Justice Department appeal defending the law and handed a victory to those who argued that the efforts of Congress to regulate cyberspace by keeping minors away from online pornography infringed on free-speech rights.

The law in question required that website operators use credit cards or adult access codes and personal identification numbers to keep minors from seeing harmful pornography. Violators faced up to six months in prison and fines of as much as $50,000 a day.

It was adopted in 1998 after the Supreme Court struck down on free-speech grounds another law called the Communications Decency Act. The law has never been enforced as lower courts repeatedly have ruled it unconstitutional.

The Justice Department appealed to the Supreme Court after a U.S. appeals court in Philadelphia declared the law unconstitutional for being overly broad and too vague.

The appeals court also ruled the law violates free-speech guarantees under the Constitution's First Amendment because filtering technologies and other parental control tools offer a less restrictive way to protect children from inappropriate content online.

The law was challenged by the American Civil Liberties Union, booksellers, online magazine publishers and others. ACLU lawyers said the law criminalizes a large amount of valuable online speech that adults are entitled to communicate and receive.

According to the government's experts in the case, the law could criminalize as many as 700 million Web pages, they said. The lawyers said the use of content filters would be more effective.

The Supreme Court refused to hear the Justice Department's appeal without any comment, allowing the appeals court ruling to stand.

(Editing by David Wiessler)

Dutch Study Says Filesharing Has Positive Economic Effects

In a study conducted by TNO for the Dutch government the economic effects of filesharing are found to be positive. According to the 146 page report (available for download, but in Dutch) filesharing is good for the prosperity of the Dutch: with filesharing more media are available, even though this costs the media industry some profit. One of the most noticeable conclusions is that downloading and buying are not mutually exclusive: downloaders on average buy just as much music as non-downloaders, but they buy more DVD's and games then people who don't download. They also tend to visit more concerts and buy more merchandise.

37% of P2P Users Say They'll Ignore Disconnection Threats
Nate Anderson

The success of "graduated response" programs in the US, UK, France, New Zealand, and elsewhere around the world may depend, in large part, on just how quickly file-sharers will buckle. If most will quit after a simple warning, the campaign to enlist ISPs (and back down on the mass legal threats) may be a huge success.

But, if only draconian sanctions like disconnection are enough to "stop the swap," the entire graduated response program could arouse critical opposition from the public and from lawmakers. The European Parliament, which has already considered the issue, has voted several times against such "three strikes" laws, largely due to the possibility of extreme sanctions such as Internet disconnection.

A past study has given the content industries reason to hope that a mere warning will be enough to get the job done. A UK study released in March 2008 found that 70 percent of all Internet users said they would stop swapping after a single warning letter—even without sanctions. Apparently, just knowing that you're inside the panopticon is good enough to govern behavior, as Jeremy Bentham believed it would.

The MPAA, which represents movie studios, has confirmed to Ars that its initial findings also support a similar conclusion.

Not so fast

Now, a new study from The Leading Question and Music Ally suggests that the situation isn't quite so rosy. When Internet users in the UK, US, and France were surveyed, 64 percent said they would stop swapping with only a warning—in line with the previous number.

But most Internet users aren't sharing music at all; even the IFPI's own numbers show that only 18 percent of Europeans engage in any file-swapping. So the real question is not how all Internet users will react, but how the file-swappers will react.

When the new survey asked this more narrow question, only 41 percent of file-swappers said a warning would get them to stop. In fact, only when disconnection was mentioned did the number jump back up to 63 percent. Rather incredibly, 37 percent of admitted file-swappers would still not stop even when threatened with imminent disconnection.

Music Ally CEO Paul Brindley said, "While warning letters from ISPs may be enough to send out an important message to all music fans, they may not be enough to dissuade the real target group of file sharers from downloading music without paying."

As we've already seen with the recording industry's litigation campaign, controversy rises as the proposed penalties go up. If disconnection or similar threats are what's required, resistance to the entire program will be intense from end users. That pressure will be brought to bear on ISPs, which has a direct relationship with customers, especially in countries where the entire graduated response program is voluntary (as it currently is in the UK and US).

The music industry can perhaps take comfort in the fact, though, that even a 41 percent reduction in file-swapping is significant and can apparently be had without litigation or unpopular sanctions. 70 percent reductions may be harder to come by.

Music Industry Imitates Digital Pirates to Turn a Profit
Eric Pfanner

After years of futile efforts to stop digital pirates from copying its music, the music business has started to copy the pirates.

Online and mobile services offering listeners unlimited “free” access to millions of songs are set to proliferate in the coming months, according to music industry executives.

Unlike illegal file-sharing services, which the music industry says are responsible for billions of dollars in lost sales, these new offerings are perfectly legal. The services are not really free, but payment is included in the cost of, say, a new cellphone or a broadband Internet access contract, so the cost to the consumer is disguised. And, unlike pirate sites, these services provide revenue to the music companies.

“Two thousand nine should be the year when the music industry stopped worrying and learned to love the bomb,” said Feargal Sharkey, a former punk rocker who now heads UK Music, a trade group for the British music industry.

Previously, the industry largely insisted that legal digital sites sell songs by the track, like Apple’s iTunes, or through subscriptions to services that do no let listeners truly own the music.

But over the last year, many people in the industry have become convinced that such offerings will never replace the revenue from plunging sales of CDs. Worldwide music sales fell about 7 percent last year, said John Kennedy, chief executive of the International Federation of the Phonographic Industry. Meanwhile, growth in downloads from iTunes, the biggest legitimate digital service, came to a halt.

Perhaps the most prominent service offering unlimited downloads has been Comes With Music, which was introduced in Britain last fall by Nokia, the world’s largest maker of cellphones. It lets users download as many songs as they want, from a catalog of more than five million tracks, when they buy certain Nokia phones.

Tero Ojanpera, who is in charge of developing entertainment services at Nokia, said at an industry conference here that Comes With Music would be expanded to Australia and Singapore during the first quarter of this year, and to other European countries later in 2009.

Other services offering unlimited downloads are being introduced by Internet service providers, which many people in the music industry say hold the key to curbing piracy because of their direct relationship with Web users. TDC, an Internet provider in Denmark, offers unrestricted downloads as part of its broadband subscriptions, and broadband providers elsewhere in Europe are rolling out similar services.

The government of the Isle of Man announced plans for a system under which consumers with broadband subscriptions would be required to pay a nominal monthly license fee. They could then legally download music from any source, even peer-to-peer services that are outlawed currently.

“At the end of the day, we are not going to stop piracy, so let’s embrace it,” said Ron Berry, the inward investment manager for the Isle of Man government.

Music companies have balked at such arrangements in the past. But they are showing a newfound flexibility in licensing their material as their existence becomes increasingly threatened.

Internet service providers, which previously resisted calls for them to take an active role in stamping out piracy are looking to offer music in their broadband packages.

Governments are also moving in to require more policing by Internet providers.

France is poised to enact a law requiring providers to shut down the Internet connections of persistent copyright offenders.

Britain, meanwhile, has threatened to introduce further legislation if voluntary measures to try to curb piracy are unsuccessful.

Music industry executives and Nicholas Lansman, secretary general of the Internet Service Providers Association of Britain, said they were confident that they could soon reach a licensing agreement to make unlimited music services available via Internet providers.

Cellphone manufacturers, meanwhile, are eager to add music services as the battle of the smartphones heats up among companies like Nokia, Apple and BlackBerry.

Mr. Ojanpera, of Nokia, declined to say how many of the Comes With Music phones had been sold in Britain.

‘Files Shared Don’t Equal Sales Lost,’ Judge Rules
p2pnet news

“It is a basic principle of economics that as price increases, demand decreases. Customers who download music and movies for free would not necessarily spend money to acquire the same product.”

p2pnet has been saying that for years, pointing out RIAA and MPAA claims that files shared equal sales lost are pure fiction dreamed up to enable corporate entertainment cartels to attack their own customers in a bid to gain control of how, and by whom, product is managed and distributed online.

Now, in a 16-page opinion, “District Judge James P. Jones, sitting in the Western Disrict of Virginia, denied the RIAA’s request for restitution, holding the RIAA’s reasoning to be unsound,” says Recording Industry vs The People.

Vivendi Universal, EMI, Warner Music and Sony BMG and their RIAA, as well as Time Warner, Viacom, Fox, Sony, NBC Universal and Disney and their MPAA, pretend their alleged ‘losses’ amount to ‘theft’ of ‘product’ and that people who share files with each other are, therefore, criminals and thieves.

This, in turn, allowed them to elevate the purely civil matter of copyright infringement to that of major crime.

Now, however, chief United States judge James P. Jones has torn the claim to shreds.

The opinion quoted in the intro comes from his decision in a case in which ex-Elite Torrents admin Daniel Dove, 27, was convicted of conspiracy and felony copyright infringement.

It was the first time in the US a P2P user was convicted by a jury of copyright infringement, boasted the FBI at the time.

But not content with their win, in Dove vs the RIAA and Lionsgate films let their greed get the better of them, also trying to claim restitution based on their spurious ’sales lost’ ploy.

Instead, they’ve opened the door for defendents in both RIAA and MPAA copyright infringement suits to say, ‘Prove it!’

Because Case 2:07CR00015 will also go down as landmark in which a judge categorically states contrary to RIAA and MPAA statements, file sharing does not automatically equal the loss of a sale, or sales.

And his ruling will be of primary importance in the current Joel Tenenbaum and Jammie Thomas lawsuits in which the Big 4 try to maintain they lost hundreds of thousands of dollars because the two, one a student and the other single mother, were, “massive” online distributors of copyrighted corporate product.

‘Give us $47,000′

The RIAA’s Declaration of Victim Losses says, “183 sound recording albums were transferred through Dove’s server a combined total of 17,281 times,” according to the decision, which states

Multiplying 17,281 by the average wholesale price of a digital album in 2005 ($7.22), RIAA concludes that its member companies suffered economic loss in the amount of $124,768.82. RIAA offers to accept only $47,000 if Dove agrees to “participate in a public service announcement designed to educate the public that music piracy is unlawful and has the potential to result in stiff criminal penalties.” (Id. at 3.) The $47,000 figure represents the approximate amount of economic loss resulting from the transfers of the 20 most frequently transferred albums on Dove’s server: 6,528 transfers multiplied by the average wholesale price in 2005 ($7.22) yields $47,132.16 in economic damages.

There is no indication as to why RIAA reduces its monetary request to the first 20 albums as opposed to 10 or 100 albums. It is notable, though, that RIAA only proves that the first 20 albums are held by record labels that are RIAA members; there is no such proof as to the remaining 163 albums.

Lionsgate’s Declaration of Victim Losses indicates that it owns the copyrights to 28 of the 700 movies Dove infringed. Lionsgate does not show any proof as to how many times those 28 titles were downloaded from Dove’s server. Lionsgate states that Dove “sold over a million units” of the 700 movie titles “at $19 per unit,” resulting in a “$22 million amount of loss to [the] industry.” (Lionsgate Decl. of Victim Losses 1.) From this $22 million figure representing the total loss to the movie industry, Lionsgate concludes that since it holds 4% of the movie titles at issue (28 out of 700), it should get 4% of $22 million, which is $880,000 RIAA and Lionsgate have the same theory of loss. They assert that for each illegal download of music or movies on the Elite Torrents network, profits were diverted from legitimate sales the copyright holders could have otherwise made.

‘Faulty assumption’

Jones says he’s “skeptical” anyone would have paid pay $7.22 or $19, “for something they got for free,” going on »»»

Certainly 100% of the illegal downloads through Elite Torrents did not result in the loss of a sale, but both Lionsgate and RIAA estimate their losses based on this faulty assumption.

The cases cited by the government and RIAA are distinguishable from or are otherwise inapplicable to this case. For instance, both the government and RIAA cite to United States v. Martin, 64 F. App’x. 129 (10th Cir. 2003) (unpublished). In Martin, the defendant pled guilty to trafficking in counterfeit goods (Microsoft Office 2000 CDs), and was ordered to pay $395,000 in restitution for Microsoft’s lost profits from diverted sales. Id. at 130, 131. The issue before the court was whether the defendant’s waiver of his appellate rights in his written plea agreement was enforceable, id. at 130, and the court found that the waiver was valid, id. at 132.

Therefore, the court did not fully review the district court’s restitution decision. Also, the crime in Martin, trafficking in counterfeit Microsoft Office CDs, is distinguishable from the copyright infringement in this case. Those who download movies and music for free would not necessarily purchase those movies and music at the full purchase price, but those who purchase counterfeit Microsoft Office CDs are more likely to purchase the legitimate version if the counterfeit version is not available.

Jones writes the the RIAA cites a similar case, “United States v Milstein, 481 F.3d 132 (2d Cir. 2007), when it argues that “[l]ost sales are an appropriate measure of restitution in criminal cases involving the misappropriation of intellectual property.”
But in this case, “the defendant was convicted of fraudulently distributing misbranded drugs and other related crimes,” he says.

“The defendant purchased foreign pharmaceuticals and re-sold them in the United States with counterfeit packaging to pass them off as their domestic counterparts. Id. at 133-34. The defendant was ordered to pay $3.5 million in restitution to the two drug manufacturers whose trademarks he misappropriated. “This figure reflected the sales that these two companies would have made if [the defendant] had actually purchased the products from them for distribution in the U.S. market.” Id. at 135. The court upheld the restitution award, noting that the defendant did not make any claim that manufacturing costs or other costs should be deducted from lost sales to arrive at a more appropriate restitution amount.”

Revenge of the Sith

Ironically, when the FBI went after Dove, it specifically cited Star Wars, Episode III - Revenge of the Sith, as being, “available for downloading on the network more than six hours before it was first shown in theatres” which in the ensuing 24 hours, “was downloaded more than 10,000 times”.

The implication was the studios had lost all kinds of business as a direct result.

But the file was a print copy available only to Hollywood insiders, as p2pnet pointed out, also saying »»»

When Revenge of the Sith arrived on the p2p networks, “There is no better example of how theft dims the magic of the movies for everyone than this report today regarding BitTorrent providing users with illegal copies of Revenge of the Sith,” raved MPAA (Motion Picture Association of America) boss Dan ‘Jedi’ Glickman.

But the illegal distribution of ‘Sith’ started during the week before its May 19 release, when Albert Valente, 28, of Lakewood took a DVD copy of the film from a post-production facility where he worked,” said the Los Angeles Daily News.

‘Unit price is not the appropriate figure for calculating loss’

Meanwhile, Lionsgate’s estimation of lost profits faces several additional problems, says Jones, continuing »»»

Lionsgate makes no showing of how many times its 28 titles were transferred by Dove’s server, but simply concludes that it is entitled to 4% (28 out of 700) of the total damages to the movie industry. When using a diverted sales theory, the victim should show how many infringing items were actually placed into commerce in competition with legitimate items. Beydoun, 469 F.3d at 108. In addition, the $19 per unit price is not the appropriate figure for calculating loss, since it represents lost revenue rather than lost profits. See id. Finally, like RIAA, Lionsgate bases its estimate of actual loss on the faulty assumption that every illegal download resulted in a lost sale.

The cases cited by the government and RIAA offer many alternative measurements of actual loss other than diverted sales, yet all interested parties have failed to bring sufficient evidence of loss under any theory. There has certainly been some harm to the victims, but without more accurate estimates from the victims it would be very difficult to arrive at an accurate and fair number for a restitution award.

The government and the victims who have come forward have failed to meet their burden of proof as to actual loss under § 3664(e). This failed attempt has demonstrated that although there was an injury to the market, as in Chalupnik, the difficulty of determining each victim’s actual loss makes the collective injury inappropriate for MVRA restitution. 18 U.S.C.A. § 3663A(c)(3).

Definitely stay tuned.

RIAA Walks Away From Another "Discovery" Case

You may recall that the RIAA walked away last week from one of their "discovery" cases seeking the identities of "John Does" who attended Rhode Island College. We have just learned that they walked away from another one, BMG Music v. Does 1-14, in Greensboro, North Carolina. 2 of the 14 John Does had settled, but the other 12 — who hung tough — will never be identified to the RIAA lawyers and will not have to pay any "settlement." This adds fuel to the debate over whether the RIAA has finally seen the light or is still sneaking around in the dark.

RIAA Scared of Court Case Webcast
Ben Jones

With the defense in the Tenenbaum case getting their request to broadcast the trial online, it seemed that some light of exposure was to be brought to the RIAA’s method of litigation. Yet the RIAA doesn’t want their court practices exposed for all to see, and have now appealed the judges decision.

RIAA court cases are few and far between. The cost of attorneys usually makes hiring one a costly alternative in comparison to the settlement money that they ask from alleged infringers. Thus far, only one case has actually gone to trial, resulting in a heavy judgment against the defendant, Jammie Thomas. While that case has been declared a mistrial, it has not stopped other cases from going ahead.

One of the cases vying to be the first to go all the way for a standing decision, is the case involving Boston University student Joel Tenenbaum. After initially offering to settle for $500, and having it rejected back in 2003, he decided to fight. His case has proved quite a headache for the RIAA by all accounts. Starting with a counterclaim asserting abuse of federal power, and that the damages demanded were unconstitutional, it has eventually gone to court after several settlement attempts. In court Joel is assisted by Professor Charles Nesson, and his law students.

In the Thomas case, the lawyer involved wasn’t particularly enthusiastic nor experienced in this area, and it showed. The same can’t be said of Prof. Nesson, who is a Harvard law professor as well as Founder and Co-Director of the Berkman Center for Internet and Society. In what might be considered a coup, he convinced the judge to allow the trial to be webcast on the Internet. This will allow others to see just how the lawyers act in a case. Yet, in the last few hours, it has been revealed that the RIAA has appealed the motion, clearly upset that it might harm their public image further.

It’s hard to see how it can though, when the RIAA makes statements on the case that do nothing to generate goodwill. RIAA’s Cara Duckworth said in a statement, “While this might be an interesting academic exercise for the professor and his class, there’s been real world consequences for those who create music.” Clearly little things like following the law are second place to their revenue steam, and how DARE the defense bother to fight the case against them. In the meantime, we’re looking forward to the webcast.

RIAA Threatens Harvard Law Prof With Sanctions

Unhappy with Harvard Law Professor Charles Nesson's motion to compel the deposition of the RIAA's head "Enforcer", Matthew J. Oppenheim, in SONY BMG Music v. Tenenbaum, the RIAA threatened the good professor with sanctions (PDF) if he declined to withdraw his motion. Then the next day they filed papers opposing the motion, and indeed asked the Court to award monetary sanctions under Rule 37 of the Federal Rules of Civil Procedure.

Judge Delays Internet Streaming of Court Hearing
Rodrique Ngowi

A judge who authorized the first online streaming of oral arguments in the U.S. District Court in Massachusetts has temporarily suspended proceedings to allow a higher court to consider petitions challenging the ruling.

Judge Nancy Gertner on Tuesday suspended until Feb. 24 hearings originally set for Thursday in a copyright infringement lawsuit that pits a Boston University graduate student against the music recording industry.

The case is part of an effort by the Recording Industry Association of America, or RIAA, to stop online music sharing. The trade group has filed a series of civil lawsuits since 2003 against about 35,000 people who allegedly swapped songs online. Most of those sued are college students, and many have defaulted or settled for amounts between $3,000 and $10,000, often without legal counsel.

Charles Nesson, a Harvard Law School professor representing Joel Tenenbaum, is challenging the constitutionality of the lawsuits, which - based on the Digital Theft Deterrence and Copyright Damages Improvement Act of 1999 - can lead to damages of $150,000 per willful act of infringement.

Nesson had asked Gertner to authorize video cameras already installed in courtrooms to be used to capture the proceedings and transmit the material to Harvard's Berkman Center for Internet and Society, which will then stream it on its Web site for free. Gertner approved the request and authorized New York-based Courtroom View Network, or CVN, which has webcast state court trials, to "narrowcast" proceedings to the Berkman Center.

The music recording industry disagreed and asked Gertner to temporarily suspend proceedings while the 1st U.S. Circuit Court of Appeals considers their appeal.

"We appreciate the court's decision to postpone the hearing so that the circuit court could conduct a full review of the matter," RIAA spokeswoman Cara Duckworth said Wednesday.

"The district court committed an egregious error of law" when it authorized the recording and online streaming of proceedings in the case, RIAA attorneys said in court documents.

They said Gertner's ruling violates a rule for the federal court of Massachusetts, established policies of the Judicial Conference of the United States and is troubling since it requires members of the public who want to view the broadcast to visit the Web site of the Berkman Center, which was founded by Nesson and contains material that is harshly critical of the music recording industry and its litigation policies.

The order authorizing the online streaming of court proceedings will cause irreparable harm to the music recording industry by promoting Tenenbaum's position to the public and the potential jury pool.

"Unlike a trial transcript, the broadcast of a court proceedings through the Internet will take on a life of its own in that forum. The broadcast will be readily subject to editing and manipulation by any reasonably tech-savvy individual," attorneys for the music industry said in court documents.

They also argued that the relationship between CVN, Tenenbaum and Nesson "strongly suggested that the proposed broadcast was not for in furtherance of the public interest, but rather part of a larger strategy to advance defendant's and his counsel's interests in connection with this case."

The judge, however, said some of RIAA's claims were never raised in their current form in the district court.

Gertner said the court agreed to Nesson's proposal after the music recording industry failed to counter his plan to let the Berkman Center act as a subscriber to Courtroom View Network services and broadcast court proceedings on its Web site.

Gertner noted that the decision did not limit streaming to the Berkman Center's Web site, saying RIAA also is free to subscribe to the CVN recording and to make it available to the public at a Web site of its choosing, provided that the group observes conditions already set by the court, including streaming unedited material.

ISPs Can Profit from Busting File Sharers
Greg Sandoval

Jerry Scroggin, the owner of a Louisiana Internet Service Provider, says he's skeptical of a service that proposes to pay ISPs to police their networks for pirated music and movies.

I wrote about Scroggin last month following the music industry's announcement that it would scale back a longtime strategy of suing individuals suspected of music piracy, and instead enlist the help of ISPs to thwart copyright violations.

Scroggin argued that the Recording Industry Association of America (RIAA) should help pay the costs incurred when they ask ISPs to chase down suspected music pirates. Days after the story was published, antipiracy firm Nexicon contacted Scroggin about a plan to share money collected from accused file sharers with ISPs.

In theory at least, paying ISPs could sway the balance of power in copyright enforcement. Up to now, ISPs have shied away from helping content creators protect intellectual property. There hasn't been much to motivate them, said Scroggins.

Film studios and the major music labels frequently ask ISPs to crack down on copyright violators. They expect this done free of charge, Scroggin said. Under the RIAA's new plan, ISPs would also be asked to suspend the accounts of chronic offenders. That means an ISP might be forced to wave bye-bye to paying customers without receiving any compensation. If ISPs could somehow be compensated, it might encourage them to become copyright enforcers.

The RIAA has said it wants ISPs to do nothing more than honor their own user agreements, which have long prohibited illegal acts, such as unauthorized file sharing.

On Thursday, I talked to Kyle Reed, the Nexicon sales associate who contacted Scroggin. He confirmed for me that Nexicon claims it can help ISPs automate and reduce the costs of chasing down file sharers, cut down on false positives and will share revenue collected from suspected copyright violators with ISPs.

He said previous antipiracy services have alienated ISPs and Nexicon wishes to avoid that.

Nexicon offers a variety of antipiracy services. One offering tracks those people who infringe on intellectual property and sends take-down notices to their ISPs. Reed said the company has the ability to distribute 95 million of these notices per day. That could prove helpful, according to Reed because the company plans to announce more customers soon. As of right now, Reed said Nexicon has only disclosed the name of one customer of this service: the family of rocker Frank Zappa.

As part of Nexicon's "Get Amnesty" service, the company tries to obtain fees from those it claims are guilty of violating copyright law. Nexicon sends e-mails to those accused notifying them that they must "settle" with the copyright owners, which typically means paying a fee. "After opening the email, the infringer clicks a link to visit GetAmnesty.com, where they can settle their infringement to avoid legal action and receive a legal release from the copyright owner," according to a statement on the company's site.

Nexicon then offers to help ISPs manage the take-down notices they receive from, well, Nexicon and competitors. The company's Envoy system uses a combination of automated and human systems to flag copyright violations and send take-down notices--saving ISPs time and money, Reed said. He added that the system is less likely to accuse someone by mistake.

"The user is presented in real-time a complete inventory of infringements processed by Nexicon on behalf of its copyright owner clients," the company wrote on its site.

Scroggin said he hasn't heard Nexicon's entire pitch but wasn't impressed with the overall approach.

"I would still wind up losing customers," Scroggin said. "I would also have to pay Nexicon for this...I have to survive in this economy but I don't have the big marketing dollars that bigger ISPs have. I have to fund 401(K)s and find ways not to lay off people. Giving free rein to the RIAA is not part of my business model."

Young 'Pirates' Receive Millions from the State

The youth league of the Swedish branch of file-share and copyright reform advocacy group, the Pirate Party, has received millions of kronor in state support.

"It is truly gratifying and shows what we are achieving with our politics," said Ung Pirat chairperson Stefan Flod in a press release.

"It is surprising. Ung Pirat works in principle to encourage something illegal. That they then receive money from a state institution is remarkable," said Lars Gustafsson, CEO of record company sector organisation IFPI to Svd.se.

Ung Pirat has been awarded 1.3 million kronor ($159,000) by the National Board for Youth Affairs (Ungdomstyrelsen), a government agency. The sum has been calculated based on an official member estimation of 1,284 members.

The organization claims in a press release that its membership has almost doubled in a year and is thus confident of receiving further state support next year.

"We have our finger on the pulse of the issues important to young people today. Our political issues touch us deeply, because they concern our lives," Flod said.

The group share the Pirate Party's opposition to a new law based on the European Union's Intellectual Property Rights Enforcement Directive (IPRED), that would make it easier to track people who illegally share copyrighted material on the Internet.

The party intends to stand for election to the European and Swedish parliaments on a platform to "reform copyright law, to get rid of the patent system (and) ensure that citizens' rights to privacy are respected."

Stefan Flod claims that there is a conflict between the interests of young people and the politicians that currently run the country.

"For older people it is still a question of a one-way form of communication. You talk to people and they listen. But the whole internet is about sharing, to communicate, to create new channels," Flod claims.

The youth affairs board announced on Friday that 90 youth organizations would share grants totalling 247 million kronor in 2009. 176 million kronor comes from the state-owned gaming monopoly Svenska Spel and the remainder is provided directly by the state.

The board defended its decision to award support to Ung Pirat.

"It is our understanding that they want to change legislation around copyright issues and that is an opinion that they are entitled to," said the youth affairs board director-general Per Nilsson.

Valve: Pirates Are Just Underserved Customers
N. Evan Van Zelfden

At the Game Business Law summit at SMU's law school today, Valve's Jason Holtman addressed the business models behind the company's popular Steam service.

Holtman, who serves as director of business development and legal affairs, says that Valve has sales in excess of 30 million units in their ten-year history. Steam launched in 2004. He remarks, "We're more than just a game company -- we're a platform holder, distributor, publisher..."

Running through the numbers behind console sales, Holtman points out that there are more PCs in the market than all the consoles combined. In fact, in 2007 alone, over 255 million new PCs were purchased. "That's a huge install base."

"Everyone's got a PC, they're connected," he says. "If you think about gaming just in terms of what analysts show you...you tend to think about the consoles." Each console company, says Hotlman, has a minimum of 50 people devoted to talking to magazines, appearing in USA today, etc.

Holtman goes on to say that there's a current meme making the rounds: 'Online sales are replacing retail sales.' "It's not a cannibalization," defends Holtman, "It's not a replacement. It's all boats rising with the tide." Retail sales are rising, just not as quickly. And he says, people are just now starting to get data from online sales.

Steam currently has 15 million connected gamers, with 1.6 million peak concurrent users. It's available worldwide in 21 languages. "From the outset, we knew we had customers worldwide," says Holtman.

"And we're a distribution channel, so we've got lots of other people's titles as well." Some three hundred plus games, in fact. "We have a great long tail, by the way...if you want to explore long tail economics."

"We're not just a way of selling game," reiterates Holtman. "What we are, actually, is a platform." As such, users have to be able to do more than just buy games, the reason Steam has achievements, and lets users talk to friends.

Holtman returns to this false idea that "Digital sales cannibalize retail," and this time he has proof. "Since Steam is actually a connected platform," he says, Valve can track activation for both retail and digital sales.

One weekend, Valve, offered Day of Defeat for free trial. At the end of that weekend, a good offer was made to customers. As expected, this increased digital downloads of the game. But surprisingly, Holtman reveals, there were "28% more units bought at retail than sold through Steam."

"What we learned from having a connected platform, is it's not about channel vs. channel," says Holtman. "You can't predict where people will shop."

Holtman also talks about giving away a character class for Team Fortress 2. Traditional thinking says: "You monetize investments by charging for them." But, he reveals, when Valve gives away it's content, sales spike for several products, both at retail and through Steam.

The final sacred cow that Holtman took a stab at was the issue of piracy. "There's a big business feeling that there's piracy," he says. But the truth is: "Pirates are underserved customers."

"When you think about it that way, you think, 'Oh my gosh, I can do some interesting things and make some interesting money off of it.'"

"We take all of our games day-and-date to Russia," Holtman says of Valve. "The reason people pirated things in Russia," he explains, "is because Russians are reading magazines and watching television -- they say 'Man, I want to play that game so bad,' but the publishers respond 'you can play that game in six months...maybe.' "

"We found that our piracy rates dropped off significantly," Holtman says, explaining that Valve makes sure their games are on the shelves in Moscow and St. Petersberg, in Russian, when they release it to North America and Western Europe.

There are, concludes Holtman, "tons of undiscovered customers," because publishers look very narrowly at the Western market.

US Removes Taiwan from IPR 'Watch List'
William Lowther

The US has taken Taiwan off its special “watch list” in recognition of the progress it has made in protecting intellectual property rights (IPR).

“Taiwan has come a long way on this issue over the last eight years,” said Sean Spicer, a spokesman for the US Trade Representative's office in Washington.

“Taiwan was a haven for pirates. Today, it has strengthened its enforcement, strengthened its laws and demonstrated a commitment to becoming a haven for innovation and creativity,” Spicer said on Friday.

“This is a credit to the hard work done by Taiwan as well as to our close bilateral cooperation. We hope that this progress can continue to be duplicated in other areas of our trade relationship,” he said.

The unusual praise-filled statement came close on the heels of the decision by two other departments of the US government to take legal actions against Taiwanese businesspeople.

In one case three Taiwanese executives have agreed to plead guilty in the US for participating in a global price-fixing conspiracy related to liquid-crystal-display (LCD) panels, and in the other, a married Taiwanese couple appeared certain to be banned from conducting business with US companies because they were alleged to have shipped components to North Korea that could have been used in weapons of mass destruction.

But it was the good news from the US Trade Representative (USTR) that will dominate business talks this weekend.

The decision to remove Taiwan from the “Special 301 Watch List “resulted from an “out-of-cycle review” announced last April to examine how well laws to protect intellectual property rights were being enforced in Taiwan.

In a written statement, the USTR said: “The US will continue to carefully monitor Taiwan's progress in improving its IPR regime, including enactment of pending legislation to fight Internet piracy.”

The US also wants to see tighter laws to prevent the import and export of pirated goods, including pharmaceutical products, medical devices and such drugs.

In the first case against Taiwanese businesspeople, three executives from Chunghwa Picture Tubes Ltd have agreed to plead guilty and serve prison time in the US for illegally fixing prices in the sale of thin-film-transistor (TFT) LCD panels.

According to felony charges filed by the US Department of Justice, Frank Lin (林鎮弘) has agreed to serve nine months and pay a U$50,000 fine; Liu Chih-chun (劉治軍) will serve seven months and pay a US$30,000 fine; and Brian Lee (李學龍) will serve six months and pay a US$20,000 fine.

They will plead guilty to joining a conspiracy with South Korean and Japanese companies between 2001 and 2006 to suppress and eliminate competition by fixing prices.

Taiwan-based Chunghwa Picture Tubes will pay US$65 million in fines.

The three Taiwanese executives will also assist the US government in its ongoing TFT-LCD investigation.

TFT-LCD panels are used in computer monitors and notebooks, televisions, mobile phones and other electronic devices.

In the second case, the US Treasury Department has sanctioned a Taiwanese couple and the two firms they run for illicit sales to a North Korean firm accused of spreading weapons of mass destruction.

The Treasury Department said that Alex Tsai (蔡顯泰) and his wife Tsai Su Lu-chi (蔡蘇綠綺), and their firms, Global Interface Company Inc and Trans Merits Co Ltd, “shipped to North Korea items that could be used to support North Korea's advanced weapons program.”


Shipments were made to the North Korean state firm, Korea Mining Development Trading Corp, which is blacklisted in the US for selling banned equipment to Syria and Iran last year.

Stuart Levey, US Treasury undersecretary for terrorism, said the couple and their firms faced a ban on doing business with any US citizens and a freeze on any assets under US jurisdiction.

Alex Tsai was indicted last year by Taiwanese prosecutors for forging invoices and illegally shipping restricted materials to North Korea, Levey said.

A Treasury spokesman refused to identify what equipment the firms allegedly sold to North Korea, but other sources said they were items that could be used in the manufacture of missiles.

Despite these setbacks, experts said that Taiwan's removal from the watch list should help improve US-Taiwanese trade across the board even in the wake of the economic slowdown.

Local Response

The Intellectual Property Office under the Ministry of Economic Affairs yesterday welcomed the news.

The director-general of the office, Wang Mei-hua (王美花), said the development was an indication that Taiwan's efforts to protect intellectual property rights had won the recognition of the US.

Wang said that the establishment of the intellectual property court on July 1 last year was the most important achievement in the nation's efforts to promote IPR protection, adding that the court had received 700 cases as of the end of the year.

Wang said Taiwan was one of the few countries in the world, along with Malaysia and Thailand, that has set up an intellectual property court. Most countries, she said, have only established intellectual property tribunals. Over the past year, Taiwan has also stepped up IPR enforcement on campuses to combat Internet and textbook piracy, she said.

The government is also taking aim at copyright infringements on the Internet and has submitted a draft amendment of the Copyright Law to the legislature last October that would provide incentives to Internet service providers to help curb such infringements.

She said her office would hold a public hearing on the legislation next week and hoped that it could clear the legislature during the next legislative session, which is due to begin next month.

Additional Reporting By CNA

Developer Considers Charges after iPhone App is Pirated
Elinor Mills

The developer of an iPhone app that has been cracked and distributed for free said he is considering pursuing criminal charges against whoever is responsible for the piracy.

On the Apple App Store, Annoy-A-Teen sells for 99 cents. But now you can get the amusing app--which plays a high-pitched tone at the press of a button that is inaudible to most adults but highly annoying to teens--for free on a pirate site, said Christopher Kemsley, an electrical engineering student trying to pay his way through college.

"I made, in a month, about the same amount of money as professionals I know in high-tech jobs" from sales of the app, he said on Friday.

Kemsley said he has been in contact with authorities in the state he believes the person responsible resides, has reported the incident to the FBI Internet Crimes unit, and will be contacting authorities in his home state of Arizona to determine if he should pursue the charges.

The app was cracked using a program called Crackulous, which allows someone to obtain an unencrypted version of an encrypted app by copying the code from an iPhone's memory, according to Kemsley. The iPhone decrypts apps and loads them into memory to run the program and then discards the app from memory when the user quits the program, he said. A jailbroken iPhone, in which the operating system has been hacked, is needed to run these cracked apps.

Apple did not respond to repeated calls and e-mails seeking comment.

Kemsley isn't the first to have his iPhone app pirated. James Bossert, the developer of the Whack 'em All iPhone game, told CNET News earlier this week that he will be releasing an ad-supported free version of his game after finding that it had been pirated.

In that case, the alleged pirate told Bossert in an e-mail that apps wouldn't get pirated if people were able to try out trial versions of the programs before having to shell out any money. In response to that comment, Kemsley said he will soon be offering a limited free demo version of Annoy-A-Teen.

"Crackers shouldn't be able to dictate or force us to have a trial version," he said.

One Day You’re Indispensable, the Next Day...
Steve Lohr

Indispensable? No one is, we’re told. Times change, people move on and the notion of the irreplaceable individual is a myth. That is irrefutable, at least in the cosmic sense of Charles de Gaulle’s grim reminder: “The cemeteries of the world are full of indispensable men.”

Yet there are moments in history, or institutions, that are so shaped by the extraordinary contributions of a single person that it is hard to imagine one without the other. So the indispensable-man debate was fueled anew last week when Steven P. Jobs said he was taking a leave of absence from Apple until July because his health problems were “more complicated” than he first thought.

Since he returned to Apple in late 1996, Mr. Jobs has been the product team leader, taste arbiter and public face of a company that has been a stylish breath of fresh air in the personal computer business. With the introduction of the iPod, iTunes and the iPhone, Apple has shaken up the music and cellphone industries as well.

What is it, then, that makes someone a candidate for the cloak of indispensability? In fields of individual endeavor, in the arts or sciences, the case for the irreplaceable individual is a strong one. There are no substitutes or fill-ins for Shakespeare, Michelangelo, Mozart, Einstein or da Vinci. In other undertakings, though, context is often crucial.

In May 1940, when he became Britain’s prime minister, Winston Churchill was indispensable, contends Richard S. Tedlow, a historian at the Harvard Business School. “He had a mongoose-and-cobra understanding of Hitler and the evil of Nazism,” Mr. Tedlow said. “And he had the unique eloquence in speeches the next few days, promising Britain only ‘blood, toil, tears and sweat,’ to rally his countrymen to the effort of uncommon self-sacrifice that the war was going to require.”

Similarly, Abraham Lincoln, a gifted writer and communicator, was ideally suited to explain the need and purpose of the Civil War to the citizens of the Northern states. “Looking back, it’s hard to imagine anyone but Lincoln doing what he did,” said John Steele Gordon, a historian and author.

Yet indispensability is often a matter of timing. Churchill, for example, spent the 1930s in the political wilderness. “In 1935, no one said Winston Churchill was indispensable,” Mr. Tedlow observed.

The indispensable individual rises at certain turning points in the history of a country or company. Sometimes, they step back from the stage shortly afterward, though few move with the speed or self-effacing equanimity of Lucius Quinctius Cincinnatus, a statesman-farmer who returned to his plow within a few weeks of being appointed dictator of Rome in 457 B.C., after he conquered the neighboring Aequians.

“Nobody is indispensable indefinitely,” said John Kao, a jazz musician and innovation consultant to corporations and governments. “The ‘great man’ theory does hold water, but mainly at times of transition when a charismatic leader lends what psychologists would call an individual’s ego strengths to the organization or country as a whole, to allow it to regroup and move forward.”

Institutions often thrive after visionary leaders, once seen as irreplaceable, make their exit. In the mid-1980s, Sam Walton was seen as the personification of Wal-Mart Stores, a chain he founded three decades earlier. He was Mr. Sam to employees, known for personally patrolling stores and attending to the smallest details, lionized on magazine covers and studied in business schools. But after he retired in 1988, Wal-Mart did not miss a step, growing faster than ever.

At one time, Bill Gates was as much the face of Microsoft as Mr. Jobs is of Apple today. Yet Mr. Gates consciously and gradually stepped back in recent years. He handed off the chief executive job to his longtime partner, Steven A. Ballmer, in 2000, and last year left day-to-day responsibilities at Microsoft to become a philanthropist full time. Any company bears less of the imprint of a single individual as it gets bigger. And at $60 billion a year in sales, Microsoft is a very large company indeed, about twice the size of Apple.

Beyond that, the product culture at Microsoft is very different from Apple’s. Microsoft products are mainly useful and necessary tools of business for writing documents, calculating spreadsheets and making presentations. Apple products are cool, elegant and easy to use, and Mr. Jobs is seen as the tastemaker in chief guiding design decisions.

Apple itself has grown dramatically, in a striking corporate revival led by Mr. Jobs over the last decade, to become a company with sales of $32 billion a year and 32,000 employees. “The real test of exemplary leadership is not making yourself an irreplaceable icon but developing a deep, talented bench who, when their turn comes, can unite a company and unleash creativity into their own way,” said Warren Bennis, a professor at the University of Southern California.

Apple, according to students of the company, is far from a one-man show, and Mr. Jobs is taking a leave from a company in good shape. “As special as Steve is, I think of Apple as like a great jazz orchestra,” said Michael Hawley, a professional pianist and a computer scientist who once worked for Mr. Jobs. “Steve did a superb job of recruiting a broad and deep talent base. When a group gets to be that size, the conductor’s job is pretty nominal — mainly attracting new talent and helping maintain the tempo, adding bits of energy here and there.”

Apple Reports Strong First Quarter
Brad Stone

Amid a deepening recession and an intensifying controversy over the health of its chief executive, Apple reported strong first-quarter profits on Wednesday that surprised analysts and handily beat Wall Street’s expectations.

Apple said robust sales of iPods and laptops buoyed the company amid a terrible holiday shopping season that hurt nearly all other technology and consumer electronics firms.

Apple said its quarterly profit jumped to $1.61 billion, or $1.78 a share, from $1.58 billion, or $1.76 a share, a year earlier.

Revenue increased to $10.17 billion, from $7.9 billion. Analysts had expected Apple to announce revenue of $9.74 billion and profit of $1.39 a share.

The news sent Apple’s stock up more than 9 percent to $90.70 in after-hours trading.

“Where many of the other consumer-facing companies are missing their expectations and seeing their revenues decline, Apple continues to see growth,” said David Bailey, an analyst at Goldman Sachs. “It is gaining market share in every category and, given the premium price of their products, that is a significant achievement.”

The earnings news came on a day when reports circulated that the Securities and Exchange Commission was investigating Apple for inconsistent disclosures about the health of Steven P. Jobs, the chief executive.

Two weeks ago, Mr. Jobs said he was suffering from an easily treatable “hormone imbalance,” and Apple’s stock briefly jumped. Mr. Jobs reversed course a week later and said he was taking a six-month leave of absence because his condition was “more complex” than previously thought.

Spokesmen for Apple and the S.E.C. declined to discuss the possibility of an inquiry into the company’s disclosures, which was first reported by Bloomberg News.

The earnings report presented a picture that was largely at odds with pessimistic speculation about Mr. Jobs’s health, and with the company’s declining stock price. Before the earnings report, Apple shares reached a two-year low on concerns that the economy was hurting its prospects, and on fears that Mr. Jobs’s absence might become permanent.

Apple said it sold 4.36 million iPhone 3Gs in its holiday quarter, down from 6.9 million phones during the fall quarter, when the 3G version was released. However, that is nearly double the 2.3 million iPhones that were sold in the year-ago quarter.

Apple also said it had sold 2.5 million Macs, up from 2.3 million in the quarter a year earlier, largely on the strength of its MacBook notebooks, which the company updated in October. Apple is posting those gains at a time when the overall market for personal computers is contracting.

IPod sales jumped a healthy 3 percent from a year ago, to 22.7 million, driven largely by consumers in Europe and Asia.

Apple enjoys higher margins than many of its competitors because it can charge a premium for devices that consumers view as more glamorous and better designed. Apple said its gross profit margin last quarter was 34.7 percent, unchanged from a year ago. The company benefited from falling prices for components like memory chips.

Apple, which is notoriously conservative with its predictions of future earnings, easily exceeded its own forecast for the quarter. But it cautioned on Wednesday that the results for the current quarter would reflect some slowness, projecting profits of 90 cents to $1 a share and sales of $7.6 billion to $8 billion.

Some analysts and shareholders say the future remains cloudy for Apple, particularly in light of the absence of Mr. Jobs. Speaking in a conference call with analysts, the company’s chief operating officer, Timothy D. Cook, who is filling in for Mr. Jobs during his leave, sought to allay those concerns.

“There is extraordinary breadth and depth and tenure among the Apple executive team, and they lead 35,000 employees that I would call wicked smart,” Mr. Cook said. “We believe we were put on the face of the earth to make great products, and that is not changing.”

Mr. Cook also appeared to fire a shot across the bow of Palm, the Silicon Valley cellphone maker that recently unveiled the Pre, a smartphone with some of the same touch-screen tricks as the iPhone.

Though he declined to specifically mention any company, Mr. Cook said that Apple would not stand for having its intellectual property “ripped off,” and that “we’ll use whatever weapons we have at our disposal.”

Palm’s executive chairman is Jonathan J. Rubinstein, who was instrumental in creating the iPod and left Apple in 2006. The company has hired several other former Apple employees.

Microsoft Plans to Cut 5,000 Jobs
Ashlee Vance

Microsoft stunned its investors on Thursday, announcing broad layoffs and offering a pessimistic forecast for the second half of its fiscal year.

Rather than issuing its second-quarter results in the customary fashion after the market closed, Microsoft rushed out the news Thursday morning that it will lay off up to 5,000 people over the next 18 months, including 1,400 people Thursday. The layoffs – a true rarity at Microsoft – span across research, sales, finance and technology roles, the company said.

“We will continue to manage expenses and invest in long-term opportunities to deliver value to customers and shareholders, and we will emerge an even stronger industry leader than we are today,” said Steven A. Ballmer, Microsoft’s chief executive.

For its second quarter, Microsoft posted net income of $4.17 billion – a figure 11 percent lower the $4.71 billion reported in the comparable period last year. Microsoft’s revenue for the quarter rose 2 percent year-over-year to $16.63 billion.

Microsoft’s earnings of 47 cents during the quarter missed the forecast from Thomson Reuters by 2 cents.

The direct impact of falling personal-computer sales, which roiled Intel last week, were evident in Microsoft’s results, as sales of its PC operating-system software dove 8 percent to $3.98 billion from $4.33 billion last year.

Blaming market uncertainty, Microsoft declined to issue a revenue or earnings forecast for the rest of its fiscal year.

“We are planning for economic uncertainty to continue through the remainder of the fiscal year, almost certainly leading to lower revenue and earnings for the second half relative to the previous year,” said Chris Liddell, the company’s chief financial officer.

Profit Decline at Nokia Comes With a Warning

The cellphone maker Nokia reduced its dividend on Thursday and warned that market volumes would shrink 10 percent this year, only a month after it forecast of a 5 percent decline.

Nokia also reported a worse-than-expected drop in fourth-quarter profit.

“It is interesting that they lower guidance for 2009 already from their assessment in December. It shows how fast things have worsened in the past month,” said Johan Strandberg at SEB Asset Management.

Analysts have forecast an 8 percent fall in the cellphone market in 2009.

Nokia also said in a statement that it would cut its dividend to 40 cents from 53 cents, the first reduction since 2001.

Nokia’s said its underlying fourth-quarter earnings per share were 0.26 euros, missing the average forecast of 0.30 euros in a Reuters poll, but within the wide range of estimates. The company looks to trim annual costs at its key handset unit by 700 million euros ($909 million).

“We are taking action to reduce overall costs and to preserve our strong capital structure. This is clearly our top priority in the current economic environment,” the chief executive Olli-Pekka Kallasvuo said in a statement.

Nokia’s figures confirmed that cellphone sales contracted last quarter for the first time in more than six years.

“In recent weeks, the macroeconomic environment has deteriorated rapidly, with even weaker consumer confidence, unprecedented currency volatility and credit tightness continuing to impact the mobile communications industry,” Mr. Kallasvuo said.

Clear Channel Parent Company Eliminates 1,850 Jobs

CC Media Holdings Inc., parent of Clear Channel Communications Inc. and Clear Channel Outdoor Holdings Inc., said it has eliminated about 1,850 full-time jobs, or 9 percent of its total work force, in an effort to cut costs.

The company said late Wednesday in a filing with the Securities and Exchange Commission that the move will lower fixed costs by about $350 million a year.

The job reductions and other actions taken as part of the restructuring program, including getting rid of overlapping functions, will lead to one-time charges of approximately $200 million. CC Media cautioned that it may have to take additional charges as the program develops.

About 40 percent of the charges and cost savings are expected at Clear Channel Outdoor.

The company's cost saving measures are expected to be in place by the end of the 2010 first quarter, according to the filing.

In addition, Clear Channel Outdoor Chief Executive Mark Mays and Chief Financial Officer Randall Mays have agreed to pay cuts that will bring their 2009 base salaries to $500,000 and a minimum base salary of $1 million in following years.

In November, San Antonio, Texas-based Clear Channel Outdoor reported that its third-quarter profit plunged 83 percent and said that the global economic slowdown had hurt advertising revenue across its business in recent months.

More Clear Channel Cuts Emerge

More layoffs from yesterday's Clear Channel cutbacks have been revealed:

Josefa Paganuzzi, Director of Communications for CC's New York cluster, has exited.

At Premiere Radio Networks, SVP of Public Relations Amir Forester, Programming Producer Dennis Falcone, Director of Affiliate Marketing Ed Powers and National Director of Affairs Relations Michael Capozzoli have all left the company.

Top 40 KKRZ (Z100)/Portland, OR PD Brian Bridgman has also left due to the budget cuts.

The Philadelphia Inquirer's Michael Klein reports that WIOQ (Q102)/Philadelphia will pick up the syndicated On-Air With Ryan Seacrest for 1-4p beginning next week, and that Sales Manager Tom Interrante has exited.

Also in Philadelphia, Jo Gamble exits as PD/MD of Urban AC WDAS-FM.

In St. Louis, Classic Hits KLOU PD John Matthews exits.

At KIOZ (Rock 105.3)/San Diego, morning co-host Zeithan Oats is out. Also at CC-San Diego, Creative Services Director for KHTS/KUSS Randy Cox exits, as does KHTS morning co-host Sean "Sonic" Leckie, KGB traffic reporter Nina Rheba and KBG jock Bobbie Hill.

AC KSNE (Sunny 106.5)/Las Vegas MD/afternoon host John Berry exits after 16 years.

Laurie Roberts exits as PD of Classic Rock KFUX/San Jose.

Jim Conlee exits mornings at KQXT/San Antonio.

WFLZ/Tampa Night Show Producer Juice is out at the Top 40 station.

Deeya McClurkin exits as PD of Triple A KPTL/Des Moines.

Rock WVVB/Birmingham PD Jimbo Wood is out.

Becky Pohotsky is out as PD at Modern Rock WURH/Hartford.

Clear Channel Corporate Streaming Manager for Online Music & Radio Missy Reno exits the company.

Sirius XM Plans Rate Increase As Stock Continues to Decrease
Daniel Kreps

With its shares of stock worth little more than a dime, Sirius XM will reportedly impose a rate increase on March 11th. The company will seek an extra $2 per additional subscription per user, plus charge $2.99 to stream Sirius XM online. The latter fee comes with an upside: all Internet subscriptions will stream with a 128k “premium” feed. According to customer support reps, current Sirius XM users can lock in at their current rates for the next three years if they re-up before March 11th.

Whether the price hikes have any effect on programming remains to be seen. While the increase isn’t exactly wallet-draining, it’s just another straw on the camel’s back for those Sirius XM who told Rolling Stone in November that they were upset with the company since their respective stations merged into one entity in November 2008. Many listeners’ favorite channels and genres were causalities of the station-merge, and customers complained of too much song repetition and DJ bantering.

Despite their huge, anti-trust-avoiding merger back in July 2008, Sirius XM has struggled to climb out of its cavernous debt. The current economic situation and a slow holiday season likely didn’t help Sirius XM’s problems, so the rate hikes are likely an attempt to help the company stay afloat. Fact is, radio itself is a bad business to be in right now, as even terrestrial radio suffered its worst year since 1954 in 2008. So if things are that bad when the radio is free, imagine how bad it is when you have to pay for it. Still, we’re hoping our ordeal with Artie Lange and “The Howard Stern Show” these past few days have at least helped sell a couple radios.

At First, Funny Videos. Now, a Reference Tool.
Miguel Helft

FACED with writing a school report on an Australian animal, Tyler Kennedy began where many students begin these days: by searching the Internet. But Tyler didn’t use Google or Yahoo. He searched for information about the platypus on YouTube.

“I found some videos that gave me pretty good information about how it mates, how it survives, what it eats,” Tyler said. Similarly, when Tyler gets stuck on one of his favorite games on the Wii, he searches YouTube for tips on how to move forward. And when he wants to explore the ins and outs of collecting Bakugan Battle Brawlers cards, which are linked to a Japanese anime television series, he goes to YouTube again.

While he favors YouTube for searches, he said he also turns to Google from time to time.

“When they don’t have really good results on YouTube, then I use Google,” said Tyler, who is 9 and lives in Alameda. Calif.

Tyler’s way of experiencing the Web — primarily through video — may not be mainstream, at least not yet. But his use of YouTube as his favorite search engine underscores a shift that is much broader than the quirky habits of children.

The explosion of all types of video content on YouTube and other sites is quickly transforming online video from a medium strictly for entertainment and news into one that is also a reference tool. As a result, video search, on YouTube and across other sites, is rapidly morphing into a new entry point into the Web, one that could rival mainstream search for many types of queries.

“There are an increasing number of people who are doing video searches to supplement and improve what they do in their offline lives,” said Suranga Chandratillake, the chief executive of Blinkx, a video search engine.

With inexpensive cameras flooding the market and a proliferation of Web sites hosting seemingly unlimited numbers of clips, it’s never been easier to create and upload video. You can now find an online video on virtually any topic. Web videos teach how to grout a tub, offer reviews of the latest touch-screen phones and give you a feel for walking across the Ponte Vecchio in Florence, Italy.

The consumption of video has followed a similar trajectory. In November, 146 million Americans watched videos online, streaming a total of 12.6 billion video clips, or nearly double the number they streamed just 20 months ago, according to comScore.

YouTube itself has grown even faster. Its share of videos streamed soared to 40 percent in November from 17 percent in March 2007.

And now YouTube, conceived as a video hosting and sharing site, has become a bona fide search tool. Searches on it in the United States recently edged out those on Yahoo, which had long been the No. 2 search engine, behind Google. (Google, incidentally, owns YouTube.) In November, Americans conducted nearly 2.8 billion searches on YouTube, about 200 million more than on Yahoo, according to comScore.

This startling statistic prompted Alex Iskold, the founder and chief executive of Adaptiveblue.com, a Web start-up, to ask in a blog post, “Is YouTube the next Google?” In other words, is YouTube effective as a mainstream search engine, and might it supplant or rival Google some day?

To test the idea, Mr. Iskold, whose inquiry was inspired partly by a conversation with Ian Kennedy, Tyler’s father, about his son’s search habits, performed a series of queries on YouTube and rated the results. Not surprisingly, some searches (vacuuming carpets, Donkey from Shrek) produced better results than others (George Washington, astrophysics).

As more video is added to the Web, the proportion of video searches that deliver satisfactory answers will grow, too. The question is, how far will video go as an alternative to text?

Mr. Iskold said that two factors would naturally limit video’s potential to supplant text on the Web. First, much content doesn’t lend itself well to video. And the Internet derives much of its utility from the web of links connecting its sites. But Mr. Iskold said that a shift toward video would continue, and that young Internet users, like Tyler, would only accelerate it. (In the comments section of Ms. Iskold’s blog post, two other parents said that their sons also used YouTube as their primary search tool.)

At YouTube, Hunter Walk, a director of product management, said the move toward video might not necessarily lead to a decline in the consumption of text or other media. Video, text and other formats, he said, will complement one another in interesting ways.

Mr. Walk said a good example is provided by an ad for Hillary Rodham Clinton during the Democratic presidential primaries — the one in which a voice asks “Who do you want answering the phone?” at the White House at 3 a.m. during a crisis. A search for “Hillary Clinton 3 a.m.” on Google would bring up news stories about the ad and the controversy surrounding it. On YouTube, the same search brought up the original commercial, as well a response by the Barack Obama campaign, pundits’ commentaries and an assortment of spoofs, giving users a much different understanding of how the story unfolded, Mr. Walk said.

“Video is part of the discovery process,” he said. “Depending on the user and the type of content, users may want to start with video or text.”

YouTube won’t break out searches by category, but Mr. Chandratillake said that on Blinkx, some of the fastest-growing searches were in reference categories like money, travel, health and food. More traditional categories, like entertainment, sports and user-generated content, remain more popular but are growing at a slower rate, suggesting a shift.

Tyler’s father, Mr. Kennedy, who is a product manager at Nokia, said he has watched Tyler and his friends going from the Wii to the computer and back to the Wii enough times to understand how much the use of online video is changing. “All of us who are a certain age think of video as a medium associated with television, and not as a reference,” Mr. Kennedy said. “It’s another method of search that we don’t fully appreciate.”

Dashboards That Promise to Do More Than Inform
Tim Moran

APPARENTLY it is not enough that large segments of the population seem to be hard-wired to their iPods. Judging by some displays at the Detroit auto show, the car, too, is becoming an extension of personal electronic devices, more like an Apple iPhone than a complex collection of mechanical bits.

This is not entirely a bad thing. Drivers accustomed to receiving vehicle information from familiar needle-and-dial gauges will soon benefit from the work automakers are doing to create information systems that are more flexible and take advantage of the latest developments in computer displays.

Instrument panels that can be customized to a driver’s whim are already available, but the next wave could include designs where the gauges are not fixed in place on the dashboard — and there are even proposals to equip cars with social networking technology like that of Facebook and MySpace.

Some of the electronic technology is in concept form only, but much of it — like Ford’s SmartGauge customizable dashboard display for the Fusion Hybrid — will be available when that car goes on sale in the spring. Created for Ford by a large supplier company, Johnson Controls, the colorful readout can be tailored to show simple information alongside a large round speedometer, or to deliver detailed readouts of power use and how efficient the driving mode is.

The 2010 Honda Insight hybrid offers an incentive system, rewarding drivers for good behavior. Its Eco Guide display builds a leafy plant, bit-by-bit, when it is driven efficiently.

Mercedes-Benz introduced the 2010 E-Class to the press in Detroit (though it was not put on public display) with a feature called Attention Assist, an in-your-face display that warns drowsy drivers it’s time for a break. Sensors measure more than 70 data streams, including the steering wheel angle, looking for actions that are characteristic of a driver dozing off. A visual warning flashes the image of a cup of coffee on the dashboard while also sounding an audible warning.

The multitalented displays arriving now are more than mere decoration, say the human-machine interface experts who engineer cars to work more effectively with people. Rather, they are the next stage in evolution for autos interacting with owners — and concept cars like the Chrysler 200C extended-range hybrid showed that future in compelling form.

A driver entering the 200C sees an oval swoop of dark curved glass instead of a conventional instrument panel. When the vehicle recognizes the driver — it uses a connection with a smart communicator like the iPhone — a glowing “on” switch appears. A touch of this starter button begins a greeting that can include anything from personal photos to a navigation screen.

Brad Gieske, a designer who works on interior electronics at Chrysler, said the concept is more about making the car connected than it is about any particular piece of hardware. He said that designers were frustrated both by the dull rectangular display screens in current autos and by the size and format limits of smart phones.

“We wanted to take the square out of the center console,” Mr. Gieske said. “We wanted to make it about technology, but at the same time we wanted to make it beautiful, to make it elegant.”

The dashboard controls use technology that recognizes gestures such as touching and dragging a fingertip across the panel; the display and the animations of a virtual trackball control are the work of Chrysler. The basic patent behind the touch-screen hardware comes from Nartron Corporation of Reed City, Mich., a maker of touch screens for automotive, military and consumer electronics uses, said Norman Rautiola, Nartron’s founder. Mr. Rautiola said he was certain that a system like this would rapidly find its way into new cars. It is likely to be far cheaper in the long run than mechanical buttons and switches, he said.

“Once you’ve designed that beautiful series of circuits behind the display, all of that interface is available for hundreds of functions,” Mr. Rautiola said.

In Texas, a Line in the Curriculum Revives Evolution Debate
James C. McKinley Jr.

AUSTIN, Tex. — The latest round in a long-running battle over how evolution should be taught in Texas schools began in earnest Wednesday as the State Board of Education heard impassioned testimony from scientists and social conservatives on revising the science curriculum.

The debate here has far-reaching consequences; Texas is one of the nation’s biggest buyers of textbooks, and publishers are reluctant to produce different versions of the same material.

Many biologists and teachers said they feared that the board would force textbook publishers to include what skeptics see as weaknesses in Darwin’s theory to sow doubt about science and support the Biblical version of creation.

“These weaknesses that they bring forward are decades old, and they have been refuted many, many times over,” Kevin Fisher, a past president of the Science Teachers Association of Texas, said after testifying. “It’s an attempt to bring false weaknesses into the classroom in an attempt to get students to reject evolution.”

In the past, the conservatives on the education board have lacked the votes to change textbooks. This year, both sides say, the final vote, in March, is likely to be close.

Even as federal courts have banned the teaching of creationism and intelligent design in biology courses, social conservatives have gained 7 of 15 seats on the Texas board in recent years, and they enjoy the strong support of Gov. Rick Perry, a Republican.

The chairman of the board, Dr. Don McLeroy, a dentist, pushed in 2003 for a more skeptical version of evolution to be presented in the state’s textbooks, but could not get a majority to vote with him. Dr. McLeroy has said he does not believe in Darwin’s theory and thinks that Earth’s appearance is a recent geologic event, thousands of years old, not 4.5 billion as scientists contend.

On the surface, the debate centers on a passage in the state’s curriculum that requires students to critique all scientific theories, exploring “the strengths and weaknesses” of each. Texas has stuck to that same standard for 20 years, having originally passed it to please religious conservatives. In practice, teachers rarely pay attention to it.

This year, however, a panel of teachers assigned to revise the curriculum proposed dropping those words, urging students instead to “analyze and evaluate scientific explanations using empirical evidence.”

Scientists and advocates for religious freedom say the battle over the curriculum is the tip of a spear. Social conservatives, the critics argue, have tried to use the “strengths and weaknesses” standard to justify exposing students to religious objections in the guise of scientific discourse.

“The phrase ‘strengths and weaknesses’ has been spread nationally as a slogan to bring creationism in through the back door,” said Eugenie C. Scott of the National Center for Science in Education, a California group that opposes watering down evolution in biology classes.

Already, legislators in six states — Alabama, Florida, Louisiana, Michigan, Missouri and South Carolina — have considered legislation requiring classrooms to be open to “views about the scientific strengths and weaknesses of Darwinian theory,” according to a petition from the Discovery Institute, the Seattle-based strategic center of the intelligent-design movement.

Stephen C. Meyer, an expert on the history of science and a director at the Discovery Institute, denied that the group advocated a Biblical version of creation. Rather, Mr. Meyer said, it is fighting for academic freedom and against what it sees as a fanatical loyalty to Darwin among biologists, akin to a secular religion.

Testifying before the board, he asserted, for instance, that evolution had trouble explaining the Cambrian Explosion, a period of rapid diversification that evidence suggests began about 550 million years ago and gave rise to most groups of complex organisms and animal forms.

Of the Texas curriculum standards, Mr. Meyer said, “This kind of language is really important for protecting teachers who want to address this subject with integrity in the sense of allowing students to hear about dissenting opinions.”

But several biologists who appeared in the hearing room said the objections raised by Mr. Meyer and some board members were baseless. The majority of evidence collected over the last 150 years supports Darwin, and few dissenting opinions have survived a review by scientists.

“Every single thing they are representing as a weakness is a misrepresentation of science,” said David M. Hillis, a professor of biology at the University of Texas. “These are science skeptics. These are people with religious and political agendas.”

Many of the dozens of people who crowded into the hearing room, however, seemed unimpressed with the body of scientific evidence supporting evolution.

“Textbooks today treat it as more than a theory, even though its evidence has been found to be stained with half-truths, deception and hoaxes,” said Paul Berry Lively, 42, a mechanical engineer from Houston who brought along his teenage son. “Darwinian evolution is not a proven fact.”

Other conservative parents told board members that their children had been intimidated and ridiculed by biology teachers when they questioned evolution. Some asserted that they knew biology teachers who were afraid to bring up theories about holes in Darwin’s theory.

Business leaders, meanwhile, said Texas would have trouble attracting highly educated workers and their families if the state’s science programs were seen as a laughingstock among biologists.

“The political games we are playing right now are going to burn us all,” said Eric Hennenhoefer, who owns Obsidian Software.

Don't Touch That Book!

Children's products must comply with new federal lead standards by Feb. 10
Marietta Homayonpour

The words calm and soothing are often associated with reading and with those who work with books.

Not this month.

Libraries, publishers and book sellers are scrambling to make sense of a law that takes effect Feb. 10 and covers products for children under age 12.

"This is entirely the law of unintended consequences," Nora O'Neill, owner of Rainy Day Paperback Exchange on Greenwood Avenue in Bethel, said about the federal Consumer Product Safety Improvement Act, known as CPSIA.

The law, with the support of almost everyone in the U.S. Congress, was passed in August 2008 after toys imported from China were found to exceeded acceptable levels of lead.

Under the new law, children's products with more than 600 parts per million total lead cannot be sold legally in the U.S. after Feb. 10, even if they were made before that date. That includes books.

"We have two choices," Emily Sheketoff, executive director of the American Library Association's Washington, D.C., office said. "Ban children under 12 years of age from libraries or take all the children's books off the shelves."

Either is a "terrible" option, Sheketoff said. Libraries, she said, "are in the business of promoting early education and the love of reading."

The U.S. Consumer Product Safety Commission, Sheketoff said, has never before regulated books. "Books are not a hazard for children," she said.

When the law was passed last year, Sheketoff said publishers got independent testing done of book components, such as paper and ink, and found that current and future lead standards under the new law were met. In August of this year, the lead standard goes down to 300 parts per million and by 2011 they go down to 100 parts per million.

But not only are new books required to meet the standards. Sheketoff said the U.S. Consumer Product Safety Commission ruled that the law is "retroactive for all books."

"We think this is completely unreasonable," Sheketoff said.

So does O'Neill, the Rainy Day Paperback Exchange owner in Bethel.

"It's insane," O'Neill said about the way the law is being applied. "They (CPSC) are looking everywhere, except where they should," she said, contending that better enforcement is still needed of products that come from China.

Like Sheketoff, O'Neill said that books are safe. "Books are not deadly."

O'Neill has owned Rainy Day for six years and purchases and sells adult and children's books. "This will have a devastating effect on small business," O'Neill said of the law. "Large business may be able to absorb testing costs, and pass them on to consumers, but small businesses won't be able to."

Earlier this month O'Neill and other second-hand item sellers did get a reprieve of sorts by the CPSC. "It's a confusing memo, very confusing," O'Neill said of the latest ruling.

O'Neill was referring to a clarification issued on Jan. 8 by the CPSC as "guidance intended for resellers of children's products, thrift and consignment stores."

The notice says that "resellers" are not required to test children's products in their inventory for "compliance with the lead limit" in the new law before they are sold. There's a caveat, however.

According to the CPSC "... resellers cannot sell children's products that exceed the lead limit ..." and could face civil and/or criminal penalties if they do. O'Neill reads the ruling as saying she might not have to test but she's still liable for making sure her books follow the law.

Meanwhile, on the library level, Sheketoff, of the American Library Association, is waiting to hear from the CPSC with the hope that schools and libraries will not come under the new law. "We're anxiously trying to find out."

The ALA has sent out information to libraries across the country telling them "to hold off doing anything" -- like taking their children's books off the shelves -- until a clarification comes from the CPSC.

"The ALA is on top of it and says the situation is extremely fluid," Maryellen Dejong, community relations coordinator for the Danbury Public Library, said about clarification of the new law. "We're watching, just as all the libraries are."

Enough is Enough. Higher Education...? Wake Up

It has been gratifying to see the number of businesses and personal computers moving to Open Source software and the Linux Operating System. In our organization alone, the numbers, while small on a grand scale, are quite significant from where we stand. We've installed hundreds of Linux systems in the past two years and the retention rate of those systems are what we get excited about.


I have received a spate of emails in the past 60 days, complaining about various universities and corporations that are disallowing most anything but Windows to access their systems. A good focal point for this can be found on a recent article here. Further evidence of public ignorance about Open Source Software was uncovered in the "Karen" donnybrook. In the most recent article reflecting the same subject, Carla Schroeder nailed it dead between the eyes.

I'm not writing this to bemoan the facts...I am going to write this in hope that we can get the attention of some people that can change this trend. We can only hope.

Many of you are not deserving of a tirade...you are simply conducting business the way business has been conducted since computer networking became a part of your operations. Hopefully we can work together. Some of you however are digging in your heels and refusing to smell 21st century air.

You are the people that I want to talk to.

First off, let's dispel a couple of things. I have sat in meetings with principals and school administrators and listened slack-jawed as system administrators (mostly MSCE's) told their employers that it was illegal to remove Windows from their current computers. They didn't say it violated their contracts or licenses...they said it was illegal.

That's either so uninformed that it begs the question "Why are you doing this job?" or it undeniably stands as a bold-faced lie.

Look. You are not only barring thousands of students and customers from your systems, you are forcing them to use an operating system that is inherently weak. In addition, you cry about your operating costs then when the tears dry, you write the check to Microsoft for the latest licenses.

We're dealing with "Higher Eduction" here, right?

Not so far as I can tell.

I have recently seen the depths of ignorance when it comes to Open Source Software and on a personal level I can understand it, but you get no such pass. Do you realize that by demanding that your students or customers use Windows, you are subjecting them to this? I want you to justify that to me. As the people making decisions as to how and by whom your systems can be accessed, I want you to justify it. I must subject myself to attacks like this for the privilege of accessing your site?

It's just one of a never-ending line of viruses and spyware tools that your system administrators have to battle. I know you are "invested" in Microsoft products...I realize that. I also know that your system administrators are deathly afraid of losing their jobs because they don't know the first thing about Linux. Many of them anyway...there are a number of them that are running Linux Servers behind your back because it makes their jobs easier...and that's a good thing. But for the ones that hold Microsoft to their breast and swear their undying loyalty?

Learn or leave....you are holding the world back from what is inevitable. Open Source will have a place in our technology...on a large scale.

Open Office documents send and receive .doc and exel spread sheets just fine. As in the story noted above, the uh...young lady lamented that she couldn't use anything but Microsoft Office because the formats on her Ubuntu computer were incompatible...?

Absolute nonsense. I am suspecting one of her professors told her just that. I have specific reasons to believe it.

I would expect a first year college student to be this ignorant, but as administrators of entire universities and server systems, I would expect a bit more breadth of knowledge.

Silly me.

I don't usually do edits once an article is posted but in this case it is important enough to make an exception. One astute and knowledgeable reader left us a link to an extremely successful migration of an entire school. No one is asking you to go to this extreme but it is posted just so you know that no one is asking you donate a kidney here...just some common courtesy in letting a popular alternative system gain access to what they need. You can see the success story here.

I had a conversation with an English Professor at the University of Texas today. He stated that his insistence his students purchase the "student discounted" copy of Microsoft Office to be more out of his laziness than for his real need for that particular program. Turns out that he just doesn't want to change his syllabus to inform his students they have a choice.

News flash Prof. Some folks just don't have a spare 150.00 laying around to sustain the Redmond Giant. You won't be able to tell a Linux-based .doc from a Windows-based one.

Now, we won't get specific here....for obvious reasons. Your "secure" system can be owned by about 17 people I know right off the top of my head...you just haven't merited their attention. Let's hope you stay below their radar. Your argument that Linux is only secure because it is obscure is also urban legend rubbish.

Take a look at this...

Now, we're going to be following up on this. Seems a certain University in Indiana is forcing some of it's students to purchase Microsoft Office or they are not being allowed to enroll. That's the report we are getting.

We'll be having a discussion with them this week. Hopefully we will report back that this was just a silly misunderstanding.

One of the questions we will be asking is this? Why do you capitulate to using or buying additional software so that the software you've already purchased will work as designed? Oh you don't do that?

Got anti-virus?

We'll also be asking a major medical center in New York why they insist that a growing number of Linux users cannot access their logins. We know why...it's a piece of proprietary software that they demand be used prior to login. Windows-based proprietary software.

We'll be talking to them as well and we'll publish the names of the organizations and the people we talk with. we'll also publish the conversation verbatim if possible.

Enough is enough.

This isn't an argument or discussion on which operating system is best. It's a statement that thousands and thousands of people are making the conscious decision to take control of their computers. I notice with a bit of humor that some of you boast of supporting Mac machines? That's nice. Some numbers indicate that Linux has surpassed Mac in user numbers a while back. Different entities will dispute this statistic and with good reason.

Linux is free so there are no real sales numbers to go by and internet polling is all over the place. Some show it as number two, others as a distant third. While that may be the case, there is sufficient evidence to show that Linux is growing in popularity by the day, and I mean substantial growth. One focused advertising effort by Linux and those numbers will change without any dispute.

Even Microsoft, in it's annual report to the SEC, sited Linux and Open Source software as the number one threat to their profit margin. I didn't see any mention of Mac in there at all. So you will support the number 3 system but number two gets the cold shoulder? We are talking millions of users in the US alone.

That leaves us with a couple of questions.

Who appointed your entity as the gatekeepers of our technology? You may not perceive yourself as such, but actions are leading some to think you are just that... the gatekeepers barring us from your sites. Linux users are growing in huge numbers and those numbers get bigger daily. I am hearing from Linux users about you at a disturbing rate.

Look, no one is asking you to embrace this thing fully, just tweak a couple of things to allow Linux users equal access to your portals and sites. Heck, pay my travel and one night's lodging, buy me a meal and I will come do it myself. I'm serious, I will be happy to do it and I am fully qualified to do so.

Why are you denying computer users simply because they choose to use a more secure operating system? In a short period of time, I will not be the only one asking you this question.

We'll be speaking shortly.

All-righty then...

Exclusive: Belkin’s Development Rep is Hiring People to Write Fake Positive Amazon Reviews
Arlen Parsa

(Update: Welcome to Slashdot, Digg, Engadget, Gizmodo readers! The latest is, I’ve heard from Belkin’s public relations department and I am expecting a formal comment to come out from them relatively soon, so stick around as this thing develops.)

I know I usually don’t write about consumer advocacy stuff, but I came across this just recently and it’s pretty beyond the pale and I couldn’t let it go without blogging about it. Here’s the scoop.

Amazon.com runs a side business called Mechanical Turk. It’s a site where people can go, register, and get paid to do little tasks that computers can’t do (like help image filtering software identify graphic search results for example). Users can do any one of thousands of tasks provided by requesters, who pay them a small amount of money in return (usually anywhere between one cent and a couple dollars per task).

I was checking out this website the other day and I made a few bucks by hand-transcribing a few videos. But then I came across this:

That’s a request from somebody named Mike Bayard to review a product and “give [it] a 100% rating (as high as possible).” It doesn’t matter if the reviewer doesn’t own the product or has never tried it– the requester has helpfully written, “Write as if you own the product and are using it.” It even goes a step further, asking the Mechanical Turk user to “Mark any other negative reviews as “not helpful” once you post yours.”

Users are paid 65 cents for every positive review they leave. There are dozens of these requests from this Mike Bayard guy on Mechanical Turk.

Sounds like somebody reallllllllly wants this item to get high ratings. So what is the product? The link is to an Amazon.com listing for a Belkin router which has consistently gotten bad reviews in the past from users who say that the product is “loaded with Bugs, goes on & off whenever it feels like, and comes at a hefty price.”

So, who is this Mike Baynard guy, and why is he willing to pay people to rate up these apparently poor quality Belkin routers? I’ll give you just one guess:

Yep, that’s right, according to his LinkedIn profile, Bayard is the Business Development Representative at Belkin International in charge of “Sales of Belkin products to major .com accounts such as Amazon.com.” In other words, this guy is paying people to post fake good reviews of his own products which, according to most people who actually use them, suck (and ironically, he’s using Amazon’s own service to screw up their own review system).

They shouldn’t get away with this. Bayard has also been paying people to post fake reviews on Buy.com and Newegg. Faking reviews is not only against Amazon.com’s Terms of Service, it’s also highly unethical and misleading. Amazon should reset its ratings for this product, and Belkin should discipline or fire this Mr Bayard, ASAP. This is one of the more scummy, totally awful advertising schemes I’ve seen. Tell Amazon and Belkin to read this blog entry and act accordingly.

Update: Sorry if my website was acting sluggish for you earlier. After getting some attention from the tech gurus at Gizmodo and Slashdot, my poor little virtual dedicated server just about collapsed so I had to request a power cycle which led to a couple of minutes of complete non-responsiveness. But things should now be back to normal. Good thing it worked too– I hear a certain newspaper columnist with a lot of clout in the tech world just might be mentioning this in a blog post, which could get Belkin or Amazon to respond. Stay tuned…

Update 2: Several other high profile tech blogs have picked up this story (see the comments section for a bunch of big name trackbacks). I just checked out Mr Bayard’s Mechanical Turk requests and, surprise surprise, as of 5:12PM EST they’ve all disappeared. This might be because A) people have already fulfilled all his requests and thus they have vanished, or B) because he heard about our reporting and got scared. Which is it? I honestly have no idea. We’ll see if any more information comes my way…

Hack: How to Play DVD Movies on Your Nintendo Wii
Mike Keller

This past holiday season, Big N's little white console dominated the competition once again. Largely due to its family-friendly appeal and relatively low price, Nintendo Wii sales haven't lost momentum since its 2006 release. However, for hardcore gamers, the Wii has always left a bit to be desired. Last generation graphics, few adult games, weak online community, and lack of DVD movie playback are just a few of the things that have led me and many other twenty-somethings to oft-favor a certain other console. However, with my recent discovery of the Homebrew Channel, I can mark one up for the Wii. I know it's old news for some, but for those of you who always wished that glowing blue drive could play your games as well as your movies, it's now easier than ever. Here's how to it, no warranty voiding mod-chip required.

First of, the things you need are:

--A Wii with system version 3.2.
--A FAT/FAT32 formatted SD card (no bigger than 2GB, as the Wii can't read SDHC cards).
--An SD card reader/writer (or a USB device that can act as one, such as a digital camera or digital photo frame).
--"Zelda: Twilight Princess" for Wii (random, I know, but you should really own this anyway).
--The "Twilight Hack" (a modified Zelda save game that runs the Homebrew Channel Installer).
--The Homebrew Channel Installer.
--"DVDX," a Homebrew app needed for the Wii to read DVDs from the drive.
--"MPlayer," a Wii port of a media player that plays commercial DVDs.

There are essentially two main tasks here: installing the Homebrew Channel, and installing the DVD player. I'll start with the HBC.

1) Insert your SD card into your reader and copy the "private" directory of the Twilight Hack onto it. Also copy the Homebrew Channel "boot.dol" file.

2) Insert the SD card into your Wii and delete your Zelda save file in the Wii File Manager (start a new game if you don't already have one). If you care about your saved game, you can first copy it to your SD card and copy it back after you've installed HBC.

3) Before inserting Zelda into your Wii, flip it over and take note of the text on the inner ring. It will either read "RVL-RZDE-0A-0" or "RVL-RZDE-0A-2" -- both versions will work, but you need to make sure you apply the correct hack (RVL-RZDE-0A-0 requires TwilightHack0, RVL-RZDE-0A-2 requires TwilightHack2, both included in the package).

4) Switch to SD view in your Wii File Manager and copy over your correct version of the hack.

5) Insert your Zelda game disc and start the game. You should see the Twilight Hack save game. Select it to start the game. Once you can control Link, walk backwards (weird, I know) until the Homebrew Channel installer starts. After a minute or two, the HBC will be installed and can be accessed just like any other Channel on your Wii.

Once you have the Homebrew Channel up and running, you can now install a slew of great third party apps such as emulators, homebrew games, media players... even Linux! For now, here's how to get DVD playback on your Wii with MPlayer.

1) Pop your SD back into your card reader. You can erase the "boot.dol" file and the "private" directory if you'd like (we no longer need the Twilight Hack or Homebrew Channel installer as it updates automatically and can be removed just like any other Wii Channel).

2) Create a directory on your SD card and name it "apps" (no quotes). Copy the "dvdx" and "mplayer" directories into the "apps" folder.

3) Eject your SD card and insert it back into your Wii. Turn your console on and start the Homebrew Channel.

4) Now you should see the two apps you just copied onto your SD card. Run the DVDX installer app. When that starts up, select "Normal Installation" and wait for it to finish.

5) Go back to the Homebrew Channel, insert a DVD movie of your choosing into your Wii and start the MPlayer app. To play the movie, select "DVD-Video" from the MPlayer menu, and then "Play DVD" (or "Play Title #1"). After a few moments your movie will load and you'll be enjoying a feature that should have worked out of the box to begin with!

*I should mention that while this method does work, the MPlayer software is currently pretty buggy. DVD menus are pretty hit or miss and not every movie I tried even plays. Hopefully they update the MPlayer software at some point, but I suspect it was more a proof of concept. There's always a certain amount of risk with installing unofficial, third party software, but hey, that's part of the fun. In any case, the Homebrew Channel is a really cool piece of work and will definitely breathe new life into your neglected little Wii.

The Myka BitTorrent Box Looks Like a Scam

Myka, a new BitTorrent enabled set-top box was about to enter the market last year, and received widespread coverage online. The project soon went silent, but this weekend they have made the news again with another promise to ship soon. Don’t fall for it though, it has scam written all over it.

Initially, the pre-ordered Myka boxes were scheduled to be shipped in the Summer of 2008, but months have passed, and nothing happened. When we reported on the ‘product’ last year, we noted that we hadn’t seen one “in the flesh” and now, almost a year after the product was announced, all the people who ordered a box are still waiting for it to be shipped.

In addition, the company ran banner campaigns on several websites that were never paid for - TorrentFreak included. Myka’s Dan Lovy contacted us last year to ask if we were interested in promoting Myka through a banner campaign. After several emails back and forth we agreed on a good rate, and put the banner up in the sidebar. The campaign ran for over a month, but we had no choice but to remove it when Dan went silent.

We never received any money for the banner campaign, and we were not the only site Myka scammed into advertising their ‘product’ for free. From then on all emails remained unanswered, until May 2008 when Dan emailed us to say that they had received a round of funding, and that he would pay up soon. That was the last time we heard from him.

Around the same time, a discussion on DigitalSpy got quite heated when someone seemed keen to promote the device and was confronted by users who were concerned at the lack of a real company name, amateur website, no real-world address and no contact details other than an email address. Indeed, even the Myka.tv domain details are protected. Not exactly confidence inspiring.

Then the whole project seemed to die. Customers who had ordered the device never heard from the company again, and the website was never updated. Only a month ago NewTeeVee reported that they were still promising to ship the pre-orders in the Summer of 2008, while through neglect the Myka forums were taken over by spammers.

Six months later after being informed of the mess on their forums, someone claiming to be Dan Lovy posted on CrunchGear yesterday, saying “I’m Dan Lovy, chief cook and bottle washer at Myka. Just spent a lovely evening cleaning out the forum. YES, the factory is springing to life.”

But what inspired this reappearance by Mr Lovy? In an unforeseen turn of events, Myka has announced it is ready to ship their set-top box in the coming weeks. The news was picked up by Engadget and the previously-mentioned Crunchgear, with Dan Lovy himself encouraging people to order a box, saying “Have you ordered your MYKA today?”

No thanks. When building a business and embracing partners and customers alike, you have to build trust. Our advice; don’t buy on their promises, they break them. Time and again.

Engadget's Netflix HD Streaming Shootout
Nilay Patel

Netflix seems to be doing things right when it comes to the streaming game, partnering with several hardware companies in an attempt to make its service more or less ubiquitous -- a pretty sharp break from the proprietary hardware approach taken by most of its competitors. That means Netflix subscribers have quite a few choices when it comes to streaming, and we thought we'd put the ones available now head-to-head and try to crown a winner. The good news? There isn't a medicore choice out there. The bad? Well, read on.

Roku Netflix Player

Roku's Netflix Player is the granddaddy of this group, originally launched back in May of 2008. It's been updated with some interface tweaks and HD support since then (and it'll soon work with Amazon), but overall, it's the still the same Netflix streaming experience it's been from the start, sleek and minimal. Dedicated hardware means setup is fast, the interface is snappy, and streams buffer in quickly -- our only complaint is that the video hardware in the unit is slightly but noticeably inferior to all the other boxes we looked at. It's not bad, mind you -- it's just not as great as on the Samsung or the TiVo. Of course, you can only ask so much from a $100 box, and you might not even notice the drop in picture quality on a lesser TV, but if not having the absolute best bothers you, you'll want to step up. Otherwise the Roku is perfect for parents, bedrooms, dens and so on -- it's cheap, it's wireless, and it's ridiculously easy to use.


Netflix on TiVo is a somewhat new thing -- it just launched in December 2008, and it was just the second device to handle HD streaming. We said it was our favorite Netflix implementation when we first tried it out, and that's still true -- although it doesn't look quite as good as the Samsung in our opinion, it's close, and it's the most consistently reliable at getting HD content to stream in HD. If you're like us and a TiVo is your primary living room device, this is by far the most convenient way to get your Netflix streams -- and TiVo's riff on the Netflix playback controls make it accessible for anyone in your family that's comfortable with the remote, which is a big win in terms of usability. Of course, getting a TiVo requires a fair bit of CableCARD drama, so if you're happy with your exisiting set-top we'd say you should look elsewhere, but if you've already got a TiVo or have decided to get one, you're doing just fine. We just wish TiVo or Netflix would tweak the interface to show us what content is in HD -- it's incredibly frustrating that it's not displayed.

Xbox 360

Ah, the Xbox. It's easy to think of the 360 as Netflix's secret weapon: it's got a huge installed base that's probably already subscribed or interested in subscribing to the service, it's plugged into a vibrant network that enables interesting planned features like Xbox Live party video sharing, and -- most importantly -- it's free. It's actually a pretty great proposition: if you've got Xbox Live Gold, you've got a Netflix box, no questions asked. So it's too bad the Netflix experience on the Xbox doesn't always live up to its potential. Although the interface is by far the flashiest and prettiest, video quality can be extremely dark, the fan runs constantly, and using the controller for playback controls doesn't necessarily feel intuitive for non-techies. To cap it all off, the 360 appears to be somewhat more particular about streaming in HD: although several Engadget editors have consistent success, during this test we never managed to pull down an HD stream, even when plugged into directly into the exact same 10Mbps cable connection as the other boxes. We're not sure if it just hates certain connections or something else is wrong, but it seems like the 360 is just more finicky than the other boxes. Our verdict: if you've got an Xbox, try it out and see how you feel. If you're happy -- like lots of people are -- that's great. If not, chances are a $100 upgrade to the Roku will bring a world of difference.

Samsung BD-P2500

The Samsung and the LG represent a whole new front in the streaming war -- it's one thing for Netflix to put out dedicated boxes and sneak onto game consoles, but it's an entirely different proposition for mainstream Blu-ray players to support the service. This is where Netflix really thinks it's going to make a play for the hearts and minds of the consumer, and while the experience on the Sammy isn't perfect, we can see why there's so much enthusiasm -- streaming video on BD-P2500 looks amazing. It runs a very slightly tweaked version of the Roku's interface, but the HQV video hardware in the box is so obviously superior even things like the cover images in the menus look better. Of course, the real reason the 2500 needs all that horsepower is for Blu-ray playback, and that's where the tradeoff comes in -- we've always found Blu-ray players to be slow, and the Samsung is no exception. While it's definitely faster than other BD units we've used, it's still rather, uh, thoughtful, and it takes the longest to buffer up a stream. (Don't even ask us how long it took to pull down a firmware update when we first turned it on.) If you're only interested in Netflix, you'll have to decide whether the dramatic bump in image quality over the Roku is worth the $250 premium and longer load times -- we'd say the BD-P2500's $350 pricetag is only worth it if you're serious about Blu-ray as well.

LG BD300

The LG is substantially similar to the Samsung -- they're both Blu-ray players that feature slightly tweaked versions of the "standard" Netflix interface found on the Roku player. Although we've heard mixed reviews of the LG's Blu-ray quality, the unit's video hardware produced solid video quality when streaming HD, and the interface was snappy and responsive. However, the BD300 had the hardest time connecting to the network of any of the units we tested -- we eventually had to manually configure it with a static IP so we could enter a DNS server address, since DHCP wasn't working with our router. From what we can tell, this is a common problem with the BD300, but once we got it working the overall Netflix experience was more or less indistinguishable from the Samsung. Seeing as the two decks are priced almost identically at retail, we'd say the Sammy is the obvious winner between these two at the moment, but if you're willing to play network tech, the LG will certainly do the job.


Before we crown a winner, it's important to note that Netflix streaming involves a pretty major tradeoff -- a huge part of the movie experience is sound, and Netflix doesn't offer any surround audio at all. You're stuck with stereo no matter what, and while we know Netflix is working it, stereo audio just doesn't cut it compared to the 7.1 and 5.1 surround we've become accustomed to. If you can deal with that (and the limited selection of content), you'll find that picture quality in HD at its best can rival that of broadcast television HD -- it's certainly not Blu-ray and there are occasional compression artifacts, but it's eminently watchable. Things in SD aren't bad either: at best it's DVD quality, still watchable at worst. Think about it this way: you're going to want to do The Dark Knight and Iron Man on Blu-ray with seven speakers and a sub at full tilt, but if you're just looking to spend a lazy Sunday watching movies under a blanket, you'll be pretty happy with Netflix.

So, who's the winner? Well, straight up we'd give it to the Samsung for picture quality alone, but really, it depends on your needs, since there isn't a bad choice in the group. If you're the sort of person with a stacked A/V rack, you'll probably find that you've got one or two Netflix-capable devices like the TiVo or Xbox 360 already -- ubiquity is the company's ultimate goal. If you're starting from scratch, we'd recommend the Samsung or LG so you can maximize your Netflix membership -- you need something to play those DVDs and Blu-ray discs you get in the mail, after all. If you've already got your physical playback situation sorted and you just want to dip a toe in the water, the Roku's a fine choice -- sure, it doesn't deliver as perfect a picture as some of the other options, but for $100 it's hard to beat.

There is one other thing:

That popped up after we'd been swapping boxes in and out for a while, but since the only device plugged in right at that second was the Samsung, we just had to wait until the servers figured it out before we could watch movies again. We don't have any problem with copy restrictions on subscription video (especially since Netflix is such a tremendous value) but at the end of the day, DRM is DRM, and wonky things are going to happen. We doubt Netflix's DRM servers deal with people constantly starting and stopping movies on four different units for the better part an afternoon very often, but there's no avoiding the fact that if something goes awry, you don't really have a lot of options to make it better. It's a just a small issue with a service we think is fantastic overall, but if you're wearing a cape while reading this on a FreeBSD box, it's something you might want to think about.

The rest of us will be happily watching Netflix's collection of 80s movies.

New TV Technology Too Pricey For Most
David Colker

The latest in television technology was on display this month at the annual Consumer Electronics Show in Las Vegas, with super-thin screens, 3-D imagery, wireless connections and ultra-sharp picture quality.

Too bad most of us can't afford it.

All this state-of-the-art TV technology — much of it not yet available — is extremely expensive, a serious consideration for many buyers in these recessionary times.

But it's fun to dream. Besides, prices for new consumer electronics almost always plunge when (and if) they become popular.

Four years ago, a 46-inch LCD TV — then considered exotic — retailed for about $10,000. Now you can pick one up for about $1,000.

By the time this year's new products get down to an earthly level, perhaps the economy will be bouncing back.

Here's a sampling of the new TV technologies on exhibit:

3-D display: There has been lots of talk about 3-D for TV. But it was Panasonic that stole the thunder with the first presentation outside Japan of its proprietary system, meant for movie theaters as well as TV.

And how did it look?

Fantastic. The several clips shown from movies and live-action events, including sequences from the opening ceremonies of the Olympic Games in Beijing, had extraordinary depth and brightness.

Of course, they were shown under ideal conditions, in a darkened room on a 103-inch plasma screen. The basic hurdle of home 3-D remains: the glasses that transform the blurry images on the screen to 3-D. Every time you head to the kitchen for a snack, turn to a friend to chat or do any other activity apart from watching the program, you would have to take off the glasses to see the real world.

Also, there could be a physical drawback. After a showing that lasted about 10 minutes, some viewers reported eyestrain and a tinge of nausea.

Battling the blur: Even if Santa just brought you an LCD television with a 120Hz refresh rate — which eliminates much of the blur in fast-action sequences on standard 60Hz LCD televisions — it's already passé.

Sony, which introduced a 240Hz set in the fall, debuted nine new models at CES with that refresh rate. No pricing was given for the new sets, due out this spring, but the current 52-inch Sony model with 240Hz lists for more than $4,000.

Even that refresh rate was put to shame by LG Display, which demonstrated a 480Hz monitor. It looked extremely sharp on an action sequence from the movie "Transformers," but it was difficult to tell without a side-by-side comparison just how much better it was than a 240Hz or even 120Hz display.

Wireless: Flat-panel HDTVs look great mounted on the wall, but the hookup wires and power cord pose problems. They have to be hidden in the wall (which requires the help of an installer unless you're especially handy) or left to hang loose.

At CES, a few manufacturers said they would be making wireless systems robust enough to handle high-definition signals. Panasonic said wireless technology would be worked into its Z1 line due out this year. Marketing executive Bob Perry didn't get into specifics of how far the signal would carry from a control unit to a screen, but said it would be a "same room" technology.

No pricing for Z1 sets was disclosed.

Thin is in: Although the trend is against ultra-thinness in people, in TVs the race continues to produce skinnier models, partly because a thinner profile often goes hand-in-hand with energy savings.

Several companies, including LG Electronics and Samsung, announced new lines of LED back-lit LCD sets, which are not only thinner and require less power, they also don't use mercury, which can be harmful if it ends up in landfills.

One of the most impressive demonstrations of thinness was a Panasonic plasma prototype less than one-third of an inch thick. The company said that model wouldn't be ready for the marketplace until at least 2010.

Satellite TV on the road: Satellite TV in cars has been pretty much a disaster so far, with the picture and sound freezing every time so much as a light pole blocks the signal. To duplicate the effect at home, hit the pause button randomly on your TiVo about 20 times a minute.

A new system by AT&T CruiseCast, although not perfect, is a huge improvement. During a ride in a test vehicle at CES, CruiseCast managed to play live cable channels almost seamlessly while riding through Las Vegas neighborhoods.

The system uses a buffer regimen to keep a channel playing even when momentarily blocked. "As long as we can get a signal 1 1/2 minutes out of every three, it will keep going," said Winston Guillory, president of RaySat Broadcasting, which has partnered with AT&T on the system.

But then the van headed down the Strip, with its tall buildings. Several times along the way, the image from MSNBC froze, especially when the van was stuck in traffic.

The system, due to hit the market in March, will cost about $1,300 for the equipment (not including the TV monitors) and then $28 a month for the TV service.

TV on your shirt: Sure, you can watch videos on some cellphones, but the picture is minuscule.

Now comes a solution. Samsung and Texas Instruments debuted the first cellphone with a tiny video projector inside. It can shine whatever is on the screen onto a wall, the back of a notebook or even a friend's shirt.

It can show photos, slides, movies and live TV if your phone is set up for that.

The projector, which uses the same Texas Instruments technology as big-screen DLP TVs, produces a perfectly watchable image. The first phone to use it, by Samsung, will be available only in Korea this month. Here in the U.S., we'll have to wait for our chance to watch "SpongeBob SquarePants" on an actual pair of pants.

New, Improved DRM!

Latest Details On Windows Vista Service Pack 2

Just one day after our confidential source revealed the rough dates for the release of Service Pack 2 for Windows Vista, we have details of what's really part of the new Service Pack 2 and how it will be released. Let's take a look!

What Is Service Pack 2?

Service Pack 2 is a single service pack which will update both Windows Vista and Windows Server 2008 products. In addition to previously released updates, it will include support for new types of hardware and several emerging standards.

What's New In Windows Vista SP2?

• Adds Windows Search 4.0 for faster and improved relevancy in searches.
• Contains the Bluetooth 2.1 Feature Pack supporting the most recent specification for Bluetooth Technology.
• Ability to record data on to Blu-Ray™ media natively in Windows Vista.
• Adds Windows Connect Now (WCN) to simplify Wi-Fi Configuration.
• Enables the exFAT file system to support Coordinated Universal Time (UTC) timestamps, which allows correct file synchronization across time zones.
• New! Adds support for new 64-bit CPUs from VIA Technologies.
• New! Improves performance for Wi-Fi connection after resuming from sleep mode.
• New! Adds new capabilities to DirectX, and increasing reliability. The graphics experience will be greatly improved for gamers.
• New! Improves audio and video performance for streaming high-definition content.
• New! Improves Windows Media Center (WMC) in content protection for TV.


Advocates Disagree on Broadband Stimulus

The U.S. government should provide money for broadband deployment in an upcoming stimulus package, several groups said Friday, but the broadband advocates couldn't agree on how the money should be spent.

A couple of speakers at a broadband stimulus forum Friday called for the government to give grants to broadband providers to roll out service to unserved or underserved areas. Another speaker called for tax credits, saying a grant program would take months to set up.

Another speaker suggested that none of the broadband money in the US$825 billion stimulus package being pushed by President-elect Barack Obama should go to large incumbent telecom and cable companies that now provide a huge majority of the broadband connections in the U.S.

"I'm fundamentally opposed to taxpayer dollars going to absentee-owned networks, unless there's no hope of a local, community-based network emerging," said Wally Bowen, executive director of the Mountain Area Information Network, a nonprofit broadband provider in western North Carolina. "Local networks are going to create local jobs; they're not going to outsource their tech support to India."

Bowen and other advocates of government broadband spending spoke at a New America Foundation event the day after the U.S. House of Representatives Appropriations Committee recommended $6 billion in broadband deployment spending as part of the larger economic stimulus package. The House version of the stimulus package bill would include $2.8 billion for the Rural Utilities Service (RUS) of the U.S. Department of Agriculture to give out as grants and loans to broadband providers.

In addition, the House bill would give another $2.8 billion to the U.S. National Telecommunications and Information Administration (NTIA) for broadband deployment grants, with $1 billion of that money going to wireless broadband projects. An additional $350 million would go toward a national program to map areas that don't have broadband.

About 25 percent of the NTIA broadband grants would go to areas without broadband, and 75 percent to areas with limited broadband options, according to the bill. The money going to unserved areas would focus on providing basic broadband service of more than 5Mbps of downstream speed for wired broadband or basic wireless broadband.

In order to quality for the 75 percent of the money going to underserved areas, a wired broadband provider would have to deploy service offering 45Mbps downstream speed, and a wireless broadband provider would have to provide 3Mbps of downstream speed.

Both the NTIA and RUS money would require providers to abide by net neutrality rules, which would prohibit them from blocking or slowing any type of legal Web content.

But the speed and net neutrality rules could limit the number of broadband providers that apply for the grants and loans, said Rob Atkinson, president of the Information Technology and Innovation Foundation (ITIF), a Washington, D.C., think tank. Broadband providers such as AT&T and Qwest aren't currently set up to deliver 45Mbps, he said at the New America Foundation event.

"The more public-interest requirements you put on these networks, the less investment you will get," Atkinson added. "I would not be surprised, by the end of 2009, we could see very little investment that will come out of the stimulus bill as currently structured."

Atkinson also called for tax credits to be part of the package, in addition to grants. Grant programs could take months to set up, while tax credits could kick in immediately, he said. ITIF's broadband proposal would not disqualify large broadband providers from getting stimulus money.

But other panelists said tax credits are difficult to track, and it would be difficult for government auditors to guarantee that tax breaks go directly to broadband deployment in new areas. In addition, speed requirements will be necessary to ensure that the U.S. doesn't have to pay for a new broadband deployment in a few years, said Benjamin Lennett, a senior program associate at the Wireless Future Program at the New America Foundation.

Rural areas, which will use broadband for things such as telemedicine and distance learning, may need higher speeds than many urban and suburban users, he added.

"Do we want to give rural areas ... inferior networks? Do we want to give them second-best networks?" Lennett said. "You're going to need fast speeds and lots of capacity. There's no way we can give a band-aid here and a band-aid there to get them to 5 or 1 megabit. That's just not going to cut it, two, three, five, 10 years down the road."

But Derek Turner, research director at media reform group Free Press, said the net neutrality requirements are even more important than speed requirements. "We don't want to be giving federal dollars to fund networks that are closed and discriminatory," he said.

No large broadband providers were represented at the forum, and some panelists didn't hold back criticism. Like Bowen, Mark Cooper, research director of the Consumer Federation of America, called for community-based broadband projects, instead of money going to the large broadband providers. Broadband stimulus money should go toward wireless broadband projects based in the communities they serve, he said.

"The cozy duopoly of telecos and cable companies has failed to deliver," he said.

Technology to Block Phones in Cars Isn't Foolproof

Many parents would love to be able to give their teenagers a cell phone that couldn't be used while driving. Now some inventors say they have come up with ways to make that possible, but they appear to be relying on wishful thinking.

One product to hit the market, $10-a-month software by Dallas-based WQN Inc., can disable a cell phone while its owner is driving. It uses GPS technology, which can tell how fast a person is traveling. But it can't know whether the person is driving -- and therefore it can needlessly lock a phone. WQN, which sells cell phone and Internet security software under the name WebSafety, says it signed up about 50 customers for its first month of service.

Aegis Mobility, a Canadian software company, plans to release a similar Global Positioning System-based product this fall, known as DriveAssistT. Aegis is in talks with big U.S. wireless phone carriers, which would have to support the software and charge families a fee of probably $10 to $20 a month, said David Teater, the company's vice president.

The DriveAssistT system will disable a phone at driving speeds and send a message to callers or texters saying the person they are trying to reach is too busy driving. But because that person could be a non-driving passenger, the approach is a blunt tool.
Other product concepts that don't involve GPS systems have their own flaws. As a result, Parry Aftab, who advises families on technology and safety, suggests worried parents find another way to stop their kids from calling or texting while driving. Parents are better off taking away a child's cell phone if it is used improperly, she said.

''More and more, we see any solution is, in large part, education and awareness, parents getting involved,'' said Aftab, executive director of WiredSafety.org. Driving and cell phone use can be a bad combination, ''but so is putting on makeup and eating a three-course meal,'' Aftab said. ''I wish technology providers would look hard at the problems before coming up with a knee-jerk solution.''

Concerns are mounting that driving while gabbing or text-messaging on a cell phone, even if it is not handheld, is unacceptably dangerous. The National Safety Council said this month that there should be a total ban on cell phone use while driving, citing the higher risk of accidents and deaths.

At least 18 states restrict cell phone use -- talking or texting -- for some or all drivers, according to the insurance industry-funded Insurance Institute for Highway Safety. Yet even in those states, motorists and especially young drivers are hardly deterred.

One of the worst accidents occurred last year in New York, when five teens were killed when their 17-year-old driver, carrying on a text conversation, collided with a tractor-trailer rig.

B. Michael Adler, chief executive of WQN, said his 18-year-old son came to mind as he was developing the company's software to disable a cell phone while driving.

''He's texting messages with two hands and driving with his legs,'' Adler said. ''You flip him the keys to the family car, you might as well be flipping him a six-pack of beer.''

WQN's surveillance service promises more than just disabling the phone in cars. It can monitor a person's whereabouts, notifying parents by text messaging when their children step out of designated zones or return home. It also can turn off a cell phone at school, preventing cheating by text messaging during classroom tests, based on a reading of the school's location.

The question parents would have to ask themselves is whether they'd want to prohibit their children's activities this way. That kid you're trying to control might not be driving, but rather sitting on a train or a city bus or in the passenger seat of a buddy's car.

Michael Hensley has thought about this very dilemma. The 52-year-old manager for a defense contractor worries that his 23-year-old daughter is a ''thumb Olympian'' inclined to send text messages while driving.

But he doesn't expect technology to provide an answer. Savvy kids ''will always find a way to defeat'' a technological product, Hensley said. ''It's human nature to defeat the system.'' Instead, Hensley said, he's tried to educate his daughter about the dangers of mixing phones with driving.

The inventors of the GPS-based software systems acknowledge their systems aren't perfect for disabling cell phones and are hard at work on improvements. Meanwhile, a separate, hardware-based solution appears to have its own flaws.

A pair of inventors affiliated with the University of Utah have developed a prototype of a key fob device that communicates with a cell phone over Bluetooth wireless signals. The key fob wraps around an ignition key; when the key is flipped or slid open, the device disables the cell phone paired with it.

This turns out to be easy to beat. A kid could remove or run down the key fob's batteries, or duplicate the key -- without the fob. So in response to questions from The Associated Press and critics on the Internet, the Utah inventors, Wally Curry and Xuesong Zhou, have dropped their original concept for something different.

Zhou considered transforming the key fob into a device that prevents nothing. Instead, it would let a driver hit a ''quit'' button and talk or text at will, but with a consequence: parents get notified by text messaging, and a monthly ''driving score'' could go to an insurer, which might jack up the teenager's premiums for bad driving.

Even that, Zhou acknowledged, wouldn't solve the tampering problem. So in his latest brainstorming he produced an elaborate scheme: Parents should estimate how many hours a child drives each month and report that to a Web site. If the key fob system reported the teenager appears to be driving substantially less than the prescribed time, it might indicate he's defeating the system, and the Web site could send a report to the parent.

For now, though, the key fob is going back to the drawing board.

Digital Storage Options for Workers on the Go
Anne Eisenberg

STEVE ASH, who writes software for banks, used to ferry his digital files from the office to grad school to home on a U.S.B. stick. But it wasn’t a method he liked.

“Everything was on it,” he said of the device. “God forbid it would get lost, stolen or dropped in the mud.”

So Mr. Ash, who is 25 and lives in Memphis, checked out new services, including Syncplicity and Dropbox, that automatically synchronize his digital files and folders across multiple computers. That way, if he leaves work in the middle of drafting a report on his desktop, the draft will be waiting for him on his bedroom computer when he gets home — with no memory stick necessary.

Syncplicity, Dropbox and similar data management services work by piping up data from a customer’s computers to the “cloud storage” of Internet servers, saving the information there and then downloading it to the user’s other computers.

The services are intended to work automatically, in the background. “Every time you have an active Internet connection, Syncplicity will sync and back up all of your computers,” said Leonard Chung, the chief executive of the company, which is based in San Francisco. The program even synchronizes files if users are, for instance, preparing a report at Google Docs, the Web-based word processor. “It will capture that report and put it onto your machines as a Word document,” he said.

Syncplicity and Dropbox also provide file-sharing among groups. When one person using Syncplicity makes changes in a joint proposal or a spreadsheet and hits “save,” the file is quickly backed up and then downloaded to colleagues’ computers with the saved changes, Mr. Chung said.

To ensure data security, Syncplicity uses the same kind of encryption employed by the military and banks, said Justin Huskamp, manager of business development. “Everything that is sitting in our database is encrypted,” he said.

At Dropbox, all data is encrypted using the same practices that banks use. “Security is the most important concern on our users’ minds and ours as well,” said Drew Houston, co-founder and chief executive of the company, also based in San Francisco.

Jonathan B. Spira, chief analyst at Basex, a business research firm in New York City, said that while the combination of synching, file-sharing and backup in the new programs might not be useful for big companies that already have elaborate information management systems, it would be helpful for those on tighter budgets — freelancers and workers at small companies, for example.

“They need tools that will ensure that files are not lost and that everyone is using the same version” across many computers, he said.

“The great benefit from a system like Syncplicity is that it pretty much works in the background,” he said. Workers, he said, “don’t have to engage in any heavy lifting” to use the programs.

Service is free for up to two gigabytes of storage at both Syncplicity and Dropbox. Both companies charge $9.99 a month or $99 a year for up to 50 gigabytes.

Syncplicity is designed for Windows users. A version for Macs will be released shortly, Mr. Chung said.

Dropbox, which is now in beta, or test, version, works with Macs and Linux-based systems as well as with PCs.

Mr. Ash chose Syncplicity to manage his data. “Having it online and knowing it’s there is worth paying for,” he said.

Jeff Rudluff of Dallas, a general partner in onlineperformancemarketing.com, an advertising firm, uses Syncplicity to unite the laptop and desktop computers of the nine employees in the business, each of whom works from home. “We don’t have a central server, but now we can share folders anyway,” he said. “When I make a change to a proposal, it’s automatically entered, so then, when anyone on the team goes to it, they have the latest document.”

In the past, he said, the company used a backup program to save data, but the procedure didn’t work. “You had to remember” to do the backup, he said. “But people didn’t.”

The company has had three computer crashes recently, but because of Syncplicity, no files have been lost, he said. “Everything was in cloud storage,” he said, “and could be quickly downloaded onto replacement computers.”

Mr. Rudluff especially likes having multiple versions of documents like spreadsheets available to him. “The really cool thing is that the program saves earlier versions of your document,” he said, instead of overwriting the original files as people changed the text. “If we make a fundamental mistake, we can go back to what we had before,” he said. Both Dropbox and Syncplicity offer this feature.

Mr. Houston of Dropbox said the service made it easy for people with ordinary, nontechie backgrounds to synchronize their files. “Just install the program and enter your e-mail and password,” he said. Files are also easily shared, he said. “You click on the folder, click ‘share,’ and type in the e-mail addresses of collaborators.” Then that folder appears on everyone else’s computers. “Anyone can make changes,” he said, and the changes appear instantly on everyone’s computers, too.

“We’ve found that companies are living out of these shared folders,” Mr. Houston said. “They are using them as an alternative to lots of e-mails and attachments.”

Single Drive Wipe Protects Data, Research Finds

A computer forensics specialist has a message for security-minded computer users: A single wipe will make drives impossible to read.

In research published on Thursday, auditor Craig Wright tested the ability of a special type of electron microscope, known as a magnetic force microscope, to read data that has been erased. While overwriting the data multiple times with a random series of 0s and 1s makes it harder to recover, Wright found that it is nearly impossible to recover any meaningful amount of data after a only single pass. Recovering a single byte of data, for example, on a used drive is successful less than one percent of the time, he found. Accurately recovering four bytes, or 32 bits, of data only works nine times out of each million tries.

(Editor's note: SecurityFocus is currently investigating the veracity of the research paper mentioned in this article. Peter Gutmann of the University of Auckland, an expert on secure deletion, has criticized the work in the epilogue to his paper on secure deletion.)

"Although there is a good chance of recovery for any individual bit from a drive, the chances of recovery of any amount of data from a drive using an electron microscope are negligible," Wright stated. "The fallacy that data can be forensically recovered using an electron microscope or related means needs to be put to rest."

Many software products designed to wipe hard drive allow for multiple passes to erase the data. Common wisdom holds that the more sensitive the data, the more times you should overwrite the drive. However, Wright's research suggests that a single pass is all that's necessary to protect the data on a hard drive.

Wright did find that multiple passes do make it harder to recover data and that data written to a pristine drive is much easier to recover. Yet, in the most common case, where the drive has been used and written to multiple times, a user can be assured of their privacy by a single pass.

"In many instances, using a MFM (magnetic force microscope) to determine the prior value written to the hard drive was less successful than a simple coin toss."

Complaints Flood Seagate Over Hard Drive Problems

Seagate offers free firmware upgrade
Lucas Mearian

Seagate Technologies' online support forum has been riddled this week with complaints from owners of the high-capacity Barracuda 7200.11 hard drive, which in recent months had already drawn some complaints that the drive has been freezing up during data transfers or failing all together.

The Barracuda 7200.11 is the eleventh generation of Seagate's flagship drive for desktop PCs and comes in capacities ranging from 160GB to 1.5TB. Complaints have not been limited to Seagate's online support site. They have also rained in on other forums. The complaints involve drives running Linux, Mac OS X and Windows Vista.

The company said in a statement Friday that indeed a problem has caused some drives to fail and it said it isolated the issue to a firmware bug affecting not only the 7200.11 but several other models manufactured through December 2008. Those include the DiamondMax 22, the Barracuda ES.2 SATA and the SV35.

Seagate is offering a firmware upgrade that it says will fix the issue.

"In some circumstances, the data on the hard drives may become inaccessible to the user when the host system is powered on," the statement said. "If you have one of the affected products ... we recommend that you update the firmware on the disk drive."

According to users, the drives tend to freeze for about 30 seconds during I/O transfers of streaming video or when reading or writing files at low speeds. One law firm, Kabatek, Brown and Kellner LLP, even states on its Website that it is considering a class-action lawsuit against Seagate because of the number of complaints about the Barracuda 7100.11.

Seagate said users should visit its support Web site to determine if their model drive is affected by the bug.

Seagate also offers support by telephone: 1-800-SEAGATE (1 800 732-4283).

Seagate did not offer a link to the firmware upgrade, saying only that "customers can expedite assistance by sending an e-mail to Seagate. The e-mail should include the disk drive model number, serial number and current firmware revision.

"We will respond, promptly, to your e-mail request with appropriate instructions. There is no data loss associated with this issue, and the data still resides on the drive. But if you are unable to access your data due to this issue, Seagate will provide free data recovery services," the company said. "Seagate will work with you to expedite a remedy to minimize any disruption to you or your business."

Seagate released the four-platter drive, Barracuda, it's largest drive ever, in July. Seagate attributes the drive's extraordinary density to perpendicular magnetic recording technology, which stands bits upright instead of laying them flat on the surface of a platter, thereby taking up less space per bit.

Computerworld had no issues with the drive when it reviewed the hardware in October, but some reader comments indicated at the time there were issues with drives failing.

Seagate Firmware Update Bricks 500GB Barracudas
Voidsinger writes

The latest firmware updates to correct Seagate woes have created a new debacle. It seems from Seagate forums that there has yet to be a successful update of the 3500320AS models from SD15 to the new SD1A firmware. Add to that the updater updates the firmware of all drives of the same type at once, and you get a meltdown of RAID arrays, and people's backups if they were on the same type of drive. Drives are still flashable though, and Seagate has pulled the update for validation. While it would have been nice of them to validate the firmware beforehand, there is still a little hope that not everyone will lose all of their data.

Sounding the Wrong Note?
Andy Sully

Music in the workplace may make the day pass quicker but it's a benefit that can come with a hefty price tag, as some small business owners are starting to find out.

Lyn Ball was preparing for her next customer at Mane Connections, the hair salon she runs in a market town in the South West of England, when a man, looking not unlike a sales rep, popped into her shop.

But far from trying to sell her anything the visitor introduced himself as being from the Performing Rights Society (PRS) and promptly issued her with a demand for a £200 music licence.

What had Ms Ball done to warrant this notice? Turn on her radio.
Len Attwood, a car mechanic, had a similar visit recently, despite having no radio of his own at his Essex workshop. But he and his two staff had been used to tuning into music stations using radios in customers' cars.

It was a way of "cheering up the workplace" says Mr Attwood, from his premises in Witham.

But in the eyes of the PRS a workplace that ticks along to the backdrop of musical accompaniment is better than one that is suffused with silence - and that's worth paying for.

More than half a million businesses across the UK are estimated to be playing music illegally, it is estimated.

Some, Ms Ball, are simply unaware they have to pay for something that is almost incidental.

"I think it's a con," she says. "The radio is hardly audible - it's there to provide a bit of background noise. It's there for staff. How does it differ from someone listening to your car radio if you give them a lift?"

Radio in bedroom

"And why should a small business - which already has to pay for lots of red tape - have to pay royalties on something the radio station has already paid for?

There's nothing new about the need to pay royalties in this way. The PRS has been licensing music for use since it was formed in 1914.

But some believe it has recently stepped up its efforts to recoup cash, and in some cases is taking matters too far.

Steve Scaife, who runs a nine-room guest house in Plymouth, says he has been pursued despite the fact that the only radio on the premises is in his bedroom.

"Because the people who ran the business before us had a PRS licence we've been constantly pursued to buy one. It's been going on for years now - letters and visits threatening court action."

Mr Scaife's woes have been taken up by local MP Alison Seabeck, who raised the matter in Parliament at the end of last year.

"Everyone accepts that people who produce music should benefit from their efforts," Ms Seabeck tells the BBC.

"But the evidence is that the PRS have had a blitz of businesses who previously hadn't been approached to pay. People feel intimidated and there seem to be anomalies in the way licensing operates. I'd like to see that addressed."

But despite the fact that the Federation of Small Businesses also believes there has been a crackdown, the Performing Rights Society itself says it is largely business as usual.

£44 upwards

Any rise in demands is simply down to the fact it's easier to gather data on companies, it says.

But is this not just heavy handed enforcement to boost the balances of wealthy pop stars?

Keith Gilbert, of the PRS, says not.

"A surprising number of songwriters work on the making of today's successful pop songs and 90% of our 60,000 members earn less than £5,000 a year from royalties," says Mr Gilbert.

"[James Bond theme writer] David Arnold says if it wasn't for the support he got from the PRS early in his career, he'd still be sweeping floors in Luton Airport. The royalties we collect allow creative people to keep being creative."

The PRS use data collected by a specialist monitoring service to decide how to divide up the money collected from its business licences - which vary from £44 to many thousands for large retail chains - is distributed.

Yet the body recognises it faces a problem with public recognition of its name and work. In an effort to be more up front, it is about to rebrand as PRS for Music and launch an awareness programme.

'Like a morgue'

In Parliament, David Lammy, the minister for intellectual property, said he thought the PRS could improve its complaints procedure. He has since spoken to the organisation on a new code of practice it is introducing.

Mr Gilbert denies that people are intimidated. He says all calls made by staff, based at PRS headquarters in London or from a call centre the organisation uses, are monitored and operatives are rewarded for being accurate and straightforward in their dealings with the public, rather than for the amount of money they collect.

"I'd urge anyone who has a problem or question about the licence system, to contact our customer service department and I want to emphasise that we haven't got the power to fine people or send bailiffs around. When there is a dispute, we try to settle it reasonably and amicably."

Ultimately though, every business which plays music to enhance the environment for staff or customers needs to pay.

"A factory owner who refused to pay for a £96 licence called me to complain that his workshop was 'like a morgue' now," Mr Gilbert says. "And that is our point. Music makes a big difference to the workplace. Its creators should get their just rewards."

Vietnamese Authorities Rein In the Country's Vigorous Blogosphere
Tim Johnston

Vietnam's government has issued several decrees in recent months to curtail blogging, as the number of Internet users soars in the communist country.

The campaign started in August, when the government published an edict giving police broad authority to move against online critics, including those who oppose "the State of the Socialist Republic of Vietnam" and undermine national security and social order.

The law also bans "obscenity and debauchery . . . and destroying national fine customs and traditions," according to the official gazette published -- online -- by the Ministry of Information and Communications.

Vietnam was a relative latecomer to the online age, but extraordinary economic growth in the past few years has triggered a similarly dramatic rise in Internet users. Estimates indicate that about 24 million people in the country of 88 million regularly use the Web. Internet cafes abound for those unable to afford a computer, and small shops sell pirated software to those who can.

In an environment in which information is heavily controlled by the state media, bloggers were quick to spot the possibilities that the online world offered. News about the country, much of it from foreign media outlets, and political commentary that is frequently critical of the government have become prime commodities. As a result, discussions about the country's political future, with or without the Communist Party, have flourished.

"It is an oddly intellectualized environment," Kim Ninh, the head of the Asia Foundation's office in Hanoi, said of the blogosphere. "There is a lot of mudslinging, but underneath that there is an intellectual tradition that dates back to the French colonial period in the '20s, '30s and '40s that continues to flow. They take the subject of political debate very seriously.

"People are looking to blogs for news they can't get in the mainstream media," she said.

The government's moves against blogging have provoked a sharp response from free-speech advocates. "Vietnam is one of the few countries where people can be locked up on charges of 'abusing democratic freedoms,' " Brad Adams, the Asia director at Human Rights Watch, said in a statement Thursday. "Vietnam's donors should continue to insist that the government stop its criminalization of peaceful expression."

After a period of relative freedom, when online and print journalists were testing the bounds of what they could publish, the authorities have recently started to crack down.

Late last year, the courts imposed a two-year sentence on a newspaper journalist after he ran a series of articles exposing corruption, and a prominent blogger known as Dieu Cay, whose real name is Nguyen Van Hai, was sentenced to two years in jail for tax evasion in a case widely seen as a punishment for his blogging.

Peter Leech, an Australian who set up a popular news aggregation site, Intellasia.net, in Vietnam, started having problems with the authorities in June 2007. He said that police frequently raided the Intellasia offices, that the U.S.-based server that hosted the site was attacked and that he was eventually forced to flee the country.

"They are getting much tougher on everything -- newspapers, the Internet, everything," Leech said from Perth, Australia.

The vast majority of Vietnamese bloggers use platforms created by Internet giants Yahoo and Google, and the government said it would enlist the help of those companies in policing the Internet.

"Service providers are willing to cooperate with Vietnamese agencies," Do Quy Doan, the deputy minister for information, said at a news conference late last month. "I think service providers also wish to have a clean Internet environment. I think if state agencies of Vietnam ask for cooperation, Google or Yahoo will be willing, too."

The most popular platform for Vietnamese bloggers is Yahoo 360. Yahoo said this week it had not been approached by the Vietnamese government regarding any controls.

"As a general policy, Yahoo companies, like other companies around the world, are required to comply with lawful demands from governments when the company is subject to that country's laws," the company said in a statement, pointing out that its Yahoo 360 platform is run in Singapore.

It remains to be seen how successfully the government could control the Internet. As China has demonstrated, technology exists to block unwelcome content, at least from the casual user. But unlike users in China, whose government censored the Internet from the beginning, Vietnamese users have enjoyed years of unfettered access, which they have come to regard as a right.

"If they did do something draconian," Leech said of government officials, "it would not only be a big step back, it would make the people very angry."

Bill Gives People The Right To Know
Anna Malpas

The State Duma on Wednesday is to consider in a third and final reading a bill spelling out citizens' right to gain access to government documents and outlining punishments for officials who do not comply.

The bill, comparable to freedom of information laws in other countries, would require officials to disclose, upon request, any information controlled by the government -- such as court rulings, budget expenditures and government permits -- that has not been deemed a state secret.

The authors of the bill and transparency campaigners said the law could be a powerful tool for citizens in dealing with the country's notoriously reticent bureaucracy and its firm grip on information that, by law, should be in the public domain.

"We consider this to be a very positive law that will reduce corruption at all levels and will increase people's trust in the authorities," Valery Komissarov, head of the Duma's Information Policy Committee and one of the bill's authors, told The Moscow Times in an interview Tuesday.

The law, which would require federal, regional and municipal officials to respond to citizens' requests for information within 30 days, would reduce corruption by empowering people to ask questions about how budgetary funds are spent, said Komissarov, a deputy with United Russia. Bureaucrats will have more difficulties trying to "pull the wool over people's eyes," he said.

While various existing laws oblige officials to disclose information about the government's activities to their employers -- taxpayers -- the bill attempts to spell out in a single law citizens' right to know, as well as punishments for bureaucrats who refuse to cooperate.

Under the proposed legislation, a citizen can request information from authorities via the Internet and should receive a reply within 30 days.

Officials are obliged to provide information that has not been classified as a state secret, although if the -information has been published earlier they can merely provide the applicant with a date and place of publication.

Officials who do not comply can be fined or even handed prison sentences of up to five years if the withholding of information causes serious bodily harm, Komissarov said. He cited the example of the Chernobyl disaster in 1986, when Soviet authorities waited several days to release the news of the explosion at the nuclear power plant, exposing people to radiation.

Ivan Pavlov, a St. Petersburg lawyer and freedom of information campaigner, called the bill "very promising."

"It has a few shortcomings, but these are nothing compared with the positive social effect it will have," Pavlov, who heads a nongovernmental organization called The Institute for Information Freedom Development, said in a telephone interview.

The law could help fight "legal nihilism" in the country, Pavlov said, employing a phrase used by President Dmitry Medvedev to describe rampant corruption in Russia.

Information on budget spending, construction projects and the results of government inspections remain largely inaccessible to the public, Pavlov said.

The problem with current legislation is the implementation, Pavlov said. Judges, for example, will often reject citizens' inquiries if they are seeking information that does not directly concern them.

"If I ask for financial information about budget spending, the court will say, 'It doesn't affect you directly, you don't have the right to this information,'" he said.

Pavlov cited the construction of the Gazprom Tower in St. Petersburg as an example of improper state secrecy.

The giant business center, incorporating a skyscraper almost 400 meters high, has sparked controversy in the city, whose center is a UNESCO World Heritage site.

In 2007, St. Petersburg resident Yelena Doilnitsina wrote a letter to St. Petersburg Governor Valentina Matviyenko and another senior city official asking to see all the permits and documents that allowed the construction to go ahead.

Doilnitsina's request was rejected on the grounds that the project did not directly concern her. A court subsequently upheld the officials' refusal to disclose the documents.

The proposed legislation would make judges more likely to grant access to information by lumping all the regulations together in one document, Pavlov said. "When there is just one combined law, it will be much better, much more understandable," he said.

The bill was first mentioned in a 2005 address by then-President Vladimir Putin to lawmakers and senior government officials. But it has taken a long time to hammer out because it went through a "great number of consultations" and had to receive approval from federal ministries, Komissarov said.

The Economic Development Ministry has been working on the law since 2002, but the bill faced "huge opposition" in the Duma, Pavlov said.

Nonetheless, the bill was passed in a first reading in January 2007 and in a crucial second reading last month. Should it be passed at Wednesday's Duma session, it will be sent to the Federation Council for consideration. If approved there, it will go to President Dmitry Medvedev to be signed into law. The law would come into force in January 2010.

Several Duma deputies criticized the bill in its earlier readings because it specifies that citizens should file information requests via the Internet, Pavlov said.

The law would require places such as libraries and schools to provide Internet access for citizens, Komissarov said.

Pavlov called this requirement a minor hurdle, since almost all Russian schools now have Internet access. The Internet is "a very effective way to see what governments are doing 24 hours a day," he said.

The law falls short of requiring state institutions to publish information on their web sites. Instead, a clause says they "can" publish information. "I think this is the main mistake in this draft of the law," Pavlov said. "But it's not critical."

Publisher Rethinks the Daily: It’s Free and Printed and Has Blogs All Over
Claire Cain Miller

Amid the din of naysayers who insist that newspapers are on the verge of death, a new company wants to start dozens of new ones — with a twist.

The Printed Blog, a Chicago start-up, plans to reprint blog posts on regular paper, surrounded by local ads, and distribute the publications free in big cities.

The first issues of this Internet-era penny-saver will appear in Chicago and San Francisco on Tuesday. They will start as weeklies, but Joshua Karp, the founder and publisher, hopes eventually to publish free neighborhood editions of The Printed Blog twice a day in many cities around the country.

“We are trying to be the first daily newspaper comprised entirely of blogs and other user-generated content,” he said. “There were so many techniques that I’ve seen working online that maybe I could apply to the print industry.”

As pay newspapers lose readers to the Internet, where they can read the same articles without charge, many free papers have held their own.

“The free newspaper business model is still very workable,” said David Cohen, a founder of Silicon Valley Community Newspapers, a group of free weeklies south of San Francisco that was sold to Knight Ridder in 2005 and is now owned by MediaNews. “There’s a huge readership that wants the local news, and local businesses tend to increase their advertising in bad times because they have to capture people’s attention.”

Still, Mr. Karp does not have to look far to see the difficulties of being successful in the newspaper business these days. The Tribune Company, which publishes The Chicago Tribune and its free daily, RedEye, filed for bankruptcy protection in December.

Mr. Karp is betting he can make his business work by combining the best of the print and Web models.

The Printed Blog will publish blog posts alongside other Weblike content, like user-submitted photographs and readers’ comments. The paper will be printed on three or four 11-by-17-inch sheets of white paper and laid out like a blog instead of in columns.

Users will eventually be able to log on to its site, theprintedblog.com, to choose which blogs they want in their edition, and editors will decide which posts make the paper. A city the size of Chicago could have 50 separate editions tailored to individual neighborhoods.

The Printed Blog also expects to duck many of the major costs that make traditional newspapers expensive to produce. The company will put commercial printers in the homes of its distributors, avoiding the circulation costs of papers with large, central printing presses. Advertisers will eventually be able to buy ads on the Web site, so The Printed Blog will not need to employ many sales people.

By publishing articles written by bloggers who are already diligently covering topics as varied as town politics and local fashion, Mr. Karp can slash one of the biggest expenses of a newspaper: reporters. So far, 300 bloggers have given The Printed Blog permission to publish their work for a share of the ad revenue, including small-audience bloggers in Chicago and nationally known blogs like Daily Kos.

The arrangement is mutually beneficial, said Lauren Dimet Waters, editor in chief of Second City Style, a Chicago blog that has agreed to be reprinted. “If they can make money off of our blog, I can’t imagine we wouldn’t, too, because of the exposure,” she said. “If it gets us exposure to 20 new people, then I’ll be happy.”

Mr. Karp will still need to pay for paper, ink and contractors to print and distribute the papers. Those costs add up, which is one reason the Internet spawned bloggers in the first place.

Advertising remains print’s one great advantage over Web publications: advertisers will pay much more for print ads than for online ones. Mr. Karp aims to sell 200 ads an issue. The Printed Blog will charge $5 to $10 for classifieds and $15 to $25 for business ads that reach 1,000 readers.

Mr. Karp, who previously founded a software company called Freerain Systems and sold it to ESM Solutions in 2007, has invested $15,000 in The Printed Blog. He receives free office space from the Illinois Technology Association, and his 10 staff members are volunteers who work on their personal laptops. He plans to raise venture capital to pay employee salaries and eventually expand.

Mr. Karp expects that each issue, to be distributed twice a day to 1,000 people, will eventually have enough ads to earn a profit of $750 to $1,500 a week. (In comparison, Mr. Cohen said that a typical weekly edition of one of the free Silicon Valley papers that reached about 20,000 people would cost about $10,000 to produce, with an operating profit margin of 11 percent to 15 percent.)

Advertisers will like The Printed Blog, Mr. Karp said, because it is hyper-local. “A clothing boutique or snow removal service can advertise to the 2,000 people who are most likely to buy the service, as opposed to many, many more,” he said.

About 15 advertisers have signed on for the first issue, including Flowerpetal.com, a florist in Chicago. “The great thing about it is you can change your pitch based on different neighborhoods,” said Brian Crummy, Flowerpetal.com’s founder.

Ads from local businesses are one reason that free dailies have been a rare bright spot in the newspaper industry. Unlike struggling car companies and department stores, which are mainstay advertisers of metropolitan dailies, small businesses have increased their ad spending during the recession, several publishers said.

“All growth in the newspaper industry for the last 20 years has been in free papers, and the fastest-growing segment of that for the last five years has been in free dailies,” said H. Harrison Cochran, publisher of The Aurora Sentinel in Colorado and past president of Suburban Newspapers of America.

Still, the economic crisis has not spared free papers. In November, free dailies in Kitsap County, Wash.; Eureka, Calif.; and Norfolk, Va., closed. In December, the three-year-old Bluffton Today in Bluffton, S.C., started charging for the paper because of falling advertising and rising costs of ink and newsprint. Its circulation has since shrunk to 6,500, from 15,000, Tim Anderson, the paper’s publisher, said.

Mr. Cohen, who was recently laid off by MediaNews, said The Printed Blog’s potential challenges would be magnified by its plan to publish dozens of niche papers. “It just sounds daunting,” he said. “To me, that’s why the Internet was invented.”

EC Considering Removing Internet Explorer from Windows

In a preliminary ruling, the European Commission told Microsoft that linking Internet Explorer to its dominant Windows operating system violates EC rules.

The EC's ruling was triggered by a complaint from IE rival Opera. Microsoft could seek to offer a Windows version without IE, as it did in the EC's 2004 ruling on Windows Media Player.

The EC said that tie shields Microsoft from head-to-head competition with rival Web browsers.

The EU released a statement Friday stating, "Microsoft's tying of Internet Explorer to the Windows operating system harms competition between web browsers, undermines product innovation and ultimately reduces consumer choice."

The commission noted last week that Internet Explorer is available on 90 percent of the world's PCs. Citing the evidence it has gathered to date, the EC said tying Internet Explorer with Windows "distorts competition on the merits between competing Web browsers insofar as it provides Internet Explorer with an artificial distribution advantage which other Web browsers are unable to match."

Google Wants to Know Which Sites to Search
Steven Musil

Google is experimenting with a search feature that allows users to tailor their searches by creating a list of sites they would like to appear most in search results.

Preferred Sites will suggest frequently visited sites based on search history when it's relevant, but users can also add and delete sites, according to the new feature's help page:

The preferred sites feature lets you set your Google Web Search preferences so that your search results match your unique tastes and needs. Fill in the sites you rely on the most, and results from your preferred sites will show up more often when they're relevant to your search query.
Google said that Preferred Sites could also have an impact on everyone's searches:

If the feature goes live to everyone, people will be able to pick a list of authoritative sites and influence all search results.
Preferred Sites is an extension of Google SearchWiki, which lets people elevate, delete, add, and annotate search results. It is activated only while the user is logged in to their Google account, and users' preferred sites and search results are private.

Watch out Wikipedia, Here Comes Britannica 2.0
Stephen Hutcheon

In a move to take on Wikipedia, the Encyclopedia Britannica is inviting the hoi polloi to edit, enhance and contribute to its online version.

New features enabling the inclusion of this user-generated content will be rolled out on the encyclopedia's website over the next 24 hours, Britannica's president, Jorge Cauz, said in an interview today.

He also used the opportunity to take a swipe at Britannica's upstart nemesis and Google for helping to promote Wikipedia via its search rankings.

"If I were to be the CEO of Google or the founders of Google I would be very [displeased] that the best search engine in the world continues to provide as a first link, Wikipedia," he said."Is this the best they can do? Is this the best that [their] algorithm can do?"

Mr Cauz, who is visiting Australia, said the changes were the first in a series of enhancements to the britannica.com website designed to encourage more community input to the 241-year-old institution and, in doing so, to take on Wikipedia in the all important search engine rankings.

"What we are trying to do is shifting ... to a much more proactive role for the user and reader where the reader is not only going to learn from reading the article but by modifying the article and - importantly - by maybe creating his own content or her own content," he said.

Mr Cauz said that any changes or additions made to Britannica entries online would have to be vetted by one of the company's staff or freelance editors before the changes were reflected on the live site.

He said the encyclopedia had set a benchmark of a 20-minute turnaround to update the site with user-submitted edits to existing articles, which are written by the encyclopedia's paid expert contributors.

Many of those changes will eventually appear in the printed version of the encyclopedia, which is published every two years.

In addition to the community editing features, Britannica.com will enable approved users to add their own creative input which will sit beside the authorised articles.

Wikipedia, which ranks among the world's top-10 most visited websites, is maintained by volunteers from all over the world and anyone with an internet connection can create and edit articles and publish them on the site.

Would-be editors on the Britannica site will have to register using their real names and addresses before they are allowed to modify or write their own articles.

Mr Cauz characterised Wikipedia as containing "plenty of cracks on it in terms of the quality".

"It's very uneven, the facts are not always correct, the model contains a lot of pitfalls."

Damning his competitor with faint praise, he said a big problem was that many users considered Wikipedia to be "fine" or "good enough".

"What is really unfortunate is that when it comes to knowledge - which is really what makes humans evolve or not evolve into the future - we tend to be non-discriminating. And that's really the troublesome thing."

Asked if he looks at Wikipedia, he said he spent several hours a day online.

"I think it would be impossible not to look at Wikipedia when one goes to Google. It's the most symbiotic relationship happening out there," he said.

"It's very much used by many people because it covers many topics and it's the No.1 search result on Google. It's not necessarily that people go to Wikipedia."

(Google's PageRank search algorithm is designed to look for the most relevant and cited web page and often that happens to be a Wikipedia entry).

Encyclopedia Britannica was first published in 1768 - two years before Captain James Cook's discovery of Australia. Founded in 1994, the Britannica.com's database contains articles comprising more than 46 million words - not counting other forms of media content.

Founded in 2001, Wikipedia is now available in more than 250 languages and attracts about 700 million visitors annually.

The English editon alone contains nearly 2.7 million articles.

Beware of Craigslist Phishing Email Scams

It came out of the blue. An email telling me that my listing for a “Sony PlayStation 3 Metal Gear Solid 4 PS3 80GB bundle” had been posted on the Singapore branch of Craigslist.

This was a surprise for me for several reasons. One is that I haven’t been to Singapore for over a year, another is that I’ve never used Craigslist in my life, and finally - and perhaps most importantly - I don’t own a PlayStation 3. (I’m a Nintendo Wii fan).

But I’m just one of many people who were probably sent this email and some - no doubt - might be curious enough to click on the link to see what on earth this email is about.

And if you did click on the link then you would be taken to a webpage that looks as stark and barren as the real Craigslist login page:

But, of course, it isn’t the real Craigslist page that you have arrived at, and if you do enter your username and password your details will be spirited away by hackers who will use your identity for their own nefarious purposes.

Remember - it’s not just the online banks, eBay and PayPal who have phishers targeting their users. There are many other sites hungry for your passwords and identities.

After Hookups, E-Cards That Warn, ‘Get Checked’
David Tuller

Steve, a health care worker in his 30s, had been told more than once that he had been exposed to a sexually transmitted infection. So when it happened again, he was not upset — even though this time he learned about it through an anonymous online postcard, e-mailed by a man with whom he had had sex.

“What was important was that I was being notified that there was a possibility that I may have been exposed to syphilis,” said Steve, who asked that his last name be withheld to protect his privacy.

The Internet has made it much easier to connect for sexual hookups. In response, public health officials have been exploring ways to harness the online world for conducting safe-sex education and preventing the spread of sexually transmitted diseases by alerting people exposed to them.

The e-card, which allows the sender to select the disease involved and includes links to public health sites and services, is part of that strategy.

“Notifying the person exposed to a sexually transmitted infection is the critical piece in preventing further spread,” said Dr. Susan Blank, New York City’s assistant health commissioner for sexually transmitted disease. “And as the reach of the Internet expands for use in finding instant sex partners, we’re using that technology as part of the solution.”

Along with eight other cities and three states, New York City has been working with inSPOT, the online partner notification system through which Steve, in San Francisco, received his syphilis e-card. (It is currently aimed at gay men but is expanding its audience to include heterosexuals, and plans to start a national site this year.)

The system was developed in 2004 by Internet Sexuality Information Services, a nonprofit agency in Oakland, Calif., with the support of health officials in San Francisco. Deb Levine, the agency’s executive director, said two factors in San Francisco led to the idea: the rise in Internet use among men who have sex with men, and an increase in syphilis among that group.

Research indicated that men with a sexually transmitted disease often failed to tell their casual sexual contacts about it.

“They did tell their partners, the people they saw every day, but they didn’t take the time to follow up with other people they were having sex with,” Ms. Levine said. “They said to us, ‘If there was an easy and convenient way to do it, we would.’ ”

In a parallel strategy, some public health departments have established online profiles on popular gay-oriented social network sites.

Through these profiles, self-identified health outreach workers are available to counsel men about safe sex and, when requested by members with a sexually transmitted disease, to electronically notify sexual partners they have met through the site.

David S. Novak, a public health strategist at Online Buddies, a company in Cambridge, Mass., said almost 30 city and state health agencies now had partner notification profiles on its popular gay site, manhunt.net.

Mr. Novak said that men who met on a social networking site often did not exchange e-mail addresses and therefore could not use inSPOT. Moreover, he said, because public health agencies confirm cases of infection before contacting sexual partners, their involvement reduces the risk that false information will be disseminated. “I think there’s room for both approaches,” he said.

Ms. Levine said inSPOT was intended to complement rather than replace the role of public health workers in partner notification, especially for easily treatable illnesses like gonorrhea and chlamydia. Public-health notification programs are aimed primarily at more serious diseases, in particular H.I.V. and syphilis.

Evaluating inSPOT is difficult, since the agency cannot measure whether recipients of e-cards have been tested. And Mary McFarlane, a specialist in sexually transmitted diseases at the Centers for Disease Control and Prevention, said she wondered whether many of those who sent anonymous cards about crabs and scabies were playing pranks on friends. Still, she said, “if people are engaging in risk online, we need to engage in public health online and to make it as usable and feasible as possible.”

Dr. Kees Rietmeijer, director of sexually transmitted disease control at Denver Department of Public Health, which has an inSPOT site, said that because in-person partner notification was time-consuming and expensive, it was important to find other ways to communicate.

“Having said that,” he added, “as far as the effectiveness, the jury is still out. If you have X number of hits on the Web site, we don’t really know if that translates to people coming to the clinic to be tested and treated.”

Digg to Cut Workforce 10%, Hire New Sales Team
Rafe Needleman

Digg CEO Jay Adelson on Thursday morning is announcing that the social media site is laying off a "very small" portion of its workforce, but will also be hiring a new direct sales force and head of sales to drive the company to profitability this year.

The overall job cuts at the 75-person company will be "microscopic in size," Adelson said to me, later confirming a figure of "about 10 percent." He reiterated that Digg this year is focusing on profitability and growth, and for the first time is building out its own advertising support structure, "which we've never really focused on before." Adelson posted a brief item about the news on the Digg blog.

The partnership Digg has with Microsoft to sell standard advertising units will continue. But Digg will be rolling out higher-profile advertising programs, and features on the site to support them, that his internal sales force will be pitching. He pointed to Digg Dialogg as an example of a vehicle that could be sponsored by a higher-profile advertising program.

It's a difficult time for all media companies, of course, but Adelson says that Digg has not seen any CPM erosion--the price they get for the ads on the site--and that the Microsoft is doing well for the company.

Even though Digg has "multiple years" of cash on hand for operating expenses at the current burn rate, Adelson said, it's a brutal economy today. "It's true we have cash in the bank, but getting to profitability makes more sense to us." Sounding like almost every other Web start-up CEO on the state of his business today, he continued, "If things don't get worse this year, if we get to the second or third quarter and things look good, I can bring some of that talent back in. But if we go in the other direction, that's not a burn rate we can maintain. I'd rather be in front."

The company raised new capital and doubled in size in 2008.

Adelson says Digg's engineering and core development group won't be hit by the layoffs. The cuts will come in areas "not core to our function. We'll be shifting some of that cost to a sales force."

Where's the money?
Adelson strongly denied the accuracy of revenue numbers reported by BusinessWeek last month. "I don't know where those numbers came from," he said, "I can confirm they are not accurate." But he did confirm the spirit of the story. "It is true we have been focused on growth and user features. We had this Microsoft deal to take us to profitability, and we were definitely focused on the user experience. We didn't focus on the ramp time to break-even. We never felt there would be any challenge to monetize Digg."

The Digg CEO backed away from discussing the valuation of the venture-backed Digg today. "We aren't focused on that," he said. "Our plan is to be independent. Our investors look at this as a multibillion-dollar opportunity. We need to go it alone and be much bigger than we are today." Furthermore, he added, "This is not the best market to be discussing exits. Even our investors are desensitized to that."

Media isn't dead, it's evolving
With media companies of all kinds taking hits, Digg's sources of content are shifting as well. But Adelson maintains that the social news aggregator will become more valuable because of this. "We work with a lot of publishers. They see us as a catalyst to transition to this new market."

He continued: "Where the content is getting written does shift in markets like this. It's true that newspapers are laying people off. But the net result is that there is more content online than before, and more reporting is first publishing online than before. I think you'll see a shift to online publications, which will only benefit Digg. Content is exploding upward."

Despite the difficult media landscape this year, Adelson believes it will be a strong year for Digg. "We believe we can get to profitability this year," he said more than once.

What this means to Digg users
While not providing specifics, Adelson said the company will be adding features "that enhance engagement, giving users more reasons for sticking around." He pointed to incremental improvements like the new "related stories" links that appear on Digg permalink pages.

The company is also moving to make Digg more personalized, so everyone gets a different experience, based on who they are and what they like. "We can't apply the same collaborative filter to everyone," he said.

Also coming: New tools to allow Digg to integrate with third-party sites like Facebook and Twitter. And without providing specifics, he added, "We have some ideas in the pipeline that will blow peoples' minds."

The Plot to Kill Google
Nicholas Thompson and Fred Vogelstein

Google may not be evil, but it sure does have enemies.

When Google's lawyers entered the smooth marble hallways of the Department of Justice on the morning of October 17, they had reason to feel confident. Sure, they were about to face the antitrust division—an experience most companies dread—to defend a proposed deal with Yahoo. But they had to like their chances. In the previous seven years, only one of the mergers that had been brought here had been opposed. And Google wasn't even requesting a full merger. It just wanted the go-ahead to pursue a small deal that it was convinced would benefit consumers, the two companies, and the search-advertising market as a whole. Settling around a large oval table in the conference room, the attorneys from Google and Yahoo prepared to make their arguments. Google wanted to serve its ads for certain search terms on Yahoo's pages in exchange for a share of the revenue those ads generated. It already had similar arrangements with AOL, Ask.com, and countless other Web sites. And the deal wasn't exclusive or permanent.

Tom Barnett, assistant attorney general for antitrust, took his seat at the table and called the meeting to order. The Yahoo lawyers kicked things off by describing their negotiations with DOJ staff; they had already suggested limiting the length of the deal and capping the amount of money in play. Barnett seemed unimpressed. "Staff," he proclaimed, "is irrelevant." He made the decisions around there.

As five lawyers involved with the case recount it, the rest of the meeting did not go much better. For hours, Barnett picked apart the deal. Google, he argued, was not preserving competition by keeping Yahoo solvent; it was trying to increase control over its old rival, with a goal of dominating the online search-advertising market. If the proposal was so harmless, he went on, why had he been deluged with letters and phone calls from advertisers opposing it? Then, late in the day, Barnett brought up the two words Google lawyers least wanted to hear: Section Two—as in, Section Two of the Sherman Antitrust Act, which criminalizes monopolies. The Justice Department invoked Section Two to splinter Standard Oil in 1911, break up AT&T in 1982, and prosecute Microsoft in 1998. Now Barnett was signaling not just that the Google-Yahoo deal was dead but that the government saw Google as a potential monopolist. In fact, Barnett insisted, if the deal wasn't substantially changed or scuttled, he would sue within five days. It was a stunning blow. Google had expected a speedy approval. Now the company, whose brand is defined by its "Don't be evil" slogan, faced the prospect of being hauled into court on an antitrust charge. Google and Yahoo tried to salvage the negotiations, but on the morning of November 5, three hours before the DOJ was going to file its antitrust case, they abandoned the deal.

Google's capitulation marked a rare defeat for the search giant, which has been almost as successful among the regulators of Washington as among the coders of Silicon Valley. And it was cause for celebration in Redmond, where Microsoft spent six months on a massive effort, costing millions of dollars, to block the Yahoo deal. Microsoft played a role in persuading members of Congress to hold hearings. It initiated a campaign that filled DOJ mailboxes with letters from politicians and nonprofit groups objecting to the deal. It convinced the country's largest advertisers to join together to oppose the company in public. It's impossible to know exactly what impact all this had on the DOJ decision. But many observers believe that Barnett, who declined to be interviewed for this article, was influenced in part by Microsoft's arguments.

The bid to stop the Yahoo deal was just one front in an emerging multipronged war against Google. The company's growth, ambitions, and politics have made it a target of some of the country's most powerful businesses and interest groups. When Google pressed the Federal Communications Commission to reallocate "white space"—unused chunks of radio spectrum—for wireless broadband and other uses, it ran into a counter-lobbying effort that included everyone from the National Association of Broadcasters to Dolly Parton. Google's push for net neutrality, which would forbid ISPs from giving preferential treatment to certain data providers, has been met by fierce resistance from telecom and cable companies, whose allies describe it as "special-interest legislation dressed up to sound less self-serving." It purchased YouTube, whose users' laissez-faire approach to copyright infuriates Viacom and other content providers. Google wants to digitize entire libraries, a prospect that frightens publishers. It has terrified a legion of small businesses that feel at the mercy of its opaque but all-powerful search algorithm. It has annoyed Republicans by associating itself largely with Democrats.

The thwarting of the Yahoo deal was the most successful attack so far by the many forces aligned against Google—but it won't be the last. "There were a lot of sharks circling Google during the DOJ review," says Christopher Murray, senior counsel for Consumers Union. "Now there's a whiff of blood in the water. I expect a feeding frenzy in 2009."

The Enemies List

Google is under fire on 4 fronts.

What's at stake:
How much do you trust Google? The search giant says there's no reason to fear its purchase of DoubleClick or its proposed revenue-sharing deal with Yahoo. But competitors and major advertisers think it's plotting world domination.

Who's upset:
Association of National Advertisers, Microsoft, WPP Group
What's at stake:
Every time a new chunk of radio spectrum becomes available, Google argues it should be opened to the public. Sounds great—except to telcos that have wanted it for themselves and broadcasters that worry new devices will mess with their transmissions.

Who's upset:
AT&T, National Association of Broadcasters, Verizon

What's at stake:
Google thinks all information is created equal and favors laws forbidding Internet service providers from determining how fast content from different providers will download. ISPs, not surprisingly, beg to differ.

Who's upset:
AT&T, Comcast, Verizon
What's at stake:
Google's insatiable hunger for data scares even some of its allies. Now its business rivals have launched a privacy crusade to drum up fears that Big Brother lives in Mountain View.

Who's upset:
AT&T, Center for Digital Democracy, Microsoft

High-profile legal battles aren't fought only in the courtroom. Public perceptions matter. Momentum matters. Relationships matter. For John Kelly, Microsoft's head of strategic relations, this lesson didn't come easy. In the 1990s, the lawyer and former lobbyist watched as Microsoft defended itself against charges that its practice of bundling its software onto computers constituted anticompetitive behavior. The company settled the case in 2001. But by then it had already won a reputation as an unrepentant and thuggish monopolist, thanks in part to shrewd lobbying by competitors like Sun Microsystems and Netscape, uninspiring testimony by Bill Gates, and masterful media relations by David Boies, the government lawyer on the case.

"Ten years ago we said, 'This is all going to depend on being right in court,'" Kelly says. "'Don't worry about all the noise, rhetoric, and lobbying by our competitors.' While the facts and the law are still what matters in the end, the important lesson we took way from that experience was that you could not let your competitors define you in the court of public opinion."

A decade later, Microsoft's reputation was still getting in its way. In January 2008, Microsoft made an unsolicited bid to purchase Yahoo. The takeover would help Microsoft bulk up its search advertising business, an area where Google held a huge advantage. But Yahoo CEO Jerry Yang, who viewed Microsoft as an uncompromising leviathan, was determined to block the deal. In early May, Microsoft dropped its bid—a tough defeat made even more frustrating when Google CEO Eric Schmidt celebrated the failure in comments to the media. "We're obviously happy it's not going to happen," Schmidt said at a press conference. "Had the merger gone through, we would have had to have a meeting around it. We would have had to have a campaign against it."

It was a stark reversal for Schmidt, who had made few public statements against Microsoft since joining Google in 2001. Kelly took the saber-rattling as a warning that Google was preparing to join the fray, perhaps by proposing its own deal to keep Yahoo out of Microsoft's hands. (Sure enough, Google did just that on June 12.) For years, Microsoft had quietly seethed as Google waltzed into a position of immense power while charming regulators and politicians with an aura of gee-whiz innocence. Even when Google hired a small team of lobbyists and took the occasional swing at Redmond, the company's feel-good reputation remained intact. The idea that Google would end up inking a deal with Yahoo, increasing its domination of search advertising while successfully casting Microsoft—again!—as a power-mad Darth Vader, was more than Kelly could stand. "Frankly, we saw history repeating itself," he says. "We realized that we were going to have to speak up."

Kelly sprang into action, activating his company's vast Washington infrastructure.Microsoft's protracted antitrust battles had left it with an army of lawyers and lobbyists and deep institutional knowledge of which politicians to approach and how best to sway them. Soon, Microsoft's lobbyists were meeting with Herbert Kohl, chair of the Senate's Antitrust Subcommittee. By early July the subcommittee was holding hearings. In October, Kohl wrote to Barnett warning that "important competition issues are raised by this transaction."

But that was all familiar, the kind of campaign Microsoft had routinely run. Kelly wanted to take a different approach this time—not just opposing the deal but persuading other interested parties to speak out as well. The arguments of a known competitor may not sway the Justice Department, but customers' opinions hold special influence. If advertisers—Google's customers—voluntarily declared their opposition, the DOJ would listen closely.

Kelly turned to Michael Kassan, an advertising consultant who had been advising Microsoft off and on since 2002. Kassan—whose clients have included AT&T, Disney, and Viacom—recently had been named by Advertising Age as possessing the third-most-impressive Rolodex in the industry. Kelly asked Kassan to start talking to his contacts and drum up opposition to Google. Kassan assured him he knew just how to do it; there was plenty of fear and mistrust of Google among advertisers. "Google has badly misjudged how it is perceived," he reassured Kelly. "We have a clear and easy story to tell."

It went like this: Google had 70 percent of the search advertising business, and Yahoo had 20 percent. Now those two companies were proposing a business deal. That would give advertisers less leverage to negotiate ad rates, and they would end up paying more.

Kassan was eager to make his case. He flew to Cannes, France, where he pitched the board of the International Association of Advertisers. He traveled to conferences in New York, Washington, Los Angeles, and Florida. He talked to many of the 32 chief marketing officers on the board of the Association of National Advertisers, the trade group that represents the top 375 advertisers in the country. By late August, Kelly and Kassan were conducting as many as three conference calls a day with major national advertisers. Google, meanwhile, hadn't started any serious outreach effort to defend the deal to the advertising community.

The hardest part of the campaign wasn't convincing ANA's board members that the Google-Yahoo proposal was bad for them. The trick, Kassan says, was getting them to say so. Indeed, Kassan was rebuffed in June, when he first asked the head of the ANA to take a public stand. "They wanted me to do something right away," ANA president Bob Liodice says. "I told them I'd look at it. But at the time I had no ability to say whether the deal was bad or good, and the last thing I wanted to do was have the organization looking like a shill for Microsoft."

Kassan and Kelly kept at Liodice, seeding his inbox with position papers, briefing documents, and news stories. Their goal was straightforward: Convince him that the ANA's position on the deal not only mattered but was crucial to stopping it. Liodice went on a fact-finding mission, inviting Google and Yahoo to answer questions and then sending written queries to executives at all three companies. Ultimately, he concluded that Google would drive Yahoo out of business and gain a stranglehold on online advertising. "The more we dug in, the more we realized that we had to say something," Liodice says. "The tipping point for me was that I had all these advertisers on my board opposing the deal. Meanwhile, Google and Yahoo couldn't produce any significant advertisers who were supporting it." In September, the ANA formally voiced its opposition. It wasn't alone; individual advertisers piled on with additional letters to the Justice Department expressing their own disapproval. DOJ staffers were talking about the "telephone book of complaints" they had received.

Microsoft's arguments weren't just winning over advertisers. Back in July, the company penned one of a series of confidential memos titled "Google + Yahoo ≠ Competition" and sent it to its allies and the Justice Department. The memo claimed that the Google-Yahoo deal was illegal on its face, mentioning as precedent the 68-year-old case United States v. Socony-Vacuum Oil Co. Inc., which Microsoft also cited in congressional testimony that same month. When Yahoo lawyer Dan Wall heard the argument, he didn't see how a 1940s case against conspiring oil companies bore much relevance to a deal in which prices are set by electronic auctions. But then a Justice official brought up Socony during one of their regular phone calls. "I thought, 'Good grief, they're buying the Microsoft BS,'" Wall says. "I don't have any doubt that Microsoft put that in DOJ's mind."

Meanwhile, the fight against Google quickly spread beyond Redmond, as other companies and trade groups began to lend support. Some had no obvious interest in the deal; Microsoft hired lobbyists who knew how to drum up support among rural and Latino groups, and before long organizations as far-reaching as the American Corn Growers Association and the Dominican American Business Network had voiced their opposition.

Other companies joined in, including AT&T. Many observers believe that the telecom company hopes to compete directly with Google someday by going into the business of serving online ads to its users, and it was happy for the opportunity to beat up on its future rival. On September 24, 10 members of Congress sent a letter to the DOJ opposing the deal. All of them have received donations from AT&T over their careers (average total contribution since 1996: $29,000), and most counted the telecom giant as one of their largest contributors.

These campaigns converged at the October 17 Justice Department hearing, in which Barnett threatened to bring an antitrust case against Google. Publicly, Google remained upbeat after the arrangement fell apart. Lobbyists for the company maintained that even in failure they had kept Yahoo out of the hands of Microsoft for at least six months, perhaps permanently. And if Microsoft eventually tries to snap up Yahoo, Google can respond with the same kind of antitrust arguments that were deployed against it.

Kassan doesn't share Google's optimistic interpretation. "They have permanently invited the scrutiny of the Justice Department into every future deal they do," he says. "Nine months ago everyone aspired to be Google. Now they have monopolist written all over them."

Google barely had time to recover from the failed Yahoo deal before its staff learned of a 94-page document titled "Google Data Collection and Retention," that had been circulating around Washington. The treatise listed all the ways that Google hoards user information. Google Checkout remembers credit card numbers. Gmail reads private email. Blogger saves draft posts. As one annotation on the document helpfully notes, Google's privacy policy "gives Google the right to retain personal information over the wishes of a user." Overall, Google is painted as a Big Brother with an insatiable desire for private data.

The document, written by a consulting firm, was commissioned by AT&T, which says it was intended only for internal use. Protection from snooping, says AT&T public policy chief James Cicconi, is one of his firm's top priorities. "We sell our customers access to the Internet," he says, "and we want them to have a good experience." Privacy is a newfound concern for the company, which in 2005 was one of the telecoms that allowed the National Security Agency to listen in on millions of phone calls. AT&T was accused of "warrantless wiretapping" before successfully lobbying Congress to grant it immunity against suits by its customers. But now AT&T is trumpeting the cause of consumer privacy, unveiling an elaborate policy stating that it will not sell its customers' browsing histories to advertisers without explicit permission.

But AT&T's nascent crusade may also be in the service of a less noble agenda: keeping up its attack on Google. Over the past couple of months, several AT&T allies have spoken out against what they describe as Google's disdain for privacy. Scott Cleland, who serves as CEO of a telecom-funded consultancy, has turned his widely read blog into a Google attack machine, with posts titled "Why Google Is the Biggest Threat to Americans' Privacy" and "Google Protecting Its Privacy to Invade Your Privacy." In late November, a cochair of an advocacy group called the Future of Privacy Forum published an op-ed in the Bangkok Post titled "Google Is Watching You." The writer was a former lawyer for AT&T, which is the group's sole funder. AT&T is also launching volleys under its own name: When its senior vice president of public policy introduced the company's new set of policies in front of the Senate, she repeatedly named Google as a privacy threat—and mentioned no other company in the entire testimony.

Once again, AT&T has found an ally in Microsoft. LMG, a public-relations firm that Microsoft hired to help defeat the Yahoo deal, has emailed public-interest advocates accusing Google of privacy violations. Last spring, Microsoft supported bills in the New York and Connecticut legislatures to impose strict regulations on businesses that gather personal information online for marketing purposes. The bills would hurt Microsoft, too, given that it also wants to sell advertisements based on customer behavior. But the self-inflicted wound may be worth it for the damage it causes Google.

True to form, Google remains cheery and confident. The company's reputation still beats the stodgy, unfriendly images of Microsoft and AT&T. Google executives also know they may be able to win some supporters on this issue; advertisers, the same group whose complaints torpedoed the Yahoo deal, aren't put off by Google's attempts to collect user data—it only helps them create more targeted ads.

And for all its woes in Washington, Google is finally learning how to operate there. It has hired more lobbyists, and its policy experts are starting to attend the cocktail parties they have long ignored. Schmidt serves as chair of the New America Foundation (a think tank at which one of the authors of this article was a fellow). And Google can now boast a uniquely powerful ally: Barack Obama, who benefited from Google employees' extensive campaign contributions and from Schmidt's well-timed endorsement.

AT&T maintains that even Google's Democratic pals might turn against the company over privacy. "Civil libertarians have fought hard over decades to establish a right to privacy as fundamental to preserving all other liberties enshrined in our Constitution," Cicconi says. "It would be shameful if liberals now toss that achievement over the side because a liberal, pro-Obama, hip-cool-trendy company comes along that wants to run roughshod over those rights." Leslie Harris, president of the Center for Democracy and Technology, a nonprofit that has long fought Google on privacy grounds, says she considers AT&T's recent interest in her cause "a perfect storm in our favor." And Google isn't out of the antitrust woods yet, either. Sanford Litvack—a government lawyer who would have run the DOJ's suit against Google had it not withdrawn the Yahoo proposal—says that, in his opinion, Google's current position may already constitute a monopoly, even without Yahoo.

Traditionally, Google has fought off powerful rivals with masterful code. It took on the established search behemoths by creating more effective software. It bested Microsoft's and Yahoo's advertising efforts by inventing an entirely new ad platform. But the war today is being fought in Washington, in the press, and perhaps even in the Justice Department again. And these aren't battles you can win with engineers and algorithms.

Microsoft Sells Off Comcast Stake

The software maker may be looking to raise cash in advance of an acquisition.
Paul McDougall

Microsoft (NSDQ: MSFT) has sold off all off its shares in Cable TV provider and ISP Comcast (NSDQ: CMCSA), according to a document the software maker filed with the Securities and Exchange Commission.

According to the document, filed last week, Microsoft divested its remaining stake in Comcast sometime prior to Dec. 31. At one point, Microsoft held about 150 million Comcast shares, which on Tuesday closed at $14.02—about 40% off its 52-week high.

Karl Triebes of F5 makes the argument for a specialized application traffic processing layer, citing technologies such AJAX as benefiting
Microsoft announced a high-profile, $1 billion investment in Comcast in 1997, with an eye to helping the company build out its high-speed data and video services.

"Our vision for connecting the world of PCs and TVs has long included advanced broadband capabilities to deliver video, data, and interactivity to the home," Microsoft chairman Bill Gates said at the time. "Comcast's integrated approach to cable distribution, programming, and telecommunications complements that vision of linking PCs and TVs," said Gates.

In recent months, Comcast has drawn heavy criticism from the Federal Communications Commission and Internet advocates for a decision to block bandwidth-hungry peer-to-peer services from its networks. It's since rescinded the practice.

It was not immediately clear if Microsoft's selloff of Comcast shares is related to the controversy. It's also possible that Microsoft is looking to raise cash in advance of an acquisition, such as another attempt to buyout rival Yahoo's search business.
Carol Bartz, who replaced Jerry Yang as Yahoo (NSDQ: YHOO)'s CEO last week, has reportedly told company employees that she would investigate whether a sale of Yahoo's search business makes sense. She has also reportedly met informally with Microsoft CEO Steve Ballmer.

Microsoft shares were up slightly more than 1%, to $18.68, in pre-market trading Wednesday.

The Dark Lord of Broadband Tries to Fix Comcast's Image
Daniel Roth

Robb Topolski couldn't stay awake. All he could manage was three hours at a stretch before passing out. At first, his doctors were baffled, though they would eventually diagnose his condition as a severe form of anemia. But for the time being, no one knew anything except that it was dangerous for Topolski to venture too far from his bed.

Topolski was a quality assurance engineer at Intel before going on disability, and he loved playing with new gadgets and software. So in late February 2007, he dragged himself out of the queen-size bed in his Hillsboro, Oregon, home, sat down at one of the three PCs a few feet away, and opened his latest toy, the file-sharing program Shareaza. He was a big barbershop-harmony fan—he'd sung baritone in Intel's One Bit Parody quartet—and he wanted to test the software by searching for some new tracks and sharing the ones on his hard drive: tunes like the Civil War-era hit "The Vacant Chair," and a Tin Pan Alley ode to prostitution, "She Is More to Be Pitied Than Censured."

Topolski pointed Shareaza to his music folder. Then he fell asleep. And that's when something strange happened—or rather, that's when nothing happened. Each time he woke up and checked his PC, he discovered there had been no activity at all. Topolski knew that his music tastes weren't exactly mainstream; but still, among the millions of BitTorrent, Gnutella, and eDonkey users out there who could see his files, no one wanted even one of his tunes? He'd search some forums for help, then fall asleep again.

After more failed file-sharing attempts, Topolski installed a packet-sniffing application so he could log and review everything coming over his network. He set up an online tunnel with a system administrator he knew in Brazil. Topolski's computer would appear to be surfing from South America, not the suburbs of Portland. That would tell him whether the problem was local.

It took him six weeks of short-burst sleuthing to reach his conclusion. In a detailed post on DSL Reports—a site for broadband enthusiasts—under his online name, funchords, Topolski laid out a case against his Internet service provider. Comcast appeared to be blocking file-sharing applications by creating fake data packets that interfered with trading sessions. The packets were cleverly disguised to look as if they were coming from the user, not the ISP. It was as if, in the middle of a phone call to a friend, Comcast got on the line and in the caller's own voice told the friend he was hanging up, while the caller simultaneously heard the same message in the friend's voice. The post generated some discussion but no response from Comcast. It did, however, catch the attention of an Associated Press reporter, who called Topolski to ask about duplicating the tests. Topolski was happy to help and tried to provide all the assistance he could, but he lost touch with the reporter after doctors told him that, in addition to anemia, he had a massive malignant tumor in his colon.

Months later, as he recuperated in the hospital after the tumor was removed, Topolski heard again from the AP reporter. The wire service had conducted its own tests on Comcast's network and the results had been equally damning. The resulting story about Comcast's misdeeds had gone viral. "Oh yeah, I think I kind of heard about that," Topolski said, the sedatives still surging through him.

"It was a pretty big deal," the reporter reminded him.

"Pretty surprising," Topolski mumbled.

"I don't think you understand," the reporter insisted. "This is a really big deal."

For Brian Roberts, 2008 was supposed to be the year Silicon Valley crowned him the most important person in its world. In five years as CEO of Comcast, the 49-year-old had turned his father's middling cable TV company into a media behemoth with $31 billion in annual revenue.

Comcast's cable infrastructure made the Internet possible. Sure, the tech metaphor of the moment was the cloud, but—metaphor be damned—Roberts knew that nothing could happen without the pipes. You needed big, fat cables to get all those petabytes of data there and back. And increasingly, those pipes belonged to Comcast.

He didn't seek this kind of power. He spent the early part of the decade scooping up cable operations, but that was just to increase Comcast's customer base. Roberts provided packages that bundled TV, phone, and Internet, offering faster and faster speeds and luring away more and more customers from the phone companies, who couldn't keep up. (Comcast is now the third-largest telephone company in the US as a result.) As callers ditched their landlines, they tended also to abandon DSL, which the phone companies made difficult to buy as a stand-alone product. "DSL," Roberts told investors recently, "is the new dialup." Today, the company has 14.7 million broadband Internet customers, making Roberts the largest provider of high-speed access to the home, and sometime early this year he is set to wrest the title of largest broadband provider, period—to homes or businesses—from AT&T.

Sure, new technologies are constantly being touted as potential rivals: 4G wireless, municipal Wi-Fi, fiber. But none of them really have a chance. By the end of 2007, 22 cents of every dollar spent on broadband in the US went directly to Comcast. And that figure looks like it's only going to increase; the number of ways to connect to the Internet reliably and at high speed is shrinking, not growing. "There's this magical thinking, both in the tech community and the regulatory community, that competition will solve all problems," says Craig Moffett, an analyst at Sanford C. Bernstein. "Well, get over it. The evidence says we're not going from two pipes to three but from two pipes to one."

If Comcast is the one pipe that dominates, that's because its main rivals are coming up short. Verizon has spent the past few years trying to steal Roberts' Internet and TV subscribers with a $20 billion fiber-optic project called FiOS, while AT&T has its own $8 billion fiber product called U-verse. But together they cover only about 20 percent of the country, and analysts project that because of costs, they will stall at 40 percent. And reach is only one of their handicaps. In 2008, Roberts launched upgrades that made AT&T's 18-Mbps U-verse seem like a throwback to acoustically coupled modems. Verizon's problem is economics. It costs the company $4,000 to hook up each customer to FiOS, which now offers speeds as fast as 50 Mbps; Roberts spends less than $50 to give one of his customers the equivalent upgrade. As for wireless—supposedly the biggest threat to fat cable wires buried underground—no one really believes it can offer the bandwidth that consumers want at a reasonable price.

Still, Roberts doesn't want to be thought of as merely the lord of the world's dumb pipes. He wants to be known as an innovator, a reputation he planned to burnish in 2008. Early last year, Roberts was ready to debut a reborn Comcast, a company that would turn those pipes into magical delivery systems. At the 2008 Consumer Electronics Show in early January, he delivered the first keynote ever given by a cable CEO.

"We must be the technology leader," he said from the stage, reeling off a list of new initiatives, like a Hulu-style video-streaming feature called Fancast (which debuted about the same time as Hulu) and a new open software platform called tru2way, designed to allow small, third-party iPhone-like apps to be added to any Comcast-connected TV. He promised incredible customer support and the rollout of Docsis 3.0—a new Internet service with speeds that will eventually exceed 100 Mbps. "I believe Comcast is the company you will want to partner with to give consumers what they really want." He ended with a declaration that Comcast was a different company now. "It's a whole new year for Comcast," Roberts said, his eyes darting around the room. "A whole new attitude. It's Comcast 3.0."

Roberts truly believed Comcast was ready for tech stardom as the Facebook or Google of 2008. Instead, he got Topolskied. On October 19, 2007, the AP story broke with the headline "Comcast Actively Hinders Subscribers' File-Sharing Traffic, AP Testing Shows." Bloggers called for protests and boycotts; the Electronic Frontier Foundation said Comcast was using tricks formerly used by "malicious hackers." A coalition of Internet law scholars and consumer groups petitioned the FCC to step in. Instead of basking in glory, Roberts found himself at the center of the fight over network neutrality—the attempt to keep ISPs from discriminating between different kinds of traffic and, say, favoring their own video or VoIP services over another company's.

By blocking BitTorrent—in effect discriminating against those packets—Roberts had opened himself up to accusations that he was a censor and a monopolist who wanted to limit citizens' access to the Internet. He was painted as power-mad, unable to restrain himself. "Comcast will say, 'We're not blocking.' But they're degrading, prioritizing, and filtering, without telling users. And they're planning to do much more of this," blogged Susan Crawford, an Internet law professor at the University of Michigan Law School.

Roberts hadn't anticipated the backlash. Subscribers accepted that cable TV was just entertainment, but the Internet felt more essential, like water or electricity, and consumers were starting to think of broadband as a constitutional right. Back in the days of basic cable, consumer complaints were always local and easily contained. But the Internet, as it turned out, was different. This was becoming a nationwide battle over who the pipes belonged to. Comcast had invested billions to build its network. Now its heaviest users were demanding that Roberts effectively hand over control to them.

The new Comcast center is the tallest building in Pennsylvania, a 58-story reflective-glass beauty. When it opened last summer, its towering height sent a clear signal that Comcast had arrived. On the 45th floor, Brian Roberts can squint out over all of western Philadelphia, though today it gives him no pleasure. He's still plagued by thoughts of Robb Topolski.

"I honestly don't think we're bad people, and we have no evil intentions," he says. "We helped invent broadband."

Roberts is 6'2". He is so lanky, his gray suit jacket drapes off his shoulders as if it's still on the hanger, never touching his body. The entire company dresses the same way: formal and dated, like midwestern bankers. His speech is reassuringly calm, a nasal monotone he keeps in check regardless of his mood. Roberts could be a partner at a mid-tier law firm or a senior actuary who shoots hoops on the weekend.

Inside the boardroom, his no-style style has made him a favorite of fellow media chiefs. No jockeying for headlines, no flash, no grand competitive vision to match a grander ego. "Comcast has become our top partner, or close to it," says Google CEO Eric Schmidt, who says he trusts Roberts' intuition and dealmaking skill. When Roberts approached Schmidt about investing in Clearwire, the WiMax company started by Craig McCaw, Schmidt quickly agreed. When Roberts then threatened to pull out during the final stages of negotiations, Schmidt dutifully followed suit. A few days later, Roberts called to say Comcast was back in. Google went back in, too, investing $500 million in 2008. "He works very hard," Schmidt says. "I think many people don't understand how he operates." Rob Glaser, CEO of RealNetworks, contrasts Comcast's style with Microsoft's approach. "If I do business with Comcast and then with a Comcast competitor, I don't wake up with a horse's head in my bed," Glaser says. "Even though Brian is in a position of a lot of power, there has never been a time when he approached that in a venal or reckless way."

Yet there's a stunning disconnect between how fellow chief executives view him and what customers think. They see Comcast as arrogant, unresponsive, and overpriced. The company has managed to place last or close to last in just about every survey of customer service. In its annual ISP report, J. D. Power and Associates regularly rates Comcast in the cellar. Harris Interactive, in its annual brand reputation survey, ranked Comcast just ahead of ExxonMobil and Halliburton. Readers of the Consumerist, a shoppers'-rights blog, voted Comcast the second-worst company in the US—after only Countrywide Financial, of subprime mortgage infamy.

Roberts remains philosophical about Comcast's poor rankings. Because Comcast is the biggest cable company, he argues, naturally it gets a high number of complaints.

The Topolski affair, as far as Roberts is concerned, is all based on a misunderstanding. Every company "manages" its network by restricting and opening access to maintain speeds. Providers have little choice, especially when it comes to P2P, the kudzu of cable. File-sharing eats up a half to two-thirds of his upstream capacity in some places. And because cable is a shared network—with some 300 homes downloading from any one pipe—a few BitTorrent devotees could make everyone's surfing experience feel more like swimming against a riptide. "We manage our network so 99 percent of the people have a great high-speed experience," he says. "You've always had Ma Bell managing its network for things like how you handle voice traffic on Mother's Day. You get a busy signal occasionally."

In his heart of hearts, Brian Roberts is still just a cable guy, exactly like his father before him. And there's something about the business that makes executives a little blasè9 about consumer complaints. They've been lambasted for so long, they just don't hear it anymore. Brian's father, perpetually bow-tied 88-year-old Ralph, started Comcast in the early 1960s. Programming cost nothing—he simply took broadcast signals and piped them to homes. Government regulation (unlike for broadcast television) was nonexistent. And expansion was just a matter of finding more towns to wire. Customers complained about price and service—but they never cut the cord. "It's the greatest thing since stealing," one of Ralph's first employees told his friends.

Roberts joined the family business in 1981, right out of the University of Pennsylvania's Wharton School. He carefully studied how top cable execs worked, then carved out a new role for himself. While others were brash and self-confident, Roberts sought to be quietly persuasive. In 1997, for example, he convinced Bill Gates to sink $1 billion into Comcast, arguing that it would help spread the Internet. It was an amazing deal for Comcast. In return for his investment, Gates got nothing, not even a promise that Roberts—then Comcast's president—would deploy Microsoft's set-top-box software. Nor, for all his cash, did Gates get voting power; Roberts controls his business through supervoting shares (today he owns less than 1 percent of the stock yet commands 33 percent of the votes). "You never hear stories about how someone got the best of Microsoft," says one awed consumer-electronics executive. "Brian Roberts did. And how did he do it? With a velvet glove. He's the Bill Clinton of cable. He charms everybody."
Roberts made his biggest move in 2002. AT&T was the dominant player in cable at the time, but after the dotcom bust Roberts sensed weakness and launched a successful $51 billion hostile bid for AT&T's cable unit. Comcast had been a regional player; suddenly it doubled in size, serving 21 million subscribers. It's now the local cable monopoly in 40 of the country's 50 largest markets.

"They were just this little Philly company. Now they're like someone who, in a year, shot up from 5'8" to 6'2"," says Gigi Sohn, president of digital rights lobby Public Knowledge. "They've had to try on a whole new wardrobe and haven't found the right fit yet. They haven't done a good job of handling tremendous growth." PR disasters mounted. One Comcast cable guy fell asleep on a customer's couch; the customer filmed it and put it on YouTube. In Virginia, a 75-year-old woman got so fed up with the company's rude service and unreliable house calls that she smashed up a local Comcast office with a hammer. In the past two years, Roberts has implemented what he calls the Comcast Marshall Plan, hiring 15,000 new frontline technicians and customer service reps. By the end of 2007, Roberts assumed that his consumer-complaint issues were behind him. They weren't. In the old days, cable users might have been mollified, but Internet users were an entirely different breed.

The Ames courtroom at Harvard Law School is typically reserved for mock trials. Its 290 seats face a massive desk on a raised dais, where real Supreme Court justices occasionally sit to determine the fate of fake cases. The FCC decided to hold its hearing on Comcast's actions against file-sharing in Cambridge, and on this February day in 2008, the five commissioners took their seats in the courtroom. At a long witness table, one place was set for Comcast, the rest for its critics.

Earlier in the day, students, professors, activists, and customers gathered on the front steps of Austin Hall. Some carried signs blasting the cable giant—"No One Owns the Internet," read one—other protestors made impromptu speeches about neutrality. Before the hearing even started, campus cops had to turn people away. An overflow crowd gathered in the basement, where a computer showed a webcast of the proceedings upstairs. "It felt like the days before the Vietnam War," says David Clark, an MIT scientist who is considered one of the fathers of the Internet.

Roberts didn't come. Instead, he sent his consiglieri, executive vice president David Cohen. A longtime Pennsylvania political operative, Cohen is stocky and pugnacious, the complete opposite of his boss. Cohen gave an impassioned and unequivocal defense of the ISP's actions. "I'm going to say, on the record, in front of this commission: Comcast does not block any Web site, application, or Web protocol, including peer-to-peer services. Period. Doesn't happen," he said. "What we are doing is a limited form of network management," he added, "during limited periods of network congestion."

The response was just as unyielding. One by one, assorted Internet guardians and programmers leaned into their microphones and pointed out the inconsistencies in Cohen's statements. They noted the harm that Comcast was doing, calling it discriminatory and dangerous to capitalism, to America, to the Internet. "If Comcast gains the FCC's permission to block BitTorrent, you can bet that BitTorrent will be the tip of the iceberg," said Timothy Wu, a Columbia Law School professor. Nevertheless, Cohen seemed to really thrill the audience. He wasn't the most exciting speaker, but several times he was greeted with surprisingly enthusiastic applause.

Later, it came out that Comcast had hired shills: seat-fillers, who the company claimed were there to save places for Comcast employees. But for some reason those employees never showed up.

Comcast needed some other way to defuse the situation, so it put together a partnership with BitTorrent—"in the spirit of openness and fostering innovative solutions," as BitTorrent's president at the time put it—to find ways for the technology to travel in peace with the other packets on Comcast's network. It sounded like reconciliation, but it was only PR. While BitTorrent the company was cofounded by the same programmer who created BitTorrent the technology, it had no actual control over the standard or its users. BitTorrent fans dismissed Comcast's move as just another cynical attempt to fool the government.

At the urging of Comcast's foes, the FCC called a second public hearing, this one at Stanford University, where the man who started it all, Robb Topolski, presented his side of the story. Nobody clapped for Comcast this time, because no one from the company came.

The public beatings were beginning to hurt. In early fall, the company decided to measure just how bad the damage was by holding a series of subscriber focus groups. Most of the people, it turned out, had never even heard of P2P. In one session, a young man mentioned that he was using BitTorrent to assemble a library of every anime movie ever created. The rest of the group quickly turned on him, accusing him of stealing their broadband. "They didn't bash us; they didn't talk about poor customer service. It was actually pretty uplifting," says one employee who attended. "If you read the blogs on the P2P stuff, you'd think we were Satan."

It drove Roberts crazy to see Comcast getting trashed, to have his family's business maligned. Roberts had told the crowd at CES that he wanted to lead the technology industry, to be a senior statesperson. Now self-proclaimed defenders of the Internet were casting him as a heel. "Comcast leadership has an attitude of 'Damn the torpedoes, we're not doing anything wrong,'" Public Knowledge's Sohn says. "Well, the apple rots from the top, from Brian Roberts."

In August, the FCC issued a 67-page report that read as if Comcast was the worst company the FCC had ever regulated. Comcast lied about its actions, schemed to prevent oversight, confused customers, and put the future of Net-based innovation at risk. The commissioners doubted Comcast's contention that blocking BitTorrent helped its network. If that were the case, the report asked, why was the company doing it during times of light traffic and in areas where there were few bandwidth-sucking households? Wasn't it possible that Comcast was trying to stop a technology that was a threat to its own video-on-demand cable services? The final verdict was devastating: "In laymen's terms, Comcast opens its customers' mail because it wants to deliver mail not based on the address or type of stamp on the envelope but on the type of letter contained therein," the FCC wrote. "This practice is not 'minimally intrusive' but invasive and outright discriminatory."

The FCC didn't levy a fine. In fact, it's still not even clear whether the commission has the regulatory right to punish such behavior. But Comcast couldn't ignore the public spanking (though it's currently appealing the decision). It submitted a report to the FCC detailing exactly how its network operated, from how many homes share an upstream connection (about 100) to the equipment it used to fight P2P traffic (the Sandvine PTS 8210). Comcast swore off discrimination based on any particular technology. And it disclosed a policy that had secretly been on the books for a while but which it now intended to enforce: It would cap subscriber bandwidth at 250 GB per month, enough for a user to download 125 movies in standard definition or to watch 1,750 hours of YouTube.

"Was it handled perfectly? You know, it's like anything. I wish we could've done some things differently," Roberts says. "We hit a very raw nerve."

In the end, the geeks won. But they may have unwittingly hurt their own cause. Roberts' "concession"—putting uniform, nondiscriminatory caps on usage—will likely mark the demise of the all-you-can-eat Internet buffet. ISPs like Time Warner Cable and AT&T have begun running limited tests of capped service, penalizing consumers for going over arbitrary limits (ranging from 5 to 150 GB). Countries where low caps are already common have found themselves trailing the world in how they use broadband; in Australia, where the average cap is 15 GB, 70 percent of Internet users say they never download or watch video online.

When broadband is turned into a scarce commodity, surfing suddenly becomes a domestic negotiation: Is it worth it to watch one more Family Guy episode on Hulu, to run BitTorrent, or to download a movie from Netflix? A recent IDC study found that the vast majority of Internet users have no idea how much data they consume or even how to measure it. It's possible that Comcast's FCC-approved cure, if adopted by all ISPs, will strangle online video and drive consumers back to channel-surfing on cable TV, which would suit Comcast just fine.

To be fair, Comcast's 250-GB cap is far above current global standards, and Roberts still may turn out to be an ideal steward of Internet access, but not everyone is willing to wait around to see if he remains so generous. In November, President-elect Barack Obama picked Susan Crawford as an adviser on recasting the FCC. As a Comcast-blasting law professor, Crawford had equated Comcast's actions against peer-to-peer file-sharing with those carried out by the Net censors in China. She called the company's moves "obviously deceitful" and argued for the Feds to break it up. If Roberts thought 2008 was bad, 2009 may be shaping up to be truly horrible.

Brian Roberts is learning. And part of his education has come from an employee nicknamed Famous Frank. Last spring, a middle management customer-support executive named Frank Eliason, 36, started Twittering in his free time. Eliason is relentlessly upbeat and hated searching for "Comcast" on Twitter and seeing only slams. He asked for permission not just to defend the company but to actually try to fix the problems. If someone on Twitter complained about, say, an Internet outage, he'd start troubleshooting for them.

Eliason—who goes by the online handle comcastcares—had already been gaining attention, and accolades, when one of Comcast's senior executives realized that maybe Roberts should be clued in. She left Roberts a voicemail—voicemail, not email, is the preferred form of communication among Comcast executives. "You're doing what?" he responded in his own voice message. "We're just letting him go at it?" Nevertheless, he did nothing to stop it.

Eliason was actively trying to prevent customer complaints from spiraling into angry vendettas. These weren't just regular users, either, but Twitter users, many of whom were likely the same early adopters who love BitTorrent, who complain to the FCC, who might even enjoy building an anti-Comcast blog. Roberts began following the Twitter feed, and he realized that this was ... good. He OK'd adding people to Eliason's special forces team, overruling Eliason's direct boss.

Soon, Eliason became a minor Internet celebrity, hence his new nickname inside the company. He was asked to speak at conferences as well as to other companies struggling with similar problems.

Thanks to Famous Frank, Comcast began thinking about going even further. The weekend that the company published its response to the FCC—outlining how it managed its network and how it planned to change—one of Roberts' lieutenants suggested something even more radical: having ordinary company engineers go on message boards to answer questions. It was the kind of proposal that violated every tenet of the old cable code of business, and the matter could be settled only at an executive board meeting on the 52nd floor.

Roberts, sitting with his back to the window, listened to both sides. Then he declared it was time to be a bit more transparent. He finally got it. He was turning a page. "I think we should do this, but we all have to have thick skins," he said. "People are going to vent. But that's all right."

FCC Grills Comcast Again

Company called out for apparent VoIP throttling
Shaun Nichols

The Federal Communications Commission (FCC) may reopen its net neutrality case against Comcast.

The FCC sent a letter to the US cable provider earlier this week asking the company to clarify its position on voice-over-IP (VoIP) traffic handling.

The letter refers to a September filing in which Comcast told the FCC that it did not distinguish between VoIP traffic generated by its own Digital Voice service, and VoIP calls from competing services.

However, the FCC cited a recent Comcast FAQ page, which warns that traffic on other VoIP services could be slowed at times of peak usage, reducing call clarity, while its own service would not see such degradations.

The company contends that its service uses a "facilities-based" system not subject to the caps. The FCC is seeking clarification on this system.

"We request that Comcast explain why it omitted from its filings with the Commission the distinct effects that Comcast's new network management technique has on Comcast's VoIP offering versus those of its competitors," reads the letter.

"To the extent that Comcast maintains that its VoIP offering is a telephone service offering transmission facilities for VoIP calls distinct from Comcast's broadband offering, then it would appear that the fee Comcast assesses its customers for VoIP service pays in part for the privileged transmission of information of the customer's choosing across Comcast's network."

The matter could be of particular concern to both sides as it comes just months after the settlement of a similar net neutrality dispute stemming from Comcast's handling of peer-to-peer service traffic.

Comcast settled the issue by agreeing to cap bandwith usage for all users, rather than specific types of network traffic.

If the company is indeed providing preferential access to its own VoIP service, the FCC warned that Comcast could be subject to further action.

All Major Canadian ISPs Slow Down P2P Traffic

Net neutrality really is the hot topic at the moment. After the FCC slapped Comcast for slowing down BitTorrent users, Canada is now looking into the network management practices of its ISPs. And rightly so, as a CRTC investigation reveals that most of the ISPs in Canada actively slow down customers using P2P applications.

Ignited by the Comcast fiasco in the US, the concept of net neutrality has certainly been brought into the mainstream. ISPs are rarely transparent when it comes to their throttling, capping and otherwise interfering behavior, but in Canada they had to come clean due to a CRTC investigation.

The Canadian Radio, Television and Telecommunications Commission (CRTC) is currently looking into the traffic management practices of Canadian ISPs, which came to a head as a result of a dispute between CAIP, and its wholesale provider, Bell. The core objectives of the investigation are to examine the Internet traffic management practices being used, and check that they are in accordance with the Telecommunications Act.

The CRTC is looking at the effects of filtering on both regular customers and wholesalers, and the results of the first round of questions are just in. Even though some of the responses are filed in confidence (summarized by Chris Parsons), there is enough information to conclude that all major ISPs slow down customers, with most specifically targeting peer-to-peer traffic.

In their response to the CRTC investigation, Bell, Cogeco, Rogers and Eastlink all admit to slow down P2P traffic, arguing that it negatively affects network performance. Shaw, one of the other big players, admitted that customers are slowed down, but most of its responses were filed in confidence and P2P was not specifically mentioned.

Bell was more open about its practices, and admits using deep packet inspection (DPI) to throttle its individual customers and wholesalers. On Bell Wireline, P2P traffic is slowed down between 4.30 PM and 2 AM. To cope with the increasing bandwidth demands of its customers, they further plan to disconnect heavy users and introduce metered plans where customers pay for the bandwidth they use.

Cogeco started to throttle P2P users back in 2001, when they were only using a tiny fraction of what they do now. However, it was seen as necessary because of the increasing load these users put on the network. Like other ISPs, Cogeco considered other options such as metered plans, but these would not solve the network ‘abuse’ by P2P users. Furthermore, the ongoing battle with P2P users who strive to evade their management solutions led the ISP to use deep packet inspection (DPI) as well.

Rogers claims it has to throttle P2P users to prevent their network from becoming “the world’s buffet,” as they like to call it. Not only does this affect their network, their bandwidth bills also increased due to the growing popularity of BitTorrent and other filesharing networks. Similar to Bell and Cogeco, Rogers is also known to use DPI. Upstream P2P traffic is slowed down across their entire network, regardless of congestion,

Shaw filed most of its answers in confidence, but provided a rather paradoxical statement which clearly shows that they slow down upstream traffic. “The traffic management technologies have reduced the rate of upstream consumption to a more manageable rate,” they write, claiming that this allows their customers to reach their full contract speeds. Similar to the other ISPs Shaw is predicting that bandwidth usage will grow, and that traffic shaping is essential to manage their network.

In summary, we can conclude that there is no such thing as net neutrality in Canada. All of the larger ISPs slow down their customers, with most of them specifically targeting P2P traffic through deep packet inspection. Because of this, P2P users can’t enjoy the speeds they were promised, and several legitimate businesses whose income depends on delivering content through BitTorrent or other filesharing networks are unable to compete with those who don’t. It’s now up to the CRTC to draw the right conclusions.

For TV’s Newest Crime Fighter, the Lips May Lie, but the Face Tells the Truth
Ginia Bellafante

During the past decade, Fox has rarely been the place to go looking for the lessons in collectivism manifest on series like “The Unit” and “Lost” and “Law & Order,” all of which pay tribute to collaborative problem-solving on networks not owned by Rupert Murdoch. Fox doesn’t smell like team spirit. It is a Randian territory of lone saviors (Jack Bauer, John Connor, Gregory House) bushwhacking through impending catastrophe with the weaponry of a singular genius.

The latest addition to the stable is the human polygraph Dr. Cal Lightman (Tim Roth). His gift is determining the criminality of white supremacists, wayward teenagers, Congressional ethics committee chairmen and any and all dubious-seeming Homo sapiens on the basis of shifting body language — “micro-expressions” — which has the effect of turning him into a one-man F.B.I.-municipal police force-Department of Homeland Security on the new series “Lie to Me” (beginning Wednesday).

In addition to his law enforcement efforts, Lightman appears to be a hot ticket on the lecture circuit, where he offers a delicious flashback pageant of public impropriety and heinous misconduct, producing PowerPoint images of Kato Kaelin, O. J. Simpson, Eliot Spitzer, Saddam Hussein, whose sneers and sniggers and pursed lips he has studied like a rabbinical student hunkering down with the Book of Job.

Lightman himself is a fruit basket of stereotype — cocky, infallible, petulant, divorced, burdened by his proficiencies — who has spent decades reading faces and pronouncing certainties: “If your suspect is surprised for more than one second, he is faking it.” The show further embeds the network’s individualist ideologies with a view that suggests private industry can always go the government suits one better. No line item for the Office of Management and Budget, Lightman operates under the auspices of his own consulting firm, the Washington-based Lightman Group, which the feds reluctantly seek out when they are tripped up, presumably by their own inexorable incompetence.

The government minions forced to deal with Lightman on the ground swallow the idea like children forced to take castor oil. “Personally, I think what you do is a joke,” one of them lets him know. But Lightman has his own minions, and thus his own devotees, the people who work for him in his all-white-and-steel, airy-truth-palace of an office. Chief among them is Gillian Foster (Kelli Williams), a behavioral analyst saddled with the task of speaking in earnest exposition and made not to drink Lightman’s Kool-Aid so much as gulp it from the tap.

“Lie to Me” is an invitation to follow her lead, and in some sense it isn’t all that easy to decline the offer. There is an appealing cheekiness to the show’s insistence on dressing up hunch work as the purview of serious science. And there is some legitimacy to the claim: the series is based on the research of Paul Ekman, a professor of psychology at the University of California, San Francisco, who is a specialist in nonverbal communication and what his publishers call deception strategies.

Nancy Drew was pretty good at breaking down deception strategies, too. So was Reese Witherspoon in “Legally Blonde.” Throughout the history of modern popular culture we’ve gone in and out of defining female intelligence in terms of intuitive displays. I’m not sure what it means that television’s reigning intuitionists are now male (Lightman joins the strike force of Adrian Monk and “The Mentalist’s” Patrick Jane). And I’m not sure whether the regendering is a democratizing net positive for feminism or whether we should take offense that women’s intuition translates somewhere along the spectrum of cute while its male counterpart is meant to suggest the power of a mind brilliantly deducing.

Against my better judgment, I suspect I’ll keep watching “Lie to Me” until I figure it out.


Fox, Wednesday nights at 9, Eastern and Pacific times; 8, Central time.

Created and written by Samuel Baum; directed by Robert Schwentke; Brian Grazer, David Nevins, Steven Maeda and Mr. Baum, executive producers; Dustin Thomason, co-executive producer; Tom Szentgyorgyi, consulting producer; Josh Singer, supervising producer. Produced by Imagine Television in association with 20th Century Fox Television.

WITH: Tim Roth (Dr. Cal Lightman), Kelli Williams (Dr. Gillian Foster), Monica Raymund (Ria Torres) and Brendan Hines (Eli Loker).

Credit Card Processor Says Some Data Was Stolen
Eric Dash and Brad Stone

Heartland Payment Systems, a major payment processing company, disclosed a data breach on Monday that potentially exposed tens of millions of credit and debit cardholders to the risk of fraud in what could quickly become one of the country’s biggest data compromises.

Robert H. B. Baldwin Jr., Heartland’s president and chief financial officer, said that his company believed the card numbers, expiration dates, and in some cases cardholder names were exposed after attacks on its computer systems at the one point where data had been unencrypted.

Once consumers swiped their cards, so-called sniffer software captured that data as Heartland sought authorization from the major payment companies and banks. Customers of Visa, MasterCard, American Express and Discover Financial were all vulnerable.

“We have industry-leading encryption, but the data has to be unencrypted to request the information,” Mr. Baldwin said. “The sniffer was able to grab that authorization data at that point.”

Data thieves introduced the software as early as May, but Heartland did not detect the breach until it was alerted to the activity in late fall. The personal data of 600 million or more cardholders was vulnerable, but data security experts suggested data from far fewer accounts had been extracted. Other confidential information, like personal security codes, is not believed to have been compromised. That might limit damages.

Even so, the Heartland breach could wind up rivaling some of the largest data thefts. In January 2007, the discount retail chain TJX revealed that data on more than 45 million customers had been compromised. And 40 million cardholder accounts were exposed in the 2005 data compromise at a tiny payment processor, CardSystem Solutions.

Avivah Litan, a data security analyst, said that the Heartland breach could result in hundreds of millions in losses and other expenses. “If you add it all up, including legal costs, it could be as much as half a billion dollars in losses — or twice as big as TJX,” she said.

Mr. Baldwin said that Secret Service officials investigating the breach suggested that the thieves involved in the attack might be part of an “international ring of hackers that are introducing breaches at a number of financial institutions.”

The Heartland breach also showed that in spite of the adoption of more stringent standards and tougher oversight by banks and credit card companies, consumers are still vulnerable. All this is happening after credit card companies and merchants spent over $2 billion on establishing the Payment Card Industry standards, Ms. Litan said. “And yet the breaches continue and they get more serious.”

Heartland, based in Princeton, N.J., works with about 175,000 small merchants and processes about 100 million transactions a month. It has created a Web site, 2008breach.com, to provide information about the incident. Cardholders are not responsible for unauthorized fraudulent charges.

Trojan Hides in Pirated Copies of Apple's iWork '09

Malware hitchhikes on iWork installer, hijacks Macs, says security firm
Gregg Keizer

Pirated copies of Apple Inc.'s new iWork '09 application suite that are now available on file-sharing sites contain a Trojan horse that hijacks Macs and leaves them open to further attack, a security company said yesterday.

The "iServices.a" Trojan hitchhikes on iWork '09's installer, said Intego, an Austin-based company that specializes in Mac security software. "The installer for the Trojan horse is launched as soon as a user begins the installation of iWork, following the installer's request of an administrator password," Intego said in a warning published Wednesday.

Once installed, the Trojan "phones home" to a malicious server to notify the hacker that the Mac has been compromised, and to await instructions. Intego did not spell out what second-stage actions the iServices.a Trojan takes but noted that they could include delivering additional malware to the hijacked machine.

Intego said that iWork '09 download traffic on file-sharing sites has been brisk, claiming that as of early Wednesday, 20,000 copies had been downloaded. "The risk of infection is serious, and users may face extremely serious consequences if their Macs are accessible to malicious users," the company's alert continued.

Users on Pirate Bay, a popular BitTorrent tracking site, confirmed that copies of iWork '09 harbored the Trojan. "I can confirm that this contains a iServices trojan," said a user identified as "Aklacat" in a comment appended to one iWork '09 listing on Pirate Bay. "Little Snitch also confirms this," said Aklacat, referring to a Mac-only personal firewall.

According to the dates assigned to Pirate Bay's iWork '09 BitTorrents, most copies were posted before Apple announced it had dropped a form of copy protection from retail copies of the suite. On Monday, Apple said that it was not including serial numbers with iWork '09, an antipiracy measure it had used to keep customers from copying earlier versions of the bundle.

Apple unveiled iWork '09 at Macworld Conference & Expo on Jan. 6 when it touted changes and additions to Pages, the suite's word processor, and Numbers, its spreadsheet application.

IWork '09 retails for $79. Apple also offers a free 30-day trial version that does require a serial number -- delivered via e-mail at the time of payment -- in order to run as a fully functional version.

Mac-only malware is such a relative rarity that Apple has publicly mocked Microsoft Corp. about the number of worms, viruses and Trojans that take aim at the Windows operating system. Late last year, in fact, when Apple revised an online recommendation that Mac users consider running antivirus software, the move drew lots of attention.

Worm Infects Millions of Computers Worldwide
John Markoff

A new digital plague has hit the Internet, infecting millions of personal and business computers in what seems to be the first step of a multistage attack. The world’s leading computer security experts do not yet know who programmed the infection, or what the next stage will be.

In recent weeks a worm, a malicious software program, has swept through corporate, educational and public computer networks around the world. Known as Conficker or Downadup, it is spread by a recently discovered Microsoft Windows vulnerability, by guessing network passwords and by hand-carried consumer gadgets like USB keys.

Experts say it is the worst infection since the Slammer worm exploded through the Internet in January 2003, and it may have infected as many as nine million personal computers around the world.

Worms like Conficker not only ricochet around the Internet at lightning speed, they harness infected computers into unified systems called botnets, which can then accept programming instructions from their clandestine masters. “If you’re looking for a digital Pearl Harbor, we now have the Japanese ships steaming toward us on the horizon,” said Rick Wesson, chief executive of Support Intelligence, a computer security consulting firm based in San Francisco.

Many computer users may not notice that their machines have been infected, and computer security researchers said they were waiting for the instructions to materialize, to determine what impact the botnet will have on PC users. It might operate in the background, using the infected computer to send spam or infect other computers, or it might steal the PC user’s personal information.

“I don’t know why people aren’t more afraid of these programs,” said Merrick L. Furst, a computer scientist at Georgia Tech. “This is like having a mole in your organization that can do things like send out any information it finds on machines it infects.”

Microsoft rushed an emergency patch to defend the Windows operating systems against this vulnerability in October, yet the worm has continued to spread even as the level of warnings has grown in recent weeks.

Earlier this week, security researchers at Qualys, a Silicon Valley security firm, estimated that about 30 percent of Windows-based computers attached to the Internet remain vulnerable to infection because they have not been updated with the patch, despite the fact that it was made available in October. The firm’s estimate is based on a survey of nine million Internet addresses.

Security researchers said the success of Conficker was due in part to lax security practices by both companies and individuals, who frequently do not immediately install updates.

A Microsoft executive defended the company’s security update service, saying there is no single solution to the malware problem.

“I do believe the updating strategy is working,” said George Stathakopoulos, general manager for Microsoft’s Security Engineering and Communications group. But he added that organizations must focus on everything from timely updates to password security.
“It’s all about defense in depth,” Mr. Stathakopoulos said.

Alfred Huger, vice president of development at Symantec’s security response division, said, “This is a really well-written worm.” He said security companies were still racing to try to unlock all of its secrets.

Unraveling the program has been particularly challenging because it comes with encryption mechanisms that hide its internal workings from those seeking to disable it.

Most security firms have updated their programs to detect and eradicate the software, and a variety of companies offer specialized software programs for detecting and removing it.

The program uses an elaborate shell-game-style technique to permit someone to command it remotely. Each day it generates a new list of 250 domain names. Instructions from any one of these domain names would be obeyed. To control the botnet, an attacker would need only to register a single domain to send instructions to the botnet globally, greatly complicating the task of law enforcement and security companies trying to intervene and block the activation of the botnet.

Computer security researchers expect that within days or weeks the bot-herder who controls the programs will send out commands to force the botnet to perform some as yet unknown illegal activity.

Several computer security firms said that although Conficker appeared to have been written from scratch, it had parallels to the work of a suspected Eastern European criminal gang that has profited by sending programs known as “scareware” to personal computers that seem to warn users of an infection and ask for credit card numbers to pay for bogus antivirus software that actually further infects their computer.

One intriguing clue left by the malware authors is that the first version of the program checked to see if the computer had a Ukrainian keyboard layout. If it found it had such a keyboard, it would not infect the machine, according to Phillip Porras, a security investigator at SRI International who has disassembled the program to determine how it functioned.

The worm has reignited a debate inside the computer security community over the possibility of eradicating the program before it is used by sending out instructions to the botnet that provide users with an alert that their machines have been infected.

“Yes, we are working on it, as are many others,” said one botnet researcher who spoke on the grounds that he not be identified because of his plan. “Yes, it’s illegal, but so was Rosa Parks sitting in the front of the bus.”

This idea of stopping the program in its tracks before it has the ability to do damage was challenged by many in the computer security community.

“It’s a really bad idea,” said Michael Argast, a security analyst at Sophos, a British computer security firm. “The ethics of this haven’t changed in 20 years, because the reality is that you can cause just as many problems as you solve.”

Microsoft's Advice on Downadup Leaves Users Open to Attack, Says US-CERT

Instructions for disabling Windows' Autorun are flawed, security group says
Gregg Keizer

Microsoft Corp.'s advice on disabling Windows' "Autorun" feature is flawed, the U.S. Computer Emergency Readiness Team (US-CERT) said today, and it leaves users who rely on its guidelines to protect their PCs against the fast-spreading Downadup worm open to attack.

In an alert issued on Monday, US-CERT said Microsoft's instructions on turning off Autorun are "not fully effective" and "could be considered a vulnerability."

The flaw in Microsoft's guidelines are important at the moment, because the "Downadup" worm, which has compromised more computers than any other attack in years, can spread through USB devices, such as flash drives and cameras, by taking advantage of Windows' Autorun and Autoplay features.

Autorun, the focus of the US-CERT warning, lets Windows automatically run any program specified in the "autorun.inf" on, for example, a CD or a flash drive, as soon as the disc or device is inserted or connected. By default, Windows has Autorun enabled.

The problem is that Downadup, which as of last week had infected nearly 9 million PCs worldwide, tries to spread using USB-based devices, typically flash drives. The worm creates an autorun.inf file at the root directory of any USB-based device it finds connected to the infected machine. Then, when that device is later connected to an uninfected computer, the autorun.inf file copies the worm to the machine without any action on the part of the user or the user even knowing.

The result: another PC hacked by Downadup.

Although Microsoft has not formally recommended that users disable Autorun as an anti-Downadup measure, most security companies and researchers have in light of the autorun.inf infection vector. According to US-CERT, Microsoft's advice is useless.

"The 'Autorun' and 'NoDriveTypeAutorun' registry values [specified by Microsoft] are both ineffective for fully disabling Autorun capabilities on Microsoft Windows systems," the organization said. "Setting the Autorun registry value to '0' will not prevent newly-connected devices from automatically running code specified in the Autorun.inf file. It will, however, disable Media Change Notification (MCN) messages, which may prevent Windows from detecting when a CD or DVD is changed."

Likewise, the recommended "0xFF" setting for the NoDriveTypeAutorun registry entry, which Microsoft says "disables Autoplay on all drives," won't protect users from infection if they happen to double-click on the drive's icon in Windows Explorer, said US-CERT.

Instead, users should make a different modification to the Windows registry, US-CERT said. In the alert, it gave the new value as well as instructions on how to copy it to Windows Notepad and import it into the registry.

"Once these changes have been made, all of the Autorun code-execution scenarios described above will be mitigated because Windows will no longer parse autorun.inf files to determine which actions to take," read the US-CERT warning.

One security researcher said he was surprised that Microsoft didn't catch its recommendation errors, particularly in light of the ongoing Downadup attacks. "Seems unbecoming of Microsoft not to have been the one posting this information on a blog of theirs," said Andrew Storms, director of security operations at nCircle Network Security Inc.

He also bemoaned the need to edit the registry to disable Autorun. "Not only [is] editing the registry outside the [reach] of most people, but now we have learned that the information from the source is not complete," Storms added in an exchange via instant messaging.

Microsoft did not immediately reply to a request for comment on US-CERT's alert.

The Big Windows 7 Problem: XP Holdouts
Shane O'Neill

Microsoft hopes that the release of Windows 7 will solve problems ranging from desktop clutter to what Vista did to Microsoft's public reputation. But the toughest challenge may be to win over the group of people that arguably represent the software giant's biggest obstacle to success: Windows XP users.

The Windows 7 pitch, to date, takes direct aim at Vista's reputation as a bloated resource hog. As developers and members of the general public begin to tinker with the Windows 7 public beta, Microsoft is framing it as a lean and lithe OS, with the flexibility to run on all types of computers, from netbooks to high-end gaming laptops.

The new and streamlined user interface features of Windows 7 are well-documented at this point. A cleaned-up taskbar, the sleek Aero Peek GUI, mouse-hover Jump Lists and multi-touch capability have generated interest from users whose Windows desktops have been cluttered for too long.

Quicker, easier, more organized. Those were the buzzwords about Windows 7 features that Parri Munsell, Microsoft's Director of Consumer Product Management for Windows, used repeatedly in a recent interview from CES (Consumer Electronics Show) in Las Vegas.

"Our goal was to make the UI in Windows 7 much easier to navigate. We'll let the beta speak for itself but we have a high degree of optimism in it," Munsell says.

As for fastest growing segment of the PC market, netbooks, Munsell says that Microsoft has made it a priority to run Windows 7 on small form-factor notebooks.

"Windows 7 has been optimized and engineered to work with anything: from the smallest netbook to the most loaded laptop or desktop," he says.

A lot is expected of Windows 7, but can it do what at times has seemed impossible-win back the trust of XP users who have shunned Vista?

The software giant has stated outright that Windows 7 will not make significant architectural changes from Vista and will run most if not all the applications that run on Vista.

Yet just 21 percent of Windows users currently run Vista, according to Web metrics company Net Applications. Most Windows users (65 percent) still run XP; they like it and they are wary of the compatibility issues that have plagued Vista.

It's All About the Third-Party Apps

That wariness is not without cause, analysts say. Even though Microsoft is trying to use Windows 7 to move XP customers forward, it's still a Vista-like operating system and will have the same compatibility problems that are part of any OS upgrade, says Al Gillen, Research Vice President, System Software at IDC .

"If you don't run Vista today, Windows 7 will not be a silver bullet," he says. Ultimately, Gillen adds, it's not the operating system that matters as much as having updated third-party applications.

"Whether they are upgrading to Vista or Windows 7, XP users have to make sure third-party applications are compatible," he says.

Microsoft has warned users of the dangers of skipping versions of Windows entirely and has been trying to wean users off Windows XP through downgrade fees. Its success has been limited however as the Vista stigma lingers.

Microsoft's Munsell urges XP users to evaluate which third-party applications are important and make sure there is vendor support.

"It is important to avoid a situation where your critical application is no longer supported on Windows XP while not yet supported on Windows 7," Munsell says.

Transition to Windows 7 Easier?

Though the transition from XP to Windows 7 will be complex, it should be simpler as compared to the early days of Vista, says Michael Cherry, lead analyst with market researcher Directions on Microsoft.

When Windows Vista first shipped, Cherry says, people were not prepared for the application and hardware compatibility problems that came with an OS so different from XP.

"At this point there should be compatible versions of most applications and, when necessary, virtualization can be used to facilitate the upgrade," Cherry says.

"This is not to say that XP apps and drivers will work on Windows 7, but that there are now compatible replacements available, which should make the transition manageable."

If Microsoft wants to move customers forward with Windows 7, it must help XP users bridge the gap as much as possible, Cherry adds.

"Microsoft needs to help XP users determine if their hardware is up to running Windows 7, and which device drivers for their hardware and programs need updating," Cherry says. "It then needs to help people find the updated drivers and software."

Pandora Ads Invasive Commercials

Change has come to Pandora.com, the popular free music site that lets listeners craft radio stations to fit their tastes.

The site added 15-second commercial breaks to its streaming music service Tuesday as it continues to experiment with new ways to generate revenue.

But its founder promised the site will never carry as many audio ads as broadcast radio, despite the fact it pays substantially higher royalty fees to the recording industry.

"The fears people have about it overtaking the listening experience are unfounded," said Pandora founder and CEO Tim Westergren in a phone interview Tuesday. "It's going to be a fraction of what you hear on broadcast radio."

The changes effect both the 21 million users of its Web site and the 3 million people who use its iPhone application, which was the most-downloaded app of 2008, Westergren said.

Pandora blogged about a similiar experiment on its Web site in January 2007.

In Pandora's latest ad experiment, a brief plug for the Fox TV show "Lie To Me" interrupted the music stream of some listeners for 15 seconds after ten songs had initially played - the same commercial interupted again about 20 songs later.

"We're trying different things out right now," Westergren said "It's certainly going to be part of our future."

On average, people will hear a 15-second commercial about every two hours, Westergren said, adding that it is a targeted ad campaign and not everyone is hearing the commercials.

Fox Broadcasting is the only advertiser in the current campaign, which also features a plug for American Idol, Westergren said.

These changes were not unexpected, as online music providers face royalty fees substantially higher than other music providers such as satellite and broadcast radio.

In fact, rate hikes nearly sank Pandora and other online music services two years ago. Under the gradually increasing rates set forth by the Copyright Royalty Board in March 2007, Pandora.com would not be able to operate profitably, and would have to fold, said its founder Tim Westergren at the time.

Broadcast radio only pays publishing fees, and not the much higher performance fees that online services also have to pay.

For instance, The Krush radio station in Sonoma County, Calif. paid about $5,000 in publishing fees in 2007 to the recording industry to reach about 30,000 listeners a week on its FM signal. But under the federally mandated CRB ruling, it was required to pay more than double that -- about $11,000 a year -- to stream its radio broadcast online to just 100 listeners a day. And that was just for 2007. The royalty fees were set to increase through 2010, when The Krush was required to pay about $20,000 a year. And if the number of people listening online doubled, then so would its fees.

Since then, the recording industry has agreed to hold off on immediate implementation of the CRB rates, which online broadcasters credit with their continued existence.

Westergren said Tuesday that the two sides would announce an agreement on lower rates soon.

"We're just wrapping it up now. It's already kind of gone through the hairy part," Westergren said.

An exact announcement date, or details about the new royalty rates, could not be provided Tuesday because the deal still needed be finalized, Westergren said.

"There has to be a move towards parity. (The recording industry) can't go on with this absurd inequity," he said.

The new rates are expected to be significantly more favorable, and that is vital to Pandora establishing a sustainable business model, Westergren said.

Most of Pandora's $25 million in revenue in 2008 resulted from display ads, and Westergren said he was not sure how big a slice audio ads will play in future revenue. Pandora users can pay $36 a year to get the service without advertising.

It remains to be seen how listeners will react. Some might gravitate away from Pandora and listen to other options that don't have interruptions, such as iTunes or a friend's music stream.

One listener used Twitter to voice displeasure on Tuesday, "Even though I understand and I knew it was inevitable... booooo for hearing my first Pandora advertisement."

Another said, "Pandora just threw a radio ad at me, and that's the end of that. I will never use Pandora again. Sorry, but that's why I don't do radio."

Still, other listeners are likely to take the changes in stride considering broadcast radio stations, which have substantially lower royalty fees, also inject commercials. Plus, the popular online video site Hulu.com is rapidly attracting users despite commercial breaks inserted into the TV shows and movies its streams.

"Like any business we have costs, and we have to figure out a way to make it work," Westergren said.

With an Ultrathin Film, a Big Step Forward for Flexible Electronics
Henry Fountain

Flexible electronics — the kind that might be used in “smart” clothing, say, or in foldable displays that could make reading news online more like reading it in print — are still far from an everyday reality. But scientists in South Korea are reporting a significant advance toward the development of such devices.

In a paper in Nature, Jae-Young Choi of the Samsung Advanced Institute of Technology and Keun Soo Kim and Byung Hee Hong of Sungkyunkwan University and colleagues describe a technique for making stretchable thin electrodes out of graphene.

Graphene is a single-layer sheet of carbon atoms (the building block, in fact, of the graphite used in pencils) and has properties that make electronics engineers swoon. But making graphene sheets of a practical size has proved problematic.

The researchers used a process called chemical vapor deposition, in which methane gas mixed with hydrogen and argon is flowed over nickel foil at high temperatures, depositing carbon atoms from the methane on the nickel.

By cooling the foil quickly, just a few layers of graphene are obtained. And the graphene can be patterned by creating a pattern in the nickel first.

By etching away the nickel, the researchers were left with an ultrathin film of graphene that could be easily transferred to a different substrate, like flexible plastic.

In addition to being nearly transparent and having excellent electrical characteristics, the films are unaffected by bending or stretching. And the researchers say the process is scalable, so relatively large films can be made.

NFB Makes Films Free Online

$1.3M project to digitize the best of its films
CBC News

The National Film Board of Canada has launched a new project to allow Canadians to see its films through online streaming.

Oscar winners such as 1952's Neighbours, 1977's I'll Find a Way and 2004's Ryan are among the more than 700 films now available for screening online at NFB.ca.

The online screening room was created as part of a $1.3-million project to digitize the NFB's collection of historic films.

"This is part of our ongoing response to the digital revolution," NFB chair Tom Permutter said in an online news conference on Wednesday.

The NFB, which restructured its film programs over the past 18 months to free up resources for the digital project, plans to put 10 new films a month online.

Classics such as Mon Oncle Antoine and Nobody Waved Goodbye are free for online screening, along with pioneering animation by Norman McLaren and animated films such as The Big Snit and The Cat Came Back.

A group of filmmakers and curators chose the first films to be made available from among the 15,000 productions made by the NFB, said Deborah Drisdell, diirector of strategic planning.

"We wanted to show the world our work — everything from our oldest films to the most contemporary and also to include films that represented all the regions of Canada and our cultural diversity," she said.

Whether a film was chosen also depended on the NFB owning the digital rights.

The NFB had new video player software created for its online screening room, Perlmutter said.

The site features a handful of recent films or films related to current affairs on its front page, but all films can be found by title or with a search by filmmaker.
Site serves as 'virtual church basement'

There are trailers of upcoming releases, as well as interviews with filmmakers and other experts who discuss NFB films and recommend a "playlist" of works that might interest viewers.

The site serves the same function as a community screening of an NFB film, Perlmutter said, referring to it as a "virtual church basement or school auditorium."

In the news conference, he stressed the NFB's history as a pioneer of new audiovisual techniques and forum for voices that would not otherwise be heard.

"Many of these creators would never get a say and many works would never see the light of day without the help of the NFB," he said.

"We have a tremendous responsibility to dig deeper, push boundaries. We can and must do things that cannot be done by the private sector."

The site features films in both official languages and has special features for the hearing or visually impaired.

Perlmutter also urged the federal government to allocate money toward a digital strategy for Canada to keep up with the rest of the world. Britain, France and the Netherlands have all allocated money to preserve their films and make their collections available in digital format, he said.

At Sundance, IFC Prepares to Go on a Shopping Spree
Michael Cieply

For the most part, IFC Entertainment is not what anyone would call a big spender in the independent film market. The company, a unit of the Rainbow division of Cablevision Systems, is really opening the wallet when it gets to six figures in a world that likes to reckon individual film sales in the millions of dollars.

But IFC will probably turn out to be one of the most aggressive buyers at the Sundance Film Festival here when it comes to the number of films bought, if not the prices paid.

Jonathan Sehring, IFC’s president, and his crew were already here last Thursday to begin stocking up on pictures for their In Theaters and Festival Direct services, which send first-run movies to more than 50 million viewers in all, through their video-on-demand services.

IFC’s most prominent test case has been “Che,” directed by Steven Soderbergh. After playing in just five theaters, the movie is scheduled to make its video-on-demand debut on Wednesday, and Mr. Sehring is hoping that solid support from cable systems around the country will make it the independent film equivalent of a blockbuster.

“I’m hoping up in six figures, maybe 250,000 buyers” for the first 90 days, Mr. Sehring said Thursday, as he headed for the Sundance opening night premiere of “Mary and Max.” That many viewers would be roughly equivalent to about $18 million in ticket sales at the box office, a solid showing for an independent film, and almost as much as “Milk” took in for Focus Features in its first seven weeks.

At a press breakfast and panel discussion here on Monday, Mr. Sehring and Mr. Soderbergh are expected to talk about their experience with “Che,” and the rapid expansion of IFC’s pay-per-view ventures.

Festival Direct has already increased its releases to six a month, while In Theaters does about two. The new video-on-demand titles play for a 90-day period, meaning that IFC has about 18 films running at a time, so the pressure to buy has stepped up.

“We’re looking at everything,” Mr. Sehring said of his company’s buying plan for the Sundance and Slamdance film festivals this year.

Video-on-demand still accounts for a tiny fraction of revenue for new feature films. But it is already changing marketplace dynamics, especially for movies that had little or no chance of attracting interest from a theatrical distributor like Focus Features or Fox Searchlight.

For one thing, foreign films, while considered box-office poison by many conventional distributors, have been viable, if not exactly hot, on video screens.

IFC already holds rights to nine films that were entered in competition for the year’s best foreign film Oscar, and is shopping for more international titles among the dozens offered at Sundance. The nine already in hand include “Dog Eat Dog” from Colombia and “Everlasting Moments” from Sweden.

In another twist, IFC does not mind festival leftovers. In fact, it tends to avoid the first-night buying frenzies when some of the more prominent new titles are screened. “We’re not going to get in a bidding war,” Mr. Sehring said. “That’s not our business.”

Seeking Bergman Film Rights? Try Aspen
Brooks Barnes

As plot twists go, this one is a doozy: after an eight-year legal battle over the lease of a movie theater, the former owners of a multiplex in Aspen, Colo., now own the rights to Ingmar Bergman’s entire film library.

Or do they?

In late December an amateurish-looking Web site popped up offering for sale on DVD dozens of classic Swedish films, including those of Bergman, the film legend responsible for classics like “The Seventh Seal” and “Cries and Whispers.” The site, SwedishClassicFilms.com, also offered to sell exhibition rights.

The offer, so unusual as to be unbelievable, was not extended by Svensk Filmindustri, the giant Swedish company that has long held the rights to Mr. Bergman’s work and to the other Swedish art house classics on the Web site’s list, including Bo Widerberg’s “Elvira Madigan” and Lasse Hallstrom’s “My Life as a Dog.” Instead, the offer came from the former owners of the Isis Theater in downtown Aspen.

In July a Colorado judge transferred all of Svensk’s film rights to Isis Litigation L.L.C. after Svensk refused to pay damages resulting from a renovation of the Isis Theater in the late 1990s. Now, having finished recording its bounty with the United States Copyright Office — and with the documents to prove it — Isis has set out to make some money.

“We never wanted to go into the Swedish film business,” said Jack L. Smith, a Denver lawyer at the firm Holland & Hart who has represented Isis in its legal battle with Svensk since the beginning. “But now we own these films and are in the process of trying to figure out how to market them.”

What Isis actually owns is subject to some debate by outsiders.

Hugh D. Wise III, a Colorado lawyer who at one time represented Svensk, could not be reached, and e-mail inquiries and telephone calls to Svensk and its corporate owner, the Bonnier Group, went unreturned. In July Torsten Larsson, a Bonnier entertainment executive, told Variety, “A court decision in Colorado means nothing in Sweden.”

After a casual perusal of recent court orders in the case, Louis P. Petrich, a lawyer who is considered one of Hollywood’s leading authorities on copyright and trademark matters, said he was unconvinced by the Isis claim. “I don’t see any basis for a state court to do this,” Mr. Petrich said.

Bankruptcy is one exception, Mr. Petrich said, and a court could perhaps transfer certain nonexclusive copyrights. But nonexclusive rights are significantly less valuable. “With nonexclusive rights, you’re not going to be an infringer if you use them, but you can’t prevent anyone else from using them either,” Mr. Petrich said.

Back in Colorado, where Mr. Smith’s firm bills itself as “The Law Out West,” Isis disagrees. “The rights that Isis now holds are exclusive rights,” Mr. Smith said. “Svensk has no further rights to the films.”

Mr. Smith said that the original lawsuit involving the theater was served to Svensk at an office in California, now defunct, establishing jurisdiction in the United States. Furthermore, Mr. Smith said, Colorado law holds that a state judge can order the transfer of assets if a defendant refuses to pay a judgment.

Svensk has certainly refused to pay — or to participate in recent court proceedings at all.

The Isis and Svensk dispute began in 1997. The Swedish company, according to court documents, was then a co-owner of Resort Theaters of America, which operated a chain of cinemas in second-home communities like Aspen. Resort Theaters in 1997 had asked the owners of the Isis Theater, which opened in 1915, to allow them to convert the historic building into a five-screen cineplex. To persuade Isis to participate in the costly project, Svensk guaranteed in writing the long-term lease.

In 2000 Resort Theaters filed for bankruptcy and rejected the Isis lease. Svensk refused to pay on the guarantee. In 2003 a Colorado court found Svensk liable, awarding Isis a judgment of almost $7 million. Svensk appealed the judgment to the Colorado Court of Appeals and the Colorado Supreme Court, which each found in favor of Isis.

In May 2008 Colorado District Judge Denise K. Lynch found Svensk in contempt of court for refusing to disclose its assets to Isis, fining the company $2,500 a day. Around this time, according to Mr. Smith, Svensk stopped communicating with him or with the court, and the company’s original lawyer, Mr. Wise, resigned. In July Judge Lynch ordered Svensk to hand over all its films to Isis within 30 days.

After silence from Svensk — and with the judgment against Svensk now reaching about $10 million — Judge Lynch in September appointed an outside lawyer to transfer all of Svensk’s film rights to Isis, a process of filing with the United States Copyright Office that took until December to complete.

Mr. Smith says Isis — he won’t name the members of the investor group publicly, except to say “there is no major media company or the like involved” — now intends to capitalize on its new asset. (The Aspen multiplex is still operating, but under different owners who have nothing to do with this litigation.) The library of Bergman, who died in 2007, is just the tip of the Svensk cinematic iceberg, with some 200 titles, most of them obscure, also registered by Isis with the copyright office.

Isis lacks physical prints of the films, but Mr. Smith says that is not of primary concern. DVDs now available in the market contain digital copies of sufficient quality, Mr. Smith said. “We are still in the process of figuring all of that out,” he said.

Fans of Bergman in particular and of Swedish cinema in general are likely to applaud any action at all involving the Svensk library. In the United States, at least, very little distribution has taken place in recent years, possibly because of a lack of commercial interest but also possibly because, as Mr. Smith contends, Svensk wanted to avoid the market to avoid seizures that might have been made to satisfy the Isis judgment.

Since 2005, after the Colorado Supreme Court ruled in its favor, Isis has been paid royalties from some DVD distribution of Svensk works by companies like Janus Films, a distributor of classic and foreign films.

Those royalties total $520,000, according to Mr. Smith.

Mr. Smith said that Isis was willing to transfer the rights back to Svensk if it paid off the judgment. Otherwise, he added, Isis would seek buyers for the library or use it in any way it could.

Who might buy the library? Film-financing experts said that companies like Janus or International Film Channel could kick the tires, but that the holdings might not be as valuable as Isis hopes.

“This library is certainly very prestigious but probably has very little commercial viability,” said Amir Malin, a partner at Qualia Capital, a media-focused investment company with assets that include several large film libraries.

“I think any serious player would take one look at the unusual circumstances here and decide it’s too much of a legal risk,” he continued. “It may end up being an interesting tale and not much else.”

How the Movies Made a President
Manohla Dargis and A. O. Scott

BARACK OBAMA’S victory in November demonstrated, to the surprise of many Americans and much of the world, that we were ready to see a black man as president. Of course, we had seen several black presidents already, not in the real White House but in the virtual America of movies and television. The presidencies of James Earl Jones in “The Man,” Morgan Freeman in “Deep Impact,” Chris Rock in “Head of State” and Dennis Haysbert in “24” helped us imagine Mr. Obama’s transformative breakthrough before it occurred. In a modest way, they also hastened its arrival.

Make no mistake: Hollywood’s historic refusal to embrace black artists and its insistence on racist caricatures and stereotypes linger to this day. Yet in the past 50 years — or, to be precise, in the 47 years since Mr. Obama was born — black men in the movies have traveled from the ghetto to the boardroom, from supporting roles in kitchens, liveries and social-problem movies to the rarefied summit of the Hollywood A-list. In those years the movies have helped images of black popular life emerge from behind what W. E. B. Du Bois called “a vast veil,” creating public spaces in which we could glimpse who we are and what we might become.

Filmmakers as diverse as Charles Burnett, Spike Lee and John Singleton have helped tear away that veil, as have performers who have fought and transcended stereotypes of savagery and servility to create new, richer, truer images of black life. Along the way an archetype has emerged, that of the black male hero, who, like Will Smith in “Independence Day,” rises from the ashes — in the case of that movie, the smoldering ashes of the White House — to save the day or just the family vacation. The movies of the past half-century hardly prophesy the present moment, but they offer intriguing premonitions, quick-sketch pictures and sometimes richly realized portraits of black men grappling with issues of identity and the possibilities of power. They have helped write the prehistory of the Obama presidency.

Modern African-American history has been, among other things, a series of firsts, and the first black movie star — the first to win an Oscar in a lead role and the first to see his name featured above the title in movie advertisements — was Sidney Poitier. For much of the 1960s Mr. Poitier bore the special burden of being the only one. He became a symbolic figure not only for other African-Americans but also for the nation as a whole: the Black Everyman.

In 1961, the year Mr. Obama was born, Mr. Poitier played Walter Lee Younger, the flawed, ambitious protagonist of “A Raisin in the Sun.” Subsequent roles would draw on some of that character’s anger and idealism, but they were more concerned with addressing the thorny questions of African-American male authority. How does a black man assert leadership in a society that expects, and is often willing to enforce, his subservience? How does he reach some accommodation with the white world without sacrificing his integrity or his self-respect?

Confronting these challenges in movies like “In the Heat of the Night” and “Guess Who’s Coming to Dinner,” Mr. Poitier became an ambassador to white America and a benign emblem of black power, though not a favorite of the Black Power movement. Almost as soon as they were released, in 1967, those earnest, integrationist, liberal pictures started to look old-fashioned and naïve. As riots engulfed American cities and a more militant black politics threatened to overshadow the civil rights paradigm, Mr. Poitier, a canny political thinker and a serious activist, was criticized for being insufficiently race-conscious.

In 1971, two years after the black scholar Larry Neal scolded Mr. Poitier in The New York Times for his choices (“There is no sense in being a million-dollar shoeshine boy”), Melvin Van Peebles’s independent production “Sweet Sweetback’s Baadasssss Song” helped usher in a new kind of African-American male representation. Hailed by Huey P. Newton as the “first truly revolutionary black film made,” this scrappy, low-budget triumph and its roving, carnal hero offered a rollicking alternative to the neutered black male of the sort that Mr. Poitier had often played.

Yet even as he stood as a not-so-benign emblem of black power, erotic and otherwise, the hypersexualized black male also became fodder for white exploitation. In the years since, much like the virgins and whores of every color in movies about women, black male characters have often been divided along an axis of virtue and sin, forced to play cop or thug, saint or sociopath. Such is the seductiveness of the Black Outlaw that, after watching Morgan Freeman slink across screen as a pimp called Fast Black in the tense 1987 drama “Street Smart,” Pauline Kael was moved to ask if he was the greatest American actor in movies.

Not all Outlaws are pimps; sometimes they just roll like them. It seems telling that in 2002 Denzel Washington became the second African-American man to win an Oscar for best actor playing a dirty Los Angeles police detective in the thriller “Training Day.” Mr. Washington brought a queasy erotic charge to his character’s violence that seemed intended to erase every last trace of his stoic, heroic, Poitieresque profile in films like “Philadelphia” and “Remember the Titans.” This was Denzel the Bad, with his black leather jacket and pumping big guns, cinematic soul brother to Samuel L. Jackson in “Pulp Fiction” and just about every other movie Mr. Jackson has starred in where he has wreaked vengeance on anyone unlucky enough to get in his way.

The violence can be just as thrilling when it’s strictly verbal. Richard Pryor was among the first comedians to discover that a white audience could be won over by being provoked and insulted. He built his stand-up act, which had wide crossover appeal, on a foundation of profane, confrontational truth-telling and never shied away from the briar patch of race. On his albums and above all in his concert films, he aired a mountain of social, racial and psychosexual dirty laundry, turning himself into an anxious, libidinous embodiment of the American id.

Pryor, the Black Provocateur of the 1970s, worked a little too blue, in his prime, for network television, so he entered the pop-cultural mainstream, somewhat improbably, as a movie star. He teamed up with Gene Wilder in a series of sweet and silly interracial buddy comedies and also starred in “Blue Collar” and “Which Way Is Up?,” in which he combined the persona of black comic everyman with that of battered and beleaguered working-class hero.

Later, as his own career foundered, Mr. Pryor’s influence spread far and wide. Chris Rock, with his commitment to political and sexual candor and his joyful disdain for the sensitivities of the audience, is perhaps his most obvious heir. But that line of succession passes through the career of Eddie Murphy, who also provides a crucial (and sometimes underestimated) link in the continuum of black movie stars that runs from Mr. Poitier to Mr. Washington to Mr. Smith.

As a young member of the rebooted “Saturday Night Live” cast in the early 1980s, Mr. Murphy (who, like Mr. Obama, was born in 1961) first made his mark lampooning black archetypes and celebrities of all kinds. In his concert movies and stand-up routines, he was swaggering and sometimes obnoxious, but his ability to combine ingratiating jokiness with cold-eyed hostility came through most successfully in feature films, where he made the transition from comic foil (in “48 Hrs.” and “Trading Places”) to action hero (in “Beverly Hills Cop”) with astonishing grace and speed.

When Mr. Murphy, on “SNL,” made fun of Bill Cosby — gumming a cigar and extolling the virtues of Jell-O Pudding Pops — it was an act both of homage and of Oedipal aggression. In 1984 Mr. Cosby may have already been a father figure to younger black entertainers, but his career as America’s dad was just beginning, with the debut of “The Cosby Show” on NBC. The novelty of that series, at once revolutionary and profoundly conservative, lay in its insistence, week after week, that being black was another way of being normal.

The traditional composition of the Huxtable family, with the father as its benevolent, sometimes bumbling head, was part of the series’s strategy of decoupling blackness from social pathology. “The Cosby Show” did not deny the existence of serious problems in black America — not least the problem of absent fathers — but the presence of Cliff Huxtable, in his own home and yours, suggested that the problems were not intractable.

And it is striking how powerful and appealing the figure of the Black Father has become in the past 25 years — how many younger, more iconoclastic performers have come home to Cliff Huxtable. Mr. Murphy himself, for instance, in the Dr. Dolittle movies, is channeling the man he used to mock, and Bernie Mac, who started out as a profane truth-teller in the Richard Pryor tradition, reached his pop-cultural apotheosis as a put-upon patriarch in the sitcom that bore his name. Even Ice Cube, without shedding his gangster scowl, settled into a comfortable niche as a family man in the “Barbershop” and “Are We There Yet?” franchises.

Black men have also flourished on screen as surrogate, spiritual fathers. Much like the wee green Jedi master who instructs Luke Skywalker in “Star Wars: Episode V — The Empire Strikes Back,” the Black Yoda helps guide young (white) heroes to their destinies. Routinely paired opposite callow, less expert actors like Keanu Reeves, Ashley Judd and Ben Affleck, Mr. Freeman in particular can be relied on to provide counsel and ballast to even the most lightweight genre exercises, along with a sense of purpose and moral seriousness. The touch of gravel in his voice is suggestive of long, hard-traveled roads, while the sagging, doggone tired and mournful eyes look as if they have borne witness to real pain. Much like James Earl Jones before him, though with less basso profundo, Mr. Freeman has become the go-to guy for voice-of-God narration, and for playing the Big Man upstairs.

Yoda himself is a science-fiction variation on Jiminy Cricket, the cute little critter who, in the 1940 Disney classic, advises Pinocchio to “always let your conscience be your guide.” In Hollywood, black characters have often provided this kind of advisory role, chirping friendly counsel from the sidelines, as Hattie McDaniel does when she maternally scolds (and protects) Vivien Leigh in “Gone With the Wind” or when an avuncular Bill Robinson (a k a Bojangles) teaches Shirley Temple how to dance up a flight of stairs in “The Little Colonel.” These mentor-student relationships invoke what the historian Donald Bogle calls the “huckfinn fixation,” movies in which a good white man, having gone up against the corrupt (white) mainstream, takes up with a “trusty black who never competes with the white man and who serves as a reliable ego padder.” The white hero “grows in stature” from this association because “blacks seem to posses the soul the white man searches for.”

For years the price of this soul was sometimes paid in black flesh. Movie history is littered with the mangled (Joe Morton in “Terminator 2”), flayed (Mr. Freeman in “Unforgiven”) and even mauled (Harold Perrineau in “The Edge”) bodies of supporting black characters, some sacrificed on an altar of their relationships with the white headliners, others rendered into first prey for horror-movie monsters. There has often been a distinct messianic cast to this sacrifice, made explicit in films as different as the 1968 zombie flick “Night of the Living Dead” and the 1999 prison drama “The Green Mile.” In the second, Michael Clarke Duncan plays a death-row inmate who suggests a prison-house Jesus: “I’m tired of people being ugly to each other. I’m tired of all the pain I feel and hear in the world every day.” More recently, Will Smith picked up the mantle of the Black Messiah in four of his star turns: “The Pursuit of Happyness,” “I Am Legend,” “Hancock” and “Seven Pounds.”

Savior, counselor, patriarch, oracle, avenger, role model — compared with all this, being president looks like a pretty straightforward job. Barack Obama, after all, is only one man (and only half black) and is working from a script that has yet to be written. But the fantasies of black heroism that have pervaded our popular culture give some sense of what the country hopes for in its new leader, whose burden is not the same as the one taken up by the 42 white men who preceded him.

In ‘Geek Chic’ and Obama, New Hope for Lifting Women in Science
Natalie Angier

With the inauguration of an administration avowedly committed to Science as the grand elixir for the nation’s economic, environmental and psycho-reputational woes, a number of scientists say that now is the time to tackle a chronic conundrum of their beloved enterprise: how to attract more women into the fold, and keep them once they are there.

Researchers who have long promoted the cause of women in science view the incoming administration with a mix of optimism and we’ll-see-ism. On the one hand, they said, the new president’s apparent enthusiasm for science, and the concomitant rise of “geek chic” and “smart is the new cool” memes, can only redound to the benefit of all scientists, particularly if the enthusiasm is followed by a bolus of new research funds. On the other hand, they said, how about appointing a woman to the president’s personal Poindexter club, the President’s Council of Advisers on Science and Technology? The designated leaders so far include superstars like Harold Varmus, a Nobel laureate, and Eric Lander, genome meister.

The Rosalind Franklin Society, a group devoted to “recognizing the work of prominent women scientists,” has suggested possible co-chairwomen for the panel. Its candidates include Shirley Ann Jackson, a nuclear physicist and president of Rensselaer Polytechnic Institute, and Shirley Tilghman, a molecular biologist and president of Princeton University. Others have proposed Jacqueline Barton, a chemist and MacArthur fellow at the California Institute of Technology. Or, given the increasing importance of brain research, how about a prominent female neuroscientist like Nancy Kanwisher of the Massachusetts Institute of Technology or Carla Shatz of Stanford University?

“People say, oh, we shouldn’t have quotas, but diversity is a form of excellence, and there are plenty of outstanding women out there,” Jo Handelsman, president of the Franklin society and a microbiologist at the University of Wisconsin, said in an interview. “You don’t have to lower your standards in the slightest — you just have to pay attention.”

Some would like to see novel approaches to treating systemic problems that often work against women’s scientific ambitions. Mary Ann Mason and Marc Goulden of the University of California, Berkeley, have gathered extensive data showing stark male-female differences in the family structure and personal lives of academic researchers at the top tiers of the profession.

Surveying outcomes for 160,000 Ph.D. recipients across the United States, the researchers determined that 70 percent of male tenured professors were married with children, compared with only 44 percent of their tenured female colleagues. Twelve years or more after receiving their doctorates, tenured women were more than twice as likely as tenured men to be single and significantly more likely to be divorced. And lest all of this look like “personal choice,” when the researchers asked 8,700 faculty members in the University of California system about family and work issues, nearly 40 percent of the women agreed with the statement, “I had fewer children than I wanted,” compared with less than 20 percent of the men. The take-home message, Dr. Mason said in a telephone interview, is, “Men can have it all, but women can’t.”

From a purely Darwinian point of view, expecting a young woman to sacrifice her reproductive fitness for the sake of career advancement is simply too much, and yet the structure of academic research, in which one must spend one’s 20s and early 30s as a poorly compensated and minimally empowered graduate student and postdoctoral fellow, and the remainder of one’s 30s and into the low 40s working madly to earn tenure, can demand exactly that.

Nor do all young men in science accept the notion that their lab bench must double as a sleeping cot while their wives take care of the kids. In a new survey of 19,000 doctoral students at the University of California, Dr. Mason and her colleagues found that while two-thirds of the respondents either had or planned to have children, 84 percent of the women and 74 percent of the men expressed worry about the family-unfriendliness of their intended profession, and many had changed their plans accordingly. While 40 percent of the male science graduate students and 31 percent of the women said they had begun their Ph.D. programs intent on pursuing an academic career — still considered the premier path to science glory — a year or more into their studies, only 28 percent of the men and 20 percent of the women still hoped to become research scientists at a university.

Dr. Mason and other legal experts suggest that President Obama might be able to change things significantly for young women in science — and young men — by signing an executive order that would provide added family leave and parental benefits to the recipients of federal grants, a huge pool of people that includes many research scientists.

Whatever the impediments, women have made great strides in most areas of science. According to Joan Burrelli of the National Science Foundation, whereas 50 years ago women earned a piddling 8 percent of the science and engineering doctorates, by 2006 they claimed a 40 percent share. In 1973, only 6 percent of the Ph.D. scientists employed full time in academia, business or elsewhere were women; by 2006 the number had risen to 27 percent. Over that same time frame, women’s share of full professorships in the sciences quadrupled, to about 20 percent. Yet the stats vary sharply from field to field: 26 percent of full professors in the life sciences are women, but in physics, 6 percent.

For many female physicists, the mystery of women’s slow progress through their ranks is nearly as baffling as the research mysteries they confront in the lab. Of course, only 6 percent of physics professors are female; only 4 to 6 percent of the matter in the universe is visible. “Sound familiar?” Evalyn Gates, the assistant director of the Kavli Institute for Cosmological Physics at the University of Chicago, said wryly.

She has urged her colleagues to attack the problem of low female numbers as they would any scientific problem, by systematically gathering data, checking their detectors, factoring out background noise. Yes, girls and women leak out of the pipeline in comparatively greater numbers than males for every scientific discipline, she said, but they fall out of physics first and fastest. Why should it be, she said, that almost half of high school students in Advanced Placement physics classes are girls, but women earn only a fifth of bachelor’s degrees in physics? What turns girls away from physics so early?

Some have suggested that girls just can’t handle the advanced math of physics. Yet in an analysis of high school students’ performance on standardized math tests, published last summer in the journal Science, Janet Hyde and her colleagues found no gender differences in average performance, and even at the uppermost tails of achievement the discrepancies were minor and inconsistent: among whites who scored in the top 1 percent, there were two boys for every girl, whereas among Asian top scorers, there was one full girl for every nine-tenths of a boy. Besides, said Dr. Gates, female students earn half of the bachelor’s degrees in another math-heavy discipline called — mathematics.

Others have insisted that women just don’t like physics, perhaps because it seems cold and abstract, concerned with things rather than the flesh-and-blood focus of female-friendly fields like biology. But such reasoning, Dr. Gates said, cannot account for the fact that women earn half of the undergraduate degrees in chemistry, which is not quite plush toy material. “Something different is going on with physics, and we don’t know what it is yet,” she said. The culture? Bubble-headed television shows like “The Big Bang Theory,” with its four nerdy male physics prodigies and the fetching blond girl next door?

The difficulties are not confined to America. Surveying some 1,350 female physicists in 70 countries, Rachel Ivie and Stacy Guo of the American Institute of Physics found that, worse than family balance issues or lack of day care options, was the problem of public perception. The women were passionate about their work. They didn’t choose physics; physics chose them. Yet 80 percent agreed that attitudes about women in physics needed a serious overhaul.

As long as we’re making geek chic, let’s lose the Einstein ’do and moustache.

Inauguration Crowd Will Test Cellphone Networks
Matt Richtel

The cellphone industry has a plea for the throngs descending on the nation’s capital for the presidential inauguration: go easy on the mobile communications.

The largest cellphone carriers, fearful that a communicative citizenry will overwhelm their networks, have taken the unusual step of asking people to limit their phone calls and to delay sending photos. The carriers are also spending millions of dollars to temporarily and substantially upgrade their networks in Washington.

Dropped calls, lost photos or delayed text messages are always a risk during spikes from sporting events and concerts. People often feel compelled to share these events with others, and that takes bandwidth.

Cellphone cameras are taking better pictures all the time, and sending those high-resolution images quickly floods the airwaves. The Obama crowd — which could exceed two million — is expected to be mostly young, just the group accustomed to staying in touch by uploading photos, blog posts and tweets on Twitter.

Many news organizations, including The New York Times, are asking people to send photos of inaugural events via e-mail.

For those coming to pay homage to the BlackBerry-toting president, the inauguration has the potential to be a wireless Woodstock. If, that is, the networks can handle it.

“If some of these estimates come true, people should anticipate delays with regards to sending text messages or making phone calls or getting onto the Internet,” said Joe Farren, spokesman for the Cellular Telecommunications and Internet Association, an industry trade group. It has asked people to send texts rather than make phone calls (text uses less bandwidth than speech) and to send photos only after the event.

“We can only bend the laws of physics so much,” Mr. Farren said.

To limit problems, the carriers are adding radios to the cell towers to pick up more signals and adding landlines to carry those signals from the towers to network centers. They are bringing in trucks costing hundreds of thousands of dollars that can transmit signals, some of which also have on-board generators in case of a power failure.

But some consumers and consumer advocates say the industry should not be patting itself on the back for its efforts; rather, it should be apologizing for charging consumers for a service that does not always work.

Gene Kimmelman, vice president for international affairs for the Consumers Union, the nonprofit that publishes Consumer Reports, said people in Washington may not get seamless service, but they will invariably get a bill at the end of the month.

“It’s like paying for an all-you-can-eat buffet and discovering there are only scraps left,” Mr. Kimmelman said. He suggested another way the carriers might spend their millions of dollars: “Maybe they should offer a rebate if they cut usage on Inauguration Day.”

The inauguration, he said, “is indicative of a common problem that consumers are getting charged for a quality of service that isn’t being delivered.”

Cellphone service, while spotty at times, has certainly improved in recent years. The challenges are acute at major events, which push demand past what the networks are intended to process and transmit. But many such events have predictable crowd sizes, enabling the carriers to beef up capacity.

“We know how many people can pack into a race track or concert,” said John Johnson, a spokesman for Verizon Wireless. Given the enthusiastic crowds that Barack Obama has drawn throughout his campaign, Verizon cannot easily predict the call volume on Tuesday. “It’s unprecedented,” said Mr. Johnson.

Verizon has several mobile units in its reserve known by their animalistic acronyms: COWs and COLTs (for cells on wheels and cells on light trucks).

These trucks cost hundreds of thousands of dollars. But carriers also have “sat COLTs,” which carry satellite dishes to send signals independent of terrestrial networks and power supplies.

“You drive it where it needs to go, park it, push a couple of buttons, the mast will deploy, the dish will deploy and our generator and satellite ensures we’re fully self-contained and independent,” said Tanya Lin, manager of emergency response team operations for Sprint. The company is bringing in two such trucks, in part to be prepared for any emergency that could compromise the usual infrastructure.

Sprint Nextel, which said it had been planning for the inauguration since April, has also increased capacity of its cell sites and terrestrial transmission lines to prepare the network to sustain 10 to 15 times the number of users it would serve on its networks during a normal day.

The company is increasing coverage not just in the city, but also along the route that brought the Obama and Biden families from Philadelphia to Washington on a whistle-stop train tour.

AT&T Mobility said it was spending $4 million to upgrade its networks. The company said that along the parade route, it was adding 80 percent to the capacity of its 3G network, its much-maligned high-speed data network; the company is improving its slower 2G network by 69 percent and increasing staff by 60 percent. It has increased coverage at 11 major hotels. And it has two satellite COLTs and two reserve satellite COLTs.

Social networks are also expecting a spike in traffic to their sites as inauguration attendees upload snapshots to Web sites like Facebook and Flickr and write to one another throughout the event.

Biz Stone, co-founder of Twitter, said the company was hoping to sidestep network hiccups. He is not expecting the same traffic spikes as during the election, when the site was flooded with as many as 10 messages a second, but says the service “will nevertheless be doubling our through-put capacity before Tuesday.”

Indeed, for some incessant communicators — the members of Generation Twitter — experiences seem complete only if they are shared via mobile device, said James E. Katz, the director of the Center for Mobile Communication Studies at Rutgers. The devices also let attendees show off their presence to those not able to be there in person.

He said that the carriers who were asking people to communicate judiciously were fighting “human nature in two ways.”

“One is asking people to postpone the instant gratification,” he said. The other is that the attendees who respect the request to text and not talk, or forgo sending photos, will be frustrated if they see others in the crowd indulging.

“This is a great opportunity,” he said, “for the cellphone companies to show they are reliable companies that do get calls through.”

Jenna Wortham contributed reporting.

Fake Sites Spreading Malware Claim Obama Won't Take Oath
Gregg Keizer

Sites claiming President-Elect Barack Obama will refuse to take the oath of office Tuesday are serving up attack code believed to be programmed by the same hackers responsible for the notorious Storm bot Trojan, researchers said this weekend.

According to researchers at several security companies, including F-Secure Corp. , MX Logic Inc. and Trend Micro Inc. , spam campaigns are in gear that try to trick users into visiting malicious Web sites hosting variations of "Waledec," the Trojan horse thought to be the successor to Storm.

Sam Masiello, vice president of information security at MX Logic, was one of the first to call attention to the attacks, which begin with one-line spam messages such as "Haven't you heard latest news about our president-elect?", "Barack Obama abandoned sinking ship," and "Obama doesn't wany [sic] anymore to be a president."

The links in those messages lead to a legitimate-looking site that resembles the real Obama-Biden campaign site . The fake site contains both bogus and real news stories. At the top of the page is a story with the headline "Barack Obama has refused to be a president," that includes text which reads, "On the Eve of Inauguration Day President-elect Barack Obama made statement. He declared that he is definitely NOT ready for this position."

Clicking on a link to read more of the story triggers a download of an executable file that is in fact a variant of the relatively-new Waledec , according to researchers at Trend Micro and F-Secure.

Waledec has been linked to 2008's Storm by researchers including Joe Stewart , director of research at Atlanta-based SecureWorks Inc. and one of the leading experts on botnets. Last week, Stewart released a new census of the world's biggest botnets, and put Waledec in the No. 9 spot with an estimated 10,000 hijacked Windows PCs under its control.

Waledec, said Stewart, shows all the signs of having been written by the same group, if not the same person, that crafted Storm. "It's so similar that it's unlikely that it's a different group," he said last week, citing the similarity of the messages that start the attacks, as well as the malware's coding.

The Waledec bot first began infecting systems just before Christmas , and used phony holiday greetings and e-cards -- a tactic also employed by Storm during 2008 -- as bait.

"As is often the case with these new outbreaks, [antivirus] detection is scarce so be aware of this new tactic," Masiello said in an entry to the MX Logic security blog Friday evening. The Englewood, Colo.-based company was tracking approximately 4,000 fake Obama e-mails per hour on Saturday.

Obama is scheduled to take the oath of office as the 44th U.S. president on Tuesday in Washington D.C. One real concern is that the planned live-streaming of the event will tax the Internet's capabilities. Experts, however, have said that they expect no widespread outages as users watch the inauguration on sites such as CNN.com.

Hacking the Hill

How the Chinese -- or someone -- hacked into House of Representatives computers in 2006, and what it will take to keep out the next electronic invader.
Shane Harris

On October 26, 2006, computer security personnel from across the legislative branch were informed that the Congressional Budget Office had been hit with a computer virus. The news might not have seemed extraordinary. Hackers had been trying for years to break into government computers in Congress and the executive branch, and some had succeeded, making off with loads of sensitive information ranging from codes for military aircraft schedules to design specifications for the space shuttle.

Employees in the House of Representatives' Information Systems Security Office, which monitors the computers of all members, staffers, and committee offices, had learned to keep their guard up. Every year of late, they have fended off more than a million hacking attempts against the House and removed any computer viruses that made it through their safeguards. House computers relay sensitive information about members and constituents, and committee office machines are especially loaded with files pertaining to foreign policy, national security, and intelligence. The security office took the information from the CBO attack and scanned the House network to determine whether any machines had been compromised in a similar fashion.

They found one. A computer in one member's office matched the profile of the CBO incident. The virus seemed to be contacting Internet addresses outside the House, probably other infected computers or servers, to download malicious files into the House system. According to a confidential briefing on the investigation prepared by the security office and obtained by National Journal, security employees contacted the member's office and directed staffers to disconnect the computer from the network. The briefing does not identify the member of Congress.

Apparently worried that the virus could have already infected other machines, security personnel met with aides from the member's office and examined the computer. They confirmed that a virus had been placed on the machine. The member's office then called the FBI, which employs a team of cyber-forensic specialists to investigate hackings. The House security office made a copy of the hard drive and gave it to the bureau.

Upon further analysis, the security office found more details about the nature and possible intent of the hack. The machine was infected with a file that sought out computers outside the House system to retrieve "malware," malicious or destructive programs designed to spy on the infected computer's user or to clandestinely remove files from the machine. This virus was designed to download programs that tracked what the computer user typed in e-mail and instant messages, and to remove documents from both the hard drive and a network drive shared by other House computers. As an example of the virus's damage, the security office briefing cited one House machine on which "multiple compressed files on multiple days were created and exported." An unknown source was stealing information from the computer, and the user never knew it.

Armed with this information about how the virus worked, the security officers scanned the House network again. This time, they found more machines that seemed to match the profile -- they, too, were infected. Investigators found at least one infected computer in a member's district office, indicating that the virus had traveled through the House network and may have breached machines far away from Washington.

Eventually, the security office determined that eight members' offices were affected; in most of the offices, the virus had invaded only one machine, but in some offices, it hit multiple computers. It also struck seven committee offices, including Commerce; Transportation and Infrastructure; Homeland Security; and Ways and Means; plus the Commission on China, which monitors human rights and laws in China. Most of the committee offices had one or two infected computers. In the International Relations Committee (now the Foreign Affairs Committee) office, however, the virus had compromised 25 computers and one server.

The House security office contacted the committees' employees and all of the members' offices, and removed the infected computers and servers. The House's technical-support center sent an advisory to all systems administrators, reminding them of safe computing practices, such as not opening links in e-mails from unknown sources. The House security office determined that whoever infected the machines had probably tricked users into visiting a website or clicking on a link in an e-mail or instant message that downloaded an infectious file; the virus then exploited as many of the computer's vulnerabilities that it could detect. A diagram in the security briefing shows how the virus, once it penetrated the computer, made multiple attempts to download different kinds of malicious software.

The hacker or hackers -- it's unclear whether more than one was involved -- attempted to evade detection by using an array of attack methods and downloading malicious files from various Internet addresses. The hacker was likely using many other infected machines as launching pads, making it essentially impossible to stop the attacks completely and exceptionally difficult to know where the hacker was located. It's relatively easy for an attacker to mask his or her location by communicating through layers of infected computers and servers around the world.

The confidential briefing does not say where the hacker was, nor does it attribute the attack to a particular group or country. Such information is notoriously difficult for investigators to ascertain. But according to some members of Congress whose machines were infected, the attack described in the briefing emanated from China and was probably designed to steal sensitive information from lawmakers' and committee offices.

Chinese Traces

That allegation and others about Chinese cyber-espionage lie at the heart of a simmering controversy over Chinese or China-supported hacking of U.S. government computer systems. As National Journal reported earlier this year, computer hackers, who several investigators and senior government officials believe are based in China and sometimes work on the Chinese government's behalf, have penetrated deeply into the information systems of U.S. corporations and government agencies.

The hackers have reportedly stolen proprietary information from executives and even one Cabinet secretary in advance of business meetings in China. Some sources contend, moreover, that Chinese hackers may have played a role in two major power outages in the United States. Power companies and outside investigators call such allegations demonstrably untrue, but many cyber-security professionals express considerable anxiety about the vulnerability of U.S. networks.

Concern about China is so great that, only hours before the opening ceremonies of the Olympic Games in Beijing last summer, the United States' top counterintelligence official, Joel Brenner, warned American visitors to leave their cellular phones and wireless handheld computers at home. "Somebody with a wireless device in China should expect it to be compromised while he's there," Brenner said on CBS News. "The public security services in China can turn your telephone on and activate its microphone when you think it's off." For those who were required or determined to take their electronic equipment, Brenner advised that they remove the batteries when they were not using the device.

Chinese sources were at the root of the hack on members of Congress in 2006, according to some lawmakers. In an interview with National Journal last summer, Rep. Mark Kirk, R-Ill., said that the virus described in the House's confidential briefing had infected a machine in his office. House security personnel informed him of the infection, Kirk said, and he called the FBI.

Kirk then co-chaired the House U.S.-China Working Group, whose members had met with 11 Chinese business leaders less than a year earlier to discuss bilateral trade issues. The group has held monthly meetings to foster a diplomatic dialogue between Chinese and U.S. officials. Kirk said that his office's infected computer was trying to contact Internet addresses that "eventually resolved themselves in China." He hastened to add, "Obviously, you don't know who is the real owner or operator of the [Internet] address."

The breach could be viewed through one of two lenses, Kirk said. "The bad view" is that Chinese intelligence sources were trying to spy on a member of Congress. The "good view" holds that Chinese citizens, who read about the commission's work in the media, hacked Kirk's computer out of frustration or retribution. But this attack profile, Kirk said, "looked toward the criminal side."

"Hacking into a congressional computer is a serious offense," he said. Although Kirk said he didn't know what files, if any, the hacker had pilfered, he assumed that the intruder wasn't looking for information about Kirk's constituents in Illinois. He concluded that the hacker was more interested in his China policy. "At that point," Kirk said, "it seemed what we had was a case of overseas espionage."

This past June, Rep. Frank Wolf, a Republican from Northern Virginia, took to the House floor and announced that four of his office's computers "were compromised by an outside source."

"On these computers," he said, "was information about all of the casework I have done on behalf of political dissidents and human-rights activists around the world." Wolf is an outspoken critic of China's human-rights policies.

"That kind of information, as well as everything else on my office computers -- e-mails, memos, correspondence, and district casework -- was open for outside eyes to see," Wolf said. And then, without naming names, he added, "Several other members were similarly compromised."

Wolf said he had met with staff from the House Information Resources office and with FBI officials. "It was revealed," he said, "that the outside sources responsible for this attack came from within the People's Republic of China." A spokesperson for Wolf told NJ that the intrusion he spoke of on the House floor is the same attack described in the confidential briefing obtained by National Journal and prepared by the House information security office. That briefing states that Wolf was one of the eight members affected, and that four of his machines were hit -- the same number that Wolf cited publicly. In his floor remarks, Wolf said that his computers were found to have been compromised in August 2006, two months before the House Information Systems Security Office scanned the network for possible infections.

Keeping It Secret

The pervasive nature of the 2006 attack begs a question: Why didn't members of Congress publicly disclose these breaches sooner? Wolf offered one answer.

"Despite everything we read in the press, our intelligence, law enforcement, national security, and diplomatic corps remain hesitant to speak out about this problem," Wolf said on the House floor. "Perhaps they are afraid that talking about this problem will reveal our vulnerability." He then added, "I have been urged not to speak out about this threat."

Wolf didn't say who urged him to remain silent. Kirk, whose office was also hit, said he spoke with Wolf before his remarks. Wolf wanted to publicly raise the issue of cyber-security to bring more attention to the problem, Kirk said. Kirk was more interested in finding the culprits.

"My objective was to get even with these guys and nail them," he said. "My objective was to tell the FBI as much detail as I can so we can go after them."

In his speech, Wolf urged his colleagues to raise their level of awareness, and he exhorted the executive branch to open up. "I strongly believe that the appropriate officials, including those from the Department of Homeland Security and the FBI, should brief all members of Congress in a closed session regarding threats from China and other countries against the security of House technology, including our computers, BlackBerry devices, and phones," Wolf said.

Wolf's outspokenness met resistance, Kirk said. "I think a number of people came to Frank and said, 'Back off. Don't do this,' " Kirk said. He declined to say who had approached Wolf. But he said that "some parts of the government" favor keeping systems open to track attackers, but they aren't inclined to talk about it openly.

Both the intelligence community and the military use cyber-monitoring tools that are essentially the same as those directed against U.S. government systems. The Air Force, in particular, considers cyberspace to be a new battleground; the service has reportedly developed a formidable capacity to inflict damage on other nations' computers and electronic infrastructure.

Learning Curve

Many members of Congress, it seems, may also be uninterested in talking about their cyber-vulnerabilities -- not because they aren't concerned about them but because they don't understand them.

Wolf has said that in discussing the threat with colleagues, he has found that members don't realize their computers are tantalizing targets. One cyber-security expert says that Wolf is probably right but that members' ignorance doesn't mean they're indifferent.

"As a member of Congress, you have so many issues competing for your attention and, historically, cyber-security hasn't been one that's won out," said Amit Yoran, who was the first director of the National Cyber Security Division in the Homeland Security Department. "It's not an issue that is particularly well tracked by their constituents."

Moreover, Yoran said, lawmakers can also fall victim to their own demands. "In Congress, you've got an organization full of a lot of senior executives." Just as in the executive branch or in the private sector, members want to be treated like CEOs. They have "very high support requirements," Yoran said. Put another way, if members of Congress want their computers to access a certain website or run a particular program, they don't ask for technical support -- they demand it.

That mind-set makes it exceptionally difficult to protect congressional computers in a uniform fashion. The House and Senate could enact the strictest security policies imaginable, but if members and their aides ignore the policies or ask for exceptions, security degrades.

No one understands that better than the office in charge of protecting members' computers -- the House Information Systems Security Office. "I can say, comfortably, that the level and quality of expertise within the security department, the IT department, of the House, is very strong," Yoran said. "The Senate as well." The confidential briefing on the 2006 breach bolsters Yoran's assessment. It is clearly written and demonstrates that the security office understands the dynamic nature of cyber-intrusions.

Yoran emphasized, however, that between expertise and adequate security, "there's a lot of ground." Members and their staffers must decide whether to follow security procedures -- and perhaps too often, they don't want to be bothered.

Who Should Lead?

Congress is more than a tempting and sometimes easy target. Lawmakers also have oversight responsibility for the security of executive branch networks, and they make decisions that affect all U.S. telecommunications systems.

Members make the laws that set security policies and standards for government systems. They issue an annual report card and other assessments on how well the government is meeting those standards. Slowly but increasingly, lawmakers are writing statutes aimed at stiffening the penalties for computer intrusion and at defining hacking more clearly as a crime.

Yet Congress's repeated run-ins with cyber-thieves and hackers don't appear to have focused lawmakers' oversight efforts. Last week, the Center for Strategic and International Studies, the Washington think tank noted for its defense policy research, released a highly anticipated cyber-security assessment for President-elect Obama. The study group included experts from a range of disciplines and industries, and was co-chaired by two members of Congress: Reps. Jim Langevin, D-R.I., and Michael McCaul, R-Texas.

The report, a year in the making, is almost entirely devoted to cyber-security recommendations for the next president. It devotes only one page to Congress's role, perhaps with good reason. The panel essentially concludes that Congress cannot manage cyber-security.

The root of the problem, the report said, lies in Congress's inconsistent, almost feudal, approach to oversight. "The fragmentation of oversight complicates efforts to improve homeland security, and cyber-security shares in this problem," the authors wrote. The Homeland Security Department, which is responsible for securing civilian government networks, "has far too many oversight committees -- more than 80 -- exercising jurisdiction."

The CSIS study group discussed whether that jurisdiction should be streamlined, a simple enough task on the surface. House and Senate rules don't explicitly give jurisdiction over cyber-issues to any committees, and congressional leaders could limit responsibility to a more manageable number of lawmakers. The study group certainly thought that was a good idea. "Without rules changes that provide clear jurisdiction, responsibility for investigation, oversight, and policy development in cyber-security will depend largely on member interest and the ability of committees to coordinate with each other," the report stated.

The study group stopped short of formally recommending that Congress take that step, however. In large measure, that's because the CSIS recommendations were meant for the president-elect, not the speaker of the House and the majority leader of the Senate. But the panel also concluded that cyber-security -- protecting critical networks not only from espionage but also from tampering and potential control by outsiders -- was of such importance and magnitude that only the president could take charge of it. Indeed, the authors titled their report "Securing Cyberspace for the 44th Presidency."

"The president could engage [congressional] leaders in a discussion to streamline jurisdiction," the report said, "but jurisdictional consolidation would not produce the immediate improvement in cyber-security that our other recommendations offer." The panel wants Obama to take charge of cyber-security and make the White House its political nerve center. It recommended that he create a new office for cyberspace in the Executive Office of the President that would work closely with the National Security Council, "managing the many aspects of securing our national networks while protecting privacy and civil liberties." Any attempt to broadly secure cyberspace will, by necessity, involve close scrutiny of the information traveling through it, including e-mails, instant messages, and, increasingly, telephone calls.

The study group also recommended that Obama appoint an assistant for cyberspace and establish a Cyber-Security Directorate in the NSC. To support that directorate, the experts recommended a National Office for Cyberspace, which would be directed by the president's cyber-assistant.

"The new administration has to take rapid action to improve cyber-security, and streamlining congressional jurisdiction isn't one of those actions," said James Lewis, a CSIS senior fellow and the director of its public policy program. He led the study group.

"The legislative process is deliberative," Lewis said. "It has to move at its own pace on questions like jurisdiction, but there are things the executive branch can and should do without waiting."

Calls for Open Source Government
Maggie Shiels

The secret to a more secure and cost effective government is through open source technologies and products.

The claim comes from one of Silicon Valley's most respected business leaders Scott McNealy, a co-founder of Sun Microsystems.

He revealed he has been asked to prepare a paper on the subject for the new administration.

"It's intuitively obvious open source is more cost effective and productive than proprietary software," he said.

"Open source does not require you to pay a penny to Microsoft or IBM or Oracle or any proprietary vendor any money."


Mr McNealy told the BBC he wants to ensure the government does not get "locked in" to one specific vendor or company.

"The government ought to mandate open source products based on open source reference implementations to improve security, get higher quality software, lower costs, higher reliability - all the benefits that come with open software.

Sun Microsystems' Java programming language is an open source product used in billions of devices such as mobile phones and computers. Instead of charging for a copyrighted programme, by and large any open source product is publicly available, is licensed under royalty free terms for unrestricted use and has an open code for all to see, copy and adapt for free.

The idea behind this is that the thinking of many will improve a product by leaps and bounds and keep it relevant.

A report by global technology research house XMG said companies "were exploring the advantages of open source software" due to the "prohibitive" cost of proprietary products.

"Colossal expense"

President Obama has said he is prepared to go through the budget "line by line" to cut wasteful spending, but has so far failed to give any specifics of how that would be done.

The Open Source Initiative, or OSI, is fully supportive of Mr McNealy's efforts which both believe is one of the main solutions the new President cannot afford to ignore.

"Scott is absolutely correct about the benefits which have been demonstrated time and again," said OSI President Michael Tiemann.

"It's an accident of history that proprietary standards became so entrenched so early and it's been a colossal expense for government."

Mr Tiemann said while some departments already use open source technologies, overall it has been estimated that the global loss due to proprietary software is "in excess of $1 trillion a year."

He claimed that the conservative cost for the US is from " $400 billion (£290bn) and upwards."

"A move to open source will lower costs and increase capability," said Mr Tiemann who is also the vice president of Red Hat, the world's leading open source technology solutions provider.

"This is the kind of change we need if we are ever going to see the government reform its operational capabilities and cost basis. If they fail to do this, it's one more stick in the mud. The capital markets are telling us today we can no longer afford much more status quo," he stated.

The Open Solutions Alliance has said the present economic downturn "will lead to an increase in adoption of open solutions due to their flexibility, scalability and value."

Meanwhile research firm Gartner has warned that the benefits of open source might not deliver unless properly managed.

"Do not expect to automatically save money with open source software, or OSS, or any technology without effective financial management," said analyst Mark Driver.

Microsoft and Oracle have opened up some of their software and protocols to developers.

"Open source President"

So just how receptive will the 44th President will be to the idea of a implementing the workings of a new government around open standards?

"The concept of open source is going to become an undercurrent to almost everything this administration does," declared the OSI's President Michael Tiemann.

"The American concept of democracy is not just of the people and by the people but with the people."

He said we have already seen a commitment to this open philosophy throughout President Obama's election campaign.

"I think what we will see now is a maturation in America and around the world of an understanding of the open source model."

Errol Louis of the New York Daily News seemed to agree.

He described Mr Obama as "our first open source President, a leader willing to let anybody and everybody figure out how, when and where they want to get involved."

He noted that the strategy popularised by computer software companies in giving away software to get others to improve on it has now been applied to politics.

Indeed the new Change.gov website is said to be a portal for "interactive government" and "open source democracy."


Mr McNealy said a new cabinet post of chief information officer (CIO) was necessary to drive this fundamental root and branch change.

He added that the CIO should "have veto power, the right to eliminate any hardware, software or networking product that touches the federal network.

"He or she would have real power, real oversight and employ real consequences for folk that don't realign with the architecture. It's what every business does that the government doesn't," he concluded.

The OSI's Mr Tiemann disagreed and said that a CIO post "would be a waste of an executive slot."

"Knowing what I know about the structure and nature of the federal government, I can't believe there is much value to having a CIO who would have to implement across the departments who find it hard to co-operate regardless of the technical hurdles.

" A CIO would just not be a productive post over the next four years," stated Mr Tiemann.

New Staff Find White House in Tech Dark Ages

'It's kind of like going from an Xbox to an Atari,' an Obama aide says
Anne E. Kornblut

If the Obama campaign represented a sleek, new iPhone kind of future, the first day of the Obama administration looked more like the rotary-dial past.

Two years after launching the most technologically savvy presidential campaign in history, Obama officials ran smack into the constraints of the federal bureaucracy yesterday, encountering a jumble of disconnected phone lines, old computer software, and security regulations forbidding outside e-mail accounts.

What does that mean in 21st-century terms? No Facebook to communicate with supporters. No outside e-mail log-ins. No instant messaging. Hard adjustments for a staff that helped sweep Obama to power through, among other things, relentless online social networking.

"It is kind of like going from an Xbox to an Atari," Obama spokesman Bill Burton said of his new digs.

In many ways, the move into the White House resembled a first day at school: Advisers wandered the halls, looking for their offices. Aides spent hours in orientation, learning such things as government ethics rules as well as how their paychecks will be delivered. And everyone filled out a seemingly endless pile of paperwork.

There were plenty of first-day glitches, too, as calls to many lines in the West Wing were met with a busy signal all morning and those to the main White House switchboard were greeted by a recording, redirecting callers to the presidential Web site. A number of reporters were also shut out of the White House because of lost security clearance lists.

By late evening, the vaunted new White House Web site did not offer any updated posts about President Obama's busy first day on the job, which included an inaugural prayer service, an open house with the public, and meetings with his economic and national security teams.

Nor did the site reflect the transparency Obama promised to deliver. "The President has not yet issued any executive orders," it stated hours after Obama issued executive orders to tighten ethics rules, enhance Freedom of Information Act rules and freeze the salaries of White House officials who earn more than $100,000.

The site was updated for the first time last night, when information on the executive orders was added. But there were still no pool reports or blog entries.

No one could quite explain the problem — but they swore it would be fixed.

One member of the White House new-media team came to work on Tuesday, right after the swearing-in ceremony, only to discover that it was impossible to know which programs could be updated, or even which computers could be used for which purposes. The team members, accustomed to working on Macintoshes, found computers outfitted with six-year-old versions of Microsoft software. Laptops were scarce, assigned to only a few people in the West Wing. The team was left struggling to put closed captions on online videos.

Senior advisers chafed at the new arrangements, which severely limit mobility — partly by tradition but also for security reasons and to ensure that all official work is preserved under the Presidential Records Act.

"It is what it is," said a White House staff member, speaking on the condition of anonymity. "Nobody is being a blockade right now. It's just the system we need to go through."

'Not starting from scratch'
The system has daunted past White House employees. David Almacy, who became President George W. Bush's Internet director in 2005, recalled having a week-long delay between his arrival at the White House and getting set up with a computer and a BlackBerry.

"The White House itself is an institution that transitions regardless of who the president is," he said. "The White House is not starting from scratch. Processes are already in place."

One White House official, who arrived breathless yesterday after being held up at the exterior gate, found he had no computer or telephone number. Recently called back from overseas duty, he ended up using his foreign cellphone.

Another White House official whose transition cellphone was disconnected left a message temporarily referring callers to his wife's phone.

Several people tried to route their e-mails through personal accounts.

But there were no missing letters from the computer keyboards, as Bush officials had complained of during their transition in 2001.

And officials in the press office were prepared: In addition to having their own cellphones, they set up Gmail accounts, with approval from the White House counsel, so they could send information in more than one way.

Obama Will Get His Blackberry

President Barack Obama is going to get his blackberry.

On Monday, a government agency that the Obama administration -- but that is probably the National Security Agency -- added to a standard blackberry a super-encryption package.... and Obama WILL be able to use it ... still for routine and personal messages.

It's not clear whether he yet has the device.

With few exceptions, government Blackberries aren't designed for encryption that protects messages above the "SECRET" status, so it's not clear whether Obama is getting something new and special. The exception: the Sectera Edge from General Dynamics, which allows for TOP SECRET voice conversations.

Perhaps the NSA and US telecommunications companies have created a special, more secure digital pathway for Obama's messages to travel on, one that would resist the inevitable penetration attempts by foreign governments.

A General Dynamics spokesperson declined to comment; the NSA did not respond to an e-mail seeking comment, neither did two Obama spokespeople.

The messages, like other White House communications, will kept from the public for the duration of his presidency, if not longer.

Obama and other officials won't be able to use Instant Messaging in the White House.

Earlier in the transition, there was a plan to give select officials access to a Blackberry owned by the Democratic National Committee; the devices would be able to be used for political communication but would be subject to different disclosure rules.

A Day Best Captured by Image, Not Narrative
Alessandra Stanley

For many a historic event, being there is the next best thing to watching it on television. The inauguration of Barack Obama was the exception: nearly impossible to witness fully in person, but even more difficult to experience thoroughly on the screen.

And that may be why CNN rented a satellite to take pictures from space of the multitudes around the Capitol and on the Mall. It’s also why NBC showcased a man from New Jersey who couldn’t get through a mobbed security checkpoint in time to view Mr. Obama’s speech on a Jumbotron. The man ended up calling a friend who held up the receiver to the television, allowing him to be a first-hand witness to history via cellphone.

It was a day of paradox as well as precedents. An awed nation stood on tiptoe to see the first African-American being sworn in as president of the United States after an election in which race turned out to be a minor factor.

A unique, uncanny moment was framed by the most familiar and predictable kind of coverage and commentary: Anchors, compelled to say something, reached for trite metaphors and hyperbolic expressions of wonder (“Our secular version of a miracle,” according to one CNN commentator) that didn’t begin to match the reality unfolding live behind them. The best narration was wordless: the deafening squeals and screams that greeted Mr. Obama and his wife, Michelle, on the parade route when they got out of their limousine and walked, hand in hand, waving to the crowds. The first couple’s first dance at the Neighborhood Ball, swaying as Beyoncé sang an Etta James standard, “At Last.”

An event that commentators repeatedly described as an “only in America” catharsis had its closest parallel overseas. No inauguration has generated the kinds of crowds and emotions that surrounded Mr. Obama’s. In recent memory, the event that probably came the closest was the pilgrimage that John Paul II made to his native Poland in 1979, when the Communists were still in control. There too, millions gathered to tearfully witness a moment that few believed they would ever see in their lifetime.

It was so momentous that cable television didn’t try very hard to lure away viewers with counterprogramming; most got into the spirit of the day. Bravo showed “West Wing” reruns; Turner Classic Movies unearthed “Washington Story,” a 1952 movie about an honorable politician persecuted by an unscrupulous, red-baiting reporter; and even MTV took a break from “Daddy’s Girls” and “The Real World” at noon to show the Inaugural Address.

Fox News forgot all about the Rev. Jeremiah A. Wright Jr. and William Ayres. “Whether you are a Democrat, Republican, right or left, pro or anti this candidacy,” Shepard Smith said, “it appears that Americans by the millions are enveloping it with love and hope.” And even Senator Edward M. Kennedy’s seizure, during lawmakers’ post-inauguration lunch for Mr. Obama in the Capitol, didn’t hijack the coverage.

Critiques of Mr. Obama’s speech were mostly diplomatic. On ABC, a former Clinton speechwriter, Michael Waldman, found a delicate way to point out that there were few memorable phrases in Mr. Obama’s speech, saying, “He didn’t strive for cheap quotability.”

George W. Bush’s final hours as president were noted, but perfunctorily. Mostly, anchors used Mr. Bush as a yardstick to measure Mr. Obama’s better handling of the day. Chuck Todd of NBC said on the “Today” show that when the news division’s editors prepared advance material in 2000, they could find no “memorable” campaign speeches by Mr. Bush to clip, whereas Mr. Obama had so many it was like “shooting fish in a barrel.”

Bob Schieffer of CBS reminded viewers of the leftover “rancor” over the Florida vote count that left many doubting the legitimacy of Mr. Bush’s election even during his swearing-in. Like most other anchors, Mr. Schieffer kept saying that he could not remember anything quite like this first day of the Obama administration.

And viewers were never quite sure where to look: Television celebrated a new president making history, but the screen also belonged to those millions in Washington who made history just by showing up.

Until next week,

- js.

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