Peer-To-Peer News - The Week In Review – January 3rd, 2004

[JackSpratts]

Pop Pop Fizz Fizz

Celebrate much? Heh heh. There may be some reading this who are shall we say, in recovery from Wednesday nights affairs. Here in Connecticut many of the towns, mine included, had their own parties that rang in the New Year with magic, music and fireworks. There was a special emphasis on activities for families with children, so naturally getting as smashed as possible wasn’t a major priority. I went to one of those. My total consumption for the entire evening consisted of two beers. One at dinner and one later on during a movie I watched at home, from a tape I made off an old movie channel. Funny thing about that. It’s perfectly legal to tape all you want off TV, and share the tapes with pals. I do so at every opportunity to the delight of my friends. Doing the exact same thing with a computer can get you in hot water. Although getting in hot water for that became a lot less likely this year, it is nevertheless one of those strange things in life that make little sense. It’s all kind of silly. Movie sales to the home are skyrocketing, the industry is healthy, indeed sales to the home now bring in more cash than ticket sales at theaters. Even the music biz is OK. It’s nowhere near as shaky as it’s whining front men wail. Pop sales for the year continue to fizz, at just a slightly slower pace. U.S. results for the year are expected to be less than two percent lower than last. No catastrophe there. In other parts of the world things are actually looking great. England and Australia continue to see sales increases for another year, in spite of rampant file sharing. And even in the U.S. some sectors of the business will see sales jumps. Some genres will experience boosts of over 10 percent, some indie labels will enjoy increases that will double their output and sales of singles are shooting through the roof. People are asking a legitimate question: If it’s true, as some record executives insist, that file sharing causes sales declines, then is it also true that file sharing causes sales increases? How can one spend four bitter years claiming one without rejoicing the other? I guess if you’re the RIAA anything’s possible. But the RIAA has little voice in this column today, and it shouldn’t have the loudest voice in this very public P2P debate - about what it means for people to share their own culture and about where that culture is heading. Will it be open for all to create and consume or will it be locked down and dribbled out by powerful interests under threat of fine and imprisonment? I see the RIAA’s days passing, its credibility stained by its own narrow self-interest and continuous war with the public. This is a view I don’t carry alone, not by any means. Besides hundreds of millions of file sharers who agree by the billions of files each week, the courts are sharing these very ideas I’ve touched on over the last twelve months as well. It may be that the RIAA can exploit Congressional weakness and ignorance and get laws passed that run counter to nearly all the ideals the founding fathers incorporated into the U.S. Constitution, or used as the foundation for this government, or wrote in their own personal letters to each other. It’s another thing entirely getting the courts to ride along. So far these courts are proving very reluctant passengers. 2003 saw them diverge in major ways from what the RIAA thought was good for their members but tried to pass off as good for the world. Here’s to a new 2004 bringing more of the same.











Enjoy,

Jack.










RIAA Plans New Lawsuits Soon
W. David Gardner

Undaunted by a court decision making it more difficult to file lawsuits against Internet users suspected of illegally downloading songs, the Recording Industry Association of America (RIAA) is vowing to file more lawsuits "in the near future."

Although the RIAA will have to go to greater and more expensive lengths to target suspected violators, an association spokesman said Monday that the RIAA will go ahead with new lawsuits. What it can't do in the wake of a decision by the U. S. Court of Appeals for the District of Columbia is force internet service providers -- like Verizon -- to reveal the identity of any of its subscribers the RIAA is suspicious of.

While the Court was sympathetic to the RIAA's attempts to protect its members -- recording artists and companies primarily -- it ruled that attempts by the RIAA to subpoena records from Verizon was an unlawful invasion of privacy.

In its ruling, the Court seemed to invite RIAA to go back to Congress and seek a revision of the 1998 Digital Millennium Copyright Act (DMCA), which the RIAA used to hit more than 300 consumers with subpoenas to investigate alleged file swapping. The DMCA was approved by Congress before online file-swapping of music was contemplated.

The RIAA spokesman said the association had made no decision on whether to appeal the Court of Appeals decision or to revisit Congress for more protective legislation.

In its decision, the Court of Appeals said: "It is not the province of the courts, however, to rewrite the DMCA in order to make it fit a new and unforeseen Internet architecture, no matter how damaging that development has been to the music industry or threatens being to the motion picture and software industries. The plight of copyright holders must be addressed in the first instance by the Congress."

The judges reversed an earlier decision by a federal court judge, who said Verizon must turn over the identities of its customers the RIAA suspected of engaging in illegal music-swapping. The Appeals Court said: "had the Congress been aware of P2P technology, or anticipated its development," then it might have drafted the DMCA more generally to cover P2P.

Cary Sherman, RIAA president, said the court's decision was "disappointing... but it only changes the process by which we will file lawsuits." The new procedure means the RIAA will have to file against Internet users whose identity will be revealed after laborious legal procedures.

The decision was hailed by Verizon and by Kazaa, leading P2P provider. Verizon's vice president and associate general counsel said: "This decision removes the threat of a radical, new subpoena process that empowers copyright holders or anyone merely claiming to be a copyright holder to obtain personal information about Internet users by simply filing a one-page form with a court clerk...Copyright holders seeking personal information about Internet subscribers will now have to file a traditional lawsuit."

And, Sharman Networks, which represents file-swapping Kazaa, hailed the decision saying the entertainment industry "has lost its way, choosing a path of endless litigation against its own customers." In a statement, Sharman urged the entertainment industry to adopt peer-to-peer technology to distribute content.
http://www.crn.com/sections/Breaking...rticleID=46858


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It's Official: Searches for P2P Music Tool KaZaa Top Harry Potter, Britney Spears as Number One Search Term on Yahoo! in 2003

Rumors of Human Cloning and War in Iraq Top News Searches; American Idol and Survivor Top Reality TV Searches

Yahoo! Inc. a leading global Internet company, today revealed the most popular search terms of 2003. Based on insight into searches conducted by Yahoo! Search's millions of users worldwide, the top searches of 2003 are a benchmark of consumer interests and trends this year.

Find the full list of top searches in 2003 including Top Rumors, Arnold Schwarzenegger Misspellings and more at http://search.yahoo.com/ top2003.

The Yahoo! 2003 Top 10 Searches:

1. KaZaa

2. Harry Potter

3. "American Idol"

4. Britney Spears

5. 50 Cent

6. Eminem

7. WWE

8. Paris Hilton

9. NASCAR

10. Christina Aguilera

Music and multimedia continue to dominate America's online mindshare as KaZaa, the most popular peer-to-peer file-sharing program, took first place followed by a spate of pop singers. The world's favorite wizard, Harry Potter took honors as the second most popular search term for the year, whizzing up from No. 10 in 2002 and beating out heavy-hitters such as Britney Spears and "American Idol".

Erik Gunther, an editor of Yahoo! Search, points out that three of this years' top searches -- Harry Potter, Britney Spears and WWE (World Wrestling Entertainment), have held spots in Yahoo!'s Top 10 for three years in a row, but notes several new entries.

"The newcomers to the Yahoo! Search Top Searches of 2003 continue to show the strength of breakouts from year to year. This year's newcomers include Paris Hilton -- buoyed by notoriety and a reality TV show -- and Christina Aguilera, who has made the list after several years in the shadow of Ms. Spears."
http://home.businesswire.com/portal/...&newsLang =en


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ANNO 2003: Legal Peer-to-Peer Solution Will Ignite New Web Boom

Payshare delivers legal, protected and profitable online distribution
Press Release

Anybody can sell their own digital content -- such as music, movies, software or electronic books -- legally and profitably with Payshare, a new digital distribution service that legitimises peer-to-peer. Payshare, developed and patented by software house ANNO 2003, will revolutionise the way digital content is distributed. "Payshare combines the anarchy and community of peer-to-peer file sharing with the rights-to-profit and free market ideals of capitalism," says Norbert Boehnke, sales director, ANNO 2003.

The Payshare distribution model allows anyone to profit by copying and promoting digital goods, and gives original content owners a far higher profit margin than traditional distribution models. Payshare model Original content owners register their digital content with Payshare and make the product available online. Purchasers buy the product and have the option to register with Payshare as a 'co-publisher'.

Co-publishers distribute the content (through, for example, a website, or a peer-to-peer network) and receive a percentage of the retail price. The percentage a co-publisher receives is set by the original content owner. "Payshare undermines traditional distribution models. Anyone -- from home movie makers to unsigned bands or established artists -- can sell their content digitally, at no risk of piracy and with a higher profit margin. Traditional music labels or movie distributors suddenly have little value to offer," says Boehnke.

First product

The first product to be distributed using Payshare is ANNO 2X, video-compression software from ANNO 2003. ANNO 2X can squeeze four hours of DVD-movies into just 630 MB at broadcast television standard. "ANNO 2X is a tool for archiving DVDs to a hard disk drive. But, more important, it helps people sell their own movies online as it lets purchasers download, and resell, content faster. For that reason, and to demonstrate Payshare, we decided to make ANNO 2X the first product available through Payshare, says Boehnke. "The web gave everyone the right to publish. Payshare gives them the right to profit too," says Boehnke.

Notes

ANNO 2X is available to journalists free of charge, who can become co-publishers. More information: http://www.payshare.net/news/

Key Payshare benefits -

-- Secure online shares
-- Original content owners get higher sales margin
-- Create revenue for anyone that co-publishes
-- Eliminates piracy
-- Leverages peer-to-peer networks legally and profitably

http://www.prnewswire.com/cgi-bin/st...2003,+04:00+AM


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Online Music Finally Starts To Rock 'N' Roll

Industry punishes downloaders while getting into the act itself
Benny Evangelista

In 2003, the struggling record industry found two ways to get consumers to pay for online music -- by enticing them with new, licensed Web services or scaring a chosen few to settle potentially expensive lawsuits.

The success of Apple Computer's iTunes Music Store, which has sold more than 25 million songs, set off a new Internet gold rush of online services that had even mainstream retailers like Wal-Mart joining the stampede.

But the recording industry also turned to litigation to try to discourage millions of people from using the popular file-sharing networks. With subpoenas and lawsuits, the industry's copyright infringement dragnet snared hundreds of people, from teenagers to grandparents.

The result was a tumultuous year that experts say marked the dawn of a new era for the recording industry, one that will have ripple effects across all of entertainment.

In 2002, the music industry wasn't convinced there was money to be made from online music, at least while file-sharing networks like Kazaa, Grokster and LimeWire offered songs for free. But with the industry's two-pronged attack this year of offering new and improved licensed music services while taking legal action against individual file sharers, 2003 became the year that the record industry started to believe.

"Finally, for the first time we have legitimate services and online music stores that consumers are using," said Matt Kleinschmit, director of Ipsos- Insight, a Minneapolis research firm that monitors consumer attitudes about online music.

Although the increasing number of online music services could surpass consumer demand, Kleinschmit said that after years of fits and starts, it's clear the online music market -- like rock 'n' roll -- is here to stay.

Same old story

The creation of iTunes and the Recording Industry Association of America's lawsuits against 382 people were the two biggest stories of 2003 in digital entertainment. But at the beginning of the year, it was the same old story -- the record industry was losing its battle against the popular file- sharing programs. Despite shutting down Napster in 2001, the labels faced new song-swapping networks that attracted even more users.

More than 60 million people in the United States have downloaded songs from the Internet using file-sharing programs like Kazaa, Grokster and LimeWire, which do not have licensing agreements to distribute songs controlled by the Big Five labels -- Universal, Sony, BMG, Warner and EMI. (It may be the Big Four next year because Sony Music and BMG are proposing a merger.)

Millions more people around the world went online in 2003 to share billions of digital songs without having to pay for them.

The $14 billion U.S. recording industry has blamed online file sharing for a 31 percent drop in CD sales compared with three years ago. Critics of the music industry say there are other factors to blame, such as stiff competition for the entertainment dollar from video games and DVDs, fewer hit songs or artists and the high price of CDs.

The ubiquity of home computers with recordable CD drives also had an impact. Technology has made it possible for almost anyone to create their own custom CDs with only their favorite songs. For many consumers, that meant no longer having to pay $18 for a prerecorded CD that contained only two or three songs they were really interested in.

"Customers who have become accustomed to managing their recorded music from a centralized digital library on their PCs are no more likely to abandon the practice than any of us would voluntarily exchange our color TVs for black- and-white ones,'' analyst Phil Leigh wrote in a recent report, "Online Music Starts Rocking.''

In April, Cupertino's Apple Computer capitalized on that consumer trend when it opened the iTunes Music Store, a Web site offering downloads for 99 cents each or $9.99 per album. Apple officials say that iTunes customers are buying an average of 1.5 million songs per week, but that the profit margin from selling songs for 99 cents is "razor thin."

Apple is closely tying iTunes, both in marketing campaigns and in how the software works, to its hot-selling iPod portable digital music players, which retail for $300 to $600.

Time magazine even proclaimed the iTunes Music Store the "invention of the year.'' Technically, the iTunes Music Store was not an invention, but a new application of an e-commerce Web site, offering songs instead of groceries or pet supplies.

Simplicity is key

What was groundbreaking, however, was that Apple created a site that was as easy to use as the free file-sharing networks. ITunes includes a broad selection of songs that can be downloaded and copied onto CDs almost without restrictions and without requiring a subscription. Even the two music services that the record labels had ownership in, Pressplay and MusicNet, did not offer that same level of flexibility.

Credit the persistence of Apple Chief Executive Officer Steve Jobs, who spent more than a year trying to convince skeptical music executives that his technology would protect their catalogs of songs from piracy, and make them money.

Apple's iTunes Music Store sold 1 million songs in its first week, even though it was then available only to Macintosh users.

"Apple broke the logjam,'' analyst Leigh said. "They deserve credit for negotiating the terms they got, but we have to remember one reason they could was the labels could consider (the service for Apple users) a closed experiment.''

Windows wants its iTunes

But within two weeks, the labels were hearing from other major companies eager to get the same licensing deals that Apple had so they could open their own virtual music storefronts for the larger market of computers running on Microsoft's Windows operating system.

In October, Apple released a version of iTunes for Windows. Even Jobs noted the irony of Apple promoting an application for its rival operating system, proclaiming "Hell froze over.''

By that time, iTunes had competition in the Windows world from BuyMusic. com, Musicmatch and MusicNow.

In addition, Roxio Inc. of Santa Clara earlier in the year bought Pressplay, an unsuccessful online music joint venture between Sony and Universal. Pressplay became the backbone for a new online music service with a familiar name -- Napster 2.0 -- which also began in October.

Tech giants such as Sony, Microsoft, Amazon.com and Hewlett-Packard also began contemplating their own online music sites.

Even Liquid Audio of Redwood City, which sold its digital music technology in January, returned from the sidelines two weeks ago as Liquid Digital Media. The firm is providing the technology for a test run by the online division of Wal-Mart, which plans to sell downloadable songs for 88 cents each.

And Rhapsody, a subscription music service started in 2001 by San Francisco's Listen.com, also began to pick up steam.

"It's an exciting time after the ups and downs of the last couple of years,'' said Sean Ryan, the former CEO of Listen.com. Ryan is now head of the online music division for Seattle's RealNetworks Inc., which bought Listen.com earlier this year.

Taking legal action

2003 was also a busy time for music industry lawyers.

In a stunning ruling after the introduction of iTunes in April, a Los Angeles judge said that the two companies distributing the file-sharing programs Grokster and Morpheus couldn't be held liable for copyright infringement, even if users were illegally sharing songs.

That ruling meant the strategy that shut down Napster Inc. wouldn't work against its successors.

So the Recording Industry Association of America, the Washington trade and lobbying group representing the world's biggest record labels, started going after individual file sharers.

The association went after people who offered a large number of music files stored on their computers for others to download. The association used a provision of the 1998 Digital Millennium Copyright Act that let copyright holders issue subpoenas without a formal civil suit or a judge's approval to force Internet service providers to reveal names of subscribers suspected of illegal song swapping.

The first of an estimated 3,000 subpoenas came during the summer, and the first of 382 lawsuits was filed in September. In all, 220 people who were either sued or were warned of possible legal action chose to settle rather than face costly legal fees and civil penalties that ranged from $750 to $150, 000 per violation.

Critics such as the Electronic Frontier Foundation accused the record association of heavy-handed misuse of copyright laws and of threatening the legal rights of all Internet users.

Setback for the RIAA

On Dec. 19, a Washington, D.C., judge dealt the recording association a major blow when he ruled it could not use the subpoenas to force ISPs to divulge private information about its subscribers.

Association President Cary Sherman said the group will continue with the more protracted and expensive legal process of filing lawsuits against suspected file sharers, naming John Doe defendants and asking judges to force ISPs to turn over their identities.

Still, Sherman said "lawsuits are a very potent form of education'' and have already created a national dinner-table dialogue about the legal and moral implications of downloading free music.

Data from Neilsen/NetRatings indicates that use of Kazaa, the most popular file-sharing program, has gone from 4.4 million users the week before the lawsuits were filed to 2.3 million the week ending Dec. 14, a 46 percent drop.

But Sharman Networks, the Australian company that distributes Kazaa, claims the program is still the most downloaded software in history. More than 308 million copies of the program have been downloaded, according to Cnet Networks Inc. , the San Francisco Internet media firm. On one day last week, users logged on to the Kazaa network were sharing 441 million files, which included songs, movies, games, software and photos.

File sharers like Alexander O'Neal of Belleville, Ill., said he wasn't worried about the lawsuits.

"If anything, it has made me feel a greater contempt for the major labels and made me download more out of spite,'' O'Neal said in an e-mail.



By the numbers

-- 308,000,000

Number of downloads for Kazaa, the most popular file-sharing program

-- 25,000,000

Number of songs sold through Apple's online music store

-- 4,467,000

Number of Kazaa users in September (just before the RIAA filed its lawsuits against users)

-- 2,330,000

Number of Kazaa users as of Dec. 12

Source: Chronicle research

http://www.sfgate.com/cgi-bin/articl...UGQV3V3L01.DTL


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2003 'Difficult' Transitional Year For Music Industry
Brian Garrity

For the global recorded music business, 2003 was a year like no other - and one the industry hopes never to see again.

In the past 12 months, record companies went to war with their consumers, gave in to pressure on CD pricing, turned to DVD and video-game features to sell albums, laid off thousands of employees, proposed mergers, sold manufacturing divisions and other assets and watched thousands more music retailers close their doors.

Of course, not all the news was bad. After a prolonged labor, a new format was born within the business - the paid digital download.

The drivers of all this activity were eroding album sales and continuing unlicensed, peer-to-peer file sharing and CD burning.

"It was a difficult year," says Doug Morris, chairman/CEO of Universal Music Group. "But when you look back in history, this will be the big transitional year."

He notes that many of the developments in 2003 came as the industry confronted the impact of piracy and digital distribution.

"It was another tumultuous 12 months for the record business, from Internet issues to new business models and mergers," says Sony Music Entertainment chairman/CEO Andrew Lack.

The music industry endured its third consecutive down year. For the full year, sales were expected to be down 4 percent to 6 percent from 2002. That's not as severe as the more than 10 percent sales dip in 2002. But it is more substantial than the 2.8 percent decline in 2001.

As bad as a year-over-year drop is, the general sentiment within the industry is that it could have been worse.

That sales deficit stood at a more daunting 8.5 percent at the end of the summer. At its lowest ebb, the current year's album volume trailed the previous year by 13.6 percent, in the week ended Feb. 2.

The industry also saw other signs of hope - small though they may be - that the worst of its sales funk is over.

Late in the year, weekly album sales totals began to improve over the same period in 2002. Going into Christmas week, 12 times in 14 weeks CD sales beat those of the same weeks in 2002.

Meanwhile, for the first time consumers began buying digital music en masse with the debut of new services like iTunes from Apple Computer in April and Napster from Roxio in November. Other music and computer companies were quick to announce plans to enter the digital fray in 2004.

By late summer, digital tracks began outselling physical singles by a growing margin - a sign that consumers are increasingly embracing the brave new world of for-pay downloading.

But the estimated figure of more than 30 million downloads sold does not a comeback make.

In addition to piracy, the industry also continued to face stiff competition for media and entertainment dollars from DVDs, games and cell phones, amid a shaky economic climate.

In response to poor sales, the major labels attempted to slash costs by eliminating thousands of staffers, selling assets and consolidating wherever possible.

In November, Sony and BMG announced plans, pending regulatory approval, to merge their recorded music businesses in a new 50-50 joint venture called Sony BMG. Two weeks after the Sony BMG news, Time Warner agreed to sell the Warner Music Group for $2.6 billion to an investment group fronted by Edgar Bronfman Jr. The move meant the rejection of an offer from EMI Recorded Music, which also sought a merger with WMG.

In the face of industry consolidation and declining sales, UMG, the world's market leader, announced in October plans to drop front-line CD prices in the U.S. to $12.98 from $18.98.

The company also will drop catalog list pricing starting Jan. 1.

The new pricing, announced Sept. 3, will result in "a dramatic increase in sales," UMG president/COO Zach Horowitz told Billboard at the time.

The gambit electrified industry discussion about pricing. The UMG makeover strikes at the heart of the current business model and changes it in profound ways beyond pricing.

For the plan to work for UMG, Billboard estimates the company will have to enjoy an album unit sales gain of about 15 percent to recapture the revenue lost to the lower pricing structure.

UMG executives would not specify what kind of sales increase they need or how the price cuts are expected to affect company revenue. With its broad sweep, the UMG initiative raises an array of concerns.

For music merchants, it appears to be the fuel for a heightened price war. That could be a disaster for music specialty retailers.

It is unclear whether the other majors will follow UMG's lead.

Meanwhile, the shift to Internet sales began in earnest in 2003.

As of late in the year, digital tracks were outpacing physical single sales by a 5-to-1 margin.

Nielsen SoundScan began tracking digital download sales during the summer, and in July Billboard debuted its newest chart, Hot Digital Tracks.

This growth spurt for sales of music in digital form comes at the end of five years of plodding development, frustration and false starts.
http://www.rockymountainnews.com/drm...534048,00.html


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Today's Grocery List: Milk, Bread, Music
Jeanne Anne Naujeck

When Mike Olsen opened his Kroger circular and saw the ''Napster music card'' for sale, he knew the digital era had arrived.

That the cards, which are redeemable for song downloads, are sold along with milk, tuna and eggs floored Olsen, who is president of Compendia Music Group, a Nashville-based independent record company.

''The whole idea that a prepaid card could be so ubiquitous might mean we sell more music,'' said Olsen. ''You'd better embrace it now because the future is here.''

It's a good symbol of just how mainstream downloading became in 2003 — and it may be a long-awaited sign of hope for the music industry.

Last December, there was widespread gloom along Music Row about the steady slide in CD sales and the growing problem of people sharing music free. Overall music sales were down 13.2% at this time last year, and record retailers such as Tower, CD Warehouse and Musicland were closing branches and filing for bankruptcy as though music was, well, going out of style.

It wasn't, but CDs were. Tired of paying $17.99 for discs, young people were swapping songs over the Internet and stuffing them onto portable plastic devices called iPods. And they didn't like the industry's own sites where consumers could pay to download songs — probably because they were funded and designed by record companies and favored certain artists, said Rich Peluso, co-president of Chordant Distribution Group, a division of EMI Christian Music Group.

''To the consumer, the artist is the brand. The consumer wanted an easy, simple way to access all artists,'' he said.

Then came Apple Computer, the arbiter of cool in technology. Its iTunes Music Store boasted easy, fast, cheap (99 cents a song) downloading, and its splashy product introduction positioned Apple founder Steve Jobs to be as much of a rock star as the artists with whom he posed in ads.

''Steve Jobs is a marketing genius,'' said Cary Sherman, president of the Recording Industry Association of America.

''He has a tremendous sense of how to make news and get people excited about his products. He also has an incredible technology.''

Peluso said iTunes' instant success — it has sold more than 25 million singles since its April launch — had energized the music community in a less tangible but equally important way.

''In '02 and early '03, as we saw peer-to-peer file sharing grow exponentially, there was a lack of hope,'' he said.

''Apple launched a phenomenal service with all artists and a consumer brand that people could trust. It got traction. When we saw millions of songs being sold, it brought back hope.''

As of Dec. 21, overall music sales were down only 4.6%, according to Nielsen SoundScan. That doesn't include paid downloads, which the service began reporting in July. Including those, sales are down just 2.2%.

Consumers also have a wider and better array of online music stores such as Musicmatch, Rhapsody, MusicNet, MusicNow, Buymusic, the now-legal Napster and Walmart.com, most selling downloadable singles for less than a dollar apiece (Wal-Mart is cheapest at 88 cents). Next year, Coca-Cola, MTV, Microsoft, Sony, Amazon, Dell, Hewlett-Packard and others plan to launch branded services.

''It's certainly a legitimate channel now,'' said Adam Mirabella of Warner Music Group's sales and retail marketing arm WEA Corp. ''A year ago it was a much more clouded view as to whether it would be successful.''

Within five years, Forrester Research analyst Josh Bernoff predicts, a third of music sales will come from downloading. This year, Peluso figures, tallies will show 1% of music sales were from downloads — about as much as CDs and DVDs made the first year each was introduced.

Digital music has an even greater advantage in that computer sales penetration is so high that most people already have the hardware they need to download.

''A year ago … downloading, ripping and burning were scary terms to almost the entire U.S. population, and now they're familiar,'' an upbeat Peluso said. ''The potential for upside on digital music is very good.''

While downloading hasn't made much money yet, SoundScan reports extremely rapid growth. More than 1.4 million songs were downloaded the week ended Dec. 21, and 1.3 million the week before, the service said.

All the major record companies are offering their music on most of the well- known online stores, including country music by artists signed to their Nashville labels. An Apple spokeswoman said that more than 200 independent labels also had signed up with iTunes.

Costs to the labels associated with making their catalogs available online include copyright clearance, digitizing and encoding the music. Most record companies have dedicated some of their staff or hired new people to deal specifically with online retail.

''More than anything, it just costs time,'' Olsen said. Compendia started out by posting its 25 or 30 best-selling (out of 500) titles.

''On one hand, it is the future and we need to be part of it. On the other hand, it's no great source of income yet for anyone. There's no question we want to be there, but let's match our efforts with potential rewards.''

At this point, music downloading is far from ubiquitous, especially among the demographic most drawn to country and Christian music and the adult audience for most of Compendia's music. The vast majority of downloading — 88% — is done by people younger than 23. A Forrester Re-search report showed that nearly half of consumers ages 12-22 downloaded music in July. And half of downloaders said they now bought fewer CDs. No one in the music industry wants to miss the boat.

''Why not?'' said Nick Hunter, president of Audium Records, a Nashville-based independent with an artist roster that includes Robert Earl Keen, Charlie Daniels Band, Dwight Yoakam, Sammy Kershaw and Daryle Singletary. ''It doesn't cost you anything, and it makes your music available to more people. There's no reason not to.''

Though Hunter notes that SoundScan download charts carry few Nashville acts (Apple's Top 100 singles Friday included only two country songs — Toby Keith's I Love This Bar at No. 72 and Alan Jackson's Remember When at No. 76), the country music business has to take advantage of any outlet for music as retail shelf space shrinks. The online space also offers unlimited room for inventory — which could increase sales of an artist's older albums — called ''catalog'' in music industry parlance.

Friday, Johnny Cash's Ring of Fire was No. 8 on the country download chart, I Walk the Line was No. 19. Roger Miller's classic King of the Road was No. 20.

''We're selling several of every song or album, which shows the consumer is responding to the depth,'' Peluso said. ''The upside is to get your catalog online.''

EMI CMG has 40,000-50,000 songs in its catalog, but only about 10% are cleared for online sales. The goal is to get every song cleared by March 31.

''The availability of content is the biggest roadblock right now. It is one of the most important key issues in the short term for our company,'' Peluso said, comparing the flow of music to online distribution as a trickle that will turn into a flood.

''2004 will be the year of swallowing the elephant.''

Christian music got its first dedicated site last month with the opening of LifeWay Christian Stores' online retail download site. It offers not only contemporary Christian rock and pop but another market segment — well-known church music and hymns that can be downloaded as singles.

''Artists with higher visibility (such as Evanescence and Jars of Clay) do well in mainstream channels,'' said Terry Hemmings, president and CEO of Provident Music Group, a part of BMG.

Just like his counterparts in the secular world, Hemmings has worried about the effects of file sharing on Christian music sales. But he's cautiously optimistic about the future.

''If (illegal file sharing) just levels off, I think we will have made great strides, but I'm not looking for online to grow significantly for the next few years. And we want to help it develop properly.''

Sherman, of the RIAA, said the trade group's high-profile lawsuits this fall against egregious file-sharers significantly stemmed illegal downloading, citing one study that showed a 53% drop in traffic on file-sharing site KaZaA. Lawsuits will continue despite last week's federal court decision that Internet service providers do not have to provide RIAA with names of individual file-sharers, he said.

Despite that setback, the year is ending on an upbeat note, Sherman said. ''Sales improved over the last quarter, and that is a dramatic change. CD sales are picking up, downloading is booming and major new entrants into the downloading business will be getting online.''

''Illegality of file sharing is becoming well known and is resulting in behavioral changes. And that is all very good news for an industry that hasn't seen a lot of good news in the past few years.''
http://www.tennessean.com/business/a...nt_ID=44647746


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RIAA Unwittingly Helping Users Be More Secure
Tony Bradley

The RIAA (Recording Industry of America) and MPAA (Motion Picture Assocation of America) have been doing battle with P2P (peer-to- peer) file sharing networks such as Napster, Kazaa and Morpheus for years now in an attempt to stop users from sharing and downloading illegal copies of songs and movies.

I don't have industry sales facts and figures in front of me, but I have seen a few references to CD sales actually declining after litigation basically caused Public Enemy #1 - Napster - to shut down. This would fit with the model of how I personally used Napster.

I am not particularly interested in stealing music from the record company or the artist who created it. However, I am interested in getting value for my money. Often times a really great song on the radio prompts me to buy that artist's CD only to find out that it was their only good song. So- for $18 I get one song worth listening to and 10 or 12 songs that are junk.

By downloading more songs on a service such as Napster or Kazaa I could make more informed buying decisions. In the end, I would either buy the artist's CD or I wouldn't. In either case I would delete the song once my "research" was complete.

Obviously there are users who aren't like that. I don't know if its the minority or the majority but obviously some users see P2P networks as a way to acquire all the music, movies and software they want without having to pay for it. Many rationalize the theft away as if they are modern-day Robin Hoods- "these big conglomerate companies make billions anyway and the artists don't make much from CD sales" goes the traditional mantra. That line of thinking conveniently ignores that its illegal whether the record companies are rich or not, and that by stealing the music the artists get nothing- at least they get something from CD sales.

I don't know what they are teaching now, but when I was in high school the RIAA was not in my government class as a part of legislative branch of government. Yet, in recent years the RIAA and the MPAA have exerted what I perceive to be an inordinate amount of influence over the legislative process in getting laws passed that are favorable to them being able to hunt down and prosecute the P2P offenders. I have no problem with the RIAA and MPAA getting the money that is rightfully theirs and / or prosecuting those who steal from them, but I despise lobbyists and lobbying and I believe that they should get their money and prosecute the thieves following the same legal rules and processes as the rest of us.

So, that is the end of my rant and now we can move on to the main topic of this article (consider it a very long introduction). Because of the success of the RIAA and MPAA in influencing the legislative process and their zeal for hunting down and prosecuting offenders recently, they are unintentionally helping to improve Internet security. As users look to find new and creative ways to avoid detection (and hence litigation) by the RIAA or the MPAA- they have taken to adopting encryption.

I don't recommend using encryption as a means of hiding illegal activity- in fact that only helps to support those who feel the interests of "national security" (or bubblegum pop song theft) demand that the government be allowed to hold the keys to all encryption. The more that they can show that encryption is primarily used by terrorists and illegal file swappers the stronger the case will be to outlaw any encryption scheme the government can't break.

But, the other side of this coin is that encryption in general is a good thing. Assuming you're not using it to plot an attack or to hide your download of the latest Lord of the Rings movie or Justin Timberlake song, it is generally wise to ecnrypt communications to hide them from prying (and possibly malicious) eyes. Standard email is sent in clear text so anyone who may intercept the messages will be able to read them. Internet communications as well may be intercepted and read. Anything you can do to scramble your communications so that only the intended recipient can decypher and read it will help you be more secure overall.
http://netsecurity.about.com/cs/gene...a/aa122603.htm


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TV producer "OK" with pirates.

'Lost' Episodes Offer Afterlife For Canceled TV Shows
Anthony Breznican

There are three stages of afterlife for a dead TV show, and a program's fate can be decided by its unaired episodes.

Heaven is a DVD release -- a kind of immortality for a series like Fox's "Firefly" or "The Tick," which had devoted viewerships that were too small for network advertisers but large enough to justify selling a boxed-set of discs.

Then there are the fallow summer months, a bitter purgatory where many as-yet-unseen installments of canceled shows are dumped in a last-ditch effort to fill the schedule with anything but reruns. Look for the remains of ABC's recently axed "L.A. Dragnet" to turn up here.

Hell, in this scenario, is never to be seen nor heard from again. Among the damned -- deserving or not -- are Fox's porn drama "Skin," ABC's supernatural thriller "Miracles" and the NBC version of the British sitcom "Coupling."

"Firefly," a sci-fi Western fusion series from "Buffy the Vampire Slayer" creator Joss Whedon, is one canceled show whose unfinished season led to a happy ending.

The program, about a hardscrabble space crew 500 years in the future, lost its bid for survival on Fox's fall 2002 schedule after 11 episodes, with three more finished but unaired. Whedon and crew wanted their work on those episodes shown somewhere, anywhere -- and fans wanted that, too.

But Whedon resisted the idea of burning off those installments as summer filler.

"Fox still owned the property and could maybe fill a summer slot or something," Whedon said. "But then it became an advantage. If they never aired these, then we could put them on the DVD as something that made it more exciting."

There were three unaired episodes -- one about a bordello beseiged by a ruthless warlord, another about a dead body who returns to life and a third involving the crew's heist of an antique laser-gun. The four-disc set including all 14 episodes was released in stores last month.

Whedon currently is writing the script for Universal Pictures to turn the "Firefly" story line into a feature film. Successful sales of the DVD could help spur that project.

But overall, summer exposure is better than nothing. In some cases, it can even rejuvenate a program teetering on cancellation.

"Seinfeld" -- originally titled "The Seinfeld Chronicles" -- was a low-rated pilot in summer 1989. NBC held onto the remaining four installments for another year before dumping them in the summer. But -- surprise! -- they became hits and the series evolved into one of the most successful sitcoms in history.

ABC is hoping for similar luck with "Karen Sisco," its comedic-thriller starring Carla Gugino as a sexy federal marshal. The show was placed on hiatus recently with three episodes still unaired.

The network plans to air those shows in March in a new time slot, and its producers supported the idea of banking the unseen installments until then; it was better than letting the show continue to languish.

"We were going to be off the air sooner or later and what we are presented with now is a shot at having a life, and it was pretty obvious from the (debut) numbers that that wasn't going to happen," said John Landgraf, an executive producer of "Karen Sisco." "But no one is saying, 'Gee, we like the show and just hope they get it right.' There's pretty much a sense that there's a great show here."

Even when a show is canceled outright, the unaired episodes are rarely destroyed. In some rare cases, that dead TV show can become valuable again years later.

The Trio cable channel has had success showcasing these kinds of shows on its "Brilliant But Canceled" series, which highlights well-regarded programs that never found a major audience, like the recent "Andy Richter Controls the Universe" and the 1970s occult series "Kolchak: The Night Stalker."

But cult-fan demand isn't always enough to loosen a network or studio's grip.

ABC's "Miracles" starred Skeet Ulrich as a priest who investigates supernatural mysteries that may be messages from God ... or the devil.

The show was canceled last spring. Only six of the 13 episodes made it to the air, and a fervent group of angry "Miracles" junkies have lobbied unsuccessfully for the DVD release of the other seven.

The show's creator, Richard Hatem, said he doesn't expect any miracles. The touchy subject matter of the series -- a blend of horror and religious iconography -- made executives nervous at ABC's parent, the Walt Disney Co.

But the more a network buries such unaired shows, the more some fans want to see them.

"For them to simply not air the episodes came across to us as malicious," said Angela Mitchell, a 36-year-old publicist in Hollywood, Fla., who helped organize the "Save 'Miracles"' campaign. "I felt like someone wanted to kill the show."

Many fans have taken to bootlegging the lost installments, making copies from foreign- market broadcasts and sharing tapes through the mail.

And for once, piracy has the support of a producer.

"Since there aren't aggressive efforts to make a profit from the show, the loss is pretty minor," Hatem said. "I'm never going to see another dime off 'Miracles,' but if people are watching and enjoying it, I'm more than happy."
http://www.canoe.ca/Television/dec31...isodes-ap.html


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AOL Offers Low-Cost Internet Service
Reuters

Time Warner Inc.'s America Online unit has launched a preliminary version of a lower-priced Internet service it can pitch to subscribers who call to drop the flagship service for a cheaper rival.

The modem dial-up service, which debuted this month under AOL's Netscape brand, will cost $1 a month until the end of February. It will cost subscribers $9.95 a month beginning in March, compared with $23.95 for the full-fledged AOL service.

The new service is a stripped-down and lower-cost version of AOL's flagship service, minus extras such as original programming and high-speed Internet music videos.

AOL is offering a cheaper alternative after watching millions of subscribers flee to lower-cost rivals such as the Juno and NetZero services owned by United Online Inc.
http://www.latimes.com/technology/la...nes-technology


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Web Serving -- P2P Style -- With BadBlue

BadBlue: Web server based on a peer-to-peer networking architecture
Aaron Weiss

When the original release of BadBlue hit the market in 2000, peer-to-peer (P2P) networking was on the ascent, embodied by the spirit of Napster and Gnutella. At the time, P2P proponents argued that the technology could be useful for activities other than mass copyright infringement. And it's true that wide and shallowly distributed networks could provide utility in enterprise environments, in parallel with conventional, centralized narrow and deep topologies. However, public relations for P2P technology have not improved much since 2000, especially in light of the recording industry's wave of lawsuits against users.

BadBlue tried from the start to define a niche outside of anonymous, masked file sharing, to bring the power of a distributed network to "legitimate" environments. BadBlue is essentially a hybrid between a Web server and peer-to-peer file sharing that lets users build an ad-hoc network among BadBlue servers, thus the P2P angle. Access to the network is handled entirely through a Web browser and mediated by BadBlue's built-in Web server. As a Web server, it supports scripting languages, such as PHP, making BadBlue's behavior extendable.

One of BadBlue's attractive features is its lightweight nature. The download is under 500 KB, and the whole ball of string squeezes into less than 1 MB when installed. The installer is simple and straightforward, and organizations using BadBlue can be up and sharing files in a matter of minutes.

Since its original release, a number of enhancements have been added to BadBlue's sharing. Office documents can be "published" on the shared network, along with photo albums. Users can perform full-text searches on popular document formats. LiveSQL allows dynamic database data to be published on the BadBlue network. All of these additions make a BadBlue-based network more useful.

This ease-of-use, though, has a dark flip side. Security is always a major concern when sharing data, and BadBlue's latest features seem to have the enterprise in mind. BadBlue now has security controls -- user accounts that limit access to specified folders and data, and bandwidth throttling and download limits to help thwart abuse.

But -- and there's always a but -- all of this may prove cold comfort in the enterprise environment. While BadBlue has made an admirable effort to cover its security bases, the very nature of P2P architecture is also its Achilles' heel. By distributing the network shallow and wide, workstations become servers, and the owners of those workstations thus take on responsibility for security -- a delegation likely to make the spine of any network administrator tingle .

BadBlue's optimal market is the home or small business interested in casual sharing. It's ease-of-use is laudable, and the Web- based search interface has been much improved since its original release. Dynamic DNS support enables users without static IP addresses to join a BadBlue network. The ability to easily publish Office documents and live databases to the network could indeed be very useful in a small business. But in a large, enterprise workplace, it's difficult to recommend taking the risk that BadBlue brings with it -- not because of any fault particular to BadBlue, but because of the nature of P2P file sharing itself. Simply put, the more links in the P2P chain, the greater the exposure to risk.

Pros: Lightweight application; Fast deployment; User friendly search network
Cons: File sharing's bad reputation for abuse; Low "must have" factor; Security concerns, particularly for enterprise-class deployments
http://www.serverwatch.com/sreviews/article.php/3293751


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'Pirate' Crew Walks Plonk To Celebrate Internet Top Spot
Kirsty Needham

A small Sydney office has beaten Harry Potter, American Idol, Paris Hilton and rapper 50 Cent in grabbing the attention of internet users worldwide this year.

The search engine Yahoo! has named its top 10 searches in 2003 and at number one is Kazaa, the "peer-to-peer" software program controversially used to share pirated music online.

Despised by the American music industry, which has unsuccessfully tried to have it shut down through the courts, Kazaa is run out of the Sydney suburb of Cremorne by Sharman Networks, with 30 staff.

"It really shows the overwhelming consumer endorsement for Kazaa and peer-to-peer technology," said head of marketing Michael Liubinskas, 29, of the Yahoo! result.

"We hope this year Australia becomes increasingly proud of what we are doing. We are proud of what we do."

Sharman snapped up Kazaa in 2002, when its Swedish inventor had to offload it quickly after an adverse music piracy court ruling in Europe.

Since then, the software has been developed also to allow the trade of licensed music, computer games and films. The company says it is intent on going legitimate.

Mr Liubinskas said Kazaa would distribute more full-length feature films next year, and there were plans to package music with video.

But the major music labels refuse to deal with Kazaa, or any peer-to-peer software, while mass piracy continues.

Internet Industry Association of Australia chief executive Peter Coroneos said: "They have created a service which many associate with unlawful use.

"The success of Kazaa is really testament to the failure of the traditional music industry."

This would change in 2004, as the music industry introduced legal, alternative forms of online sale in response to consumer demand, he said.

Music fans would pay for them if the price was right.

"The magic tipping point is around 49 cents a song," Mr Coroneos said.
http://www.theage.com.au/articles/20...546532872.html


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Haitians Sue Game Maker
AP

A lawsuit that claims a top-selling video game is dangerous to society and asks that it be removed from store shelves will be decided in a U.S. federal court.

Haitian civil-rights groups filed the lawsuit because the game, Grand Theft Auto: Vice City, instructs players to "kill the Haitians" and awards points for each kill.

The New York-based Rockstar Games Inc. has agreed to remove the offensive line from future versions of the award-winning video that has sold 11 million copies.

But the Haitian organizations, led by the Haitian-American Coalition of Palm Beach County, have also asked for more than $15,000 (U.S.) in damages.

The suit was filed Dec. 23 in state circuit court in Palm Beach County. Attorneys for Rockstar Games opted to move the case to federal court, and that motion was granted Tuesday. No hearing dates were immediately set.

The lawsuit takes on heavyweights in the video game industry, including Rockstar Games, its parent company Take-Two Interactive Software Inc., Sony Computer Entertainment, the Microsoft Corp., and retailers Target, Wal-Mart and Best Buy.

The manufacturer of the game, in which a former convict is hired to recover stolen drug money in the streets of Miami, has been harshly criticized for its portrayal of Haitians.

Earlier this month, about 100 Haitian-Americans demonstrated outside a Wal-Mart store in nearby Boynton Beach chanting, "Stop Vice City."

Attorneys for the Haitian organizations and the video game manufacturer did not return phone calls late Wednesday.
http://www.globetechnology.com/servl...ry/Technology/


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With CD Sales Slipping, the DVD Steps In
Chris Nelson

What music industry executives would love to see in the new year is a magic bullet to end the three-year sales slump that they say is mostly the fault of Internet music trading.

But since a miracle cure is about as likely as Eminem performing with the Boston Pops, executives at the music labels are aiming to make up lost ground in more modest ways, like pushing music video DVD sales.

Sales for music video DVD's in 2003 jumped 102 percent over 2002 sales, to 17.2 million units, according to Nielsen SoundScan. Total sales are expected to climb higher still for the coming year.

"The entertainment dollars tend to be going more toward visual media," said Jordan Katz, senior vice president for sales at Arista Records. "With music it's a very potent combination."

The model for music DVD's is "The New Breed" by the rapper 50 Cent. It has sold 645,000 copies since April, making it the best-selling music DVD of the year. And because the release included a bonus audio CD with four songs, it was ranked No. 2 at its debut on Billboard's Top 200 albums chart.

Despite the spurt, sales of music DVD's still do not come close to sales of traditional CD's. "Get Rich or Die Trying," a CD by 50 Cent, has sold more than six million copies. And aside from "The New Breed," the only other DVD to sell more than a half million units this year was the "Led Zeppelin DVD," which has sold 525,000 since May.

The industry is hardly settled on how best to entice customers with DVD's. In addition to stand-alone packages, 50 Cent and the rocker Tom Petty have released DVD sets with bonus audio discs. Many more artists, from Metallica to Alicia Keys, have offered bonus DVD's with their traditional CD albums.

Even the packaging is still in flux. The hip-hop duo OutKast, for instance, issued their recent DVD collection, "The Videos," in both the jewel boxes used for CD's and the clamshell case used for movie DVD's.

Label executives hope to find clues in these numbers on how to drive DVD sales in the new year.

"Because of the plethora of releases this year, there's certainly a lot of data which we're in the middle of combing over now to make some decisions about what we're going to be doing," Mr. Katz said.
http://www.nytimes.com/2003/12/29/bu...pagewanted=all


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Duel Of The Dual-Layer DVD Formats
Ed Frauenheim

One side of the ongoing recordable DVD format battle is expected to be first with products that nearly double the amount of data held on one disc. But that victory may not put an end to the feud.

The DVD+RW camp, which includes Hewlett-Packard, Dell and Philips, plans to put so-called "double-layer" DVD recording devices on the market by next spring. Discs on these systems are expected to hold 8.5GB, or four hours of DVD-quality video (16 hours of VHS-quality video). That's about the same amount as the DVDs studios use to issue movies.

But the so-called "dash" camp promoting the DVD-R and DVD-RW formats also is working on dual- layer recording, which involves writing data on two separate surfaces, layered like coats of paint, on a DVD. And unlike in the videotape-standard battle between VHS and Betamax, "plus" and "dash" may be able to coexist for some time to come, observers say.

"I would put my money on the plus camp" in bringing out dual-layer DVD recording first, said Pete Gerr, an analyst with research firm Enterprise Storage Group. But when it comes to the overall format struggle, "it continues to be a skirmish for as long as Pioneer wants to stay in it," Mr. Gerr said. Pioneer is a major advocate of the dash format.

"I do believe that the plus guys are going to get there first," said Robert DeMoulin, marketing manager for branded optical products at Sony Electronics. Sony, like some other manufacturers, makes DVD recorders that combine both plus and dash technology.

Mr. DeMoulin pointed out there are plenty of older dash recorders on the market. "I just don't see that the dash format is going away any time soon," he said.

The skirmish began a few years ago, when a group of companies did not like the recordable DVD technologies developed by the DVD Forum standards body. The DVD Forum approved formats called DVD-RAM and DVD-R, for write-once recording. Later, the DVD Forum added the DVD-RW rewritable standard for the ability to record, erase and record again on the same disc.

The dissident companies formed the DVD+RW Alliance, which put out its own technology for write-once and rewritable recording. As a result, seemingly countless recordable drives and disc media types are on the market, creating potential confusion for consumers. For example, a DVD- R/-RW drive cannot record on +R or +RW discs. In theory, discs that are recorded using +R, +RW, -R and —RW media all can be read by DVD players. But a recent U.S. government study found that DVDs and DVD drives are compatible only 85 per cent of the time.

The move from single-layer to double-layer recordable DVDs, rather than resolving the fight, just extends it to another battleground.

Single-layer recordable DVDs — or digital versatile discs — hold up to 4.7GB and can be used to store data or up to two hours of digital video. Their popularity is growing quickly. The number of write-once recordable DVDs sold worldwide is expected to climb from 55 million in 2002 to more than 300 million this year, according to research firm Santa Clara Consulting Group.

Retail movies sold on DVDs typically come with data written on two layers. But the commercial process involves "stamping" the discs rather than burning spots with a laser, the method used by DVD writers. Dual-layer recording has not been available to the average consumer in the past. The new technology will give consumers the ability to cram much more data onto discs burned at home.

"Dual layer is a great sort of incremental turn of the technology crank," Mr. Gerr said.

Both the plus and dash groups have created prototypes of dual-layer recording technology. Neither side has an official specification, but the plus group has a more aggressive schedule. It has finished writing up the details of a dual-layer, write-once standard for recording data at up to 2.4 times the normal playback speed (2.4x).

Dual-layer DVD recorders slated for PC use are expected to emerge by spring, with dual-layer recorders targeted at the consumer electronics market available later in the year, according to Hans Driessen, global communications manager for Philips' Optical Storage division.

Dual-layer DVD-R products are slated to come out some time next year, said Andy Parsons, senior vice-president in the business solutions division of Pioneer Electronics USA. But he said dual-layer recording, no matter what the format, faces hurdles. One is the importance of fully recording both layers of a dual-layer disc, he said. If that doesn't occur, Mr. Parsons said, some DVD players might behave unpredictably, for instance by causing a momentary interruption of the program.

Fully recording an 8.5GB dual-layer disc could increase the time needed to make a recording, according to Mr. Parsons. "That's what we're thinking about now," he said. "One must be careful not to rush things to market."

The dual-layer DVD+R specification does not require the entire disc to be recorded. Philips' Mr. Driessen said that if one layer of a dual-layer DVD+R has a recorded signal at a particular point on the disc, the other layer must have a matching signal; otherwise, a player may detect an error. For example, if one layer has 4GBs of data recorded, the other layer must have 4GB as well. But he said blank space may be left at the edge of the DVD without any playback problems.

Arranging for both layers to be recorded in equal amounts is relatively easy in the case of data files of a known size, Mr. Driessen said. When a user records a television broadcast of unknown length, however, the drive may need to add "dummy" data in order for the disc to be readable in DVD players. This could mean a finalization process of up to 25 minutes, Mr. Driessen said. "Future write speed improvements (such as 4x) will reduce this finalization time," he said.

The dual-layer DVD+R recording prototype created by Philips and media-maker Mitsubishi Kagaku Media uses focused light to mark areas on two dye surfaces stacked on top of each other. For each dye layer, reflective material sits underneath to send back light to the lens, which interprets the signal. One challenge is getting light to stop and record on the closest layer, and also to pass through it to record data on the subterranean surface.

Plus and dash can each claim victory in some regard. Sales of recordable DVD media using the plus format increased from 2 per cent of the U.S. retail market in July 2001 to 55 per cent in July 2003, according to market research firm NPD Group.

But the dash format has been holding steady around the world. According to Santa Clara Consulting Group, the combined factory sales of —R and —RW blank media amounted to 61 per cent of the total worldwide market share in the third quarter. DVD+R and +RW blank media accounted for 37 per cent, while DVD-RAM media sales made up 2 per cent. Dash media's worldwide market share hovered at about 60 per cent for the first three quarters of the year, according to the research firm.

The end result will likely be uneasy coexistence. Mr. Parsons said he used to think the dash forces would triumph, but no longer. The term "victory" isn't relevant any more, he said, because the price of dual-format drives soon will be close enough to that of single-format drives that few people will choose just one format. Pioneer has shifted to drives that can work with both plus and dash formats.

"I think they're both going to coexist for a long time," he said. "There's room for everybody."
http://www.globetechnology.com/servl...ry/Technology/


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Battle Over Next DVD Format
Ken Belson

When Hisashi Yamada pulls back his bow, he thinks of only one thing: Hitting the bull's-eye 92 feet away.

"When I concentrate on the target," said Mr. Yamada, a champion archer who demonstrates his skill dressed in the traditional blue-and-white hakama, "I forget about everything else."

In his regular job, Mr. Yamada, a 60-year-old electrical engineer, is putting that same single-minded focus to work for the Toshiba Corporation, which is battling like a Japanese samurai warrior of old in a fight to the finish over whose format will be used in the next generation of DVD's.

The discs, which have been under development for several years, will hold four to five times more digital video and audio data than those now on the market. They are needed because broadcasters and movie studios are planning to take advantage of the spread of high-definition television screens to produce more digital programming with multitrack sound and much better resolution.

The new discs and their players will not be widely available until at least 2005, but already the world's largest electronics, computer and entertainment companies are embroiled in a multibillion-dollar fight over whose technology will become an industry standard.

The arguments are in many ways reminiscent of the Betamax-VHS showdown in the 1970's and the clashes over digital audiotape, compact discs and the original digital videodiscs released in 1997. As in those battles, technology is just the starting point for debates filled with emotion and industry politics.

Beyond the technical details like tracking speed and tilt is a serious tussle over how to divide - and protect - the billions of dollars in royalties from the licensing of this technology and the content sold on the discs. Also at stake is an effort by electronics makers to prevent emerging Chinese rivals and well-established Silicon Valley computer makers from making significant inroads into the home entertainment business.

"This is a very intense conflict over intellectual property," said Warren N. Lieberfarb, a driving force behind the development of the original DVD format. It has the added overlay, he said, "of the Japanese, Korean and European consumer electronics industries fearing China's aggressively emerging consumer electronics industry as well as the PC industry."

At the technological level, the combatants are divided roughly into two camps. Under Mr. Yamada's leadership, NEC and Toshiba have formed a group that has developed the HD (high definition) DVD, a disc that is 0.6 millimeter thick and made with machinery similar to that used for today's DVD's. On the other side is the 10- company Blu-ray Group, led by Sony and Matsushita, whose best-known brands are Panasonic and JVC. That group has developed a disc only 0.1 millimeter thick that can hold more data but needs additional investment to be produced. Information on the discs can be overwritten after it is recorded, something that is not possible with the HD DVD's now.

At 12 centimeters in diameter, both discs are similar to today's offerings, though Sony's discs are protected from fingerprints, dust and scratches by square plastic cartridges when not in use. The HD DVD group has developed a single lens that emits red and blue rays to read both current and next-generation discs. The Blu-ray machines require two separate lenses.

While the discs are still at least a year away from mass production, both sides are expected to be out in full body armor trying to win new allies at the big Consumer Electronics Show in Las Vegas, Jan. 8 through 11, where they are planning to show prototypes of their devices.

There are many battles left to fight, though, before these new DVD's hit the shelves, and it is entirely possible that the camps will never reach a consensus, forcing consumers, retailers, movie studios and others to adapt, at least initially, to two competing standards.

In the Betamax-VHS war, one standard ultimately triumphed. That is an important reason the two chief antagonists in that fight - Sony, the loser, and Matsushita, the winner - are now allies. In the wake of other format conflicts, including the one over the first generation of DVD's, multiple standards co-exist, with the differences papered over by machines that can play several formats. But in other cases, including the development of higher-quality music discs, the disputes seem to have scared away consumers and retailers caught in the middle.

The ideal, everyone involved insists, is for one format to emerge as the winner so costs can be kept to a minimum. But as Mr. Yamada knows, that is about the only thing on which people can agree. In addition to his role at Toshiba, he is chairman of the powerful Technical Coordination Group at the DVD Forum, a six-year-old group of more than 200 companies that is trying to decide on one format.

In November, the HD DVD camp's specifications were endorsed by the forum's steering committee. The victory was significant, but tellingly contentious. The format was not approved until the third ballot, and only after voting rules were changed and several companies abstained. The Blu-ray Group did not submit specifications for a read- only disc, which Hollywood is eager to have for movie sales and rentals.

Mr. Yamada called the negotiations "very delicate," and said the Blu-ray Group was trying to prevent the HD DVD from becoming the industry standard because it does not yet have a solid alternative.

"They don't want to approve HD DVD in the forum, but since they only have rewriteable discs, they can't say theirs is better than ours," said Mr. Yamada, who argues that his goal is to produce an open format that all companies can share. The Blu-ray Group, he said, "wants to control the technological standards themselves."

The HD DVD group may get an additional lift in February, when the Walt Disney Company, Microsoft and Sanyo are expected to take over leadership of the DVD Forum. The three companies have not sided with either format, but are seen by some as friendlier to the Toshiba-NEC group.

Though the two camps produce discs that store similar amounts of data, manufacturers say that the HD DVD discs cost only 15 percent more to produce than current discs, a fraction of what they say the Blu-ray discs will cost. Stamping out prerecorded discs cheaply is the key to wooing Hollywood studios, which want to keep their retail prices low in a business that now brings in more money than movies in first-run theaters. Retailers also want one standard so they do not have to stock two versions of every movie.

"What Hollywood cares about is cost," said Kanji Katsuura, the chief technical officer at Memory-Tech, the second-largest maker of DVD's in Japan. "They basically want the same price as discs now."

Sony and its allies dismiss claims that their technology is too expensive, saying that the cost per disc will naturally fall as production takes off. They also say their rewriteable discs are what consumers really want because they can be used not only to play movies but also to record high-definition digital television programming, now available selectively in the United States and offered on a limited basis in Japan starting this month.

"What we are striving for with Blu-ray is the next stage in the evolution of this technology," said Yukinori Kawauchi, a manager in the planning and control division at Sony's broadband network unit. Such a leap happens only "every 10 or 20 years, like the transition from CD's to DVD's," he said. In April, Sony started selling Blu-ray DVD recorders in Japan, where they cost 378,000 yen, or $3,500, and take discs that sell for 3,000 yen, or about $27. Sony does not release sales figures, but industry sources said only a few hundred players had been sold so far.

Mr. Yamada said Toshiba wanted to introduce DVD recorders in 2005 that cost less than $2,000 and players priced below $1,000. They would be much cheaper than machines using the competing format, but would still be aimed mostly at the early adopters, who are the first to try new technologies. As in the past, the new formats are not expected to take off in the mass market until the price falls sharply.

"The battle really depends on the price level," said Yuki Sugi, a consumer electronics analyst at Deutsche Securities in Tokyo. "When the price falls to 120,000 yen ($1,080), it will catch on. This is a kind of magic number for high-priced electronics."

History indicates that the magic number might be reached earlier than anticipated. Sales of DVD discs and players gathered steam when production began in China, pushing prices lower. But some manufacturers worry that their technology could be used by Chinese rivals, legally or otherwise. This fear, some critics say, is why the Blu- ray group has kept a tight lid on its technology instead of sharing more of its specifications with other members of the DVD Forum. Striking back, nine Chinese companies have said they plan to develop their own DVD formats.

Copyright infringement is another worry. After the rapid spread of illegally copied DVDs, Hollywood is pushing both technical groups to come up with new security measures to protect their movies. Neither group has developed a prototype that satisfies the movie industry - a major impediment to a commercial launch.

"We are very much focused on both picture quality and content protection," said Peter Murphy, senior executive vice president and chief strategic officer at the Walt Disney Company, which has about one-fourth of the home video market. "The consumer electronics manufacturers can come up with the technical standards for the next- generation discs, but unless we also agree on the content protection standards, many of the studios may choose to wait before releasing content in the new format."

Also lurking nearby are giants like Microsoft, I.B.M. and Intel, which are eager to work their way into family rooms by promoting their technology for use in set-top boxes, DVD players and digital video recorders with hard disk drives. American computer makers, adept at producing hardware on thin margins by building sophisticated global supply chains, could also develop competing products, turning television into just another function of the home computer.

"Younger generations are completely happy working with a mouse, which is better than a 1,000-button remote," said Tom Adams, president of Adams Media Research in Carmel, Calif. "Microsoft can dominate in ways that Sony or Toshiba can't."

Some analysts contend that high-speed Internet connections will ultimately make discs less relevant as consumers download more music and movies, though this is a more distant threat.

For now, discs remain the medium of choice, and the decision on a format will ultimately be up to Hollywood. Some movie executives are leaning toward the HD DVD format because it is seen as the cheaper of the two. But others are still weighing the technological and financial arguments from both groups.

Many in the industry say the worst case would be an endless fight, forcing the public to wrestle with two formats.

If that happens, said Mr. Lieberfarb, the developer of the original DVD format, "everyone is a loser, particularly Hollywood studios, the retailer community and, most importantly, the consumer."
http://www.nytimes.com/2003/12/29/te...pagewanted=all