Peer-To-Peer News - The Week In Review - October 25th, '03

[JackSpratts]

Quotes of the week: "We are told that copyright owners are entitled to this unprecedented subpoena power so they can effectively exploit their copyright monopolies, we are not told why that right -- or that monopoly -- is more valuable than the privacy and due process rights those subpoenas invade.

"That right is insufficient to justify, without prior judicial review, an invasion of our fundamental personal liberties." - Daniel Ballard

"You can't stop the kids sharing files." - James Chen


Hell It’s Me

Singer songwriter Todd Rundgren launched a blistering attack against the business of music. Like Janis Ian, he rightly concludes the RIAA’s strong-arming of ordinary citizens has little if anything to do with protecting artists and their livelihoods and everything to do with protecting their own narrow corporate interests. That the RIAA also claims to be protecting songwriters from downloading - because songwriters can’t make up any alleged losses by performing - makes his arguments well worth listening to. Like John Perry Barlow, the lyricist for the Grateful Dead and a major proponent of file-sharing, Rundgren makes his living writing songs for others as well as performing and producing and has given the matter real consideration. That he comes down squarely against the RIAA speaks volumes about their lack of credibility on the issue of protecting artists. If musicians make most of their money performing live (and they do) it may be that in the future they’ll directly compensate the writers who provide their songs, much like they pay the rest of their touring organization, and it’s more than likely this will be an improvement over the present system for the songwriters.

If you’d like to a see what the Establishment considers a “reasonable and balanced” look at Peer-to-Peer and the legal and moral reasons why file sharing should be stopped, look no further than this month’s Fortune magazine.

In a particularly one sided article entitled “From Betamax to Kazaa: The Real War Over Piracy” author Roger Parloff makes the money case for investors while overlooking the other issues, especially the important cultural ones. Naturally enough he thinks file sharing is fundamentally different from other copying technologies like the VCR – so different in fact that the Supreme Court’s ruling that copying is legal does not apply and he thinks therefore P2Ps can be banned.

That his conclusion seems preordained comes as no surprise. We are talking about Fortune magazine after all, the bible of capitalists and product of media giant TimeWarner, owner of some of the largest record companies and film studios – and music, film and TV libraries - in the world. It's an old argument with many hidden holes and it’s aggravating just stumbling over them. All in all a frustrating read.

“Why did the studios ever think they might be entitled to compensation for consumers' personal use of their works within the home? Try looking at it this way. What entices people into stores to buy VCRs is, in part, the prospect of taping copyrighted shows. If so, why should equipment manufacturers hoard all the profits, rather than sharing them with the copyright holders?”

Well…In the case of Peer-to-Peer the “VCR” is free and profit is zero. Even the networks P2P users are now migrating to are ad-free, have no real income streams or any hope of seeing them and are run by volunteers. But the question ignores a more fundamental point. In America we don’t tax industries (people actually) because other industries play parts in purchase decisions. When I buy Michelin tires the company doesn’t send a check to Oldsmobile because that’s where the tires wind up. I pick up furniture that works well in my 100 year old house but that doesn’t mean the carpenter's descendents get a piece of the profits - the carpenter got paid when he built it. We all do work that benefits someone but to tax all of us for that reason alone is counter productive and demonstrably unworkable - while to tax us simply for the benefit of a few is downright unfair. He’s right that things have changed since the Betamax case but there's some snow in the video obscuring his picture. P2P changes things so thoroughly that in time the funds media companies may stand to lose - or gain - may come to be seen as one of the least important aspects of file sharing.












Enjoy,

Jack.











It's Time To Let The Monolith Of Commoditized Music Collapse Like The Berlin Wall
Todd Rundgren

Music is a sacrament. This has been true for thousands of years of human history, save the last 100 or so. I'm sure it was not Edison's purpose to debase such an important aspect of our collective liturgy, but what would one expect when something that was once ephemeral and could only be experienced at the behest of other humans is reduced to a commodity on a shelf.

The mechanisms of music, how and why it affects us the way it does, are still mystical even to a cynical older record producer like myself. Anyone who denies the depth and power of this medium has simply forgotten, in the face of the relentless Philistine argument, that all things can be commoditized regardless of their sacred origins -- that all music is worth exactly what the RIAA says it is.

Most musicians who have enjoyed any success under this model are in an ethical bind: On one hand, you may believe that your survival depends on effective marketing of a commodity; on the other, you realize that your truest expressions are being trivialized to fit properly into a prealloted space. How many times have I heard the argument, "Love the record, but we don't hear a third single -- back to the studio"?

I must remind my fellow players that for the vast majority of history we have only been appreciated for the quality of human expression we could produce at the moment. Great performances were only memories in the minds of those who witnessed, each unique except perhaps for the calliope at the local merry-go-round which was, of course, a machine.

The plain reality is that, except for a few notable aberrations, musicians will always be more appreciated, certainly in a financial sense, by live audiences than by labels and the listeners they purport to represent. The seemingly quaint idea that recordings were promotion for great performers is no less true today. Ask Phish.

Ask also whether, as a musician, you ever believed the RIAA was actively protecting your interests until they got into a fight with their own customers and started using your name, your so-called well-being, as justification. And when the customers became skeptical they became the enemy. And to follow the RIAA's logic, customers are therefore the enemies of musicians. Let us ignore the fact that if you ever got compensated for your contribution, it would have been because your manager and lawyer (and many before) forced the labels to recognize your labor in financial terms.

The reason why the RIAA comes off as a gang of ignorant thugs is because, well, how do I put this -- they are. I came into this business in an age of entrepreneurial integrity. The legends of the golden age of recorded music were still at the helm of most labels -- the Ertegun's, the Ostins, the Alperts and Mosses by the dozens. Now we have four monolithic (in every sense of the word) entities and a front organization that crows about the fact that they have solved their problems by leaning on a 12-year-old. Thank God that mystical fascination with the world of music has been stubbed out -- hopefully everyone will get the message and get over the idea that the musician actually meant for you to hear this.

The RIAA protects musicians like the musicians union protects musicians: They reward hacks and penalize those outside the system. The labels are not making this stink out of principle. They are not interested in the rights of musicians who don't sell any records for them. That myth was exploded when Warners dropped Van Morrison for "lackluster sales."

This stink is about a bunch of dumb-asses blaming the public for doing what the labels could have -- and should have -- done 10 years ago. I know because I told them so, each and every one individually and relentlessly: Put the music on a server so you can deliver on-demand services to people's homes. Seems so stupidly simple now.

After nearly 40 years in this business I know who my friends are. I know it isn't the labels who lost interest in my "fringe audience" decades ago. It is that fringe audience who still await any recording or performance I may come up with despite the RIAA trying to drive some symbolic wedge between me and my listeners just because their ass is in a sling. Don't do me any favors.

Audiences and musicians are on the same side. Musicians come from the audience (unlike record execs who come from the ranks of failed musicians). We experience together the mystical sacrament that a musical performance can represent. Additionally, we will be comfortably if not handsomely compensated by that audience if we can deliver a suitably affecting performance with some regularity.

It's time to let the monolith of commoditized music collapse like the Berlin Wall. Musicians can make records if they feel like it, or not. Wide open pipes are ready to transport us, mainstream and fringe alike, into the ears of an eager audience who appreciates us and is more than willing to financially support us. Get out of the way if you can't lend a hand because ... you know the rest by heart.
http://www.hollywoodreporter.com/thr...ent_id=2007230


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Paper Reveals Treaty Would Send P2P File-Sharers to Prison

Sponsors Petition to Delete Intellectual Property Chapter

- International civil liberties group IP Justice published a report today entitled "FTAA: A Threat to Freedom and Free Trade," that analyzes key sections of the Free Trade Area of the Americas (FTAA) Treaty. The FTAA Treaty will govern the lives of 800 million Americans in the Western Hemisphere in 2005.

Similar to the North American Free Trade Agreement (NAFTA), the FTAA Treaty seeks to bind the 34 democracies in the Western Hemisphere (including the US) to a single trade agreement. It will require all countries to change their domestic laws on a wide range of topics, including intellectual property rights.

The draft intellectual property rights chapter in the FTAA Agreement vastly expands criminal procedures and penalties against intellectual property infringements throughout the Americas. One clause would require countries to send non-commercial infringers such as Peer-to-Peer (P2P) file-sharers to prison. It is estimated that 60 million Americans use file-sharing software in the US alone.

According to the IP Justice report, "unless the second proposed clause to Article 4.1 is deleted from the FTAA Treaty, Internet music swapping will be a felony throughout the Western Hemisphere in 2005."

The proposed agreement forbids consumers from bypassing technical restrictions on their own CDs, DVDs and other property, similar to the controversial US Digital Millennium Copyright Act (DMCA). Even though bills are pending in the US Congress to repeal the DMCA, FTAA proposes to outlaw even more speech and legitimate conduct.

Mislabeled as a "free trade" agreement, the FTAA Agreement would actually make it illegal to bypass trade barriers such as DVD region code restrictions and it would enable price discrimination against consumers in the Americas.

The draft treaty also imposes new definitions for "fair use" and "personal use," curtailing traditional fair use and personal use rights to a single copy and only under limited circumstances. This prevents consumers from backing-up their media collections, using their media in new and innovative ways, and accessing media for educational and non-commercial purposes.

Another clause would require all countries to amend their copyright laws to extend copyright's term to at least 70 years after the life of the author, essentially forcing the new US standard on all other 33 countries in the hemisphere. Although forbidden by the US Constitution, FTAA's copyright section would allow companies to copyright facts and scientific data.

Another provision requires all domain name trademark disputes to be decided by the Internet Corporation for Assigned Names and Numbers (ICANN), a private and unaccountable organization that is ill equipped to determine the limits of freedom of expression rights or the scope of intellectual property rights. Americans would no longer have access to their local public courts to adjudicate rights over their Internet domain names.

"The FTAA Treaty's IP chapter reads like a 'wish list' for RIAA, MPAA, and Microsoft lobbyists," said IP Justice Executive Director Robin Gross. "Rather than promote competition and creativity, it is bloated with provisions that create monopolies over information and media devices," stated the intellectual property attorney.

In conjunction with the White Paper, IP Justice published an online petition calling upon the FTAA Trade Ministers to delete the entire chapter on intellectual property rights from the trade agreement. Earlier this year Brazil called for scrapping the chapter on intellectual property rights also.

FTAA Treaty negotiators, including the Office of the US Trade Representative who negotiates on behalf of US government, will meet in Miami from November 16-21, 2003. Debate over the text of the FTAA Treaty will conclude by January 2005 and the treaty is due to take effect by December 2005.

IP Justice White Paper on FTAA IP Chapter:
http://www.ipjustice.org/ftaa/whitepaper.shtml

IP Justice FTAA Educational Campaign:
http://www.ipjustice.org/ftaa

IP Justice's Top 10 Reasons to Delete FTAA's IP Chapter:
http://www.ipjustice.org/ftaa/topten.shtml

IP Justice Petition to Delete FTAA's IP Chapter:
http://www.ipjustice.org/ftaa/petition.shtml

Official FTAA Website:
http://www.ftaa-alca.org

Draft chapter on intellectual property rights in FTAA Agreement:
http://www.ftaa-alca.org/ftaadraft02/eng/draft_e.asp

IP Justice is an international civil liberties organization that promotes balanced intellectual property law. IP Justice defends individual rights to use digital media worldwide and is a registered California non-profit organization. IP Justice was founded in 2002 by Robin D. Gross, who serves as its Executive Director. To learn more about IP Justice, visit the website at
http://www.ipjustice.org.
http://www.infoshop.org/inews/storie.../10/19/6269615


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Grokster President Sparks Discussion
K. George Pradhan

Project Dialogue lived up to its name on Monday, when Grokster President Wayne Rosso sparked a heated debate in Wilson Hall among the animated audience members present to discuss the legitimacy of peer-to-peer file sharing and its effects on the music industry.

"Who hates me already?" Rosso, the self-proclaimed "Sultan of Swap," said jokingly to begin his speech.

Out of the approximately 80 people present in the mosaic of students, faculty members and individuals from the greater Nashville community, among the handful of people to raise a hand was musician Harold Bradley, reportedly the most recorded guitarist in history.

"It was a very interesting speech and I appreciate that we can have such discussion in our free country, but it's very surprising that he would come into our own town - Music City, USA - and tell people that it's OK to download music for free when it clearly hurts the singers, songwriters and musicians that I represent," Bradley said.

Bradley is currently the president of the Nashville Association of Musicians and the vice-president of the American Federation of Musicians.

The speech, entitled "Take Back the Music," was the second event of the 2003-04 Project Dialogue series. This year's theme is "Ideas, Images, Internet: Who Owns What?" A television crew from the CBS show "60 Minutes," was present to record the occasion.

Rosso spoke at length about how the Internet is inevitably revolutionizing the ways in which our lives are becoming more convenient, and how industries must adapt in response. Each step in making music more widely available has ultimately helped music sales, Rosso said, citing the example of radio among other things.

He referred to the landmark Supreme Court case of Sony v. Universal, in which the Court ruled in favor of Sony being legally allowed to make VCRs that can tape television programs.

"Sure it can be used for infringing copyrights, but that doesn't mean it has no other uses," Rosso said. "Just because some people are misusing it, you can't hold Sony responsible.

"File sharing technology is no different from a Xerox machine or a VCR. The way to stop unauthorized content on a P2P network is simple: you authorize it, you license it," Rosso said.

However, record individuals refuse to consider licensing their songs to him, he said.

"Nobody is trying to rip you off," Rosso said to several upset musicians in the audience. The artists strongly disagreed, using the term 'stealing' often to refer to file sharing.

"This is nothing new, you guys!" Rosso said heatedly as raucous interjections and complaints from audience members continued, including attacks on his financial comfort and one tongue-in-cheek insult about his weight.

Nonetheless, several audience members shared Rosso's point of view.

"I was really glad that he made the point of how the technology isn't inherently wrong, it's only how each person uses that technology," said freshman Jonathon Rigsby. "I agree that a lot of musicians are probably getting screwed over because of (file sharing), but it's so far out there, so commonplace, that the only thing they can do about it is to try and legitimize it.

"In that respect, his idea of licensing music to major file sharers is probably a smart thing."

The public relations aspect of the music industry's campaign to end file sharing was also discussed.

"This whole scenario has done nothing but breed contempt for the record industry in its customers," Rosso said.

"I have a collection of about 6,000 CDs, and I despise the record industry," said Dr. Michael Harrington, professor of music business at Belmont University.

Rosso suggested that musicians could take advantage of the new technology for their own benefit and independence. "File sharing programs are a great distribution mechanism and have a great deal of power (to help musicians)."

After the event had formally ended due to time constraints, people stood and engaged in vibrant discussions in several groups around the lecture hall for up to an hour.

"I understand that things have changed," Bradley said in one such discussion. "But the thing that hasn't changed is that singers, songwriters and musicians need their money."

"All I'm saying is let's take advantage of this technology," Harrington said in response. "It sounds crazy but we can tap into it. Just like any technology, I think we'll all be better off for it in the end."

Other artists present also felt that Rosso focused too much on criticizing the record industry and dodged the fundamental issue of musicians being hurt financially.

"Rosso paints the record labels as the enemy, but he doesn't take into account that the ones losing their houses and their livelihoods are the musicians," said Bruce Bouton, a country music artist. "Speaking as a musician, I have had my fair share of disputes with the record industry, but in this case, I support the record industry over file sharing.

"Also, I think it's disturbing... that a lot of young people feel they deserve this music for free," Bouton said.

In response to the recent lawsuits, Rosso is in the process of forming a lobbying organization, P2P United, to represent the interests of file-sharing services in Washington. One of the organization's first efforts has been to raise money to reimburse those being sued for illegal downloading, including the mother of a 12-year- old girl who paid $2,000 to settle legal action taken against her daughter. Rosso maintains that file sharing is inevitable and that the music industry must adapt.

"The music industry wants to kill us; they want us dead," Rosso said. "They can't do it. Maybe Grokster will go out of business somehow.

"I don't know. But there will always be some kid in a basement in Romania who will find a way. Technology always wins. Always."
http://www.vanderbilthustler.com/vne.../3f8f7258773d6


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A New Tech Battle Brews In D.C.
Declan McCullagh

Even casual observers of the moral swamp called Washington, D.C., may remember the notorious Hollings bill, a mandatory copy protection proposal last year, which Hollywood's lobbyists loved and Silicon Valley hated.

Because Senator Ernest "Fritz" Hollings, D-S.C. is retiring, the entertainment industry has been forced to locate new champions in the U.S. Congress. It has found them in three key members of the U.S. House of Representatives: Lamar Smith, R-Texas; Howard Berman, D-Calif.; and John Conyers, D-Mich.

The like-minded trio has quietly drafted a bill arguably as intrusive as Hollings' plan. They seem to be trying to target peer-to-peer clients, but you wouldn't know it from their proposal.

The fine print says huge categories of software--including Web browsers, instant messaging clients and e-mail utilities--that are offered for download must contain a warning that it "could create a security and privacy risk."

And the catch? If the companies or individuals who offer the software for download don't comply with the requirement, they will face criminal penalties such as fines or prison terms of up to six months. Even, that is, if the software is actually secure and poses no security risk.

Ouch.

Imagine what that means in practice. Any program that lets someone else send data to your computer--such as a remote Web site setting a cookie--or use your computer to search other computers' contents over the Internet would be covered.

Microsoft, AOL, Yahoo and anyone else that offers such software would have to put warnings up, or their executives would face prison time. The editors of the popular open-source sites SourceForge and CPAN would have to follow suit. So would Download.com, which News.com publisher CNET Networks owns.

This is not merely a theoretical concern. Because Smith is the chairman of the subcommittee that oversees copyright laws, he's in a unique position to shepherd this scheme into law, possibly even before Congress adjourns this year. A scheduled October 2 vote was postponed, because the subcommittee ran out of time, but Smith's aides say he's aiming to try again this week or next.

Legislative high jinks

Some background: The same mandatory download warnings existed in another bill, H.R. 2752, which Conyers and Berman drafted and then introduced in July.

Other sections of the July bill were especially prickly, such as the idea that music fans should serve jail time for downloading even one illegal MP3 file. It suffered an unlamented, ignominious demise- -the expected fate, after all, because all its sponsors were Democrats.

In response, Berman and Conyers tried to preserve parts of their radioactive bill by injecting them into an otherwise uncontroversial, bipartisan proposal, H.R. 2517, which was previously intended to nudge the FBI toward more copyright prosecutions and to create an "Internet Use Education Program"--basically a propaganda office the U.S. Department of Justice would run that would warn everyone not to violate copyright laws.

True, these ideas are hardly the best use of taxpayer dollars, but they're not likely to cause a firestorm of public outcry, either. (Another section that made it in: a sure-to-please-Hollywood penalty that says videotaping movies in theaters would be against the law.)

With the support of Smith, an influential House Republican, Berman and Conyers are hoping to replace that generally innoucous bill with their "amendment in the nature of a substitute." Jeff Lungren, a spokesman for Smith, told me on Friday: "We're still working on this legislation to reach a consensus--and one that will receive solid support from both parties. We are not commenting on what, if any, changes might be made." He added that he hopes to "move the bill later this month."

Lungren wouldn't say who's supporting the download notification penalties or who's involved in the negotiations.

For its part, the Recording Industry Association of America claims that it's not pushing the three politicos in this direction, and I believe them. Mitch Glazier, the RIAA's senior vice president and lobbyist, says "notice is a good idea, and quite frankly, P2P services ought to be doing it voluntarily...So, we support the chairman, we like the concept--but agree that it is overly broad in its current form."

The last remaining potential culprit is the Motion Picture Association of America and its member companies, which were behind the original Hollings bill last year and which other lobbyists tell me are behind this one, too. (Walt Disney lobbyist Preston Padden once told me that Hollings' Consumer Broadband and Digital Television Promotion Act represented "an exceedingly moderate and reasonable approach.")

An MPAA spokesman declined to comment.

Unfortunately, this has become Congress' usual pattern: A knee-jerk response that overreacts to a perceived technological problem. Instead of taking a thoughtful, careful approach, clue-impaired Congress critters do things like enact the Communications Decency Act and the Digital Millennium Copyright Act, which SunnComm Technologies used last week to threaten a Princeton University student. (Trivia: Did you know that on Sept. 11, 1997, a House committee voted to ban all encryption products without backdoors for the FBI?)

Now, apparently at the behest of the MPAA, Congress may criminalise the unrestricted distribution of broad categories of basic and popular software, regardless of whether the programs actually create security or privacy vulnerabilities.

Jonathan Potter, head of the Digital Media Association that represents companies such as AOL, Amazon.com, Apple Computer, RealNetworks and Yahoo, opposes the replacement bill.

"We have communicated to Chairman Smith and representatives Conyers and Berman, in writing and in person, our companies' strong concerns that the anti-P2P provision seems to penalise a much broader class of software applications than was intended," Potters said. "They have asked us to work together to bridge our differences, and we have agreed to try our best."

We'll see. Berman and Conyers are probably lost causes--after all, Berman is the fellow who introduced a bill last year that would give copyright holders the right to assail a peer-to-peer node they suspect may be distributing their intellectual property without permission. Conyers has already chosen which side he'll line up with on this issue.

On the other hand, perhaps there's still time for Smith to realise that he may not want to become known as the Fritz Hollings of 2003.
http://www.zdnet.com.au/newstech/ent...0280029,00.htm


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Congressional Caucus to Examine Entertainment Piracy

The aggressive crackdown on movie, music and software piracy on the Internet has been a headline grabber during the past six months, but a new group of congressional lawmakers is focusing instead on trampling the rampant copyright infringement taking place in broad daylight overseas.

Brazil, China, Pakistan, Russia and Taiwan have willfully ignored the need to crack down on the sale of pirated goods, a practice that costs the world economy billions of dollars each year, said Rep. Robert Goodlatte (R-Va.) at a press conference today on Capitol Hill.

Goodlatte is one of the four co-chairmen of the newly formed International Anti-Piracy Caucus, a 50-member group that gathered on Capitol Hill with top executives from the entertainment industry to highlight what they said are weak copyright laws and enforcement in other countries.

The caucus will try to persuade the Bush administration to include strong anti-piracy provisions in any trade deals it negotiates with foreign countries, said Sen. Joseph Biden (D-Del.), another co-chairman of the caucus along with Sen. Gordon Smith (R-Ore.) and Rep. Adam Schiff (D-Calif.).

Schiff said that the administration should make anti-piracy efforts a prerequisite for countries seeking U.S. foreign aid.

"We want to make sure that a message is delivered to every ambassador [and] to every country that we expect fair treatment in this area," said Smith.

Douglas Lowenstein, president of the Entertainment Software Association, said the caucus will be helpful because the electronic gaming industry has been able to make virtually no inroads into Asian and Eastern European markets because of software piracy.

The caucus debuts at a time when the recording and motion picture industries are trying to cut down on the illegal online trading of digital music and movie files via the Internet on so-called peer-to-peer networks. The Recording Industry Association of America is waging a legal campaign against people who use P2P services like Kazaa and Grokster to illegally trade music.

The motion picture industry also is facing a rise in online piracy as more people buy powerful computers and subscribe to high-speed Internet connections. The Motion Picture Association of America garnered significant attention this month for its controversial decision to try to cut down on piracy by banning DVD and videocassette "screener" copies for judges at film awards.

Despite the piracy problems on the Internet, Biden said offline bootlegs would be an easier target.

About $3 billion in pirated entertainment software is sold each year, according to the ESA. The recording industry estimated that it lost $1 billion to piracy in 2002. The BSA tallied its 2002 loss at $5.5 billion for the Asia-Pacific region alone.

Much of today's press conference dealt with the open-air markets in countries like Russia where bootlegged hard copies of popular music, movies and software are sold on the black market for pennies on the dollar.

Goodlatte said he saw copies of Windows XP on sale "across the street from the Kremlin" for less than $2 -- months before its official U.S. release.

He said that the caucus also will focus on file-sharing companies that run their businesses from small island nations like Vanuatu to avoid the United States's stronger copyright laws. It will not examine the recording industry's crackdown on U.S. file swappers, Goodlatte said.

Adam Eisgrau, executive director of P2P United, a group representing file-sharing services, applauded the creation of the new caucus but criticized the entertainment industry for ignoring the needs of artists they claim to represent by not sharing earnings equitably.

"Counterfeiting and piracy is bad," Eisgrau said. "So is a marketplace in which millions and millions of Americans engage in an activity that doesn't reward individual artists."

In addition to naming the five countries to its piracy watch list, the caucus extolled Malaysia, Thailand and Mexico for trying to address U.S. concerns regarding piracy.
http://www.bizreport.com/article.php?art_id=5245


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Recording, film execs want colleges to charge for downloaded music - University administrators say they aren't interested in new student fee
Michael Gluskin

If the recording and film industries get their way, university students across the country will soon be paying for downloaded music - even if they don't use the Internet.

An independent group of film and music industry executives and national higher education leaders has been quietly crafting a pilot program that would make universities add a mandatory file-sharing fee to students' room and board payments.

The program, the brainchild of the recently formed independent Joint Committee of the Higher Education and Entertainment Communities, is still in its infancy. Only a few universities have agreed to join the program, but its creators are giving stiff warnings to those who haven't complied, including students at this university.

"No one would be required to participate, but those who don't, their students run the risk of having lawsuits filed against them and getting put in prison ... Music thefts are in the billions of dollars, and Congress is taking it very seriously," said Steve MacCarthy, vice president of University Relations at Penn State University.

University officials here have shown little interest in the program. They have looked at several different programs, including the committee's pilot program, but have yet to settle on specifics, said Amy Ginther, coordinator of Project NEThics in the Office of Information Technology.

Penn State's President Graham Spanier, co-chair of the new committee, encouraged this university to participate in the spring pilot program last month in a letter sent to university President Dan Mote.

"As you no doubt know, the recording industry is stepping up its enforcement of copyright, and the legal liability of students engaged in unauthorized P2P [peer to peer] file sharing ... will increase significantly," Spanier wrote in the letter.

The pilot program, which includes Penn State and the University of Rochester, pairs universities with an online music service interested in developing file sharing technology that could be used on a college campus. In the letter to Mote, Spanier said the committee would act as a "marriage broker" between universities and interested music services.

If the pilot program is successful, a permanent system may be established on certain college campuses.

"One idea is a program to charge students a fee folded into their regular semester bills which would offset copyright royalties," Penn State spokesman Tysen Kendig said.

Any fees would be "nominal," MacCarthy said. He said the fee would be added to a student's room-and-board charge, and that Penn State is close to reaching an agreement with a music provider to start a pilot program.

The university should keep its priorities focused on the state budget crisis - not file sharing, said Student Government Association President Tim Daly.

"I wouldn't expect this university to be too excited about the program because the increases in mandatory fees and tuition are significant problems," he said.
http://www.inform.umd.edu/News/Diamo.../21/news5.html


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Peer-to-Peer Networking Grant
Crains

Researchers at Brooklyn's Polytechnic University and Columbia University have won a $2.8 million grant to study "peer-to-peer networking" as a way of ending computer networks' reliance on central servers.

Brooklyn Poly's Center for Advanced Technology in Telecommunications said the National Science Foundation gave the institutions the grant for research over the next five years. It is the lead university in the project; along with Columbia, the University of Massachusetts is also participating.

Peer-to-peer networks connect different computers with minimal or no reliance on central servers. Some expect it to eventually revolutionize the Internet and computing, creating a global network that allows huge numbers of computers to communicate directly. CATT says its research will focus on "developing guidelines, performance modeling and optimization tools" that can be used to create affordable peer-to-peer applications.

Dr. Keith Ross, the project's leader, said in a statement that the goal is to help create "a massive, global virtual computer which will be shared by users around the world."
http://www.crainsny.com/news.cms?newsId=6723


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Picasa Launches 'Hello' - The Easiest Way to Securely Share Digital Photos
Press Release

Hello Enables Friends to Instantly Share High Resolution Pictures, Chat About Them, and Print Them at Home or Online

Picasa, Inc., the leading developer of software which enables photographers to effortlessly organize, manage and share digital photos, announces the availability of Hello, a completely new way to share digital pictures. For consumers with an Internet connection, Hello opens a private peer-to-peer network link that enables friends to instantly share and chat about digital photographs.

Hello is offered as a free download at www.hello.com and can be used with or without Picasa, the company's award-winning digital photo organizing software. For consumers who have Picasa, Hello is automatically integrated, allowing one-click photo sharing. To share photos using Hello, consumers simply select the pictures they would like to send in Picasa, click the "Send to Hello" button and specify the person to receive them. Immediately, those images appear on their contact's Hello window. Users can see which pictures their friend is viewing and can chat about them in real-time. Hello makes it simple to send single photos or hundreds without the need for attachments or uploading to websites. Consumers who do not have Picasa can use Windows Explorer to select pictures to share.

Any pictures received via Hello are automatically organized and stored in a Picasa album, organized by the sender's name. To print high quality prints at home, Hello automatically retrieves the high-resolution version of a picture from the sender, eliminating the need to send email requests back and forth.

"Hello recreates the experience of sitting down on your couch with a friend and showing them your photo album," says Lars Perkins, CEO of Picasa. "With Hello, you can watch your friends' reaction as they see your pictures, instead of waiting hours or days for a reply. Unlike e-mail, Hello lets you send 50 pictures just as quickly as sending 5, and your friends will always be able to choose and print the pictures they like best."

Highlights of Hello include:
* Instant sharing of pictures over a private peer-to-peer network - a
single click sends one or multiple images to one or many recipients.
* Chat upon receipt lets you narrate your pictures and provides immediate,
faster-than-email feedback
* Private network ensures only the people you want will see your pictures
* Allows users to send or request high-resolution images that can be
printed at home
* Request online prints with two clicks; days later, they arrive in the
mail
* Pre-paid printing option allows friends and family to order prints
without the hassle of entering shipping and credit card information

http://biz.yahoo.com/prnews/031022/law075_1.html

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Austrailian ISP in 'World First' Music Industry Court Case
James Pearce

In what is believed to be the first case of its kind in the world, the Australian music industry has listed an Internet service provider (ISP) as a respondent in a court case involving alleged music piracy.

E-Talk Communications, trading as Comcen Internet Services found itself in Federal Court in front of Justice Brian Tamberlin in Sydney this afternoon charged with making money from the provision of copyright-infringing music files. This is the first time the music industry has accused an ISP of being directly involved in piracy by allowing its infrastructure to be used for file-trading activities, according to Michael Speck, the manager of Music Industry Piracy Investigations (MIPI), who led the industry's investigation.

However, lawyers representing E-Talk Communications claimed in court today that the music industry, in acting against its subsidiary, Comcen, were pursuing the wrong entity. They argued the industry should be pursuing another entity associated with E-Talk Communications. In response, lawyers for the music industry applicants -- which include Universal Music Australia, EMI Music Australia, Sony Music Entertainment (Australia), Warner Music Australia, BMG Australia and Festival Records -- claimed they had the right entity, and would simply add the other entity to the proceedings.

The tactic marks an escalation in the simmering battle between the music industry and the ISPs over how much responsibility the latter should take for any copyright infringing behaviour of their subscribers. Around the world the music industry is attempting to force ISPs to hand over the details of specific customers, and the Australian Record Industry Association (ARIA) pulled out of negotiations with the Internet Industry Association (IIA) over differences on this issue.

"This case proves what the music industry has been saying about the Internet industry for many years, that music piracy is an integral part of the ISP business model," Speck told ZDNet Australia . He added that the evidence uncovered in this case proves that ISPs know how much illegal file sharing is happening on their networks, and they embrace it for the revenue.

"If things don't change we'll be going after more ISPs," said Speck.

The charge is the result of an 11-month investigation into the Web site http://www.mp3s4free.net, culminating in raids over Friday and Saturday last week. The registrant of the domain name, Australian Stephen Cooper, was also charged but failed to appear in court today, prompting an adjournment of proceedings until Tuesday 28 October.

"In my experience investigating the revenue structure of Web sites such as [mp3s4free.net] the ISP hosting the Web site, [Com-cen], stands to benefit economically from the increased consumption of bandwidth that would result from an increase in the flow of traffic to the Web site and an increase in the number of sound recordings downloaded by visitors to the Web site due to the large size of music files," Speck's affadavit.

"The Web site appears to me to be highly organised," said Speck. "It provides a whole user interface to encourage Internet users to find digital music files and to assist them in the download process."

Lawyers for the music industry claim the Web site received 7 million unique visitors from around the world over the past 12 months.

"In my experience investigating Internet piracy and other piracy, this Web site is one of the largest sites of its kind, providing thousands of infringing recordings and continuously providing very recent releases based on top local and international charts for free download, under a highly accessible domain name and using obvious metatags," read the affidavit.

Speck also noted the Web site had disguised some music files by relabelling them as jpg files, "so as to avoid detection by persons or organisations, such as MIPI, monitoring files stored or shared".

The maintainers of the Web site appear to be aware of the illegality of their practice, as in the "Frequently Asked Questions" section under the question "Are MP3s Legal?" it reads:

"MP3s are both legal and illegal. It is legal when the song's copyright holder has granted permission to download and play the song. It's still legal if you encode the MP3 for personal use, however it is illegal to distribute or trade MP3s without permission from the song's copyright holder."

However, this is incorrect. Under current Australian laws it is illegal to make a back-up copy of legally obtained copyrighted material for personal use without the permission of the copyright holder.

The site also includes a disclaimer stating: "All audio files can be downloaded for evaluation purposes only and must be deleted after 24 hours! If you like a song, please buy the original. If you don't agree with these rules, the webmaster of mp3s4free.net, our host and advertisers, are not responsible for anything. When you download a song, you take full responsibility for doing so. None of the files on this site are stored on our servers. We are just providing links to remote files."

The move comes amongst widespread opposition to the U.S. music industry's campaign to suing individual file-swappers. A week-long boycott of the record industry which started on Monday, 'Stop RIAA Lawsuits Coalition', has seen 122 Web sites join it.
http://www.zdnet.com.au/newstech/ebu...0279975,00.htm


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Pricey perhaps, but "not going to be the cataclysmic event that the music industry experienced."

Film Industry Pay Dearly For Piracy
Richard Wray

The impact of internet piracy could be losing the film industry $460m (£275m) annually within seven years unless the leading motion picture studios and distributors act now, warns a new report.

Informa Media Group believes revenues from legitimate sales of movies over the internet will be more than $870m by 2010. But sales over the internet would be worth $1.33bn if the industry clamped down completely on online piracy.

Adam Thomas, the author of the report, Film on the Internet, said the industry is unlikely to go the same way as the music labels, where online piracy has had a major effect on profits, but the studios should not be complacent.

"It is not going to be the cataclysmic event that the music industry experienced but there are warning signs and it could be a serious issue," he said.

In fact, the prognosis given in the Informa report is not as dire as one given earlier in the year by Deloitte & Touche. A report from the consultants warned that online piracy could cost the top studios up to $4bn annually within the next two years.

The Informa report estimates that 144,000 films are downloaded every day across the world or 6,000 an hour.

But internet piracy can have a detrimental effect on more than just corporate profits: an unfinished version of the action movie The Hulk was available on the internet two weeks before its cinema release. As more internet users watched the pirated copy, online chat rooms filled up with bad reviews of what was an unfinished version of the film.

Some in the industry have blamed this "bad press" for the poor takings and official reviews received by the film.

"It may have been a bad film anyway, but that [the pirate copy] did not help," said Mr Thomas.

So far the industry has been shielded from the full force of internet piracy by the huge quantity of data inherent in films, leading to lengthy download times.
http://www.guardian.co.uk/business/s...067446,00.html



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Hollywood 'Need Not Fear Piracy'
BBC

Hollywood has little to fear from internet piracy, according to a business research group.

File-sharing and CD/DVD piracy will only have a limited impact on digital film sales, said Informa Media.

Instead Hollywood will actually thrive on the internet through legitimate online sales, the group's report adds.

Although the study estimates losses to the film industry of $460m (£275m) in 2010, it predicts legitimate global film sales will soar.

Legal movie sales via the internet will outstrip the losses from piracy, raking in $3.49bn (£2.1bn) by 2010, said the group in its report Film on the Internet.

According to the group's research, about 1% of the current 1.5m broadband users connected to a pirate peer-to-peer network are actively downloading at least one film at any one time.

This will lose the film industry $92m (£55m) in 2003, said Informa Media, reaching the $460m figure in just seven years.

In other predictions for 2010, Informa Media said North America would still sell the most movies online, accounting for 41.9% of the global total.

DVD sales would be reduced from 97% to 75% of the digital film sales market by 2010.

Among the online formats, digital downloads are expected to be the most successful. Streaming is less attractive because users have to be online while watching, whereas downloading allows users to watch the film file at leisure.

The group predicts subscription services will be a success, particularly to sites which offer a wide range of independent films.

The Motion Picture Association of America (MPAA) recently launched an advertising campaign to fight piracy.

They have also issued a ban on "screeners", the DVDs of Oscar-nominated films issued to Oscar voters.

Hundreds of stars and filmmakers are protesting against the ban, saying it will curb the chances of independent films because the screeners are sometimes the only chance for their films to be seen.
http://news.bbc.co.uk/1/hi/entertain...lm/3210486.stm


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Same Study, Completely Opposite Interpretations On Downloadable Movies
Contributed by Mike

This isn't the first time that I've seen the same study interpreted completely differently by two different reporters. However, I think it is the first time that I've seen the same study interpreted in completely opposite ways by the same news organization. We're not talking about opinion pieces, either, but two supposedly factual pieces written about the same study concerning movie downloads. Both are written for the Guardian in the UK, but make completely opposite points. The first one says that the movie industry is going to "pay dearly for piracy" online. Meanwhile, the other one says that "Hollywood has little to fear from internet piracy". Yes. They are both talking about the same exact study from Informa Media Group, and both of these articles appear on the same Guardian site. The study basically says that there's plenty of money to be made in online movie downloads, but that there will be some loss due to "piracy". No matter which interpretation of the study you prefer, I think the overall study is flawed. Beyond using the typical "extrapolate and project" method of figuring out where online movies are headed, the study does little to nothing to determine if someone downloading a free movie uses that experience to decide whether or not to go out and see the movie in the theater and/ or buy the full DVD themselves (to get the extra features and such). It assumes, again, that the static movie is what people are buying, rather than the actual social experience of "going out to the movies", in which case a download is a promotion for the movie, itself. The study also makes a number of random assumptions, saying that 50% of downloaded movies will result in a lost sale of $3.50. It doesn't say how they came up with either number, and both can easily be argued.
http://techdirt.com/articles/20031021/106214.shtml


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The Lowdown On Legal Music File Sharing
Sam McDonald

The music business wants to make an honest listener out of you.

While the Recording Industry Association of America threatens to drag illegal downloaders and uploaders into court, a number of services are fighting to meet the demand for lawfully distributed Internet music.

Leading the charge is iTunes, the Apple service that grabbed market share with the help of its popular iPod portable player. Apple recently unveiled a PC- compatible version of iTunes. If that takes off, it could be on the road to pay-per-song dominance.

It won't get there without a struggle, though. More competitors are set to emerge, including a re-tooled, legal version of Napster, the renegade Internet site that helped ignite the file-sharing furor.

Here's a quick look at how some of the legitimate download services stack up:

BuyMusic.com - One of the first digital music download services for Windows users, BuyMusic has worked out most of the kinks. Downloads are offered by the song or by the album. Prices range generally from 79 cents to $1.14 a song, $7.99 to $12.89 for an album. Most tunes are 99 cents, most albums $9.99.

There's no subscription plan, no monthly fee. You simply pay for what you download.

According to Rolling Stone magazine, the service offers a library of 300,000 songs. A spot check showed that it includes a broad but not necessarily deep selection of rock, blues, jazz and rap. Music is organized conveniently into genres and subgenres.

The service does allow previews of songs, but only with the Microsoft Windows Media Player.

iTunes.com - It's not just for Mac users anymore. A Windows version of the Apple music download service is easy to navigate. Browsing and sampling music is a breeze. Prices are generally 99 cents a song, $9.99 an album. Some full discs are as cheap as $6.93.

We noticed that a number of albums are not available in their entirety. And using iTunes isn't as simple as visiting the Web site. It requires downloading the system's player and search engine. Also, Rolling Stone pegged the number of songs at 200,000, making it one of the smaller collections of the competing services. It's likely to grow, however. And the database won points for offering albums by cult artists like The Shaggs, a late-'60s girl rock group, and Mutabaruka, a beloved reggae act.

Rhapsody - This subscription service, found at www.listen.com, offers two primary online products. A $9.95-a-month top tier provides access to what Rhapsody describes, not so modestly, as the largest legal collection of digital music in the world. The collection contains more than 20,000 albums from more than 9,000 artists. Rolling Stone put the number of stockpiled songs at 350,000. Online listening is unlimited. The ability to burn CDs from the collection is available for an additional fee per track, typically 79 cents per burned song.

A $4.95 per month Radio Plus service allows customers to use computers like a jukebox. Music is streamed, not downloaded. CDs can't be burned from the Rhapsody library at this tier.

Napster.com - This legendary - or notorious - name in Internet music is set to return as a legal service Oct. 29. Details are sketchy as yet, but the Napster Web site promises a gigantic library of 500,000 tracks and prices of 99 cents per song, $9.95 per album. The company is now a division of software maker Roxio Inc. Whether music consumers will warm up to a legit version of the service is anyone's guess.
http://www.dailypress.com/news/local...ws-local-final


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Music To My Peers
Chris Marlowe

The recording industry's attempts to grapple with online piracy have included education and lawsuits, pitting it against consumers.

When the Digital Millennium Copyright Act was first introduced in Congress six years ago, it was viewed by lawmakers as a means of bringing the United States' copyright laws into line with other countries that adhere to the standards set by World Intellectual Property Organization treaties.

But even before the DMCA was signed into law in 1998, the entertainment industry had staked one side of a battlefield that had consumer electronics manufacturers, providers of online services, First Amendment experts and other interests aligned against the other.

It was inevitable that the music biz would lead the charge, if only because music downloads are more feasible for the average American with a computer and a high-speed Internet connection than are full- length movies and TV series.

The RIAA, which stands alongside the MPAA as showbiz's most powerful lobbying group, has taken legal action around the world to shut down file- sharing services starting with Napster and Scour. It has battled technology developments that it deems to be aiding and abetting copyright crime. It has also targeted the Internet service providers and telephone companies that provide the two-way pipe that facilitate the download-on-demand marketplace.

But the RIAA took its campaign into uncharted legal waters in April when it began suing individuals that it suspected of engaging in unauthorized downloads of copyrighted materials. The trade organization used its DMCA authority to issue subpoenas -- which lack a judge's scrutiny, since they require only the signature of a federal court clerk -- and force ISPs, telephone companies and others to reveal the true identity of previously anonymous customers.

That amounts to a dangerous level of authority to grant to a private trade group and possibly a violation of the Constitution, legal experts say.

"We are told that copyright owners are entitled to this unprecedented subpoena power so they can effectively exploit their copyright monopolies," said attorney Daniel Ballard of McDonough Holland & Allen. "We are not told why that right -- or that monopoly -- is more valuable than the privacy and due process rights those subpoenas invade." McDonough Holland & Allen represents at least four of the individuals who have been sued and has consulted with about 20 more.

For all the wide-ranging strategies and tactics in play in recent and pending digital copyright cases, the arguments boil down to a tug of war over protecting the fair- use rights of consumers versus the ownership interests of copyright holders. The music industry is waging all-out war on this front at a time when CD sales continue to decline, falling another 9% domestically and 11% worldwide last year.

"There is no question that piracy is a huge component of the challenge," RIAA chairman and CEO Mitch Bainwol said. "Obviously you've got physical piracy and the online piracy. To suggest that piracy is not a major factor in the decline of sales is not supportable."

Consumers are fighting for the freedom to make the most of new technologies in the sanctity of their own homes and on their own digital devices. The latest cases have drawn on the precedent established in 1984 by the U.S. Supreme Court's decision in the so-called Betamax case that fair use encompassed home videotaping of a television broadcast despite strong opposition from the entertainment industry. The Betamax case also added the phrase "substantial noninfringing uses" to the copyright law lexicon. The court agreed that some people were using their VCRs to pirate movies but decided that the technology could not be blamed since its primary function was legitimate and met a consumer demand for time-shifting of programs.

In a document on its Web site, the Electronic Frontiers Foundation states its concerns for the future of fair use: "While stopping copyright infringement is an important policy objective, (the DMCA) throws out the baby of fair use with the bath water of digital piracy. ... Copyright owners can unilaterally eliminate fair use, rewriting the copyright bargain developed by Congress and the courts over more than a century." It goes on to cite the advent of copy-protected CDs as a prime example of "the collision between fair use and the DMCA" since they restrict how consumers can enjoy music they legitimately purchased.

Napster (which shares only a brand name with Roxio's new, completely legal service) used that logic as its defense when the RIAA successfully sued it in 1999. The music industry claimed that unlike the Betamax case, Napster participated in the infringing: It was created solely for copying CDs without permission, the downturn in music sales was caused by such copying, and the company could filter out copyrighted material if it wanted to. The court agreed.

Indeed, most of the judicial rulings to date have gone in the industry's favor. But showbiz was dealt a setback in April in a federal judge's ruling on a lawsuit filed by the RIAA and the MPAA against file-swapping services Grokster, Streamcast Networks' Morpheus, and Sharman Networks' Kazaa.

U.S. District Court Judge Stephen Wilson decided that Grokster and Morpheus had no control over how they were used and therefore could not be held liable for its customers doing illegal things with the technology. (Kazaa was not affected by the ruling).

The entertainment industry's appeal against the Grokster ruling has not yet been heard but has already caused the RIAA to change its tack. The court had virtually said that the industry's only recourse was to sue individual users -- and on April 3, it did. The first to be sued in federal court for direct and contributory copyright infringement were for East Coast college students: Daniel Peng, a sophomore at Princeton University; Jesse Jordan, a freshman at Rensselaer Polytechnic Institute; Aaron Sherman, a senior at RPI; and Joseph Nievelt, a junior at Michigan Technological University.

All four settled out of court within the month for amounts ranging from $12,000 and $17,500 each, but without admission of wrongdoing. Members of the public immediately began sending donations. On June 22, Jordan put a notice on his Web site asking people to stop, after the amount he received reached $12,005.67. As of last month, Peng had received donations totaling more than two-thirds of his settlement debt.

The RIAA maintains that it is taking the extraordinary step of suing college students and other individuals to send a message about the illegality of music downloading.

"It is critical that this industry do what it can to get the message out. If it requires legal action against individuals, then so be it," Bainwol said. The aggressive campaign hasn't been without PR risks for the lobbying group.

On Sept. 8, the RIAA cited an additional 261 individuals for copyright violations. On that list were Brianna LaHara, a 12-year-old honor student living in a New York government-assisted housing development, and Durwood Pickle, 71-year-old Texan who let his grandchildren use the computer when they visited. The legal action was dropped against Sarah Ward, a 65-year-old educator and sculptor, when it became known that only Mac computers were in her home -- Macs cannot use Kazaa, the peer-to-peer program the RIAA said Ward used to illegally download music.

More recently, software engineer Ross Plank became the second public assertion that the RIAA had targeted the wrong person. He said the RIAA has the wrong IP address (an online computer's unique identifier), he doesn't have file sharing software anywhere on his wireless network, and he had never even heard of most of the Spanish-language music artists the subpoena said he downloaded.

"There was an understanding that there were going to be cases that would provoke sympathy," Bainwol said. "But the critical bottom line is that when you aggregate millions and millions of people, who, however innocently, are downloading, you end up producing a marketplace environment that is devastating to the jobs of clerks, songwriters, artists and even people who work in record companies."

The Internet service providers have their own reasons to be concerned over these RIAA lawsuits, too. Verizon Communications refused to disclose the identities of its customers accused of piracy, as requested by the RIAA, until ordered to do so by a federal judge in January. SBC Communications and Pacific Bell Internet Services have also taken up the fight.

The telephone companies challenged Section 512 of the Digital Millennium Copyright Act, a provision that created a streamlined subpoena procedure. Verizon said that it did not apply to ISPs that are not hosting potentially infringing material on their own servers. More than a dozen amicus briefs had been filed arguing that Section 512 of the DMCA is unconstitutional, saying that it gave copyright owners the ability to violate protected, anonymous speech.

The recording industry commenced its second round of legal action against individuals last week, when it sent a warning letter notifying more than 200 people that they could be sued for stealing music. Those letters fulfilled a promise Bainwol made to Sen. Norm Coleman, R-Minn., during a Senate hearing examining the association's use of the lawsuits and the controversial DMCA subpoena process.

DMCA critics maintain that the right to be presumed innocent, the right to remain anonymous while engaging in lawful activities and the right to due process all are under threat.

"Though the copyright industries generate enormous wealth for our economy and clearly have the right to vigorously enforce their copyrights, that right is insufficient to justify, without prior judicial review, an invasion of our fundamental personal liberties," attorney Ballard says.


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Open-Source Audio in a Proprietary World
David Halperin

Whether or not open-source audio standards will threaten the dominance of MP3 and WMA remains to be seen. Open- source audio developers -- opposed by aggressive commercial giants, ideologically committed to nonprofit but needing development capital -- seem to face unbeatable odds.

Even before we could send recorded sound reliably over the Internet and a file-sharing revolution set the music industry in an uproar, the large size of digital audio files was causing headaches. A minute of raw stereo sound at CD quality -- or 16-bit, 44.1 KHz sampling -- occupies 10.5 MB on a hard drive. Obviously, files of song-length recordings at that size can quickly get unwieldy.

Compression proved to be the answer. In 1987, technicians at the Fraunhofer Institut Integrierte Schaltungen in West Germany began working on a sophisticated compression algorithm, one that could achieve compression ratios of 10:1 and better while preserving high-quality sound.

The original test bed for this technology was a box of electronics the size of a refrigerator, but by 1992 the Fraunhofer team, working with Deutsche Thomson Brandt, had reduced it to software and it became part of the MPEG standard. Officially known as MPEG-1 Layer III -- also endorsed by the ISO -- the new kid on the block soon became known as MP3 , and the rest, as they say, is history.

Players, both software and hardware, were created to play MP3s. Combined with Napster's peer-to-peer file-sharing network, the compact new codec -- or compression-decompression algorithm -- helped overturn the traditional relationship between music publishers and consumers, a confrontation now being played out in the courts.

Fraunhofer and Thomson still own the copyrights to MP3 and charge developers to use it in their authoring packages and players. A refinement, MP3Pro, has recently hit the streets, and the new MPEG-4 standard incorporates Advanced Audio Coding (AAC) developed by Dolby and used by Apple (Nasdaq: AAPL) for its iTunes pay-per-track online music store.

Meanwhile, other developers have not been idle. Microsoft (Nasdaq: MSFT) incorporated a proprietary audio codec into its Windows Media Audio (WMA) format, and RealNetworks (Nasdaq: RNWK) used its own codec in its RealPlayer systems. Like MP3, these formats must be paid for by developers wishing to use them. Both the authoring applications used to create music in these formats and the players themselves are usually charged fees.

Those fees typically vary with the number of units to be produced and, in some cases, the nature of the use. The numbers are serious: 100 million MP3 players, for example, are expected to be in use worldwide by the end of this year, and a billion music tracks are said to be downloaded every month.

Open-source developers have been busy, too. As Christopher Montgomery, founder and lead programmer at Xiph.org, an open-source development project, puts it, "Open source is not a fad any more than the Internet is; it is a necessary force driving innovation and the Internet forward while protecting the interests of individuals, artists, developers and consumers."

Several open-source audio encoding-decoding formats have been created, and they are supported by many authoring and player packages. There's LAME. There's Monkey's Audio and a voice-oriented codec called Speex.

There's also Exact Audio Copy, software written by a student at the University of Dortmund in Germany. Finally, and perhaps most significantly, there's the oddly named Ogg Vorbis, which could be the strongest challenger yet to the proprietary music formats.

"We are seeing Ogg Vorbis adopted by MP3 player manufacturers and chip manufacturers who, as the market grows and as the lower end becomes increasingly commoditized, are looking for ways to boost their feature sets," IDC senior analyst Susan Kevorkian told TechNewsWorld.

"One way for them to do that is to support a greater number of codecs," said Kevorkian. "The crux of the matter is how many people are using it and how much music is available encoded in that format."

You might think the choice of compression format would be easy: Run some tests and see which sounds best. But it's not so simple. First, modern compressors are based on psychoacoustic effects - - that is, tests that rely on human hearing. Comparison tests -- and there have been many -- are therefore largely subjective. Almost everyone comes up with a different set of bests and worsts.

In addition to psychoacoustic issues, there are Internet-specific issues: To be practical, a codec must support streaming. There's also the choice between lossy and lossless algorithms. The former eliminates supposedly nonessential data to achieve a greater compression ratio, but at a cost in quality and in the time required to encode and (more critically) decode.

Data transfer rate plays a role, too: The holy grail of audio compression is the best quality combined with the lowest bit-rate. Codecs can succeed or fail on that factor alone. Backward compatibility is important, too, as well as support from third-party manufacturers. Even content matters: Classical music demands more from a codec than rock. Finally, there's the question of digital rights management (DRM) to prevent unauthorized copying of audio content.

DRM might be the critical issue. "The question is, are the music labels actively supporting [Ogg]?" Kevorkian said. "Because if digital rights management isn't a part of it, then it's certainly not the direction that the music industry's going. In fact, [open-source developers] are proponents of unprotected codecs."

However, said Kevorkian, the major record labels are experimenting more actively with CD content protection technologies that include both a protected set of Red Book audio files - - the standard audio CD file format -- plus Windows Media Audio files, which are protected so that you'd be able to transfer them to your PC's hard drive but not distribute them online.

"Also," she said, "as the music industry supports paid music services more actively, we expect the majority of paid music services to support Windows Media Audio because the codec and the DRM are closely integrated, so every music service provider doesn't have to think about combining the two like Apple did."

Whether or not open-source audio standards will threaten the dominance of MP3 and WMA remains to be seen. Open-source audio developers -- opposed by aggressive commercial giants, ideologically committed to nonprofit but needing development capital -- seem to face unbeatable odds. Perhaps they'll take heart by looking at open source's recent progress in the corporate world.


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Database Protection Bill Advances in Congress
Andy Sullivan

An effort to protect school guides, news archives and other databases from wholesale copying won the approval of a congressional subcommittee on Thursday, despite objections of lawmakers who said it is not necessary.

The House of Representatives intellectual-property subcommittee voted 11-4 to provide a legal umbrella for publishers of factual information, such as courtroom decisions and professional directories, similar to the copyright laws that protect music, novels and other creative works.

Database providers have pushed for such protection for years, saying they have few legal tools to protect themselves from rivals who copy and resell information that they have painstakingly assembled.

Business, consumer and library groups have blocked passage in previous sessions of Congress, saying database publishers can protect themselves through existing laws and terms-of-service agreements.

Lawmakers drafted a more narrowly focused version this year, and the subcommittee amended it further so research activities at colleges and universities would not be affected.

But opponents at the subcommittee meeting said they still saw no reason for it to become law.

"This is the classic solution in search of a problem," said Virginia Democratic Rep. Rick Boucher.

"When all is said and done, this is an effort to create a property right in an area that cannot be copywritten," said California Democratic Rep. Zoe Lofgren.

Bill proponent Rep. Howard Berman, a California Democrat, wondered if perhaps they had weakened it too much.

"All that hard work has appeared to reduce support for this ball, rather than reduce its opposition," Berman said.

No similar bill has yet been introduced in the Senate.
http://www.reuters.com/newsArticle.j...toryID=3631754


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Reading the Broadcast Flag Rules
Edward W. Felten

With the FCC apparently about to announce Broadcast Flag rules, there has been a flurry of letters to the FCC and legislators about the harm such rules would do. The Flag is clearly a bad idea. It will raise the price of digital TV decoders; and it will retard innovation in decoder design; but it won't make a dent in infringement. It's also pretty much inevitable that the FCC will issue rules anyway -- and soon.

It's worth noting, though, that we don't know exactly what the FCC's rules will say, and that the details can make a big difference. When the FCC does issue its rules, we'll need to read them carefully to see exactly how much harm they will do.

Here is my guide to what to look for in the rules:

First, look at the criteria that an anti-copying technology must meet to be on the list of approved technologies. Must a technology give copyright owners control over all uses of content; or is a technology allowed support legal uses such as time-shifting; or is it required to support such uses?

Second, look at who decides which technologies can be on the approved list. Whoever makes this decision will control entry into the market for digital TV decoders. Is this up to the movie and TV industries; or does an administrative body like the FCC decide; or is each vendor responsible for determining whether their own technology meets the requirements?

Third, see whether the regulatory process allows for the possibility that no suitable anti-copying technology exists. Will the mandate be delayed if no strong anti-copying technology exists; or do the rules require that some technology be certified by a certain date, even if none is up to par?

Finally, look at which types of devices are subject to design mandates. To be covered, must a device be primarily designed for decoding digital TV; or is it enough for it to be merely capable of doing so? Do the mandates apply broadly to "downstream devices"? And is something a "downstream device" based on what it is primarily designed to do, or on what it is merely capable of doing?

This last issue is the most important, since it defines how broadly the rule will interfere with technological progress. The worst-case scenario is an overbroad rule that ends up micro-managing the design of general-purpose technologies like personal computers and the Internet. I know the FCC means well, but I wish I could say I was 100% sure that they won't make that mistake.
http://www.freedom-to-tinker.com/archives/000458.html


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The Honorable Michael K. Powell
Chairman
Federal Communications Commission
445 12th Street, S.W.
Washington, DC 20554

Dear Chairman Powell:

Recent reports suggest that the Federal Communications Commission (FCC) will soon act on a petition to implement a so-called "broadcast flag" proposal purportedly designed to help thwart digital piracy. If adopted, the proposal would require all digital televisions, computers and other consumer electronics devices sold in the United States to look for and respond to a specific, technological standard to prevent digital television broadcasts from being redistributed over the Internet or outside a secure home network.

As you know, this proposal has been roundly endorsed by the film and broadcast industries, but it has split off significant portions of the consumer electronics and information technology industries into opposing camps. More importantly, however, thousands of American consumers have filed comments with the Commission, and consumer advocate groups contend that granting this petition would significantly impact the commonplace viewing and recording of broadcast television that consumers have become accustomed to since the introduction of the VCR more than twenty years ago.

Consumer advocates and computer companies have also argued that the broadcast flag proposal will remain an ineffective solution to television piracy so long as there are unprotected analog outputs used to link together consumers' televisions with their cable and satellite set-top boxes, their VCRs, and increasingly, their TiVo's and DVD recorders. Notably, the Motion Picture Association of America raised similar concerns in the context of your recently completed proceeding on "plug-and-play" digital televisions, commenting to the Commission that "the continued availability of unprotected analog connections" means that the plug-and-play proposal itself "fails to achieve meaningful protection of digital content."

I understand that the content industries have asked the FCC to consider this action to support their efforts to protect highly valued digital television content from being redistributed illegally. I respect their legitimate desire to protect their valuable content. I would be concerned, however, if such protection means consumers must face an endless cycle of replacing their home electronic devices each time the next, incremental piece of the piracy solution is unveiled.

I am writing to inquire how implementation of the broadcast flag proposal would impact consumers -- both immediately and in the future. In particular, I ask you to comment on whether this impact would be mitigated or further exacerbated by future Commission actions to address the "analog hole" issues that all parties agree will persist even if a broadcast flag is implemented. Given these apparent doubts about the effectiveness of a broadcast flag, has the Commission considered whether the anticipated benefit to be derived from such a mandate justifies its potential cost to consumers?

I note that this letter reflects my own concerns on this important question of public policy. It is not written on behalf of any party seeking favorable disposition of any matter in any party to any proceeding before the Commission. Please treat this letter in compliance with all applicable substantive and procedural rules.

Sincerely,

John McCain

Chairman

cc: Commissioner Kathleen Abernathy
Commissioner Jonathan Adelstein
Commissioner Michael Copps
Commissioner Kevin Martin

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TV on DVD: What's the Difference?
Reuters

Television shows may look the same -- or even better -- when they appear on DVD. But sometimes, they don't sound the same.

Studios frequently have to replace the music heard during the original broadcast for the DVD release, largely because of the prohibitive costs associated with licensing the music, studio executives say.

Sony on December 16 will release the second-season set of Dawson's Creek, featuring new music that replaces the pop tunes from the series. Disney's first-season set of Felicity contained new music. And Universal has said that Miami Vice won't be coming to DVD anytime soon because of the difficulty of obtaining the rights to the pop music that crowded the show's soundtrack.

But in some cases, like Warner's Smallville, the music remains intact.

It all comes down to a matter of money, said Gord Lacey, founder of TVShowsOnDVD.com.

"(Studios are) saying, 'We couldn't afford to license the music we used in the show,"' Lacey said. "It's happening more and more, actually." Indeed, studio executives acknowledge that the price of obtaining those rights is prohibitive.

It does get pretty expensive to hand over cash to license the pop music that plays all too frequently in today's television series, Lacey said. And it seems as if the music companies are taking their own beleaguered industry's woes out on the studios by charging -- or trying to charge -- top dollar to let their acts be heard in DVDs, he said.

But the expense appears to be worth it to Warner Home Video, at least in the case of the Smallville first- season set.

"We believe that the consumer is entitled to receive the original and uncut music as it was delivered during its original and subsequent airings," said Jeff Baker, VP of nontheatrical franchise marketing. "Therefore, our DVD version reflects the original music." Baker said he can't think of any instances of Warner having substituted music on television shows.

But cost is indeed a factor, and Warner is sitting on two TV series, which Baker didn't name, slated for release next year, all because of the cost of music clearances.

"As the market tightens in the next year or two, we will not overextend financially if it does not make sense," Baker said. "We will either shelve the product or consider substituting the music."

The studios themselves seem to have been blindsided by the very success of TV shows on DVD. As a result, they weren't legally prepared for music clearances when it came time to put their shows on DVD, Lacey said.

The success of TV on DVD is "a relatively new business opportunity" and as a result, contracts were not written with music licensing for the DVD in mind, Baker said.

But if studios are out in front of the issue with their fans, Lacey said, consumers accept it. He said that for its first-season set of Felicity, Disney licensed the music that played in the first and last episodes -- and replaced everything in between.

"They basically didn't let consumers know," he said. "You get fans, they put it in there, and all of a sudden the music is different, and they don't like that. They complain very loudly." But Disney added a note to the back of the series' second-season set advising buyers of the change, he said.
http://www.wired.com/news/digiwood/0,1412,60890,00.html


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Senate Committee Approves P2P Security Bill
Roy Mark

The Senate Governmental Affairs Committee Wednesday approved a bill mandating federal agencies to
develop and implement security plans to protect their network systems from the risks posed by peer-to-peer (P2P) file sharing. Earlier this month, the U.S. House of Representatives approved the same legislation.

Both the House and the Senate have already implemented security measures against P2P security threats through both technical and non-technical means, including firewalls and employee training. The Government Network Security Act of 2003 would give Executive Branch agencies six months to take similar steps.

The federal government uses and stores a wide variety of classified and sensitive information, including information vital to national security, defense, law enforcement, economic markets, public health, and the environment. Government computers also contain personal and financial information of U.S. citizens and businesses.

Installation of P2P software on government computers can expose this sensitive information to the public.

The House Committee on Government Reform issued a staff report in May showing how through a "couple of simple searches" of the most popular P2P programs, personal information such as tax returns, medical records, and confidential legal documents and business files were found.

"We learned (through hearings held in May) that using these programs can be similar to giving a complete stranger access to your personal file cabinet," said bill co-sponsor Tom Davis (R-VA) said. "Needless to say, file sharing programs create a number of risks for federal departments and agencies if they are installed on government computers. Because files are shared anonymously on peer to peer networks, there is also a risk of the spread of viruses, worms, and other malicious computer files."

Instead of banning P2P networks on government computers, a Davis spokesman told internetnews.com in Sept., "We didn't want to be that draconian." Neither the legislation, the staff committee report nor the Davis spokesman could site how many government computers have P2P software installed.

Both the House and Senate legislation contains language that states, "Innovations in peer-to-peer technology for government applications can be pursued on intragovernmental networks that do not pose risks to network security."
http://dc.internet.com/news/article.php/3097621


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Radio Stations Must Pay Royalties for Webcasting
Shannon P. Duffy

In a huge win for the recording industry, a federal appeals court has refused to overturn a rule passed by the U.S. Copyright Office that says radio stations must pay royalties when their broadcasts are simultaneously transmitted digitally over the Internet in a practice known as "streaming."

The unanimous three-judge panel of the 3rd U.S. Circuit Court of Appeals found that the rule was correct because Congress intended for the royalty exemption to apply only to "traditional, over-the- air broadcasts."

The decision in Bonneville International Corp. v. Peters, handed down Friday, upholds an August 2001 decision by U.S. District Judge Berle M. Schiller. The district judge had concluded that the rule was entitled to deference, and even if it were not, it would still pass legal muster because it is consistent with recent congressional efforts to address technological advances that threaten record sales.

The 3rd Circuit concurred, finding that, in passing the rule, the Copyright Office correctly interpreted two statutes passed in recent years to respond to technological advances -- the Digital Performance Right in Sound Recordings Act of 1995, or DPRA, and the Digital Millennium Copyright Act, or DMCA, passed in 1998.

Visiting 7th Circuit Senior Judge Richard D. Cudahy traced recent evolutions in copyright law as it relates to music, noting that for many years, the law granted protection only for public performances, and provided no protection at all for owners of the copyrights to sound recordings.

In 1971, Cudahy said, Congress passed the Sound Recording Amendment, granting limited copyright in the reproduction of sound recordings in an effort to combat recording piracy.

"However, there was still no right to public performance of that sound recording," Cudahy noted.

Although radio stations routinely pay copyright royalties to songwriters and composers -- through associations like the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music Inc. (BMI) -- for the privilege of broadcasting recorded performances of popular music, they do not pay the recording industry royalties for that same privilege, Cudahy said.

The system worked well until about 10 years ago because "the recording industry and broadcasters existed in a sort of symbiotic relationship wherein the recording industry recognized that radio airplay was free advertising that lured consumers to retail stores where they would purchase recordings."

But the 1990s "brought significant technological change," Cudahy said, when advancements in digital- recording technology created the possibility that consumers would soon have access to services whereby they could pay for high-quality digital audio transmissions or even pay for specific songs to be played on demand.

The recording industry, Cudahy said, "was concerned that the traditional balance that had existed with the broadcasters would be disturbed and that new, alternative paths for consumers to purchase recorded music (in ways that cut out the recording industry's products) would erode sales of recorded music."

Congress responded by passing the DPRA, which added a digital audio transmission performance right to the list of protectable rights.

But, the DPRA also exempted noninteractive, nonsubscription broadcast transmission. That law, too, proved inadequate, Cudahy found, because technology continued to advance, and the Internet soon became a viable medium over which to transmit, in real time, sound recordings.

In 1998, Congress amended the DPRA by passing the DMCA, which specifically addressed Internet streaming.

In March 2000, the Recording Industry Association of America petitioned the Copyright Office for a rulemaking to clarify whether AM/FM webcasting -- the simultaneous Internet streaming by radio broadcasters of their AM/FM broadcast programming -- was a "nonsubscription broadcast transmission" that was exempt from the digital audio transmission performance right.

When the Copyright Office sided with the RIAA, the National Association of Broadcasters responded by filing suit in U.S. District Court to challenge the rule. Schiller upheld the rule, finding that "the Copyright Act evinces Congress' intent to empower the Copyright Office to interpret the statute."

Over the years, Schiller said, Congress has clearly shown that it "recognized the expertise of the Copyright Office in matters relating to copyright."

Turning to the specific question of whether the Copyright Office had the power to decide the issue, Schiller found that "Congress implicitly, if not explicitly, entrusted the Copyright Office with the task of determining which entities and means of transmission would be exempted."

Now the 3rd Circuit has ruled that Schiller got it right because the rule is consistent with, and effectuates the goals of, the most recent statutes.

"The exemptions the DPRA afforded to radio broadcasters were specifically intended to protect only traditional radio broadcasting, and did not contemplate protecting AM/FM webcasting," Cudahy wrote in an opinion joined by 3rd Circuit Judges Jane R. Roth and D. Brooks Smith.

"The DMCA's silence on AM/FM webcasting gives us no affirmative grounds to believe that Congress intended to expand the protections contemplated by the DPRA," Cudahy wrote.

The broadcasters, Cudahy said, "must show something more than congressional silence to argue convincingly that Congress intended to lump AM/FM webcasting with over-the-air broadcasting."
http://www.law.com/jsp/article.jsp?id=1066080445213

[JackSpratts]

what you don't know can hurt you

The Copyright Cuffs

Why we should care who gets the merchandising deal from a movie or the song tie-in on a variety show.
Jonathan Zittrain

A couple of years ago I was talking with a law school colleague about cyberlaw and the people who study it. "I've always wondered," he said, "why all the cyberprofs hate copyright."

I don't actually hate copyright, and yet I knew just what he meant. Almost all those who self-identify as cyberspace law scholars agree that copyright law is a big mess. So far as I can tell, federal courts experts don't reject or loathe our system of federal courts, and criminal law experts split every which way on the overall virtue of the criminal justice system. So what's with cyberprofs' uniform discontent about copyright?

I think an answer can be gleaned from the tax scholars. Without decrying the concept of taxation, every tax professor I've met regards the U.S. tax code with a kind of benign contempt, explaining it more often as a product of diverse interests shaped from the bottom up than as an elegant set of rules crafted by legal artisans to align with high-level principles about the most just way to redistribute resources or to maximize social welfare.

Copyright is like that too, and while I hate its Platonic form no more than the typical tax maven hates tax, I find myself struggling to maintain the benign part of my contempt for its ever-expanding 21st-century American incarnation. A gerrymandered tax code primarily costs the public money- measured by overall inefficiency or extra taxes unfairly levied on those without political capital. But copyright's expanding cost is measured by a more important, if inchoate, currency of thoughts and ideas.

The Law and the Reality: From TVs in Restaurants to Woody Allen Quotes

We live today under two copyright regimes-the law on one hand and reality as experienced and practiced by the public on the other. These regimes' orthodoxies have become increasingly divergent, but until recently they governed completely discrete spheres.The U.S. legal regime is found within Title 17 of the federal code. It proscribes such acts as the public performance of music without payment to the composer, or the copying of books without the permission of the author (or more likely the company to whom the author long ago assigned rights).

The limits on behavior enumerated in the first regime have gone far beyond the wholesale copying of books, maps and charts covered by the first copyright act of 1790. They now extend to computer software, dances, boat hulls (delineated in a 1998 amendment as "the frame or body of a vessel including the deck, but not the rigging") and music (Congress covered performances in 1909, and copies of sound recordings in 1971). What the public can and can't do is now described at a dizzying level of detail worthy of the most byzantine tax code.

For example, bars and restaurants that measure no more than 3,750 square feet (not including the parking lot, so long as the parking lot is used exclusively for parking purposes) can contain no more than four TVs of no more than 55 inches diagonally for their patrons to watch, so long as there is only one TV per room. The radio can be played through no more than six loudspeakers, with a limit of four per room. That is, unless the restaurant in question is run by "a governmental body or a nonprofit agricultural or horticultural organization, in the course of an annual agricultural or horticultural fair or exhibition conducted by such body or organization." Then it's OK to use more speakers.

This astonishingly elaborate and expansive copyright regime isn't fed only by statutes, of course. Judges' interpretations account for much of its reach. The notion of "contributory" copyright infringement-in essence, aiding and abetting copycats-is entirely judge-made. In conjunction with a statutory limit on creating not just copies but "derivative" works of a copyrighted original, a theory of contributory infringement led two courts to outlaw the production by third parties of cassette programs designed to be inserted into the belly of Teddy Ruxpin talking stuffed animals. The idea was that by pushing the play button when a non- Teddy Ruxpin story tape was inside the creature, children would be creating a contraband derivative "audiovisual work comprising animated plush toy bear with unique voice." Since toddlers are largely unsusceptible to cease-and- desist letters, it fell to the cassette manufacturers to stop providing the ready means for the kids' illegal behavior.

For all of its detail, however, Title 17 remains stubbornly vague, recalling Woody Allen's indictment of a bad restaurant: "The food at this place is really terrible...and such small portions." Including Woody Allen's quotation here is probably fair use, so it's OK to repeat it without his permission-but we'd have to risk a lawsuit to be sure. No wonder most publishers proceed as if fair use doesn't exist at all, asking permission to use every quote-or failing that, doing without.

Con't


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Copyright Term Extension: Does A Bad Report Cost More Than A Good Report?
Lessig

As Michael Geist writes, it is increasingly the practice of the US government to export its copyright policy though bi-lateral trade agreements. One example is the trade agreements being concluded with Australia right now that will require Australia to increase its copyright term to life plus 70.

The Allen Consulting Group has prepared what it apparently considers an economic analysis of the proposed Term Extension. The report was commissioned by the Motion Picture Association, among others. The report is embarrassingly poorly done.

I describe some errors in the extended entry below. But I hope for the Allen Consulting Group that this report is not representative of its work in general.

While the report describes a 1989 article by Posner/Landes as the "major theoretical contribution" to the analysis of term extensions, the most striking feature of the Allen report is its failure to address the arguments made by 17 economists, including 5 Nobel prize winners, in the brief submitted in Eldred and then published by AEI-Brookings. While that brief has been smartly criticized (though I believe erroneously, as I will describe in another post) by Liebowitz & Margolis, it certainly sets the framework for any economic analysis of term extension. (The Posner/Landes piece is about the length of terms generally, not term extension).

As Akerlof, et al., frame the analysis, the fundamental distinction in any consideration of term extension is the difference between extending existing terms, and extending terms prospectively. This distinction appears no where in the Allen Consulting Group report. Thus throughout the report, one is bounced around with arguments that are true for prospective extensions but false for retrospective extensions, and false for prospective extensions, but true for retrospective extensions. While the report cites the brief in a footnote and to accompany another cite, it nowhere addresses this core question that brief raises: Whether or not you believe extending terms in the future makes sense, what possible argument is there for extending terms for works that already exist?

In America, the answer to that argument was simple: Hollywood benefited. But what is the argument in Australia?

More frustrating is the pudginess of this argument that purports to be economics. There's lots saying that both sides exaggerate their claims, but nothing to provide any actual evidence to evaluate whether any claim is exaggerated. And then, after acknowledging there is no useful actual evidence at all, the report concludes that on balance, the effect of the extension would be neutral, and so Australia should do it.

I've put some notes on the report here that you might find useful as you read through their argument. No doubt I'm not a neutral in this debate. But I only hope the Allen Consulting Group got alot of money for this report. It certainly won't help its reputation as a firm that provides objective economic analysis.
http://www.lessig.org/blog/archives/001522.shtml#001522


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Buck a Song, or Buccaneer?
Leander Kahney

Apple Computer's iTunes Music Store for Windows appears to be off to a grand start, but no matter how successful it may be, the online store will never, ever have the slightest impact on the file-sharing networks, experts say.

Launched last week, Apple's iTunes jukebox software and associated online store had attracted a million Windows users in just over three days, Apple said Monday.

In the same period, the iTunes store sold 1 million songs at a buck a pop -- twice as many as were sold in the store's first three days of existence this April, when it was open only to Mac users. To date the store has sold 14 million tunes, more than 70 percent of all the music sold online.

To hear Apple's CEO Steve Jobs tell it, the iTunes store is the beginning of the end for the file-sharing networks.

"This has been the birth of legal downloading," Jobs declared at last week's flashy launch event.

He added, "We're going to fight illegal downloading by competing with it. We're not going to sue it. We're not going to ignore it. We're going to compete with it."

According to Jobs, competing with file-sharing networks means providing things like reliable, one-click downloading, good-quality sound and liberal usage rights. Plus, buying songs from Apple is legal: No one is going to be sued by the Recording Industry Association of America for doing it.

"It's good karma," Jobs said. "You're supporting artists. You're not stealing."

So confident is Jobs of competing with the file-sharing networks, the store will sell 100 million songs before the end of next April, Jobs predicted.

But to Eric Garland, CEO of BigChampagne, a Beverly Hills, California-based research firm that tracks file- sharing networks, 100 million songs is the teeniest, weeniest drop in the bucket.

"100 million songs in a year sounds like a lot of songs," he said. "But it's a tenth of all the songs available at any time on Kazaa. It represents a tiny fingernail, a sliver of a fraction of the downloads from Kazaa."

Garland said on average, there are 700 million files being traded on Kazaa, and 900 million files at peak. Most of it is music, he said.

"When you look at the (Apple iTunes) numbers, they are very modest," he said. "You're talking about a mom-and-pop business when compared to the millions in the file-sharing free-for-all.... Relative to the MP3 phenomenon, it's a small revolution."

Garland compared the iTunes store to a business bottling water. Apple might be very successful selling bottled water, but most people still will get their water from the tap, he said.

"They might create a successful business, but they are not tackling the main point of consumption," Garland said. "It's like charging a premium for every thousandth (song) download, but most music is still being downloaded for free."

Fred von Lohmann, senior staff attorney with the Electronic Frontier Foundation, agreed.

"I think it's exciting, and it will attract several hundred thousand customers," he said. "It's just not a compelling offering to 60 million file sharers. It's not going to entice Kazaa users to give up file sharing."

Von Lohmann said the store may become a "great niche product" like a boutique motorcycle firm: Apple's online store may be successful, but it will never be the vehicle of choice for most people, he said.

Both von Lohmann and BigChampagne's Garland scoffed at suggestions that the music store would increase the number of files on the file-sharing networks.

Garland said everything at the iTunes store already is available on the file-sharing networks. "There's far more music on Kazaa than on the Apple store," he said. "Why would Kazaa be getting its music from that network? I don't think the Apple store is going to be feeding music to Kazaa."

The one exception, Garland said, are those tracks exclusive to the Apple store, which in every case have been uploaded to the file-sharing nets within hours of their release, sometimes before, he said.

"Every exclusive on the Apple store is immediately available on Kazaa," he said. "And many, many more people are acquiring those exclusives from Kazaa than (from) the iTunes music store."

(Music sold at the iTunes store is encoded in copy-protected AAC format, which is easily circumvented, allowing files to be converted to the MP3 format. Though AAC and MP3 are both compressed formats, degradation of quality is minimal, Garland said.)

"In a P2P world all it takes is one person to upload some content to the file-sharing networks, and then everyone else can download it," said von Lohmann. "It's the smart-cow problem. It only takes one smart cow to open the latch of the gate, and then all the other cows follow."

An Apple spokesman declined to comment beyond the statements made by Jobs at the launch event.
http://www.wired.com/news/business/0,1367,60901,00.html


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Audible Service Could Teach Music Industry a Lesson
Lisa Napoli

Reasonably priced secure downloads. Compensation for writers and artists. Peaceful alliances between publishers and online distributors.

A utopian vision for the music industry? Perhaps. But that approach, which appears to be the goal of Apple Computer's iTunes music store and others like it, is already a reality for delivering audio books and other spoken word offerings over the Internet, as created by Audible, a small company in Wayne, N.J.

Technological challenges for Audible - like having to invent a playback device to fulfill the promise of mobile listening, and a small target audience not accustomed to going online - have been daunting. So have financial woes: Since the company went public in July 1999, its stock has ranged from a high of $25 a share to just pennies, and Audible has never made a profit. The stock closed at $2.03 on Friday, up 44 cents. And yet, in part because of investors like Microsoft, Amazon and Bertelsmann, Audible, which was begun in 1995, survived an era that destroyed many other digital start-ups.

Survival also has something to do with the fact that Audible's business has nothing to do with music, Donald R. Katz, Audible's founder, said. While the music industry has struggled with how to work with the Internet, initially denying it was even a threat and keeping it at arm's length for years, Audible has been using digital downloading to reach new audiences and to deliver the wares of the audio book industry more efficiently and less expensively.

"Consumers are listening to audio books on cassette, on CD, on MP3's," said Mary Beth Roche, president of the Audio Publishers Association, a trade group. "Our challenge in the bricks-and-mortar stores is limited shelf space. How do you figure out what format for which title?''

Digital downloading offers a solution. Ms. Roche, who is also the publisher of Audio Renaissance, an Audible partner, said that the audio books industry had traditionally lagged behind the music business in technological innovation. But it has forged well ahead of the record business in developing a viable and secure delivery system that customers are willing to pay to use.

"Audible was able to come up with a digital rights management system that worked and made everyone comfortable,'' she said. "Maybe we benefited because we were a smaller business."

There are big differences between the two recording industries. Audio book sales, about $2 billion a year, are a small fraction of the music industry's $12 billion in revenues from the United States. Unlike CD's, audio books - often filling four or more cassettes - can be unwieldy, more naturally suited to the digital format. And users of spoken word content, which covers a variety of products, including radio programs and daily digests of newspapers, are typically older, which makes them more respectful of copyright laws, industry executives say. "A book is a substantial cultural artifact, where a song doesn't have much weight to it," Mr. Katz said. He cited the "politicization of sharing music'' as another reason for the music industry's problems.

An author and former journalist, Mr. Katz founded his company before the term "dot-com" was tacked on to every business plan, before portable digital audio players existed, and when rumblings about music piracy were as new as the Web itself.

At the beginning, Mr. Katz's team had to concoct not just the software for secure digital delivery of its offerings but the portable hardware device on which to play them back. Initial users had to buy portable devices that predated MP3 players; the company's first portable digital audio device is so innovative that it is preserved as an artifact at the Smithsonian Institution.

"One of the reasons we didn't grow as quickly as we could have is that the business was predicated on the ubiquity of playing devices," Mr. Katz said. The devices have only taken off in the last two years, particularly with the introduction of the Apple iPod, which works with Audible.

On Thursday, Audible's reach grew with the announcement that thousands of hours of its offerings will be available from Apple's iTunes music store.

Audible long ago abandoned making its own device; it now gives away an MP3 player as an incentive for new subscribers.

Persuading audio book publishers and radio producers to allow him to sell their content online was not easy at first, Mr. Katz said, particularly because many publishers were still feeling the sting of failed experiments with the CD-ROM. But unlike the record industry, book publishers agreed to share their rights long before a free alternative like Napster or Kazaa came along to make copyright violations as easy as clicking a mouse.

"Audible had to go out and convince publishers that this new technology would shepherd their content in a secure way and that it wouldn't cannibalize their business," Mr. Katz said. "I was pretty honest that the revenues would be very, very small at the beginning. Everybody basically was fundamentally happy to have this extra revenue stream."

The market for audio books has grown 360 percent since 1990, industry figures show. One in five American households includes someone who has heard an audio book, said Robin Whitten, editor of AudioFile magazine. "When I started you had to explain what an audio book was to people,'' Ms. Whitten said. "Now it's part of most people's experience."

As the business has grown, Audible has managed to carve a niche. Its alliances with publishers have improved and offerings have become more comprehensive. Audible is growing but it is not yet a financial success, Mr. Katz said. "We're getting close to being self-sustaining,'' he said. "The big challenge is it's just not well known enough."
http://www.nytimes.com/2003/10/20/te...n er=USERLAND


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The RIAA and the Music Piracy Debate

Sen. Norm Coleman (R-Minn.) was online to talk about his efforts to rein in the recording industry's aggressive legal war against people who illegally trade music online. Piracy is wrong, Coleman agrees, but so too are some of the industry's tactics.

An edited transcript follows.

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.

________________________________________________

washingtonpost.com: Good morning Senator Coleman, thanks for joining us today. The war over online file swapping has been escalating in recent months, as was made clear a hearing you presided over last month. Having failed in efforts to shut down networks like Kazaa and Morpheus, the Recording Industry Association of America (RIAA) has mounted a legal blitz against individuals who trade songs online. The RIAA says the lawsuits are among the few effective tools they have to combat music piracy, but you and others have expressed concern about their tactics. Can you describe your concerns?

Sen. Norm Coleman: Good morning. It's great to be here. I've noted publicly that law and technology in this area seem out of sync. This forum is a great opportunity for policy and technology to be in sync.

First we recognize that file sharing is wrong. It is taking without compensation someone else's property.

But the question is how do you stop what 60 million Americans are already doing? I have three concerns about the RIAA approach.

First, the broad grant of subpoena authority has the potential to sweep in folks who may not have done anything wrong.

Second, the civil penalties in this area, including fines up to $150,000 per song, are clearly excessive. They can be used to intimidate and threaten folks who may or may not have done anything wrong.

Finally, I also have concerns about the impact on personal privacy protection. The technology used by the RIAA and P2P networks has the potential to undermine personal privacy protections.

_______________________

Bangor, Me.: What's your reaction to the RIAA's latest news that they will send warning letters before dumping lawsuits on suspected file sharers?

Sen. Norm Coleman: Good first step. This action still doesn't solve the underlying concerns I raised before. You are not going to change the behavior of 60 million people through the use of lawsuits alone.

_______________________

Macon County Line: I heard you want to introduce a bill that would affect the recording industry's campaign against file sharing. What will it do?

Sen. Norm Coleman: We anticipate having one more hearing before we begin looking at legislation. There is existing legislation that would change the subpoena process. I am in support of that in concept, but we need to hear from some of the technology companies before we finalize any legislative approach.

I do not believe the solution to this problem lies simply in legislation.

_______________________

Lyme, Conn.: It is my understanding the music industry has chosen a few unfortunate people and decided to make examples of them by suing them for large amounts of money in hopes of deterring others. Wouldn't it be more effective, and fairer, if the industry sought smaller fines from a larger number of people? If people thought they could actually be caught and could face reasonable penalties, wouldn't that deter more people?

Sen. Norm Coleman: That is a very reasonable approach and one we are looking at closely. The punishment needs to fit the crime.

_______________________

Greenfield, Mass.: How do you feel about the RIAA blaming online music piracy for their drop in sales. Do you think other factors, like the economy, could be just as much to blame?

Sen. Norm Coleman: The online piracy is certainly a factor in sales reduction, however so are high prices. It is clear that consumers deserve to have more safe, legal, affordable online downloading options.

_______________________

Lansing, Mich.: Do you think that the recording industry is in part to blame for the current degree of piracy of copyrighted music? What I do not understand is why it has taken approximately two years since the shutdown of Napster for a convenient legal outlet for mp3s to emerge, such as Apple's iTunes. I do not know if the executives of the music industry ever tried listening to mp3s on their computers and realized that this was a extremely convenient way to listen to music (more so than compact discs) that was here to stay.

Sen. Norm Coleman: I do believe the industry should have more aggressively addressed consumer needs a long time ago.

_______________________

Red River Rock, Ark.: What do you think of the new guy running the recording industry? He doesn't seem like a "music" kind of person. What sort of experience does he bring to this situation?

Sen. Norm Coleman: I am a big fan of the "new guy." Let me just say this, the issue here is not just a music issue, it is a meeting consumer needs issue. It's solving a problem in a "reasonable way" issue, and the new guy, Mitch Bainwol, has a history of getting that done.

_______________________

Arlington, Va.: What is your reaction to the latest word that the RIAA is sending warning letters before filing anti-piracy lawsuits? Is this enough, or just "a step in the right direction"?

Sen. Norm Coleman: As I stated before, a step in the right direction.

_______________________

washingtonpost.com: Senator Coleman, many of our participants are asking questions about the state of copyright law in general. Do you think 1998's Digital Millennium Copyright Act struck the right balance between the rights of consumers and those of intellectual property owners? If not, what can Congress do to adjust that balance?

Sen. Norm Coleman: I think one of the problems with the 1998 DMCA is that it was created before the advent of KaZaA, Napster and the P2P technology that is used today to facilitate illegal downloading. This is what I mean when I say the law and technology are not in sync.

It is a great challenge for Congress to "adjust that balance" because technology changes so much quicker than the legislative process.

_______________________

Salt Lake City, Utah: I have heard many people say that it's not stealing if you don't sell it. How do we educate the public?

Sen. Norm Coleman: First, the P2P can do a better job of letting users know that trading copyrighted music online is illegal.

Secondly, the industry should use the same moxie it employs to sell its music, to educate consumers.

Third, we all have to recognize the challenge of educating young people that something that technology makes so easy; that you can't touch or feel, is still wrong.

_______________________

Washington, D.C.: Gartner reports that a substantial number of P2P users utilize the same to "sample" music. How often have you bought a $20 album, only to find a single song worth listening to. This accounts for the popularity of "listening posts" popular at music stores. Do you think industry is missing the opportunity to use P2P as a marketing tool?

Sen. Norm Coleman: Yes.

_______________________

Phoenix, Ariz.: I am concerned that in an effort to protect copyrights, the FCC and congress are poised to mandate anti-copying devices in consumer electronics that will also prevent me from moving my own legally-purchased music and video between my home, car, and portable devices, or recording TV programs for time-shifting. (Such as transferring CDs to my iPod, or watching DVDs on my laptop computer.)

How do you view the apparent tradeoffs between preventing unlawful digital duplication through technology with what are today considered fair use by honest consumers?

Sen. Norm Coleman: This is a very complex issue. I share your concerns but on the other hand we need to bring the hardware and software industries into this discussion. They need to be part of the solution. I anticipate my next hearing will address some of the technology issues.

_______________________

Alexandria, Va.: What's the atmosphere like up there when it comes to file sharing. I understand there are a couple of bills that vaguely talk about copyright protection (I think this is in the House) but is there any will to change the legal environment beyond the bill you're proposing?

Sen. Norm Coleman: Though everyone would say that they want a fair and balanced approach there is no consensus today on how to achieve that approach. The reason I hold hearings is not to rubber stamp preexisting views, but to try to find common ground that protects the future of the entertainment industry while at the same time meeting consumer needs and treating them more fairly.

_______________________

Tupelo, Miss.: What's your biggest objection to the RIAA subpoenas? Are you concerned about how easy it is for the industry to get them? how freely they seem to be doling them out? or how consumers can be hit by lawsuits without ever being informed that they are the subject of a corporate investigation?

Sen. Norm Coleman: All of the above.

_______________________

Last Mile Gorge, Penn.: I must be the only person in the world besides Cary Sherman and co. who thought going after the 12-year-old girl was a good idea. Stealing is stealing, even if you're on a ventilator. Do you concur?

Sen. Norm Coleman: I agree if you are stealing and you are on a ventilator, it's wrong- but we don't pull the plug. The penalty has to fit the crime. I'm concerned about making an example of a few people to change the behavior of 60 million people. What is the fair response to the actions of this 12-year old honor student.

_______________________

Arlington, Va.: What do you hear from constituents on this issue of the RIAA's lawsuits? Has it been a hot-button one, or overblown by the press?

Sen. Norm Coleman: For a while I was getting more comment about this than the war in Iraq. I have a 13-year old and a 17-year old. Like many other parents, we know this is something our kids are dealing with.

_______________________

Arlington, Va.: Does any other industry group enjoy the powers given to the RIAA? For example, can the Business Software Alliance get a clerk to issue a subpoena in cases of suspected software piracy?

Sen. Norm Coleman: The authority under the DMCA is not given to the RIAA specifically, rather it is given to any copyright holder. Some of my colleagues have raised concerns about pornographers utilizing the same authority to investigate the lives of whomever they choose.

_______________________

Edina, Minn.: How do you think the recording industry moves away from penalizing P2P users and moves toward deploying their own network of legal file sharing? In other words,when do you think they will capitalize on the technology rather than punishing people that are ahead of the curve?

Sen. Norm Coleman: The long term solution to this problem will not come about solely through lawsuits. That is simply one tool.

I do not think the answer lies in simply more legislation. The solution must be led by the industry and be a combination of law, technology, and creative business solutions. The industry has a right to be protected, but you have to do a better job of meeting consumer needs.

_______________________

St. Paul, Minn.: You say the penalties are too high, but clearly record companies are in a tight spot here. With 60 million Americans trading songs, they can only hope to go after a tiny fraction of the offenders. Don't you think they need stiff penalties if they hope to scare anyone away from piracy?

Sen. Norm Coleman: When the current law provides a penalty of up to $150,000 per illegally downloaded song. We know that penalty will never be imposed. My concern is the threat of that penalty is so severe that you force someone who didn't do anything wrong to settle because of fear of bankruptcy.

Lorraine Sullivan, one of the witness at the hearing related that her discussions with the RIAA were like talking to an abusive debt collection agency. I have concerns about using the law to threaten people. I don't think you are going to change the behavior of 60 million consumers by the threatening a few individuals with lawsuits.

_______________________

Washington, D.C.: You mention your myriad concerns both with the RIAA subpoenas and with the damages awardable under existing copyright law, but the record industry is bleeding and these lawsuits seem to be the only bandage that works. What kind of an olive branch you're willing to extend to artists so they can track down the people that steal from them?

Sen. Norm Coleman: Artists have a legitimate right to be compensated for their work. My goal is a stronger recording industry with more workable protections for artists. Testimony at the hearing reflected consumer backlash to the RIAA litigation strategy.



As stated before, more safe, legal, affordable downloading options will provide greater opportunity for artists to be compensated for their work.

_______________________

Salt Lake City, Utah: What do you feel would be a fair and proportional punishment for unauthorized file swapping?

Sen. Norm Coleman: We are trying to sort that out right now. The purpose of my hearings is, in part, to help determine the answer to that question.

_______________________

Cherry Hill, N.J.: OK, everyone's asked you whether you've been a file sharer. Now, are your kids? What would you do if you had a subpoena served and you end up under the lawsuit gun because one of your kids couldn't keep away from a free copy of that latest Avril Lavigne single?

Sen. Norm Coleman: First, I'd be pretty mad at my kids. I've had the discussion with them, but as any parent can tell you, it is difficult to control the actions of even the most responsible teenager.

The reality is I would have the resources and knowledge of the law to deal with this issue in a way in which it would not be much more than an embarrassment. However, many consumers like Lorraine Sullivan are frightened by the prospect of litigation. What will it cost? What are the penalties? How will I pay?

Again, I want to ensure the penalty fits the crime. I also want to ensure the people who are targets of investigations are in fact those people who engaged in the illegal downloading.

_______________________

Thunder Bay, Minn.: Senator - good to "see" you online. You say $150K is too much to demand for one stolen song. Last I checked they haven't exercised that clear legal right to go for that much cash. If they're suing people and settling for $2,000-$3,000 a pop -- and they're suing 1000s of song swappers -- it seems like the RIAA already is operating with forbearance. That said, what's a good maximum pairer damages award?

Sen. Norm Coleman: Glad to see Thunder Bay online. Two observations. First I am pleased the RIAA seems to be using forbearance however, the law does not require that and gives what I think is excessive broad discretion to protect their copyright interest, (both in subpoena power and potential penalties).

Again, part of this process of holding hearings is to find the answer to that question.

_______________________

Binghamton, N.Y.: Sen. Coleman - good morning - I know it's a little off-topic, but who were some of the acts you worked with before you were in Congress?

Sen. Norm Coleman: I was a roadie for ten years after 1969. I drove a truck for Jethro Tull. Carried some equipment for Savoy Brown. Did concerts at both the Spectrum in Philly, and the racetrack at Laurel, Maryland. One of my jobs was to stand behind the big marshall amps and make sure they didn't fall over. In those days there was no wireless technology.

That was a long time ago in a universe far, far away.

It was fun being online, I will try to get to some of the unanswered questions later. If you have any additional comments or questions, please contact me at opinion@coleman.senate.gov

_______________________

washingtonpost.com: Unfortunately we're out of time. We would like to thank Sen. Coleman for taking the time to join us and our audience for asking so many thoughtful questions.
http://www.washingtonpost.com/wp-dyn...-2003Oct9.html


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Cinema Admissions To Fall In 2003

Global cinema admissions will fall by 3.8% in 2003 to 8.46 billion, according to a new report from Informa Media Group. This follows a strong year in 2002 and declines in 1998, 1999 and 2000.

However, Global Film: Exhibition & Distribution - Sixth Edition points out that global box office receipts will drop 2.6% to $20.1 billion in 2003. This is the first fall in box office receipts for more than a decade.

Simon Murray, publisher at Informa Media Group, said: "A stronger slate of film releases in the second half of the year is not expected to be enough to swing the whole year round to higher figures than 2002. Going forward, industry growth is likely to be muted as the multiplex building boom is over in many countries. In fact, several countries appear to be overscreened, so the net screen count will fall in these territories, including the U.S."

Despite the poor estimates for 2003, admissions and box office figures for 2003 will still be higher than for 2001. The U.S. will see a 5% decline in 2003 and the UK will suffer a 4% fall. Global admissions are not forecast to beat the 2002 figure before 2010. However, the 2002 box office figure will be topped in 2005 as higher ticket prices in multiplexes have a greater effect.

Admissions by Continent (million)
1995 2002 2003 2010

Asia Pacific 6,352 5,317 5,156 5,129
Europe 826 1,167 1,104 1,227
Latin America 163 385 370 429
Middle East/Africa 185 155 150 149
North America 1,364 1,770 1,682 1,803
Total 8,889 8,793 8,461 8,737
Source: Informa Media Group

Despite the low admissions growth, global box office figures are expected to rise 14% between 2003 and 2010 to $23 billion - or nearly double the 1995 total. Much of this increase is due to multiplexes charging more for tickets than traditional cinemas.

Gross Box Office by Continent ($ million)
1995 2002 2003 2010

Asia Pacific 2,841 3,502 3,470 4,061
Europe 3,266 5,654 5,423 6,206
Latin America 308 1,087 1,065 1,416
Middle East/Africa 83 102 101 118
North America 5,934 10,282 10,025 11,126
Total 12,432 20,626 20,084 22,927
Source: Informa Media Group

Asia Pacific dominates the admissions figures, but low ticket prices mean that its influence on gross box office revenues fell in the late 1990s. The U.S. will take 46% of global box office in 2003, and this share will fall only slightly to 45% by 2010. The top 10 countries account for 85% of global box office in 2003, with this proportion likely to drop only a little by 2010.

Japan is the most lucrative market per screen, with Hong Kong, South Korea and Singapore following. These top earners are ideal markets for multiplex expansion. The global average revenue per screen is $144,000 in 2003, with the U.S. at $271,000.
http://www.informamedia.com/NASApp/c...=2001 7112810


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U.S Electronic Media & Entertainment Spend Exceeds $100 billion

U.S. consumer expenditure on electronic media and entertainment passed the $100 billion mark in 2002, according to a new report from Informa Media Group. U.S. Electronic Media and Entertainment forecasts that a further $20 billion will be added to this total by 2010. This growth comes despite the cyclical nature of the games industry, the impact of piracy especially on the music sector and the decline of the VCR/VHS market.

Consumer expenditure on electronic media and entertainment
$ million 2002 2003 2005 2010

TV subscription/PPV/VoD 46,156 48,829 53,459 64,512
DVD/video 20,302 21,634 23,204 21,555
Theatrical Exhibition 9,520 9,806 10,102 10,883
Games 12,548 10,565 7,135 8,870
Music 12,698 11,979 12,130 15,388
Grand Total 101,224 102,813 106,030 121,208
Source: Informa Media Group

Subscription and PPV/VoD revenues mainly from cable and satellite operations provide the bulk of the revenues - 46% in 2002 and 53% in 2010. The sector will grow by 40% during this period, mainly due to consumers' conversion to digital packages.

Digital TV will also extend its market share due to a stagnant film exhibition sector, and the music industry's ongoing battle against piracy, especially peer-to-peer downloads and CD burning. Furthermore,

DVD growth will be rapid, but will not be able to make up the shortfall from VHS losses. The games sector appears to follow a five-year cycle, which is principally dictated by the launch of a new generation of consoles.
http://www.informamedia.com/NASApp/c...034 683211732

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Inexpensive Animated Movies Could Transform The Movie Industry
Sander Olson

Preliminary evidence suggests that computer-generated animated movies are becoming less expensive to make. Companies like Pixar have been making feature-length animated movies at least since Toy Story, and many animated movies have been quite profitable. Most recently, Finding Nemo has been a critical and financial success. Unfortunately, the high cost of making animated movies has impeded development of the genre. Now, however, new animated movies are being developed that are in line with regular movie production costs; one feature-length animated movie called Valiant should only cost US$40 million to make. Moreover, Vanguard Films, the studio which is producing these movies, is confident that it can churn out a series of high- quality, full-length animated movies for $40 million or less. The original Shrek cost $60 million to make, and the sequel, Shrek 2,will probably cost more than $40 million to produce. Nevertheless, some conventional movies now cost $180 million or more to create, making animated movies look cost-effective by comparison. Computer power is now sufficiently great that generic PCs can now do much of the rendering work needed to make an animated film, and there is now a growing number of companies capable of creating animated movies. By contrast, many conventional movies are becoming increasingly expensive to produce, and even keeping production costs steady will be a challenge for the movie industry. If the average cost of creating animated movies moves to $40 million or less and these low-cost animated movies do well at the box-office, the animated movie genre could become dominant. Conventional production studios may soon find themselves losing business to animated movie companies, and animated movie companies may increasingly turn to outsourcing of labor in order to further reduce production costs.
http://www.geek.com/news/geeknews/20...1020022264.htm


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Plan For 'Window On The World' Attraction
Ananova

A window between cities that allows people hundreds or even thousands of miles apart to meet and talk could make its debut in Britain next year. Tholos, named after a type of circular ancient Greek temple, consists of a large round screen nearly 10ft high and 23ft wide. Its designers hope to see one of the first two in the world become a new tourist attraction in the centre of London. The London Tholos would be linked to an identical one in Vienna. Through them, people in both cities will be able to see and hear each other in real time.





The cylindrical structure contains technology that simultaneously transmits and receives high definition live moving images. People standing in front of London's Tholos would see a wrap-around picture of the scene in Vienna. At the same time, a similar London image is displayed in the Austrian capital.Citizens in both countries would be able to face each other and talk via an array of directional microphones and loudspeakers, which keep conversations private. Effectively, it is like meeting up in the town square - except that you might be on different continents.

Given the necessary sponsors and planning permission, Tholos screens twinning London and Vienna could be up and running by the second quarter of next year. There are ambitious plans to expand the system into a network linking at least 16 European cities by 2008, and then others in North America and Asia.

Each Tholos is expected to cost about £1.4 million to build and install. Public access would be free, and running costs paid for by advertising, which will take up 13% of airtime.
http://www.ananova.com/news/story/sm...ews.technology


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MP3 Players

Archos has introduced a pair of portable music players that can be customised to better reflect the user's needs. One of them, the Gmini 220, is the world's smallest player with a 20GB hard drive, Archos claimed.

The Gmini 120 and 220 essentially allow the user to bolt on a series of accessory modules, including a voice recorder (including a built- in microphone), a photo viewer (essentially a memory card adaptor), music composition software and an FM radio receiver. The idea is that buyers can pay for the features they want rather than fork out for functionality they don't need.

Archos is also providing the players with a new icon-based user interface which can be customised too. The UI allows users to manage songs on the device without having to connect it to a host computer.

The Gmini 220 weighs just 170g (6oz), which is actually fractionally more than the 20GB iPod. Archos did not provide other dimensions for the device top back up its 'world's smallest' claim. However, we'll find out when the 220 ships next month.

The Gmini 120 is available today, and apparently contains a 20GB hard drive too, but not as compact a model as the one in the 220. Archos said the difference between the two Gminis is form-factor and screen size. The 220 is smaller and has a 2.5in blue-backlit greyscale LCD. Archos didn't specify the 120's screen size. Both players offer MP3 and WMA recording and playback, and work with Windows and the Mac OS.

The 120 costs $250, the 220 $350. The latter comes with all the available accessory modules bundled - 120 owners will have to buy them separately. The voice recorder costs $20, the 'Photo Wallet' $30, the MadWaves Interactive Music Composer $10 and the FM Remote Control $40.
http://www.theregister.co.uk/content...yer%20 10--22


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Group Contends Record Labels Have Wrong Guy

The Electronic Frontier Foundation asks the music industry to drop its case against a Playa del Rey man who says he doesn't download songs.
Joseph Menn

An online civil rights group has adopted the cause of a Playa del Rey man who believes he has been mistakenly accused of improper file trading by the record industry, setting up a possible showdown over the music business' methods for identifying suspected pirates.

The San Francisco-based Electronic Frontier Foundation on Monday asked lawyers for three record labels to drop their suit against 35-year-old Web site designer Ross Plank, asserting that he is the second target of 261 high-profile suits who is the victim of mistaken identity.

The record companies referred questions to the Record Industry Assn. of America, where a spokeswoman said the trade group was looking into the dispute.

"We're confident in our evidence collection process," RIAA spokeswoman Amanda Collins said. "But to the extent someone claims that we've erred, we will investigate the matter."

More than 50 people sued by RIAA have settled.

Foundation staff attorney Wendy Seltzer said that if the labels do not dismiss the case from U.S. District Court in Los Angeles, her nonprofit group could seek damages to compensate the harried defendant and to learn more about how the labels pick their targets.

"This is a process that needs to be tightened up a lot," Seltzer said.

Plank said his first warning came when his Internet access provider, Comcast Corp., notified him that it had been subpoenaed about his alleged song sharing. Because Plank doesn't use any of the file-swapping networks, he figured it was a mass mailing and threw the notice away.

Weeks later, a reporter called and told him he'd been sued. Plank thought then that someone else could have been using his home-office computer to post songs.

Both Plank and his fiancee use the machine in their business, and Plank has a wireless network that allows his roommate and even neighbors in his condominium complex to get online.

"I'm not someone who does any downloading," Plank said. "I'm planning a wedding; I'm trying to run a business. There's stress enough in life."

At a relative's suggestion, Plank contacted the foundation. The group checked the subpoena that had been issued in the case, which identified a suspect by his Kazaa screen name and Internet protocol address.

Plank said he found out his computer had been using a different Internet address at least since May, before the date cited in the subpoena.

Plank and the foundation said it's unclear whether the record companies had an incorrect IP address or whether Comcast turned over the wrong name.

Comcast spokeswoman Sarah Eder said the Philadelphia cable operator had been "absolutely scrupulous" in making sure it identifies the right customers. "We're going to be looking into it tonight," Eder said.

Comcast also was the provider for 66-year-old Massachusetts sculptor Sarah Ward, whose case was the first known one to be dropped by the record labels since they began suing computer users in September.

Taken together, the cases could open an avenue for defendants to argue that the evidence against them is unreliable, defense attorneys said.

Also, because so many Internet accounts are shared by families or friends, an argument can be made that the person who is paying for access should be served with a subpoena seeking more information, not sued, said Beverly Hills defense attorney Joseph Singleton.

Otherwise, the labels "are making allegations on an insufficient basis, which you're not supposed to do," Singleton said.

Last month, the RIAA said that in future lawsuits it would first notify the targets by letter - potentially minimizing mistakes and increasing the chances of early settlements.
http://www.latimes.com/technology/la...nes-technology


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Journal Is Giving Science Back to the People

Similar publications can cost thousands of dollars, but the Public Library of Science Biology is available online at no charge.
Rosie Mestel

The inaugural issue of a new scientific publication appeared online today, its pages brimming with studies on elephants, biological clocks and thought-controlled robotic arms. Its publishers are hoping it will spark a revolution.

The journal, Public Library of Science Biology, can be read, downloaded and copied free by anyone with Internet access - distinguishing it from the vast majority of scientific journals, which charge annual subscription fees that can run into the thousands of dollars.

Scientists, librarians, charitable foundations and patient groups expressed support for the fledgling publication as an alternative to journals such as Nature and Cell, which charge significant subscription fees. Some journals - such as the organic chemistry publication Tetrahedron Letters, costing $11,000 a year - are a substantial burden for university libraries.

Many view such costs as unfair, complaining that science, generally paid for with public money, should not have to be bought back to be shared.

"The public pays for most of this research one way or another," said Steven Koonin, provost of Caltech and a professor of theoretical physics. "For someone to be locking it up with high prices and copyright restrictions just does not seem right."

California scientist Michael Eisen, a cofounder of PLoS Biology, added: "We're getting a raw deal."

The San Francisco-based, nonprofit Public Library of Science (www.plos.org) is the brainchild of Nobel laureate Harold E. Varmus, molecular biologist Patrick O. Brown of Stanford University and Eisen, a biology professor at UC Berkeley and scientist at Lawrence Berkeley National Laboratory.

The trio's dream: a world in which the many thousands of scientific journals - from Advances in Internal Medicine to Zoology - are placed in an electronic library open to the public.

Varmus, Brown and Eisen have spent years trying to persuade scientific publishers to make such access possible.

Several years ago, they circulated a letter calling for change, which was signed by over 30,000 scientists. The scientists who signed promised to publish only in journals that provided open access to articles within six months of publication.

Most journals refused to change their practices, and the campaign fizzled. Varmus and his colleagues finally decided the only solution was to publish their own scientific journals.

With a start-up grant of $9 million from the Gordon and Betty Moore Foundation and the Irving A. Hansen Memorial Foundation, they drew up a business plan and hired editors, some wooed from leading for-profit publications.

Today's launch of PLoS Biology will be followed next year by the launch of PLoS Medicine. Eventually, the library will publish a variety of journals covering other areas of science, said Varmus, former chief of the National Institutes of Health.
http://www.latimes.com/technology/la...nes-technology


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Sony Says Profit Tumbled 25% From a Year Ago
Ken Belson

TOKYO - The Sony Corporation's troubles continued last quarter, as its net profit fell 25 percent from the period a year earlier, the company said Thursday. Income from its games division plunged and its movie studio posted a loss.

Sony, the world's second-largest electronics maker, also trimmed by 23 percent its full-year target for operating income, a measure that excludes taxes and one-time events and reflects the core business. The company, which is trying to overhaul its electronics division, left its net profit target unchanged.

The quarterly results were below market expectations and provided more evidence that Japan's premier brand is having trouble keeping its vast entertainment and electronics empire competitive. While Sony has been cutting expenses to meet rivals like Dell, Matsushita Electric and other electronics giants, it has been relying on profits in the game and movie operations to buoy earnings.

But in the quarter ended Sept. 30, the movie division was unable to reproduce last year's record run at the box office. Demand for PlayStation 2 game consoles slipped, while sales of electronics in Sony's most profitable market, the United States, fell 8 percent.

Sony, at least for now, appears to have weathered another more immediate worry - the yen's strength against the dollar - because of improving demand for its cellphones, laptop computers and digital cameras in Japan and Europe. A weaker dollar typically erodes profits when they are converted into yen, but Sony offset those losses with gains against other currencies.

The tepid numbers came just days ahead of Sony's annual strategy session; the results of that will be released on Tuesday. Several reports have surfaced suggesting that Sony will announce plans to cut as much as 10 percent of its work force and phase out some production of slow-selling electronics like its cathode ray tube televisions. Sony is also likely to announce a partnership to produce liquid crystal display panels with Samsung Electronics in South Korea.

The moves, if announced, would help reassure investors that Sony was serious about cutting the size of its work force, selling assets and rejuvenating its product lineup, which is under attack from a variety of competitors. The revamping is needed if Sony is going to more than double its profit margins, to 10 percent, by 2006, as the chairman, Nobuyuki Idei, has promised.
http://www.nytimes.com/2003/10/24/bu...ss/24sony.html


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Ruling a Setback for Crime Database

Baker Says Georgia Law Prohibits Disclosure of Info
WSBTV.com

A much-debated crime database that would gather extensive data on law-abiding citzens has been deemed illegal by Georgia's attorney general.

Attorney General Thurbert Baker decided Monday that the law bans a broad release of driver's license and auto tag information. In a letter to the Georgia Bureau of Investigation, Baker called the database "laudable" for its purpose of preventing terrorism.

But Baker said Georgia law specifically bans the dissemination of "its entire driver information database where there is no particular investigation or active prosecution pending for which the information is sought."

Baker was not making a ruling on the so-called Matrix project. He was writing his legal opinion to the GBI, advising that the law would have to be changed for Matrix to proceed as planned.

Matrix stands for Multistate Anti-Terrorism Information Exchange and was created to track terrorists after the Sept. 11, 2001, attacks on New York and Washington. Florida has used the database for more than a year.

The Matrix database would include: fingerprints, driver's license photos, Social Security numbers, credit information, past addresses and telephone numbers, business associates, speeding tickets, arrests, even marriages and divorces.

Several states that orginally signed on for the database have changed their minds because of privacy concerns.

Former Georgia Rep. Bob Barr, a Republican, is among critics of the database, saying it would violate civil liberties.

GBI Director Vernon Keenan disagrees. In an interview published earlier this month in The Atlanta Journal-Constitution, Keenan called the Matrix database "one-stop shopping" for crime fighters.

State officials disagree on how much Matrix would cost, so it's unclear whether Georgia will proceed. Jim Lientz, Georgia's chief operating officer and a top adviser to Gov. Sonny Perdue, has said he doubts Matrix will be adopted in Georgia unless federal funds bear the entire cost.

Georgia already has contributed criminal and sex offender records to Matrix.
http://www.wsbtv.com/news/2568615/detail.html


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P2P Lives On In A Worldwide Distributed Filesystem
Andy Oram

Back in 2001, if not earlier, companies were marketing filesystems that offered far greater robustness, scalability, and
(perhaps) performance than traditional distributed filesystems such as NFS. OceanStore is probably the best known of these systems, although it is a research project rather than a product.

Now Internet2 is offering such a filesystem across all the dozens of universities that are part of its network. There's even a Windows client! That means Logistical Networking could become the first mass phenomenon in the next generation of distributed filesystems.

The idea of these filesystems is that each file is broken into pieces when stored, and each piece is sent to multiple systems. Encryption protects the data from snooping, and digests protect it from corruption. Never again will you have to stop work because your file server is down; there will always be another server with your data. Downloads experience extra overhead because the locations of the parts have to be resolved, the data could be far away, and the encryption introduces extra work--but breaking large files into pieces can help compensate.

There are so many theoretical advantages for these systems over NFS and CIFS that I am convinced they'll dominate filesystem storage in a few years. Internet2 has taken an excellent step in that direction. It may be the most important illustration of the peer-to-peer concept, far more useful than anonymous distributed systems such as KaZaa.
http://206.191.55.162/MLISTS/news2003/0108.html


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What if Peer to Peer 'Wins'?
Thomas Mennecke

Special Thanks to W. Friedman, AKA Dumwaldo, who wrote this article.

Lets take an honest look at things for a moment here. What is the worst thing that could happen if peer to peer were to eventually overtake the recording industry and bankrupt them all, as the RIAA claims will eventually happen if the current path is not deterred.

So what would happen? Well, music would probably get better as a result. In fact, music would probably improve so much it would eventually be looked back at as a tremendously favorable improvement. If the big business record companies were all eliminated there would be no more music motivated by greed and fortune seeking. The only motivation left to create music would be, well, a love of music.

Most of the music made available by the large recording interests is not art and the creators and performers are not “art”ists. They are part of an industry fueled by a desire for money. From the author and performer of the music all the way down to the guy that empties the garbage pails in the studio and back up to the president of the record company, every single one of those people is doing a job in search of a good paycheck. None of them, performers included, are doing it because of an inner passion that drives them to create. It is not art; it is music that is mass-produced for profit.

The loss of current music continually fed at rapid pace would become overshadowed by the sheer quality of the musical works. Do you really need a new song every week if the 'old' song is not played out in 3 days? Quality music has a lasting quality that keeps it from getting old quickly.

The problem with creating music with longevity is it equals lower sales. Lower sales of course equal lower profits. Recording labels are not in business to bring you art, they are in it for the money and nothing else. Plain and simple, this is capitalism at its finest.

Capitalism and art mix as well as oil and water. I would like to think that years from now music itself will evolve and grow far greater than it is today as a result of the growing free trade of music among a global community. The music industry might eventually fall, but it surely will not stop the music.

If anything, the advent of online file sharing guarantees that we will forever have a supply of fresh music. At no time in history has it ever been as easy as it is now to get music out to masses. No longer does an ARTist have to cow tow to the demanding 'recording industry mafia'. The free trade of music through peer-to-peer services is a godsend to any true artist, but it is a detriment to the purveyors of 'made for profit' recordings that have nothing to do with art. These are the guys getting 'cheated' and not any creator of art. Don’t let the propaganda fool you.
http://www.slyck.com/news.php?story=282


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Can The New Napster Cut It?
Dominic Timms

As anyone who sat through the Matrix Reloaded or any of this summer's selection of Hollywood sequels can attest, producing a follow up that matches the expectations of the original is no easy thing. If it's hard to come up with the goods for a movie that hit box-office gold first time around, then it ought to be nigh on impossible to better a website that revolutionised the way people approached music. That, however, is the intention of a US firm that is bringing back Napster, the ground-breaking site, developed by 19-year-old computer whizz Shawn Fanning in 1999, which made file- sharing a household concept and terrified the music industry. Complete with its infamous feline logo and a record industry that pummelled the original into legal oblivion two years ago firmly behind it, the cat, as they say, is back.

"Napster invented online music. With Napster 2.0 we are in the process of re-inventing it, says Chris Gorog, chairman and chief executive of Roxio, the company that bought the Napster name and technology patents for $5m (£3m) last November. At a glitzy presentation in New York last week, Gorog described the service as "the largest digital music store in the world, with the deepest, richest music catalogue ever assembled, featuring well over 500,000 songs, all available to you at the click of a mouse."

With Napster 2.0 the big difference is that users pay, unlike the original which gave users access to virtually any copyrighted song for free. At a base level it operates much like an online store where users can search, buy, download or burn music to CD for 99 cents a track or $9.95 an album. Tracks can also be transferred to a portable digital player, such as the Samsung Napster player also unveiled at the launch. This $299 device stores music like a traditional MP3 player but also acts as a wireless player which can link up to existing devices such as car and home stereos.

In an attempt to replicate what Napster president Mike Bebel calls "the central P2P [peer to peer] vision of Shawn Fanning", Roxio has developed a second, more comprehensive layer to Napster 2.0, which comes courtesy of a $9.95 monthly subscription. This opens up all the half million or so songs to more or less unrestricted use and also offers users email, customisable internet radio stations - you can even have one tailored to your own tastes - and the ability to send play-lists to non-Napster members. Once they receive your email they can listen to 30-second clips of songs before deciding whether to buy them. All users get a free interactive magazine and an archive of the Billboard charts.

Definitely more polished than the original and with the cachet of one of the best-known brands on the internet, you'd expect Napster 2.0 to do well. But it will face stiff competition from Apple's iTunes, which is set to radically expand its user base with a Windows version before Christmas, as well as an additional fight from services such as MusicMatch, Rhapsody, eMusic and MusicNow. Further down the road more intense competition will come from Sony when its new online music service starts next year.

But the real battle Napster has on its hands isn't fighting price pressures and protecting wafer-thin margins on 99 cent downloads from legal rivals. The key issue for Napster and the other bona fide operations is: can they persuade users of so- called illegal but free alternatives such as Kazaa, Morpheus, iMove, Bearshare and newer operators, such as Suprnova and Earthstation V to switch to paid-for sites?

Not if you believe many of today's file-sharing generation who clog message boards and news groups with assertions that music buying is dead. "The era of paying for music is over. People are already getting used to the idea of music and movies being free through P2P services. Sure, you might get a better experience if you buy the album with its art and CD- quality sound, and seeing a film in the theatre is a much more enjoyable experience, but these new legal services don't offer anything that P2P doesn't," is one typical music downloader's take.

Efforts by groups such as the Recording Industry Association of America (RIAA) to close free networks such as Grockster, Kazaa, and the Israeli P2P network iMesh are still stuck in legal limbo. A definitive conclusion in the US supreme court could still be years away.

The RIAA's subsequent change of tack to go after individual file-sharers is also in danger of backfiring. Last month anti- RIAA campaigners took to the streets after a 12-year-old girl was fined $2,000, while last week another lobby organisation, StopRIAAlawsuits.com, said it had signed about 50 websites to a week-long boycott to coincide with the next round of individual lawsuits due this week.

Even analysts suggest a wholesale switch from illegal file- sharing to legitimate music services is a remote prospect. "Legal music sites lag P2P equivalents for the simple reason that most online users don't want to pay. They're wedded to the idea of free music and can't see the value of legal sites," says Tom Ewing, European market analyst for Nielsen Netratings.

A survey from Informa Media suggests that while internet music revenues will rise from $1.1bn in 2002 to reach $3.9bn in 2008, only $1.8bn of that will come from subscriptions and downloads, with the rest made up of CDs bought online. Meanwhile the value of sales lost to illegal internet services will nearly double to $4.7bn over the next five years.

The report's author, senior Informa analyst Simon Dyson, says: "The determination of the P2P community to develop services that allow users to share music anonymously will keep a lid on any attempts to develop a legitimate download sector. There is a determination in their ranks to be part of the long-term future. Even if the RIAA wins the ongoing court case in the US it's not a certainty that that's going to stop people exchanging files."

Part of this determination can be seen in moves by established P2P networks, such as Kazaa, to make tracking users' downloads more difficult. Newer entrants, such as the Palestinian-based Earthstation V and Russian outfit suprnova.com - which has Tarantino's latest Kill Bill Vol 1 available, in addition to a large catalogue of music - are launching services where anonymity takes precedence over virtually anything else. It is this combination of discretion, a free service and the reluctance of the big five record companies to license services such as Napster and iTunes outside the US that is helping to drive the popularity of illegal file-sharing services.

But evidence from Nielsen suggests the combined effect of punitive legal action by the RIAA in the US and the launch of legal alternatives could be starting to bite. Kazaa, which peaked at 15.1 million US users in March, fell to 9.36 million users last month, while Grockster dropped from a February high of 785,000 users to 219,000 in the same period. "You can't say for certain if users have stopped illegal file sharing or just moved on to other smaller networks but it does look like the RIAA's legal moves are starting to have an impact," says Ewing.

If that scenario continues then there's little reason to suggest that Napster 2.0 can share some of the $1.8bn market that Informa predicts online music services will generate by 2008. But with free alternatives springing up in the same way they did after the original Napster was shut down, not to mention competition from Apple and Sony, the going is likely to be tough. Even with Shawn Fanning as a consultant, it's hard to shake the feeling that it will be the ground-breaking nerve of the original Napster that'll stick longer in the hearts and minds of music fans, rather than the altogether slicker sequel.


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`You Can't Stop The Kids Sharing Files'

In response to claims by the music industry that the sharing of digital music or MP3 files by peer-to-peer (P2P) technology infringes their copyrights and deprives them of royalty fees, the Intellectual Property Office announced recently that the Internet was to be the next battlefront in the war against piracy. Taipei Times staff reporter Bill Heaney talked to James Chen, chief executive officer of Kuro.com.tw -- the developers of Taiwan's largest file-sharing community with 500,000 users -- to find out what all the fuss is about

Taipei Times: The music industry claims that peer-to-peer music file sharing infringes their copyrights and is already suing three local P2P enthusiasts. The industry claims that your Web site encourages people to break the law. How do you respond to those charges?

James Chen: People who understand technology wouldn't say that. Our business is a legal business. Subscribers to our site pay for our software and services.

Of course the music labels have their reasons for making these claims. One of these is that revenues from CDs have been very bad and decreasing for the past few years. Between five and 10 years ago the Internet was not as widespread as it is now. I already realized at that time that sales of CDs were down. The most important reason is that consumer entertainment patterns changed. Previously, young people could only go to a record store or a bookstore. But Taiwan's entertainment venues increased at that time.

Now we could go to pubs, discos, Internet cafes - a lot more places, meaning our NT$1,000 had to be divided among many more places. That's the first point. But the second most important point is that technology changed, particularly CD burners. Before the widespread use of the Internet, when a burner cost less than NT$10,000, the music industry was already affected. Now burners cost US$80 to US$100 and are much faster. Both these factors led to the crash of the local music industry. P2P then put more pressure on top of that.

TT: What about the price of CDs? Did that hurt the market?

Chen: I remember cassettes. They cost around NT$170. Why, when content was exactly the same, did CDs cost more than NT$300? The price was almost double for a different delivery package. Consumers didn't have a preference for cassettes or CDs per se, but they realized that CD quality was better. Cassettes slowly disappeared, and now you don't see them anywhere. But by doubling the price, you opened the door to piracy. That's why there are so many pirated disks now.

I've been in the music business a long time - about 15 years - and in that time I've come to realize that today's music industry managers don't understand the big picture. The market can no longer tolerate a controlled channel way of doing business.

In 2000, I discussed music downloads with the managing directors of labels in Asia. At that time they weren't willing to discuss digital music downloads. Their opinion was songs should be packaged in CDs, not sold individually. Now they are slowly realizing that MP3 files can be sold individually, but it's too late as the market has moved way ahead of them yet again.

They have done too little too late. I am sure that within two years, the music labels will be using P2P, but who knows what new technologies or inventions will be around then.

TT: The music industry has approved Apple Computer Inc's iTunes music download Web site which sells each song for US$0.99 of which a portion is royalties. Would you consider following the Apple model?

Chen: I have already discussed this with the music labels. In Taiwan they have no plans to operate this model. The local managing directors also do not have the power to decide this matter. They can only decide for local music content.

I asked them to tell me how they could co-operate with me. If they are not satisfied with my offer of how much to pay them, they should tell me how much would satisfy them. The next problem is how to divide the money, and finally how much copyrighted material we could use, but they didn't reply to me. We had discussions on May 26, June 10 and June 17. The fact that they couldn't come to an agreement with us shows that their aim is not to co-operate with anyone but try to control the market themselves.

Our request is that there is a level playing field where music can be sold as CDs or over the Internet on an equal basis, but their priority is on the CD with the Internet as a secondary channel.

TT: You did offer to charge your subscribers an extra NT$50 on top of their standard monthly fee of NT$99 and pass this on to the music labels, but your offer was rejected as it did not pay royalties on each title every time it was downloaded. Are you going back to the negotiating table with any new offers? If so, what, and if not, why?

Chen: The NT$50 charge we offered was not cast in stone. We came up with that figure from our own market research, but did not rule out a higher charge. But the music companies said it was too low without saying how much would be acceptable.

There are 300 million people in the world sharing music files. Only two companies can collect fees, and they are both Taiwanese -- Kuro and EzPeer. Kuro has proven that we have the capability to collect money from peer-to-peer and we have the intention to co-operate with the labels. That is the major difference. We are sure we can create a new revenue stream, and by doing so we can help the labels convince the other P2P service providers to control their services.

P2P -- which allows computer users to locate and download over the Internet music files from any other computer that shares the same P2P software and is logged onto the Web -- can make the music-listening market grow much bigger. In China, for example, piracy is a huge problem. But if we can agree on revenue sharing with the music industry, we can collect more revenues in China. We have shown that it can work. I am willing to sit down and talk any time, anywhere.

TT: The music industry has requested you stop placing their copyrighted material on your server until you have reached an agreement about licensing. How do you respond to their demand?

Chen: I need to make a clarification here. There are no songs on our server. This shows that the music industry does not understand the technology. We place a list of file names on our site, not files. The files are stored in the users' computers.

The industry needs to accept the power of the Internet as a tool. It used to be it would take up to a year for a new song or singer to reach the far reaches of the market in Taiwan and China through the CD channel. But with the Internet, new music can flow to every part of the market within a few hours.

TT: Will you be investing in new technologies, for example MPEG4 video downloads?

Chen: We have developed a digital multimedia magazine in-house, and we currently have around 60,000 downloads per week of that. We create the content ourselves. We are trying to prove that P2P is a killer application. You probably don't know that your ICQ, Yahoo or Microsoft Instant Messenger has a P2P mechanism inside. Kuro endorses this technology so much. The music application is one of the services we provide. We are developing many more on top of this ? like software and movies. We are ahead of time, much further ahead than the music labels.

But the problem we have at the moment is bandwidth. ADSL in Taiwan is just not fast enough. It is 1.5 megabytes per second. The minimum you need for downloading movie files in 6 megabytes per second.

TT: Recent cases launched by the RIAA in the US and the IFPI here have put music consumers -- and your customers -- in court. Has this hurt your business and how do you react to these tactics?

Chen: Recent changes to the Copyright Law said that if you make less than five copies of a song, or the market value of your copy is less than NT$30,000, you are not breaking the law. Also many users buy a CD and make copies for personal use - that is reasonable. You can't say people can't copy CDs onto their computer. We have lost 10 to 15 percent of our business. But users quickly forget. The behavior model has changed. Users listen to music as MP3 files now, not CDs.

TT: But the changes to Copyright Law also gave rights holders the right to claim royalties for songs that are distributed over the Internet. Doesn't that apply?

Chen: The definition is if you are distributing the song for commercial purposes, so this does not apply to P2P. Users of P2P are not collecting money, they are sharing the file. It is not a business activity.
http://www.taipeitimes.com/News/biz/.../20/2003072683












Until next week,

- js.










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Current Week In Review.

Recent WIRs -


http://www.p2p-zone.com/underground/...threadid=17741 October 18th
http://www.p2p-zone.com/underground/...threadid=17709 October 11th
http://www.p2p-zone.com/underground/...threadid=17666 October 4th
http://www.p2p-zone.com/underground/...threadid=17605 September 29th





Jack Spratts Week In Review is published every Friday. Please submit letters, articles, and press releases in plain text English to jackspratts at lycos.com. Include contact info. Submission deadlines are Wednesdays @ 1700 UTC.

[TankGirl]

Thanks Jack for another great WiR!

The Todd Rundgren story is absolutely great. Straight to the point with the authority of experience, and no prisoners taken.

After nearly 40 years in this business I know who my friends are. I know it isn't the labels who lost interest in my "fringe audience" decades ago. It is that fringe audience who still await any recording or performance I may come up with despite the RIAA trying to drive some symbolic wedge between me and my listeners just because their ass is in a sling. Don't do me any favors.

Audiences and musicians are on the same side. Musicians come from the audience (unlike record execs who come from the ranks of failed musicians). We experience together the mystical sacrament that a musical performance can represent. Additionally, we will be comfortably if not handsomely compensated by that audience if we can deliver a suitably affecting performance with some regularity.

It's time to let the monolith of commoditized music collapse like the Berlin Wall. Musicians can make records if they feel like it, or not. Wide open pipes are ready to transport us, mainstream and fringe alike, into the ears of an eager audience who appreciates us and is more than willing to financially support us. Get out of the way if you can't lend a hand because ... you know the rest by heart.

- tg

[multi]

yeah the times are changing but the RIAA wont see it..

[Mazer]

I hate to say it but I'm impressed with Napster's new feature list.

Can The New Napster Cut It?
In an attempt to replicate what Napster president Mike Bebel calls "the central P2P [peer to peer] vision of Shawn Fanning", Roxio has developed a second, more comprehensive layer to Napster 2.0, which comes courtesy of a $9.95 monthly subscription. This opens up all the half million or so songs to more or less unrestricted use and also offers users email, customisable internet radio stations - you can even have one tailored to your own tastes - and the ability to send play-lists to non-Napster members. Once they receive your email they can listen to 30-second clips of songs before deciding whether to buy them. All users get a free interactive magazine and an archive of the Billboard charts.

It made the transformation from Internet Service Provider to Content Provider, something it could never have done under its original management. I have to give Roxio credit for knowing how to leverage its name brands so effectively, nobody else could have done this. I can imagine Napster hooking up with EarthLink to make a Music themed ISP, and it's popularity would rival AOL's content services. I guess I'll have to avoid joing Napster on principle.

Of course I doubt that it's DRM system is impenetrable, and once it's hacked Napster's database will flow directly onto the free networks, with the help of a few volunteers to pay the monthly fee. How long would it take to download and unwrap 500,000 songs?