Go Back   P2P-Zone > Peer to Peer
FAQ Members List Calendar Search Today's Posts Mark Forums Read

Peer to Peer The 3rd millenium technology!

Thread Tools Search this Thread Display Modes
Old 13-07-11, 06:43 AM   #1
JackSpratts's Avatar
Join Date: May 2001
Location: New England
Posts: 9,781
Default Peer-To-Peer News - The Week In Review - July 16th, '11

Since 2002

"This is a vote of seismic significance. It could spell the beginning of the end for the Murdoch empire." – Jonathan Tonge

July 16th, 2011

France Tracks Down 18 Million File-Sharers

Starting October last year French Internet users have been receiving letters as part of the three-strikes system built-in to the controversial Hadopi anti-piracy legislation. This week the agency responsible for the warnings gave out details on the scope of the operation. In the last 9 months 18 Million file-sharers were tracked, but due to limited capacity ‘only’ 470,000 warnings were sent out to first-time offenders.

Under France’s new Hadopi law, alleged copyright infringers will be hunted down systematically with the ultimate goal of decreasing piracy. Alleged offenders are identified by their Internet providers and will be reported to a judge once they have received three warnings.

The judge will then review the case and hand down any one of a range of penalties, from fines through to disconnecting the Internet connection of the infringer.

This week the Hadopi office for the first time released official data on the massive anti-piracy effort. The scope of the operation is mind-boggling, but whether it will result in the desired outcome is yet to be seen.

Despite millions of file-sharers being tracked, France has yet to witness its first disconnection.

The Hadopi agency revealed that since October last year the IP-addresses of 18 Million file-sharers were reported by their ‘hacked‘ tracking partner Trident Media Guard. Of this massive list a randomly selected sample of one million IP-addresses was sent to the Internet providers to obtain further information on the subscribers, and 900,000 identities were returned.

This mass discovery process resulted in 470,000 first warning emails, which equals little over 50,000 per month. The number of people who received a second warning is currently stuck at 20,000 and only 10 Internet subscribers received a third warning.

According to the Hadopi agency these 10 cases are currently being investigated by a judge. These alleged offenders risk a fine of 1500 euros and could lose their Internet connection temporarily. Thus far, however, no French file-sharers have been disconnected.

As the results of France’s controversial three-strikes anti-piracy law are revealed, many people doubt whether the costs involved with the massive operation are justified.

Last month a report from the UN’s Human Rights Council labeled Internet access a human right, arguing that Hadopi is a disproportionate law that should be repealed. This assessment was supported by Reporters Without Borders recently.

“Aside from its practical omissions and shortcomings, the Hadopi law directly violates the principles of the defence of free expression by making it possible to disconnect people from the Internet. Its adoption was one of Reporters Without Borders’ reasons for adding France to the list of ‘countries under surveillance’ in its latest ‘Enemies of the Internet’ report,” the organization writes.

In addition to the human rights issues it is also highly questionable how significant the claimed deterrent effect of the disconnection threat is.

A recent survey by ZDNet.fr found that just 4% of file-sharers polled said they have stopped sourcing music from illegal services for fear of detection. Instead, many BitTorrent users simply turn to proxies and VPNs to conceal their identities.

Thus far, however, the French Government is determined to continue its war against piracy. Effective or not, the Hadopi office will continue to track down millions of French file-sharers each month in the hope that the tide turns in their favor.

ISPs, Academics and Citizens Oppose EU Anti-Piracy Legislation

Today the European Commission published the responses to a public consultation on Europe’s anti-piracy directive IPRED. As expected, there is a huge divide between the copyright holders on the one hand, and Internet providers, academics and citizens on the other. The latter fiercely oppose the draconian measures that IPRED introduces, claiming it threatens basic human rights while stifling innovation.

Over the past several years many stringent anti-piracy treaties and directives have been proposed in the European Union and abroad, usually as a result of pro-copyright lobbying efforts.

The “IPR Enforcement Directive” (IPRED) falls into this category. In short, it is filled with measures that would make it easier to clamp down on file-sharers while turning Internet providers into copyright police.

Earlier this year various stakeholders and EU citizens were given the chance to have their say on IPRED, and the results of this consultation were published today. A total of 380 responses were sent in, nearly half of which came from individuals.

There is very little consensus on the contents of the anti-piracy piracy directive. What is apparent from the summary published by the European Commission is that there’s a clear divide between copyright holders on the one hand, and citizens, Internet providers and academics on the other.

As was to be expected, the overwhelming majority of copyright holders and various collecting societies call for even stricter rules on copyright-infringement and file-sharing. They further call for greater responsibilities for Internet providers who they think should filter rogue sites and monitor copyright infringers.

Most of the responses, however, were opposing the implementation of harsher anti-piracy measures for a variety of reasons.

The Internet providers for example stress that stricter rules could have a chilling effect on innovation. They also side with the vast majority of citizens, consumer protection organisations and academics who claim that IPRED threatens basic human rights.
“The overwhelming majority of individual citizens, consumer protection organisations and academics strongly argued against any further (over)regulation of IPR infringements, especially in the context of the online world. Filtering of content and monitoring traffic on the internet were perceived as threats to fundamental rights or even censorship and therefore clearly rejected,” the European Commission writes.

In addition, the majority of the respondents argue that the entertainment industry itself is one of the causes of piracy, due to the lacking availability of legal content.

“Many stakeholders who opposed amending the current IPR Enforcement Directive, including ISPs, telecommunication operators and a majority of individual contributors, viewed the lack of available and attractive licit offer as one of the main causes for online piracy. They considered that increasing such service offers would constitute a feasible alternative to imposing more detailed enforcement measures.”

Most citizens go even further and call for legalizing file-sharing entirely, as it helps the free exchange of information.

“In their contributions, most individual citizens called for removing copyright protection against file-sharing, arguing that the free exchange of information would help spread culture as well as increase creativity without having detrimental effect on industry and society as a whole; such free exchange should therefore be supported rather than considered as infringing copyright law,” the European Commission writes.

From reading the responses it is clear that the majority has serious doubts about the anti-piracy measures that are introduced by IPRED. However, as we’ve seen time and time again in the past, this is by no means a guarantee that the lawmakers will listen.

China Says Piracy Problem Not "Extremely Serious"

China said on Tuesday its crackdown on pirated goods has made great strides, a claim borne out by government statistics but not necessarily by a trip to one of Beijing's many shops where pirated software, movies and clothes are readily available.

Marking the end of a nine-month campaign against intellectual property rights (IPR) infringement with cases worth 3.43 billion yuan ($530 million), Vice Minister of Commerce Jiang Zengwei said the situation had taken a turn for the better.

"You could say that there still exists some problems with China's IPR, but I don't endorse the idea that it is extremely serious," Jiang told reporters at a press conference.

Jiang said police had shutdown 12,854 illegal plants making pirated and counterfeit goods and arrested 9,031 suspects since the crackdown began in late October.

China has touted that all central government agencies are using legally purchased software as of May to show it is making progress in the battle against IPR infringement.

Jiang said he hoped they could be role models to the rest of the country as local government bodies would be required to set aside budget for legal software.

"We have the same demands for these local governments as for the central government. That is to say, they should include the money to purchase legal software into the their budget and the audit authority will also carry out audits," Jiang said.

"The government will further formulate policies and regulations on the legalization of software within the government and state-owned enterprises and gradually formulate a mechanism in this respect," Jiang added.

But some experts have argued that it is difficult to rely on government claims that all computers are running legal software without verification from an independent auditor.

The United States and other Western countries have repeatedly complained that China has not kept promises to stamp out intellectual property theft.

The U.S. Trade Representative's office in May listed China as a country with one of the worst records for preventing copyright theft for the seventh year.

Chinese piracy and counterfeiting of U.S. software and a wide range of other intellectual property cost American businesses alone an estimated $48 billion and 2.1 million jobs in 2009, the U.S. International Trade Commission said in May.

(Reporting by Michael Martina; Editing by Yoko Nishikawa)

DVD Hacks Database Contains Instructions to Unlock Region-Free Mode for Hundreds of DVD Players
David Galloway

Electronics manufacturers have to include region coding by law, but many engineers provide hidden unlock codes that enable your DVD player to view DVDs from any region. Enjoy a wider variety of films and TV shows by checking the DVD Hacks database to see if your player includes this undocumented feature.

Why does region coding exist? When DVDs first appeared in the late 1990s, films that are slated to be summer blockbusters in the United States may end up being a Christmas release in Europe or Asia. When that happens, the DVD release of the film in the US may proceed the theatrical release elsewhere and impact the box office return in that country. Region Codes allow, in theory, for a film distributor to determine the release date, price, and other variables. This was happening at the same time as the rise of the internet-fueled global economy. These days foreign release dates are now either simultaneous with the US release date or the foreign release date is close enough that DVDs are not a serious concern. As a result Blu-ray discs only have three regions as opposed to eight for DVDs.

Finally, if you're in the market for a new DVD or Blu-ray player, check out the models that interest you on the DVD Hacks database.

ACS: Law Drops File-Sharing Cases
Max Clarke

A series of lawsuits against peer-to-peer file sharers brought by ACS: Law on behalf of Media CAT have today been dropped following an undisclosed settlement.

“We considered from an early stage that these actions against our clients were not brought correctly. The Judgment and eventual settlement supports our view in all material respects,” said Michael Forrester, solicitor at Ralli who acted on behalf of several of the defendants.

ACS: Law received extensive media coverage for their high profile lawsuits serving to make examples of individual file sharers in a bid to clamp down software piracy. While the move attracted support from government and from intellectual property holders under the Federation Against Software Theft, they had been blasted by others for making accusations ‘based on untested legal and factual propositions and issues of technology’ that amounted to harassment.

“The legal basis for the claims made against these alleged file sharers involves complex legal and technical principles. These are extremely difficult for a lay person to understand and can lead to an innocent person being pursued.”

“ACS:Law’s interest is specifically mentioned,” commented the Judge, “because of course they receive 65% of the revenues from the letter writing exercise. In fact Media CAT’s financial interest is actually much less than that of ACS:Law.

“Whether it was intended to or not, I cannot imagine a system better designed to create disincentives to test the issues in court. Why take cases to court and test the assertions when one can just write more letters and collect payments from a proportion of the recipients?”

Judge Fines Righthaven $5,000
David Kravets

A Las Vegas federal judge has sanctioned copyright troll Righthaven to the tune of $5,000 for making misrepresentations to the court.

U.S. District Judge Roger Hunt of Nevada last month ordered Righthaven explain why Hunt should not sanction it for trying to “manufacture standing.” (.pdf) Standing is a legal concept that has enabled Righthaven to bring about 200-plus lawsuits over copyrighted articles and photos owned by news agency Stephens Media.

Judge Hunt, ruling from the bench Thursday, said Righthaven basically tried to pull the wool over the court’s eyes.

“The court finds those representations are not true and that they are intentional,” Hunt said, according to an account in VegasINC.

In all its lawsuits, Righthaven, which uses a loophole in copyright law to sue blogs and others for infringement, claims ownership of the copyright material even though judge Hunt found that it is not the real owner.

Judge Hunt’s ruling was part of a case in which the judge had ruled Righthaven did not have standing to bring a copyright lawsuit against the Democratic Underground blog for allegedly pilfering four paragraphs from a 34-paragraph story published by the Las Vegas Review-Journal, which is owned by Stephens Media.

Hunt noted that Righthaven and Stephens Media had agreed to share the proceeds of any damages awards or settlements — but Stephens Media kept ownership of the copyright. Yet in each of the cases Righthaven brought on behalf of Review-Journal articles, Righthaven never disclosed, as required, whether third parties had a “pecuniary interest” in the outcome.

Several other Righthaven cases have been dismissed for the same reason, and dozens of bloggers who settled with Righthaven are mulling their legal options.

An internal agreement between Righthaven and Stephens Media had given the Review-Journal’s owner and Righthaven each a 50 percent stake in any settlements or verdicts. The accord said Stephens Media shall retain “an exclusive license to exploit the Stephens Media assigned copyrights for any lawful purpose whatsoever and Righthaven shall have no right or license to exploit or participate in the receipt of royalties from the exploitation of the Stephens Media assigned copyrights other than the right to proceeds in association with a recovery.”

The agreement has been amended twice, and is still the subject of court challenges.

Shawn Mangano, Righthaven’s attorney, told Judge Hunt in a legal filing that the firm did not believe it was necessary to disclose the financial link. He told VegasINC he was considering appealing.

Final Ruling Confirms ‘Pirate’ Sites Act Lawfully in Spain

Lawyers defending a file-sharing site say a new legal victory provides final confirmation that sites providing links to copyright works act lawfully in Spain. In a complaint filed during 2009, SGAE claimed that Index-web.com violated its rights but in yet another blow to the music rights group and Spain’s Ley Sinde anti-filesharing law, this week a court disagreed.

Several rulings over the past couple of years have indicated that sites providing mere links to copyright works act legally under Spanish law. One key case, however, threw uncertainty into the mix earlier this year.

The case dates back to May 2009, when music rights group SGAE (Sociedad General de Autores y Editores) filed a complaint against Jesus Guerra, the operator of file-sharing link site Elrincondejesus.com. SGAE claimed the site abused the copyrights of its members.

At full trial Judge Raul N. García Orejudo ruled that offering an index of links and/or linking to copyright material is not the same as distribution, noting that under current Spanish law there is nothing which prohibits such sites from operating.

In March this year, however, an SGAE appeal resulted in Elrincondejesus.com being subjected to a fine of 3,587 euros by the Provincial Court of Barcelona.

In addition to P2P links, Elrincondejesus had offered links to files held on sites such as MegaUpload and RapidShare. The Court said that by offering these direct links Elrincondejesus had made copyright works “publicly available”, even though the site had not uploaded them to the Internet. This, the Court concluded, was a breach of SGAE’s rights.

All this must’ve seemed like very bad news for index-web.com, a site with the same structure as Elrincondejesus that had been fighting an almost identical case against SGAE dating back to 2009. After initially being cleared of wrong-doing at a May 2010 hearing, following an SGAE appeal Index-web.com would now have to face the Provincial Court in Barcelona, the same court that had found Elrincondejesus liable in March.

This month that case went ahead, but rather than SGAE coming out on top again as it had done against Elrincondejesus, the pendulum swung the other way. The Provincial Court, with the same judges presiding as in the previous case, decided that links – whether to material on P2P networks or cyberlocker-type services – do not infringe intellectual property rights.

Lawyers for Index-web.com, Javier de la Cueva and David Bravo, say the ruling is significant and represents the “..first final decision in civil proceedings issued in our country stating that pages of links to P2P sites or direct downloads do not infringe any intellectual property rights.”

Cueva and Bravo say the ruling from the influential Barcelona court will become the legal standard for interpreting Spain’s intellectual property laws in future, and will have implications for Ley Sinde, the Spanish government’s troubled anti-filesharing legislation.

Following the ruling in favor of Index-web.com, Cueva and Bravo – who also represent Elrincondejesus – have filed an appeal on the site’s behalf, hoping to overturn the 3,587 euro fine handed down in March.

What remains to be seen now is how the US government will react. As part of Operation in Our Sites, US authorities previously seized the domain name of sports links site RojaDirecta on the basis that it operates illegally. The Provincial Court ruling appears to put the legal status of RojaDirecta beyond doubt.

Nevertheless, just this week federal prosecutors urged a judge not to return the site’s domain following a request by Puerto 80, the company behind Rojadirecta.

“Returning the Rojadirecta domain names at this time would provide Puerto 80 with the very tools it used to commit the crimes the government has alleged it engaged in prior to the seizure,” the government said in its filing.

Since it is committing the same ‘crimes’ as RojaDirecta, will Index-web.com have its domain seized by the US too?

Florida Judge Tosses a Key MPAA Claim Against Hotfile (Exclusive)

The movie industry's battle against Hotfile is a test case concerning rampant alleged piracy on cyberlocker sites.
Eriq Gardner

Some higher-ups in the movie industry have identified file-storage "cyberlockers" as being Hollywood's biggest threat in the war against piracy. In February, the MPAA took action with a major lawsuit against Hotfile, one of the most popular websites on the Internet.

So far, the case isn't going perfectly. On Friday, a Florida judge dismissed the claim that Hotfile committed direct copyright infringement. The case now proceeds to determine whether Hotfile holds any secondary liability for inducing copyright infringement by its users.

In February, the movie industry alleged that visitors on Hotfile were up to more than just the storage of files for personal convenience. According to the complaint , thousands of movies and TV shows were being traded by Hotfile users with the encouragement, assistance, and active participation by the company itself. For example, the MPAA accused Hotfile of paying people to put infringing materials on its site so that others would pay for the privilege of downloading these works.

Hotfile controls the servers, the databases, and the software that manages the site. It has a "credit" system that rewards its most popular members. The MPAA argued to a Florida federal court that the encouragement, knowledge, and financial interest in making the infringements happen together constituted "volitional" acts, and thus, Hotfile should be punished for direct infringement.

Florida federal court judge Adalberto Jordan isn't buying it.

"To be sure, (Hotfile founder Anton) Titov and Hotfile allegedly encourage the massive infringement," says Judge Jordan in his decision. "Yet nothing in the complaint alleges that Hotfile or Mr. Titov took direct, volitional steps to violate the plaintiffs' infringement. There are no allegations, say, that Hotfile uploaded copyrighted material. Therefore, under the great weight of authority, the plaintiffs have failed to allege direct copyright infringement."

The judge based his decision on prior case law that established specific causation needed for a direct infringement claim beyond a defendant's system being used by a third party to create a copy.

Hotfile hasn't escaped all claims, however.

Judge Jordan denied its motion to dismiss a charge of secondary, contributory infringement and refused to let Titov off the hook from being personally liable for copyright infringement on Hotfile.

But in narrowing the scope of the case, the judge mitigates any damage award. And as we've seen in the YouTube and Veoh cases thus far, there are DMCA "safe harbor" defenses to secondary infringement claims if a defendant can show it promptly takes down flagged content upon notice from a copyright holder. Hotfile has already signaled it intends to seek safe harbor.

"While the Court dismissed the direct infringement claim based on its view of the law, it made clear that the secondary infringement claims will go forward against all defendants and we are confident that we will be able to establish Hotfile's culpability through those claims," says Karen Thorland, vice president and senior content protection counsel at the MPAA

She adds: "The fact remains that Hotfile and its operators facilitate the theft of copyrighted motion picture and television properties on a staggering scale and profit handsomely from encouraging and providing the means for massive copyright infringement. The theft taking place on Hotfile is unmistakable. In less than two years Hotfile became one of the 100 most trafficked sites in the world - a direct result of the massive digital theft that Hotfile has promoted."

uTorrent To Launch a Paid Version

The uTorrent team is working on a paid version of the leading BitTorrent client that will enable users to convert videos and transfer files to external devices. Branded uTorrent Plus, the extended uTorrent client will be be released to the public this coming fall. uTorrent’s parent company BitTorrent Inc. hopes the Plus version will bring in some extra revenue, but considering the target audience it is expected to ‘suffer’ from piracy as well.

With close to 100 million active users a month, uTorrent is without doubt the most-used BitTorrent client. Over the past several months the development team has been very active, and this coming fall another major release will see the light.

The uTorrent team is currently finalizing a paid version of uTorrent that will extend the functionality of the current application. One of the key features of uTorrent Plus is the ability to convert videos and transfer files to external devices such as iPods and PSPs.

uTorrent Plus will launch as an invite-only beta before it rolls out its public release later this year. Further details on the exact specifications and capabilities of the paid uTorrent client are expected to be announced in the weeks to come.

Jordy Berson, Director of Product Management for uTorrent, told TorrentFreak that no price has been set for uTorrent Plus at this point. However, Berson assured us that the Plus variant will add new features and that no existing functionality will be stripped from the regular uTorrent version.

With uTorrent Plus BitTorrent Inc hopes to cater to the needs of many of its users, while making some extra revenue in the process.

“We think of it more as diversifying revenue sources. Some of the features will involve us paying licensing fees so it’s not like this is a pure profit business for us, although given our scale we’ll be able to negotiate good terms and pass on to customers a great value,” Berson told TorrentFreak.

One of the downsides to paid software, especially that targeted at BitTorrent users, is that it will probably be available to download for free on torrent sites. The uTorrent team is aware of this issue but doesn’t plan to include any extreme anti-piracy measures.

“We will use a pretty standard licensing system to unlock the Plus version,” Berson told TorrentFreak.

ISP Flip-Flops: Why Do They Now Support "Six Strikes" Plan?
Timothy B. Lee

Why did three of the nation's largest network providers—Comcast, AT&T, and Verizon—sign on to the music and movie industry's "copyright alert" system? When we posed that question to Verizon spokesman Ed McFadden, he insisted that Verizon was just being a good citizen. In fact, he sounded surprised that we were even asking the question. Why wouldn't Verizon want to help fight illegal activity on its network?

Well, here's how Verizon's fellow telecom behemoth AT&T put it in a regulatory filing last year:

While we at AT&T are willing to, and actively do, forward these notices to our customers today, we nonetheless believe that there are significant legal and policy issues associated with taking the next step of sanctioning our customers based solely on the receipt of multiple third party notices.

Private entities are not created or meant to conduct the law enforcement and judicial balancing act that would be required; they are not charged with sitting in judgment of facts; and they are not empowered to punish alleged criminals without a court order or other government sanction. Indeed, the liability implications of ISPs acting as a quasi-law-enforcement/judicial branch could be enormous. The government and the courts, not ISPs, are responsible for intellectual property enforcement, and only they can secure and balance the various property, privacy, and due process rights that are at play and often in conflict in this realm.
Verizon executive Tom Tauke expressed similar concerns in 2008 that such a process, once begun, would be a slippery slope. "Once you start going down the path of looking at the information going down the network, there are many that want you to play the role of policeman," he said. "Stop illegal gambling offshore. Stop pornography. Stop a whole array of other kinds of activities that some may think inappropriate."

ISPs have been making these principled arguments for over a decade. They used them in 1998 to persuade Congress to add a "safe harbor" to the Digital Millennium Copyright Act. For years, they stubbornly resisted calls for them to become copyright cops.

This hasn't just been an American position; ISPs like Australia's iiNet have long resisted the "pseudo 'trial and conviction' process" that results from totally private enforcement.

That stance has changed in recent years, at least among the major players—nearly all of whom now operate major content delivery networks of their own, often in the form of pay-TV systems. This week's announcement marks one of the more dramatic moves away from the basic principle that network operators don't play policeman in non-technical areas.

In our conversation, Verizon's McFadden defended the decision without reference to these once-heated arguments about ISPs/intermediary enforcement. Instead, the new system is good for Verizon's customers, he said, because it gives them "a number of different options to address this issue if their broadband connection has been used" for illegal file sharing. And he insisted that it's in Verizon's interest not to have illegal activity happening on its network.

Well, perhaps. Some users might find the "alerts" helpful, but we doubt many will appreciate the "mitigation measures" that come with them. And federal law is very clear that ISPs are not responsible for illegal activity on their networks so long as they comply with the applicable safe harbor rules. As for ISPs wanting to stop illegal online behavior... content owners have been charging for years that ISPs don't want to act because it means angering paying customers. If Verizon, AT&T, and others have been wanting to play policeman, they have had years of opportunities to do so. So what changed now?

McFadden insisted that nothing significant has changed. The new system was, he said, "in line with the approach Verizon has taken in the past." And in some important respects, he's right. One important point of continuity, which he repeatedly emphasized in our conversation, is that Verizon "will not share customer data with third parties" unless the law requires them to do so. The ISPs have also refused to do any monitoring of filtering of traffic.

Still, the new "mitigation" measures do represent a shift that could raise all sorts of legal and technical headaches for network operators. Given their existing legal protections, why tread in such shark-infested waters?

Bargaining chips

White House arm-twisting had something to do with it. As we reported on Thursday, the White House has been credited with "brokering" the deal. It's not clear what that means, but perhaps administration officials hinted that if ISPs didn't agree to a voluntary graduated response system, the administration would throw its weight behind a legislative solution.

McFadden wouldn't comment on whether White House inducements were a factor in Verizon's decision. But those meetings at the White House sound a lot like the "multi-stakeholder process" envisioned in an international report signed in Paris last month. That document explicitly contemplates using the threat of intermediary liability as a stick to get ISPs to "voluntarily" sign up for the role of copyright cop.

Another possible clue to the mystery comes from this Verizon regulatory filing from 2010. After insisting that its existing notification system (without "mitigation") was working fine (indeed, it was apparently quite effective), Verizon added that the system was "based in commercial agreements, in which Verizon benefits from the lawful distribution of content and hence has made millions of dollars of investment in the notice regime on top of the billions of dollars it has invested in its broadband networks."

It's not clear which "commercial agreements" Verizon is referring to, but it sounds like a reference to Verizon's FiOS business, which includes a pay-TV component. Today, unlike in 1998, Verizon depends on copyright holders for access to television content. Perhaps it used participation in that earlier notification program as a bargaining chip to get better terms for the content it wanted—and Thursday's announcement may have been the result of a similar deal.

But if so, the companies involved aren't interested in saying much about it.

No more presumption of innocence?

Ars talked to Wendy Seltzer, a scholar at Princeton's Center for Information Technology Policy and the head of the Chilling Effects clearinghouse, about the significance of the move. She argued that ISP regulation got things right the first time.

"I think that it's wrong for ISPs to be getting into this fight at all," she said. "They're breaching the useful separation of layers between carriage and content."

That separation is important, she added, because it preserves the presumption of innocence that is the foundation of our legal system. Users shouldn't have to explain to their ISPs what they're doing with their Internet connections, she argued—and they certainly shouldn't have to pay $35 (the appeals fee for those challenging a "mitigation" measure). Indeed, they shouldn't face any "mitigations measures" at all until their use of the network has been ruled unlawful in court, she believes.

Indeed, she pointed to higher education as a cautionary example. In an effort to stop campus file sharing, "universities have tightened up their networks in ways that make it harder for their CS and information schools to do research," she said. "Instead of creating the network as something for their students to explore, it becomes something that is to be used only in approved ways. That doesn't fit with the ideal of the Internet as an evolving technology."

"Very Bold or Very Dumb": Data Caps Don't Apply to ISP's Own Movie Service (Updated)
Nate Anderson

Update: Shaw provided no information when I contacted them before running this story, but starting this afternoon, the company suddenly started tweeting up a storm. According to the company, watching Movie Club on a television incurs no data cap because it is delivered through Shaw's existing video-on-demand QAM cable infrastructure. When users access Movie Club through a computer, they will access an IP-based version of it delivered over the Internet—and this will affect monthly data caps.

What happened here—miscommunication, change of heart, misspeaking? It's not clear. As Canada's Financial Post noted today, Shaw's president had said on multiple occasions that Internet access to Movie Club would not count against a data cap.

On Thursday, Shaw president Peter Bissonnette told the Calgary Herald that movies streamed using its new service will not count against a subscriber’s monthly Internet data caps, unlike movies streamed from competing outlets such as Netflix Inc., which continue to count against a user’s cap.

In an interview with the Financial Post on Friday, Mr. Bissonnette said “If they [subscribers] choose to go online and view it, it doesn’t contribute toward that [data cap].”

Original story: Canadian cable operator Shaw is one of the country's largest Internet access providers—and it just wrapped up its participation in national hearings on the metered billing and data caps after an angry outcry from the public over the issue. Which made the news about its new CAN$12-per-month "Movie Club" service a bit surprising:

Subscribers to Movie Club—who initially can watch on their TV or computer, with phones and tablets planned to come on line later—can view content without it counting against their data plan.
“There should be some advantage to you being a customer,” [Shaw president Pete] Bissonnette said.

No wonder Netflix is upset about the data capping behavior of Canadian ISPs.

OpenMedia.ca, which defends net neutrality and pushes back against things like usage-based billing, said that Shaw's move was blatantly anticompetitive.

"It’s unfair for Shaw to restrict access to competing services by making them more expensive to use than Shaw’s own services," said executive director Steve Anderson. "It clearly demonstrates that Internet metering isn't about paying for use; it’s about prioritizing Big Telecom’s services in order to hogtie the competition and assert dominance in multiple markets."

US companies like AT&T do something a bit similar, offering IPTV services over the same wire as Internet access but claiming that they are "managed services" exempt from data caps and net neutrality rules. Shaw's product appears to go further, offering computer and smartphone access to the content, which suggests delivery over the "actual" Internet. (We reached out to Shaw for comment but received no response by press time.)

Canadian law professor Michael Geist wrote of the new service, "At a minimum, assuming the service is as described in the article, it would seem that a CRTC complaint is a certainty and the pressure will be on the Commission to demonstrate that the law against undue preference in Canada has some teeth."

Peter Nowak, a Canadian tech journalist and pundit, called out these kinds of bundling tactics back in May, before the Movie Club details had been announced (his concern was tying TV service to higher Internet speeds; you can't get one without the other).
"First, the big ISPs tried throttling, then they tried UBB [usage-based billing]," he wrote. "Neither worked, so now they’re collectively trying to slow Netflix et al with regulation. Unless Canadian regulators are a bunch of loonies (and the jury is out on that), that too won’t work. Tied-selling, where customers have to pay cable companies for video whether they want to or not, may be their final kick at the can."

The new announcement about Movie Club led Nowak to tweet a perfect summary of the story last night: "First Shaw tries to illegally tie internet service to cable, now it's clearly violating net neutrality rules. Either very bold or very dumb."

Why Comcast Should Be Sued

I was reading a Google+ post from Chris Pirillo about how he was surprised there wasn’t a class action lawsuit against them yet. At first I chuckled to myself thinking that Comcast may be a terrible company, they surely aren’t doing anything illegal though. However after crunching some numbers I realized that Comcast is actually misleading customers when they are selling internet packages.

Here is my reply to Chris:

“Chris I feel like we could talk about Comcast for hours. Their data caps don’t make any sense at all because people want faster broadband because they need that extra speed because they are using their internet more.

At 105Mbps you are downloading 13.125 megabytes per second according to Google’s calculator.

1GB = 1024MB and with your 250GB cap that means you have 256,000MB to use per month before you reach the cap.

Now going back to what Comcast will let you download per second you take 256,000/13.125 and you come up with 19,504 and some change. That means you can download stuff at your maximum bandwidth for 19,504 seconds.

This turns out to be 325 minutes or 5 hours of downloading stuff. Feel free to double check my math.

So essentially you are paying $100+ for 5 hours of nonstop internet access per month. If you’d like to chat about this more let me know I’m here all day, and I actually think I’m going to write up an article about this for my blog.”
Did you catch that? The plan that Chris Pirillo has from Comcast which he pays for on a monthly basis only lets him have a total of 5 hours of internet usage where he is using his full connection. There are 720 hours in a 30 day month, which turns out to be 0.69% of a month.

How is this not illegal? From a moral standpoint and not a political standpoint this practice should be illegal.

A Call to Take Back the Internet From Corporations
Jennifer 8. Lee

Is the Internet due for a “Magna Carta moment?”

That is a question being posed by Rebecca MacKinnon, an Internet scholar at the New America Foundation, who argues that private corporations are exerting excessive power over the Internet and should have that power checked. Just as the English barons crafted the original Magna Carta in 1215 to constrain the power of the unpopular King John, she says, Internet users should organize and push back against the companies.

“The sovereigns of the Internet are acting like they have a divine right to govern,” said Ms. MacKinnon, whose book, ”Consent of the Networked,” will be published by Basic Books in January 2012. “They are in complete denial that there is something horrible they would ever do.” She gave a preview of her book at the TEDGlobal conference in Edinburgh on Tuesday morning and in an interview.

The control that companies exert over the Internet in areas ranging from banking to freedom of speech has raised increasing levels of concern, especially in the wake of the controversial WikiLeaks release of State Department cables last year. Several companies constrained WikiLeaks, including Amazon, which kicked WikiLeaks off its servers after pressure from American lawmakers; PayPal, which suspended WikiLeaks’ account; and credit card companies, which refused to take donations for it.

Governments at this point rarely act directly to constrain the Internet; instead, their policies are mediated through privately owned and operated services, Ms. MacKinnon said. This is true of China, which maintains the famed Great Firewall that blocks sites like Twitter, YouTube and Facebook in favor of local services. But domestically, every year the Chinese government gives out “China Internet Self-Discipline Awards” to honor companies that voluntarily cooperate with its censorship policies. Baidu, which had been Google’s rival in China before the search giant redirected China users to its uncensored Hong Kong site in 2010, has been among the honorees.

One company that has drawn attention is Apple, whose market power allows its review process for iPhone applications to become a de facto censor in many countries. In China, the company has restricted access to Dalai Lama-related iPhone applications, and earlier this year it removed a Palestinian protest iPhone application called ThirdIntifada in response to the Israeli government’s complaints. Even in the United States, Apple banned an iPhone app from a political cartoonist in 2009 because it ridiculed public figures, a decision that was reversed after the cartoonist won a Pulitzer Prize.

Although “we don’t always do it very well,” people generally know how to hold governments accountable, particularly in a democracy, said Ms. MacKinnon. However, it’s still unclear how users can push back against private transnational companies on the Internet. The solution is most likely not for Congress or other lawmakers to pass regulations alone, she said. ”It’s going to require innovation that is not only going to need to focus on politics, on geopolitics, but is also going to need to deal with questions of business management, investor behavior and consumer choice,” she said.

Companies should start thinking of their users more as constituents who have a voice in the policy making, she said. Also, good corporate governance policies, like the ones that have become standard for clothing manufacturing companies, could become more widespread. Google, for example, regularly releases a transparency report, which lists how many requests for information it receives from each government. Google, Yahoo and Microsoft have helped develop a code of conduct around Internet freedom through the Global Network Initiative. However, Twitter and Facebook have not joined in, limiting the impact of the code.

Ms. MacKinnon predicts that no matter what it will ultimately look like, the process of pushing back on Internet companies is likely to take sustained decades-long political effort, similar to those movements that created environmental and child-labor laws. What is important right now is to open the conversation, she said. She threw out a question on stage: “How can we hold power accountable on the Internet?”

EU Court Says eBay May be Liable on Trademark Abuse

Internet auction marketplace eBay may be liable for trademark infringements committed by users on its site if it plays an active role in their use, Europe's highest court ruled on Tuesday.

The auction site may also have to actively monitor its customers to ensure their offers for sale are lawful, the court ruled.

The case relates to allegations of trademark infringement through the sale of branded goods on eBay, lodged by L'Oreal, the world's largest cosmetics maker.

One of L'Oreal's complaints was over the sale on eBay of samples or testers explicitly marked "not for sale." The cosmetics giant also criticized the level of protection offered by eBay against the sale of counterfeit goods and the availability of goods to consumers in the European Union that were meant for other markets.

The court ruled that EU trademark rules do apply to offers for the sale of goods located outside the bloc if it is clear that those offers target EU consumers.

It said EU national courts should assess if any offer did target EU markets, but that in some cases exemptions from liability offered by EU laws may might not apply.

This would be the case particularly when an online service provider, such as eBay, "plays an active role" in managing information related to sale offers.

"When the operator has played an 'active role'... it cannot rely on the exemption from liability which EU law confers, under certain conditions, on online service providers such as operators of Internet marketplaces," the court said in a statement.

The court also ruled that an online market provider could be liable if it had enough information to judge that an offer was unlawful and failed to prevent access to it.

The court found that under EU law, member states had to ensure that national courts could order market operators to take measures that help to end trademark infringements by users of a marketplace such as eBay, as well as preventing further infringements of that kind.

"Those injunctions must be effective, proportionate, and dissuasive and must not create barriers to legitimate trade," the court said.

(Reporting by Michele Sinner; Writing by Justyna Pawlak; Editing by Hans-Juergen Peters)

GetJar To Apple: We’re Not Going To Take It!

As some of you may have seen in today’s Wall Street Journal, an article appeared entitled “Apple Lawyers to GetJar: Drop App Store”. In this article, the journalist highlights the fact that we’ve received a Cease & Desist (C&D) notice from Apple for our use of the term “app store.” We’ve issued a statement to the press full of legalese and formalities explaining what’s happened here and our position. This blog post reflects what we think is really happening and our position.

First, this isn’t really about Apple vs. GetJar. It would be presumptuous of us to think so given the difference in size and scale that’s apparent between the two companies. Better yet, we don’t even compete with Apple. Nobody can on iOS as they’re a closed ecosystem. We merely re-direct Apple users to Apple’s App Store as a courtesy. We do this for free with nothing in return. We don’t even get much Apple traffic and our Android traffic is hundreds of times larger and strategically far more important. Why do we even do it? Because as the largest FREE app store that serves consumers on over 2,500 devices in 190 countries we don’t discriminate against Apple users although Apple apparently chooses to discriminate against us.

The truth is that we’re both really surprised and also very disappointed with Apple’s C&D notice. First, let’s look at the facts:

GetJar was started by developers for developers in 2004 as a beta testing platform. We started formally distributing free apps in early 2005 and are among the pioneers of the modern direct-to-consumer (D2C) app store distribution space when the iPhone was just an R&D project in Steve Job’s head. So it’s not as if we were waiting around for Apple to come up with the idea of app stores and decided in 2011: “Apps will be big, let’s scribble together a business plan and raise some VC money!”

It’s questionable whether Apple even owns the term “App Store” to begin with. If you look at the case being battled out between Apple and other 3rd parties and really do some homework you’ll see that:

• They filed to register App Store in 2008 with the USPTO and were denied the mark.
• Since Apple has a tough time with the word “NO” they filed again and were given a “provisional” registration under the condition that they could TM App Store if nobody opposed the registration. Well it just so happens that Microsoft among others did oppose it.
• So for Apple to be going around threatening or suing others on the basis of a tenuous “ownership” claim of a generic name that isn’t 100% theirs is seriously “taking-the-piss” as the English would say and we would probably use more colorful language here in the US.
• GetJar has been using the term “App Store” in press releases and in it’s positioning with consumers, trade, analysts and press since early 2009 and it’s only now that Apple has decided to send us a C&D. That said, GetJar does not use the term in it’s brand/slogan or strapline.

Those facts are hard to dispute. It puzzles us that Apple’s C&D notice comes on the back of a major PR and marketing campaign initiated by GetJar as we helped bring one of iOS’s most popular games, Cut The Rope, to Android. As their exclusive distribution launch partner, we help bring a game that had just won the Apple Design Award to Android consumers the world over. At the same time, we shifted our company positioning from Appsolutely Everything to Appsolutely FREE, since GetJar has been and always will be about FREE apps. Is this timing purely coincidental? Or does Apple care more about the fact that we’re trying to give apps away for free to consumers? You be the judge.

Second, let’s look at where the industry is heading. The truth is really alarming. The ecosystem as a whole is becoming increasingly closed. It’s character is dictated by larger companies exercising excessive force to get bigger shares of the pie. For example, Android was supposed to be FREE and open; yet developers can’t choose their billing solution. They have their price points micro-managed for them without input. If Apple isn’t suing Amazon, it’s suing start-ups. Now Microsoft, who is struggling to gain traction with Windows Mobile, is charging OEM’s for using Android using our country’s broken patent system. Where are all of these law suits and threats getting us? Is anyone actually worrying about whether app developers and content providers make enough money to keep the lights on?

In conclusion, GetJar won’t be subject to this kind of bullying. We’re not going to “Cease & Desist”. We were here long before Steve & Co. We were built by developers, to help developers. Not to help sell handsets or search results. In the words of Twisted Sister: We’re not going to take it! Steve Jobs isn’t our Dad.

We have always been an advocate for developers. We’ve shared our manifesto on pricing. As a matter of fact, we’re hereby starting a Facebook Cause called The Open And Free App Movement (#OFAM) to encourage every pissed off developer, start-up, carrier, OEM or NGO who is fed up with this crap to make their voice heard. So if you give a damn and want to help please:

• Friend the movement on Facebook: http://www.facebook.com/pages/The-Op...86596041395518
• Follow us on twitter: Twitter.com/OpenAndFreeApps
• Tweet the hashtag #OFAM to get others to sign up.
• Share your experiences, suggestions and ideas on what we need to do to keep the ecosystem OPEN and to fight this kind of abuse.

Keep Apps FREE and OPEN!

Patrick (Mad) Mork (CMO)
Posted by patrick on July 8, 2011 – 12:58 pm

Antitrust Officials Probing Sale of Patents to Google’s Rivals
Jia Lynn Yang

It’s not often that search giant Google looks like the little guy. But in a move unprecedented in the tech world, six of Google’s rivals — including Apple, Microsoft and Research in Motion — combined forces recently to prevent the company from buying a critical trove of patents.

Federal antitrust enforcers are scrutinizing whether Google, often accused of abusing its Web search power, is facing an unfair coalition of companies that could block its popular Android mobile phone software, according to a source close to the matter.

More worrying, according to some experts, the $4.5 billion auction of Nortel Network’s remaining patents demonstrates the growing dysfunction of the country’s patent system, where even the most amorphous ideas can be rubber-stamped by the government and protected for years. Companies are increasingly arming themselves with ever-growing patent portfolios to initiate or shield themselves from costly lawsuits.

The result, these experts say, is tantamount to a nuclear weapons standoff: Companies with formidable patent portfolios can use them as cudgels against rivals, while those with fewer patents risk being eaten alive in court.

For years tech companies did not go after one another in patent lawsuits. But that has changed recently as the battle to dominate the mobile phone space has grown fiercer. Google’s Android operating system has rocketed to the top slot as the most popular in the world, just ahead of Apple’s iPhone and RIM’s BlackBerry.

The battle to beat Android has already turned into a legal bonanza. Apple is suing HTC, Samsung and Motorola, all makers of phones with the Android platform. Oracle is seeking up to $6.1 billion in a patent lawsuit against Google, claiming Android infringes upon Oracle’s Java patents. And Microsoft is suing Motorola over its Android line.

The latest tussle over patents began when the Canadian telecom equipment maker Nortel Networks declared bankruptcy and put up for sale its portfolio of about 6,000 patents covering an array of wireless and Internet technologies. Nortel described the portfolio as touching “nearly every aspect of telecommunications and additional markets as well, including Internet search and social networking.”

Google, which has a relatively small collection of patents compared with some older tech firms, entered a starting bid of $900 million this spring.

At the time, Google explained on its official blog that “one of a company’s best defenses against . . . [patent] litigation is (ironically) to have a formidable patent portfolio, as this helps maintain your freedom to develop new products and services.”

Then an unknown group calling itself Rockstar Bidco stepped forward with a whopping $4.5 billion offer — turning the Nortel sale into possibly the biggest intellectual-property auction of all time. The group, it turned out, was a coalition of Google’s biggest rivals in mobile phones.

The sale immediately raised concern among some antitrust experts. This week, the American Antitrust Institute sent a letter to the Justice Department asking antitrust officials to begin an investigation of the sale ahead of Nortel’s bankruptcy proceedings, set for Monday.

“Why is the portfolio worth five times more to this group collectively than it is to Google?” said Robert Skitol, an antitrust lawyer at the Drinker Biddle firm. “Why are three horizontal competitors being allowed to collaborate and cooperate and join hands together in this, rather than competing against each other?”

Microsoft, Apple and RIM declined to comment beyond prior news releases announcing the patent sale.

Google has cried foul.

“This outcome is disappointing for anyone who believes that open innovation benefits users and promotes creativity and competition,” said Kent Walker, Google senior vice president and general counsel in a statement. “We will keep working to reduce the current flood of patent litigation that hurts both innovators and consumers.”

It’s unclear what the companies will do with Nortel’s patents or how they might split them up among them. The firms could sell them to other companies, including those in the sole business of licensing out patents. They could hold on to them purely as a defensive move to discourage potential litigation, or pursue lawsuits against rivals such as Google.

Brian Kahin, a senior fellow at the Computer & Communications Industry Association, said the companies don’t even have to litigate. They could sell the patents to “patent trolls” — firms that don’t invent or make products but acquire patents and then sue or threaten to sue bigger tech companies for infringement.

“The one thing that’s significant here is you have three of the four smartphone platforms ganging up on the fourth,” said Kahin. “You want patents for an economic benefit, not as a legal instrument.”

Designers Revisit Copyright Protection
Eric Wilson

Let’s see here. On Wednesday, ABS by Allen Schwartz began selling a series of royal-wedding-inspired dresses that includes a fairly good copy of the Alexander McQueen gown worn by Catherine, Duchess of Cambridge, for $1,100. That same night, Representative Bob Goodlatte, a Virginia Republican, reintroduced legislation seeking to grant copyright protection to designers, presumably discouraging exactly that kind of knockoff fashion. And on Friday, the Proenza Schouler designers Jack McCollough and Lazaro Hernandez went to Washington to plead their case before Congress.

Do you get the feeling we’ve been down this road before?

Now five years into a campaign by the Council of Fashion Designers of America to enact some sort of protection for original designs, the proponents of such legislation say they have their best chance yet at seeing a bill become law. But it is a far cry from what they proposed in an earlier bill that was deemed too broad. After manufacturers complained that the bill could lead to frivolous lawsuits over who had what idea first, the designers agreed to a more narrow definition of what would be protected, with a very high burden of proof on the designers.

One of the biggest differences in the new bill is that designers would have to prove that a copy is “substantially identical” to their originals, rather than “substantially similar.” And they would have to prove that their designs were truly original, that the defendant’s design was an infringement and that the defendant indeed had knowledge of their work. Also, similarities in color and patterns would not count.

“It is going to be a very limited number of items that are going to be protected,” said Steven Kolb, the executive director of the fashion council.

In fact, it is difficult to imagine what exactly would be protected, though Mr. Kolb said that Kate Middleton’s wedding dress would probably be a good example, or anything you might see at the current Costume Institute exhibition of Alexander McQueen. But passage of the bill would be a symbolic victory for designers, especially those who have suffered financially by the widespread copying of their work. Cheaper versions of Proenza Schouler’s popular PS1 bag, for example, have appeared throughout the market, including at Target, where the designers once created a less expensive line.

“The passage of the bill, in many ways, would be a powerful deterrent,” Mr. Kolb said.

Mr. Schwartz doesn’t think so. Pretty much anything that is created in fashion, he argued, is the result of what is in the air, so if two people are doing the same thing, it means they are both on trend. With his red-carpet-inspired dresses, he usually makes enough small changes that it would be hard to call them identical to the original, even when they look alike.

“It’s hard to prove because it’s not the truth,” Mr. Schwartz said. “Can you imagine? These people would go around saying they made the first asymmetrical dress. It’s egocentric and it’ll never fly.”

But the designers are determined to make their case heard. Mr. Hernandez, in an e-mail, said: “We spend over $3 million to develop and produce each of our four collections. Our ability to profit from this investment is hurt when our stolen designs are in stores before we can even manufacture them ourselves.

“We understand that most of what is designed is not going to be protected,” he wrote, “but in the instances in which we and other designers come up with something unique and special, we and those designers should be able to benefit from those ideas. Our unique items are what have established Proenza Schouler’s identity. To have our creativity stolen dilutes the value of what we have worked so hard to build.”

Study: Fair Use Drives Large Part of US Economy

The CCIA and a lawmaker warn Congress not to limit fair use when it debates copyright law
Grant Gross

Industries that rely on fair use exceptions to U.S. copyright law have weathered the recent slow economy better than other businesses, according to a new study released by a tech trade group.

The fair use industries, including consumer device makers, software developers, search engines and news organizations, had US $4.5 trillion in revenue in 2009, up from $3.4 trillion in 2002, according to the study, commissioned by the Computer and Communications Industry (CCIA) Association. Revenue peaked at $4.7 trillion in 2008 and 2009, said the study, by Capital Trade, an economic consulting firm.

Fair use industries in the U.S. employed 17 million people in 2009, about one out of every eight U.S. workers, according to the study, released Monday. The employment numbers were down from 17.7 million 2008.

"The fair use economy really held its own" during the recent recession, said Andrew Szamosszegi, co-author of the study.

Fair use businesses make up about 17 percent of the U.S. gross domestic product, according to the study.

The study shows the importance of fair use exceptions in copyright law, said Ed Black, CCIA's president and CEO. While the entertainment industry and other groups push for tougher copyright laws, lawmakers should consider the impact of those laws on fair use and on its economic impact, he said.

Congress should be careful as it considers the so-called PROTECT IP Act, aid Representative Jared Polis, a Colorado Democrat. The bill, approved by the Senate Judiciary Committee in late May, would weaken the "underpinnings of the Internet," he said at an event announcing the study.

"These economic arguments are particularly important when there's a lot at stake -- jobs, jobs jobs," Polis said.

A spokeswoman for Senator Patrick Leahy, a Vermont Democrat and main sponsor of the PROTECT IP Act, did not immediately respond to a request for comments. The legislation would allow U.S. Department of Justice to seek court orders requiring search engines and Internet service providers to stop sending traffic to websites accused of infringing copyright and would allow copyright holders to seek court orders requiring payment processors and online ad networks to stop doing business the accused websites.

The Recording Industry Association of America defended the PROTECT IP Act. The bill "targets the worst of the worst illegal foreign sites that profit from stealing American goods," Mitch Glazier, executive vice president of government and industry relations, said in a statement. "Any suggestion that these overwhelmingly illegal sites would fall under any kind of 'fair use' defense is wholly incorrect. The legislation attacks clearly illegal acts, and not the technology used to implement them."

Fair use exceptions allow people to use a portion of works protected by copyright without the owners' permission. Fair use limitations to copyright law allow people to excerpt a protected work for news reporting, criticism, teaching and research. Fair use allows people to reverse engineer software, allows search engines to cache images and text, and allows TV viewers to tape programs and watch them later. It also allows consumers to sell or lend copies of music, books and other protected materials.

The CCIA study said the payrolls of fair use companies in the U.S. grew from $895 billion in 2002 to $1.2 trillion in 2008 and 2009. The average annual pay for someone in the fair use industries rose from $55,288 in 2002 to $80,703 in 2008, then declined to $78,968 in 2009.

Monkeys Don't Do Fair Use; News Agency Tells Techdirt To Remove Photos
Mike Masnick

Remember our story last week, discussing the copyright issues of monkeys taking photographs of themselves using a photographer's camera that he had left alone? The whole post was about whether or not anyone had a legitimate copyright claim on the photos, noting that the photographer, David Slater, almost certainly did not have a claim, seeing as he did not take the photos, and even admits that the images were an accident from monkeys who found the camera (i.e., he has stated publicly that he did not "set up" the shot and let the monkeys take it). And yet, Caters News Agency has a copyright notice on two of the images, claiming to hold the rights to them. We doubted that the monkeys -- who might have the best "claim" to copyright on these photos, if there is one, had licensed the images.

Either way, we were a bit surprised to receive a notice on Monday from Caters News, telling us they represented David Slater with respect to the syndication of those photos, and asking us to take down the photos. The notice was not a DMCA takedown notice. It doesn't even mention copyright, though that seems like the only basis upon which they would make such a takedown request. And, to be clear, it was not in the least bit threatening. There is no legal language and no threat at all in the note. Here it is in its entirety (minus the name and contact info of the person who sent it):


I have noticed you have used David Slater's images on your website. However we are representing David Slater and syndicating these images on his behalf.


These images are being used without David's or our permission, therefore can I ask you remove these images from your site immediately.

Please email me to inform me when this done.


Given that the very nature of our post was to point out that it's unlikely that Caters has a legitimate copyright claim on these photos, it struck me as a bit odd that they would not even address that at all. In fact, I almost wondered if this was a prank from someone. So I contacted Caters to confirm that it was legit and received confirmation saying that it was, indeed, genuine. After consulting no fewer than four lawyers (I'm nothing if not thorough) on this matter, I decided that the best course of action was just to ask for a clarification, since they did not make clear the actual basis for the request, and point out that it's not at all clear Caters has any legal claim whatsoever. At the same time, assuming they could come back with some legal argument for why the copyright was legit, we decided to make it clear that we believe, strongly, that the use of the images was protected fair use, if they actually are covered by copyright. Since the initial email was not threatening or legalistic, I decided that it was best to reply in kind, without having a lawyer respond on our behalf.

In response to your email concerning the posting of images that were taken by some monkeys using David Slater's camera, I was hoping you could elaborate on your request for us to remove the images. Your request never uses the word copyright, but in the absence of a copyright claim it is not clear to me on what basis you might be asking that the photos be removed. If you ARE asserting a copyright claim, what is the basis for your claim that Slater holds the copyright on any of the images (and thus, had the right to license them to you)? In the original article, Slater himself apparently admits that the images were an accident from monkeys who happened upon the camera, so I'm trying to understand the basis for claiming that the copyright on the images are Slater's to license?

Separately, we believe strongly that the use of the images in our post was quintessential fair use under US copyright law. The post itself was not about the photos, so much as the copyright issues raised by the photos. As such, displaying the photos as part of that discussion was necessary to make the point. We believe the very nature of the discussion around the copyright question makes this a transformative use of the photos, Furthermore, Section 107 of the Copyright Act lists out "news reporting" as one of the key purposes for which fair use is designed to cover.

As this very discussion relates to the point of our original post, we also intend to make this discussion public, as it would likely further the commentary around the copyright on these images.

Thank you,
Michael Masnick

Caters was quick to reply, and it appears they have a rather different view on these things:

Michael, regardless of the issue of who does and doesn't own the copyright - it is 100% clear that the copyright owner is not yourself.

You have blatantly 'lifted' these photographs from somewhere - I presume the Daily Mail online. On the presumption that you do not like to encourage copyright theft (regardless of who owns it) then please remove the photographs.

If I'm reading this correctly -- and I believe that I am -- Caters News Agency is claiming that anyone, copyright holder or not, can issue a takedown on a photo, if they can claim that the person using the image is not the copyright holder either -- regardless of whether "fair use" applies. That's... an interesting interpretation of the law. It's also not a valid interpretation of the law. In fact, in some places, sending a takedown notice, if you are not the copyright holder, is what's actually against the law. It's absolutely true that we are not the copyright holder, but as I made clear in my email, that does not matter, as we believe that our use qualifies as fair use. The whole point of fair use is, in fact, to allow those who are not the holders of the copyright to make use of the work in some cases, so it seems odd that Caters would imply no such thing exists.

Also, the second paragraph seems completely out of left field. If the images are either public domain or fair use, then there is no "theft" or "lifting" at all. And, no, I'm not "encouraging copyright theft" at all. You could say I might be encouraging fair use, but that seems like a good thing, doesn't it? Separately, "copyright theft," implies someone falsely taking possession of the copyright itself, not making use of a work. I don't see how that applies to us at all. We're not the ones claiming a copyright on an image we have no copyright interest in. Finally, whether or not we got the images from the Daily Mail seems entirely superfluous. At no point has Caters suggested that the Daily Mail holds the copyright on these images, so bringing up the Daily Mail seems to suggest a bizarre situation where Caters appears to believe that our fair use efforts violate some totally unstated right that the Daily Mail holds on these images.

Either way, we stand by our original analysis. We do not believe Caters News Agency has a legitimate copyright interest in the photo, and the company is in no position to issue a takedown of the images. Furthermore, even if it does turn out, through some convoluted process, that Caters does have a legitimate copyright interest in the photo, we believe that our use falls squarely into the classical confines of fair use under US copyright law. Thus, we have no plans to remove the photos or make any changes, barring Caters providing us with a sound basis for doing so.

More importantly, this highlights another case of someone completely misunderstanding the purpose and intent of copyright law, believing that it is universal and that it gives total control to the copyright holder. Caters does not even seem willing to consider that this image might not even have a copyright given its provenance. In fact, under Cater's own definition, it seems just as reasonable for us to ask that it take down the image, given that we do not believe that it has a valid copyright interest in the image either. Not everything gets copyright, and when something is covered by copyright, it does not give the rightsholder full control over every use. It's unfortunate that a company that has built a business around copyright appears not to understand these basic facts.

Groundhog Decade

Hollywood is about to repeat the catastrophic mistakes of the music industry.
Bill Wyman

What happened to the music industry over the last 10 years or so was a lot like the plot of The Hangover. Bad judgment and self-indulgence producing chaos, pain, blinding sun, dim but lacerating memories … and you wake up to find there's a tiger in your hotel suite. It's been more than 10 years since compression technologies and ever-faster online speeds started making it easy to move media around online. That's the development that put the plot in motion. For music fans, what was first the slow agony—and then the thrill—of emailing a song to a friend evolved with ever-increasing speed into a world in which we can easily swap discographies of 10, 20, even 50 or 100 albums.

What that meant for the music industry was painful: Its sales are about 40 percent of what they were 12 years ago, and there are even worse metrics than that. (There's a chart on this blog post, for example, which demonstrates that people are buying about one-fourth as many CDs as they were in the 1990s.)

Throughout, chaos reigned: The fall of the CD. The rise and fall of the DVD; the rise and fall of Napster. The rise and rise and rise of the file-sharing networks and cyberlocker sites. Thousands of legal attacks by the record industry on file-sharers; the coming of Netflix; the opaque future of streaming services and cloud storage. Indeed, Steve Jobs recently announced Apple's foray into cloud storage. The idea is that we'll be able to match our iTunes libraries—music for now, but eventually video as well—to online repositories, where they will be accessible to all of our computers, TVs, phones, and pads. (I'm not buying it, but that's a subject for another time.)

But note that this has come a decade after the introduction of the iPod. While many of the industry's humiliating Hangover-like pratfalls took place in public, a lot worse was going on behind the scenes. The labels knew something was happening, but they didn't know what it was, and scrambled wildly—and spent that way, too—to get a piece of it. (Remember Warners and Imeem?) It took more than 10 years of rights wrangling, much of it done personally by the irresistible Jobs himself, with the recalcitrant and stubborn levels of the music industry, from artists and their agents and managers, to the record industry with the various labels and corporate parents, and then songwriters and their various rights organizations, most of which resisted technological change in every knuckleheaded way possible.

Speaking of which, look at the New York Times today. Hollywood and the cable industry are teaming up to penalize illegal downloaders by taking away part or all of their Internet access after five or six warnings, the beginning of a new Whac-a-Mole game that, even if successful, will just see the downloaders move to new and more secure ways to move media around.

Right now, in fact, the movie and TV business looks a lot like the music one did in the early 2000s. And as we've seen, that decade didn't work out too well for the labels. So it's worth looking at the situation and wondering how things are going to fare in the TV and movie world in the decade ahead. It can all be summed up in one single sentence. I'll get to that in a minute.

The situation for watching a movie or a TV show these days is a mess. Here's a case study. If I want to watch some old episodes of The Office, for example, I have an extraordinary slew of options. But there are two problems with this. For one, I don't want a slew of options. I really just want one. And, as for the second, they're all hard to use or incomplete in one way or another.

DVDs, once so sleek and cool—you don't forget your first director commentary—are now unwieldy and a drag to use. You have to sit there waiting for the things to load, chugging like the digital equivalent of a Model T. Then you get all the FBI and Interpol warnings, several of them, in various languages. Go ahead, push the "top menu" button on your remote all you wish and curse the screen the way your father did his old console TV, but you're not going to be taken anywhere. The studios deliberately program the warnings so they can't be skipped. At some point, the disc allows you to start navigating menus to see the episode you want … and then you do it all over again, including all the legal warnings, when you go to the next disc.

Now, this is all for a product you as a consumer have taken the time and effort to pay and bring home to your house. In other words, you bought the thing legally, but the studios still petulantly want you to hear them whining about piracy, and have no evident interest in giving you control to use it as you wish.

So let's move to cable. When I used to subscribe to DirectTV, my DVR box had an enormous hard drive. As I watched my favorite shows—three or four on NBC, a lot more on HBO and Showtime, just for starters—I just archived the current season, along with scores of movies and the churn of daily and weekly news shows I keep up on. Then I moved, and am now back stuck with Cox, the Yugo of cable service.

My new DVR holds so few shows I thought the hard drive was damaged originally. They weren't. It was just the (sub)standard Cox offering. It holds now about 20 shows, and a few movies, and is basically useless in that it fills up every few days and starts deleting older programs. And, of course, there's no way to archive the shows I want to keep or add my own extra hard drive.

But what about "on-demand," you ask? Cox's is dismal. Press the on-demand button, wait a few minutes and you can page through something that looks like an in-room viewing interface in a Marriott from the 1990s. (There's no search.) Eventually you'll find the NBC archive, and then eventually a few episodes of The Office. Click a few times and wait patiently, and you'll find each episode comes with un-fastforwardable-through commercials, generally from movies of NBC sister-company Universal. Most of the time, there are only two, and they are each repeated about four times during the 22-minute episode. Most recently they were a mirthless preview of Little Fockers and an already-forgotten, simpering Zach Galifianakis movie called It's Kind of a Funny Story. Watch two episodes of the show and in the space of an hour you will have seen each of those commercial eight times. This is a less than optimal viewing experience.

Now NBC's not the only network, of course. HBO, too, has some on-demand shows available on Cox's system. But only some.

Since I'm an HBO subscriber, I have another venue for seeing old HBO shows that I want to watch or series I want to catch up on. The network provides it … on the Web. HBO now has a service called HBO Go. The site contains a fairly big chunk of the network's history. There's no Larry Sanders, but it's got most of the tony stuff—the complete Sopranos, The Wire, Six Feet Under, Deadwood, and Sex and the City, for example. This is great, and the next time I'm in NYC maybe I'll be the cool guy at the Spring St. subway station watching old episodes of Carnivale on his Nexus One. But I really want these TV shows available where I actually, um, watch TV, which is on the couch in front of the TV set. That, I can't get, and it seems odd.

So then there's Netflix. (Note that I'm now on my fourth media financial outstream—first cable, then DVDs, then premium cable, and now an additional $23.99 a month for Netflix.) Netflix has a fairly impressive library of film and TV shows available on DVD. But of course you have to wait a couple of days to get something (I'm including the time it takes to mail your other disc back), and there are the gaps for films and shows that just aren't on disc. (Like the Australian Wilfred, for example.) Irritatingly, Netflix doesn't provide a way to request titles, either.

Now, Netflix also has a limited number of films and TV shows on its on-demand streaming service. Netflix streaming works fine. It's fast and responsive. The only problem there is that the Sony PS3 through which I access it has become a supreme annoyance. Even before its recent hacking problems, the PS3 had become incredibly pushy, suddenly demanding I sign onto something called the PlayStation Network before I could watch a Netflix video. (This could have something to do with my move to Cox, I'm not sure. But I also don't care. I just want to watch a movie on Netflix.) In recent months the thing also began greeting me with an annoying Netflix sign-on screen instead of just signing me in. The sign-on screen includes a little check box that lets me tell it to sign me onto Netflix automatically. It shows me this little check box, in fact, no matter how many times I've already checked it.

Once the PS3-hacking issue got underway, a new phenomenon resulted: After being forced to use that annoying Netflix sign-on screen, I would then be told I needed first to go sign on to the PS3 network … which was of course down. I would be routed to a screen that said I couldn't in fact sign on to the PlayStation Network, and was told to push a button to go back to the previous screen … which told me I couldn't sign on to Netflix until I signed onto the PlayStation Network. This merry-go-round continued for a few more iterations before the thing gave up and let me onto Netflix. Imagine the fun for parents who just want to show their kids Toy Story 3.

Anyway, once you manage to access Netflix, the first six seasons of The Office are available for immediate streaming—but not, for some reason, the current season.

At this point I don't really want to spend the time to explain how annoying the PlayStation store's video offerings are to use. (You can get some Office webisodes there.) Or to talk about another video HD service on the PS3, called Vudu, offering "Top Quality High-Speed Streaming Movies on Your PS3™ System!," which sounded exciting and was intriguing right up to the point where nothing happened when I clicked on its icon. Or to discuss how difficult it is to get Hulu Plus up and running. That service lets me see the current season of The Office and finally makes the show's complete archive available to those who are not exhausted. (Who said TV isn't mentally stimulating?) It's $7.99 a month, too, or the fifth payment plan so far, but who's counting?

(Apple TV, you ask? Netflix works better on that, of course, but it has other problems. There's no disc drive, so I can't replace a DVD player with it, much less a Blu-ray, or play data discs the way the PS3 lets me. And there's no convenient USB port for a thumbdrive, which the PS3 also has.)

This frustrating and pointless process can be repeated with any TV show you wish, or any group of director's films or any genre. Some parts of it are available here under these circumstances, some are available there under those. Some in this place, some in that, and some not at all. And the availability can change without notice.

The trouble facing the movie industry right now is the same one the music industry had to confront 10 years ago. This is the summing-up sentence I referred to above:

The easiest and most convenient way to see the movies or TV shows you want is to get them illegally.

Now, I recently obtained, through sources I will not divulge for obvious reasons, a single DVD disc with 22 episodes of The Office on it as data files—a complete season. (Since I already own all the DVDs and got the disc just to make a journalistic point, I hope the courts will be lenient.) I can play it on my PS3 and I can take the disc with me when travelling to watch on the computer.

This obviates the need for four or five DVD discs. The quality isn't high-end HD, but it's quite good. And of course I don't get the extras like the deleted scenes, though I'm sure I could if I wanted. The PS3 has a Bluetooth remote, much better than standard-issue cable-company ones, that responds to commands with lightning speed. And there are no FBI or Interpol warnings.

Again, to belabor the obvious: The illegal version isn't just free. It's better.

Here's one more example. Vuze is one of the most popular bit-torrent clients. I don't know when it happened, but some months ago I noticed some new icons under the video menu on the PS3. "Vuze on Macintosh" read one. "Vuze on PC" said another. I poked around, and finally figured out that the Vuze program on my computers had added a new feature, one that that lets you play on your TV the video sitting on the connected devices on your home network. The feature had installed itself automatically on the PS3. That's a little scary, I guess, but compare this to how, right after I downloaded Hulu Plus, I started it up … and was told I had to download an update. Now I just toss any video I have on my computers in the Vuze PS3 folder and I'm good to go.

It's not perfect, but it's incredibly useful. It's also thoughtful, in the sense that the program anticipated what people might need and made it happen. (It also plays all of the various video codexes, unlike Apple TV, which handles just the limited ones its QuickTime player is comfortable with.) There are no terms and conditions, no Interpol warnings, and no sign-on screens, and best of all there is no artificial divide between this season and that of some TV series. It's all there when I want it. Why should I go back to on-demand or Netflix?

In the music industry throughout the 2000s, the record labels were hampered by a number of things—their own lack of technical knowledge, the sprawling and discordant number of rights holders, corporate paralysis in the face of change, or just, in some of the more enlightened operations that tried to ride the wave, some bad guesses about where the technology was going to go.

(They were also stymied by a failure of imagination brought on by decades of corrupt machinations, short-term bottom-line thinking, and the arrogance of having milked a lot of money out of their ability to resell their product in different formats to each new generation of consumers.)

Anyway, because of all these things, the music industry, when it began to feel the effects of the technological change coming, doubled down on stupid. The labels didn't get together to co-opt this new rough beast. When Napster appeared, they sued it instead of working with it and creating a central repository for its product. When kids started file-swapping on other venues, the labels adopted the scorched-earth policy of suing its own customers, even though it wasn't offering most music legally. And then when Steve Jobs showed the labels a way to get their product to consumers easily and smartly, they insisted on digital-rights-management software, which again made the legal product less desirable than the illegal and led to years of stunted progress before they finally gave up.

It seems plain that the 2010s are going to be the decade of video. There are good reasons, looking at matters in the short term, for the movie and TV industries not to get their acts together. There are genuine economic forces at work that prevent it as well. (For one, the principals involved need to accept what the music industry never did—that the overall value of its product, which had been propped up by its monopoly control of it, has been considerably and permanently lessened. It's a lot to ask.)

But we can see what didn't work for the music industry. Will Hollywood figure it out? I doubt it. For one, the power of the parties involved, the complexity of their interrelationships, and even the internecine battles playing out inside some of them dwarf those of the music biz. Consider: Sony, Microsoft, Apple and Nintendo; the TV hardware makers (including Sony); the studios, each with corporate parents and international interests (Sony again); theater chains; TV studios (Sony again), TV networks; stars, writers, directors, and their unions; ancillary players like Netflix, Amazon, and the like; and others I'm forgetting. (And then add antitrust regulators here and, even more importantly, in the EU into the mix.) Try getting that crew of misfits and miscreants to agree on anything.

Another factor mitigating against them proactively fixing the problem: The stakes are in a sense lower, in that theater exhibition, a big chunk of the studios' income, won't be affected, for now. The exhibition field can be thought of as the movie industry's equivalent of the live-concert industry in music, but one where all the money doesn't go to the artists. But: The increasing quality of the home-viewing experience, particularly for adult-appeal films, is I think an underappreciated iceberg ahead. And the free money coming from innovations like 3-D and IMAX showings, however evanescent their appeal, are for now covering up a lot of softness in the industry.

Another bright spot, from the industry's point of view: The machinations needed to use illegal video are presently a lot more complicated than they are for illegal music, particularly for segments of the audience that are older than, say, 30 and don't play video games. But that's a phenomenon whose prevalence decreases with every passing year. Younger people grew up manipulating their game consoles and computers. They won't have the problems fortysomethings today have.

If the studios were smart they'd go to the mat and create a massive one-stop shop for TV and movies, find a price point they can live with and then set programmers loose to make the thing as easy to use and ubiquitous as possible. Instead they've been wasting their time strong-arming the cable companies to help them on a new crusade against illegal downloaders—an unwieldy process that doesn't address the root problem and won't work.

Where have we heard that before?

I'm not saying that using illegal media is right. And of course it's free—the studios can't do anything about that. But does it have to be easier?

No—and until something is done about the ease of use, the film and TV studios are going to live out a script very similar to the one the music industry just acted out. I know the name of that movie. It's called The Hangover 2.

Netflix Business Model Faces Serious Challenges After Raising Rates, Again
Dan Rayburn

Today, Netflix announced that they are raising rates on monthly plans that allow customers to get unlimited streaming and one DVD out at a time. The plan which originally cost $9.99 a month will now cost $15.98 a month.

In addition, the company is now splitting out streaming only plans from DVD plans and consumers can get an unlimited streaming plan for $7.99 a month, or one DVD out at a time for $7.99 a month.

Essentially, Netflix is making people decide if they really want DVDs as part of their streaming subscription and if they do, requiring them to pay nearly $6 more for it per moth.

In November of last year, Netflix raised DVD plans between $1-$3 per month, depending on the plan you were in and now, only eight months later, they are raising rates again. This is a bad move on Netflix's part, but one that's not surprising as they look for ways to generate more revenue. With their licensing costs skyrocketing and the company aggressively pursuing more content deals for their expansion into Latin America, Netflix is feeling the pressure.

Now, they are forcing people like me who were paying $9.99 a month, to drop to a streaming only plan at $7.99 a month. That's $24 in revenue they are missing out from one customer, per year, and they are going to be millions like me who make that decision. Typically, I only got one or two DVDs a month, so Netflix wasn't losing money on me with the inclusion of DVDs in my plan. Now, when I want a DVD, I'll simply go to Redbox and get it for $1 a night. Forcing customers to go somewhere else for DVD rentals, when even Netflix admits their is still a demand for then, really isn't a smart move.

It was bad enough that Netflix gave in to the studios and agreed not to rent any new DVDs by mail for 28 days, just so the studios could force consumers to have to buy the DVDs instead. Now they are raising prices on DVD plans for the second time in 8 months and not increasing the selection and inventory of streaming only content fast enough or with content that's a lot newer.

In January of 2008, Netflix confirmed it had about 12,000 titles available for streaming. In September of 2009, ads on their website put that number at 17,000. Today, it appears that Netflix has about 20,000 titles for streaming, although Netflix won't confirm that number. If that number is accurate, it means that at any given time, Netflix has only added about 4,000 pieces of content a year for the past two years. That's not a lot of content.

Netflix is going to have a real challenge continuing to grow their subscriber numbers each quarter when they continue to give customers less for their money each month and make their plans less valuable.

Added: When logging into my Netflix account, unless I click on "your account" and then select "change plan," there is no notice that Netflix is going to raise my rate to $15.98 a month come September 1st. So unless you have heard of the news, imagine how many people are going to be surprised when they see their monthly fee change. Netflix should be highlighting this change to you immediately upon logging into their website.

New Service Offers Music in Quantity, Not by Song
Ben Sisario

Daniel Ek, the 28-year-old co-founder and public face of Spotify, the European digital music service, paced around the company’s loftlike Manhattan office on Tuesday afternoon, clutching two mobile phones that buzzed constantly.

After nearly two years of stop-start negotiations with record labels, Spotify was preparing to finally open in the United States. With less than 48 hours before its planned start, however, the company still had not completed its final major label deal, with the Warner Music Group.

Yet Mr. Ek said he was confident that there would be no delay, and that Americans would soon be able to experience what has made Spotify the world’s most celebrated new digital music service. He was right. By Wednesday afternoon, Spotify’s deal with Warner was signed, and on Thursday, as scheduled, it will become available in the United States.

“We’ve made it easier to listen, and we’ve made it easier for people to share,” Mr. Ek said. “Hence, people tend to get more into the experience, and they tend to find new music and build larger collections that they want to take with them. And therefore, they also pay more for music.”

If Apple’s iTunes ushered in digital music’s first phase as a large-scale business, then Spotify and other services like it could be its future. Rather than selling individual tracks to be downloaded, subscription services sell monthly access to vast catalogs of music, with whatever songs a listener wants to hear streamed directly to his computer or mobile phone.

Spotify will be offered in the same three-tier plan that it has in Europe: a free, ad-supported version; a basic ad-free version for $5 a month; and a premium service for $10 a month that adds access on a mobile phone, higher audio quality and other perks.

At first, Spotify’s free version will be available by invitation only, given out through current users or by the company to the thousands who have requested the service on Twitter and through its Web site. (Paid subscriptions will be available right away.)

With its lightning-fast interface, easy integration with Facebook and “freemium” business model, Spotify has quickly become the most popular such service in the world. Begun in Sweden in 2008 and until now available in only seven European countries, it has signed up 1.6 million paid subscribers and more than 10 million registered users in total. It also has been one of the fastest-growing investments in the new digital boom, having recently raised $100 million in a round of investment that valued the company at $1 billion.

But Spotify faces a number of challenges in the American market. While the company had relatively little competition in Europe as a subscription service, in the United States a number of similar companies have gotten a head start, including Rhapsody, Rdio and MOG. Like those services, Spotify allows its premium users to save a certain number of tracks to their phones for offline use, in the subway or on the plane. And new cloud services from Apple, Google and Amazon promise to make people’s music collections available anywhere they go.

Whether the company makes a profit is another question. It lost $26.5 million in 2009, but it has not reported on its financial performance for last year.

Spotify’s speed offers the company one significant advantage over its American competitors. (It achieves that speed partly through using a peer-to-peer network, which lets a song play almost instantaneously.) But its crucial selling point has been its free access, which the company believes can lure in new users, who then get attached to its playlisting and social networking features and will be enticed to join.

That reliance on free access, however, has also worried American record labels and some analysts, who fear that it could cannibalize sales from other sources, like iTunes.

“What Spotify seems to be doing is solidifying a perception that music should be free,” said Mark Mulligan, an independent media analyst in Britain. “It’s one thing to download from BitTorrent and keep looking over your virtual shoulder to make sure no one sends you a cease-and-desist letter. It’s another to be streaming music freely from a service that you know even the labels are advocating.”

Those concerns held up Spotify’s negotiations with the labels, and in April the company made concessions to the labels’ concerns by placing restrictions on the amount of time its free European users could spend on the service. For the first six months, a free user is now limited to 20 hours of listening a month; after six months, the limit becomes 10 hours, and no song can be listened to more than five times in a month. American users will be subject to the same limitations.

European users complained loudly when those restrictions were introduced, but Kenneth Parks, Spotify’s managing director for North America, who led most of the label negotiations, defended the changes.

“It’s still an amazing experience that’s free for the rest of your life,” Mr. Parks said. “It has not diminished the magic of what Spotify is about, and millions and millions across Europe, and soon the U.S., will validate that.”

Spotify argues that by offering virtually all available music free, and sharing advertising revenue with record companies (the major labels own about 18 percent of the company), it removes the appeal of piracy, and consumers who had been lost to the industry can be lured back.

For Mr. Ek, Spotify’s success is directly attributable to its ease of use as an alternative to illegal downloading, which in his native Sweden had almost completely overtaken the market when he and a partner, Martin Lorentzon, founded the company.

“At the time you could only buy DRM music tracks for 99 cents,” he said in his slight Swedish accent, referring to digital rights management, the system of restrictions used by iTunes and other digital retailers.

“At the same time, I could steal a file which cost zero, had no restrictions whatsoever and had better sound quality,” he said. “The illegal, pirated product was actually better than the one you purchased. So our view is, ‘How do we create a better product than piracy?’ ”

Another concern for labels has been the size of Spotify’s royalty payments, which are computed in fractions of a cent per stream, an order of magnitude less than the royalties associated with downloads and CD sales. (Download royalties vary, but in general record labels and artists collect about 70 percent of the retail cost of a download, which is typically $1.)

That means that song has to be streamed many times for it to make as much money as a download, but labels say that as Spotify has grown, those streams have started to add up.

Last year, Spotify paid about $60 million in royalties; that made it the second-largest source of digital revenue for European record labels, after iTunes, according to the International Federation of the Phonographic Industry.

“Spotify are currently one of our top digital partners globally by revenue, and that is with them only being open in seven European territories,” said Simon Wheeler, the director of digital for the Beggars Group, an independent label group whose artists include Adele and Vampire Weekend. “I expect them to be second or third place this year for us.”

Many analysts and music executives say they believe that Spotify’s greatest advantage in the United States is Facebook. The service is already closely integrated with Facebook, so that users can easily share songs with friends and play with features like drag-and-drop playlists.

Spotify is also one of several digital music services that has been in talks with Facebook to help it develop an extensive media platform that could instantly raise its profile here.

Spotify declined to comment on those talks. But Mr. Ek said he was not concerned about the company’s ability to build up to a large scale in the United States.

“We want to make it simple for people,” he said. “If you want to take your music with you, you shouldn’t have to worry about 15 different sync programs or anything else. It ought to be as simple as pressing play and it works. And ultimately when you get to that point, that’s when people are prepared to pay. People are prepared to pay for convenience.”

Sean Parker: Spotify US is Realisation of My Napster Dream
Tim Bradshaw

Sean Parker, co-founder of the original Napster, the pioneering file-sharing service, says the launch of Spotify in the US “represents the realisation of a dream”.

Spotify, the much-hyped European music service, brought Mr Parker – now at Founders Fund, a venture firm – onto its board as an investor in 2010, when it began to realise that convincing the US record labels was going to be tougher than it expected.

Mr Parker clearly sees Spotify as the heir apparent of Napster, which although still alive in name, was closed in its original form in 2001 after an RIAA lawsuit.

“For a decade I have waited for a music service that could rekindle my excitement about music by enabling music to be shared freely across the world – all the while empowering artists to reap the economic benefits of selling their music,” Mr Parker wrote on his Facebook wall on Thursday.

He said he hoped that Spotify would help to reverse the music industry’s “downward trend” since Napster and mark “the beginning of a return to growth by the recorded music business”.

“Spotify promises to get people excited about music again, and the result will be a new golden age of music – more people discovering and listening to more music than ever before. Spotify is removing the barriers to sharing music with friends so that music can move freely and find its fans organically. In this hyper-efficient system great music will find its natural audience. This means that more artists will find success, more fans will discover them, and artists will make more money selling their music than they thought possible. The rusty gears of the record business will turn again.”

Mr Parker also extolled the virtues of Spotify’s integration with social networks. Rumours have suggested that Spotify and Facebook – where he was founding president – could soon forge deeper ties.

“Since Spotify takes music viral, listening to music online is finally going to be a social experience. (Just like it’s always been offline.) And by making music social the experience of discovering and listening to new music will be more fun than ever before.”

What's Driving Rise in Music Sales?
Greg Sandoval

Album sales edge up 1 percent for just the first half of the year and suddenly it seems everybody in the music industry is giddy.

That's likely due to the fact that since 2004, all the news about sales has been bad, bad, bad. Consider that the music industry hasn't seen growth since George W. Bush was preparing for a second term as president, the Boston Red Sox were breaking the curse of the Bambino, and Mark Zuckerberg was founding Facebook.

Last Wednesday, research firm Nielsen SoundScan announced that the industry recorded a 1 percent increase in overall U.S. album sales for the first six months of the year, snapping a dismal seven-year run of sales declines. Digital music helped power the gains as sales of digital tracks rose 11 percent, a rebound from the 1 percent growth for all of 2010. Digital albums grew at a healthy 19 percent.

Nobody is dancing in the streets, but the numbers have stirred hope among some connected to the business that a decade-long revenue slide--which they trace to Napster and the onset of illegal file sharing--may be over. "I think the rise in album sales certainly gives one cause for cautious optimism," said John Marmaduke, CEO of Hastings Entertainment, a chain store that sells books, DVDs, and CDs.

Of course, there's nothing to say that the second half of the year won't bring more losses and it's not clear whether the rise in unit sales will translate into revenue growth. Nielsen tracks unit sales and not the revenue generated. The Recording Industry Association of America (RIAA) collects that data but doesn't report until after the end of the year. And the last full year that revenue was up was--you guessed it--2004. Total music sales were more than $12 billion then. They tumbled to $6.8 billion last year.

The graphic below charts the amount of revenue generated by overall music sales for the years 1996 through 2010. Note that 2004 also halted a string of revenue declines, but in that case the upturn was short-lived. The obvious question here is whether the recent sales boost is also an anomaly?

It might be easier to answer that question if we knew what triggered the sales increases. Nobody seems to know for sure, but some of the experts and people on the front lines of music retail agree several factors likely played a part.

Death of LimeWire

The four largest record companies took down LimeWire, at one time the most popular way to download music illegally. NPD Group, a research firm, reported in March that 56 percent of everyone who downloaded music illegally with a peer-to-peer service in the third quarter last year did so with LimeWire.

The RIAA prevailed last year in a copyright case it brought against the company behind the peer-to-peer network and founder Mark Gorton. A federal judge found Gorton and the company liable for copyright infringement and ordered the service be shut down. Gorton, who closed the service down in October, later paid RIAA members $105 million in damages. NPD reported that the percentage of Internet users who download music via P2P services in the fourth quarter of 2010 was 9 percent. For the same period three years earlier, the percentage of users downloading via P2P was 16 percent.

"We're still an industry that is hard hit by digital theft and half the size it was ten years ago," Mitch Bainwold, the RIAA's CEO, told CNET in an e-mail. "There's probably no one single reason (for the rise in sales), but improved marketing efforts ...and antipiracy successes like the closure of LimeWire have helped."

Not everyone agrees that LimeWire or P2P services stifle sales. Wayne Rosso, the former president of defunct file-sharing network Grokster who now blogs about the music industry, says that the last time the recording industry saw album sales climb was in 2004, when there were a dozen file-sharing services operating, including Grokster, eDonkey and BearShare. Rosso said plenty of studies show file sharing stimulates song sales.

"This minor blip is nothing to get too excited about," Rosso said. "But it really shows it's all about the product...music has to have legs. That's what has been lost in the last decade: quality."

It's the music, stupid

Adele, the 23-year-old British singer-songwriter can certainly claim some credit for the increases. Her album "21" was No. 1 in the year's first half with 2.5 million albums sold. Lady Gaga's "Born This Way" was second with 1.5 million.

Certainly, a recent trend of retailers chopping at prices--none more so than Amazon--has helped lure music buyers. In May, the company stoked demand for "Born This Way" by offering the entire album for 99 cents. The digital stampede to the site ended up taking down Amazon's servers.

Not every retailer has to cut that deeply, said Marmaduke, from Hastings Entertainment. He said some catalog CDs are selling well at between $3.99 and $7.99. "When you're competing with rampant piracy," Marmaduke said, "the best way to combat it is to lower prices."

Russ Crupnick, NPD's senior industry analyst, said price doesn't mean much if the listener doesn't like the song. He said his studies have shown people seem to be interested in music again. For this he credits some of the hot new acts as well as better music-discovery tools (Pandora, YouTube, and Slacker), listening devices (smart phones) and one factor that surprised him...

Is 'cataclysmic drop' over?

Crupnick suspects that the digital revolution might have finally burrowed down to the core CD fan. Anybody who is going to migrate to digital has done so, leaving a group of consumers who prefer to own discs rather than song files. For retailers and record companies, CDs traditionally produced better profit margins than digital albums.

"The cataclysmic drop in CD buyers may have stopped," Crupnick said. "Between the years 2006 to 2009, the number of CD buyers dropped by around 20 million. We talk about young people and the lost generation but some of these younger music buyers are telling us 'I want that thing I can hold, the liner notes and album cover and the other ancillary materials that come with physical products."

In addition to selling books, the Borders chain was once a major music retailer. The company this year filed for bankruptcy protection and closed more than 200 stores.

None of the good news can erase the fact that the recording industry still faces plenty of threats and uncertainty.

The number of music retailers continues to fall. In the past 10 years, Tower, Virgin, and Circuit City disappeared. Earlier this year, Borders, the book merchant that also dedicated a big portion of floor space to CD sales, filed for bankruptcy protection and closed 226 stores. Music industry sources say that Best Buy, the consumer-electronics chain and one of the country's largest music retailers, has warned record companies that they may follow Wal-Mart's lead and reduce the floor space dedicated to CDs. A Best Buy spokeswoman declined to comment.

On the digital side, the news hasn't been much better. Imeem, SpiralFrog, Ruckus, iLike, and MySpace Music are gone, either sold for pennies on the dollar or forced to shut down.

The labels, however, haven't played all their cards. New music services from Google and Spotify are launching. The RIAA also isn't letting up on antipiracy. On Thursday, the trade group announced that it had successfully enlisted the help of some of the country's most powerful Internet service providers to combat illegal file sharing.

Any impacts this might have on sales won't be felt for sometime. So, the next chance the industry will have to test its health will come next year, when it will learn whether this latest sales trend was just a blip or whether the times are a changing.

Belgian Newspapers: Google Blocking Us On Searches
Don Melvin

Google blocked several Belgian newspapers from its web search results Friday in what the papers called retaliation over a copyright infringement lawsuit.

Google said an order issued in the case required it to exclude the newspapers' websites.

The newspapers filed a lawsuit against Google in 2006 claiming the web giant had no right to post links to their articles on Google News without payment or permission. They won, and a Belgian appeals court upheld their victory in May.

The paper La Capitale said on its web site Friday that Google had begun "boycotting" it. Google searches late Friday showed that the websites of the newspapers who sued Google, who were members of an organization called Copiepresse — a Belgian, French-language newspaper copyright management company — did not appear in search results, as they have in the past.

Google spokesman William Echikson said the court decision applied to web search as well as Google News and the company faced fines of 25,000 euros ($35,359 per infringement if it allowed the newspapers' websites to keep appearing.

"We regret having to do so," he said. "We would be happy to re-include Copiepresse if they would indicate their desire to appear in Google Search and waive the potential penalties."

An article Friday on the web site of one of the newspapers, La Libre, took issue with Google's interpretation.

"It is necessary to distinguish the Google search engine from the Google news service," the article said. "The news editors do not oppose having their content referenced by the Google search engine, they refuse on the other hand for their informational content to be included in Google News," the article said.
http://www.google.com/hostednews/ap/... 2fba59868b1d6

The Copyright Lobby Absolutely Loves Child Pornography
Rick Falkvinge

“Child pornography is great,” the man said enthusiastically. “Politicians do not understand file sharing, but they understand child pornography, and they want to filter that to score points with the public. Once we get them to filter child pornography, we can get them to extend the block to file sharing.”

The date was May 27, 2007, and the man was Johan Schlüter, head of the Danish Anti-Piracy Group (Antipiratgruppen). He was speaking in front of an audience from which the press had been banned; it was assumed to be copyright industry insiders only. It wasn’t. Christian Engström, who’s now a Member of the European Parliament, Oscar Swartz, and I were also there.

“My friends,” Schlüter said. “We must filter the Internet to win over online file sharing. But politicians don’t understand that file sharing is bad, and this is a problem for us. Therefore, we must associate file sharing with child pornography. Because that’s something the politicians understand, and something they want to filter off the Internet.”

“We are developing a child pornography filter in cooperation with the IFPI and the MPA so we can show politicians that filtering works,” he said. “Child pornography is an issue they understand.” Schlüter grinned broadly.

I couldn’t believe my ears as I heard this the first time. But the strategy has been set into motion worldwide.

Schlüter’s plan worked like clockwork. Denmark was the first country to censor AllOfMP3.com, the (fully legal) Russian music store, and is now censoring The Pirate Bay off the internet. The copyright industry is succeeding in creating a fragmented Internet.

This is why you see the copyright lobby bring up child pornography again and again and again. They are using it as a battering ram for censoring any culture outside of their own distribution channels. You can Google the term together with any copyright lobby organization and see them continuously coming back to it.

In Sweden, the copyright industry lobbyist Per Strömbäck has publicly admitted it being one of his best arguments. Try Googling for the Swedish word for child pornography on the lobby site and see if you get any hits in any articles (over 40).

The reasoning is simple and straightforward. Once you have established that someone who is in a position to censor other people’s communication has a responsibility to do so, the floodgates open and those middlemen can be politically charged with filtering anything that somebody objects to being distributed.

It is not hard to see why the copyright lobby is pursuing this avenue so ferociously.

It doesn’t really matter that filters at the DNS level are ridiculously easy to circumvent. The idea is to create a political environment where censorship of undesirable information is seen as something natural and positive. Once that principle has been established, the next step is to force a switch to more efficient censorship filters at the IP or even the content level.

News reached us this week that Internet Service Providers in the United States have now entered an agreement with the copyright lobby to police the net. This arrangement, it turns out, also stems from the copyright industry’s love of child pornography.

“We pointed out to [the governor] that there are overlaps between the child porn problem and piracy,” Mr. Sherman [The RIAA president] said, “because all kinds of files, legal and otherwise, are traded on peer-to-peer networks.”

Sound familiar? It should. It’s a page right out of the 2007 scene where the Danish Mr. Schlüter talked about the copyright lobby’s policymaking strategy of associating non-monopolistic distribution of culture with the rape of small defenseless children.

This association strategy has now worked in the United States, too.

Just when you think the copyright lobby can’t sink any lower, they surprise you again. And it gets worse. Much worse.

In Europe, the copyright lobby is now pushing Commissioner Malmström to create a similar censorship regime, despite clear setbacks from the European Court of Justice defending human rights and freedom to communicate.

But taking one step back, would censorship of child pornography be acceptable in the first place? Is the copyright industry perhaps justified in this particular pursuit, beyond their real goal of blocking non-monopolistic distribution?

There are two layers of answers to that. The first is the principal one, whether pre-trial censorship is ever correct. History tells us that it plainly isn’t, not under any circumstance.

But more emotionally, we turn to a German group named Mogis. It is a support group for adult people who were abused as children, and is the only one of its kind. They are very outspoken and adamant on the issue of censoring child pornography.

Censorship hides the problem and causes more children to be abused, they say. Don’t close your eyes, but see reality and act on it. As hard as it is to force oneself to be confronted emotionally with this statement, it is rationally understandable that a problem can’t be addressed by hiding it. One of their slogans is “Crimes should be punished and not hidden”.

This puts the copyright industry’s efforts in perspective. In this context they don’t care in the slightest about children, only about their control over distribution channels. If you ever thought you knew cynical, this takes it to a whole new level.

The conclusion is as unpleasant as it is inevitable. The copyright industry lobby is actively trying to hide egregious crimes against children, obviously not because they care about the children, but because the resulting censorship mechanism can be a benefit to their business if they manage to broaden the censorship in the next stage. All this in defense of their lucrative monopoly that starves the public of culture.

It’s hard to comprehend that there are people who are so shameless that they would actually do this. But there are. Every time you think the copyright lobby has sunk as morally low as is humanly possible, they prove you wrong.

Women And Children First: Technology And Moral Panic
Ben Rooney

Why is it that some technologies cause moral panic and others don’t? Why was the introduction of electricity seen as a terrible thing, while nobody cared much about the fountain pen?

According to Genevieve Bell, the director of Intel Corporation’s Interaction and Experience Research, we have had moral panic over new technology for pretty well as long as we have had technology. It is one of the constants in our culture.

“I like the fact that moral panic is remarkably stable and it is always played out in the bodies of children and women,” she said.

There was, she says, an initial pushback about electrifying homes in the U.S.: “If you electrify homes you will make women and children and vulnerable. Predators will be able to tell if they are home because the light will be on, and you will be able to see them. So electricity is going to make women vulnerable. Oh and children will be visible too and it will be predators, who seem to be lurking everywhere, who will attack.

“There was some wonderful stuff about [railway trains] too in the U.S., that women’s bodies were not designed to go at 50 miles an hour. Our uteruses would fly out of our bodies as they were accelerated to that speed.”

She has a sort of work-in-progress theory to work out which technologies will trigger panic, and which will not.

• It has to change your relationship to time.
• It has to change your relationship to space.
• It has to change your relationship to other people.

And, says Ms. Bell, it has to hit all three, or at least have the potential to hit them.

The first push-back is going to be about kids

“Think about it,” she says “Electricity? Changed our relationship to time, and changed our relationship to space, because not only could we make big spaces but we could light them up. It rearranged the cityscape completely. And it totally changed our relationships to other people in all sorts of ways, whether it was because you could suddenly cook for yourself so you didn’t need servants.

“Cars? Clearly the same. Television? Absolutely. The Internet? Yes. Mobile phones? Yes. Fountain pens? Not so much. They may have changed our relationships to other people, but they didn’t really change our relationships to time and space.”

Now if we have a rule for which technologies are going to cause panic, we also can predict where the panic will start.

“The first push-back is going to be about kids. Is it making our children vulnerable? To predators? To other forms of danger? We will immediately then regulate access. I don’t want to seem cynical because there is a reason why we worry about children, but I do think you can tell that’s where it’s going to start.”

The problem, says Ms. Bell, is that cultures change far slower than technologies do. And because the rate of technological innovation is increasing, so too is the rate of moral panic.

When a new technology comes in, society has to establish norms about how to handle it. That is a long and slow process. She cites the mobile phone. Almost as soon as they became ubiquitous, there started a commentary against them, she said.

Comedy has always played the role of social control

“There was a British comedian who did a sketch with a huge phone in a library. Immediately there is mockery of this behavior. Immediately that becomes part of the things that is associated with the mobile phone. Because then you start to look like this idiot with the phone, and nobody wants to be mocked.

“Comedy has always played this role of social control. Much of Shakespeare’s plays are a form of social control by telling people what is inappropriate. It is about how you regulate what is appropriate.”

These conversations about what is and is not acceptable, tacit and explicit, take time. But technology doesn’t wait: “We don’t get to stabilize before the next one comes along. We still have conversations about the TV, like, ‘is it rude to leave the TV on when you have visitors, even if you turn the volume down?’”

And ironically, in a world that has a greater ability to communicate and pass messages than at any other time in our history, we are no better at working these things out today than we were with the introduction of the printing press: “One of the challenges is that culture is transmitted through things that cannot be digitized.”

So unless something happens, and Ms. Bell is skeptical that it will, then as a society we can expect to be struggling with issues surrounding technologies, well, pretty well for ever.

“We are still having conversations now about the meaning of ‘opening doors’. Opening doors is seen as a transgressive act for feminists since the 1960s, but actually the action is rooted in notions of moral purity from 1600s.”

It has taken us 400 years and we still haven’t sorted out the door.

Child Identity Theft: Why You Should Worry

Michelle Dennedy’s daughter Reilly is nine and already has had her identity stolen twice. Earlier this year Dennedy, who lives in California, learned that the most recent use of Reilly’s identity was to get utilities set up in Arizona.

She is part of a growing trend — stealing the identities of children. On July 12, the Federal Trade Commission is hosting a forum on child identity theft, pulling together a broad group of parents, lawyers, advocates and experts to discuss how to handle this disturbing crime.

“The criminals are focused on where is the softest the target and we’re handing them our kids,” said Dennedy, who was the chief privacy officer for Sun Microsystems and vice president for privacy at Oracle Corp. and started a website on the issue. “We have a whole generation of kids being compromised.”

Children are, indeed, an easy target. They become victims without even knowing it.

“Child ID theft is a particularly troubling crime because it is often undetected for years,” said David Vladeck, director of the FTC’s Bureau of Consumer Protection.

A child could become victimized at birth and not even learn of the situation until they apply for a student loan or have a background check done for an internship when they’re a teenager. A recent study found children’s identities are stolen at more than 50 times the rate of adults. There are several reasons why.

Until now, there was really no reason to check on your child’s credit report. After all, children don’t have credit histories. Social Security numbers have been issued in a somewhat predictable sequence, so identity thieves have taken to plucking newly minted numbers or those that would have been given out a couple of years ago and started using them to help people to acquire an identity with a clean slate — one not tainted by prior financial woes and one that could be used to gain employment in a country they did not legally enter.

Since the children don’t really need to use the numbers, the thieves who have assumed their identities begin establishing their own record with the stolen Social Security number.

In addition to identities stolen at random, Social Security numbers are hoisted by relatives and friends, or from hospitals, doctors’ offices and schools, said Anne Wallace, executive director of the Identity Theft Assistance Center.

“Obviously, these are very vulnerable victims,” she said.

One strategy to help cut down on the exposure of these numbers is to limit who sees them, Wallace said.

“You as a parent should think of your child’s personal information as cash,” she said. “Think about who you are giving it to and for what purpose.”

Steve Schwartz, executive vice president for identity theft protection and recovery firm Intersections Inc., said in most instances in which someone requests that number there is no real reason. “My question back is why. Why do you need it? Can I give you something else?”

There often are no obvious warning signs that your child’s identity is being used, he said, but pay particular note if credit card offers come in their name or collection agencies start to call.

Because a credit record legally can’t be established before someone is 18, technically you can’t really request a report on your child. You actually would have to check out whether someone is using their Social Security number specifically, typically using their own name rather than your child’s.

Linda Foley, founder of the Identity Theft Resource Center, said the impact of these crimes are often beyond financial.

“I’ve been asked ‘What’s the harm to the child if they are only five?” The point is that fraud occurred, a crime took place that may impact that child in 12 years, she said. “Some people use the Social Security number of a child to work. Then when the parents submit their tax return it is denied because that ‘child’ is not deductible.”

Foley suggests not to overreact in advance of there being any suspicion. “Unfortunately, the truth will find you soon enough and in the case of child identity theft, the issues are far easier to remedy than in adult cases. A child is a minor therefore any contract signed (such as a credit card application) is invalid. There is no argument a creditor can make that changes the law.”

Dennedy noted that the company ID theft recovery company Debix Inc. is offering a free service, for a limited time, that allows parents to run their child’s number to see whether it is being used in circumstances that would never apply to a child, such as for employment.

She said the crime is particularly alarming when you consider who she is: Someone who has been working to protect such information professionally for more than a dozen years and is zealous of her children’s privacy.

“If this can happen to me, this can happen to anyone,” Dennedy said.

Harvard Researchers Accused of Breaching Students' Privacy

Social-network project shows promise and peril of doing social science online
Marc Parry

In 2006, Harvard sociologists struck a mother lode of social-science data, offering a new way to answer big questions about how race and cultural tastes affect relationships.

The source: some 1,700 Facebook profiles, downloaded from an entire class of students at an "anonymous" university, that could reveal how friendships and interests evolve over time.

It was the kind of collection that hundreds of scholars would find interesting. And in 2008, the Harvard team began to realize that potential by publicly releasing part of its archive.

But today the data-sharing venture has collapsed. The Facebook archive is more like plutonium than gold—its contents yanked offline, its future release uncertain, its creators scolded by some scholars for downloading the profiles without students' knowledge and for failing to protect their privacy. Those students have been identified as Harvard College's Class of 2009.

The story of that collapse shines a light on emerging ethical challenges faced by scholars researching social networks and other online environments.

The Harvard sociologists argue that the data pulled from students' Facebook profiles could lead to great scientific benefits, and that substantial efforts have been made to protect the students. Jason Kaufman, the project's principal investigator and a research fellow at Harvard's Berkman Center for Internet & Society, points out that data were redacted to minimize the risk of identification. No student seems to have suffered any harm. Mr. Kaufman accuses his critics of acting like "academic paparazzi."

Adding to the complications, researchers like Mr. Kaufman are being asked to safeguard privacy in an era when grant-making agencies increasingly request that data be shared—as the National Science Foundation did as a condition for backing Harvard's Facebook study.

The Facebook project began to unravel in 2008, when a privacy scholar at the University of Wisconsin at Milwaukee, Michael Zimmer, showed that the "anonymous" data of Mr. Kaufman and his colleagues could be cracked to identify the source as Harvard undergraduates.

"The steps that they tried to take to engage in innovative research, to me fell short," says Mr. Zimmer, an assistant professor at Milwaukee's School of Information Studies and co-director of its Center for Information Policy Research. "It just shows that we have a lot of work to do to make sure that we're doing this kind of research correctly and in ways that don't jeopardize the subjects that we're studying."

The controversy over the Harvard data set, known as "Tastes, Ties, and Time," comes amid growing interest in social-network research across disciplines, including sociology, communications, history, geography, linguistics, business, computer science, and psychology. The daily minutiae of our digital lives are so culturally valuable that the Library of Congress is on the eve of opening a research archive of public tweets.

"If you had to dream of research content, it would be sending out a diary and having people record their thoughts at the moment," says Alex Halavais, an associate professor of communications at Quinnipiac University and soon-to-be president of the Association of Internet Researchers. "That's like a social scientist's wet dream, right? And here it has kind of fallen on our lap, these ephemeral recordings that we would not have otherwise gotten."

But that boon brings new pitfalls. Researchers must navigate the shifting privacy standards of social networks and their users. And the committees set up to protect research subjects—institutional review boards, or IRB's—lack experience with Web-based research, Mr. Zimmer says. Most tend to focus on evaluating biomedical studies or traditional, survey-based social science. He has pointed to the Harvard case in urging the federal government to do more to educate IRB's about Web research.

'Complete Social Universe'

The project at the center of this dispute dates to Facebook's younger days. Even then the Harvard-born network was on its way to conquering American higher education. In 2006, with clearance from Harvard's IRB and Facebook, Mr. Kaufman's team began dipping into the profiles of one class to build a data archive for social-science research.

The researchers downloaded each student's gender, home state, major, political views, network of friends, and romantic tastes. To determine race and ethnicity, they examined photographs and club affiliations. They recorded who appeared in students' photo albums. And they culled cultural tastes like books, music, and movies (top film: Lord of the Rings).

The archive was built to feed a team of five sociologists—four from Harvard, one from the University of California at Los Angeles—whose research interests include culture, race, and public health. Their push to vacuum up so many Facebook profiles helped overcome a big obstacle to social-network research: getting enough data. Typically researchers conduct such studies through external surveys of social-network users, Mr. Zimmer says. Or they'll do an ethnography of a smaller group. That means the available data can be soiled because of self-reporting biases and errors, he says. Or it may not truly represent the population. Not only had Mr. Kaufman's team amassed an ample data set, but they had improved it by collecting information from the same class over four years. The data, as Mr. Kaufman puts it, amount to "a complete social universe."

But here's where things get sketchy. Mr. Kaufman apparently used Harvard students as research assistants to download the data. That's important, because they had access to profiles that students might have set to be visible to Harvard's Facebook network but not to the whole world, Mr. Zimmer argues in a 2010 paper about the case published in Ethics and Information Technology. The assistants' potentially privileged access "should have triggered an ethical concern over whether each student truly intended to have their profile data publicly visible and accessible for downloading," Mr. Zimmer says in an e-mail.

In an interview, Mr. Kaufman declined to discuss who helped collect the data. But the sociologist did concede in a videotaped 2008 Berkman talk that the assistants created "an interesting wrinkle to this, from a legal point of view."

"We faced a dilemma as researchers," Mr. Kaufman said on tape. "What happens if a student has a privacy setting that says, 'You can't see me unless you're my friend,' and our undergraduate research assistant who is downloading the data is a friend of that person? Then can we include them in our data?"

He left that question unanswered at the time. But Mr. Kaufman talks openly about another controversial piece of his data gathering: Students were not informed of it. He discussed this with the institutional review board. Alerting students risked "frightening people unnecessarily," he says.

"We all agreed that it was not necessary, either legally or ethically," Mr. Kaufman says.

Muddled Online Ethics

The Harvard case reflects how the Internet is changing the relationship between researchers and their subjects, sometimes creating what Elizabeth A. Buchanan, director of the Center for Applied Ethics, at the University of Wisconsin-Stout, calls a "strange distance" between the two. Researchers may grab content posted online without interacting with the people who wrote it or considering them "human subjects." But they may be aggregating data that can be traced to individuals, says Ms. Buchanan.

The fundamental question is how best to protect subjects, she says, "and sometimes in Internet research ... those issues get muddled."

For example, Quinnipiac's Mr. Halavais did a Twitter study focused on protests surrounding the Group of 20 summit in Pittsburgh. But something unanticipated happened: Some people were arrested for using Twitter to help demonstrators evade police. After that, one of the key people in the study deleted his Twitter account. What the subject didn't know was that researchers had collected his tweets in an archive and planned to publish papers about the data.

Mr. Halavais didn't seek approval from his review board—as he sees it, studying Twitter is like studying newspapers. "We did not predict that the very act of tweeting something might be considered a criminal offense," he says. "I don't think an IRB would have been able to predict that any better than we would."

A rule of thumb holds that if an online community requires a password to enter, then researchers must seek IRB approval to study its members. But some scholars go further, Mr. Halavais says, arguing that researchers should seek approval to study open publishing platforms like blogs and Twitter.

Attitudes toward privacy are also evolving, among both researchers and companies. Fred Stutzman, a postdoctoral fellow at Carnegie Mellon University who studies privacy in social networks, used to harvest Facebook data that students made public on his university network. He isn't sure he'd do that today.

"This is the nature of these systems," says Mr. Stutzman, who has criticized the Library of Congress's Twitter project. "Maybe in three years, we'll look at public tweets and say, Oh, my God, those weren't public. A lot of people that are using Twitter nowadays may actually want to go back and delete their accounts or take those things out of the public at a later date, and they no longer can."

Twitter recently alarmed researchers by saying that collecting tweets and making them openly available violates the terms of service, a blow to academics who want to share data.

Facebook, too, has taken a stricter approach to research as the company has matured and weathered several privacy controversies. Cameron Marlow, its head of data science and "in-house sociologist," has built up a small but tightly controlled program for external research since joining Facebook, in 2007.

Asked about the Harvard sociologists' project, Mr. Marlow says things would be different had it begun now: "We would have been much more involved with the researchers who are doing the data collection."

All work would be done on Facebook servers, for example. And releasing data? Unlikely.

"We tend to not release any data, for the fact that it's almost impossible to anonymize social-network data," he says.

What's the Danger?

Mr. Zimmer proved him right. Within days of Harvard's release from the data archive, he zeroed in on the institution without even downloading the profiles. Most of what he needed was in the archive's code book—a lengthy document, at the time easily available online (it has since been restricted), that described in detail how the data set was collected and what it contains. The size of the class, uniquely titled majors like "organismic and evolutionary biology," and Harvard's particular housing system all clued Mr. Zimmer in to the source of the Facebook information.

Mr. Kaufman, for his part, won't comment on whether Harvard is, in fact, the source of his data.

But assuming that Mr. Zimmer is correct, why does it matter? What's the danger?

One issue, Mr. Zimmer says, is that someone might be able to figure out individual students' identities. People with unique characteristics could be discovered on the basis of what the Harvard group published about them. (For example, the original code book lists just three students from Utah.) Their information could be absorbed by online aggregators, like Pipl. A prospective employer might Google a student and use the resulting information to discriminate against him or her, Mr. Zimmer says.

"These bits and pieces of our personal identities could potentially have reputational harm," he says.

He's right about how easy it is to identify people who are presumably part of the data set. By searching a Facebook group of Harvard's Class of 2009, a Chronicle reporter quickly tracked down one of those three Utah students. Her name is Sarah M. Ashburn. The 24-year-old is in Haiti working for a foundation that helps AIDS victims.

The Facebook-data controversy was news to her. In a telephone interview, Ms. Ashburn says her main qualm with the project is its use of students who may have had privileged access to data that was supposed to be shared only with friends, or friends of friends. Because of that, she feels that the researchers should have informed the class about their project.

Still, she isn't concerned about the possibility that her own data is out there.

"Anything that's put on Facebook somehow will make it out into the general public, no matter what you attempt to do," she says. "So I never have anything on my Facebook profile that I wouldn't want employers, my grandmother, like anyone in the world to be able to see."

The Biggest Victim

In their defense, the Harvard sociologists stress that researchers outside their own group had to apply for access to download the data and agree not to share it or identify people within it. Distribution was halted immediately after privacy concerns were raised, says Kevin Lewis, a Ph.D. candidate who is part of the research team. By that time, he says, fewer than 20 researchers had access. Each presumably still has a copy.

After the initial release, the researchers took additional steps to protect the students' identities. For example, a revised code book substituted general regions, like "mountain" and "Pacific," for students' home states, and general major categories, like "humanities" and "life sciences," for their academic backgrounds.

As for the criticism of Harvard's institutional review board, the university seems to agree on the need for greater guidance. A spokesman, Jeff A. Neal, notes that "current federal human-subjects regulations were written well before the Internet age, and there is still little published guidance for IRB's on the implications of new and emerging technologies and potential risks." He adds, "Federal regulators, professional associations, and IRB's are all working to understand these risks and to develop guidelines."

The biggest victim in this case may be scholarship.

The controversy has tainted Harvard's data. And "once a data set has been clearly de-anonymized, it becomes a little bit like kryptonite," says Mr. Halavais. "People will touch it, but you're putting your own ethical stance at risk if you do."

There may never be another chance to touch it. The Harvard sociologists are still using the data for their own research. But they haven't settled on a secure way of publicly sharing it again.

Since the public release ceased, in 2008, Mr. Lewis has received more than 200 requests for the data from researchers. He still gets one or two inquiries each week.

Anonymous Hackers Release 90,000 Military E-mail Accounts
Ridge Shan

The “hacktivist” organization Anonymous Operations posted some 90,000 military e-mail addresses and passwords, to the Pirate Bay torrent website on July 11, in what they called “Military Meltdown Monday."

The organization hacked into the networks of government contracting and consulting firm Booz Allen Hamilton, where they claim to have discovered “a list of roughly 90,000 military e-mails and password hashes ... 4gb of source code,” and “maps and keys for various other treasure chests buried on the islands of government agencies, federal contractors and shady whitehat companies.”

Anonymous further claims that Booz Allen was involved with several government surveillance and intelligence-gathering programs “that may be deemed illegal” and insinuate that several of Booz Allen’s executives, all former members of the Nation Security Agency, garnered illegal government favor in their private business efforts.

Anonymous preceded the release with multiple lead-up tweets from several of their affiliated twitter accounts. One account, “anonymouSabu,” formerly part of the LulzSec hacking group, claims that this is the first of “two of the biggest releases for Anonymous in the last 4 years,” and sent a warning to the intelligence community, stating “Everyone brace. This is literally explosive.”

Another account, “YourAnonNews”, states that “today’s #AntiSec release will without any doubt be the biggest release so far.”

“AntiSec” or operation Anti-Security, was a collaborative effort between hacker groups LulzSec, Anonymous, and various others to attack and steal confidential information from major governments and corporations, and expose perceived corruption and abuse of power. LulzSec disbanded in late June, its members reintegrating with their original foundations in Anonymous.

The websites and networks of numerous companies and government organizations have already been attacked in the name of AntiSec. Anonymous believes that their efforts are simply a form of civil disobedience, calling their tactics “peaceful protest." The government, meanwhile, has been actively trying to track down and arrest its members.

Anonymous made headlines last year when they attacked MasterCard, Visa, and PayPal after the companies had suspended payments directed to the information leaking website WikiLeaks and its founder, Julian Assange.

Cyber Theft Illustrates Pentagon Security Challenge
David Alexander

A foreign intelligence service stole 24,000 files from a U.S. defense contractor earlier this year, a dramatic illustration of the threat confronting the Pentagon as it works to bolster military computer security, a top defense official said on Thursday.

Deputy Defense Secretary William Lynn revealed the theft as he unveiled a new Pentagon cybersecurity strategy that designates cyberspace as an "operational domain" like sea, air and land where U.S. forces will practice, train and prepare to defend against attacks.

Lynn said the theft occurred in March and was believed to have been carried out by a foreign intelligence service and targeted files at a defense contractor developing weapons systems and defense equipment. He declined to specify the country behind the attack, what company was hit or what the files contained.

"It was 24,000 files, which is a lot," Lynn said. "But I don't think it's the largest we've seen."

The theft was a dramatic illustration of the rising difficulties the Pentagon faces in protecting military and defense-related networks critical to U.S. security.

Defense Department employees operate more than 15,000 computer networks and 7 million computers at hundreds of installations around the world. The department's networks are probed millions of times a day and penetrations have compromised huge amounts of data.

Lynn said a recent estimate pegged economic losses from theft of intellectual property and information from government and commercial computers at over $1 trillion.

New Cyberstrategy

In addition to calling for the Pentagon to treat cyberspace as an "operational domain," Lynn said the new strategy includes four initiatives aimed at bolstering network security by layering defenses and improving cooperation with other network operators.

Lynn said as part of its active defenses, the Pentagon would introduce new operating concepts and capabilities on its networks, such as sensors, software and signatures to detect and stop malicious code before it affects U.S. operations.

"Our strategy's overriding emphasis is on denying the benefit of an attack," he said in a speech at the National Defense University. "If an attack will not have its intended effect, those who wish us harm will have less reason to target us through cyberspace in the first place."

The strategy also calls for greater U.S. military cooperation on cybersecurity with other government agencies, defense contractors and U.S. military allies abroad in order to take advantage of the open, interwoven nature of the Internet.

Former Homeland Security Secretary Michael Chertoff, who now heads the Chertoff Group risk management firm, praised the strategy as a "good first step" but said the challenge would be filling in the details.

"It's not put your pencil down, work is done," he said. "It really just sets the table for a lot of hard work thinking through the details of what the plans are going to be, what the capabilities have to be and how we're going to build the various layers of defense."

He cited the possibility of creating secure communities on the Internet for some functions, finding ways to encourage individuals to practice computer security and sharing security-related information more widely between public and private sectors.

"These are going to be hard things to do because they are going to require trade-offs," Chertoff said. "You're not going to eliminate the risk of cyberattacks. What you have to do is minimize and manage those risks."

Offense Versus Defense

General James Cartwright, vice chairman of the Joint Chiefs of Staff, said the Pentagon must shift its thinking on cybersecurity from focusing 90 percent of its energy on building better firewalls and only 10 percent on preventing hackers from attacking U.S. systems.

"If your approach to the business is purely defensive in nature, that's the Maginot line approach," he said, referring to the French fixed defensive fortifications that were circumvented by the Nazis at the outset of World War Two.

"If it's OK to attack me and I'm not going to do anything other than improve my defenses every time you attack me, it's very difficult to come up with a deterrent strategy," he said.

Cartwright said part of the answer was to build up the military's offensive response capabilities.

"How do you build something that convinces a hacker that doing this is going to be costing them and if he's going to do it, he better be willing to pay the price and the price is going to escalate, rather than his price stays the same and ours escalates," Cartwright said.

"We've got to change the calculus."

(Editing by Todd Eastham and Bill Trott)

Rumor About NSA-Google Alliance to Stay Just That
Nick McCann

The National Security Agency does not have to disclose its relationship with Google amid press reports that the two partnered up after hackers in China launched a cyber attack on the U.S. government, a federal judge in Washington ruled (pdf).

In February 2010, the Electronic Privacy Information Center requested a number of communications between the NSA and Google regarding cyber security.

Following an alleged Chinese hacker attack, media outlets had reported that NSA teamed up with the web giant for an investigation.

The center, which calls itself a public-interest group dedicated to civil liberties issues, requested records "concerning an agreement or similar basis for collaboration" and "Google's decision to fail to routinely encrypt" Gmail messages and Google Docs.

The NSA denied the Freedom of Information Act request for the documents.

"While it acknowledged working 'with a broad range of commercial partners and research associates,' the Agency refused to 'confirm [ or] deny' whether it even had a relationship with Google," the court's order said.

This type of answer is known as a Glomar response after the Hughes Glomar Explorer, a ship used in a classified CIA project to raise a sunken Soviet submarine from the Pacific Ocean.

U.S. District Judge Richard Leon agreed with the NSA that the requested documents were protected, relying on a declaration by Diane Janosek, NSA deputy associate director for policy and records.

"[A]ny acknowledgement by NSA of the existence or nonexistence of a relationship or agreement with Google ... would reveal whether or not NSA considered the alleged attack to be of consequence for critical U.S. government information systems," Janosek said in her declaration.

The court granted the NSA's motion for summary judgment on July 8. "Because NSA's answer is both logical and plausible, the Declaration satisfies all the requirements set forth by our Circuit," Leon wrote.

The FBI May Have Had No Warrant for the Raid on Instapaper, Pinboard, et al.
J-P Teti

I submitted a Freedom of Information Act request for the warrant used to raid the data center where Instapaper and Pinboard had servers. I received a response today after submitting my request on June 23rd. This is what they said:

Based on the information you provided, we conducted a search of the indices to our Central Records System. We were unable to identify responsive main file records.

Given that all evidence indicates that I submitted the correct address and provider name, this makes it likely that the FBI had no warrant for this search and seizure. The FBI raided a business that was leasing space for servers. There is no reason they could not have shown a warrant. Sadly, this is the exactly what I expected. A few other people have submitted FOIA’s under slightly different search terms, so perhaps something will turn up, and someone on Twitter told me that this is weak grounds to claim they didn’t have a warrant, but I suspect they used some sort of trick under the “PATRIOT” act.

If you’d like to see it, here’s the response I received from the FBI in PDF form. The black box was put over my address by me, not something printed on the page.

NOTW Reporters Tried to Access 9/11 Phone Data: Report

Britain's Daily Mirror newspaper reported on Monday that News of the World journalists had offered to pay a New York police officer to retrieve the private phone records of victims of the September 11, 2001, attacks.

Citing an unidentified source, the newspaper said journalists had wanted the phone numbers of the dead as well as details of the calls they had made and received in the days leading to the attacks.

News Corp chief executive Rupert Murdoch last week shut down the News of the World, Britain's top-selling Sunday tabloid, as allegations grew that its journalists had illegally accessed the voicemails of thousands of people, from child murder victims to the families of Britain's war dead.

The police officer, who now works as a private investigator, said at the time that he would turn down the request because of "how bad it would look," the source was quoted as saying.

(Reporting by Karolina Tagaris; Editing by Janet Lawrence)

Gordon Brown Says Newspaper Hired ‘Known Criminals’
John F. Burns, Jo Becker and Alan Cowell

Former Prime Minister Gordon Brown brought new and alarming charges on Tuesday to the broadening scandal enveloping Rupert Murdoch’s media empire in Britain, accusing one of the most prestigious newspapers in the group of employing “known criminals” to gather personal information on Mr. Brown’s bank account, legal files and tax affairs.

The claims came a day after reports that two Murdoch newspapers may have bribed police officers or used other potentially illegal methods to obtain information about Queen Elizabeth II as well as Mr. Brown.

And two former journalists for The News of the World — the newspaper at the epicenter of the scandal, which the Murdoch family closed last weekend — said on Monday that police officers had been bribed to use restricted cellphone-tracking technology to pinpoint the location of people sought by the papers in their pursuit of scoops.

Political momentum gathered on Tuesday for a sharp, if largely symbolic, rebuke to Mr. Murdoch’s News Corporation, in the form of parliamentary motion opposing the company’s proposed takeover the satellite broadcast giant British Sky Broadcasting. The government said that it would join the opposition Labour Party and support the motion on Wednesday, calling on Mr. Murdoch to abandon the $12 billion bid for the shares of the broadcaster that his company does not already own. Mr. Murdoch had hoped to save the deal, which still needs regulatory approval, by shuttering The News of the World.

Members of Parliament at a hearing on Tuesday questioned top police officials, including Assistant Commissioner John Yates, who was in charge of the initial hacking inquiry in 2006, and who declined to reopen it in 2009. “In hindsight, had I known what I should have known, it was a poor decision,” Mr. Yates said.

A separate Parliamentary committee on Tuesday said it would summon Mr. Murdoch, his son James and Rebekah Brooks, the chief executive of News Corporation’s British newspaper group, known as News International, to testify before the committee next week, according to news reports.

Since flying to Britain over the weekend, Mr. Murdoch has assumed command of damage control efforts at his London headquarters amid a torrent of new revelations, including reports that newsroom malpractice extended far beyond The News of the World to two other newspapers in his British stable — The Sunday Times, an upmarket broadsheet, and The Sun, the country’s highest-selling daily tabloid. Mr. Brown accused The Sunday Times — owned by News International, the British subsidiary of Mr. Murdoch’s News Corporation — of employing “known criminals” to gather personal information on his bank account, legal files and “other files — documentation, tax and everything else.”

“I think that what happened pretty early on in government is that the Sunday Times appear to have got access to my building society account, they got access to my legal files, there is some question mark about what happened to other files — documentation, tax and everything else,” Mr. Brown, who was Britain’s Labour prime minister from 2007 to 2010 after serving for a decade as chancellor of the Exchequer, told the BBC on Tuesday.

“I’m shocked, I’m genuinely shocked, to find that this happened because of their links with criminals, known criminals, who were undertaking this activity, hired by investigators working with the Sunday Times,” Mr. Brown said.

Mr. Brown added: “I just can’t understand this — if I, with all the protection and all the defenses and all the security that a chancellor of the Exchequer or a prime minister has, am so vulnerable to unscrupulous tactics, unlawful tactics, methods that have been used in the way we have found, what about the ordinary citizen?”

The Guardian newspaper reported earlier that Mr. Brown’s bank, Abbey National, alerted him that someone acting for The Sunday Times had posed in his name — a practice commonly referred to as identity theft, or blagging — to obtain details of his account six times in 2000, when he was chancellor. The BBC said that the effort was made as part of an inquiry by the paper into allegations that Mr. Brown had bought a property in his native Scotland at below-market value, something Mr. Brown has strongly denied.

But the most damaging aspect of the affair involving Mr. Brown related to his son Fraser, now five years old, who suffers from cystic fibrosis. Mr. Brown told the BBC on Tuesday that he had never publicly discussed his son’s medical condition. But a person close to Mr. Brown said on Monday that he believed that The Sun gained access to his son’s medical records for an article about his illness that ran in November 2006, four months after the boy’s birth.

Mr. Brown said on Tuesday that he and his wife Sarah were “in tears” when they learned that details of the health issue were going to appear in the newspaper.

The BBC, quoting its sources, said the information about the boy’s condition had been obtained first by The Sunday Times, and passed to The Sun. Mr. Brown said that Ms. Brooks, then The Sun’s editor, called him to tell them that the tabloid knew of the boy’s condition, which they had believed was something known only to themselves and medical professionals who were caring for their son.

In a statement, News International said it noted the allegations about Mr. Brown, adding: “So that we can investigate these matters further, we ask that all information concerning these allegations is provided to us,” Britain’s Press Association news agency reported. The statement said The Sun was satisfied that its story about the boy’s cystic fibrosis had been obtained legitimately.

But Mr. Brown said: “They will have to explain themselves. I can’t think of any way that the medical condition of a child can be put into the public arena legitimately unless the doctor makes a statement or the family makes a statement.”

A person close to Mr. Brown said that the former prime minister asked Scotland Yard last year whether his personal details were among the 11,000 pages of notes seized from Glenn Mulcaire, a private investigator working for The News of the World who was jailed in 2007 for hacking the phones of the royal household. Scotland Yard confirmed that, the source said.

Phone hacking and other illegal or unethical methods have also been common at many British newspapers that are not Murdoch-owned. But the focus for now is on the Murdoch empire, which confronted what many have called an existential threat on Monday by revising its attempted $12 billion takeover for Britain’s most lucrative satellite television company, British Sky Broadcasting, in ways that appeared to delay the bid for at least six months.

Many commentators in Britain said Mr. Murdoch appeared to be playing for time, in the hope that public and political anger over the current scandal will abate, making room for politicians and regulators to judge the takeover on its business merits, and not on the basis of retribution for the hacking scandal.

The revelations about the intrusive activities directed at the queen and Mr. Brown have seized the headlines, driving home the realization that nobody, not even the most powerful and protected people in the land, had been beyond the reach of news organizations caught up in a relentless battle for lurid headlines and mass circulation.

A wide segment of British society, from celebrities to ordinary families wrestling with personal tragedies, has been shown to be potentially vulnerable to the newspapers’ use of cellphone-hacking, identity theft, tracking technology and police bribery — perhaps even clandestine property break-ins, if some reports circulating in recent days are true.

The BBC and The Guardian, in their Monday reports, cited internal e-mails from a News of the World archive in which requests were made for about $1,600 to pay a royal protection officer — one of several hundred Scotland Yard officers eligible to serve in the palace security detail — for classified information about the queen, Prince Charles and other senior members of the royal family in what a Scotland Yard official described as a major security breach. The Guardian article said two officers on the royal detail were involved and that the e-mails from an archive assembled by The News of the World were exchanged by a senior executive and a reporter, neither of whom it identified.

The accounts said the money was used to obtain a copy of a contact book used by the royal protection service — a volume known as the Green Book, according to the BBC — that contained information about the queen, Prince Charles, other senior royals and their friends and contacts. A report in The Evening Standard newspaper said the information included “phone numbers, and tips about the movements and activities” of the queen and her husband, Prince Philip. The BBC said the book also gave details of friends of the royal couple, their palace staff and other regular royal contacts. A Guardian report said the police had informed the palace that the cellphones of Prince Charles and his wife, Camilla, Duchess of Cornwall, may have also been hacked.

The BBC also reported that an e-mail requesting approval for the money to buy the contacts book was written by Clive Goodman, The News of the World’s royal correspondent, who served a four-month jail term in 2007 for his role in an earlier hacking case. The request for funds was addressed to Andy Coulson, a former editor of The News of the World and senior aide to Prime Minister David Cameron. Mr. Coulson was questioned by police for nine hours on the hacking allegation and other alleged abuses after he was arrested last Friday. He was released on bail.

Prime Minister Cameron said on Monday that he was outraged by the diversion of the contact book, describing the alleged police involvement in the palace intrusion as “a dereliction of duty” and adding, “We need to get to the bottom of that if it is true.”
Separately, an inquiry by The New York Times, which included interviews with two former journalists at The News of the World, has revealed the workings of the illicit cellphone tracking, which the former tabloid staffers said was known in the newsroom as “pinging.” Under British law, the technology involved is restricted to law enforcement and security officials, requires case-by-case authorization, and is used mainly for high-profile criminal cases and terrorism investigations, according to a former senior Scotland Yard official who requested anonymity so as to be able to speak candidly.

According to Oliver Crofton, a cybersecurity specialist who works to protect high-profile clients from such invasive tactics, cellphones are constantly pinging off relay towers as they search for a network, enabling an individual’s location to be located within yards by checking the strength of the signal at three different towers. But the former Scotland Yard official who discussed the matter said that any officer who agreed to use the technique to assist a newspaper would be crossing a red line.

“That would be a massive breach,” he said.

A former show business reporter for The News of the World, Sean Hoare, who was fired in 2005, said that when he worked there, pinging cost the paper nearly $500 on each occasion. He first found out how the practice worked, he said, when he was scrambling to find someone and was told that one of the news desk editors, Greg Miskiw, could help. Mr. Miskiw asked for the person’s cellphone number, and returned later with information showing the person’s precise location in Scotland, Mr. Hoare said. Mr. Miskiw, who faces questioning by police on a separate matter, did not return calls for comment.

John F. Burns and Jo Becker reported from London and Alan Cowell from Paris. Ravi Somaiya, Don van Natta and Graham Bowley contributed reporting from London, and J. David Goodman from New York.

Focus of Phone-Hacking Investigation Shifts to Les Hinton

Top aide to Rupert Murdoch faces questions on whether he saw 2007 internal report on widespread hacking
Dan Sabbagh and Polly Curtis

Les Hinton, Rupert Murdoch's lifelong lieutenant and closest adviser, faces questions over whether he saw a 2007 internal News International report, which found evidence that phone hacking was more widespread than admitted by the company, before he testified to a parliamentary committee that the practice was limited to a single reporter.

News of the existence of the 2007 report – the conclusions of which were kept hidden from the public, MPs and police – came as Murdoch, chairman and CEO of News Corporation, arrived in the UK to deal directly with the rapidly developing crisis.

The collection of memos that formed the inquiry were sent to the Metropolitan police earlier this year. This step came after executives who had joined NI more recently discovered its existence and sent it to the Operation Weeting team investigating News of the World phone hacking.

Despite the alleged conclusions of the memos, NI executives repeatedly went on the record to say hacking was confined to a single "rogue reporter" – and gave evidence to parliament that that was the case.

Hinton, who then ran NI, which is owned by News Corp, spoke to the Commons culture committee looking into the Goodman affair on 6 March 2007. He was asked whether the News of the World had "carried out a full, rigorous internal inquiry" into phone hacking and whether he was "absolutely convinced" the practice was limited to a single reporter.

The Guardian understands that Hinton was among five NI executives who had access to the report. The then News of the World editor, Colin Myler, and legal counsel, Tom Crone, are also understood to have seen it.

Hinton – an employee of Murdoch for 52 years – was succeeded by James Murdoch, who it is understood had no knowledge of the 2007 internal inquiry until recently. He joined NI from BSkyB, where he had been chief executive. Also in the dark was Rebekah Brooks, who at the time was editing the Sun.

The NI investigation began after Clive Goodman, the News of the World's former royal editor, and Glenn Mulcaire, its £100,000-a-year private investigator, were jailed for hacking into phones belonging to aides of Prince William and Harry. It was conducted with the help of lawyers Harbottle & Lewis, and was led by NI's director of legal affairs, Jon Chapman, who has since left the company.

Lawrence Abramson, managing partner of Harbottle & Lewis, wrote to Chapman to say that they had not found anything irregular in their examination of the internal emails.

The letter, which was presented to the select committee, concluded: "We did not find anything in those emails which appeared to us to be reasonable evidence that Clive Goodman's illegal actions were known about and supported by both or either of Andy Coulson, the editor, and Neil Wallis, the deputy editor, and/or that Ian Edmondson, the news editor, and others were carrying out similar illegal procedures."

The NI investigation was based on the examination of 2,500 emails: on Sunday night, however, there were reports that only 300 of those emails had been passed on to Harbottle & Lewis.

While pressure seemed to be growing on some senior NI executives, Murdoch gave a very visible show of support to Brooks when he appeared with her on Sunday night outside his London home. Asked what his priority was, he smiled, gestured to Brooks and said: "This one." Brooks is set to be interviewed by police as a witness in the coming days.

The scandal continues to grip Westminster and Scotland Yard. Sir Paul Stephenson, the head of the Metropolitan police, is to make an apology over the force's "institutional" failings in its investigation of the scandal.

As one of News Corporation's biggest investors, Yacktman Asset Management, insisted that buying BSkyB was not a "make or break" deal for the company, the government was scrambling to find a way to postpone a decision on the deal without exposing it to a multimillion-pound judicial review.

Labour is threatening to table a motion on Wednesday calling for a delay until after the police inquiries are completed if the prime minister does not take action. Nick Clegg is to tell Lib Dem MPs that they can back the motion if it is legally compliant.
The government has consistently said it cannot drop the BSkyB deal because it has already satisfied a plurality test and any other reasoning would leave it exposed to judicial review. But it was becoming increasingly clear it would have to find a way or face a rebellion in the Commons that could result in a standoff between the legislature and the judiciary.

Ed Miliband, the Labour leader, told the BBC's Andrew Marr show: "I say this to the prime minister candidly. Over the next 72 hours I hope he changes his position on this because I don't want to force this to a vote in the House of Commons.

"But I think he's got to understand that when the public have seen the disgusting revelations that we've seen this week the idea that this organisation, which engaged in these terrible practices, should be allowed to get that 100% stake without the criminal investigation being completed and on the basis of assurances from that selfsame organisation, I'm afraid that won't wash with the public."

His office said they had until Tuesday night to table the motion, and would use the next 48 hours to get "as much political support as we can".

Jeremy Hunt, the culture secretary, who is in charge of taking the decision on BSkyB, will consult his lawyers to see what impact a parliamentary vote could have on his quasi-judicial role in ruling on BSkyB. There were suggestions from the Lib Dem benches that the Tories could even back the Commons motion if it provided a way out. However, No 10 sources said that they would not speculate on a motion when they hadn't yet seen the wording.

Such a motion, which would be tabled during Labour's opposition day debate on Wednesday, would result in a resolution in the Commons, which although not legally binding could put intolerable pressure on the government to postpone the deal. The decision had already been kicked into the long grass after Hunt's department received a reported 200,000 responses to a consultation.

Philip Hammond, the transport secretary, when asked on Sky News about the award of a 100% stake in BSkyB to News International, said: "Well, I understand that people would be very concerned about that and I think probably many of us would be very concerned, but we have to operate within the law. The government can't just change the rules in midstream – if we did we'd undoubtedly be taken to court and we'd probably lose so we have to tread very carefully within the law."

With Labour leading the charge against NI, the Lib Dems sought to regain their reputation for standing up to the Murdoch empire. In opposition they had been the only party voicing concerns about journalistic practices at News International.

The energy secretary, Chris Huhne, confirmed that Clegg had warned Cameron in the days after the coalition was formed against hiring Andy Coulson, the ex-editor of News of the World, to be his director of communications.

An aide to Clegg said that if the motion resolved the legal issues, he would back it: "If it's legally compliant then any motion that states the obvious will receive Liberal Democrat support. Nick thinks that it's preposterous that everything going on couldn't influence such a decision."

Lord Oakeshott, the Lib Dem peer and close ally of Vince Cable, who was stripped of the responsibility for the BSkyB merger after a Telegraph sting recorded him saying he had "declared war" with Murdoch over the merger plans, said: "Lib Dems from the cabinet to councillors … are totally united. We want to block the BSkyB bid and then break up the Murdoch empire. He's far too powerful – we don't let Tesco have 40% of the market. This is not just about blocking the bid, it's about ending a serious danger to our democracy."

Experts: Murdoch's Companies May Face US Actions
Gregory Katz

Legal experts said Monday it is possible Rupert Murdoch's U.S. companies may face legal actions because of the shady practices at the News of the World, his now defunct British tabloid.

They said Murdoch's News Corp. might be liable to criminal prosecution under the 1977 Corrupt Foreign Practices Act, a broad act designed to prosecute executives who bribe foreign officials in exchange for large contracts.

The News of the World was accused of making payoffs to police in exchange for information - a possible violation of the anti-bribery provisions of the act. It would be up to the U.S. Department of Justice to decide if this merited criminal charges, while the Securities and Exchange Commission would determine if there had been financial wrongdoing at News Corp.

Former federal prosecutor Dan Guthrie of Dallas, now a lawyer specializing in white collar cases, said Murdoch's concern about possible legal exposure under the corrupt practices act may explain his abrupt decision to shut down the tainted tabloid.

"That was my first thought when I heard the news," he said. "Someone must have advised him that he needed to do that to limit his exposure. Clearly the act is broad enough to cover something like this, and the U.S. Department of Justice is being increasingly vigorous in enforcing this act."

He said that by shutting the paper Murdoch may be hoping to prevent any possible U.S. prosecution under the act, and also keep prosecutors from investigating whether the corrupt practices were used at some of Murdoch's other newspapers.

"By closing the paper, you've essentially lopped it off from the empire and said it's gone," Guthrie said. "That tends to mitigate the need for an investigation. You don't just close down a profitable paper in a cavalier way; there must be something going on behind the scenes."

He and other lawyers said they would be shocked if the Securities and Exchange Commission is not investigating the allegations against the News of the World.

"The SEC will automatically be involved because it's a listed company, and the Department of Justice will be looking at this," said Stuart Deming, a Washington lawyer who handles corrupt practices cases. "They may wait and see what the British do."

He said the SEC would be examining whether proper accounting procedures and internal controls were in place. If bribes were covered up with fraudulent accounts, that could lead to prosecution, he said.

"The act is very broadly interpreted, and if the payment to police officials was for the purpose of getting information, it would certain be a violation of the act because it would help them make more money," Deming said.

"The SEC will automatically be involved because it's a listed company, and the Department of Justice will be looking at this," said Deming. "They may wait and see what the British do. If the British prosecute, the U.S. might not for common sense reasons, to conserve resources."

He said the SEC would be examining whether proper accounting procedures and internal controls were in place. If bribes were covered up with fraudulent accounting, that could lead to penalties, he said.

New York lawyer Ron Kuby said U.S. prosecutors have increasingly taken the view that events that take place outside the United States may be brought to U.S. courts - a trend toward "extraterritorial jurisdiction" that might make Murdoch more vulnerable.

Metropolitan Police Chief Paul Stephenson has vowed that police who took illegal payments from the newspaper will face criminal charges.

FBI Opens News Corp. Hacking Probe
Devlin Barrett and Amy Schatz

The Federal Bureau of Investigation has opened a probe into whether employees of News Corp. might have hacked or attempted to hack into the private calls and phone records of Sept. 11 victims and their families, according to people familiar with the matter.

The investigation was opened Thursday morning, following a request a day earlier by Rep. Peter King (R., N.Y.), who heads the House Homeland Security Committee and whose Long Island district was home to many victims of the 2001 terrorist attacks.

The FBI is investigating whether employees of News Corp. might have hacked or attempted to hack into the phones of Sept. 11 victims and their families. Devlin Barrett has details.

The investigation will probe allegations made in a British press report, notably whether employees of News Corp. illegally accessed the private calls, voice-mail messages, or call records of 9/11 victims or their families, these people say. It will also look into whether any News Corp. employees bribed or sought to bribe police officials to gain access to such records, they said.

A spokesman for News Corp. declined to comment.

The FBI, which typically doesn't confirm investigations, declined to comment.

The U.K.'s Daily Mail reported earlier this week that News of the World reporters tried to hack the voice mails of dead 9/11 victims, citing an unidentified former New York policeman who said he was offered money by News of the World reporters to retrieve private phone calls. The unidentified former officer says he declined the offer.

A scandal over phone hacking in the U.K. by News of the World, a publication recently closed by News Corp., has roiled the media empire and prompted a series of legal inquiries. The long-running saga gained momentum earlier this month when British papers reported that people acting on behalf of News of the World hacked into the cell phone messages of Milly Dowler, a teenage girl in Britain who was later found murdered. When her voicemail inbox became full, hackers reportedly deleted messages to make room for new ones, giving her family false hope the girl might still be alive, a lawyer for the family said.

The U.K. press has reported that other hacking incidents targeted victims of terror attacks and slain British soldiers. Previously, most of the revelations concerned privacy breaches targeting celebrities and politicians.

Mr. King said in a statement that he welcomed it the FBI investigation.

Another member of Congress, Senator Robert Menendez (D., N.J.), called on British authorities to share any information they obtain about hacking directed at American citizens.

Tracy Schmaler, a spokeswoman for the Justice Department, said the agency "does not comment specifically on investigations, though anytime we see evidence of wrongdoing, we take appropriate action. The department has received letters from several Members of Congress regarding allegations related to News Corp. and we're reviewing those.''

In his letter, Mr. King urged FBI Director Robert Mueller to "immediately commence an investigation of News Corporation pertaining to recent media reports alleging that journalists working at the News of the World, a News Corp. subsidiary, attempted to obtain phone records of victims of the terrorist attacks of Sept. 11 through bribery and unauthorized wiretapping.''

Mr. King's allegation was raised against News of the World, but the officials familiar with the fledgling investigation said the FBI is not limiting its inquiry to just employees or agents of that paper.

Federal Communications Commission Chairman Julius Genachowski Thursday told lawmakers concerned about the News Corp. phone hacking scandal that "any hacking of phones should be investigated" but didn't say that his agency would do so.

Mr. Genachowksi told lawmakers at a hearing on privacy Thursday that there are already several U.S. federal and state laws prohibiting phone hacking, including "federal wiretapping laws that protect against unauthorized hacking" and "provisions in the Communications Act that criminalize interception of information."

Earlier this week, Mr. Genachowski said that he didn't expect the FCC to get involved in the continuing probe in the U.K. of the phone hacking scandal.

News Corp. also owns The Wall Street Journal.

Pressure Mounts to Halt Murdoch/BSkyB Deal

Prime Minister David Cameron came under growing pressure on Sunday to halt Rupert Murdoch's bid for pay-TV operator BSkyB, at least until an investigation into phone-hacking at the media magnate's newspapers has been completed.

Labour Party leader Ed Miliband said he would force the issue to a parliamentary vote this week if Cameron failed to act.

"He needs to make clear that BSkyB cannot go ahead until the investigation is complete," Miliband told the BBC's Andrew Marr programme.

"I hope he changes his position on this. I don't want to have to force a vote."

Pressure came too from members of the the Liberal Democrats who have traditionally had a less cosy relationship with Murdoch.

Deputy LibDem leader Simon Hughes said he would be prepared to back Labour's call for the deal to be postponed and urged other LibDems to do the same -- setting the stage for a major test of the coalition's unity.

Murdoch's News Corp, the world's largest news conglomerate, has made a $14 billion (8 billion pounds) bid for the 61 percent of the profitable pay-TV operator BSkyB that it does not already own.

Murdoch was flying into London on Sunday to try to save the deal after a phone-hacking scandal caused a public outcry and forced him to close the News of the World, the first British paper he bought in 1969.

Cameron has ordered a judge-led enquiry into the phone-hacking allegations but has so far resisted calls to end Murdoch's attempt to buy out BSkyB.

Transport Secretary Philip Hammond said he understood public concern over an expansion of Murdoch's empire but the government had to operate within the law.

"The government can't just change the rules in mid-stream. If we did we'd undoubtedly be taken to court and we'd probably lose," he told Sky News.

Previously, those looking at whether Murdoch should get the go-ahead have focussed on whether it would give him too much power over Britain's media. News Corp also owns two dailies and one other Sunday paper.

But the phone-hacking allegations have prompted Britain's media regulator Ofcom to say it will consider whether News Corp directors are "fit and proper" persons to run BSkyB.

Shares in BSkyB shed more than 7 percent on Friday on growing doubts that the deal would go through.

(Reporting by Christina Fincher, editing by Tim Pearce)

British Parliament to Vote Against Murdoch Deal
Kate Holton and Keith Weir

Summoning a degree of national unity rarely seen outside times of war, Britain's parliament will tell Rupert Murdoch on Wednesday to drop an expansion plan for his media empire while police probe possible crimes by his journalists.

In a watershed moment for British politics, a barrier of fear of the Murdoch press that affected all parties has collapsed under the weight of public outrage. It has triggered a stampede among politicians who were last month courting his favor to outbid each other in condemning the U.S.-based mogul.

A vote, called by the opposition Labour party but also endorsed by Prime Minister David Cameron's Conservatives and their coalition partners, will pass in parliament after 4 p.m. (1300 GMT). Though non-binding, it could well force Murdoch to withdraw News Corp's $14-billion bid to buy out the 61 percent of broadcaster BSkyB it does not already own.

While some analysts said it was too early to declare that the business was in serious retreat in Britain, many said that the sweeping political influence Murdoch had enjoyed over both left and right in politics seemed most suddenly curtailed.

"This is a vote of seismic significance," said politics professor Jonathan Tonge of Liverpool University. "It could spell the beginning of the end for the Murdoch empire.

"For decades now, successive prime ministers have cozied up to Murdoch. Now it's a new era.

"Political leaders will be falling over themselves to avoid close contact with media conglomerates. This is a turning of the tide -- it's parliament versus Murdoch at the moment."

Others, however, were cautious.

"I'm in two minds," said Steven Fielding, politics professor at Nottingham University.

"My first instinct is to think ... in the medium to longer term, the natural order will reassert itself ... People will forget what the News of the World did ... and that people's desire for tittle tattle, regardless of how it is found, will remain ... Ultimately there's a reason why politicians sucked up to Rupert Murdoch and to others.

"They inherently need to get on well with the press."

U.S. Questions

The company has not commented as its share price has fallen and investors have renewed calls for the Australian-born billionaire and his family to cut emotional ties to struggling newspapers on which their empire was built in order to focus on expansion in television and other media.

The fallout from the scandal threatens to spread to the United States, where Murdoch owns The Wall Street Journal, the New York Post and Fox television. John Rockefeller, chairman of Senate's commerce committee, called for an investigation to determine if News Corp had broken any U.S. laws.

Rockefeller said he was concerned by allegations that the hacking of cellphone voicemails, acknowledged in London by News Corp, "may have extended to 9/11 victims or other Americans," in which case he said "the consequences will be severe."

British police are also investigating whether News of the World journalists bribed policemen. Police chiefs defended their honesty in parliament on Tuesday but faced questions over whether their relations with Murdoch managers had meant that previous inquiries into phone hacking were limited.

The buyout of Sky, Britain's dominant pay-TV network and highly profitable, has been a key part of a global strategy.

Murdoch, 80, has sacrificed the 168-year-old News of the World, a top-selling Sunday tabloid which he bought in 1969, closing it down after a long-running scandal over phone hacking by journalists blew up last week with allegations that not only celebrities but vulnerable victims of crime had been targeted.

Yet that has failed to draw the sting of popular anger and Cameron, who has been embarrassed by his own ties to former News of the World editors, has been forced to rescind the provisional blessing the government gave to the Sky takeover.

Cameron has ordered a full public inquiry into the affair and promised new regulation of the British media. Before the debate on Murdoch, he will face his weekly grilling in the chamber by Labour leader Ed Miliband and others at noon.

Bid "Politically Dead"

The Independent newspaper, which has been critical of Murdoch since the scandal broke, quoted ministers as saying privately that the takeover would be "politically dead" after the vote on the opposition motion in parliament.

It said the only way News Corp could complete the takeover of BSkyB would be to sell off his three remaining British newspapers -- The Sun, The Times and The Sunday Times -- grouped in the British subsidiary News International.

The Sun hit back on its front page on Wednesday at a charge by former Labour prime minister Gordon Brown that it may have hacked medical records to break a story in 2006 that his newborn son was suffering from cystic fibrosis.

The Sun said it had a legitimate source. The Sunday Times also defended its actions in probing Brown's personal finances as pursuing a story that was in the public interest. It denied Brown's accusation that it hired "criminals" to do so.

Many politicians believe that journalistic misdeeds have not been restricted to News International. Allegations surfaced this week of possible phone hacking by other tabloids and police raided the offices of the Daily Star last week.

That has increased pressure for formal regulation of the British press which, while restricted by draconian defamation laws, is otherwise subject to a voluntary code of conduct.

The potential costs to News Corp of the scandal have been growing as police have said thousands may have been targeted by the News of the World -- at least according to notes kept by a private investigator who, with the paper's royal correspondent, was jailed in 2007 for hacking the phones of aides at court.

Police say they have not even contacted more than a few dozen of those whose names or numbers were found in the notes.

The News of the World has already made payments worth tens of thousands of dollars to some celebrities who complained their phones were hacked. Lawyers said compensation to, for example, the families of soldiers killed in Afghanistan or of children murdered in notorious cases could be even greater.

A lawyer for England soccer star Wayne Rooney said on Wednesday he was seeking damages from the newspaper for hacking his voicemails to break stories that he had hired prostitutes.

Whatever the cost of such action, and the billions in value that has been wiped off its shares, the greater damage to News Corp may come from crimping its expansion strategy as a result of damage to its reputation among politicians and regulators.

News Corp shares on Tuesday lost gains they had made on news of a $5 billion share buy-back that took advantage of a 14-percent slide in the company's stock price since Thursday. BSkyB has lost a fifth of its value over the past.

"Sea Change"

Murdoch, his son James and Rebekah Brooks, the former News of the World editor who is now chief executive at News International have been summoned to answer questions by a legislative parliamentary committee next week.

As a U.S. citizen, Murdoch need not attend.

"This is a potential sea change, clearly in the short and medium term, he is damaged and severely limited," said Ivor Gaber, professor of political journalism at City University.

"Where as before he would have walked through the back door of Downing Street, now he might not walk through at all.

But you should never underestimate Murdoch.

"We're three or four years off an election and people can afford to be quite brave. Whilst he still controls a significant amount of British newspaper circulation and its TV and radio news he's bound to continue to have influence.

Labour has sought to capitalize on Cameron's friendship with Brooks, 43, and his hiring of her successor as News of the World editor to be his spokesman just months after the paper's royal correspondent was jailed for phone hacking in 2007.

Andy Coulson quit as spokesman in January and was arrested on Friday on suspicion of conspiring to intercept communications and to corrupt officials.

(Additional reporting by Georgina Prodhan, Mohammed Abbas, Brenda Goh, Karolina Tagaris, Paul Sandle, Michael Holden and Timothy Heritage; Writing by Alastair Macdonald)

Murdoch, Savaged in Parliament, Pulls British TV Bid
Kate Holton and Georgina Prodhan

Rupert Murdoch withdrew his bid for broadcaster BSkyB on Wednesday, as outrage over alleged crimes at his newspapers galvanized a rare united front in parliament against a man long used to being courted by Britain's political elite.

The Australian-born billionaire's U.S.-based News Corp, thwarted in a key move to expand its media empire in television, said it would keep its 39 percent of the highly profitable pay-TV network, but left investors guessing over whether it might try again to buy up the rest, or even sell up.

The withdrawal removes the most pressing political conflict the company faced. But a police probe and new public inquiries into the scandal and into media regulation as a whole may keep an unflattering spotlight on it and weaken the influence the 80-year-old media magnate has enjoyed in Britain for decades.

"Successive prime ministers have cozied up to Murdoch," said politics professor Jonathan Tonge of Liverpool University.

"Now it's a new era. Political leaders will be falling over themselves to avoid close contact with media conglomerates. This is a turning of the tide. It's parliament versus Murdoch."

While there was no clear legal obstacle to letting the bid proceed via a regulatory review, having won informal government blessing some time ago, even Murdoch's dramatic closure of the scandal-hit News of the World tabloid had failed to stem public anger, leaving the $12-billion buyout politically untenable.

"With such universal political disapproval it would have been foolhardy to carry on," said stock analyst Steve Malcolm at Evolution Securities. "It would be a futile pursuit."

Conservative Prime Minister David Cameron, under fire over his own ties to former News of the World journalists, threw his government's weight behind an opposition motion on Wednesday that denounced Murdoch's bid to extend his media power while police were investigating whether his journalists hacked into the voicemails of thousands of people in search of stories.

"It has become clear that it is too difficult to progress in this climate," News Corp deputy chairman Chase Carey said, adding that the group, whose top executives have gathered in London, remained "a committed long-term shareholder" in BSkyB.

Shares Bolstered

Shares in News Corp, also owner of Fox television and the Wall Street Journal in the United States, had shed 15 percent in a week on fears of widening damage to its brands and a loss of opportunity in television. They ended the day up 3.8 percent as investors welcomed relief from poisonous publicity.

BSkyB closed up around 2 percent.

Shareholders had been concerned by talk from politicians in the United States and Australia about mounting investigations. In Washington, three senators said on Wednesday that the Justice Department and securities regulator should investigate whether News Corp broke laws in the United States over phone hacking.

There have been reports that families of victims of the 9/11 attacks may have been targets of would-be phone hackers.

A Justice Department spokeswoman said they would review the letters sent by the senators as part of standard practice, but that did not mean an investigation would be initiated.

For a week, Britain has been in uproar since a major turn in the long-running saga of phone-hacking by the News of the World. Rival newspapers published allegations that, far from being limited to spying on the rich or powerful, the practice extended to victims of crimes, including child murders and the 2005 London bombings, as well as to parents of Britain's war dead.

Cameron has been embarrassed by the arrest of his former spokesman -- a former News of the World editor -- and has had little choice but to follow the popular mood against Murdoch and

News International, News Corp's powerful British newspaper arm which also owns the best-selling Sun tabloid and London's Times.

"This is the right decision," Cameron said of the withdrawal of the BSkyB bid. "This company clearly needs to sort out the problems there are at News International, at the News of the World. That must be the priority, not takeovers."

New Labour leader Ed Miliband has, despite his party's own long courting of Murdoch, emerged with his hitherto modest standing somewhat burnished by his stand on the bid. He said: "This is a victory for people up and down this country who have been appalled by the revelations of the phone hacking scandal.

"People thought it was beyond belief that Mr Murdoch could continue with his takeover after these revelations ... Nobody should exercise power in this country without responsibility."

The show of cross-party unity against Murdoch in parliament was short-lived, with both Cameron and his Labour predecessor Gordon Brown having to defend their contacts with the press baron against rumbustious questioning from the opposing benches.

Cameron said there had been mistakes all round, leading to a "firestorm" engulfing parts of the media, police and the political system. Brown has spoken out with emotion of having his baby son's illness revealed by a Murdoch tabloid.

Government Opposition

The four-sentence statement from News Corp left the door open to a new offer to buy out other BSkyB shareholders at some point.

Chris Marangi, portfolio manager at News Corp shareholder Gabelli Multimedia Funds said: "This is not surprising, it doesn't mean the desire's not there. It's politically savvy, and he needs to buy his time and let this blow over ... At the time, it's circle the wagons and protect existing operations."

Several former employees of News International have been arrested this year after police reopened inquiries which they had dropped in 2007 following the jailing of the News of the World's royal correspondent and a private investigator.

Those under suspicion of phone hacking and of bribing police include former editor Andy Coulson, whom Cameron hired as his spokesman in 2007 after the hacking scandal first broke. Coulson left the prime minister's office in January and, like other News of the World staff, denies knowing of any wrongdoing.

In the most senior departure from the organization since Coulson, the legal manager of News International, Tom Crone, has left the company, a source familiar with the matter told Reuters. He has been closely involved in the company's defense.

That for years consisted of blaming one "rogue reporter" but has shifted to accept possibly wider problems.

Murdoch flew in from the United States at the weekend to take command, alongside his son and heir apparent James and Rebekah Brooks, the News International chief executive. She was Coulson's predecessor at the News of the World at a time when some of the gravest alleged misdeeds took place.

Giving details to parliament of a formal public inquiry into the affair, to be chaired by a senior judge, Brian Leveson, Cameron said that senior executives, however high in the Murdoch organization, should be barred for life from the British media if found to have taken part in any wrongdoing.

Cameron has said Brooks, a frequent guest at his home and a close confidante of Murdoch, should quit. Many of the 200 staff sacked from the News of the World have complained that their jobs were sacrificed in an effort to create a firebreak designed to stop the scandal hitting Brooks or the Murdoch family.

Continuing Investigations

Rupert and James Murdoch and Brooks have been summoned to answer questions by a parliamentary committee next week. As U.S. citizens, the Murdochs need not attend.

Former premier Brown raised pressure on Brooks by telling parliament that, in 2002, she had been told by police about "serious malpractice" by News of the World journalists and by investigators carrying out surveillance on their behalf.

Tom Watson, a Labour member of parliament who campaigned against police and political reluctance to widen the inquiry into phone hacking after 2007, said News Corp still faced tough questions after dropping the BSkyB bid: "Like everything with this company they were dragged into it kicking and screaming.

"We've still not seen anyone of the top take responsibility for creating a culture in a newsroom that would allow a journalist to target the phone of an abducted 13-year-old girl. Until somebody carries the can and somebody apologizes at the top of that company I just think this is going to run on and on."

News International has said it is cooperating fully with the police investigation. Police, who have been under fire themselves for failing to probe deeper earlier, say they have nearly 4,000 names to look into in the files of the former News of the World investigator jailed for phone hacking.

Police have contacted fewer than 200 of those people so far.

The scandal may have wider implications for the relationship between politicians and the media in Britain.

"This could herald a new era in British politics in which politicians and journalists are more cautious in how relationships are developed," said Mark Wickham-Jones, politics professor at Bristol University.

Steven Fielding at Nottingham University questioned how much could change: "People will forget what the News of the World did ... and that people's desire for tittle-tattle, regardless of how it is found, will remain. Ultimately, there's a reason why politicians sucked up to Rupert Murdoch and to others ... They inherently need to get on well with the press."

Many politicians believe that journalistic misdeeds have not been restricted to News International. Allegations surfaced this week of possible phone hacking by other tabloids and police raided the offices of the Daily Star last week.

That has increased pressure for formal regulation of the British press which, while restricted by draconian defamation laws, is otherwise subject to a voluntary code of conduct.

(Additional reporting by Keith Weir, Mohammed Abbas, Avril Ormsby, Michael Holden, Matt Scuffham, Douwe Miedema and Jodie Ginsberg; Writing by Alastair Macdonald)

Wired Publishes the Full Manning-Lamo Chat Logs
Glenn Greenwald

Yesterday -- more than a full year after it first released selected portions of purported chat logs between Bradley Manning and government informant Adrian Lamo (representing roughly 25% of the logs) -- Wired finally published the full logs (with a few redactions). From the start, Wired had the full chat logs and was under no constraints from its source (Lamo) about what it could publish; it was free to publish all of it but chose on its own to withhold most of what it received.

Last June -- roughly a week after Wired's publication of the handpicked portions -- I reviewed the long and complex history between Lamo and Wired Editor Kevin Poulsen, documented the multiple, serious inconsistencies in Lamo's public claims (including ones in a lengthy interview with me), and argued that Wired should "either publish all of the chat logs, or be far more diligent about withholding only those parts which truly pertain only to Manning's private and personal matters and/or which would reveal national security secrets." Six months later, in December, I documented that numerous media reports about Manning and WikiLeaks were based on Lamo's claims about what Manning told him in these chats -- claims that could not be verified or disputed because Wired continued to conceal the relevant parts of the chat logs -- and again called for "as much pressure as possible be applied to Wired to release those chat logs or, at the very least, to release the portions about which Lamo is making public claims or, in the alternative, confirm that they do not exist."

Now that Wired has released the full chats, I just want to highlight a few passages that they concealed, and dispassionately lay out several key facts, so that everyone can decide for themselves if Wired told the truth about their conduct and assess the journalistic propriety of it. Before I first wrote about Manning's arrest and the conduct of Wired's reporting of it, I interviewed Poulsen by email and published the full exchange. Just look at what he told me about the material Wired was withholding:

GG: Last question: you published what were clearly excerpts of the chats between Lamo and Manning - did he provide you with the whole unedited version and if, so, do you intend to publish it? Or is what you published everything he gave you?

KP: He did, but I don't think we'll be publishing more any time soon. The remainder is either Manning discussing personal matters that aren't clearly related to his arrest, or apparently sensitive government information that I'm not throwing up without vetting first.

So Poulsen claimed that the concealed portions were either (1) personal matters or (2) sensitive government information that needed vetting (Wired made a similar claim when releasing the log excerpts, claiming that what was withheld was either "portions of the chats that discuss deeply personal information about Manning or that reveal apparently sensitive military information"). As it turns out, while some of what Wired withheld was certainly personal information about Manning of no newsworthy relevance (and nobody, including me, ever objected to that material being withheld), substantial portions of what they withheld do not even arguably fall within those categories, but instead provide vital context and information about what actually happened here. To say that Poulsen's claims about what Wired withheld were factually false is to put it generously.

Just consider some of what Wired concealed. First we have this, from very early on in the first Manning-Lamo conversation (emphasis added):

MANNING: uhm, trying to keep a low profile for now though, just a warning

LAMO: I'm a journalist and a minister. You can pick either, and treat this as a confession or an interview (never to be published) & enjoy a modicum of legal protection.

In a subsequent conversation, Lamo again promised him: "i told you, none of this is for print."

So Lamo lied to and manipulated Manning by promising him the legal protections of a journalist-source and priest-penitent relationship, and independently assured him that their discussions were "never to be published" and were not "for print." Knowing this, Wired hid from the public this part of their exchange, published the chat in violation of Lamo's clear not-for-publication pledges, allowed Lamo to be quoted repeatedly in the media over the next year as some sort of credible and trustworthy source driving reporting on the Manning case, all while publicly (and falsely) insisting that the only chat log portions it was withholding were -- to use Poulsen's words -- "either Manning discussing personal matters . . . or apparently sensitive government information." As BoingBoing's Rob Beschizza put it in rejecting Wired's claims: this passage "reads like a deliberated attempt to manipulate or even entrap Manning, on Lamo's part, and seems quite important to understanding what Manning thought he was doing by talking to him." There are multiple passages for which that's true.

While concealing information that would cast Lamo in a negative light, Wired also concealed portions that cast doubt on the DOJ's efforts to prosecute WikiLeaks and Julian Assange:

LAMO: in all seriousness, would you shoot if MP’s showed up? ;>

MANNING: why would i need to?

LAMO: suicide by MP. . . .

MANNING: do i seem unhinged?

LAMO: i mean, showed up -- for you -- if Julian were to slip up.

MANNING: he knows very little about me

MANNING: he takes source protection uber-seriously

MANNING: "lie to me" he says

LAMO: Really. Interesting.

MANNING: he wont work with you if you reveal too much about yourself

So here's Manning making clear that Assange has virtually no idea who Manning even is, that Assange purposely goes out of his way not to know the identity of WikiLeaks sources, and -- to use Manning's words -- Assange "takes source protection uber-seriously." Does anyone need to explain how relevant that is to public discussions of WikiLeaks generally or the specific suggestions that Assange could or should be prosecuted as Manning's co-conspirator? Independently, that Assange is fanatical about source protection is crucial to know.

Whatever else is true, in light of these fascinating, relevant passages, can anyone argue that Poulsen told the truth when claiming that the only material that Wired withheld was either Manning's personal information or national security secrets? Isn't it clear that Poulsen and Wired were hand-picking which passages to release and conceal in order to shield Lamo's conduct and claims from scrutiny and make WikiLeaks look as bad as possible: the concern that those of us had in the first place in allowing Poulsen of all people to arbitrate what gets released and what gets disclosed?

Then there are the lies that Lamo was permitted to tell for a full year -- lies that Wired's concealment of the logs enabled. To explain how Manning was able to send huge volumes of material to WikiLeaks, Lamo told The New York Times last December that Manning "did an actual physical drop-off when he was back in the United States in January of this year" -- something we now know Manning never even alluded to, let alone told Lamo. Lamo's claim in his interview with me about one of the great mysteries here -- namely, how and why Manning chose him of all people to contact and confess to (Manning "was searching for 'Wikileaks' on Twitter") -- is also not in the chat logs, certainly not with that specificity. Nor is Lamo's contradictory claims to both CNET and The Washingtonian -- that Manning found Lamo as a result of reading Poulsen's account in Wired of Lamo's involuntary commitment to a psychiatric hospital -- referenced in these logs either. The full chat logs also prove Lamo lied to Yahoo! News when he told them "that [Lamo] spelled out very clearly in his chats with Manning that he wasn't affiliated with WikiLeaks or acting as a journalist," nor is there any mention in the logs of this story Lamo told to the BBC:

I did tell [Manning] that I worked as a journalist. I would have been happy to write about him myself, but we just decided that it would be too unethical."

And Lamo's statement in my interview with him -- that Manning's "intention was to cripple the United States' foreign relations for the foreseeable future" -- also appears to be a complete fabrication; Manning talked endlessly about his desire to trigger worldwide reforms, not to cripple American foreign relations.

In sum, the full chat logs -- in particular the parts Wired concealed for over a year -- prove that Adrian Lamo is a serial liar whose claims are inherently unreliable. But Wired's selective editing prevented this from being proven -- served to shield from critical scrutiny the person the BBC accurately described as Poulsen's "long-time associate" -- and thus enabled Lamo to run around for a full year masquerading as a reliable source, making claims that were fabrications and driving much of the reporting about the Manning and WikiLeaks investigations. Enabling false claims to be disseminated to the public on a vital news story -- by withholding plainly relevant information that proves those claims false -- is the opposite of the purpose of journalism, as is needlessly withholding key context to the events one is purporting to describe; yet that's exactly what Wired did here, and continued to do despite growing calls for the release of this information.

Then there's the fact that Manning -- far from being some anonymous, low-level, invisible grunt -- had, or at least claimed to have, some very high-level connections; as Jane Hamsher details, that includes Shin Inouye, a White House spokesman and long-time Obama aide, whom Manning claimed to Lamo was one of his "sources," along with numerous other politically connected figures whose names Wired redacted. Manning's claimed repeated contacts with a White House aide and other key political officials constitutes neither personal information nor national security secrets -- it certainly seems to be in the public interest to know -- yet was actively concealed by Wired.

Then we arrive at Wired's explanation yesterday for why they suddenly decided to release the full logs. To justify the decision to disclose the full logs, Wired.com Editor-in-Chief Evan Hansen writes that "by all evidence, Manning is a figure of historic importance." Is that something that just dawned on Hansen? That was the crux of my argument more than a year ago: that Wired should release the relevant chat excerpts it was concealing or at least confirm or deny public claims Lamo made about those chats "in light of the magnitude of this story on several levels." This has always been the heart and soul of the criticism of Wired: that they were not withholding relevant material in some ancillary, insignificant case, but rather one of the most important political events of the last decade. It's nice that Hansen finally realized this, albeit a year late.

Then there's the national security secrets Poulsen claimed to be valiantly safeguarding until he could "vet" them. What happened to those? Did Wired vet them (such as Manning's statement, concealed by Wired until yesterday, that "approximately 85-90% of global transmissions are sifted through by NSA" or that " 85% of [U.S. aid to Pakistan] is for F-16 fighters and munitions to aid in the Afghanistan effort, so the US can call in Pakistanis to do aerial bombing instead of americans potentially killing civilians and creating a PR crisis")? As it turns out, there are very few passages in these logs that could arguably qualify as national security secrets. And amazingly, Hansen admits: "We have been satisfied for some time that there is nothing of military importance in the unpublished logs." Then what justified Wired's refusal to release those parts until now?

Ironically, I find Hansen's explanation about why Wired now published the portions of the chat logs dealing with deeply personal matters -- such as Manning's gender identity struggles and desire to transition to female -- to be less than persuasive. He argues, not unreasonably, that New York Magazine's recent discussion of Manning's personal issues dilutes the privacy concerns. That's true, though I'm not sure it's necessary for people to read about Manning's detailed discussions of his gender struggles. But that's a close call about which I don't have any strong opinion.

The key point is that -- contrary to Hansen's blatant strawman back in December when he addressed my criticism -- nobody, and certainly not me, ever called for the indiscriminate publication of the portions of the chat logs dealing exclusively with Manning's personal, non-relevant matters. To the contrary -- as the quotes above demonstrate -- I repeatedly argued that such purely personal material was properly withheld. Rather, the controversy was over Wired's obvious concealment of matters outside of the scope of Manning's personal issues, ones that were plainly relevant to newsworthy matters and, in particular, to Lamo's claims about what Manning told him. The concern was that Wired was concealing material to glorify and shield its source, Poulsen's long-time associate Adrian Lamo, in a way that distorted the truth and, independently, denied the public important context for what happened here. Wired's release of the full chat logs leaves no doubt that those concerns were justified, and that Wired was less than honest about what it was concealing.

UPDATE: Last December, in the wake of the controversy created by my re-raising of this issue and Wired's response, BoingBoing noted that Hansen, Wired.com's Editor-in-Chief (as well as Poulsen), finally began responding to some inquiries about what the concealed portions contain and do not contain (which is what I had been requesting all along). Among other things, Hansen said this:

BoingBoing understood that claim the way I did, the only way it reasonably could have been: as Hansen's confirmation that "no further discussion about the relationship between Manning and Assange" is contained in the concealed portions -- a vital matter in light of the DOJ's efforts to tie Assange to Manning as his co-conspirator. But how can Hansen's claim possibly be reconciled with the significant passage -- previously withheld and now quoted above -- in which Manning explains that Assange purposely remained ignorant of his identity? Isn't that rather obviously a "discussion about the relationship between Manning and Assange" which, contrary to Hansen's assurances, Wired was indeed concealing? And again, whatever one's views are on the significance of that passage -- and I think it's highly significant -- it squarely contradicts Poulsen's claims about the two categories of information Wired withheld (personal information and sensitive government secrets).

Vodafone Hacked - Root Password Published

The Hacker's Choice (http://www.thc.org) announced a security problem with Vodafone's Mobile Phone Network today.

An attacker can listen to UK Vodafone mobile phone calls.

An attacker can exploit a vulnerability in 3G/UMTS/WCDMA - the latest and most secure mobile phone standard in use today.

The technical details are available at http://wiki.thc.org/vodafone.

THC was not immediately available for comments but an associated member of the group commented that 'the problem lies within Vodafone's Sure Signal / Femto equipment'.

A Femto Cell is a tiny little home router which boosts the 3G Phone signal. It's available from the Vodafone Store to any customer for 160 GBP.

THC managed to reverse engineer - a process of revealing the secrets - of the equipment. THC is now able to turn this Femto Cell into a full blown 3G/UMTC/WCDMA interception device.

Eduart Steiner, Senior Security Researcher, explains the details to us:

"A Femto is linked to the Vodafone core network via your home Internet connection. The Femto uses this access to retrieve the secret key material of a Vodafone customer who wants to use the Femto."

"The Femto can only be used by the person who purchased the femto. At least that is what Vodafone tells you."

"THC found a way to circumvent this and to allow any subscriber - even those not registered with the Femto - to use the Femto. They turned it into an IMSI grabber. The attacker has to be within 50m range of the UK Vodafone customer to make the customer's phone use the attacker's femto."

"The second vulnerability is that Vodafone grants the femto to the Vodafone Core Network HLR /AuC which store the secret subscriber information. This means an attacker with administrator access to the Femto can request the secret key material of a UK Vodafone Mobile Phone User".

This is exactly what happened. The group gained administrator access to the Femto. An attacker can now retrieve the secret key material of other Vodafone customers.

This secret key material enables an attacker to listen to other people's phone calls and to impersonate the victim's phone, to make phone calls on the victim's cost and access the victim's voice mail.

The easiness at how fast THC was able to get to these secrets is shocking. “This is clearly a design flaw by Vodafone.” says Eduart Steiner. “It is disgusting to see that a major player like Vodafone chooses ‘newsys’ as the administrator password, thus allowing anyone to retrieve secret data of other people”.

In light of recent the Phone Hacking Scandal involving the News of the World the question has to be asked if Vodafone should be held liable for not protecting their customers adequately.

Who is liable if the brakes on my car malfunction? The drive or the manufacture? Or the guys who tell us how insecure they are?

Vodafone was not available to comment.


Vodafone released a statement that the vulnerability has been fixed in early 2010.

We welcome the effort! We are disappointed by the results!

What we have seen is that Vodafone fixed the way THC gained administrator access to the femto.

This of course does not fix the core of the problem:

The femto transfers key material from the core network right down to the femto.

(This is in gross violation of the 3G/UMTS security recommendation which clearly states that the 3G/UMTS encryption should go all the way up to the core network.)

We would have expected Vodafone to have learned from the PS3, Xbox and pay-tv hacks and done better.

Do not base your security on the fact that the hardware is un-breakable. You know you will fail.

Different methods have since been disclosed to gain administrator access to the femto.

Vodafone states "The Vodafone network has not been compromised."

THC retrieved key material from the core Vodafone network from customers not registered to the femto.

This should not be to hard to understand. Maybe repeating it helps (fingers crossed!):

THC retrieved key material from the core Vodafone network from customers not registered to the femto.

THC informed Vodafone in 2009 about the problem.

THC appreciates the Vodafone statement.

1. If Vodafone did fix the problem they would have been obliged to inform their customers and regulators.

2. Or Vodafone lies and they did not fix the problem and they are still shipping interception devices?

You pick! It's either potentially a criminal act or a lie - or both.

Hacker’s App Automates Over-The-Shoulder iPad Spying

Shoulder surfing, the simple act of leering over a computer users’ shoulder to spy on passwords and other sensitive info, may not seem like the most advanced hacker trick. But when it comes to shoulder surfing Apple’s iPad, Haroon Meer has it down to a science.

Earlier this week, the South African security researcher announced that he’d built shoulderPad, an app for Mac OS, jailbroken iPhones and iPads that’s designed to auto-snoop on iPad users’ passwords by watching their touchscreen keyboards. Simply pretend to be fiddling with your phone or tablet a few meters away from an iPad user while he or she enters their PIN or password, and shoulderPad can uses your device’s camera to read and interpret the target’s keystrokes.

The app’s secret? When a user types on an iPad’s touchscreen, each key glows blue for a fraction of a second after it’s struck, a helpful bit of feedback for any virtual keyboard. ShoulderPad’s image recognition algorithms, based on Open CV’s open source image recognition software, look for that flash of blue. “At any distance, if the blue is distinguishable, shoulderPad can detect that keystroke,” says Meer.

He says that the same trick could be easily applied to recorded footage from a surveillance camera. “Any time you’re entering your iPad password in a public area, someone might be able to decode it later at their leisure,” he says.

Meer, who works for the security firm Thinkst in Pretoria, compares that relative vulnerability to the scene in the espionage movie Sneakers, when the group of hackers watch a video of their target, a mathematician, entering his password on a traditional PC keyboard. The keystrokes are obscured, and the hackers bicker over which letters he seems to be typing. “If the mathematician being spied on in Sneakers was using an iPad, they would have had his password easily!” Meer writes in PDF explaining his hack.
Here’s a short video demonstrating his image-recognition trick.

Meer notes that Apple, like most software companies and Web services, is careful to obscure passwords being entered on a device with asterisks or dots. But highlighting the keys as they’re typed is almost as insecure as leaving the letters visible, he argues. “In an attempt to provide feedback to users, current mobile devices take two security steps backwards,” he writes, “Leaving us less secure than we were in the past.”

Read the full PDF explaining Meer’s work here.

China: 1.3 Million Websites Shut in 2010

More than one million websites closed down in China last year, a state-run think tank has said.

The Chinese Academy of Social Sciences said there were were 41% fewer websites at the end of 2010 than a year earlier.

Chinese officials have tightened regulations on the internet in recent years, and they launched a crackdown on pornography websites in 2009.

The academy's researcher said there was no link, insisting China had a "high level of freedom of online speech".

Liu Ruisheng said that despite the declining number of sites, the number of web pages had risen to 60 billion during 2010 - a 79% increase on the previous year.

"This means our content is getting stronger, while our supervision is getting more strict and more regulated," he said.

Civil rights campaigners have long railed against China's web censors, who impose controls known as the Great Firewall of China.

A number of websites are routinely blocked, such as the BBC's Chinese language service, and social media sites like Facebook, Youtube and Twitter.

Israel Blocks Airborne Protest, Questions Dozens
Jeremy Last

Aided by Facebook, Israel on Friday prevented scores of pro-Palestinian activists from boarding Tel Aviv-bound flights in Europe, questioned dozens more upon arrival at its main airport and denied entry to 69, disrupting their attempts to reach the West Bank on a solidarity mission with the Palestinians.

Israel had tracked the activists on social media sites, compiled a blacklist of more than 300 names and asked airlines to keep those on the list off flights to Israel. On Friday, 310 of the activists who managed to land in Tel Aviv were detained for questioning, said Interior Ministry spokeswoman Sabine Hadad. Of those, four were immediately put on return flights and 65 were being held until flights home could be arranged for them, she said. The rest were permitted entry, she said.

At one point during the operation, two planes from Geneva and Rome were diverted to a secluded area of the airport upon landing and boarded by security.

Organizers of the "Welcome to Palestine" campaign accused Israel of overreacting to what they said is a peaceful mission to draw attention to life under Israeli occupation, including travel restrictions. Israel controls all access to the West Bank.

"This was never about demonstrations at airports. We are on a fact-finding mission. We want to understand what's going on," said Pippa Bartolotti, a 57-year-old British activist from Wales.

She said she was the only member of a 40-member group on a flight from Britain who managed to enter Israel. "Unfortunately everybody else is in a holding bay and expected to be deported," she said. "There are people from Belgium, France and the U.K."

Israel has been jittery about the arrival of foreign activists since a deadly naval raid on an international flotilla that tried to break Israel's blockade of the Gaza Strip last year. The incident, in which nine Turkish activists died in clashes with naval commandos, drew heavy international criticism and forced Israel to ease the blockade.

Israel took a series of measures to prevent clashes this time, most notably by barring protesters from the country altogether. Hundreds of police were also deployed at the already heavily fortified Ben-Gurion International Airport.

Authorities forwarded a blacklist to foreign airlines, preventing scores from boarding their flights.

Yigal Palmor, a spokesman for Israel's Foreign Ministry, said the list was compiled by following organizers' preparations on social networks and websites. In all, about 300 people were identified as planning to create "provocations" upon arrival, he said.

"These people announced on their Internet sites that they planned to come here and cause disruptions, and told their friends. We were able to contact other foreign ministries and simply give them links," Palmor said. Barring entrance in such cases is "accepted practice in any country," he added.

Recent anti-Israel protests, including deadly clashes along the frontiers with Lebanon and Syria as well as another attempted flotilla last week, were organized on Facebook and other sites. Defense officials say Israel now closely follows organizer activities online.

Activists, meanwhile, were sending updates on their progress through Israeli border controls on Twitter.

Israeli police spokesman Micky Rosenfeld said some 200 people were prevented from boarding their flights at airports throughout Europe. "The companies did not allow them on the airplanes because we told them clearly they wouldn't be able to enter Israel," Rosenfeld said.

More arrivals were expected Saturday.

Anna De Palma, 44, a Portuguese citizen, said she passed border controls without problems, apparently because she didn't identify herself as an activist. "I said I was coming to visit. That was it," she said. "I am not a conspicuous person and we don't have to be conspicuous about it."

"I am going to participate in the mission on the call of civilian Palestinian society. To participate in specific demonstrations. To help the Palestinian people. To make a stand," she said.

One of the organizers, French activist Olivia Zemor, said her group planned only nonviolent activities. "Welcome to Palestine" released a statement Friday calling the moves to prevent activists from reaching Israel "provocative, blackmailing and illegal."

At Charles de Gaulle Airport in Paris, several would-be protesters were turned away from check-in counters, and protesters subsequently gathered in the terminal, shouting "Boycott Israel," as French police stood by.

Cynthia Beatt, a British citizen living in Germany, told The Associated Press that she had been barred from boarding a Lufthansa plane Friday morning in Berlin. "Lufthansa called me last night and said I would not be allowed to board their plane because Israel denied me entry," Beatt said.

In Geneva, dozens of activists were barred from boarding an EasyJet flight to Tel Aviv. Aline Yazgi, a spokeswoman for Switzerland's second biggest airport, said the passengers tried to pass through security without a boarding card and were turned back, closing part of the airport for about 40 minutes as a result.

An EasyJet spokesman in Geneva, Adrian Fuhrer, said 40 people were prevented from boarding the plane at the request of Israeli authorities. "It was compulsory for EasyJet not to let these people on board," Fuhrer said.

Israel has not publicized its criteria for denying entry, but has said peaceful visitors will not be deported. The large numbers of people who were blocked indicated that Israel was giving few activists the benefit of the doubt.

The activists have placed Israel in an awkward position. Authorities are determined to keep out people they consider hostile agitators, but critics in Israel have said the government's high-profile reaction has only drawn attention to the activists' attempt to gain publicity.

Visitors can reach the West Bank only through Israeli-controlled crossings, either through international airports or the land border with Jordan. Citing security concerns, Israel bars most Palestinians from entering Israel or using its airport, meaning they must travel to neighboring Jordan to fly out.

At any given time, hundreds of foreigners, including activists and aid workers, are in the West Bank.

Travel restrictions in the Gaza Strip, ruled by the militant Hamas group, are even more rigorous. Israel allows few people to cross its border with Gaza, and most Gazans can travel abroad only by crossing into Egypt through their shared border.

Associated Press writers Angela Charlton in Paris, Kirsten Grieshaber in Berlin, and Frank Jordans in London contributed to this report.

25% of Car Accidents are Because of Gadgets

In a recent study by the Governors Highway Safety Association, driving distractions such as cell phones and other electronic devices, cause as much as 25% of all US car accidents. It is common knowledge that driving while distracted is not a safe thing to do, but now we have some scientific data that goes in-depth on the topic.

The Governors Highway Safety Association (GHSA) is a nonprofit research group that works to improve traffic safety. Research was calculated via 350 scientific papers published since 2000.

The study talks about how distractions affect our driving performance and how drivers are typically distracted most of time. One thing that stood out of the report was the claim that being distracted was the cause of 15 to 25% of all accidents ranging from minor property damage to death.

"Despite all that has been written about driver distraction, there is still a lot that we do not know, Much of the research is incomplete or contradictory. Clearly, more studies need to be done addressing both the scope of the problem and how to effectively address it," said GHSA Executive Director Barbara Harsha.

GHSA Executive Director Barbara Harsha stressed, "While distracted driving is an emotional issue that raises the ire of many on the road, states must take a research-based approach to addressing the problem. Until more research is conducted, states need to proceed thoughtfully, methodically and objectively."

The study suggests that distracted driving accidents be reported in accident reports to assist in evaluating distracted driving laws and programs. The study also suggests to create low-cost roadway measures that alert motorists when they are drifting out of their driving lane. The study also suggests that all cell phones be banned on the road, even hands free. Yeah, good luck with that one!

In fact, according to the study, there is no evidence that cellphone or texting bans have reduced crashes.

The Fanless Spinning Heatsink: More Efficient and Immune to Dust
Sebastian Anthony

There’s a fundamental flaw with fan-and-heatsink cooling systems: no matter how hard the fan blows, a boundary layer of motionless, highly-insulating air remains on the heatsink. You can increase the size of the heatsink and you can blow more air, but ultimately the boundary layer prevents the system from being efficient; it’s simply a physical limitation of fan-and-heatsink cooling systems in specific, and every kind of air-cooled heat exchanger in general, including air conditioning and refrigeration units.

But what if you did away with the fan? What if the heatsink itself rotated? Well, believe it or not, rotating the heat exchanger obliterates the boundary layer, removes the need for a fan, and it’s so efficient that it can operate at low and very quiet speeds. Ladies and gentlemen, I give you the Air Bearing Heat Exchanger. Developed by Jeff Koplow, a researcher at the US government’s Sandia National Laboratories, the new heatsink (which has also been dubbed the “Sandia Cooler”) basically resembles a big, metal fan. The cooler consists of a static metal baseplate, which is connected to the CPU, GPU, or other hot object, and a finned, rotating heat exchanger that are cushioned by a thin (0.001-inch) layer of air. As the metal blades spin, centrifugal force kicks up the air and throws it up and outwards, much like an impeller, creating a cooling effect.

This new technique is so efficient that if these heat exchangers can find windespread adoption in computers and air conditioning units, Koplow estimates that the total US electricity consumption could drop by 7%. Furthermore, if you’re a computer geek, there’s another big advantage of the Air Bearing Heat Exchanger: it’s intrinsically immune to the build up of dust and detritus. The Sandia Cooler may also be the technology that smashes down the “Thermal Brick Wall” that is preventing computer chips from moving beyond 3GHz.

So when can you get your hands on one? Koplow is now working on a design that can be mass-produced — and hopefully he’ll soon be able to bring this awesome piece of technology to market.

Police: Internet Providers Must Keep User Logs
Declan McCullagh

Law enforcement representatives are planning to endorse a proposed federal law that would require Internet service providers to store logs about their customers for 18 months, CNET has learned.

The National Sheriffs' Association will say it "strongly supports" mandatory data retention during Tuesday's U.S. House of Representatives hearing on the topic.

Michael Brown, sheriff in Bedford County, Va., and a board member and executive committee member of the National Sheriffs' Association, is planning to argue that a new law is necessary because Internet providers do not store customer records long enough.

"The limited data retention time and lack of uniformity among retention from company to company significantly hinders law enforcement's ability to identify predators when they come across child pornography," according to a copy of Brown's remarks. Any stored logs could, however, be used to prosecute any type of crime.

The association's endorsement comes nearly two months after Reps. Lamar Smith (R-Texas), the head of the House Judiciary Committee, and Debbie Wasserman Schultz (D-Fla.) introduced legislation that would force Internet companies to log data about their customers. It says they must store for "at least 18 months the temporarily assigned network addresses the service assigns to each account, unless that address is transmitted by radio communication"--language that amounts to a huge and unusual exception for wireless carriers.

In January, the U.S. Department of Justice also called for some sort of legislation in this area, but the White House has not taken a public position and the department has pointedly declined to elaborate on what it wants. No Justice Department representative is scheduled to testify tomorrow. The International Association of Chiefs of Police applauded data retention requirements five years ago but did not endorse specific legislation.

Brown declined a request from CNET to discuss his testimony.

The Republican backers of the bill--it was the GOP's first major tech initiative after taking over the House in January--hope Brown's endorsement will provide a welcome boost to their proposal's prospects.

Similar bills have been introduced starting in early 2006, but privacy and civil liberty concerns have kept them from even receiving a floor vote. So has the scope: industry representatives have been wary ever since Justice Department representatives were talking privately about whether social-networking sites should be required to keep track of what Internet address uploaded what photograph.

According to Brown's testimony:

Unmasking child pornographers on the Internet is a painstaking and complex process for law enforcement officers and typically requires assistance from Internet Service Providers (ISPs) to accurately identify the perpetrator. However, some ISPs only retain their clients' records for a short period of time. It could be hours. It could be days. It could be weeks. It could be months. And it varies from ISP to ISP. As such, the limited data retention time and lack of uniformity among retention from company to company significantly hinders law enforcement's ability to identify predators when they come across child pornography.
Marc Rotenberg, executive director of the Electronic Privacy Information Center, is planning to suggest during tomorrow's hearing that the committee rewrite the measure by eliding the most incendiary sections. In an e-mail Monday afternoon, Rotenberg said he also has concerns that the language ignores reasonable data minimization procedures and doesn't envision how bad a data breach could be.

The definitions in Smith's bill could sweep in coffee shops that offer wired connections to their customers, as well as hotels, universities, schools, and businesses that offer wired network connections, on top of traditional broadband providers.

Smith introduced a broadly similar bill in 2007, without the wireless exemption, calling it a necessary anti-cybercrime measure. "The legislation introduced today will give law enforcement the tools it needs to find and prosecute criminals," he said in a statement at the time.

These concepts are not exactly new. In June 2005, CNET was the first to report that the Justice Department was quietly shopping around the idea, reversing the department's previous position that it had "serious reservations about broad mandatory data retention regimes." Despite support from FBI director Robert Mueller and the Bush Justice Department, however, the proposals languished amid worries about privacy and the cost of compliance.

"Retention" vs. "preservation"

At the moment, Internet service providers typically discard any log file that's no longer required for business reasons such as network monitoring, fraud prevention, or billing disputes. Companies do, however, alter that general rule when contacted by police performing an investigation--a practice called data preservation.

A 1996 federal law called the Electronic Communication Transactional Records Act regulates data preservation. It requires Internet providers to retain any "record" in their possession for 90 days "upon the request of a governmental entity."

Because Internet addresses remain a relatively scarce commodity, ISPs tend to allocate them to customers from a pool based on whether a computer is in use at the time. (Two standard techniques used are the Dynamic Host Configuration Protocol and Point-to-Point Protocol over Ethernet.)

In addition, an existing law called the Protect Our Children Act of 2008 requires any Internet provider who "obtains actual knowledge" of possible child pornography transmissions to "make a report of such facts or circumstances." Companies that knowingly fail to comply can be fined up to $150,000 for the first offense and up to $300,000 for each subsequent offense.

Wi-Fi–Hacking Neighbor From Hell Sentenced to 18 Years
David Kravets

A Minnesota hacker prosecutors described as a “depraved criminal” was handed an 18-year prison term Tuesday for unleashing a vendetta of cyberterror that turned his neighbors’ lives into a living nightmare.

Barry Ardolf, 46, repeatedly hacked into his next-door neighbors’ Wi-Fi network in 2009, and used it to try and frame them for child pornography, sexual harassment, various kinds of professional misconduct and to send threatening e-mail to politicians, including Vice President Joe Biden.

His motive was to get back at his new neighbors after they told the police he’d kissed their 4-year-old son on the lips.

“Barry Ardolf has demonstrated by his conduct that he is a dangerous man. When he became angry at his neighbors, he vented his anger in a bizarre and calculated campaign of terror against them,” prosecutor Timothy Rank said in a court filing. “And he did not wage this campaign in the light of day, but rather used his computer hacking skills to strike at his victims while hiding in the shadows.

“Over months and months, he inflicted unfathomable psychic damage, making the victims feel vulnerable in their own home, while avoiding detection.”

Ardolf’s attorney, Kevin O’Brien, said in a telephone interview that “it was a lengthy sentence for a first time offender.” The defendant also forfeited his house and computer gear.

Ardolf had no criminal record, but an investigation revealed that he’d also hijacked the Wi-Fi of other neighbors, and terrorized them as well.

A father of two, Ardolf had turned down a 2-year plea agreement last year to charges related to the Biden e-mail. After that, the authorities piled on more charges, including identity theft and two kiddie-porn accusations carrying lifetime sex-offender registration requirements. He pleaded guilty to them all last year.

The bizarre tale began in 2009 when Matt and Bethany Kostolnik moved in the house next door to Ardolf, who at the time was a Medronic computer technician living in the Minneapolis suburb of Blaine. On their first day at their new home, the Kostolnik’s then-4-year-old son wandered near Ardolf’s house. While carrying him back next door, Ardolf allegedly kissed the boy on the lips.

“We’ve just moved next door to a pedophile,” Mrs. Kostolnik told her husband.

The couple reported Ardolf to the police, angering their creepy new neighbor. ”I decided to ‘get even’ by launching computer attacks against him,” Ardolf later wrote in a letter to the judge.

Rank, the prosecutor, put it not so mildly:

“It was apparently this incident which caused the defendant to begin a calculated campaign to terrorize his neighbors, doing whatever he could to destroy the careers and professional reputations of Matt and Bethany Kostolnik, to damage the Kostolniks’ marriage, and to generally wreak havoc on their lives,” he said.

Ardolf downloaded Wi-Fi hacking software and spent two weeks cracking the Kostolnik’s WEP encryption. Then he used their own Wi-Fi network to create a fake MySpace page for the husband, where he posted a picture of a pubescent girl having sex with two young boys. Under the “about me” section, he wrote:

“I bet my coworker that since I’m a lawyer and a darn great one that I could get away with putting up porn on my site here. I bet that all I have to do is say that there is plausible deniability since anybody could have put this on my site. Like someone hacked my page and added porn without my knowledge. This is reasonable doubt. I’m a darn good lawyer and I can get away with doing anything!”

He then e-mailed the same child porn to one of the husband’s co-workers, and sent flirtatious e-mail to women in Mr. Kostolnik’s office. “You are such a fox,” read one of the e-mails. He sent the message’s through the husband’s genuine e-mail account.

After the husband explained to his law office superiors that he had no idea what was happening, his bosses hired a law firm that examined his network and discovered that an “unknown” device had access to it. With Kostolnik’s permission, they installed a packet sniffer on his network to try and get to the bottom of the incidents.

Then, in May 2009,the Secret Service showed up at Kostolnik’s office to ask about several threatening e-mails sent from his Yahoo account, and traced to his IP address, that were addressed to Biden and other politicians. The subject line of one e-mail read: “This is a terrorist threat! Take this seriously.”

“I swear to God I’m going to kill you!,” part of the message to Biden said.

A forensics computer investigator working for Kostolnik’s law firm examined the packet logs, and found the e-mail sessions sending the threats. In the data surrounding the threatening traffic, they found traffic containing Ardolf’s name and Comcast account .

The FBI got a search warrant for Ardolf’s house and computer, and found reams of evidence, including copies of data swiped from the Kostolniks’ computer, and hacking manuals with titles such as “Cracking WEP Using Backtrack: A Beginner’s Guide;” “Tutorial: Simple WEP Crack Aircrack-ng” and “Cracking WEP with BackTrack 3 – Step by Step instructions.” They also found handwritten notes laying out Ardolf’s revenge plans, and a cache of snail mail that Ardolf had apparently stolen from the Kostolniks’ mail box and stashed under his bed.

“One of the manuals had Ardolf’s handwriting on it and another had the unique identifying ID for the Kostolniks’ router typed into it,” Rank, the prosector, wrote.

Also discovered in Ardolf’s possession was the pornographic image posted on MySpace and sent to the husband’s co-worker, and evidence that he’d secretly staged a similar harassment campaign against a neighbor at Ardolf’s previous home in Brooklyn Park, another Minneapolis suburb. Among other things, he sent that family a snail-mail message consisting of a one-page, color print-out of the family’s “TurboTax” return with personally identifying information, in addition to several skull images.

“I told you about a year ago that you should be very afraid. I can destroy you at will, you sorry ass excuse for a human,” the letter said.

The Brooklyn Park family told the FBI they believed Ardolf was upset that their personal care attendants, who looked after their two disabled twin daughters, parked their car in front of his house.

Amid Growing Criticism, HADOPI Reports on Measures to Combat Digital Piracy

France’s digital rights authority HADOPI is continuing with its “three strikes and you’re out” approach to illegal downloading, giving a progress report at a news conference yesterday, although several international bodies have just recognized Internet access as a fundamental right and France’s National Commission for Information Technology and Freedoms (CNIL) has accused HADOPI of failing to protect personal data.

Reporters Without Borders calls on the French authorities not to engage in a statistics and public relations war and instead to draw the appropriate conclusions by repealing the HADOPI law.

Aside from its practical omissions and shortcomings, the HADOPI law directly violates the principles of the defence of free expression by making it possible to disconnect people from the Internet. Its adoption was one of Reporters Without Borders’ reasons for adding France to the list of “countries under surveillance” in its latest “Enemies of the Internet” report.

HADOPI announced at yesterday’s news conference that digital rights holders have reported 18 million instances of alleged illegal downloading since the law took effect (out of a total of 22 million Internet connections in France). In response, HADOPI has so far sent a total of 470,000 initial warning letters, and 20,598 second warnings.

The authority is to question 10 Internet subscribers who have crossed the “three warnings” threshold, and it could transfer their case to prosecutors. If convicted, they could be fined up to 1,500 euros and their Internet access could be suspended.

In a report last month, United Nations special rapporteur for freedom of expression Franck Larue said: “cutting off users from Internet access, regardless of the justification provided, including on the grounds of violating intellectual property rights law, [is] disproportionate and thus a violation of article 19, paragraph 3, of the International Covenant on Civil and Political Rights.”

Larue’s report cited France’s “gradual response” and the United Kingdom’s 2010 Digital Economy Act as examples of measures that violate the covenant in this way.

The Organization for Security and Cooperation in Europe’s media freedom representative, Dunja Mijatovic, has also just identified the Internet as a fundamental right, saying that “everyone has the right to participate in the information society” and that “states have the duty to guarantee Internet access for their citizens.”

The obligation of governments to promote universal Internet access was also stressed in a joint statement issued on 1 June by representatives of the United Nations, the OSCE, the Organization of American States and the African Commission on Human and Peoples’ Rights.

On 16 June, the CNIL issued a warning to Trident Media Guard (TMG), the company that collects the IP addresses of alleged violators for HADOPI, accusing the company of “inadequate security measures” as regards the protection of personal data.

Until next week,

- js.

Current Week In Review

Recent WiRs -

July 9th, July 2nd, June 25th, June 18th

Jack Spratts' Week In Review is published every Friday. Submit letters, articles, press releases, comments, questions etc. in plain text English to jackspratts (at) lycos (dot) com. Submission deadlines are Thursdays @ 1400 UTC. Please include contact info. The right to publish all remarks is reserved.

"The First Amendment rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public."
- Hugo Black
JackSpratts is offline   Reply With Quote

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Forum Jump

Similar Threads
Thread Thread Starter Forum Replies Last Post
Peer-To-Peer News - The Week In Review - July 9th, '11 JackSpratts Peer to Peer 0 06-07-11 05:36 AM
Peer-To-Peer News - The Week In Review - January 30th, '10 JackSpratts Peer to Peer 0 27-01-10 07:49 AM
Peer-To-Peer News - The Week In Review - January 23rd, '10 JackSpratts Peer to Peer 0 20-01-10 09:04 AM
Peer-To-Peer News - The Week In Review - January 16th, '10 JackSpratts Peer to Peer 0 13-01-10 09:02 AM
Peer-To-Peer News - The Week In Review - December 5th, '09 JackSpratts Peer to Peer 0 02-12-09 08:32 AM

All times are GMT -6. The time now is 05:46 AM.

Powered by vBulletin® Version 3.6.4
Copyright ©2000 - 2019, Jelsoft Enterprises Ltd.
© www.p2p-zone.com - Napsterites - 2000 - 2019