Peer-To-Peer News - The Week In Review – December 20th, '03

[JackSpratts]

Quotes of the week:

“Define all the world as an ISP if you like, the validity of a subpoena still depends upon the copyright holder having given the ISP, however defined, [effective] notification. And as we have seen, any notice to an ISP concerning its activity as a mere conduit does not satisfy the condition and is therefore ineffective.

In sum, we agree with Verizon that §512(h) [the Digital Millennium Copyright Act] does not by its terms authorize the subpoenas issued here.”

“Nothing in the legislative history supports the issuance of a [DMCA] subpoena to an ISP acting as a conduit for P2P file sharing.” - Chief Judge Douglas H. Ginsburg.

"Due process is alive and well in the American court system." - Peter Swire.









RIAA Loses Big - Major Victory For Americans

This week the high flying arrogance of the RIAA met the sobering power of the U.S. courts - and crashed. Derisively dismissing the industries position as “silly,” the judges made clear the contest wasn’t even close.

While it will be hard to imagine the RIAA not playing courts and appealing the pro-Verizon verdict on the illegality of automatic P2P subpoenas, it is unquestionably bad news for them by any measure. They went court shopping just last week to get a similar SBC suit moved to such friendlier Washington DC locales, as judges there usually indicate greater misplaced sympathies for media companies and after another pro-industry LA judge granted the move, observers universally agreed it was a blow to SBC. How fast things change.

That the names of the people sued by the RIAA were disclosed illegally indicates to me at least the money paid in settlements should be returned to those individuals immediately, and any “acknowledgments of culpability” must be rendered void as the “fruit of the poisoned tree”… still, I won’t be holding my breath. The RIAA seems to think laws only work when they work in their favor.

If the RIAA still wants the names and addresses behind the IP numbers they’re going to have to labor for them like everyone else. They may in all probability be forced to file expensive and time-consuming “John Doe” lawsuits - and for the first time factor in the monetary costs. It’s one thing to pay with their reputations, which the music industry has proved more than willing to squander. It will be interesting to see if they feel the same way about their cash.

Without question this is a major tactical victory for file sharers - but it is so much more. Indeed it is a huge reaffirmation of every American’s basic Constitutional expectations of fairness and privacy, and re-establishes for all citizens the importance of a presumption of innocence. Automatic robo-writs, created without real evidence of wrongdoing and served without judicial oversight have no place in any land calling itself a democracy.

For the time being at least these draconian McWrits are history, relegated to footnote status with the other ugly examples of undue corporate influence that diminish however temporarily America’s storied systems of checks and balances.

It’s beginning to feel a lot like Christmas.










Enjoy,

Jack.











Appeals Court Reverses Decision on Music Subpoena Case
Mark Wigfield

WASHINGTON -- In a major setback for the recording industry, a federal appeals court on Friday struck down a ruling ordering Internet service providers to identify customers using the Internet to share copyrighted music.

Written by Chief Judge Douglas Ginsburg for a unanimous three- judge panel of the U.S. Court of Appeals for the District of Columbia, the decision was a victory for Verizon Communications (VZ, news) Inc. (VZ, news) and other Internet service providers.

A lower court had ruled that Verizon had to comply with a subpoena from the music industry's trade association, the Recording Industry Association of America, or RIAA, seeking the identity of a subscriber to its Internet service who was downloading copyrighted music and redistributing it through the use of peer-to-peer file- sharing software KaZaA.

The Digital Millennium Copyright Act "does not authorize the issuance of a subpoena to an ISP acting as a mere conduit for the transmission of information sent by others," Judge Ginsburg wrote.

Peer-to-peer software "was not even a glimmer in anyone's eyes" when the law was enacted.

The court said it is "not unsympathetic either to the RIAA's concern regarding the widespread infringement of its members' copyrights, or to the need for legal tools to protect those rights. 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 industry and software industries."

The court noted that even as the case was being considered, "committees of the Congress were considering how best to deal with the threat to copyrights posed by P2P (peer-to-peer) file sharing schemes."

Facing plummeting music sales believed to be caused by free music downloads, the RIAA served its first subpoena on Verizon Internet Services about a year and a half ago. Verizon refused to comply on various legal grounds, arguing in part that because it was simply a conduit for music stored on subscribers' computers, there was no authority under law for Verizon to release subscribers' identities.

But a lower court twice rejected Verizon's arguments, and the RIAA last summer began in earnest its controversial campaign to identify people sharing copyrighted music and prosecuting them. The group believes the program has been an effective deterrent, despite the backlash that occurred when grandmothers and college students were hit with large fines for sharing files.

Cary Sherman, RIAA president, said, "Regardless of this decision, we will continue to defend our rights online on behalf of artists, songwriters and countless others involved in bringing music to the public. We can and will continue to file copyright infringement lawsuits against file sharers who engage in illegal activity."

He added that the decision "is inconsistent with both the view of Congress and the findings of the District Court. It unfortunately means we can no longer notify illegal file sharers before we file lawsuits against them to offer the opportunity to settle outside of litigation. Verizon is solely responsible for a legal process that will now be less sensitive to the interests of its subscribers who engage in illegal activity."

Verizon counsel Sara Deutsch said the court "has given a very important victory to all consumers by making it clear that the recording industry can't use radical new subpoena powers to trample on Internet users' privacy, safety and due process rights."

The decision "came just at the right time," she added, because of recent efforts by the RIAA to get multiple identities through one subpoena.

The Digital Millennium Copyright Act provides expedited subpoena powers in copyright matters, allowing a clerk to issue one for a $35 fee without a judge's order. Ms. Deutsch said the recording industry can still get subscriber identities by filing a " John Doe" lawsuit in which a subpoena request would be weighed by a judge.

That's a far more cumbersome and costly process.

"It all has to do with cost and efficiency," Ms. Deutsch said. The recording industry was "trying to gather as many names as possible to change people's behavior. The court said you can't trample on people's rights because it is expedient to do so."

Sen. Sam Brownback (R., Kan.), has shown interest in the subject and in September introduced a bill that would have relieved Internet service providers from the duty to identify their subscribers in a digital copyright matter without a court order.

The bill has no cosponsors. And as next year's election's loom, it's unclear whether Congress will have the time or political will to reopen the complicated digital copyright law.
http://www.quicken.com/investments/n...r&column=P0DFP


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Kazaa Wins In European File-Sharing Court Battle
Eric Bangeman

The Supreme Court of the Netherlands has ruled that P2P software such as Kazaa is legal. In doing so, they rejected the International Federation of the Phonographic Industry's (IFPI) demands that Kazaa distribution be stopped and its owners (Sharman Networks) forced to pay royalties for the files transfered on their network. The IFPI also wanted the Kazaa's code modified to filter out copyrighted material.

"The victory by Kazaa creates an important precedent for the legality of peer-to-peer software, both in the European Union as elsewhere," Kazaa's lawyers Bird & Bird said in a statement. The decision by the Dutch court, the highest European body yet to rule on file-sharing software, means that the developers of the software cannot be held liable for how individuals use it. It does not address issues over individuals' use of such networks.

Sharman Networks has made recent attempts to "legitimize" Kazaa, pushing it as a possible vehicle for software distribution or even sales and legal distribution of copyrighted media. They have also pursued a strategy of distancing themselves from the activities of the end-users as much as possible. In this case, the strategy has paid off. While the court's decision is limited to Holland, it does demonstrate that some jurisdictions are capable of making decisions about the legality of some software tools independent of their possible uses. In this case, Kazaa's potential to be used for sharing copyrighted material (which is by far its most-popular use), does not allow those who might be adversely affected by such usage free rein to try and kill it off.
http://arstechnica.com/news/posts/1071870117.html


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Darknets
Gary Rivlin

When the U.S. military sought to create a secure network over which soldiers in Tikrit could share intelligence on medical supplies and road conditions with nongovernmental organizations in New York and Geneva, it turned to a software package called the Groove Workspace. Using Groove, Central Command set up a so-called Darknet. Darknets allow a group to create a digital utopia that is equal parts socialist and elitist: participants can get information freely as long as they share the same software and have been granted the access code.

A Darknet isn't as much a new technology as an old idea -- the corporate Intranet -- reconstructed for a paranoid age. A Darknet offers all the security of a private in- house network, but it allows users to send encrypted messages and documents around the world through that vast, bustling, danger-filled wasteland of sprawl called the Internet. Sri Lankan human rights activists now trade cloaked electronic communications with one another using a Darknet, as do researchers at GlaxoSmithKline who work in geographically dispersed teams.

Darknets are suddenly au courant among the cybercool as well. This past summer, when, in a frenzy against music downloading, the Recording Industry Association of America started slapping suits on children and grandmothers, hundreds of thousands of music devotees flocked to Web sites like Bad Blue and Waste. Like Napster and KaZaA, these sites let users sift through the public contents of one another's hard drives and swap files on the Internet. But like the soldiers in Tikrit, file-swappers need an invitation to enter. Inside the velvet-roped cyberclub of the Darknet that Bad Blue or Waste creates, members can trade purloined music or movies or whatever it is they want to exchange, having been waved inside by the bouncers at the door.
http://www.nytimes.com/2003/12/14/ma...4DARKNETS.html

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P2P Users Face New Challenge – Update
Thomas Mennecke

"One up-manship" has been a common term in the P2P community, usually referring to the "technological arms race" between pro-filesharing programmers and copyright holders. So far, the P2P community has maintained the upper hand, as its mere existence is testament to its ability to adapt.

Perhaps the P2P community's greatest achievement was the concept of decentralized networking, a direct response to the RIAA's conquest of Napster. While Napster's vulnerable servers proved to be easy to shut down, decentralized networks have proven to be virtually impossible to stop.

As other techniques such as file-hashing have kept corrupt mp3s at bay, protecting users from the RIAA has become top priority for many P2P programmers. Kazaa Lite, and subsequently Kazaa Media Desktop, allows the user to hide their shared directory from outside viewing, while other networks such as FileTopia encrypt file- transmissions.

Other projects, such as PeerGuardian, offer a degree of protection against the RIAA. Multiple techniques used in conjunction, i.e., using PeerGuardian while blocking outsiders from viewing your shared directory (but still sharing!), will significantly decrease your chances of becoming an RIAA target.

Considering the RIAA's lackluster campaign that has only yielded a few hundred successful lawsuits (out of 60+ million American file-traders), circumstantial evidence suggests that the self protective steps are working. In fact, it may be working so well that encrypted and tunneled traffic in and out of college networks is going largely unnoticed.

MesoCom has developed a P2P tracking program, called P2P Watch Dog, that can supposedly track and detect traffic from encrypted networks. The company claims that it has been able to detect traffic on college and corporate networks that had previously gone unnoticed.

"The system was recently installed by a university in Massachusetts, who found that their current system was detecting less file-sharing traffic, but that their bandwidth was still being saturated. Peer-to-peer clients had simply evolved beyond traditional detection methods. After installing P2P WatchDog, it became clear that the students had migrated to clients that their previous system could not detect."

In addition, the developers claim that it was also able to decrypt the supposedly invulnerable EarthStation 5 network.

"NEWS! -- New Encrypted P2P Client is Now Traceable!
(10/27/03) P2P WatchDog has cracked the Earthstation 5 SSL protocol, and found a way to trace the supposedly "untraceable" new P2P client."

Furthermore, MesoCom states that traffic on the ES5 network is easily trackable, due to its unque signiture. P2P Watch Dog explains.

"With the exception of file transfers, and accessing web content for the client UI, all of the traffic generated by ES5 uses UDP, and is either encoded or encrypted. Unfortunately, bandwidth consumption is perhaps the worst among clients we have tested. We routinely see file searches consume 5 megabits. Fortunately this makes it a good candidate for traffic analysis, since the pattern is unique and bandwidth consumption like this on a UDP channel is rare except for streaming video."

So, in the end while P2P Watch Dog's presence may not be earth shattering, it is yet another object of interest to the file-sharing community. In addition, it reiterates that NO P2P network is safe. Will P2P Watch Dog be the grand savior for saturated college networks? Maybe for a while. However, as file-sharing’s short history has taught us, not even the RIAA’s war machine can stop information from being free.

Update

Around 9:00 PM, EST, Slyck contacted MesoCom via land line. We inquired at to which version of ES5 was used for their UPD bandwidth test. They informed us the initial test used ES5 version number 1.1.30, build 2180 (downloaded Sep 29, 2003). After we discussed conducting a retest, MesoCom use ES5's latest version, number 1.1.45, build 2368 (downloaded Dec 15, 2003):

"Search for "U2". After one minute, integrated bandwidth was 1.4Mb in, 0.4Mb out, for 1.8Mb total.

Search for "Garfunkel". After one minute, integrated bandwidth was 0.7Mb in, 0.2Mb out, for 0.9Mb total.

Note, that's all in megabits, not megabytes, and all of it was UDP traffic."

Shortly thereafter, MesoCorp updated their ES5 Protocol description. Although much improved, MesoCom pointed out to us that this is still excessive, and that ES5 is still easily identifiable. Also keep in mind that recent improvements does nothing to help those still using earlier software versions (update if you use ES5!) In addition, MesoCom points out that:

"Note that P2P WatchDog does not decrypt the ES5 SSL stream, and does not attempt to collect information on the file being transferred. It merely identifies file transfer traffic as originating from ES5, so that it can be blocked. "
http://www.slyck.com/news.php?story=345


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Europe Outpaces U.S. as Capital for File-Sharing

LONDON (Reuters) - Europe holds the dubious distinction of become the new file-swapping capital of the world, stealing the crown from the United States, a new survey on Monday said.

In October, 9.35 million Europeans used the popular Kazaa file-sharing software or visited the Kazaa web site compared to 8.24 million Americans, Internet measurement firm Nilsen//NetRatings said.

Kazaa is considered the undisputed kingpin of file-sharing. It is closely watched by the media industry to determine the extent of black market trade in free music, film and video game files between Internet users.

Its popularity has triggered a slew of law suits around the world. The U.S. trade body, the Recording Industry Association of America (RIAA), is trying to shut it down after arguing it's help send CD sales in a downward tail-spin the past three years.

The record industry in the U.S. has also resorted to suing individual file-sharers, many of which are Kazaa users. The move appears to be curbing usage in the U.S. even as it draws criticism from consumer groups.

Between March and October, the number of American Web surfers to use the Kazaa application or visit www.Kazaa.com has nearly halved from a peak of 16 million monthly users, the research firm said.

In Europe, where no such legal threat exists, usage of Kazaa and rivals eDonkey and WinMX, remains robust.

"There would need to be a definitive statement from European music executives for us to see a similar downturn," said Tom Ewing, Nielsen//NetRatings European market analyst.

The London-based music trade body International Federation of the Phonographic Industry (IFPI), could not be immediately reached for comment. In September, the IFPI told Reuters it had no plan to sue individual file-sharers as its sister organization, the RIAA, had done in America.

October is the first month Nielsen//Netratings began tracking usage of the Kazaa file- sharing application although it has been able to track visits to its Web site for some time, Ewing said.

Kazaa is most popular in Germany where 1.95 million surfers used the application in October. France, Spain and Britain, respectively, round out the top four. "These are Europe's biggest broadband markets," Ewing said by way of explanation.
http://www.reuters.com/newsArticle.j...toryID=3995733


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Euro File-Swappers Face Legal Action
Macworld staff

Europe has become the file-swapping hub of the world as US users ease off in the face of aggressive litigation by copyright holders – forcing the music industry to begin litigation in Europe next year.

Nielsen/NetRatings reports that 9.35 million Europeans used the Kazaa peer-to-peer file-swapping network in October while 8.24 million Americans did the same.

Between March and October 2003 the number of US Kazaa file sharers halved, once the RIAA began litigation against individuals.

Today's Guardian reports that the chairman of international recording industry group, the IFPI, will warn that similar legal action against consumers in Europe has become "an inevitability". He suggests it may begin next year.

The IFPI's campaign against illegal sharing of copyright material "will only intensify in 2004," the report says.
http://www.macworld.co.uk/news/main_...fm?NewsID=7511

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File-Sharing Sites Plan To Form P2P Group Next Year
Jessie Ho

Despite being indicted for copyright infringement, two online file-sharing Web sites announced yesterday that they plan to establish a peer- to-peer (P2P) association by the end of next year.

"Widely applying P2P technology beyond music file sharing is an irreversible trend, and Taiwan should not absent from this wave," James Chen (???), chief executive officer of Kuro.com.tw (???), told a press conference.

"We should find a solution to balance the new technology and its impact to existing industries, rather than destroying it," he said.

Kuro, the nation's largest online file-sharing site with 500,000 members, and Ezpeer.com.tw were indicted by prosecutors for violating the Copyright Law (????) after the International Fed-eration of the Phonographic Industry (IFPI) filed charges against them. IFPI filed charges against Kuro in September and against Ezpeer in August of last year.

IFPI, which represents 10 local and international record labels, claimed that such P2P sites allow subscribers to download and share music files without obtaining authorization from the copyright holders.

Both Kuro and Ezpeer charge subscribers a monthly fee. Kuro charges NT$99 while Ezpeer is NT$1 more.

The companies say Taiwan's courts should follow the lead of their counterparts in other countries, noting that US-based Grokster Ltd was found not liable for copyright infringement by the district court in Los Angeles last April.

Unlike Kuro and Ezpeer, however, Grokster does not use a centralized file sharing system. Information is transferred directly between users without the participation of any computers controlled or owned by the company.

Kuro and Ezpeer also offer a title directory for their members, a service which is also considered key to their indictments.

Kuro and Ezpeer had offered to pay compensation to the record labels, but the offer was rejected.

Reaching a profit-distribution formula acceptable to both parties is still the best solution to the case, Chen said yesterday.

"I'm 100 percent sure that we will win the case, because we only provide a platform for users to swap their files -- we don't illegally distribute them," Chen said.

IFPI Taiwan secretary-general Robin Lee (???) is also confident of winning the copyright war.

"We don't oppose P2P, but we do oppose manipulators who use the technology to infringe upon our rights," Lee said. "We are discussing granting online music distribution rights with a total of seven companies who are willing to gain authorization before allowing users to share their files."

Prospective online-file operators include iBIZ Entertainment Technology Corp (???????), Hinet and Acer Inc, Lee said.

iBIZ is an arm of Era Communications Co (???? ??), which said last month that it would launch its online music downloading service by the end of the year.

The lawsuits appear to have had limited impact on Kuro and Ezpeer. Kuro lost 1,800 subscribers, Chen said, while Ezpeer president Weber Wu (???) said his service saw a 30 percent drop in membership. Both Chen and Wu said that their investors were unfazed by the indictments.
http://www.taipeitimes.com/News/biz/.../16/2003079806


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Canada Ruling Won't Stop Music Lawsuits
Jim Hu

A ruling in Canada declaring downloading music through peer-to-peer services legal, but uploading illegal, may do little to prevent the music industry from taking its own action against file swappers.

That's because the country's industry group, the Canadian Recording Industry Association (CRIA), is in lockstep with its U.S. counterpart's plan to sue individual file swappers. And last week's ruling by Canadian regulators will not pose a formidable barrier for CRIA to begin its own round of litigation, according to a legal analyst.

"I don't know that last week's decision has a huge impact on (the music industry's) potential litigation strategy," said Michael Geist, technology counsel for the law firm of Osler, Hoskin & Harcourt in Ottawa.

The CRIA, Geist said, can just as easily find music uploaders as downloaders. Peer-to-peer services such as Kazaa allow a user to download songs from other PCs while simultaneously uploading songs off the user's hard drive for public availability.

Speculation that the CRIA will follow the Recording Industry Association of America (RIAA) in suing individual file sharers reached a boiling point on Tuesday. Canada's National Post, a nationally distributed newspaper, published a top story that said the CRIA was planning to take legal action against music uploaders.

The story, citing unidentified sources, added that the CRIA would begin serving lawsuits as early as January. In an interview with the paper, the association's head, Brian Robertson, said the decision to begin suing individuals came after attempts to educate consumers about why file sharing was wrong.

A CRIA spokeswoman declined to comment on the piece. Instead, she pointed to a press release issued on Dec. 4, a day after the RIAA issued 41 lawsuits against individuals in the United States, that offered bold comments about the CRIA's stance on file sharing.

"CRIA has invested in excess of one million dollars to date in an effort to educate young people on the issues of Internet piracy and we will continue to do so," Roberts said in the release. "For the hardcore group, however, it appears that education has and will not make any impression. They are killing the music they profess to love. They should be aware that they may face legal consequences for their actions."

The U.S. lawsuits have so far attracted considerable negative publicity. Targets of the suits have included preteens and the elderly, as well as some users who claim they were wrongfully accused. The threats may have discouraged file swapping, according to some studies showing a dramatic decline in Kazaa usage. But there are other data that show Kazaa usage reaching all-time highs.

And what may have worked in the United States may not be easy to replicate in Canada, given differing subpoena procedures and different hurdles for litigation.

"It's a more difficult, expensive and cumbersome process than in the U.S.," said Geist.
http://news.com.com/2100-1027_3-5126...l?tag=nefd_top


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Regulator Freezes Copying Media Levy
Jim Jamieson

The Copyright Board of Canada offered a few crumbs to both sides of the personal- copying-media-levy argument on Friday.

The Copyright Board refused a request by the Canadian Private Copying Collective -- a group that acts for the music industry -- to significantly hike tariffs on media such as recordable CDs and cassette tapes and ruled that existing levies be frozen through 2004.

However, the board did agree to widen the reach of the levy to include MP3 players with non-removable memory. A $2 tariff will apply to players with up to one gigabyte of memory, $15 for those with up to 10 GB and $25 for those above 10 GB. The CPCC wanted a levy that would have collected $148 for a 40 GB iPod.

The collective was denied its request to have blank DVDs, removable flash-memory cards and removable micro hard drives added to the levy list.

Vancouver electronics retailers had a mixed reaction to the ruling.

"It's a move forward that the board has recognized that these items are not necessarily being used by individuals to copy music," said London Drugs chief executive Wynne Powell.

"Now, as Canadians, we have to get this act repealed in totality."

The current levy charges 21 cents for a CD recordable disk, for example, while the CPCC had requested an increase to 59 cents.
http://www.canada.com/vancouver/thep...8-7291710973F1


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Altnet Determines That BigChampagne Does Not Infringe TrueNames Patented Technology

Claims Against Eight Other Companies Remain Outstanding
Press Release

Altnet, a subsidiary of Brilliant Digital Entertainment (AMEX:BDE), a leading provider of secure digital media via Internet and peer-to-peer technologies, announced today that, on the basis of information provided by BigChampagne, Altnet is satisfied that BigChampagne is not infringing any issued claim of Altnet's patents.

On November 11, 2003, Altnet issued cease and desist notices to nine companies that it believed were using its patented digital file identifying technology without its permission. BigChampagne is the only company to have responded to the cease and desist letter and to have demonstrated to the satisfaction of Altnet that it has not engaged in any activity that constitutes an infringement of Altnet's patented TrueNames file identifying technology. Further, Altnet is satisfied that BigChampagne did not use such technology to assist the Recording Industry Association of America in identifying people sharing files who then were sued for copyright infringement.

"After discussing the issue with BigChampagne and reviewing the facts they presented, Altnet apologizes to BigChampagne for any miscommunication or false impression created by Altnet's press release that BigChampagne was engaged in any wrongful conduct. Clearly, it was not," said Derek Broes, executive vice president of worldwide operations for Altnet and Brilliant Digital.

Broes added, "However, the fact remains that there are still eight firms who have been served notice and who have failed to respond, let alone provide any evidence of non-infringement. We will not permit companies to use Altnet's TrueNames file identifying technology to spoof, track or interdict files on file sharing networks without our permission."

The eight firms still under notice from Altnet are BayTSP, Cyveillance, Media Defender, Media Sentry, NetPD, Inc., Overpeer, Inc., Ranger Online and Vidius.

Altnet's TrueNames technology facilitates the identification of unique files on a massively distributed network by using a unique file hash identifier that enables one to track, retrieve, monitor and charge for the distribution of content. TrueNames is a method of identifying data based on the actual contact of the file, rather than by the file name, origin, location, address or other information that can be easily changed. A unique identifier, or hash, is assigned to the data using an algorithm in a process protected by United States Patent Nos. 5,97,8,791 and 6,415,280.
http://www.primezone.com/pages/news_....mhtml?d=49784


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Hackers Borrow Networking Tactics From Music Pirates

Money is the motive behind new breed of rogue programs.
John Schwartz

The people who design rogue programs that take over computers from afar are now applying the tactic that made music-pirating programs so effective - and the Internet may never be the same.

The rogue programs, known generically as Trojan horses, have enabled pornographers and others to mask their identities by using the computers of unwitting users as relay stations.

It had been assumed that diligent investigators could ultimately shut down a system by identifying the server computer used as the initial launching pad. But now a researcher has determined that a new kind of Trojan horse could make the systems virtually unstoppable.

Joe Stewart, a computer expert at the LURHQ Corp., a security company based in Chicago, said he discovered this new phase in the evolution of Trojan horses while taking apart a program called Backdoor.Sinit, which has been circulating on the Internet since late September.

Sinit, Stewart said, does something unexpected: It uses the commandeered PCs to form a peer-to- peer network like the popular KaZaa file-sharing program. Each machine on the network can share resources and provide information to the others without being controlled by a central server machine.

"It's like KaZaa, only without all the pesky copyrighted files," Stewart said. And, as the music industry has discovered, when there is no central machine, "these tactics make it impossible to shut down," he said.

Computer security researchers have been watching the evolution of remote-access rogue programs as they have become more common and have put more machines under the control of hackers. The rings of infected computers have been used to send spam, to present online advertisements for pornographic Web sites and to trick people into giving up information like credit-card numbers.

At least one-third of all spam circulating on the Internet is now sent from or relayed by personal home computers that have been taken over, said Jesse Dougherty, director of development at Sophos, an antivirus and antispam company.

Security researchers began to notice an enormous rise in the volume of spam in the summer, when versions of the SoBig virus were making their way across the Internet. SoBig, Dougherty said, "was so big and so virulent that people started to wonder, 'What is the purpose of all this?' "

Clues have started to emerge. Each version of SoBig was programmed with a life span, turning itself off after a month. The regular updating of the program hinted at a commercial use, Dougherty said.

Researchers found further evidence that Trojan programs were used in spamming, Dougherty said, when a new malicious program, MiMail, caused infected machines to attack the computers of organizations that fight spam.

The problem for the hackers was that the system could still be defeated at its weakest point. Many of the early rings were programmed to download software updates and instructions from a single site that could be discovered and shut down by law enforcement agents.

Now the Trojan program designers are taking the "next logical step" and moving to the peer-to-peer model, Stewart said. The Sinit program has been discovered on machines that have been hijacked to serve pop-up advertisements and to download "porn-dialers," programs that cause the victim's machine to turn on the modem and place expensive pay-per-minute phone calls.

"Sinit appears to have been created as a money-making endeavor," Stewart said in a research paper describing his discovery. "This Trojan is also further evidence that money, not notoriety, is now the major driving force behind the spread of malware these days."

There is now a market for the services of networks of infected machines. On Web sites frequented by hackers, spammers and people who identify themselves as practitioners of credit-card fraud, the remote-access networks, or "radmins," are offered openly.

On one such site, Carder Planet, a typical pitch from "r00t3d" reads, "I have a steady supply of FAST radmins. I am wanting to offer these to those of you who need good hosting for your scam pages" for periods of a week to "six months or more" for a price of $50 per machine.

The hacker did not respond to online requests for further information.
http://www.rockymountainnews.com/drm...505512,00.html


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AOL Trumpets New Winamp
Jim Hu

America Online on Tuesday released an upgrade for its free Winamp multimedia software, and a fee-based "pro" version that encodes songs into MP3s is expected to follow.

As previously reported, the Winamp 5.0 update highlights a return to simpler times for Nullsoft, the original developer of Winamp, which AOL acquired in 1999 to jump-start its online music strategy. The previous version, Winamp3, was an ambitious attempt by Nullsoft to create its own programming language, called "Wasabi," and to develop applications for the player. However, Winamp3 was dogged by criticism that it was bloated and slow. It was scrapped earlier this year for the slimmer 2.x version.

Brennan Underwood, who led the development of Wasabi, and another prominent Nullsoft developer were laid off last week, according to sources close to Nullsoft. The layoffs were part of widespread cuts in AOL's California offices.

Nullsoft founder Justin Frankel had hinted on Winamp's Web site that version 5.0 could be launched Monday. But the company waited until early Tuesday morning to officially release it.

Winamp 5.0 is an attempt to combine elements of the 2.x and 3.x versions into a sleeker, faster player. Like previous iterations, it is designed to manage online music and video libraries. New features include Winamp-developed software that can rip and burn CDs using Dolby's Advanced Audio Coding format.

AOL also is expected to release a for-pay version of the software, called "Winamp Pro," as early as Wednesday. The software will cost $14.95, according to the Web site, but it was not available for download as of Tuesday morning. The site, however, shows that Winamp Pro will include MP3 encoding and 48x CD burning.

Germany's Fraunhofer Institute, which owns a patent covering MP3 technology, requires licensees to pay a per-copy fee for software that includes MP3-encoding capabilities.

Other Winamp5 features include quick access to Shoutcast radio stations, which let customers listen to other people's song lists or to broadcast their own, and a similar video-streaming service.

"Winamp continues to be a popular player for digital media enthusiasts who want a lot of flexibility and control over their media experience," AOL said in a statement.

Once a dominant online music player, Winamp has faded into the background under AOL, as competitive products from Microsoft, RealNetworks and Apple Computer have gained market share. In May 2003, Winamp reached 5.5 million users, lagging far behind Microsoft Windows Media's 43.1 million, RealNetworks' 26 million and Apple QuickTime's 13.5 million, according to online measurement firm Nielsen/NetRatings.

Windows Media and QuickTime are both bundled into Microsoft and Apple's operating systems, respectively. RealNetworks' software remains widely used by consumers for playback and by the industry as a streaming-media delivery format.

AOL has recently taken bolder steps to incorporate Nullsoft's technology into its flagship proprietary service. The most recent version of AOL uses Nullsoft's audio and video- streaming technology, and its media player is based on Winamp technology.
http://news.com.com/2100-1025-5125657.html


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A Net of Control

Unthinkable: How the Internet could become a tool of corporate and government power, based on updates now in the works.
Steven Levy

Picture, if you will, an information infrastructure that encourages censorship, surveillance and suppression of the creative impulse. Where anonymity is outlawed and every penny spent is accounted for. Where the powers that be can smother subversive (or economically competitive) ideas in the cradle, and no one can publish even a laundry list without the imprimatur of Big Brother. Some prognosticators are saying that such a construct is nearly inevitable. And this infrastructure is none other than the former paradise of rebels and free-speechers: the Internet.

To those exposed to the Panglossian euphoria of Net enthusiasts during the 1990s, this vision seems unbelievable. After all, wasn’t the Internet supposed to be the defining example of empowering technology? Freedom was allegedly built into the very bones of the Internet, designed to withstand nuclear blasts and dictatorial attempts at control. While this cyberslack has its downside—porn, credit-card fraud and insincere bids on eBay—it was considered a small price to pay for free speech and friction-free business models. The freedom genie was out, and no one could put it back into the bottle.

Certainly John Walker believed all that. The hackerish founder of the software firm Autodesk, now retired to Switzerland to work on personal projects of his choosing, enjoyed “unbounded optimism” that the Net would not only offset the powers of industry and government but actually restore some previously threatened personal liberties. But in —the past couple of years, he noticed a disturbing trend. Developments in technology, law and commerce seemed to be directed toward actually changing the open nature of the Net. And Internet Revisited would create opportunities for business and government to control and monitor cyberspace.

In September Walker posted his fears in a 28,000-word Web document called the Digital Imprimatur. The name refers to his belief that it’s possible that nothing would be allowed to even appear on the Internet without having a proper technical authorization.

How could the freedom genie be shoved back into the bottle? Basically, it’s part of a huge effort to transform the Net from an arena where anyone can anonymously participate to a sign-in affair where tamperproof “digital certificates” identify who you are. The advantages of such a system are clear: it would eliminate identity theft and enable small, secure electronic “microtransactions,” long a dream of Internet commerce pioneers. (Another bonus: arrivederci, unwelcome spam.) A concurrent step would be the adoption of “trusted computing,” a system by which not only people but computer programs would be stamped with identifying marks. Those would link with certificates that determine whether programs are uncorrupted and cleared to run on your computer.

The best-known implementation of this scheme is the work in progress at Microsoft known as Next Generation Secure Computing Base (formerly called Palladium). It will be part of Longhorn, the next big Windows version, out in 2006. Intel and AMD are onboard to create special secure chips that would make all computers sold after that point secure. No more viruses! And the addition of “digital rights management” to movies, music and even documents created by individuals (such protections are already built into the recently released version of Microsoft Office) would use the secure system to make sure that no one can access or, potentially, even post anything without permission.

The giants of Internet commerce are eager to see this happen. “The social, economic and legal priorities are going to force the Internet toward security,” says Stratton Sclavos, CEO of VeriSign, a company built to provide digital certificates (it also owns Network Solutions, the exclusive handler of the “dot-com” part of the Internet domain-name system). “It’s not going to be all right not to know who’s on the other end of the wire.” Governments will be able to tax e-commerce —and dictators can keep track of who’s saying what.
http://msnbc.msn.com/Default.aspx?id=3606168&p1=0


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Xbox Live Could Provide New Year Bill Shock
Paul Brislen,

Auckland - Anyone receiving Xbox Live for Christmas could have an unhappy new year if the Australian experience is anything to go by.

Xbox Live, launched in time for the pre-Christmas shopping rush, allows users of Microsoft's Xbox gaming console to play against other users online.

However the Australian experience is that broadband traffic charges will limit demand for the service.

Xbox Live requires at least a 256Kbit/s service - Telecom's new JetStream Home service is aimed at just such a user, however Telecom's billing regime charges users for both upload and download traffic.

In Australia gamers have discovered this can be a costly business. According to posters to Telstra's BigPond gamer forum, traffic downloaded during games range from 7MB per hour for the simplest games, such as MotoGP, while the more popular first person shooters (FPS) like Return to Castle Wolfenstein (RTCW) have been clocked at up to 21MB per hour.

One Sydney user, who has been playing for up to six months, says uploading to multiple users can churn through traffic at a great rate of knots.

"When I host 16 player RTCW on my Telstra uncapped cable I consume about 90MB download and 210MB upload per hour (thats 300MB/hour in total)."

On Telecom's basic JetStream Home package, with a traffic cap of 500MB, the user would end up paying excess charges before the second hour was over. From there on, Telecom charges 20 cents per megabyte even for domestic traffic.

However, that's only the download side of the game - uploading uses traffic as well. Xbox Live in New Zealand is run as a peer-to-peer (P2P) network. That means one player will host a game, and others will log on to play. The host player will be uploading traffic to the other players during the course of the game.

If a game has 10 players that means the upload traffic is increased tenfold, for example. A game with 10 players, each using 10MB an hour of uploaded traffic will cost the host player 100MB an hour, plus their own traffic usage. This would reduce their playing time from 23 hours a month to less than five hours a month.

Xbox Live also includes a headset so players can talk to each other during the game. This voice service will also use traffic, although players are less sure how much this will cost.

Telstra has recently dropped its traffic caps in Australia, relying instead on a soft cap at 10GB of traffic a month, followed by a reduction in the speed of the user's connection. In response, Optus, the number two telco in Australia, has introduced new caps for its cable service ahead of a complete revamp of the service next year. The new plans include an increase in traffic levels from 550MB per month to 3GB per month.

PC gamers can play without incurring traffic charges at all. Telecom introduced its JetStream Games realm several years ago and players who log on to servers within the realm aren't charged for traffic. No such facility is available for Xbox players.

Microsoft did not return Computerworld Online calls.
http://www.computerworld.co.nz/news....C?OpenDocument


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Social Networks
Jon Gertner

Just a few years ago, the network was what people tapped into at parties or business conventions or what they called upon if the market turned sour or they were in desperate need of a job. In the time since, a coterie of ''network thinkers'' have begun to extend the language of the network -- ''nodes'' and ''hubs'' and ''links'' -- to phenomena ranging from the workings of the world economy to the possible spread of a dangerous pathogen. Several network theorists, most notably Albert-Laszlo Barabasi of Notre Dame and Duncan Watts of Columbia, have recently discovered that varieties of systems display a common architecture that governs their dynamics and structure. The way a cluster of neurons fires, for instance, has marked similarities to the way a disease like SARS travels the globe or the way a contagious idea disperses. Apparently, lots of complex networks look like lots of other complex networks (the Internet and the North American power grid, for example). And apparently the idea that everything is connected to everything else no longer seems so far-fetched.

Many software and Web applications now allow us to explore our nearly infinite social connectivity. The most hyped and widely known is Friendster.com, which went online in March and allows users to meet people up to four social degrees away. There is also Tribe.net, which started in late July and focuses less on dating and more on utilizing social networks for professional relationships, as well as Tickle (another dating service) and LinkedIn (another professional contacts service).

All are in hot pursuit of market share -- a good indication that treating the human community as a network may be profitable as well as innovative. Tribe's backers include The Washington Post Company and Knight-Ridder, and Friendster has a number of Silicon Valley's top venture-capital firms betting on it. Users see dollar signs, too. A new social network software application called Spoke, for example, allows businesses to mine their computer databases so that a company's sales force might tap into co-workers' relationships for contacts, thus saving them from the inefficiency of cold calling. Meanwhile, several Democratic contenders, notably Howard Dean and Wesley Clark, have used in-person networking sites like Meetup.com to amass contributions and arrange rallies. At last count, the Dean bloc on Meetup had grown from a small but enthusiastic faction to more than 150,000.

Some of the fledgling social-network companies may indeed mature into powerful business hubs like eBay or Amazon. Yet the more intriguing prospect, from a sociological standpoint, anyway, is whether these applications will actually transform our lives. Ever since the publication of ''Bowling Alone,'' we've been flooded with even more data about the end of community and lamentations for its return. At least in theory, a readily accessible social network would enable more of us to bond with people we regard as far less anonymous than strangers. The larger possibility, that plugging into our social networks might somehow remedy a profound national loneliness, is even more enticing.

What seems just as likely, however, is that social-network applications will further fracture life into disparate spheres -- the online and the offline. Jonathan Abrams (the C.E.O. of Friendster) and Mark Pincus (the C.E.O. of Tribe Networks) see their creations ultimately as a means to enrich offline experiences. But this fact is incontrovertible: technology has outpaced our physical ability to manage the social network. Duncan Watts, author of this year's book ''Six Degrees,'' has wondered whether our primitive ancestry gives us a hard-wired tendency to attend to only our immediate associates, like family and friends. Our online persona may be rich with friends and contacts; it may make us feel popular and deeply valued as we trade tips about the best Australian Shiraz or converse about the best way to get to Burning Man. But our offline persona still gets stuck in traffic on the way to the liquor store. Our online persona may manage a Web-based cocktail party of three degrees -- a party that would include our friends, the friends of our friends and the friends of our friends' friends. But our offline persona, juggling the demands of family and work, can barely return the telephone calls from the first degree.
http://www.nytimes.com/2003/12/14/ma.../14SOCIAL.html


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Cyberoptic Group Releases Digital Rights Director Copywright Protection for Digital Content Owners
Press Release

Florida Internet technologies company to provide copyright protection services for musicians, videographers, and other content owners that prevents unauthorized access and distribution of streaming or downloadable audio and video files.

Boca Raton, FL (PRWEB) December 16, 2003 -- CyberOptic Group, LLC, a Florida-based Internet technologies company, announced today the availability of Digital Rights Director, a new service for musicians, videographers, and other content owners that gives protection against unauthorized access and distribution of streaming or downloadable audio and video files.

Digital Rights Director allows any number of restrictions to be imposed on media files, such as limiting to an expiration date, number of plays, and even the ability to transfer to a portable device.

Digital Rights Director allows streaming and downloadable media to be sold using a Pay-to-Play business model that prevents anyone from accessing the file without first having to remit payment, regardless of how they receive the file. Streaming media/ web casts, web site downloads, CD/DVD distribution, e-mail, or peer to peer file sharing are all controlled, including the number of times the file can be accessed

In addition to asset security for streaming media, Digital Rights Director allows content owners to effectively promote their content while collecting valuable customer information such as names, email addresses, and/or any other desired information.

Jonathan Castleman, CyberOptic Group’s President, states, “Although the Internet is widely used by consumers to access audio and video content, content owners have been reluctant to release their premium content over the web and have resorted to shipping tapes, CD’s and DVD’s. Digital Rights Director allows content owners to take advantage of the enormous distribution benefits offered by the Internet while eliminating the concerns of unauthorized access and distribution of their intellectual property.

Digital Rights Director has numerous business applications including digital media preview-and-purchase, pay-per-view audio or video, corporate presentations requiring protection of sensitive material, distance learning, online promotions, CD/DVD distribution, and subscription audio/video sales models.
http://www.emediawire.com/releases/2003/12/emw94534.htm


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Hold onto that copy of EZ-CD Creator…

CD-Burning Suit Threatens Industry
Macworld staff

A legal challenge has begun that threatens all manufacturers of CD authoring software, including Roxio and Apple.

Optima Technology yesterday sued Roxio, claiming that Napster 2.0's parent company has infringed its patent for burning CDs. Optima wants the courts to issue an injunction against Roxio as well as unspecified damages, royalties and attorneys fees.

Optima also warns that many other companies are infringing its patent.

The story stretches back to 1995, when Optima developed software for burning images, music, video and data to CD. The technology was patented in 1997; that patent is known as a recordable CDROM accessing system, Reuters reports.

The company claims the industry standards from the Optical Storage Technology Association are also covered by its patent. It says any company using those standards is infringing its patent.
http://www.macworld.co.uk/news/top_n...fm?NewsID=7507


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BitTorrent and RSS Create Disruptive Revolution
Steve Gillmor

Disruptive technologies are born for all sorts of reasons—good ideas, market pressure, economic opportunity, and sometimes just plain luck. Many of today's disruptive leaders only emerged when combined with other seemingly unrelated inventions. Wi-Fi and broadband (DSL and cable but not satellite) have prospered in a mutually symbiotic fashion. So too have weblogs and RSS.

For newbies, RSS feeds are XML text files generated by blogs, websites and other web servers that desktop clients—called RSS Readers or Weblog Readers—download on a set schedule, usually once an hour.

As RSS gains momentum, it begins to strain the boundaries of its current infrastructure. Feeds are increasingly containing full text, graphics, and even multimedia files. Strict constructionists are bemoaning the trend, suggesting that syndication is all about signaling rather than transporting. Those of us who've moved to RSS as the gateway to as much information as we can filter reject that notion.

It reminds me of the dawn of the Web, when Internet academics and geeks bemoaned the influx of the point-and-click crowd. Or the Notes administrator priesthood who kept the keys to creating new applications from us lowly users. Weblogs are just the most recent instantiation of that revolution, where users gained control of their pages, data, and voices.

Now we have the same argument from the entrenched Web crowd. RSS should just provide the abstract, the notification, the announcement of new content. But the ultimate target is the Web page, where eyeballs equal dollars. It's the old guard protecting last year's business model – like the RIAA desperately poking a finger in the p2p dike or the MPAA outlawing the distribution of DVDs for Academy Award consideration.

Who's the Jack Valenti of this production? I hope it's not Dave Winer, RSS founding father and author of one of the most popular RSS feeds, Scripting News. Notice I say RSS feed, not weblog. Since the day I first adopted an RSS reader (Radio Userland on the PC, NetNewsWire on the Mac), I have consumed Dave's site through RSS.

Dave has always included the full text and graphics in his feed, but recently he's limited the entries to the current day. I'm not sure why that is, but perhaps it's because it limits the size and bandwidth usage of the RSS file he serves to his subscribers.

Note that my copy of NetNewsWire is set to download at the most rapid interval possible—30 minutes. That's still not fast enough for me, relying as I do on RSS for timely notification of important posts. But bandwidth costs on popular sites like Dave's make this kind of polling economically prohibitive. Or do they?

Here's how Dave put it one morning last week: "Now, should an aggregator be polling every 30 minutes? The convention early on was no more than once an hour. But newer aggregators either never heard of the convention or chose to ignore it. Some aggregators let the users scan whenever they want. Please don't do that. Once an hour is enough. Otherwise bandwidth bills won't scale."

To be fair, Dave goes on to say there are good ways to optimize polling, but that progress in the RSS community is hard to come by. He's probably right – but I'm not dissuaded by that daunting prospect. RSS has forever altered the way I acquire information, and its disruptive quality can surely bond with another such technology to conquer this bottleneck.

Next page: Revolutionary peer-to-peer program to the rescue!

One such candidate is peer-to-peer, as resurrected in the form of Bram Cohen's BitTorrent. It's an elegant protocol for distributing files, one that takes advantage of "the unused upload capacity of your customers." BitTorrent breaks up files into shards that are uploaded around the network as the file is downloaded by multiple clients. The more popular a file, the more endpoints exist. You download a file with BitTorrent by simultaneously collecting shards, assembling them together locally as they arrive.

Map this to RSS feeds: the more popular the feed, the more nodes on the network serving pieces of the feed. That would allow rapid downloads by many users by distributing the data across multiple sites. It's a digital Robin Hood, redistributing the wealth from the server to a network of peers. BitTorrent does cryptographic hashing of all data, so feed owners can be confident the file reaches its target unchanged.

But there's even more to this disruptive alliance: a small amount of special code known as a tracker sits inside the host Web site and emits information to help other downloaders find each other. As Bram Cohen describes: "[Trackers] speak a very simple protocol layered on top of HTTP in which a downloader sends information about what file it's downloading, what port it's listening on, and similar information, and the tracker responds with a list of contact information for peers which are downloading the same file."

So you've got a list of peers connected via known ports, a trusted group of RSS feed subscribers, who can marshall their resources for additional economic benefit. That could take the form of an affinity group marketing their attention to an advertiser or political cause, a secure pool of computing resources for distributing confidential information, and a pathway for signaling information about new content on that particular subnetwork.

Even if none of this were to be leveraged, the combined polling of the group, if staggered by one minute intervals, would monitor a feed even though each client only polled once per hour. But once you were on the BitTorrent feed, you could shut off the polling after the first connection.

Next page: Two great disruptive technologies that taste great together.

There are server solutions to the polling problem, including Dave Winer's sub-element documented on the RSS 2.0 site maintained by Harvard's Berkman Center. Or you could use a service like Dave Sifry's Technorati to inform you of updates as they occur. An email or instant message alert might be too disruptive for some, but building the service into the reader (or information router as I prefer to call it) could prove popular.

Sifry suggests how this might work:

"In order to facilitate an event-based mechanism to eliminate inefficient polling of RSS feeds, the subscriber's information router can request a notification via XMPP (or other notification protocol) whenever the feed is updated. Technorati is notified of the feed update via XML-RPC ping call as the normal result of the CMS' update procedure, and then proceeds to notify all of the information routers that the new content is available, along with the BitTorrent URL - then the information routers collectively download and distribute the new content via BitTorrent. The original feed is only downloaded when it is seeding the BitTorrent peers, and the subscribers get to take advantage of the highly available fresh content."

There we have it: two disruptive technologies coming together to produce an outcome that's win- win for each other. For BitTorrent's peer-to-peer part, the fact that its author controls RSS content takes that bit of digital McCarthyism off the table. And as for RSS, this solution requires no changes to the specification whatsoever. It's up to content providers to support it on the server (no problem, since it cuts costs) and aggregator/reader/routers to support it on the client (those who don't see the benefits ain't paying attention).

As for me, I'm off to listen to some Chris Lydon RSS audio, downloaded via Dave Winer's Enclosure extension and copied to my Microsoft DRM-free iPod. Hi ho hi ho disruptively we go…
http://www.eweek.com/print_article/0...=114581,00.asp


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Will it all go to lawyers?

Roxio Ups Sales Forecast

Roxio has provided an update on its business outlook for the quarter ending December 31, 2003.
Macworld staff

Roxio announced that its digital media software business is "performing ahead of the company's expectations" stating that this is "due to the strong performance of category leading products, Easy CD & DVD Creator 6 for Windows, and Toast for the Mac platform".

The company has raised its current quarter outlook for software sales, increasing guidance to $14.5 million from $14 million. And, according to Roxio's Chairman and CEO Chris Gorog, the release of Creator 7 in the quarter of 2004 will cause "a very substantial increase in software revenues".

Roxio states that the $35 billion dollar music industry is "just beginning its transformation from physical to online distribution". The company also says that Napster has "quickly established itself as one of the top two players in this sector".

Gorag predicts that: "Given this current uptake rate by consumers, we now expect revenue for our online music business to be approximately $3.5 million for the December quarter. This represents a quarterly run-rate of approximately $5 million, given that Napster 2.0 launched at the end of October."

Gorog confirms that Napster-related marketing spend is expected to "decrease substantially going forward as we move away from our launch quarter and into steady-state marketing activities".

He also confirms that Napster schemes such as prepaid retail cards and the Napster BurnPak "should positively impact Napster's financial results starting in early 2004."

Roxio shares rose 14 per cent on the Nasdaq following the announcement.
http://www.macworld.co.uk/news/main_...fm?NewsID=7500


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Philips Will Launch Open Digital Media System Soon
Reuters

Philips Electronics (PHG.AS)said on Tuesday it was six months away from launching a system against illegal copying that will allow consumers to play digital video and music on any digital media player.

Philips hopes the so-called digital rights managementsystem being developed by Intertrust, which it jointly owns with Japan's Sony Corp. (6758.T), will replace a confusing array of proprietary systems.

Digital music stores which have opened on the Internet this year use different DRM methods to protect songs against unlimited copying. But consumers can then only play the music on computers, CD and MP3 players which support the same DRM system.

``Consumers want an open system, and the electronics industry wants it too,'' Ruud Peters, chief executive of Philips's intellectual property and standards unit, told Reuters.

U.S. software maker Microsoft (MSFT.O), for instance, has opened music stores on the Internet that sell music encoded in such a way that they can only be played back with a Windows Media Player.

This player can be installed on any personal computer, and Microsoft has already struck deals with consumer electronics makers to build it into hundreds of devices.

``The electronics industry recognizes that Microsoft is a formidable player, but consumer electronics makers do not want to become dependent on Microsoft. They need an interoperable and independent system,'' Peters said in an interview.

``DRM is an accelerator which will boost digital sales of media, because it will convince media companies their content is protected. It should not be a competitive weapon,'' he added.

``We hope to have an interoperable system between now and six months,'' Peters said. When launched, the new DRM system will be endorsed by a large number of electronics companies and media companies such as film distributors and music publishers, he said.


``When we launch we want to give guarantees that it will be sufficiently supported,'' Peters.

Philips is Europe's largest maker of consumer electronics and the world's No. 3, while Sony is the biggest. Intertrust is the biggest holder of DRM patents, and all digital music players need Intertrust's technology to develop their own DRM system.

Philips and Sony bought Intertrust early this year to make sure key DRM patents would be available to everyone in the electronics industry, and also because they saw that DRM technology would become a crucial part of digital media. They have said they would make them available on reasonable terms.
http://www.nytimes.com/reuters/techn...ips-media.html


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Phone Service Over Internet Revives Talk of Regulation
Matt Richtel

Politicians have worked hard to keep access to Internet connections and many forms of Internet communication free from regulation and taxation. But the debate over how government treats the Internet is likely to reach a new level of intensity now that Internet technology is colliding with one of the nation's most lucrative businesses, telephone service.

Last week AT&T and Time Warner Cable announced that they intended to make Internet-based phone service available to millions of consumers next year, allowing those consumers to bypass traditional phone companies. Those moves signaled the start of a technological shift that could change one of the biggest and most important industries in the American economy. Central to that shift is whether and how Internet phone service should be regulated, a question that the Federal Communications Commission started to explore in hearings two weeks ago.

In an interview on Thursday, Michael K. Powell, the chairman of the F.C.C., said he had not made up his mind on that question. But he was not at all shy about stating his preliminary view - that Internet-based calls are fundamentally different from traditional phone calls and ought to be regulated cautiously, if at all.

"There is no functional or technical difference between an Internet phone call and other data - be it bits, or e-mail or Web pages," Mr. Powell said, during a visit to San Francisco. Up to now, Internet traffic has been essentially unregulated and untaxed because many politicians and regulators have argued that the technology and online commerce would grow more quickly if the Internet were left alone.

Mr. Powell noted that while Internet-based calls might serve the same function as calls over conventional phone lines, the underlying technology was different enough that it would not make sense to subject them to "100 years of judgments" and regulations. "Let's get this thing right and define it as truer to its real nature," he said, referring to the new technology.

His views are far from universally supported, given the many complex political and financial interests at stake.

What is clear is that the existing telephone infrastructure is heavily regulated, on both the state and federal levels, with intricate rules intended to keep phone access universally accessible and affordable.

Gene Kimmelman, the senior director for public policy at Consumers Union, said those regulations existed to satisfy important public policy concerns. He contended that goals like universal access would be gravely threatened if the world went to Internet-based services that were unregulated.

Mr. Kimmelman said that Mr. Powell's views, which seem to argue for far less regulation, would undo "social policy that has made phone service affordable and accessible." He added that one possible result was that basic connections which, under the regulatory structure were essentially subsidized by consumers and the industry, could cost significantly more than they did now.

Besides, he argued, function, rather than technology, should guide the regulatory decision. "It looks, smells, feels like plain old telephone service," he said of Internet service, and therefore it should be treated similarly.

This debate - the latest front in a 20-year-old regulatory battle that started with the breakup of the Bell system - will define the grounds on which various players in telecommunications compete. The question of how to regulate Internet-based calling will be "the communications regulatory issue over the next few years," said Eric Rabe, a spokesman for Verizon, with audible emphasis on the word "the."

For starters, regulators will have to address some central technical questions. Telephone calls are traditionally carried to and from homes on copper lines, with routing of the traffic using circuit switch technology. Internet phone service digitizes voice signals and sends them as Internet data.

Mr. Kimmelman argues that even with Internet-based service, the voice signals are still sent over existing communications networks, whether copper wires, coaxial cable or fiber optic lines. And he maintains that there is nothing sacrosanct about the mere fact that the signals are sent as Internet traffic.

"It's just a different way of assembling ones and zeroes so they can be more efficiently transmitted," Mr. Kimmelman said, noting that Internet calls would still have to travel through traditional phone wires through part of their journey.

Mr. Powell, however, maintains that what is important is not the wires but the technology involved. And, he pointed out, consumers who want to use Internet phones would still have to pay phone and cable companies to get Internet access through those networks, and in doing so, would still be supporting the basic telecommunications infrastructure.

"You pay Verizon $39.95" for high-speed access to the Internet, Mr. Powell said. He argued that once consumers have paid for that access, the providers should not necessarily be paid more for the use of that access to send particular communications, whether in the form of e-mail messages or phone calls.

Telephone and cable companies are staking out different positions, and other members of the F.C.C. may not share Mr. Powell's views.

The phone companies naturally are not eager to compete against Internet-based competitors who can avoid the huge costs of regulation. But some, like Verizon, also say that the solution is not to regulate Internet calling, but to deregulate the phone industry.

SBC, another major telephone provider, said it thinks it could compete against unregulated Internet-based services. The reason, said Dorothy Attwood, senior vice president for federal regulatory strategy at SBC, is that phone companies have a head start on features important to consumers like 911 service and the ability to make calls even when the power fails.

The cable companies have their own perspective on regulation. Atlanta-based Cox Communications, for instance, contends that regulation should be based, not on the technology used, but on the market share of a company, with larger companies subject to more regulations.

Cox, which already offers phone service based on circuit switch technology to nearly one million customers, will start Internet-based phone service in Roanoke, Va., today. But it does not expect the regulatory questions to be answered soon.

"It will be four to five years,'' said Carrington Phillip, vice president for regulatory affairs at Cox Communications, "before we have a good sense of how regulation is going to evolve."
http://www.nytimes.com/2003/12/15/te...y/15phone.html


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Argentina Won't Copy RIAA Tactic
Flavio Bustos

BUENOS AIRES -- As in the United States, online music piracy is on the rise in Argentina. But in contrast to the efforts of the Recording Industry Association of America, the trade group representing major labels here has not employed a flurry of lawsuits to deter the spread of illegal file trading.

"We are not here to go after users who exchange music (files), but rather to stay alert and report infringements to whom it may concern," said Gabriel Salcedo, CEO of the Cámara Argentina de Productores de Fonogramas y Videogramas, or CAPIF. The trade group, which translates as the Argentine Chamber of Phonogram and Videogram Producers, represents the interests of major labels including Warner Bros. and Sony in Argentina.

Today, the major problems facing the recording industry in Argentina are counterfeit CDs and the growth of music downloads through peer-to-peer file-sharing services, Salcedo said.

"In Argentina, 153 million musical files -- about 10 million CDs -- are being shared annually, according to data provided by the main ISPs and other sources," Salcedo said, adding that around 322,000 users are exchanging an average of 10 songs online every week.

But unlike the legal action taken in the United States by the RIAA, in Argentina, education and prevention are the preferred methods of persuasion.

"If we find that employees are swapping songs through the Internet using their employers' computers and time, we'll contact the company to tell them what is happening, so that they take the corresponding preventive and corrective steps," said Salcedo.

A companion to the growth of online music file sharing is counterfeit CDs, which account for 53 percent of all CDs sold in Argentina.

While a large number, it's not as bad as in other Latin American countries where, according to the International Federation of the Phonographic Industries, an RIAA-affiliated Swiss association, the number of pirated CDs increased to 300 million in 2002 from 260 million in 2001. Paraguay (where 99 percent of CDs sold are counterfeit) leads the region, followed by Venezuela (75 percent), Mexico (68 percent), Colombia (65 percent) and Brazil (53 percent).

In Argentina, CAPIF tries to whittle away at counterfeit CD sales through dialogue. When a case of infringement is detected, CAPIF officials inform the offending site's ISP. The ISP then takes down the website.

"In general, we speak fluently with ISPs, and they understand that if they do nothing to cope with this problem, our next step will be to take legal action. But again, we have an open relationship with Internet service providers," said Salcedo.

Between July and October, 309 sites were taken down. Twenty-nine offered direct music downloads, while the remaining 280 promoted home delivery of counterfeit CDs. In the same period, CAPIF disabled 395 e-mail addresses.

In Argentina, where justice sometimes seems absent, the fact that some individuals have been tried and sentenced for this crime is surprising. Seven people -- including five former policemen -- have been in prison for a year and a half on charges of being members of a gang producing counterfeit CDs. In addition, more than 400 others face trial for music piracy.

Amid this tangle of accused and accusers, winners and losers, are the musicians and artists. Litto Nebbia, a popular Argentine rocker, said he uses the Internet to pay for and download legal music files.

"Sound quality is high, and I know that a portion of the money paid goes to copyright fees," said Nebbia. "This reminds me of the discussion on drugs, whether they (should be) legalized or not.

"I don't know how an agreement could be reached (on file swapping). The major labels are the ones that stand to lose more. I think the solution is to adjust to reality, that is, big companies should lower disc prices, because in the middle of this, we artists are the ones who are losing."

Flopa, a young artist who is very familiar with music swapping, said she believes that "P2P services do not damage artists more than big labels do." In any case, she said, "Labels should lobby telephone companies, as the money people are not spending on music is being spent on Internet service providers."
http://www.wired.com/news/digiwood/0,1412,61531,00.html



New York Times Illustration by Frank O’Connell


NYT Q & A

Transpose Your Music From Vinyl Onto CD's
J.D. Biersdorfer

Q. I have a collection of vinyl records, and I have the cables needed to import the recordings onto my computer so that I can burn them onto CD's. Is there a way to eliminate hissing and popping?

A. A good audio restoration program can filter noise and remove many of the crackles, pops and hissing sounds from old albums. There are some options for less than $100 for both the Windows and Macintosh systems.

Pinnacle Clean for Windows is designed to enhance and improve sound quality from a variety of audio sources, including vinyl records, cassettes, MP3 files and other CD's. The software can be automated and comes with its own CD-burning program. It works with Windows 98 SE and later and comes in two versions: Pinnacle Clean Plus for $100, which includes a U.S.B.-based preamplifier and audio cables, and Pinnacle Clean, a $50 version without the pre-amplifier. More information is at www.pinnaclesys.com/audio.

Magix Audio Cleaning Lab, designed for home users with Windows 98 or later, comes with many features to enhance the sound quality of your imported records or tape. The program is available on a CD for $40 or as a download for $30 from site.magix.net.

Macintosh users can clean up their audio files with programs like SoundSoap from BIAS. The software, which works with Mac OS X and Windows XP, costs $100 at www.bias-inc.com/products/soundsoap.

Mac users can consider Roxio's Toast Titanium software, which includes a CD Spin Doctor program to remove extraneous noise from audio files. Toast Titanium 5 ($90) works with Mac OS 9 and OS X and Toast Titanium 6 ($80 after a rebate) is for Mac OS X only; both are at www.roxio.com. Electronic versions to download are also available at the site.

Q. I want to buy a DVD recorder, but I am confused about formats. What is the difference between DVD+RW and DVD-RW formats?

A. Although both are designed to store more than 4 gigabytes of data and video, the two DVD disc formats differ in technology and manufacturer allegiance. The DVD- RW disc is officially supported by the DVD Forum (www.dvdforum.org), an industry group founded in 1997.

DVD-RW discs generally have greater compatibility with existing DVD players, but many newer DVD players can handle most formats. Supporters of the DVD+RW disc in the DVD+RW Alliance group (www.dvdrw.com) claim that their format is better for recording home movies because of the way the video is encoded onto the disc. You should also check the manuals of the devices you want to play the discs in to see which formats they can handle.

If you do not know which format to choose, consider a recorder that can record and play both DVD+RW and DVD-RW discs, and then buy your blank DVD's based on the type of compatibility you need for data backup or making home movies. Several companies, including Sony, Pioneer and Memorex, make dual-format recorders, and Iomega makes one that plays all DVD formats.

Q. Is it true that the iPod's battery cannot be replaced?

A. At first, Apple Computer did not have a specific repair program for iPods with ailing power cells that had passed out of the company's one-year warranty period. But the company now has a mail-in battery replacement service for $99. Details are at http://www.info.apple.com/support/ap..._service.html.

The company also sells a version of its AppleCare Protection Plan service package especially for the iPod ($59), which extends the warranty and support to two years. More information is at http://www.apple.com/support/product...careipod.html.

If you are a do-it-yourselfer with an out-of-warranty iPod, you can buy a replacement battery. Opening the iPod's case can be challenging, but most batteries include instructions. Batteries are available at Laptops for Less ($49; www.ipodbattery.com) and PDASmart ($59; www.pdasmart.com/ipodpartscenter.htm).