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Old 27-01-10, 07:49 AM   #1
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Default Peer-To-Peer News - The Week In Review - January 30th, '10

Since 2002

"It’s the difference between Joseph Stalin and the Khmer Rouge. It’s still egregious." – Joe Sibley

"Most of the popular voice encryption solutions are worthless." – Notrax

"You don’t shoot up and you’re not a lesbian. What do you actually do?"

January 30th, 2010

‘Piracy Isn’t Killing Music’ Radiohead’s Guitarist Says

Last year, Radiohead expressed their growing discomfort with record labels that abuse copyrights for their own benefit, while harassing their fans. In a recent interview, Radiohead guitarist Ed O’Brien said that he doesn’t believe piracy is killing the music industry, but that the industry will kill itself if it doesn’t adapt to the digital age.

obrienIn an attempt to take a stand against the labels, several well known artists including Radiohead formed the Featured Artists Coalition last year, a lobby group that aims to end the extortion-like practices of record labels and allow artists to gain more control over their own work.

Radiohead and others are unhappy with the fact that the labels, represented by lobby groups such as the RIAA and IFPI, are pushing for anti-piracy legislation without consulting the artists they claim to represent. Radiohead, who used BitTorrent to leak one of their songs, went as far as being willing to show up as a witness against the RIAA in court.

In a new MIDEM interview, Radiohead guitarist Ed O’Brien stands up for file-sharers once again, stating that piracy is not killing the music industry in his view.

O’Brien is no stranger when it comes to piracy. “There’s a very strong part of me that feels that peer-to-peer illegal downloading is just a more sophisticated version of what we did in the 80s, which was home taping,” he said, something the music industry strongly discouraged at the time.

“If they really like it, some of them might buy the records,” he said, adding that if they don’t buy the albums they might buy a concert ticket, t-shirt or other merchandising.

“I have a problem about it when people in the industry say ‘it’s killing the industry’, it’s the thing that’s ripping us apart’,” O’Brien said, adding: “I don’t believe it actually is.”

According to O’Brien the music industry is using analogue business models in a digital age. “You’ve got to license out more music, more Spotifys, more websites selling more music. You’ve got to make it slightly cheaper as well to get music in order to compete with the peer-to-peers.”

Radiohead’s guitarist says he’s surprised that the music industry is still struggling with the digital transition, and urges the labels to “move quicker” and get their content out there at a fair price.

Lawyers Challenge Lowered Amount of ‘Shocking’ File Sharing Award
David Kravets

Lawyers for a music file sharer said Monday they would challenge a judge’s order reducing from $1.92 million to $54,000 the amount their client, Jammie Thomas-Rasset, must pay the recording industry for copyright infringement of 24 songs.

The appeal concerns Friday’s head-spinning order by U.S. District Judge Michael Davis. The Minnesota federal judge dramatically lowered the amount a jury in June ordered Thomas-Rasset to pay — after being found liable in what at the time was the nation’s first Recording Industry Association of America file sharing case to reach trial. Most of the RIAA’s 30,000 lawsuits were settled out of court for a few thousand dollars during the record companies’ six-year litigation campaign, which is winding down.

Joe Sibley, Thomas-Rasset’s attorney, said in a telephone interview that even the reduced amount of damages is unconstitutionally excessive. It’s a penalty of 2,250 times an assumed $1 cost of a music download.

“We’re still appealing the underlying constitutionality,” he said. “It’s the difference between Joseph Stalin and the Khmer Rouge,” Sibley said. “It’s still egregious.”

The Copyright Act allows damages of up to $150,000 per track. A Minnesota jury dinged Thomas-Rasset $80,000 a song. Davis, the judge who presided over the trial in Duluth, Minnesota, lowered it Friday to $2,250 per song — three times the $750 minimum. The judge declared the $1.92 million verdict “shocking” and said damage awards “must bear some relation to actual damages.”

Judge Davis declined to rule on Sibley’s position that the Copyright Act in the file sharing context was unconstitutional. Instead, the judge exercised what is called “remittitur.” That’s when a judge reduces a jury’s damages award upon a finding that there was no rational basis for the jury to have reached its decision.

To be sure, the RIAA now finds itself in a legal conundrum as it sorts out a response to the only court decision to reduce a copyright damages award.

The reduced verdict, $54,000, is a big penalty, and the RIAA could walk away a courthouse winner.

But would the RIAA stand idle and refrain from challenging a legal decision that for the first time seemingly created a judicial right to alter a jury’s copyright infringement award? The music industry’s lobbying and litigation arm isn’t disclosing its next move. The group must inform the judge of it response by Friday.

In court briefs, however, the group told the judge earlier that it might accept a reduced award in the interest of “finality.” Copyright attorney Ben Sheffner suggests that the judge’s decision has left the RIAA between a rock and a legal hard place.

Lory Lybeck, the Washington state attorney leading a proposed class action against the RIAA on accusations that its six-year-old litigation campaign has been a “sham,” said Davis’ decision was “a huge win for the RIAA for the judge not to say these civil penalties are unconstitutional.”

For the RIAA to challenge Davis’ decision, Lybeck suggested, “would be a very strange strategy.”

Still, the legal jockeying may not have much application in the real world.

The RIAA is winding down its lawsuit campaign and instead is working with other rights holders and internet service providers to adopt a program to discontinue internet access of online copyright scofflaws.

That change in strategy is not lost on Sibley. But he said the RIAA could once again renew its litigation campaign.

“Somebody needs to decide the application of these ridiculous damages,” he said. “In this digital world, somebody has to say there isn’t any constitutional basis to allow this kind of threat to continue.”

Jammie Thomas Rejects RIAA's $25,000 Settlement Offer
Greg Sandoval

The four top recording companies on Wednesday made a settlement offer to Jammie Thomas-Rasset, the Minnesota woman who was found liable last summer of willful copyright infringement and ordered by a jury to pay $1.92 million in damages.

And wasting little time, Thomas-Rasset's attorneys rejected the settlement offer almost immediately.

Days after a federal court judge reduced the damage amount to $54,000, the Recording Industry Association of America forwarded settlement terms to her attorneys, according to a copy of the letter obtained by CNET. The RIAA, the trade group representing the four largest record labels, informed Thomas-Rasset that it would accept $25,000--less than half of the court-reduced award--if she agreed to ask the judge to "vacate" his decision of last week, which means removing his decision from the record.

The RIAA said in the letter to Kiwi Camara and Joe Sibley, attorneys for Thomas-Rasset, that the $25,000 she would paid would go to a musician's charity. The RIAA said that if Thomas-Rasset declined the offer, the group would challenge the judge's ruling to lower her damages.

That's what the music industry will have to do, said Joe Sibley, one of Thomas-Rasset's attorneys, in an interview with CNET. What this means is the court fight will go on. The RIAA wasn't pleased with her decision.

"It is a shame that Ms. Thomas-Rasset continues to deny any responsibility for her actions rather than accept a reasonable settlement offer and put this case behind her," the RIAA said in a statement.

Sibley and Camara had already said that they planned to challenge even the lowered amount set by the court. Sibley told CNET last week they have always sought a $0 award.

"My clients have pursued this case to establish that the defendant was in fact responsible for the infringements alleged and that there were serious damages to them and to their artists as a result," wrote Timothy Reynolds, one of the RIAA's outside counsel. "Two juries resoundingly agreed. We do not believe embarking on a third trial is in anyone's interest."

Over the past four years, since Thomas-Rasset was first accused of illegally sharing more than a 1,000 songs, she has become deeply embedded into the debate over copyright and illegal file sharing. To some, Thomas-Rasset is the Joan of Arc of peer-to-peer. To others, she is a crook who denied sharing music but was contradicted by overwhelming evidence and eventually ordered to pay whopping damages by two separate juries.

My sources in the music sector predicted last week that the RIAA would try to settle. After Michael Davis, chief judge for the U.S. District Court for the District of Minnesota, lowered the damages amount, my sources said the big labels were satisfied to walk away after winning two trials and seeing Davis order Thomas-Rasset to pay a significant damage amount in $54,000. RIAA managers believe they have achieved whatever deterrent value the case can provide, the sources said.

But the RIAA likely won't lose much sleep over Thomas-Rasset's rejection of the settlement offer. They are just as happy to try and reverse a couple decisions made by Davis during the case. Davis reduced a damages award that was well within the range for statutory damages set by Congress. According to legal experts, no judge has done this in a copyright case and the RIAA may have had a good case for appeal, said lawyers.

Davis' other controversial decision was his ruling on "making available." During Thomas-Rasset's first trial in 2007, Davis said he erred by telling the jury that simply making music available for sharing was a copyright violation. In that case the jury ordered Thomas-Rasset to pay $222,000 but Davis threw the decision out after concluding he had erred.

The RIAA argued that Davis' original jury instructions were correct.

As for what happens next, Davis gave the RIAA seven day to decide whether to challenge his decision and schedule a hearing in his court to argue over the damages. What happens if Davis again finds that the $1.9 million is too much?

Whether the RIAA can appeal that is still unclear. Meanwhile, Thomas-Rasset's attorneys will continue to challenge any damages amount as unconstitutional.

HOWTO: Thrive as a Musician Without Suing Your Fans
Tim Jones

TechDirt's Mike Masnick is at the Midem music industry conference in Cannes this week. He put together a fantastic memo to the International Association of Entertainment Lawyers: "The Future Of Music Business Models (And Those Who Are Already There)".

Masnick writes that the mainstream entertainment industry's formula for contending with the Internet — desperately trying to invent "new copyright laws or new licensing schemes or new DRM or new lawsuits or new ways to shut down file sharing" — is counterproductive.

“However, there is another solution. Stop worrying and learn to embrace the business models that are already helping musicians make plenty of money and use file sharing to their advantage, even in the absence of licensing or copyright enforcement.

In simplest terms, the model can be defined as:

Connect with Fans (CwF) + Reason to Buy (RtB) = The Business Model”

He lists a dozen artists who've done well for themselves through various permutations of this model. Everyone knows about the efforts of big names like Trent Reznor and Radiohead, but Mike also draws attention to less-famous success stories like Josh Freese, Jill Sobule, Corey Smith, Jonathan Coulton, Moto Boy, Amanda Palmer, Matthew Ebel, Moldover and K-Os.

“As you look through all of these, some patterns emerge. They're not about getting a fee on every transaction or every listen or every stream. They're not about licensing. They're not about DRM or lawsuits or copyright. They're about better connecting with the fans and then offering them a real, scarce, unique reason to buy -- such that in the end, everyone is happy. Fans get what they want at a price they want, and the musicians and labels make money as well.”

These stories stand in stark contrast to the problems that major labels' copyright-enforcement efforts can cause for their artists. Just last week, we noted how even talented and popular bands like OK Go and Death Cab For Cutie have seen their promotion actively undercut by their own labels' copywars.

The memo is a great roundup of clever new business models that music fans and and aritsts alike will find worth reading.

Mixtapes Land Deals for New Generation of Rappers
Mariel Concepcion

Detroit rapper Hayes takes inspiration for his mixtapes from -- of all things -- magazines.

"I want to give people a little taste of what a Hayes album would be like," he says. "It's like getting a trial subscription to your favorite magazine -- you get my music for free, you get to know me, and then hopefully you'll appreciate me enough to come back and support me." Tellingly, neither of Hayes' two mixtapes -- 2006's "24 Songs of Power" and 2010's "The First 48" -- traffic in two staples of the form: beats lifted from other official songs ("jacked beats," in mixtape parlance) and DJ scratches.

"I have my own format," Hayes says. "I like to use original beats. I call my mixtapes 'street albums' -- I don't like to rap over other people's beats."

Hayes' self-reliance is about to pay dividends: Two months ago he signed to Interscope through a joint deal with producers Timbaland's Mosley Music Group and Dr. Dre's Aftermath Records.

"For Tim, it wasn't just Hayes' lyrical prowess but his craftsmanship that really caught his ear," says Rick Frazier, Hayes' manager and vice president of Mosley Music Group. It was the entire package, Frazier says -- from lyrics to the original production by his in-house team, the Breakfast Club -- that got Hayes noticed.

Following the mixtape-to-major-label success in 2009 of Toronto rookie Drake and Atlanta's Gucci Mane, labels are taking a new look at artists who make professional-caliber mixtapes -- a highly personalized form of unauthorized music compilation -- their calling card. In addition to Hayes -- who's touring with Timbaland and has started recording his debut album -- up-and-coming Houston rapper Chalie Boy and Atlanta-born Pill recently signed to labels on the strength of their mixtapes.

Getting Noticed

Nicole George, vice president of the rhythm and soul membership department at performance rights organization ASCAP (American Society of Composers, Authors and Publishers), says that her team listens to mixtapes and follows the industry talk, which leads them to artists and writers whom ASCAP could sign.

Chalie Boy put out mixtapes for a decade before recently signing to Dirty 3rd/Jive/Battery Records. "As I was shopping around for deals, mixtapes kept my name afloat in the music industry," he says. "Eventually, the buzz off my mixtapes not only got me signed, but it got me paid work through features on others' albums and mixtapes as well as show performances."

Now, Chalie Boy is prepping the release of his major-label self-titled debut album; the lead single, "I Look Good," peaked at No. 20 on Billboard's Hot R&B/Hip-Hop Songs chart in December.

Another rapper, Pill, had the Internet buzzing the last few months with his own "4075: The Refill" -- hosted by DJ Skee and Empire and released in November -- as well as his February 2009 mixtape, "The Prescription." Both releases largely featured original production.

"Anyone can jack a beat, put hot metaphors together and sound convincing," Pill says of his decision to use new beats from the likes of Illfonics and Drum Majors. "I wanted people to hear me over original tracks. You can tell the difference between a mixtape artist and an actual artist who can make a real track."

Eskay, founder/owner of Nahright.com, a Web site focused on posting music by new hip-hop artists, notes that after Curtis "50 Cent" Jackson's underground tapes triggered a massive bidding war in 2002, "everyone jumped on the bandwagon and tried to release mixtapes at a rapid pace."

But quickness can be the death of quality -- and the industry is looking for polish, not just potential. Pill signed to Asylum at the end of last year following his own bidding war. "If you're putting out a mixtape that is on a level of most other artists' studio albums, then people will support your music," says Hof, of New Music Cartel's mixtape specialist OnSmash.com.

Route to the Charts

Aubrey "Drake" Graham, a graduate of TV's "Degrassi High," stunned the hip-hop world in 2009. In February, he released "So Far Gone" for free on his own blog. In May, the song "Best I Ever Had" entered Hot R&B/Hip-Hop Songs at No. 78; by the end of June it topped the chart. Soon, the majors came in hot pursuit, and in midsummer Drake signed to Universal Motown. He has since collaborated with hip-hop's elite, including Jay-Z, Kanye West, Eminem and mentor Lil Wayne. Drake's early mixtape songs were released on an official EP, "So Far Gone," which has sold 344,000 copies in the United States, according to Nielsen SoundScan.

Gucci Mane's route to hip-hop stardom was far less direct. After leaving prison in March 2009 (on charges stemming from a 2005 conviction for aggravated assault), the prolific Atlanta rapper released a torrent of mixtapes -- "Writing on the Wall," "The Movie 3-D: The Burrprint!" and the three-part Cold War series ("Guccimerica," "Brrrussia" and "Great Brrritain"), among others -- all filled with original material.

During the summer he signed to Asylum, which released his second official studio album, "The State Vs. Radric Davis"; by then he'd already been featured on 12 charting songs, and his mixtape profile brought a string of klieg-light guest appearances, including spots on the remix of the Black Eyed Peas' "Boom Boom Pow" and Mariah Carey's "Obsessed." "Pow" reached No. 1 on the Billboard Hot 100, while "Obsessed" peaked at No. 7. "The State Vs. Radric Davis" has sold 215,000, according to Nielsen SoundScan. (Mane is back in prison for violating probation.)

Beyond generating sales and superstar hookups, mixtapes have garnered underground radio airplay and helped to nurture relationships with fans. After 50 Cent was shot nine times in 2001, his recording contract was terminated by Columbia Records. In turn, 50 Cent started to flood the streets with mixtapes that were built to dazzle.

"He revolutionized the art of stealing songs and changing hooks and getting more airplay for his version than even the original song," says Whoo Kid, a pioneering mix master known for releasing unauthorized music from the likes of the Notorious B.I.G. and 2Pac -- as well as for being 50's official DJ.

In 2006, industry vet Lil Wayne famously reinvented his career by releasing mixtapes featuring his hallucinogenic rapping over beats from recent hits. "Dedication 2," hosted by DJ Drama, came first, trailed a year later by "Da Drought 3." Although Drama was arrested in 2007, after a police raid of his Atlanta office over alleged bootlegging, Wayne, for one, wouldn't be slowed, releasing "Dedication 3" in 2008 and "No Ceilings" in '09.

"What happened to me hit the mixtapes circuit hard," DJ Drama says. "It's still in the rebuilding process, but 2009 proved that mixtapes are just as important to hip-hop music as they ever were. They're just changing with the times, much like the record industry."

For Hayes, Chalie Boy and Pill, the make-it-sleek lessons of Drake and Gucci Mane might have led them to record deals, but it's the entrepreneurial spirit of 50 Cent and Lil Wayne that's keeping them in business.

"Mixtapes will always be a viable marketing tool to help promote artists, whether there's money involved or not," Whoo Kid says. "I don't make most of my money selling mixtapes anymore, but I constantly give away tapes for free on the Internet, and I'm booked now through 2011 for paying gigs all around the world. Without that exposure, I won't be able to connect the dots in other ways."

Music Industry Prepares for Post-Merger Landscape
Ray Waddell

After nearly a year of intense scrutiny, political posturing and consumer outcry, it's time for the music business to come to grips with its new superpower: Live Nation Entertainment.

At a time when live entertainment remains one of the healthier sectors of the troubled music industry, the combined Live Nation and Ticketmaster stands to dominate each part of that sector: touring, management and ticketing.

Live Nation is the largest promoter and venue operator in the world, owning the majority of North American amphitheaters and promoting most of the world's top-grossing tours, including U2 and Madonna in 2009. Ticketmaster's Front Line Management, which has for the past few years aggressively acquired rival management firms, boasts relationships with more than 200 major touring acts, including the Eagles, Neil Diamond, Van Halen and Christina Aguilera. And Ticketmaster Entertainment sold 14 million-plus tickets, valued at more than $8.9 billion, in 2008.

The new company, led by president/CEO Michael Rapino and executive chairman Irving Azoff, would control the majority of box-office dollars, the myriad revenue streams from concert ticketing and the growing e-commerce from fan-ticket interactions. Live Nation Entertainment will also aggressively pursue competitive advantages in merchandising, VIP ticketing, fan clubs and, ultimately, physical distribution.

"Those are the things where I think I'm going to add the most to the equation," Azoff told Billboard in an earlier interview. "And Michael is going to run the ticketing and the promoting operations."

As a result of concessions that the newly merged company made to secure the approval of the U.S. Department of Justice (DOJ), Live Nation will license Ticketmaster's primary ticketing software to competitor AEG for five years and is expected to sell Ticketmaster's automated ticketing service provider, Paciolan, to Comcast-Spectacor.

But ticketing is no longer the core business here. Instead, it will be the linchpin of a broader-based operation aimed at profiting from every aspect of the artist/fan relationship.

Client Clout

With Front Line's unmatched client roster and Live Nation's long-term deals with U2, Madonna, Jay-Z, Nickelback, Shakira, Jonas Brothers and others, Live Nation Entertainment's clout with artists is unrivaled. It's similarly superior in its reach among music fans. Driven by its market-leading positions in ticketing, venue ownership and operation, Live Nation can market to fans when a show is announced, during the event and long after the tour buses leave town, even if it doesn't bundle tickets with promotion and artist services, or if there's a "firewall" between promoter and ticketing operations, as stipulated by the DOJ.

The appeal to sponsors along this pipeline is huge. And Live Nation has everything from merchandise to VIP amenities to recorded content to sell not only at live events but, more important, through its growing digital storefronts and information hubs at LiveNation.com and MusicToday, as well as through Front Line's I Love All Access VIP program.

Jim Guerinot, who manages such acts as No Doubt, Trent Reznor and Nine Inch Nails, takes an optimistic view of the merger.

"My function is to try and get the most opportunity for my clients, whether that is getting lower ticket prices or coming up with innovative ways to get our tickets in the hands of fans instead of brokers," Guerinot says. "This is going to give me a great opportunity to do that. It's very challenging when you're dealing with these siloed companies, where you have the promoter over here and the ticketing company over there and you can't do what you want to do."

'Not a Better Mousetrap'

While ticketing contracts expire all the time, many Ticketmaster contracts remain current, and Live Nation will remain a formidable competitor in bidding for renewals and new business. This makes some independent promoters nervous, including I.M.P. Productions chairman Seth Hurwitz.

"Letting this move forward and allowing them to keep the existing deals in place accomplishes nothing," Hurwitz says, adding that he's skeptical of the value of government oversight. "What if the deals expire and (the venues) all decide to sign with Live Nation? Then nothing's happened." Hurwitz expects the company to offer incentives he simply can't match: "If they offer these incentives, and part of these incentives are things they can only offer because they have created a monopoly, then this is not a better mousetrap."

Many questions about the deal remain unanswered. The future of Live Nation Ticketing and its president, Nathan Hubbard, will have to be addressed. While all ticketing operations will carry the Live Nation banner, melding with the largest ticketing company in the world won't be easy. And how aggressive will the newly merged company be in acquiring new ticketing contracts under the watch of the DOJ? The DOJ has said that it may investigate the competitive effects of any acquisitions that Live Nation makes of other ticketing companies.

The government won't be the only party keeping a close eye on the company. So will its shareholders -- especially John Malone, chairman of Liberty Media, which launched a tender offer to acquire 34.5 million shares of Live Nation stock a day after the DOJ approved the merger. Once Liberty completes the offer, it will command a hefty 34.9 percent stake in Live Nation, up from 14.6 percent.

Malone has a complicated history with Barry Diller, chairman of Live Nation and chairman/CEO of former Ticketmaster parent IAC. In January 2008, Malone, then a majority shareholder in IAC, sued IAC to prevent a restructuring that would dilute his ownership stake. Malone lost, Diller broke up IAC, and Ticketmaster was spun off as its own publicly traded entity.

Another potential personality clash: Managers like Azoff have always sat on opposite ends of the negotiating table from promoters. Who has the edge now at Live Nation? The promoter with deep pockets, venues and marketing resources? Or the management company with 200 touring acts in its stable? And can artists trust Front Line to be aggressive on their behalf when negotiating deals with its sibling promotion division?

Fair Treatment for Indies

As for independent managers outside this system, Guerinot says he doesn't feel threatened. "I've always found it to be a plus," he says of his boutique status. "Even when they rolled up (promoters) originally, I've always found these guys to have a greater sensitivity to making sure the smaller companies are treated on par and fairly."

Guerinot cites two recent examples where he was able to work with both Ticketmaster and Live Nation on fan- and artist-friendly initiatives. "No Doubt wanted to do a (show with) $10 lawn (tickets)," he says. "That was a big deal to us -- trying to come up with a model that gave greater incentives to put more people in the place as opposed to fewer people at a higher gross."

He says Live Nation and Ticketmaster adjusted service fees to keep ticket prices down. And when Nine Inch Nails embarked on a 2009 farewell tour, Ticketmaster and Live Nation allowed the band to offer and fulfill direct-to-fan ticketing.

"You can talk about the innovation that may occur because of digital technology and direct-to-consumer, all of which I believe in, but those are two things an independent manager had happen within the last 12 months," Guerinot says.

The international attention placed on this merger has shined a spotlight on the inner workings of the concert business, not always in a flattering way.

"Some good could come of all this," says Vans Warped tour founder Kevin Lyman, president of 4fini Productions, which has thrived and innovated by working both with and outside the biggest companies. "The veil of Ticketmaster being the greedy party has been pulled back, and we have now learned that there were few innocents, (with) promoters, artists and their managers all getting kickbacks on the (ticketing) fees."

Whether they are pro- or anti-merger, most would agree that the industry model needs to be adjusted, and this corporate union will see to that. Guerinot considers it an opportunity to grow the pie instead of finding new ways to slice it.

"These guys are going to be prepared to rapidly have a direct-to-consumer model that expands what we're going to be able to do," he says. "I'm one of those guys who can't wait to get in there and start doing stuff."

(please visit our entertainment blog via www.reuters.com or on blogs.reuters.com/fanfare/)

Sly Stone Sues Ex-manager For $50 Million
Jill Serjeant

Sly Stone has filed a $50 million lawsuit against his former manager, alleging fraud and 20 years of stolen royalties.

Stone, the frontman of Sly and the Family Stone, claimed that Jerry Goldstein had diverted an estimated $20-$30 million of royalties and used them to fund a lavish lifestyle.

Stone also claimed that Goldstein registered the name of the Sly and the Family Stone band with U.S. authorities as one owned by the Goldstein family, and used it borrow millions of dollars.

Goldstein could not immediately be reached for comment.

Stone's lawyer Robert J. Allen said the lawsuit highlighted "a dark side of the music business where some of these artists are being robbed of their intellectual property and the fruits of their genius by unscrupulous people who prey on their trusting nature and lack of business and legal knowledge."

The lawsuit filed in Los Angeles Superior Court on Jan. 28 seeks damages of $50 million and asks for a full accounting from royalty collection companies to determine exactly how much had been taken from him.

With hits like "Family Affair" and "Dance to the Music", Sly and the Family Stone was one of the biggest names in music in the late 1960s, appearing at Woodstock and paving the way for later artists such as Prince.

But the band fell apart in the 1970s because of heavy drug use and erratic behavior. After years out of the public eye, Stone gave his first live musical performance since 1987 at the 2006 Grammy awards, but left the stage before his song was over.

He has since made several brief appearances and was reported recently to be working on a new album for release sometime this year.

EC to Monitor Anti-Piracy Trial

A human rights watchdog has asked the European Commission to assess the legality of software being used to analyse file-sharing in the UK.

The software in question is called CView and will be used by ISP Virgin Media to identify legal versus illegal traffic on its network.

The EC has said it will monitor the use of the software, following a complaint from Privacy International.

Virgin Media countered that the software posed no risk to privacy.

Privacy International has concerns about the software, designed by monitoring firm Detica.

It utilises so-called deep packet inspection, which means that it can identify actual file-names, making it possible to accurately find out what content is legal and what is not.

According to Alexander Hanff, head of ethical networks at Privacy International, use of such software is in breach of current UK law.

"Under the Regulation of Investigatory Powers Act (Ripa) intercepting communications is a criminal offence regardless of what you do with the data," he said.

Mr Hanff said he would file a criminal complaint if Virgin Media deployed CView.

He said the software is similar to that used by ad firm Phorm, which developed technology to monitor individual's web use in order to better target adverts.

Trials of the technology in the UK have been put on hold while the EC investigates how it was tested.

Legal service

The UK government is in the process of creating legislation that could see illegal file-sharers identified and, potentially, thrown off the network.

But this software will not do that job, said a spokesman for Virgin Media.

"It was never designed to capture identities. This isn't an answer for that," said Asam Ahmad.

Instead the software will be used to identify how much traffic on its network is illegal.

"We want to understand what we can do to reduce illegal file-sharing. This will tell us things such as the name of the top ten tracks being shared as well as the percentage of legal versus illegal," said Mr Ahmad.

Virgin Media is about to launch its own music service.


Mr Ahmad said no date had yet been set for the trial but told BBC News it will monitor traffic on three peer-to-peer networks notorious for trading illegal as well as legal software; Gnutella, eDonkey and BitTorrent.

He admitted that potentially 40% of Virgin Media's customers could have their data scrutinised and confirmed that it has no plans to inform them beforehand.

He also conceded that it would not be technically difficult to link up deep packet inspection technology with the IP addresses which would identify individuals but stressed that was not the plan currently.

"These mandates have not yet been set and when it comes down to identifying individuals or prosecuting them, that is a role for content providers, not us," he said.

Virgin Media is involved in an ongoing education campaign, which includes sending letters to those identified as downloading illegal content on its network.

Andrew Ferguson, editor of broadband news site ThinkBroadband, said the trial could be "double-edged".

"If Virgin can form a baseline for its 'illegal' P2P traffic, it can see how much effect any legislation has, and perhaps plan better for the letter forwarding side of things," he said.

But he pointed out that Virgin Media is not alone in using deep packet inspection - BT has been doing it for years, he said.

"It is possible they may be doing exactly what Virgin are doing," he said.

Dunstone Vows to Bash Tories on Filesharing Laws

And the record labels can shove their partnerships
Chris Williams

TalkTalk boss Charles Dunstone has promised to continue his firm's campaign against laws meant to reduce illegal filesharing under a Conservative government, despite being friend of David Cameron.

Dunstone today hosted a reception within sight of Parliament as part of TalkTalk's "Don't Disconnect Us" campaign, aiming to attract MPs and officials. He told The Register it would continue after the election, denying any political aspect to his firm's attacks on the Digital Economy Bill.

"It's genuinely about the principle," he said, saying that he had not spoken to Cameron, his friend and Oxfordshire neighbour, about the issue. Last year Dunstone was part of Cameron's creative industries review panel and was tipped for a Tory peerage.

He also said he had no idea how much the proposed measures - which as well as suspension of internet access include written warnings and bandwidth restrictions - would cost TalkTalk, the country's second largest ISP.

The Tories support the Digital Economy Bill and have criticised the government for not bringing its disconnections and other sanctions against persistent copyright infringers forward quickly enough.

Jeremy Hunt, the shadow culture secretary, attended TalkTalk's reception this morning, where the potential technical, ethical and legal pitfalls of the Digital Economy Bill were argued by groups including Which?, Liberty and the Open Rights Group.

TalkTalk has been by far the most vocal internet industry opponent of the government's plans, most recently scorning Bono's views on filesharing. Although rivals Virgin Media and BT registered their opposition officially during the Department for Business' consultation last year, they have done nothing to match TalkTalk's concerted public campaigning.

Dunstone suggested this relative timidity could be a result of their hopes of becoming paid content providers. He was blunt about TalkTalk's own plans in that area, insisting "it's not our job to sell music".

Amazon and Apple could do a good job of that, he said, strictly walking the traditional ISP line that they are mere conduits. The possibility of new growth by building its own licensed music download service in cooperation with record labels has meanwhile seen Virgin Media, for one, effectively abandon that creed.

Dunstone apparently feels no interest in making friends with the recording industry, charging it had "treated its customers so badly they have effectively gone on strike", and insisting it could never expect some lost revenues to return. He refused to be drawn on whether he had ever participated in illegal filesharing.

The combative tone from TalkTalk at the reception was slightly at odds with the Open Rights Group's more conciliatory approach. The group's executive director Jim Killock said political focus should in fact be on cooperation between ISPs and record labels, rather than on enforcement, to foster more attractive legal download services. It's clear TalkTalk customers won't be offered them.

The Bill itself is currently at the House of Lords committee stage. Killock expressed hope the pile of amendments so far tabled and several stages of debate remaining might delay it until after the election.

Perhaps Dunstone will have a word with Dave then.

TalkTalk CEO Criticised for 'Scare-Mongering' Over Filesharing
Kimberley Howson

A music industry expert has criticised the Chief Executive Officer of broadband provider TalkTalk for "scare-mongering" on the issue of illegal filesharing.

Feargal Sharkey, the head of UK Music, has claimed that Charles Dunstone's suggestion that tackling filesharing would be costly and lead innocent web users to be disconnected could be wide of the mark.

Writing for the Daily Mail, he explained that account suspensions would only occur in extreme cases, while creative industries, broadband providers and technology companies have to work together to tackle the issue.

He added: "The more progressive internet providers would appear to be supportive.

"Ironically, the volume of unlicensed file sharing is hitting their businesses too - clogging networks and slowing broadband speeds."

Mr Sharkey's opinion piece in the newspaper was written in response to Mr Dunstone's previous article in the same publication, in which he claimed the digital economy bill would create an "Orwellian nightmare".

NZ Trade May Face Closer Scrutiny Under ACTA

April ACTA meeting to be held in New Zealand
Stephen Bell Wellington

Due to New Zealand’s small population, trade movements here could come in for close scrutiny under the planned Anti-Counterfeiting Trade Agreement, people close to the negotiations suggest.

While local officials have previously insisted only commercial-scale piracy of copyrighted goods will be targeted — that there is no intention, for example, to scan individual travellers’ MP3 players for copyright-infringing content at the border — sources now say that what is considered a “large” shipment, worthy of official attention, will depend on the size of the market in the country concerned.

“There can’t be a blanket statement that small shipments will be excluded, because most of [New Zealand’s] are small,” the sources say.

Officials speaking on background in interviews with both Computerworld and Fairfax stablemate The Dominion Post, say the draft text of the treaty is still far from finished and there are widely differing positions being put forward.

The situation may firm up a little after a further meeting in Mexico this month. Following that meeting New Zealanders will be asked to put forward submissions specifically on the parts of the agreement dealing with digital traffic.

The New Zealand government will host the following round of ACTA negotiations in Wellington in April.

Sources are still insistent that ACTA negotiations are unlikely to influence the course of copyright measures in domestic law, such as a replacement for the controversial Section 92A of the Copyright Act. It is scheduled to come back before Parliament later this year.

Those measures are aimed at tackling small-scale infringements online. Domestic law in the countries that are parties to the ACTA negotiations varies widely and the agreement will not attempt to impose absolute uniformity.

New Zealand legislation is likely to “hit most of the bases” that are expected to be of concern to ACTA negotiators in the US, an official at the Ministry of Economic Development told Labour MP Clare Curran last year.

There is confidence in government circles that New Zealand, with a strong domestic policy on copyright and counterfeiting and no specific reputation as a haven for piracy, is in an active rather than a passive position in the negotiations. With a growing film and software industry, sources say, New Zealand stands to benefit from stricter enforcement of intellectual property protection.

They emphasise New Zealand does not rate a mention on the US “watch-lists” of countries, whose intellectual property protection gives cause for concern. These lists are contained in the annual “special USTR 301” report of the office of the US Trade Representative.

However, few countries that are party to the ACTA negotiations are on that list. While not specifically listed, New Zealand does rate one mention in the USTR 301 report as giving concern in respect of “issues related to innovation in the pharmaceutical sector and other aspects of health care goods and services”.

The ACTA negotiations were unlikely to come up during the cancelled visit of US Secretary of State Hillary Clinton, says a spokesman in Foreign Affairs Minister Murray McCully’s office.

ACTA may have been mentioned somewhere in the written briefs for the visit, but these documents are huge, he says. Topics are tackled in order of priority and in the limited time of Clinton’s visit, only a minority of the subjects listed will actually come up for discussion.

Three Strikes and You’re Out System Draws Cries of Foul from Governments
Michael Geist

Canadian officials travel to Guadalajara, Mexico this week to resume negotiations on the still-secret Anti-Counterfeiting Trade Agreement. The discussion is likely to turn to the prospect of supporting three strikes and you’re out systems that could result in thousands of people losing access to the Internet based on three allegations of copyright infringement. Leaked ACTA documents indicate that encouraging the adoption of three-strikes - often euphemistically described as “graduated response” for the way Internet providers gradually send increasingly threatening warnings to subscribers - has been proposed for possible inclusion in the treaty.

While supporters claim that three strikes is garnering increasing international acceptance, the truth is implementation in many countries is a mixed bag. Countries such as Germany and Spain have rejected it, acknowledging criticisms that loss of Internet access for up to a year for an entire household is a disproportionate punishment for unproven, non-commercial infringement.

Those countries that have ventured forward have faced formidable barriers. New Zealand withdrew a three-strikes proposal in the face of public protests (a much watered-down version was floated at the end of last year), the U.K.’s proposal has been hit with hundreds of proposed amendments at the House of Lords - and France’s adventure with three strikes has included initial defeat in the French National Assembly, a Constitutional Court ruling that the plan was unconstitutional - and delayed implementation due to privacy concerns from the country’s data protection commissioner.

Much of the three-strikes debate has focused on its impact on Internet users, yet the price of establishing such systems has scarcely been discussed. That may be changing due to the U.K. government’s own estimates on the likely costs borne by Internet providers and taxpayers in establishing and maintaining a three-strikes system.

Initial government estimates peg the expense to Internet providers alone at as much as £500 million ($850 million Canadian) over 10 years.

This includes the costs of identifying subscribers, notifying them of alleged infringements, running call centres to answer questions and investing in new equipment to manage the system. As a result, the U.K. government estimates that 40,000 people could lose Internet access due to anticipated increases in subscriber fees.

The U.K. recording industry has challenged these numbers, but there is reason to believe they actually understate the actual economic impact. The U.K. estimates focus exclusively on the Internet provider costs, but provide no accounting for actual enforcement of the system. When court and regulatory costs are factored into the equation, the taxpayer burden runs into the hundreds of millions.

Moreover, the U.K. estimates are consistent with a 2006 Industry Canada commissioned study on the costs of Internet provider notification schemes. The study concluded that the cost of a single notification was $11.73 for larger Internet providers (more than 100,000 subscribers) and $32.73 for smaller Internet providers. Considering the sheer number of notifications - last summer Bell Canada acknowledged receiving 15,000 notifications each month - the costs quickly run into the millions of dollars.

The disparate impact between big and small Internet providers highlights another hidden cost of three-strikes systems - the negative effect on the competitive landscape for Internet services. The U.K. estimates that the costs for small Internet providers are so great that consideration should be given to exempting them entirely, since the additional burden would result in decreased competition. The same report identifies the disproportionate harm to wireless carriers, who would face massive capital costs and be placed at a competitive disadvantage.

Reducing competition and increasing costs runs counter to Industry Minister Tony Clement’s commitment to improving the competitive environment for wireless and Internet services. Yet the ACTA talks move in that direction, potentially leading to huge costs for an unproven system that could lead thousands to conclude they can no longer afford Internet access.

Sweden Sets Pace as Countries Race to Tackle Music Piracy

Countries all over the world are following the lead of Sweden, France and South Korea as the battle against illegal music downloads intensifies.

Sweden has taken the most stringent stance, adopting tough legislation and taking legal action against illegal downloading site The Pirate Bay.

But the country has also benefitted from the huge success of its free ad-supported music streaming service, Spotify, which helped sales of digital music soar by 98 percent and CD sales by 1.9 percent.

Figures released earlier this month by the Swedish Recording Industry Association showed music sales for 2009 up 10.2 percent on the previous year, making Sweden one of few countries in the world with sales results in the black. In all, digital sales accounted for 16.3 percent of the total.

"It remains to be seen whether this year's positive development really will break the trend," said association spokesperson Lisa Cronstedt in a statement, as the industry seeks to rebound from a lengthy period of decline.

Worldwide music sales have crashed some 30 percent since 2004 as piracy has risen, the International Federation of the Phonographic Industry (IFPI) said last week.

"Many countries are mulling a gradual response but are waiting to see what results are achieved in countries that have taken steps," said industry consultant Aymeric Pichevin at a conference on piracy held at the annual MIDEM music industry trade fair in Cannes, which closes on Wednesday.

France has adopted a gradual response -- bombarding people who are illegally downloading from the Internet with threats, and taking them to court only if they ignore the warnings. That is the spirit of its so-called Hadopi law, adopted end 2009 and to be enforced this year.

South Korea is the only country in the world to have launched this type of action, in July 2009. IFPI figures indicate the move had an immediate impact on digital sales, which jumped 53 percent in the first nine months of 2009.

The French music market too was bolstered in the second half of last year by the news that a law would be passed to help protect the struggling from piracy.

Its two stage programme -- warn first, take action later -- has impacted as far away as New Zealand, which is now looking at similar measures.

Britain is considering how to strengthen measures to combat music piracy but believes in a more softly-softly approach.

"The idea is to send threats to Internet users and then wait to see what effect this first phase has before considering whether sanctions need to be taken," said Pichevin.

At MIDEM, which is the music industry's biggest annual get-together, the topic of piracy sparked heated debated.

The "Featured Artists Coalition" (FAC), which includes stars such as Pink Floyd, Blur and Radiohead, was sceptical that strong-arm tactics can be effective, a stand that irritated singer Lily Allen.

"I believe we will have a law, but in a run-up to a general election, there is little window of opportunity," said Geoff Taylor, the head of BPI, which represents the British music industry.

In Spain, where 31 percent of Internet users regularly illegally download music, according to a survey carried out for MIDEM, the government appears to be reluctant to attack consumers directly.

The government there has drawn up a draft law enabling the closure of sites that allow illegal downloads, but this has come under attack by opposition parties.

In Japan and the United States, the music industry has opted to negotiate agreements directly with Internet Service Providers (ISPs).

That approach failed in Spain and Britain "where ISPs were afraid of losing customers," Taylor said.

Canada's association of composers and songwriters on the other hand wants to negotiate a license with ISPs for Internet users who want to download.

"There's no harm in sharing music, that's always been the case. The only problem is that we're not paid and we need to find a way of monetizing the sharing," said the head of the association, Eddie Schwartz.

BitTorrent Census: About 99% of Files Copyright Infringing
Jacqui Cheng

It has never been a secret that the majority of files being shared over BitTorrent are movies and music that are likely being shared illegally. (Sorry, Linux distro nerds.) Princeton senior Sauhard Sahi confirmed this recently after setting out to survey the content available on BitTorrent and, although there are caveats to his findings, they highlight the relationship DRM has with illegal file sharing. As in: the more DRM there is on the legit versions of the content, the more popular it is on P2P.

Sahi chose a random sample of 1,021 files from the trackerless Mainline DHT and classified them by file type, language, and apparent copyright status. He found that nearly half (46 percent) of files were nonpornographic movies and TV shows—the largest single category of content. 14 percent of the files were porn, tied with the 14 percent dedicated to games and software. Just 10 percent of the files were classified as music, and one percent were books and guides.

Sahi also analyzed whether the content was infringement, checking to see if was in the public domain, freely available via legitimate channels, or user-generated content. Based on this study, 100 percent of the movie/TV show sample was found to be infringing, as well as all of the music torrents. Seven of the 148 files in games/software were found to be noninfringing (two were Linux distros), and one of the 145 porn files was given the benefit of the doubt as noninfringing. Overall, about one percent of the total files were categorized as "likely noninfringing."

So, people largely use P2P to pirate stuff—big surprise. It's the types of files and in what ratios that show us why people share media illegally, however. Music was once the only reason to use P2P networks, and the record industry long feared that going DRM-free would only aid in a massive explosion of illegal file sharing. That has obviously not been the case—P2P users can now share their DRM-free MP3s easier than ever, and yet this category is one of the smallest of all files shared. And it makes sense: why would you bother going to BitTorrent, which may have misnamed and poorly encoded MP3s, when you could easily spend less than a dollar, getting exactly what you want from a place that you trust?

Movies and TV shows, on the other hand, are hugely popular on Bit Torrent—a trend that seems to mysteriously coincide with the heavy DRM and restrictions that come with that kind of content. DVD encryption, browser restrictions, DRM on downloads from iTunes or Amazon—there's effectively no way for consumers to buy this content without restrictions, so they're turning to P2P to get it.

Of course, Sahi's results are only from Mainline and may not reflect the entire P2P system as a whole. His data also includes all files being shared, some of which may not be getting any downloads, while others are being downloaded en masse. Still, it's reasonable to assume that most users share what's in demand, and what's in demand right now is heavily-DRMed movies, movies, TV, and movies.

O'Reilly Drops eBook DRM, Sees 104% Increase in Sales

It's been 18 months since O'Reilly, the world's largest publisher of tech books, stopped using DRM on its ebooks. In the intervening time, O'Reilly's ebook sales have increased by 104 percent. Now, when you talk about ebooks and DRM, there's always someone who'll say, "But what about [textbooks|technical books|RPG manuals]? Their target audience is so wired and online, why wouldn't they just copy the books without paying? They've all got the technical know-how."

So much for that theory.

Instead, expect to hear DRM apologists (either DRM vendors or technologically naive people in publishing who believe what DRM vendors tell them) now saying, "Oh sure, it works for O'Reilly, but those are tech books. Regular trade books can't possibly work the same way!"

During the past 18 months we've seen a dramatic shift in customer preference from print to digital when looking at sales from oreilly.com, which is a substantial sales channel for us. And looking across all of our sales channels for individual ebooks -- including mobile apps -- 2009 ebook revenue was up a staggering 104% on 2008 (which was more than 50% above 2007).

2009 O'Reilly Ebook Revenue up 104% (Thanks, Andrew!)

Italy's Berlusconi Moves to Impose Regulation on YouTube, Other Sites
Colleen Barry

Silvio Berlusconi is moving to extend his grip on Italy's media to the freewheeling Internet world of Google and YouTube.

Going beyond other European governments, the premier's government has drafted a decree that would mandate the vetting of videos for pornographic or violent content uploaded by users onto such sites as YouTube, owned by Google, and the France-based Dailymotion, as well as blogs and online news media.

Google, press freedom watchdogs and telecom providers are among those pressing for changes in the draft to prevent the fast-track legislation from taking effect as early as Feb. 4. They say the decree would erode freedom of expression and mandate the technically burdensome — maybe even impossible — task of monitoring what individuals put on the Internet.

Reporters Without Borders Media says the measures could force Web sites to obtain licenses to operate in Italy.

The 34-page decree mandates vetting of any content harmful to minors, specifically pornography or excessive violence, and would require telecoms providers to shut down any Internet site not in compliance, or face fines ranging from $210 to $210,960.

The draft says it would be handled by "an authority," without elaborating, raising questions about among media freedom advocates about how it could be implemented.

Reporters Without Borders said in a statement this week that the draft proposal as written "pose yet another threat to freedom of expression in Italy."

The draft was written in mid-December, just around the same time the media empire founded by Berlusconi announced it was seeking at least $779 million in damages against YouTube and Google on allegations of misusing video it produced. The move is in response to a 2007 European Union directive to set up media rules, but only Italy has taken the directive to mean putting Internet companies in the hotseat.

The decree also inherently challenges the YouTube business model, shared by other hosting platforms, of allowing users to upload video without being controlled — the principle at the center of the Milan trial of four Google executives charged with defamation and violating privacy for allowing a video to be posted online showing an autistic youth being abused. Google says it removed the video as quickly as it could. A verdict is expected in the coming weeks, with the executives facing possible jail sentences.

The decree could also provide a tool to swiftly deal with hate groups, like those praising Berlusconi's attacker that mushroomed on Facebook after Berlusconi was struck by a man wielding a statue of Milan's cathedral.

Carlo Carnevale Maffe, an Internet economist at Milan's Bocconi University, argues that Internet must be regulated like other economic platforms or big companies will retain a monopolistic grip and keep getting bigger and more powerful.

"I cannot consider YouTube as a benefactor of mankind. I must consider YouTube as a company," Maffe said. "Google and the Internet live without regulation worldwide. This is impossible and we need to clear what are the limits of this new platform. We need to upgrade the legal platform to make sure the Internet is not blocked from innovation, but to give fair competition to the Internet."

Google's concern is that the decree takes aim at user-generated content, which drives YouTube, that is by its nature not managed in the same way as TV network content is. That was not the intention, Google argues, of the EU directive that Italy has taken to include Internet controls.

"If I am the BBC and I am using the web to broadcast my IPTV (Internet protocol TV), I am in the scope of the directive. If I am a user posting on YouTube video of my son's birthday, I am not under the scope of the directive," Marco Pancini, European senior policy counsel of Google Italia, said in an interview Friday before testifying on the decree before an Italian parliamentary committee.

Pancini was quoted earlier this week as telling Italian media that it would "destroy the Internet," but he said Friday that after meeting with drafters this week that he was convinced they were open to amending the decree.

Pancini was testifying along with the Italian associations for Internet and telecommunication providers as well as the national press and music federations. Pancini said he expected parliament to return the draft with changes next week, delaying implementation.

Dan Glickman to Step Down as Chairman, CEO of MPAA

The chairman of the Motion Picture Association of America is stepping down, the group said Friday, to become president of Refugees International.

Dan Glickman took over the MPAA in 2004 and has helped guide the movie industry through the rise of digital technology and online piracy. Glickman is a former secretary of agriculture and Democratic congressman from Kansas.

The MPAA, which represents Hollywood, said its president and chief operating officer, Bob Pisano, will serve as interim chief executive while it searches for a replacement.

The office of the chairman is in Washington, but most organizational operations are in Los Angeles.

Before joining the Motion Picture Association, Pisano served as national executive director and chief executive of the Screen Actors Guild. Before that, he held a number of executive positions at Metro-Goldwyn-Mayer and Paramount Pictures.

Glickman officially leaves on April 1.

At Hulu, 'Free' May Soon Turn Into 'Fee'
Dawn C. Chmielewski and Alex Pham

Hulu soared to popularity by offering free online viewing of popular TV shows. Now that free ride may soon end.

The Internet video site is weighing plans to charge users to watch episodes of "30 Rock," "Modern Family" and "House." The move would mark a sharp change of course for the venture, which was launched nearly two years ago by a consortium of studios to distribute without charge TV shows and movies over the Internet.

The site has spent months studying how to strike a balance between what people expect to watch free online and what they would be willing to pay for, said people familiar with the matter who were not authorized to speak publicly.

One plan being considered would allow users to view the five most recent episodes of TV shows free but would require a subscription of $4.99 a month to watch older episodes. Hulu believes it will need at least 20 TV series — both current ones and those no longer on the air — to make such a pay service attractive to users. A firm pricing model could emerge within six months, the sources said.

A Hulu spokeswoman declined to comment.

Hulu's plan to charge for some programs comes as many publishers are similarly grappling over how to get people to pay for online content that they've long gotten free.

On Wednesday, in a development that could have implications for the struggling newspaper industry, New York Times Co. unveiled a plan to charge online readers for stories. The newspaper will adopt a "metered" approach, starting next year, in which users can read a limited number of articles before being charged.

Hulu and the New York Times join a growing lineup of companies that are building pay walls around their content.

Internet radio company Pandora Media Inc., which had offered its service free, recently began charging users a monthly fee of 99 cents if they listened more than 40 hours a month.

"The economic reality of any type of content is that you need people to put some money into the tip jar," said Tim Westergren, founder of the Oakland company.

That imperative has grown as advertising dollars flooding online are expected to slow.

Boxee, a company that lets people pipe Netflix movies, YouTube videos, Pandora music and other online media directly to their TVs, on Wednesday introduced a way for studios and publishers to charge for on-demand content rather than rely on advertising.

"This lets content owners dictate the way they want to sell online," said Andrew Kippen, Boxee's vice president of marketing. "There will be more content available online, and there's not going to be one clear way to win. What we're saying is, work with us to try out some different business models and see what works."

Analysts say Hulu may be preparing to deliver its video service through the array of Internet-connected TVs, game consoles and other devices that were on display at the recent Consumer Electronics Show in Las Vegas.

"The whole reason Hulu needs to consider a subscription model is that the long-term play for online video is not to computers; it's to a collection of other devices — connected TVs, video game consoles," said Forrester Research media analyst James McQuivey.

Netflix has found that an increasing percentage of its subscribers use an on-demand service to watch movies through Internet-connected video game consoles, Blu-ray players and other devices connected to the TV.

Hulu, a partnership of NBC Universal, News Corp., Walt Disney and Providence Equity Partners, has emerged as an Internet darling — and a thorn in the side of some investors, who see the site not as a defense against piracy or video phenomenon YouTube but as a threat to the economics of the television business.

Cable operators, in particular, protested Hulu's allowing free Internet access to shows that were previously available only to their subscribers.

Mozilla Leader Worries about Internet Limits
Edith M. Lederer

The leader of the Mozilla Project, whose Firefox Web browser now has 350 million users, said Sunday that she is concerned that legal restrictions could limit Internet expansion.

Mitchell Baker said she worried about "the increase in laws that make it difficult to run an open network," especially rules about content.

"You suddenly become liable for anything that gets downloaded, whether it's legal or not," she said. "If you said to a municipality, if you build a road, you have to guarantee nothing illegal happens on it - that's what's happening on the Internet now. So that's the kind of regulatory disruption that's going to have some long-term consequences."

Baker spoke at an opening panel of a three-day conference on digital innovation and creative ideas.

The DLD conference - which stands for Digital-Life-Design - is chaired by Hubert Burda of Germany, owner of Hubert Burda Media, and digital investor Yossi Vardi, who co-pioneered instant messaging and chaired the panel, titled "Disruptive."

Niklas Zennstrom, co-founder of Skype which now has over 500 million users, said successful companies can't become complacent and must continue to make improvements and not be afraid "of disrupting themselves."

Vardi asked J.P. Rangaswami, chief scientist of the BT Group in Britain, what he thought of what Skype was doing to telecommunications companies like his.

"Watch this space," Rangaswami replied cryptically.

Vardi then asked Rangaswami whether he sees the industry following Skype's efforts to set minimal charges for phone calls around the world.

"I think those parts of the industry that don't follow what Niklas is doing will either find themselves out of a job or working for him," he replied.

American entrepreneur Jimmy Wales, whose nonprofit charity founded Wikipedia, the free online encyclopedia that has 350 million users, said it was a "very, very bad business" to try to compete against because the reference work is offered for free.

He ruled out advertising on the site for now - but left open the possibility it could happen sometime in the future to raise money for the charity.

Moderator Vardi expressed amazement that the Internet companies had small work forces despite their vast number of users.

Skype has just over 600 employees, Mozilla about 250, and Wikipedia just 30.

What advice would the three give to companies trying to get 100 million users?

"Stay out of software first of all," said Mozilla's Baker. "Go to Web sites and services."

Wales said, "Have a very pure, simple vision that everyone can understand immediately."

Zennstrom said the idea should also "make consumers' lives easier." And, he stressed, "don't do a copycat of someone else."

BT's Rangaswami said he believes the Web in the past 20 years has made people more willing to collaborate, to work together. The emphasis is on online data "because it's through that that people can do things," he told The Associated Press.

Ranjaswami said the key is transparency.

"So I think all the data.gov initiatives are very, very important because that's laying the foundations of the next generation - how we use that transparency of public information to start really making change as a result of community," he said.

Yves Daccord, director-general of the International Committee of the Red Cross, said in a video presentation that Twitter and the social media have been very important in mobilizing a response to the earthquake in Haiti and giving the people "the sense that we are very close."

In the future, he said, he expects victims of disasters to use social media more effectively to communicate their needs so humanitarian organizations can deliver better services and reunite families.

So Is Verizon Cutting Users Off Or Not?
from the probably-not,-but-they-need-to-clarify dept

Well, well, well. A few days ago, News.com had a story that got a lot of attention saying that Verizon was kicking users off of its service after it had received accusations of file sharing. At the time, we wondered if this was a misstatement by a Verizon spokesperson, and in an update, Verizon insisted that News.com had misquoted its spokesperson, and it had not kicked anyone off. And yet, lots of folks are still reporting that Verizon is kicking users off for file sharing. And, now, News.com has come back and stands by its original story.

Reading through the details, what it appears to have happened was that a Verizon person misspoke, and News.com accurately reported the misstatement (suggesting that users had been kicked off). Verizon is still claiming it "reserves the right" to kick users off, but has not actually done so. Hopefully it realizes that doing so based solely on accusation is a huge mistake and one over which it would almost certainly face serious backlash.

IFPI Loses “Deep-Linking” Case Against Baidu

In 2008, Baidu was sued for around $9 million by Sony BMG, Universal Music and Warner Music for providing so-called “deep-links” to copyright music tracks. A court has now ruled that providing search results does not breach copyright law, clearing China’s biggest search engine of wrong-doing.

Search engine Baidu.com is not only China’s biggest, but also a major player globally. It recently grabbed headlines when it was hacked by the ‘Iranian cyber army’, the same outfit that took Twitter offline in December.

Baidu has become increasingly popular with the Chinese population for its MP3 indexing abilities. While its “MP3 Search” provides algorithm-generated links to millions of undoubtedly illicit copyright tracks hosted by others (so-called “deep-linking”), Baidu has always insisted that the provision of such links alone is entirely legal. Needless to say, IFPI, the global music group, disagrees strongly with this assertion.

“The music industry in China wants partnership with the technology companies – but you cannot build partnership on the basis of systemic theft of copyrighted music and that is why we have been forced to take further actions,” said John Kennedy, Chairman and Chief Executive of IFPI, in a February 2008 statement.

Bolstered by an earlier ruling against Yahoo China, by further actions Kennedy unsurprisingly meant “legal actions.” In early 2008, IFPI (Sony BMG, Universal Music and Warner Music) sued Baidu.com for $9m. Today the result of that case has been made public.

Beijing No.1 Intermediate People’s Court has cleared Baidu on accusations of copyright infringement, with a court statement showing that simply providing search results does not breach Chinese copyright law. According to lawyer Sun Yan, the case against the search giant fell because IFPI failed to identify the actual sites hosting the illegal music downloads.

IFPI has challenged Baidu – and lost – in the Beijing No.1 Intermediate Court before. In September 2005, IFPI filed claims regarding nearly 200 music tracks it claimed were made available via Baidu. In 2006, the Court ruled Baidu was not infringing copyright. IFPI appealed to the Beijing Higher People’s Court which upheld the earlier ruling.

750,000 Lost Jobs? The Dodgy Digits Behind the War on Piracy
Julian Sanchez

A 20-year game of Telephone

If you pay any attention to the endless debates over intellectual property policy in the United States, you'll hear two numbers invoked over and over again, like the stuttering chorus of some Philip Glass opera: 750,000 and $200 to $250 billion. The first is the number of U.S. jobs supposedly lost to intellectual property theft; the second is the annual dollar cost of IP infringement to the U.S. economy. These statistics are brandished like a talisman each time Congress is asked to step up enforcement to protect the ever-beleaguered U.S. content industry. And both, as far as an extended investigation by Ars Technica has been able to determine, are utterly bogus.

"I have said it thrice," wrote Lewis Carroll in his poem The Hunting of the Snark, "what I tell you three times is true." And by that standard, the Pythagorean Theorem is but schoolyard gossip compared with our hoary figures. As our colleagues at Wired noted earlier this week, the 750,000 jobs figure can be found cited by the U.S. Department of Commerce, Customs and Border Patrol, and the U.S. Chamber of Commerce, among others. Both feature prominently on TheTrueCosts.org, an industry site devoted to trumpeting the harms of piracy. They're invoked by the deputy director of the U.S. Patent and Trademark Office. And, of course, they're a staple of indignant press releases from the congressional sponsors of tough-on-piracy legislation.

By more conventional standards of empirical verification, however, the numbers fare less well. Try to follow the thread of citations to their source, and you encounter a fractal tangle of recursive reference that resembles nothing so much as the children's game known, in less-PC times, as "Chinese whispers," and these days more often called "Telephone." Usually, the most respectable-sounding authority to cite for the numbers (the FBI for the dollar amount, Customs for the jobs figure) is also the most prevalent—but in each case, that authoritative "source" proves to be a mere waystation on a long and tortuous journey. So what is the secret origin of these ubiquitous statistics? What doomed planet's desperate alien statisticians rocketed them to Kansas? Ars did its best to find the fountainhead. Here's what we discovered.

Looking for lost jobs

First, the estimate of 750,000 jobs lost. (Is that supposed to be per year? A cumulative total over some undefined span? Those who cite the figure seldom say.) Customs is most often given as the source for this, and indeed, you can find press releases from as recently as 2002 giving that figure as a U.S. Customs and Border Patrol estimate. Eureka! But when we contacted CBP to determine how they had arrived at that imposing figure, we were informed that it was, in essence, a goof. The figure, Customs assured us, came from somewhere else, and was mistakenly described as the agency's own. This should come as no great surprise: CBP is an enforcement agency, whereas calculating the total loss of jobs from IP infringement would require some terrifyingly complex counterfactual modeling by trained economists. Similar claims have appeared in Customs releases dating back at least to 1993, but a CBP spokesperson assured us that the agency has never been in the business of developing such estimates in-house.

With Customs a dead end, we dove into press archives, hoping to find the earliest public mention of the elusive 750,000 jobs number. And we found it in—this is not a typo—1986. Yes, back in the days when "Papa Don't Preach" and "You Give Love a Bad Name" topped the charts, The Christian Science Monitor quoted then-Commerce Secretary Malcom Baldridge, trumpeting Ronald Reagan's own precursor to the recently passed PRO-IP bill. Baldridge estimated the number of jobs lost to the counterfeiting of U.S. goods at "anywhere from 130,000 to 750,000."

Where did that preposterously broad range come from? As with the number of licks needed to denude a Tootsie Pop, the world may never know. Ars submitted a Freedom of Information Act request to the Department of Commerce this summer, hoping to uncover the basis of Baldridge's claim—or any other Commerce Department estimates of job losses to piracy—but came up empty. So whatever marvelous proof the late secretary discovered was not to be found in the margins of any document in the government's vaults. But no matter: By 1987, that Brobdignagian statistical span had been reduced, as far as the press were concerned, to "as many as 750,000" jobs. Subsequent reportage dropped the qualifier. The 750,000 figure was still being bandied about this summer in support of the aforementioned PRO-IP bill.

$250 billion? What's that in real money?

What, then, of that $200 to $250 billion range? Often, it's attributed to the Federal Bureau of Investigation, and indeed, the Bureau routinely cites those numbers. According to FBI spokesperson Catherine Milhoan, the figure "was derived through our coordination with industry, trade associations, rights holders, and other law enforcement agencies" at a 2002 anti-piracy confab. But neither the Bureau nor the National Intellectual Property Rights Coordination Center, which assembled the inter-agency powwow, could find any record of how that number was computed.

At this point, it's necessary to get a little speculative. As with Customs, the FBI is not in the habit of doing sophisticated economic analysis in-house. And the last time the government conducted any sort of verifiably rigorous study of the costs of IP theft—about which more presently—it was a protracted undertaking that involved sending detailed questionnaires to hundreds of businesses, which government economists concluded was still insufficient to produce a reliable figure for the economy as a whole. However, $250 billion is about the number you come up with if you start with $200 billion in 1993 dollars and adjust for inflation to 2002. And that lower end of the range, $200 billion, happens to date back to 1993.

Another group that routinely uses the $200 to $250 billion figure is the International Anti-Counterfeiting Coalition, which (along with the FBI) is often given as the source of the number. That organization's white papers, as recently as 2005, footnote the figure to 1995 congressional testimony urging passage of what became the Anticounterfeiting Consumer Protection Act of 1996. So Ars dug into the archives at the Library of Congress to discover where the witnesses before the House and Senate Judiciary Committees got their data.

Several of the witnesses were conspicuously vague about their sources. An IACC factsheet submitted for the hearings said the group itself "estimates the economic cost due to product counterfeiting to exceed $200 billion each year," a number repeated by the group's then-president, John Bliss. Congressman Bob Goodlatte (R-VA) gave the same figure without sourcing. But several witnesses pointed to Forbes magazine as the source of the number. Rep. John Conyers (D-MI) noted that the International Trade Commission had placed the size of the counterfeit market at $60 billion in 1988 and that "a more recent estimate by Forbes Magazine says that American businesses are losing over $200 billion each year as a result of illegal counterfeiting." Finally, Charlotte Simmons-Gill of the International Trademark Association was kind enough to give a precise citation: the October 25, 1993 issue of Forbes.

Ars eagerly hunted down that issue and found a short article on counterfeiting, in which the reader is informed that "counterfeit merchandise" is "a $200 billion enterprise worldwide and growing faster than many of the industries it's preying on." No further source is given.

Quite possibly, the authors of the article called up an industry group like the IACC and got a ballpark guess. At any rate, there is nothing to indicate that Forbes itself had produced the estimate, Mr. Conyers' assertion notwithstanding. What is very clear, however, is that even assuming the figure is accurate, it is not an estimate of the cost to the U.S. economy of IP piracy. It's an estimate of the size of the entire global market in counterfeit goods. Despite the efforts of several witnesses to equate them, it is plainly not on par with the earlier calculation by the ITC that many had also cited.

But here, at last, we have a solid number to sink our claws into, right? Sure, it's 20 years old, but the U.S. International Trade Commission at least produced a reputable study yielding a definite figure for the cost of piracy to the U.S. economy: $60 billion annually.

Well, not quite.

"Biased & self-serving"

The number the ITC actually came up with, based on a survey of several hundred business selected for their likely reliance on IP for revenue, was $23.8 billion—the estimated losses to their respondents. That number was based on industry estimates that the authors of the study noted "could admittedly be biased and self-serving," since the firms had every incentive to paint the situation in the most dire terms as a means of spurring government action. But the figures at least appeared to be consistent and reasonable, both internally and across sectors.

The $60 billion number comes from a two-page appendix, in which the authors note that it's impossible to extrapolate from a self-selecting group of IP-heavy respondents to the economy as a whole. But taking a wild stab and assuming that firms outside their sample experienced losses totaling a quarter to half those of their respondents, the ITC guessed that the aggregate losses to the economy might be on the order of "$43 billion to $61 billion."

The survey also, incidentally, asked respondents to estimate the number of job losses they could attribute to inadequate intellectual property protection. The number they came up with was 5,374. If we assume, very crudely, that job losses are proportionate to dollar losses, then the ITC's high-end estimate of $61 billion in total economic costs would correspond to a loss of not 750,000 jobs, but 13,774.

If we want to be very precise, however, we should note that the ITC was not calculating losses from IP "theft," but rather "inadequate protection" of intellectual property. And "inadequate protection" was interpreted to mean protection falling short of the level provided by U.S. law. The protection provided by a foreign country might be deemed "inadequate," the study explained, if "exceptions to exclusive rights are overly broad"—for example, if a country's law contained "broad exceptions for public performances in hotels or film clips" or "too broad exceptions for educational photocopying." A legal regime could be "inadequate" because "terms of protection are too short" or because of "inadequate" civil or criminal remedies, meaning monetary damages or criminal penalties for infringers were not high enough.

Calculating the net cost of piracy to the economy

One final, slightly theoretical point deserves emphasis here. All the projections we've discussed, the rigorous and the suspect alike, calculate losses in sales or royalties to U.S. firms. This is often conflated with the net "cost to the U.S. economy." But those numbers—whatever they might be—are almost certainly not the same. When someone torrents a $12 album that they would have otherwise purchased, the record industry loses $12, to be sure. But that doesn't mean that $12 has magically vanished from the economy. On the contrary: someone has gotten the value of the album and still has $12 to spend somewhere else.

In economic jargon, charging anything for pure IP—which has a marginal cost approaching zero once it has been produced—creates a deadweight economic loss, at least in static terms. The actual net loss of IP infringement is an allocative loss that only appears in a dynamic analysis. Simply put, when people pirate IP, the market is not accurately signaling how highly people value the effort that was put into creating it, which leads to underproduction of new IP. To calculate the net loss to the economy over the long run, you'd need to figure out the value of the lost innovation in which IP owners would have invested the marginal dollar lost to piracy, and subtract from that the value of the second-best allocation—which is to say, whatever the consumer of the pirated good spent his money on instead—and the value of the deadweight loss (free music or software is a net economic benefit to someone) incurred by pricing IP at all.

If that sounds incredibly complicated, it is. And in fact, it's more complicated than that, because as Yochai Benkler has argued persuasively, IP is an input to innovation as well as the product of innovation. So under certain very specfic conditions, "piracy" can produce net gains. While it seems extremely unlikely that this is the case in the aggregate—IP theft almost certainly does impose net economic costs—simply calculating lost sales and licencing fees, assuming someone could produce a credible figure, would not provide a complete picture of the economic impact of IP infringement. It would give us, at most, one side of the ledger.


But enough theory and speculation; here is what we can say for certain: the two numbers that are invariably invoked whenever Congress considers the need for more stringent IP enforcement are, at best, highly dubious. They are phantoms. We have no good reason to think that either is remotely reliable.

Perhaps more importantly, both numbers are seemingly decades old, gaining a patina of currency and credibility by virtue of having been laundered through a relay race of respectable sources, even as their origin recedes into the mists. That's especially significant, because these numbers are always invoked as proof that the piracy problem is still dire—that everything we've done to step up international enforcement of intellectual property laws has been in vain. But of course, if you simply recycle the same numbers from 15 and 20 years ago—remember that IACC's 2005 publications still cite that 1995 congressional testimony, from which it seems safe to infer that they have no more recent source—then it will necessarily seem as though no ground has been gained.

Neither figure is terribly plausible on its face. As Wired noted earlier this week, 750,000 jobs is fully 8 percent of the current number of unemployed in the United States. And $250 billion is more than the combined 2005 gross domestic revenues of the movie, music, software, and video game industries.

Still, anything is possible: The figures could happen to be more or less accurate. But given the shady provenance of the data, the one thing we know for certain is that we don't know for certain. And we're making policy on the basis of our ignorance.

Filmmakers Eye Web, TV as Alternate to Theaters
Cameron French

Here's a plot twist worthy of any Hollywood movie. To save independent films from extinction, the time may be near for some low-budget movies to play outside theaters, instead of in them.

The idea -- alternative distribution of movies via video-on-demand on cable and satellite television systems and the Internet -- is what some "indie" players at this week's major industry event, the Sundance Film Festival, are backing.

The low-budget film arena that produced movies like Oscar-winner "Slumdog Millionaire," has struggled through hard times as low-cost digital equipment and an influx of investors fueled a glut of films at the onset of a recession.

Backers of on-demand releases say alternative distribution presents ways for low-budget filmmakers to profit without having to compete for limited space in movie theaters.

To promote the idea, Sundance is releasing three films, including Michael Winterbottom documentary "The Shock Doctrine," on demand via a new program it calls Sundance Selects. Five more films will be on YouTube.

"The beauty of this (video-on-demand) model is that you take a lot of the voodoo economics of film distribution out of the equation," said Jonathan Sehring, president of IFC Entertainment, who is working with Sundance.

Traditionally, a distributor pays a producer a fee to release a film, often forking over less than the production cost and promising the filmmaker a share of profits that may never be realized if a movie fails at box offices.

Utilizing TV on-demand or Web downloads, indie movies can closely target audiences and avoid millions of dollars spent to market a film in theaters, proponents say. Some filmmakers like it because their movies get seen, and distributors hope for new customers outside traditional art houses in major cities.

New Generation, New Market

"We think that we can't survive as a company unless we make a concerted effort to understand the marketplace, understand the audience, understand what different opportunities are out there," said Christine Walker, principle at Werc Werk Works, whose movie "HOWL" opened the festival.

Works is one of a number of indie production companies that are finding audiences through on-demand or downloads, which she said leads to collaboration among distributors and filmmakers.

"Maybe the distributor doesn't get as much as they might have in a traditional deal, but they're not risking as much either," she said.

Nolan Gallagher, founder and CEO of Gravitas Ventures, said his company now releases about 300 films a year on-demand at 40 cable TV operators, and the industry already is at a point where a producer can realize a profit via an on-demand deal.

Veterans like Bob Berney, co-founder of distributor Apparition, caution it is still early days for on-demand models but agree that they may be a wave of the future.

To be sure, directors who grew up watching their heroes on silver screens would like nothing more than seeing their films in theaters. But many are growing willing to bypass glitzy red carpets simply to make money doing what they love.

"If video-on-demand is what is needed in order to keep (the industry) alive, then I'm all for supporting it," said Joshua Safdie, who along with his brother Benny directed "Daddy Longlegs", one of the Sundance films to be release on-demand.

(Editing by Bob Tourtellotte)

Talking About a Revolution (for a Digital Age)
Manohla Dargis

“IT is time to blow the whole thing up.” In September 1960, when those words were lobbed at the world by a New York-centric, off-Hollywood circle of malcontents called the New American Cinema Group, there was no mistaking their radical urgency. Given the cold war times — one of the first large ban-the-bomb rallies had been held in Madison Square Garden some months earlier — this call to annihilation might have seemed tasteless. But for this group, whose numbers included the film critic, later filmmaker Jonas Mekas and the not-yet-director Peter Bogdanovich, the time for a free American cinema, one rooted in personal vision and liberated from censorship and the distribution and exhibition strangleholds, was now.

The time may have come once more. In the last few years American independent cinema has been rocked by seismic changes — including downsized companies and emerging technologies — that have altered this world more profoundly since 1993, the year that the Walt Disney Company bought Miramax Films. In the ensuing years the other major studios followed suit (Sony already had a boutique with Sony Pictures Classics), building specialty divisions, snapping up talent and writing bigger and bigger checks. It was an industry shift that soon resulted in a studio-indie infrastructure that had its own auteurs as well as its own producers, agents, lawyers, managers, publicists, festival programmers and journalists. Together this world gave indie movies “buzz” and minted new stars, some of whom hit it big, going from Sundance to Scorsese.

That infrastructure is crumbling. Three of the major studios have closed, absorbed or scaled back their various specialty divisions, including a now severely diminished Miramax Films. Yet even as the studio-indie model disintegrates, a new nonstudio model appears to be emerging from the rubble. In recent years, for instance, novice filmmakers and longtime independent insiders have begun experimenting, and finding some success, with new approaches to releasing movies, including self-distribution. The D.I.Y. world isn’t new, but what is novel is how filmmakers and other industry insiders are sharing their nuts-and-bolts experiences and blue-sky ideas both in person and online, creating a virtual infrastructure. But filmmakers who use Facebook to sell their movies aren’t simply partaking in a social-networking fad; they are trying to create a more complex, interactive and personalized relationship between them and their audiences. That explains why more than one D.I.Y. adherent likes to invoke the music world, where fans can become a loyal following, one that doesn’t just download a single song (or, as the most passionate of fans sometimes do, swap bootlegs), but also buys T-shirts, posters, memorabilia, concert tickets and yet more songs.

The frisson of the live concert experience partly explains why some independent filmmakers now show up at some of their screenings in person. Last August, for instance, the young filmmaker Andrew Bujalski appeared at the decidedly low-key Los Angeles premiere of his latest, “Beeswax,” at the Nuart Theater, one of that city’s single-screen art-house theaters. Before the movie began, he chatted amiably with filmgoers in the theater lobby, not far from the concession stand. Along with his producers, he also introduced the movie and, when it was over, stayed to take questions from an audience that now had a sense of the man to go along with his director’s credit.

Online and off, the human factor of course remains paramount to the independent world, and while its emergent foundation has a virtual component it retains a crucial bricks-and-mortar side too. Proof of this can be found in the three-day, pre-Sundance Film Festival confab, the Art House Convergence. Inspired by John Cooper, who recently took over as the director of the festival, this third annual meeting brought together more than 100 independent exhibitors, including art-house theater operators like the director Michael Moore, who has the State Theater in Traverse City, Mich., to discuss survival strategies. One of the most critical problems facing art-house cinemas is what’s been deemed a “hair problem” — meaning, an aging clientele that’s either gray or bald and whose declining numbers are worrisome to independent exhibition.

In a recent blog post on his Web site, trulyfreefilm.com, the producer Ted Hope, whose recent titles include “Adventureland,” wrote that it “is really surprising how few true indie films speak to a youth audience.” He continued, “In this country we’ve had Kevin Smith and ‘Napoleon Dynamite,’ but nothing that was youth and also truly on the art spectrum like ‘Run Lola Run’ or the French New Wave (‘Paranormal Activity’ not withstanding...),” adding: “Are we incapable of making the spirited yet formal work that defines a lot of alternative rock and roll? And if so, why is that?”

Any future alternative film culture will depend on the cultivation of younger patrons who are used to receiving much if not all of their entertainment at home and on hand-held devices. Some film festivals, notably South by Southwest, have attracted young audiences, partly by showcasing young directors like Aaron Katz (“Quiet City”). A similar generational enthusiasm and energy has to carry over into a new independent model if current and future filmmaking generations — including Kelly Reichardt (“Wendy and Lucy”), Ronald Bronstein (“Frownland”), Barry Jenkins (“Medicine for Melancholy”) and those whose movies are still on their laptops or in their dreams — are to find the kind of audiences and momentum that, in the 1980s, turned Jim Jarmusch and Spike Lee into cultural touchstones.

Game changers like Lance Weiler, a D.I.Y. visionary whose 1998 mock documentary “The Last Broadcast,” directed with Stefan Avalos, was the first movie released in theaters digitally, understand that younger audiences can’t be reached the way that their Fellini-loving grandparents once were. Younger audiences might not be more active moviegoers than their grandparents (watching a film is never a passive experience), but they live in an interactive, media-saturated world. These days “everyone is his or her own media company,” Mr. Weiler wrote in Filmmaker Magazine. “With the push of a button they can publish, shoot or record and moments later it can be online for the world to see.” This audience, in other words, has its own D.I.Y. ethos, and sometimes can be part of a movie’s creative process.

The major studios certainly are paying attention to what Mr. Weiler and other do-it-yourselfers have to say. For the release of its recent hit “Paranormal Activity,” a digital-age spin on the old haunted-house formula, Paramount Studios lifted a number of release strategies from this new world, including exploiting social networks — (TweetYourScream) on Twitter — to stoke and sustain audience interest. At the same time Paramount was also borrowing a page from the exploitation cinema handbook. In the 1950s and ’60s the director and producer William Castle (“The Tingler”) competed with Big Hollywood by actively engaging his audience with various gimmicks, like placing buzzers under seats to zap moviegoers mid-screening or advertising that nurses would be standing by in case anyone fainted.

Castle’s genius was to make audience members feel as if, with their giggles and screams, they were active participants in the movie and its meaning. That ability to make moviegoers see themselves as a part of the action was a crucial element to how Harvey and Bob Weinstein turned Miramax Films into a dominant force not only in independent cinema but also in Big Hollywood. It helped that two of their most popular and early stars, the directors Kevin Smith (“Clerks”) and Quentin Tarantino (“Pulp Fiction”), were natural showmen who attracted intensely dedicated followings. Yet as time went on and Miramax increasingly devoted its resources to slick commercial productions (“Cold Mountain”) that were at times indistinguishable from mainstream fare, it was no longer reaching out to specific audiences but the mass.

Miramax’s early success in forging deep and seemingly meaningful connections to its audience was greatly aided by its ability to sustain the fiction that it was separate from Big Hollywood, even as its power grew and its Oscar statuettes accumulated. By playing the studio outsiders, the Weinsteins could keep prices down and maintain the indie cred that was initially their most valuable and, in a way, lethal brand. In Peter Biskind’s 2004 book “Down and Dirty Pictures: Miramax, Sundance, and the Rise of Independent Film,” a Disney executive, Chris McGurk, recalls how the studio bought Miramax: “We laid out on a piece of paper how we would help Miramax take over the independent world and kill everybody. The big issue was whether these two guys could work with us, work within the system.”

The Weinsteins did and then didn’t work within the system, breaking with Disney in 2005 and opening their self-titled company shortly thereafter. They aren’t wholly to blame for everything that went right and wrong in the studio-indie system: They are just the flashiest example of the Hollywood-ization of the independent world. Throughout the 1990s and into the 2000s, other distributors tried to match Miramax dollar for dollar, hit for hit, by throwing money at movies that, as the stakes and studio-indie investments grew, shifted attention and resources away from work that was not simply independent in their initial financing but also aesthetically and politically adventurous, shocking, even confrontational. It’s no surprise that along the way much of the conversation shifted from the art of cinema to its business.

Business remains part of that conversation by necessity, though the discussion has shifted again as artists, exhibitors and distributors consider the reconfigured landscape, one with less money and uncertain audiences, true, yet also no longer as tightly in the grip of Big Hollywood. This year’s Sundance was abuzz about entries that were available for rental on YouTube or through video on demand during the festival, as filmmakers try out new ways to make an impact. These small-screen efforts have met with skepticism even while reaping the expected publicity, because it’s unclear how they might affect a movie’s distribution chances post-festival. Now, as the independent cinema nurses its Hollywood hangover, the future remains unclear even as one message is getting louder: It is time to blow the whole thing up.

‘Avatar’ Faces Traffic Jam at 3-D Screens
Michael Cieply and Brooks Barnes

Will it soon be time for 20th Century Fox’s “Avatar” to surrender the 3-D stage? Walt Disney Studios certainly thinks so.

“Alice in Wonderland,” a 3-D adaptation from Tim Burton and Disney, is set to replace “Avatar” in all commercial Imax theaters and in many multiplexes that operate 3-D screens on March 5.

The problem is that “Avatar” is still playing like gangbusters — especially in 3-D theaters, which charge premium prices for tickets and have been instrumental in making “Avatar” a box office phenomenon — and exhibitors are grumbling at having to let go of a sure winner to pick up an uncertain new prospect.

Fox executives are now quietly talking about fighting to hold some of the big-format screens for “Avatar,” perhaps by giving more favorable financial terms to theater owners who keep it. Disney is set to take over the 3-D real estate just two days before the Academy Awards, a situation that would make it hard for “Avatar” — a front-runner for best picture — to get the traditional Oscar box office bump.

A similar showdown is brewing between, on the one side, DreamWorks Animation and Paramount Pictures, which plan to release the animated “How to Train Your Dragon” in 3-D on March 26, and, on the other side, Warner Brothers. Warner has just decided to convert its sword-and-sandals fantasy “Clash of the Titans” to a 3-D format and release it on April 2. “How to Train Your Dragon” will have to make do with fewer 3-D seats, which sell for a $3 to $5 premium.

The 3-D bottleneck is likely to grow worse. Michael Lewis, the chief executive of RealD, which equips theaters that account for about 90 percent of 3D screens in the United States, said about 60 films were set for 3-D release over the next three years.

“As audiences experience more 3-D movies, scheduling challenges for theater owners and studios will naturally increase while there is a temporary shortfall of 3-D screens,” Chuck Viane, Disney’s president for distribution, said in a statement. Another Disney executive, who spoke on the condition of anonymity because he was not authorized to comment, said the studio did not see “Avatar” as a problem because early interest in “Alice in Wonderland” was quite strong.

“It will beautifully draft off of ‘Avatar,’ ” the executive said.

Fox, Imax and DreamWorks Animation declined to comment. Spokesmen for the Cinemark and AMC theater chains, which operate 3-D screens, did not return telephone calls. A spokesman for the Regal chain had no comment.

Imax long ago promised almost all of its 179 domestic and 82 foreign theaters to Disney for the opening of “Alice in Wonderland,” which stars Johnny Depp. At the time, few suspected that “Avatar” would still be racking up ticket sales that have made it the best-selling film in history, with more than $1.9 billion at the worldwide box office so far. In fact, the flagship Imax theaters in places like the AMC Loews Lincoln Square in Manhattan are still selling out weekend shows with no sign of a slowdown. More than 70 percent of ticket revenue for “Avatar” has come from 3-D.

The owners of Imax’s commercial theaters appear to be bound by their commitment to Disney — although contracts have often meant less in the world of movie exhibition than pragmatic decisions based on the leverage of the players involved. Under pressure from Fox, for instance, Imax might well ask Disney to permit the large-screen theaters to hang onto “Avatar” for midnight screenings during the three-week run promised to “Alice in Wonderland,” according to one executive who was briefed on the situation but spoke on condition of anonymity to avoid further conflict. Another possibility might be to re-release “Avatar” in the large-screen format sometime later this year.

Disney could have a harder time maintaining its anticipated number of 3-D screens that are not Imax. Decisions about what movies play on those screens are generally made on the local or regional level, based on how well tickets are selling. Given the staying power of “Avatar,” theater owners are speculating that it could monopolize 3-D screens into April. The number of tickets sold for “Avatar” is thus far about the same as that for “Titanic” over the same length of time. “Titanic” ran for nine months after its release in 1997.

The collisions among movie studios for 3-D theaters stems from a shortage of screens equipped with the technology. By year’s end the number of 3-D screens in the United States will have expanded to about 5,100, according to the National Association of Theater Owners. But that is still too few to accommodate dozens of big-budget movies released in the format. Mr. Lewis said his company had contracts to install an additional 5,000 screens worldwide. But much of the expansion, he said, has been waiting for a loosening of capital markets.

Eventually, multiplexes that now operate one or two 3-D screens will have five or six. “By the end of the year, I think it’s going to be a nonissue,” Mr. Lewis said of the shortage.

China’s Zeal for ‘Avatar’ Crowds Out ‘Confucius’
Sharon LaFraniere

A Hollywood vision of the future is testing the Chinese government’s preference for a piece of the country’s past.

Confronted with a clamor of ticket-buyers for “Avatar” and sparse audiences for the domestic film “Confucius,” Chinese authorities appeared to have backpedaled this week on a decision to pull “Avatar” from the nation’s 2-D movie screens in favor of “Confucius.”

Zhang Hongsen, the vice director of the film bureau of the State Administration of Radio, Film and Television, said last week that Avatar would be limited to 3-D and Imax screens after “Confucius” opened on Jan. 22 on 2-D screens, according to the news agency Xinhua. But 2-D showings of “Avatar” have continued at some theaters outside Beijing this week, theater employees and officials said.

In Shanghai, an official with the biggest local cinema chain told fans not to worry that they would miss “Avatar” because of state-imposed restrictions. Wu Hehu, a senior manager for the chain, Shanghai United Circuit, told a Shanghai daily newspaper that its theaters would continue to show “Avatar” on both 3-D and 2-D screens.

China tries to nurture its domestic film industry by severely restricting the number of foreign movies allowed into theaters and the lengths of their runs. But the decision to limit “Avatar,” the highest-grossing film of all time, has stirred up criticism of the state’s interference with market preferences.

“I thought it was a bad move and also a bit stupid,” said Stephen Teo, an associate professor of broadcast and cinema studies at Nanyang Technological University in Singapore. If authorities were worried about “Avatar” competing with “Confucius,” he said, they should have delayed the opening of “Confucius” until “Avatar” crowds thinned.

Mr. Zhang, of the state film bureau, the industry’s regulatory agency, said last week that the decision to pull “Avatar” from 2-D screens was purely commercial. He said that “Confucius” was available only in the standard 2-D format and that “Avatar” had not performed as well in theaters with 2-D screens as it had in theaters with 3-D or Imax screens.

“So to take the 2-D version off the screen is quite normal,” he said, according to China Daily, a state-controlled newspaper.

But “Avatar” is outperforming “Confucius” so decisively — racking up an estimated 2.5 times as much revenue every day — that pulling it from screens seems commercial folly, Mr. Teo said. In its first three weeks in China, “Avatar” topped $100 million in revenue, or about $4.7 million a day. “Confucius” averaged just $1.8 million a day in its first three days, Xinhua reported.

Part of the problem could be that although it is building theaters rapidly, China still has only a fraction of the number in the United States. Moreover, perhaps one-third of its estimated 4,700 cinema screens are too antiquated to show foreign films, according to one industry worker.

China allows 20 foreign films a year to be shown on local screens, splitting revenue among producers, theaters and local distributors. Chinese distributors purchase the local rights to show other foreign films without sharing profits with the producers, industry sources say.

Those few foreign films compete with a growing number of domestic films — more than 400 in 2008, including those co-produced with foreign companies. Over all, box-office revenue is soaring.

But China’s main studios are all state-owned and some producers complain that the government cannot decide whether movies should serve as market-driven entertainment or nationalistic propaganda.

Critics say “Confucius” belongs in the latter category. The movie, produced by Beijing Dadi Century Ltd., focuses on the later life of the philosopher, whose teachings are garnering renewed interest in China. The cast, led by the Hong Kong actor Chow Yun-fat and the Chinese actress Zhou Xun, was billed as star-studded. It opened on 2,500 screens in China, a record number.

According to Xinhua, Mr. Chow, who plays Confucius, predicted the film would challenge “Avatar,” produced by 20th Century Fox. But 13,039 Internet users gave “Confucius” ratings that averaged 4.4 on a scale of 1 to 10 on douban.com, a popular Chinese entertainment Web site. About 95,280 users gave “Avatar” a rating that averaged 9.1.

Meanwhile, Xinhua reported on Thursday that every showing of “Avatar” at a 459-seat Imax theater in Beijing was sold out. In Hunan Province, officials even renamed mountain peaks in a national park, saying they were prototypes for the “Hallelujah” mountains in “Avatar.”

Chinese media criticized the move, saying starstruck officials had forgotten their cultural roots. But the officials said the “Avatar” connection would increase tourism to the park.

Li Bibo contributed reporting.

He Doth Surpass Himself: ‘Avatar’ Outperforms ‘Titanic’
Michael Cieply

James Cameron’s science-fiction epic “Avatar” has passed his “Titanic” to become history’s highest-grossing film, with a sizable boost from higher-priced tickets for 3-D and Imax showings.

“Avatar,” like other contemporary films, has also benefited from the steady inflation of ticket prices —today’s average is $7.46, up from $4.69 in 1998 when “Titanic” was in theaters — meaning that “Titanic” had to sell many more tickets to reach box-office totals like “Avatar’s.” But “Avatar” remains poised to keep going for weeks if not months.

Through Monday its ticket sales around the world reached $1.86 billion, edging past the $1.84 billion in sales posted by “Titanic,” which came out in December 1997, according to figures released Tuesday by 20th Century Fox.

Fox released “Avatar” around the world; it split the distribution of “Titanic” with Paramount Pictures.

Through Monday “Avatar” took in about $554.9 million in domestic theaters, placing it just behind “Titanic,” with sales of $600.8 million, in the domestic box-office rankings, and just ahead of “The Dark Knight,” a Warner Brothers film from 2008, which took in $533.3 million.

The performance of “Avatar” is particularly striking because the film — a leading contender in this year’s Oscar race — reached its summit so quickly.

“In just 39 days it has eclipsed the worldwide record,” said Paul Dergarabedian, the president of Hollywood.com’s box-office division. “That’s extraordinarily impressive.”

Mr. Dergarabedian said he thought “Avatar” would pass the domestic box-office mark set by “Titanic” by the middle of next week, and that it is almost certain to pass $2 billion in worldwide sales before the end of its run.

Privately, some involved with the film are guessing that final ticket sales will go as high as $2.5 billion, though Fox has made no public projection. New Line Cinema’s “Lord of the Rings: The Return of the King,” No. 3 in the all-time worldwide rankings, had $1.1 billion in ticket sales, according to Boxofficemojo.com.

Fox said 72 percent of worldwide sales for “Avatar” came from 3-D screens. If Mr. Dergarabedian’s estimates are correct, the movie has accounted for roughly 56 million admissions in domestic theaters to date.

That is about the same number of tickets that “Titanic” had sold at this point in its theatrical run, he said.

But “Titanic” played and played, remaining in theaters until September 1998 and racking up about 128 million admissions. “Avatar” still needs a very long tail to surpass the number of viewers who saw “Titanic.”

To calculate the number of “Avatar” viewers around the world is impossible without taking into account exchange rates and a patchwork of ticket prices and viewing habits in dozens of countries in which the film has been showing.

Large-format Imax theaters have accounted for about $137.1 million of “Avatar” ticket sales around the world, said Greg Foster, president and chairman of Imax Filmed Entertainment. “There’s been only the most minimal drop-off,” he said. Imax theaters are scheduled to continue showing “Avatar” until “Alice in Wonderland,” another 3-D film, from Walt Disney, opens on March 5.

The world record is sweet vindication, both for Mr. Cameron and for Fox. Skeptics had questioned whether Mr. Cameron could deliver on his promise of a revolutionary visual experience, and whether Fox and its financial partners would profit from a film that cost nearly a half-billion dollars to make and release.

While those questions are now settled — the film will make a profit and the critics have been kind — the Academy Awards, scheduled for March 7, remain a hurdle. On Sunday the Producers Guild of America gave its highest movie award, sometimes a harbinger of success at the Oscars, to “The Hurt Locker.” A small, independent drama about the Iraq war, it was directed by Kathryn Bigelow, who is Mr. Cameron’s ex-wife.

On Tuesday Tom Rothman, a chairman of the Fox film operation, said the global success of “Avatar” carried a lesson beyond economics. “It tells you all of us on the planet have more things in common than we have dividing us,” Mr. Rothman said.

United States Box Office

Issued Tue Jan 26, 2010

Title/Distributor Wknd. Gross Total Gross # Theaters Last Wk. Days Released
TWENTIETH CENTURY FOX $34944081 $551741499 3141 1 38
SONY PICTURES $17501625 $17501625 2476 0 3
WARNER BROS. $15732463 $60735686 3111 2 10
TWENTIETH CENTURY FOX $14010409 $14010409 3344 0 3
PARAMOUNT $8418192 $31242633 2571 3 45
WARNER BROS. $6628069 $191076852 2670 6 31
TWENTIETH CENTURY FOX $6403504 $204140348 2973 4 33
CBS FILMS $6012594 $6012594 2545 0 3
UNIVERSAL $5810025 $98270085 2301 7 31
LIONSGATE $4584524 $18544639 2924 5 10
WARNER BROS. $4166136 $233678402 1932 9 66
PARAMOUNT $3902190 $69245716 1707 10 52
UNIVERSAL $2889110 $22855295 1939 8 17
LIONSGATE $1551703 $28096998 1523 11 17
IDP/SAMUEL GOLDWYN FILMS $1513955 $1513955 441 0 3

NBC Facing Long Road Back after Conan O'Brien Drama
Jill Serjeant

NBC may have put a public relations nightmare behind it with the departure of "Tonight Show" host Conan O'Brien, but the network faces a long, costly road to revive its sagging fortunes, media analysts said.

NBC's $45 million exit deal for O'Brien was seen as a drop in the bucket against NBC Universal's estimated $3 billion cash flow, and a cheaper solution than paying off Jay Leno after the failure of his new prime-time talk show.

Leno will return in March as the frontman of the "Tonight Show," which he hosted for 17 years and made the top-rated late night program on U.S. television. But the move leaves the network with a worrying hole in its prime-time line-up.

NBC, which is owned by General Electric Co., will likely have to spend about $300 million to develop new dramas and comedies for the slots left by its cost-cutting experiment with Leno, RBC analyst David Bank said.

The Hollywood Reporter said the $45 million that will go to O'Brien and his staff "could have paid for about eight drama pilots."

"This has been a nightmare for NBC. It's not that they can't turn it around. They are just going to have to be very patient," said Marc Berman, senior TV writer with Mediaweek.

"Now they have to focus on programing and change their tune, and they have to spend a lot of money. They can't be cheap about it now," Berman said.

NBC, under the leadership of NBC Universal president and CEO Jeff Zucker, has trailed the other three big U.S. networks in ratings for most of the last five years after failing to find a replacement for 1990s hits "Seinfeld" and "Friends".

Zucker said in a PBS interview this week that he was very proud of his work.

Leno's Battle

Media watchers have welcomed the return of Leno to the "Tonight Show."

NBC TV entertainment chairman Jeff Gaspin told web site Broadcasting&Cable that, under O'Brien, "The Tonight Show" was on track to lose money in 2010 for the first time in its 56-year franchise because of increased competition and the downturn in advertising revenue.

Leno faces a battle to regain his old audience against late-night rival David Letterman on the CBS network, which is owned by CBS Corp.. But analysts expect Leno to improve on O'Brien's poor ratings.

NBC is putting Jerry Seinfeld's new game panel "The Marriage Ref" and the drama series "Parenthood" in two of its empty 10 p.m. slots starting in March.

But it may be unable to reap the expected benefits from the shows because advertising slots were sold last year on the basis of the smaller audiences expected for "The Jay Leno Show."

"Whatever they put on at 10 p.m. is probably going to out-perform Leno from a ratings perspective. But I don't think they are able to be going to go back and monetize those ratings," said RBC's Bank.

NBC will use its coverage of the Winter Olympics in February to promote the new offerings, though it has said it will lose money on the games in Vancouver. It paid $2.2 billion in 2003, when television markets were healthier, for the U.S. broadcasting rights to the 2010 winter and 2012 summer Games.

Looking to the 2010-11 season, NBC has ordered pilots for six new scripted dramas and two new comedies, including shows by Emmy-winners Jerry Bruckheimer and David E. Kelley.

But that level of talent does not come cheap and is no guarantee of success.

Besides, said Bank, "just having a hit show is not the goal. The goal is to create a hit show that you can sell into syndication, into home video and sell internationally."

NBC's troubles with Leno and O'Brien erupted after cable operator Comcast Corp struck a deal in December to take a 51 percent stake in NBC Universal, subject to federal approval.

Christopher Marangi, a media analyst with Gabelli & Co., said Comcast could provide a welcome shot in the arm for NBC.

"I think under the ownership of Comcast, they'll have more flexibility to further invest in content and grow the network again," he said. "If they can get NBC's ratings back to just an average level, it is worth several hundred million dollars to the entity."

(Editing by Paul Simao)

NBC, Conan O'Brien Back in Business
Nellie Andreeva

Conan O'Brien is getting "Justice" at NBC after all.

Days after the network severed ties with O'Brien as host of "The Tonight Show," it picked up an hourlong pilot from O'Brien's production company, Conaco.

Additionally, NBC has ordered multicamera comedy pilot "The Pink House."

Both shows hail from UMS.

The untitled O'Brien project, known as "Justice," was written by John Eisendrath. Described as a new take on a law show with a larger-than-life character at the center, it follows an ex-Supreme Court justice who quits the Court to start his own legal practice.

Eisendrath is executive producing, with O'Brien, his longtime executive producer Jeff Ross and Conaco's David Kissinger also expected to serve as exec producers.

As part of O'Brien's $33 million settlement with NBC, his NBC-based company was to continue to operate at NBC Uni through the end of the development season.

It would be truly ironic if, following his acrimonious divorce from NBC, O'Brien delivers a hit show for the network as a parting gift.

The pilot pickup for the Eisendrath's script, which had been one of the most buzzed about at NBC in the past couple of weeks, marks the third legal drama pilot on the network's slate for next season, along with "Rex Is Not Your Lawyer" and David E. Kelley's "Kindreds."

"Pink House," from writers Rick Weiner and Kenny Schwartz ("American Dad), centers on two guy friends who move to Los Angeles post-college.

Scott Stuber is exec producing.

Shirley Bell Cole, the Voice of Little Orphan Annie, Dies at 89
Dennis Hevesi

At a time when so many people could not spare a dime for a movie ticket, hundreds of thousands of youngsters hovered around big, boxy Depression-era radios in their living rooms, entranced by scripted voices and sound effects that conjured images of adventurous heroes in faraway places.

Those figures included Tarzan, Jack Armstrong, Dick Tracy and the spunky, curly-haired Little Orphan Annie, who in her high-pitched voice exclaimed, “Leapin’ lizards!” at scintillating twists in the serial plot.

In real life, the red-haired Annie was Shirley Bell, a brown-haired girl from the South Side of Chicago, who was the primary radio voice of the character from 1930 to 1940. She got the part, adapted from Harold Gray’s popular comic strip, when she was 10 and, managing to maintain that bubbly preteen voice, played Annie until she was 20.

Shirley Bell Cole died on Jan. 12 at 89, her daughter, Lori Cole, said, adding only that her mother had lived in Arizona.

“Orphan Annie was like the keystone of after-school radio during the Depression,” Chuck Schaden, an expert on radio history, said in an interview on Thursday. “It meant a lot to kids because she would save the day, come to the rescue. At Christmas time in those days they were happy to get two pennies.”

Mr. Schaden recently retired as host of “Those Were the Days,” a show on the Chicago radio station WDCB that rebroadcast vintage programs. “Little Orphan Annie,” he said, was particularly exciting. “She was a real role model and would embark on adventures that little girls — 10, 12 years old — would never dream of,” he said.

Annie was the adopted daughter of Oliver Warbucks, known as Daddy, the cue-ball-headed, tuxedoed (at least on paper) capitalist who took his girl and her dog, Sandy, on journeys abroad. Reading scripts from behind the microphone, little Miss Bell (with sound effects like a cascading waterfall or a cackling bird) would transport listeners into treacherous adventures in often exotic places. Annie was captured by pirates in the South Pacific. Off the coast of Africa, she eluded headhunters by fashioning masks of herself and propping them in every porthole of Warbucks’s big boat.

When Daddy Warbucks was off on his own, Annie stayed at a farm in Simmons Corners with Mr. and Mrs. Silo. In town she would trail bank robbers and turn them in to the police.

“The listeners so believed in her; they were not very sophisticated, and radio was just in its infancy,” said Susan Cox, who helped Mrs. Cole write her self-published autobiography, “Acting Her Age: My Ten Years as a Ten-Year-Old” (2005).

“When one of the stories was that Mr. and Mrs. Silo were going to lose their farm,” Ms. Cox said in a phone interview, “listeners started sending in money to save the farm.”

When Annie solved a mystery with a secret decoder badge, thousands of listeners sent in two inner seals from jars of Ovaltine in exchange for their own decoder. Back then, that was one way sponsors rated shows.

The 15-minute episodes, starting at 5:45 p.m., were first broadcast on WGN in Chicago in 1930. The show proved so popular that within a year NBC was broadcasting it nationally. For a time, a separate cast performed the show on the West Coast, but eventually Shirley Bell was the one and only Little Orphan Annie.

Shirley Adrienne Bell — who hated the taste of Ovaltine — was born in Chicago on Feb. 21, 1920. Her father left the family when Shirley was a toddler. Her mother, Irene, “was the consummate stage mother,” Ms. Cox said.

“She made this 2-year-old girl sing, dance, give recitations at synagogues all over Chicago,” Ms. Cox added.

By the time she was 6, Shirley was a member of the WGN Players, an acting group sponsored by the station. She was the pick of the crop four years later when hundreds of girls auditioned for the Annie role.

It paid off. Five afternoons a week (and, for a time, on Saturdays too) she took the trolley to the radio station for the live broadcast. “For her, it was just a job,” her daughter said.

For Shirley’s mother and for relatives in nearby buildings, it was a lifesaver. “She was the only one working, and she earned all the money for five immigrant Jewish families,” Ms. Cox said. In 1931 (when a Pontiac sold for $600), Shirley earned $4,160; in 1937 she earned $7,514.

In 1940, when Ovaltine dropped its sponsorship of “Annie,” Shirley Bell’s acting career ended. A year later she married Irwin Cole, a businessman. He died in 1998. Ms. Cox declined to comment about other survivors.

Throughout her life, Mrs. Cole kept the curly red wig she wore for publicity appearances more than 70 years ago. She could always slip into that high-pitched voice, her daughter said, and sing the show’s opening song:

Who’s that little chatterbox?

The one with the pretty auburn locks?

Whom do you see?

It’s Little Orphan Annie.


Comcast, NBC Promise to Keep News, Free TV

Cable giant Comcast and NBC Universal said on Thursday they would continue reporting news, keep broadcast television free and offer more children's programming if the U.S. government approves Comcast's plan to take control of the TV and movie company.

But the filings, which were submitted to the Federal Communications Commission, did little to immediately allay critics of the deal, who were concerned about Comcast's control of NBC's television shows and movies in cable, television and on the Internet.

They dismissed pledges by Comcast, which plans to buy a majority stake in NBC Universal from General Electric, to offer an additional hour of children's programming each week using multicast channels of NBC owned-and-operated affiliates, and lengthen the amount of time that ratings information appears at commercial breaks.

The top U.S. cable provider also urged the FCC not to condition the deal to take into account online video distribution.

"It would be inappropriate for the Commission to impose any conditions on the transaction based on the possibility that online video distributors might one day emerge as direct competitors to Comcast's terrestrial cable business," the Comcast/NBC Universal filing said.

Comcast is the No.1 U.S. residential Internet service provider and NBC owns a third of Hulu.com, the most popular U.S. website for viewing TV shows.

The public interest group Public Knowledge disagreed vehemently with Comcast's argument.

"We are incredulous that Comcast and NBCU would downplay Internet distribution of video at a time when the FCC has repeatedly identified online video as one of the primary drivers to broadband adoption," said Harold Feld, legal director of Public Knowledge in an email statement.

"The commission must make certain competitors will have access to Comcast and NBC programming as the online market evolves," said Feld.

On Capital Hill, Rep. John Conyers, chair of the House Judiciary Committee, said he was looking for more.

"Such additions might include commitments to independent programming in addition to its already stated commitment to diverse programming, maintaining access to sports programming, and ensuring that consumers still have access to their favorite shows online for minimal or no cost," said Conyers in a statement.

Tricky Approval From FCC?

Craig Moffett, analyst at Bernstein Research, said the key issue was Comcast-NBC's power in both distribution and programming.

"The regulators will focus on Comcast's ability to raise prices for consumers and programming fees to other distributors like satellite TV providers," he said.

The FCC's review could be trickier for Comcast and NBC than the Justice Department's review because the commissioners could force Comcast to provide content to competitors even if they disagree on the fees associated with those deals.

The companies described their deal as a vertical transaction, which means that they are not rivals but different steps in the same supply chain. U.S. antitrust regulators tend to shy away from challenging such deals on antitrust grounds.

Under the terms of the deal, Comcast would get 51 percent of a new joint venture that includes NBC Universal, valued at $30 billion, and Comcast's own cable networks, valued at $7.25 billion. GE would own the remaining 49 percent.

As payment for its stake, Comcast will contribute $6.5 billion in cash and its cable networks.

The filing, and subsequent reaction, presaged a long public battle, said Jeffrey Silva, a telecommunications expert with Medley Global Advisors, LLC.

"You can expect that public interest groups are going to ask a lot more concessions," he said. "This is just the beginning."

(Reporting by Diane Bartz and Yinka Adegoke; Editing by Maureen Bavdek and Robert MacMillan) http://www.reuters.com/article/BROKE...11140220100128

BBC Given Go-Ahead for Freeview HD Copy-Protection

Because premium content providers want DRM
Patrick Goss

The BBC has been granted provisional approval for the BBC to introduce copy protection for content on the Freeview HD platform.

With Freeview HD closing in on a commercial launch, focus has continued on what level of copy protection should be put in.

The BBC believes that having no copy protection provides a barrier for getting content on to a platform, and believes that content makers will not be prepared to go the extra mile for Freeview HD unless they feel their intellectual property is protected.

Essentially the fear is that with the content now available in glorious HD quality, people will not want to go out and buy DVDs and Blu-rays because it will be too easy to record and copy content either to physical media or to hard drives.

Provisonally approved

And Ofcom's decision is that the BBC will provisionally be allowed to compress the content and offer a decompression algorithm to equipment manufacturers.

The proviso given by Ofcom is that the BBC should "restrict the availability of programme listing information for HD TV services only to receivers that implement content management technology".

What that means is that you will be able to record to your DVR but not then copy it to another device unless it supported the same copy protection technology.

Justified objective

"In view of the fuller submission provided by the BBC, Ofcom is currently minded to approve its request for a multiplex licence amendment subject to consultation responses, on the basis that in principle, content management is a justified objective which ensures that the broadest range of HD content is made available to citizens and consumers," said Ofcom's statement.

"Ofcom has considered alternative proposals for implementation put forward by the BBC and is minded to grant approval under the amended licence on the basis that the proposals are the least intrusive means of achieving effective copy management to deliver the benefits of a wider range of content to consumers."

Disagree? Then you should raise your complaint by April 5 when the final consultation ends and the decision is made final.

Nielsen to Combine TV, Online Ratings

'Extended Screen' will help measure Web audience
Cynthia Littleton

The major broadcast and cable nets should take a big step forward in monetizing Internet viewing of full-length programs this fall. That's when Nielsen intends to introduce a service that will combine TV and online viewing of shows into a single rating.

Network execs have been pushing Nielsen to come up with a cumed rating they could present to advertisers that adds online viewing into ratings that track viewing done live and via DVR (within three to seven days of the premiere telecast).

As more viewers watch TV shows via Web streaming online, net execs have gnashed their teeth at the lost income potential as online viewing eats away at ratings for the traditional telecasts. Even though most legal online offerings of TV shows have embedded advertising, those online spots aren't nearly as valuable to the nets as they would be if online viewing stats were factored into a cumed rating.

There's one wrinkle to the Nielsen rating plan, however, that could spur a major change in the way nets offer programs online. For Web viewing to be included in what Nielsen is calling its "Extended Screen" reporting service, the online episodes have to carry the exact same commercials that run in a TV telecast. For the past few years, online airings of TV shows typically have carried a quarter or fewer of the spots included in a traditional TV airing, and the online runs often draw different sponsors.

At present, Nielsen's new service would not factor in online viewing done via Hulu, which has become the dominant online vid service for full-length segs, nor would it capture viewing done via ABC.com or other net websites.

But it would work with the new Fancast Xfinity online vid service launched in December by Comcast, which offers on-demand online viewing of a range of cable programming to Comcast subscribers on a password-protected basis. Some of the shows that run on the Xfinity platform carry the same commercial load as they do on regular TV telecasts. The same is true for the "TV Everywhere" service that Time Warner Cable is testing.

Nielsen said it would launch its "Extended Screen" service in September, with the first batch of data released by the end of the year. Those numbers would be considered "evaluation data" until February, when the ratings will go live as part of its national ratings, including its "C3" ratings that measure viewership of commercial breaks in premiere telecasts and via DVR playback within three days.

Nielsen plans to pull in online viewing data from 7,500 of the 12,000 households in its National People Meter Sample. Those 7,500 households represent about 20,000 people and 12,000 computers.

Nielsen was pressured into speeding up its timetable for developing an omnibus ratings service last fall when showbiz congloms and advertisers joined to create the Coalition for Innovative Media Measurement (Daily Variety, Sept. 11). Org plans to fund research into cutting-edge media measurement systems, which sent a signal that coalition members were frustrated with Nielsen's slowness to respond to the online viewing boom.

FBI Arrests Alleged Cable Modem Hacker
Jeremy Kirk

U.S. federal authorities arrested a 26-year-old man on Thursday for allegedly selling modified cable modems that enabled free Internet access, according to the U.S. Department of Justice.

Matthew Delorey of New Bedford, Mass., is charged with one count of conspiracy and one count of wire fraud. If convicted, he could face up to 20 years in prison for each charge, and a $250,000 fine.

Delorey allegedly ran a now-defunct Web site called Massmodz.com, where hacked modems were sold. The modems had been modified in order to spoof the device's MAC (Media Access Control) address. It is possible then to either obtain free Internet access or make it appear that a different modem is obtaining access.

Authorities alleged that Delorey sold two of the modified modems to an undercover FBI agent.

Delorey also allegedly posted to YouTube showing how to get free Internet access through modified cable modems.

He allegedly posted instructional videos with titles such as "Massmodz.com How to Get Free Internet Free Cable Internet Comcast or any Cable ISP - 100% works" and "Massmodz.com How to bypass Comcast registration page with premod cable modem SB5100, SB 5101."

Federal authorities have recently moved against other people regarding cable modems. In October Ryan Harris, 26, was arrested for allegedly running a San Diego company called TCNISO that sold customizable cable modems and software that could be used to get free Internet service or a speed boost for paying subscribers. Harris is charged with conspiracy, computer intrusion and wire fraud.

A Little ‘i’ to Teach About Online Privacy
Stephanie Clifford

A LITTLE blue symbol is carrying big implications.

Trying to ward off regulators, the advertising industry has agreed on a standard icon — a little “i” — that it will add to most online ads that use demographics and behavioral data to tell consumers what is happening.

Jules Polonetsky, the co-chairman and director of the Future of Privacy Forum, an advocacy group that helped create the symbol, compared it to the triangle made up of three arrows that tells consumers that something is recyclable.

The idea was “to come up with a recycling symbol — people will look at it, and once they know what it is, they’ll get it, and always get it,” Mr. Polonetsky said.

Most major companies running online ads are expected to begin adding the icon to their ads by midsummer, along with phrases like “Why did I get this ad?”

When consumers click on the icon, a white “i” surrounded by a circle on a blue background, they will be taken to a page explaining how the advertiser uses their Web surfing history and demographic profile to send them certain ads.

The symbol will be introduced Wednesday by Mr. Polonetsky’s group and a coalition of trade groups that have been vocal about fending off government regulation.

It comes amid a fierce debate about privacy. Congress has shown interest in the subject. And Federal Trade Commission officials have been vocal, saying that privacy policies of companies are not clear or accessible enough to protect visitors, and debating whether online data is being used appropriately.

Maneesha Mithal, associate director for the division of privacy and identity protection at the Federal Trade Commission, said it was “too early to tell” whether the icon and phrases would work with consumers.

“We support industry efforts to develop a consistent symbol and message that would help educate consumers about online advertising,” Ms. Mithal said in an e-mail message. “We hope they will share data, such as click-through and opt-out rates, that will inform the debate.”

The conversations between the commission and trade groups have become intense over the last year. The gauntlet was thrown last February, when the Federal Trade Commission warned that unless the industry wanted it to step in, it had better devise stricter self-regulatory principles.

That report inspired the project from Mr. Polonetsky and his co-chairman, Christopher Wolf.

“One of the key points,” Mr. Polonetsky said, was about privacy policies. “Legalese is not especially working.”

Mr. Polonetsky’s group, which is a mix of privacy officers of privacy advocates, academics and corporations, began experimenting with icons. Several divisions of the advertising holding company WPP, including GroupM, the Kantar Group and Ogilvy, helped create the icons.

“We said, let’s turn to creative people whose job it is to sell things, to communicate, instead of to lawyers whose job is to create highly accurate things that mean only what they mean and can be highly complex,” Mr. Polonetsky said.

The WPP divisions came back with several potential icons, which were presented to focus groups. The little “i,” which was dubbed “Power I,” did well, as did an asterisk that resembled a silhouette (“Asterisk Man”).

Icons that failed included one that looked like a “T” in a thought bubble. (“The focus group recipients just didn’t know what to make of this one,” Mr. Polonetsky said.)

The forum also tested some different phrases to go with the icon, like “Why this ad?”

“The feedback from focus group users was, don’t ask me to click something, tell me something and then I’ll decide to click,” Mr. Polonetsky said.

The group narrowed the icons down to Asterisk Man and Power I. Next, the WPP divisions, along with two professors, tested the icons and phrases with a panel of 2,604 Internet users to see if they remembered them and understood what they meant. Two of the phrases — “Why did I get this ad?” and “Interest-based ads” — did the best, while industry groups also liked the phrase “Ad choice,” which had done well in the focus groups.

Of course, without industry adoption, an icon is pretty meaningless. That is where the advertising groups come in.

Industry groups had already begun trying to avoid regulation and legislation when the F.T.C. report was issued last winter. The groups argued that legislation or regulation would move too slowly to reflect technological changes, and would choke Internet revenue.

In July, major advertising groups representing most name-brand advertisers and agencies agreed on new self-regulatory principles. Those included the adoption of a new, industry-standard icon that group members would run, which would link visitors to a page with information about privacy. Rather than stuffing information about so-called behavioral targeting into the privacy policy, the idea was to make the information much more visible.

There is no legal requirement that all the groups’ members, which include major online companies like Microsoft, Yahoo, Google, and traditional marketers like Procter & Gamble and General Electric, along with some ad networks and ad exchanges, adopt the icon, said Stuart P. Ingis, a partner at the Venable law firm and a lawyer for the coalition of trade groups. But, he said, he expects that within a couple of months, many of the companies will begin running it, and “you’ll wind up capturing a large percentage of the marketplace.”

The Interactive Advertising Bureau, which is involved in the self-regulation effort, has already begun an online campaign to explain the behavioral tactic to consumers. Mike Zaneis, vice president for public policy for the group, said the second phase of that campaign, beginning in a couple of months, would focus on what the Power I is and how consumers are supposed to interact with it.

And, similar to recycling’s role in environmental protection, Mr. Polonetsky is not expecting that his icon will immediately fix all the problems.

“This is not the full solution, but this moves the ball forward,” he said.

Google Toolbar Caught Tracking Users When 'Disabled'

We'll ignore this window if you close it
Cade Metz

Google has updated its browser toolbar after the application was caught tracking urls even when specifically "disabled" by the user.

In a Monday blog post, Harvard professor and noted Google critic Ben Edelmen provided video evidence of the Google toolbar transmitting data back to the Mountain View Chocolate Factory after he chose to disable the application in the browser window he was currently using.

The Google toolbar offers two disable options: one is meant to disable the toolbar "permanently," and the other is meant to disable the app "only for this window."

In a statement passed to The Reg, Google has acknowledged the bug. According to the statement, the bug affects Google Toolbar versions 6.3.911.1819 through 6.4.1311.42 for Internet Explorer. An update that fixes the bug is now available here, and the company intends to automatically update users' toolbars sometime today.

The statement also says that the bug does not occur if you open a new tab after disabling the toolbar for a particular window. In the statement, Google goes on to say that the bug disappears if you restart your browser, but this doesn't quite make sense. If you're interested in disabling Google toolbar for a particular window, you aren't going to close that window.

"For that option to work as its name promises, Google Toolbar must cease transmissions immediately," Edelman says. "Fact is, the 'Disable Google Toolbar only for this window' option doesn't work at all: It does not actually disable Google Toolbar for the specified window."

It would appear that in saying the bug is fixed when the browser relaunches, Google is referring to a second bug Edelman uncovered. The Harvard prof also found that the toolbar continued to transmit data when he attempted to disable it through Internet Explorer's "Manage Add-ons" window.

With the Google toolbar, certain "enhanced features" require the transmission of data back to Google servers. These features include the ability to view a website's Google PageRank, essentially a measure of its importance on the web at large, and the new Sidewiki, a means of adding meta-comments to webpages. Using a network monitor, Edelman confirmed that if "enhanced features" are activated, Google collects domain names and associated directories, filenames, URL parameters, and search terms.

The user chooses whether to turn on "enhanced features," but Edelman argues that it's much too easy for a user to do so without completely realizing the consequences. The toolbar's standard installation routine launches a "bubble message" that pushes readers to turn on the features, he says, and it's less than clear about what data is being transmitted.

"The feature is described as 'enhanced' and 'helpful,' and Google chooses to tout it with a prominence that indicates Google views the feature as important," Edelman writes. "Moreover, the accept button features bold type plus a jumbo size (more than twice as large as the button to decline). And the accept button has the focus - so merely pressing Space or Enter (easy to do accidentally) serves to activate Enhanced Features without any further confirmation."

Yes, he continues, the message points out that the toolbar "tells us what site you're visiting by sending Google the url." But he argues this stops short of explaining that it collects everything from directories, filenames, and URL parameters to search keywords.

What's more, Edelman says, turning off "enhanced features" is more difficult than turning them on - especially for the average Joe. It appears that the features can't be turned off unless you uninstall the entire toolbar. Or "disable" it. But that doesn't always work. Or at least it didn't until Edelman noticed it didn't.

How Google's Nexus One Censors Cuss Words
Chris Matyszczyk

Some of you who have been basking in the beauty of your new Nexus One Googlephone may not have tried out all of its delightful features.

And what I am about to tell you may lead you to utter some naughty words. Please, go ahead. I have heard them all, in several different languages. And I respect the vehemence of the vernacular.

However, your Nexus One will not be so charmed by the vigor of your tongue. It will, dare I utter the word when referring to a product from the newly emancipated Google, censor you.

You see, the pungently polite people at Reuters were playing with their Nexus One when they noticed something about its built-in voice-to-text feature.

Every time they said something naughty into the phone, the naughty word came out as "####"--and not just "f---." It even censored the "S" part of BS.

Reuters immediately called Google and screamed at them: "What the #### are you miserable ############# playing at?"

Oh, perhaps I have stretched the boundaries of possibility with that heartening notion. They probably asked a little more politely, given that they secured a really quite ingenious reply from a Googleperson.

Apparently, the censorship is not because Google is trying to clean up the world and turn it into the nicest parts of Alabama. No, the company is worried about what might be transcribed.

"We filter potentially offensive or inappropriate results because we want to avoid situations whereby we might misrecognize a spoken query and return profanity when, in fact, the user said something completely innocent," Google told Reuters.

Yes, the technology isn't quite perfect, so even the potential of a misplaced curse is being avoided at all costs.

What interests me most is how Google chooses its list of naughty nuances. Is there some poor engineer over at the Googleplex whose sole task was to write software that immediately identifies expletive expressions? Do they take account of those who swear in Spanish, Italian, or, like me, Polish?

And if you say "For crying out loud" a little too quickly, might the transcription come out with a four letter f-word (or rather four hash marks) at the beginning?

One other thing. I have a Croatian friend. If I ever got a Nexus One, I would like to be able to address him by his name. His name is Fuk. Would his name be transcribed, every time, as ###? How sad.

Twitter Working to Thwart Censorship

Micro-blogging site Twitter is developing technology that will prevent government censorship after Iran and China moved to censor its users.

Speaking at the World Economic Forum, Twitter CEO and co-founder Evan Williams said the company was working on "hacks" to stop any blocking by foreign governments.

"We are partially blocked in China and other places and we were in Iran as well," he said. "The most productive way to fight that is not by trying to engage China and other governments whose very being is against what we are about."

Williams said Twitter had an advantage in evading government censors over a singular website as its streams are distributed through a number of outlets, including syndicating sites and mobile applications.

Twitter was among a number of social networking sites who were asked to make a statement about censorship at the Davos conference.

The debates comes on the heels of a declaration from Google that it would discontinue to censor search results in China, following allegations of cyber-attacks origination from the country.

Technology is increasingly playing a more important role in free speech.

Last year Twitter was used heavily in reporting first-hand post-election oppression in Iran, and subsequently used to organize rebellion.

Williams said he did not want to give details of the changes, but said he was hopeful for "technological ways" to thwart censorship.

Ohio High Court Narrowly Interprets Anti-Porn Law
Julie Carr Smyth

The Ohio Supreme Court has narrowly interpreted a state law aimed to protecting children from online pornography and predators, delivering a partial blow to free-speech advocates who wanted it thrown out as unconstitutional.

A coalition led by the American Booksellers Foundation for Free Expression also claimed the Wednesday ruling as a partial victory, saying their legal challenge had succeeded in getting the state to voluntarily limit the effects that state restrictions might have had on Internet content.

In its unanimous decision, the court said a 2004 law extending the state's definition of "material harmful to minors" to the Internet is clearly intended to apply only to person-to-person communications - not to generally accessible Web sites and public chat rooms.

"We conclude that a person who posts matter harmful to juveniles on generally accessible websites and in public chat rooms does not violate (the law), because such a posting does not enable that person to 'prevent a particular recipient from receiving the information,'" Justice Paul Pfeifer wrote in the decision.

The decision went against the booksellers' coalition, which has successfully challenged similar statutes around the country - including Vermont, New York, Virginia, South Carolina, Arizona and New Mexico.

The group had argued the law could be applied broadly to online material and erode the constitutional free speech rights of online booksellers, newspaper publishers and video game dealers. Technology, they say, can't always keep the harmful information from children.

The high court's legal interpretation now goes back to the 6th U.S. Circuit Court of Appeals based in Cincinnati, which is considering the larger constitutional question.

The lower court had asked justices to resolve two key legal questions before moving forward on the booksellers' lawsuit. The questions involved what is meant by the technical terms contained in the law: "mass distribution" and "personally directed devices." On both questions, the court sided with Ohio Attorney General Richard Cordray's arguments that the law is intended to be narrowly interpreted.

"Based on our understanding of generally acceptable websites and public chat rooms," Pfeifer wrote, "they are open to all, including juveniles, and current usage and technology do not allow a person who posts thereon to prevent particular recipients, including juveniles, from accessing the information posted."

In a statement, the free speech coalition said it was pleased that the court "accepted the Ohio Attorney General's belated recognition that the statute was too broad, and should be construed narrowly" but remained concerned that many questions remain unanswered as to how it will apply to online content.

For example, newspaper Web sites that charge fees or university alumni sites that require a password might be deemed private venues where the posting of non-obscene adult material could be prosecuted. And the decision makes no determination on how social-networking sites such as Twitter or Facebook could be affected by the content limits.

"The decision is a step in the right direction, but still fails to make sure that the Ohio statute does not infringe free speech," the statement said.

A federal district court where the suit originated put enforcement of the law on hold after concluding its wording was overbroad and in violation of the First Amendment. That decision was appealed to the 6th Circuit.

This is the second challenge by booksellers, newspaper publishers and others of the status. State lawmakers specifically amended the initial statute in an attempt to address First Amendment issues and avoid litigation.

Google Negotiating Ways to Keep Presence in China
Joe Mcdonald and Michael Liedtke

Even if its stand against censorship leads it to close its search engine in China, Google still hopes to maintain other key operations in the world's most populous Internet market.

Google is negotiating to keep its research center in China, an advertising sales team that generates most of the company's revenue in the country and a fledgling mobile phone business as the company navigates the delicate negotiations with the government.
Both sides are torn by conflicting objectives.

Google says it's no longer willing to acquiesce to the Chinese government's demands for censored search results, yet it still wants access to the country's engineering talent and steadily growing online advertising and mobile phone markets.

Chinese leaders are determined to control the flow of information, but realize they need rich and innovative companies such as Google to achieve their goal of establishing the country as a technology leader. Even some Chinese media that rarely deviate from the party line have warned that Google's departure could slow technology development and hurt China's economy.

Analysts are split on how the current impasse will be resolved, with some resigned to Google having to pull completely out of China for the foreseeable future while others envision a face-saving compromise that preserves a toehold in the country for the company.

Robert Broadfoot, managing director of Political and Economic Risk Consultancy in Hong Kong, is among the camp that expects Communist leaders to bend their rules to keep Google in the country.

"They're hardly going to close the door on the innovator. They are very interested in what (Google is) innovating, because they may want it for themselves," said Broadfoot, who has advised companies on China since the 1970s.

Google said Jan. 12 it might close its China-based search engine, Google.cn, because it no longer intends to censor the results as it has for the past four years. And, the company warned, the decision could lead the company to pull out of the country completely.

The threat stemmed from computer hacking attacks on Google's computer code and efforts to break into the e-mail accounts of human rights activists. Google said the intrusions originated from within China, but stopped short of linking them directly to the country's government.

Google CEO Eric Schmidt told analysts last week that the company planned to make changes in China in "a reasonably short time" while raising hope for a compromise.

"We made a strong decision that we wish to remain in China," Schmidt said. "We like the business opportunities there. We'd like to do that on somewhat different terms than we have."

The dispute with China prompted Google to postpone the planned release last week of its latest mobile phones for the country, a market with more than 700 million accounts. But the company says it still hopes to sell the phones in China.

Even if Google.cn is shut down, Google wants to keep its Beijing development center and sales offices in Beijing, Shanghai and Guangzhou, according to a person familiar with its thinking. But that won't happen if management believes its decision to stop censoring search results will jeopardize employees in China, according to this person, who asked not to be identified because of the sensitivity of the negotiations.

Google will not say how many employees it has in China, but industry analysts estimate its work force at 700. The Mountain View company employs about 20,000 people worldwide.

U.S. Enables Chinese Hacking of Google
Bruce Schneier

Main Entry: en•able
Function: transitive verb
Inflected Form(s): en•abled; en•abling \-b(ə-)liŋ\
Date: 15th century

a : to provide with the means or opportunity <training that enables people to earn a living> b : to make possible, practical, or easy <a deal that would enable passage of a new law> c : to cause to operate <software that enables the keyboard>

- Webster

Google made headlines when it went public with the fact that Chinese hackers had penetrated some of its services, such as Gmail, in a politically motivated attempt at intelligence gathering. The news here isn't that Chinese hackers engage in these activities or that their attempts are technically sophisticated -- we knew that already -- it's that the U.S. government inadvertently aided the hackers.

In order to comply with government search warrants on user data, Google created a backdoor access system into Gmail accounts. This feature is what the Chinese hackers exploited to gain access.

Google's system isn't unique. Democratic governments around the world -- in Sweden, Canada and the UK, for example -- are rushing to pass laws giving their police new powers of Internet surveillance, in many cases requiring communications system providers to redesign products and services they sell.

Many are also passing data retention laws, forcing companies to retain information on their customers. In the U.S., the 1994 Communications Assistance for Law Enforcement Act required phone companies to facilitate FBI eavesdropping, and since 2001, the National Security Agency has built substantial eavesdropping systems with the help of those phone companies.

Systems like these invite misuse: criminal appropriation, government abuse and stretching by everyone possible to apply to situations that are applicable only by the most tortuous logic. The FBI illegally wiretapped the phones of Americans, often falsely invoking terrorism emergencies, 3,500 times between 2002 and 2006 without a warrant. Internet surveillance and control will be no different.

Official misuses are bad enough, but it's the unofficial uses that worry me more. Any surveillance and control system must itself be secured. An infrastructure conducive to surveillance and control invites surveillance and control, both by the people you expect and by the people you don't.

China's hackers subverted the access system Google put in place to comply with U.S. intercept orders. Why does anyone think criminals won't be able to use the same system to steal bank account and credit card information, use it to launch other attacks or turn it into a massive spam-sending network? Why does anyone think that only authorized law enforcement can mine collected Internet data or eavesdrop on phone and IM conversations?

These risks are not merely theoretical. After September 11, the NSA built a surveillance infrastructure to eavesdrop on telephone calls and e-mails within the U.S. Although procedural rules stated that only non-Americans and international phone calls were to be listened to, actual practice didn't match those rules. NSA analysts collected more data than they were authorized to and used the system to spy on wives, girlfriends and notables such as President Clinton.

But that's not the most serious misuse of a telecommunications surveillance infrastructure. In Greece, between June 2004 and March 2005, someone wiretapped more than 100 cell phones belonging to members of the Greek government: the prime minister and the ministers of defense, foreign affairs and justice.

Ericsson built this wiretapping capability into Vodafone's products and enabled it only for governments that requested it. Greece wasn't one of those governments, but someone still unknown -- A rival political party? Organized crime? Foreign intelligence? -- figured out how to surreptitiously turn the feature on.

And surveillance infrastructure can be exported, which also aids totalitarianism around the world. Western companies like Siemens and Nokia built Iran's surveillance. U.S. companies helped build China's electronic police state. Just last year, Twitter's anonymity saved the lives of Iranian dissidents, anonymity that many governments want to eliminate.

In the aftermath of Google's announcement, some members of Congress are reviving a bill banning U.S. tech companies from working with governments that digitally spy on their citizens. Presumably, those legislators don't understand that their own government is on the list.

This problem isn't going away. Every year brings more Internet censorship and control, not just in countries like China and Iran but in the U.S., the U.K., Canada and other free countries, egged on by both law enforcement trying to catch terrorists, child pornographers and other criminals and by media companies trying to stop file sharers.

The problem is that such control makes us all less safe. Whether the eavesdroppers are the good guys or the bad guys, these systems put us all at greater risk. Communications systems that have no inherent eavesdropping capabilities are more secure than systems with those capabilities built in. And it's bad civic hygiene to build technologies that could someday be used to facilitate a police state.

China Rebukes U.S. Calls to Investigate Hacking
Michael Wines

China delivered a bristling response on Monday to the United States’ demand that it investigate recent attacks on American computers from Chinese soil, saying that any suggestion that it conducted or condoned the hackers’ intrusions was “groundless and aims to denigrate China.”

The comment, in a published interview with a government spokesman, was part of a broadside in China’s state-run press on Monday that cast the United States as a cyberhegemon, trying to dominate the global information flow by meddling in Chinese Internet policies.

A brace of interviews and news articles placed in major state newspapers and on many prominent Web sites underscored the chill in public exchanges between the governments since Jan. 12, when Google threatened to leave China unless Beijing stopped censoring its search results.

Google issued the ultimatum after discovering efforts by still-unidentified Chinese hackers to steal valuable corporate software code and break into the Google mailboxes of Chinese human-rights activists. Dozens of other American computers were also targets of the attack, Google has said.

China’s reaction to the issue, at first muted, has turned caustic since Friday, a day after Secretary of State Hillary Rodham Clinton called for Beijing to conduct a “transparent” inquiry into the attack. Mrs. Clinton also singled out China’s Internet censorship as a threat to the free flow of information.

The Chinese government’s comments come atop months of increasingly stringent limits on what ordinary Chinese citizens can access on the Internet, and increasingly strict programs to monitor those who try to view unapproved content.

From blocking or closing down thousands of blogs and social-networking sites to accusing the United States of seeking information hegemony, the government has made it clear that the control of information has become even more of a central priority than in years past, according to David Bandurski, an analyst and author at the Hong Kong-based China media Project, who spoke in a telephone interview on Monday.

“The C.C.P. media worldview is that you have China versus a hostile West in this global war for public opinion,” he said, referring to the China Communist Party. China’s paradox, he said, is that while Beijing accuses the United States of “information imperialism,” its own policies seek to shut out dissenting voices — including those of many of its own citizens — and to make the Beijing government’s view of the world China’s dominant voice.

Monday’s fusillade by the Chinese not only dismissed Ms. Clinton’s statements, but also depicted the United States as cyberspace’s villain and China as its unwilling victim.

Zhou Yonglin, the deputy operations chief of China’s National Computer Network Emergency Response Technical Team, was quoted as saying that China was the world’s largest target for hackers, with more than 262,000 Internet addresses under assault last year, and that the greatest share of attacks — one in six — originated in the United States.

Mr. Zhou also questioned Google’s claim that attacks on its computers had been traced to Chinese soil, saying that other American companies had sought his agency’s help after previous attacks, but that it “has not been alerted to any specific report on the issue submitted by Google.”

“We have been hoping that Google will contact us so that we could have details on this issue and provide them help if necessary,” he said in the interview, which was conducted by the Chinese state news agency Xinhua.

Separately, an unidentified spokesman for the State Council Information Office defended as “totally correct” China’s censorship of Internet sites that the government deems deemed harmful. “We are resolutely against those who make a issue of things without referring to actual facts by needlessly accusing China, ignoring Chinese laws and interfering in Chinese internal politics,” the spokesman told Xinhua.

The State Council, the rough equivalent of the American government’s cabinet, is among the most powerful Chinese governing bodies.

The sharpest language, however, came from the Communist Party-backed Global Times, which frequently criticizes American policy. The newspaper quoted a Chinese analyst as calling Google’s complaint “a U.S. government-initiated strategy with covert political intentions.”

“As the global landscape is undergoing profound irreversible shifts, the calculated free-Internet scheme is just one step of a U.S. tactic to preserve its hegemonic domination,” Yan Xuetong, who heads the Institute of International Studies at Beijing’s Tsinghua University, said in the article.

A separate article noted that Congress expanded the power of security agencies to monitor Americans’ e-mails and Internet activities in the wake of the Sept. 11 attacks, and it accused Mrs. Clinton of preaching a double standard by criticizing China’s limitations on Internet freedoms.

Call to Banish Virus-Hit Computers from Internet
Natasha Bita

COMPUTERS infected with viruses could be "expelled" from the internet under a new industry code to control Australia's plague of contaminated PCs.

The federal government has given the internet industry an operate-or-legislate ultimatum to identify "zombie" computers involved in cyber-crime.

The Internet Industry Association - whose members include major internet service providers Optus, Telstra, Vodafone, AAPT, Virgin and Hutchison 3G, as well as industry giants Facebook, Google and Microsoft - is preparing a voluntary industry code to come into force this year.

The move follows industry intelligence that Australia now hosts the world's third-highest number of "zombie" computers infected with malicious software that can attack other PCs, send spam, store child pornography or steal the user's identity.

A draft copy of the voluntary code says the ISPs should identify affected computers and try to contact the users, by phone or email.

It proposes ISPs apply an "abuse" plan to slow down the speed of the customer's infected computer, or to change the customer's password so they are forced to call the ISP help desk.

"(Another action could be to) provide the customer with a timeframe in which to take remedial access and, if this is not adhered to, terminate service."

The code states ISPs should cut off internet access only in the "most extreme of cases", when a customer had refused to install anti-virus software, or where the amount of spam being sent from the customer's account was clogging up the network.

A global report by security technology giant McAfee reveals that Australia now ranks behind only the US and China for the number of "zombie" computers that fell under the control of spammers in 2009. "The `Land Down Under' is proving to be fertile ground for zombie recruiting," the report says.

It estimates Australia accounts for 6.3 per cent of the world's "new zombies", compared with 18 per cent from the US and 13.3 per cent from China. Just two years ago, Australia was not even in the top 10 countries listed in McAfee's Global Threats report.

The internet industry's voluntary code of conduct is being pushed by the federal Department of Broadband, Communications and the Digital Economy.

The department has told a parliamentary inquiry into cyber-crime that the voluntary code is faster than introducing legislation.

"We've always said that if this does not work then government will have to consider firmer options because this is really serious stuff," Keith Besgrove, the first assistant secretary of the digital economy services division, told a cyber-crime hearing in Canberra late last year.

"This is damn dangerous and we've got to do something about it."

A Peek Inside the ‘Eleonore’ Browser Exploit Kit
Brian Krebs

If you happen to stumble upon a Web site that freaks out your anti-virus program, chances are good that the page you’ve visited is part of a malicious or hacked site that has been outfitted with what’s known as an “exploit pack.” These are pre-packaged kits designed to probe the visitor’s browser for known security vulnerabilities, and then use the first one found as a vehicle to silently install malicious software.

Exploit packs have been around for years, and typically are sold on shadowy underground forums. A constant feature of exploit packs is a Web administration page, which gives the attacker real-time statistics about victims, such as which browser exploits are working best, and which browsers and browser versions are most successfully attacked.

One of the most popular at the moment is a kit called “Eleonore,” and I’m writing about it here because it highlights the importance of remaining vigilant about patching. It’s also a reminder that sometimes the older exploits are more successful than the brand new variety that garner all of the headlines from the tech press.

This pack tries to exploit several vulnerabilities in Adobe Reader, including one that Adobe just patched this month. The kit also attacks at least two Internet Explorer vulnerabilities, and a Java bug. In addition, the pack also attacks two rather old Firefox vulnerabilities (from 2005 and 2006). For a partial list of the exploits included in this pack, skip to the bottom of this post.

It’s important to keep in mind that some of these exploits are browser-agnostic: For example, with the PDF exploits, the vulnerability being exploited is the PDF Reader browser plug-in, not necessarily the browser itself. That probably explains the statistics in the images below, which shows a fairly high success rate against Opera, Safari, and Google Chrome users.

Just from observing some of these stats, it’s clear that some of the most successful exploits target vulnerabilities that were patched quite some time ago. In a few cases where I have highlighted the importance of patching Java vulnerabilities, for example, I received feedback from some readers who doubted whether anyone ever tried to attack Java flaws. The Java exploit was the second most successful attack (behind an exploit pack that attacks at least three different Adobe Reader flaws).

Vulnerabilities exploited by this Eleonore pack include:

PDF pack

PDF Brand new PDF Exploit (12/2009)

PDF collab.getIcon (4/2009)

PDF Util.Printf (11/2008)

PDF collab.collectEmailInfo (2/2008)

MS Internet Explorer Exploits

MS09-002 (Internet Explorer 7 exploit 1/2009)

MDAC – ActiveX (Internet Explorer exploit, 3/2007)


Javad0 (12/2008) – Java Calendar (Java Runtime Environment (JRE) for Sun JDK and JRE 6 Update 10 and earlier; JDK and JRE 5.0 Update 16 and earlier; and SDK and JRE 1.4.2_18 and earlier)


compareTo – exploit for a Firefox vulnerability from 2005

jno – Exploit for Firefox version 1.5.x (2006)


To Beat Spam, Turn its Own Weapons Against it
Jim Giles

SPAMMERS' own trickery has been used to develop an "effectively perfect" method for blocking the most common kind of spam, a team of computer scientists claims.

Most of the billions of spam messages sent each day originate in networks of compromised computers, called botnets. Unbeknown to their owners, the machines quietly run malicious software in the background that pumps out spam.

Researchers have now come up with a system that deciphers the templates a botnet is using to create spam. These templates are then used to teach spam filters what to look for.

The system, developed by a team at the International Computer Science Institute in Berkeley, California, and the University of California, San Diego, works by exploiting a trick that spammers use to defeat email filters. As spam is churned out, subtle changes are typically incorporated into the messages to confound spam filters. Each message is generated from a template that specifies the message content and how it should be varied. The team reasoned that analysing such messages could reveal the template that created them. And since the spam template describes the entire range of the emails a bot will send, possessing it might provide a watertight method of blocking spam from that bot.

To test their idea, the team installed a previously captured software bot onto a machine. After analysing 1000 emails generated by this compromised machine - less than 10 minutes' work for most bots - the researchers were able to reverse-engineer the template. Knowledge of that template then enabled filters to block further spam from that bot with 100 per cent accuracy.
Knowledge of the spam template enabled filters to block further spam with 100 per cent accuracy

High accuracy can be achieved by existing spam filters, but sometimes at the cost of blocking legitimate mail. The new system did not produce a single false positive when tested against more than a million genuine messages, says Andreas Pitsillidis, one of the team: "The biggest advantage is this false positive rate."

"This is an interesting approach which really differs by using the bots themselves as the oracles for producing the filters," says Michael O'Reirdan, chairman of the Messaging Anti-Abuse Working Group, a coalition of technology companies. But he adds that botnets have grown so large that even a 1-minute delay in cracking the template would be "long enough for a very substantial spam campaign".

The research will be presented in March at the Network and Distributed System Security Symposium in San Diego.

Man to Plead Guilty in Scientology Cyber Attacks

A Nebraska man has admitted his involvement in cyber attacks against the Church of Scientology.

A Nebraska man is expected to plead guilty next week to launching a cyber attack that shut down the Church of Scientology's Web sites, federal prosecutors said Monday.

Brian Thomas Mettenbrink, 20, of Grand Island, Nebraska, was accused of participating in an attack orchestrated by a group that called itself "Anonymous."

The group led protests against the church in various parts of the country before announcing in January 2008 that it would launch a cyber offensive, said Thom Mrozek of the U.S. Attorney's Office in Los Angeles.

Mettenbrink admitted in court that he downloaded software from an "Anonymous" message board and used it to launch "denial of service" attacks on Scientology Web sites.

In such attacks, hackers flood a target site with so much traffic that it is unable to handle the volume and slows to a crawl or crashes altogether. As a result, the site is then unavailable to legitimate users.

The group targeted the church after it forced Web sites to yank a leaked video of actor and church member Tom Cruise fervently making the case for Scientology.

The video was intended for attendees at a church award ceremony in 2004 where Cruise was being honored.

"We are the authorities on getting people off drugs, we are the authorities on the mind, we are the authorities on improving conditions ... we can rehabilitate criminals," Cruise says in the video.

In 2008, the video was leaked online and widely ridiculed.

The church responded by threatening to sue Web sites unless they removed the clip. "Anonymous" then launched its attack.

As part of its offensive, the group asked Internet users to not only download the "denial of service" software from its message board, but also to place prank phone calls, post proprietary church documents online, and send black pages to church fax machines to waste ink.

The group posted a YouTube video that said it aimed to "expel Scientology from the Internet."

"Expect us," the video ended. The attacks targeted local and global sites of the church.

Mettenbrink is expected to plead guilty in federal court next week to a misdemeanor charge of accessing a protected computer with authorization. He agreed to serve a year in prison, Mrozek said.

Mettenbrink's is the second successful prosecution connected to the "Anonymous" attacks. Last year, Dmitriy Guzner of Verona, New Jersey, was sentenced to a year and a day in federal prison for attacks on Scientology sites.

The Church of Scientology, founded by the late science fiction author L. Ron Hubbard, is well known for its high-profile, celebrity members.

In October, film director Paul Haggis left the church for its alleged public support of Proposition 8, which eliminated the right of same-sex couples to marry in California.

Also in October, a French court convicted the church and six of its leaders of organized fraud. The court imposed fines totaling more than $1 million on the church and the convicted staff.

The plaintiffs focused their complaints on the use of a device that Scientologists say measures spiritual well-being. Members used the electropsychometer, or E-Meter, to "locate areas of spiritual duress or travail so they can be addressed and handled," according to Scientology's Web site.

The plaintiffs said that, after using the device, they were encouraged to pay for vitamins and books. They said that amounted to fraud.

The church has called the decision a "modern Inquisition" and said it would appeal the verdict.

TechCrunch Officially Hacked

Popular technology blog Techcrunch has been hacked and is currently down with all but a message noting that the site has indeed been compromised.

The blog has experienced frequent downtime of late but as have other blogs who host on Rackspace including, Mashable and The Inquisitr – we fortunately aren’t (we’re with Slicehost, owned by Rackspace interestingly enough).

This case appears different however with other blogs remaining live and Techcrunch admitting they had been targeted with a message that reads:

“Earlier tonight techcrunch.com was compromised by a security exploit.
We’re working to identify the exploit and will bring the site back online shortly.”

Earlier, presumably when the initial hack took place, text with a link to a rapid share download site was posted.

Oddly enough, sister blog CrunchGear is running smoothly, which indicates that TechCrunch in particular rather than its network was targeted.

The irony here of course, as it would be for us, is TechCrunch is a reliable source for information on site downtime.

More info over at Inquisitr and and Technologizer.


TechCrunch is now back up, interestingly all comments gone. Stay tuned for more info as to what happened.

Update 2:

A statement now on the blog reads:

“As some people noticed, at approximately 10:30 pm PST on Monday evening the main site in the TechCrunch Network – techcrunch.com – was hacked and redirected. The site was back up briefly at 11:30 pm but shortly went down again. As of 2:00 am, the site is back up and appears to be stable.

At this point we’re still gathering information on how the site was compromised, and will update this post with additional information.”

Cambridge Researchers Knock Verified by Visa

The credit-card check has been criticised for giving online shoppers unclear signals about whether they should trust it, and teaching bad habits about security

The 'Verified by Visa' credit-card check has come under criticism from Cambridge University researchers, who said it is training online shoppers to adopt risky security habits.

The feature, which is used to authenticate online financial transactions, confuses users by not displaying security cues, security engineering researchers Ross Anderson and Steven Murdoch said in a paper published on Tuesday.

"The technical design of Verified by Visa trains people in appallingly bad security habits," Anderson told ZDNet UK. "It gives the wrong signals."

The protocol underlying Verified by Visa, as well competitor MasterCard's SecureCode service, is 3-D Secure (3DS). The protocol is implemented as an iframe pop-up box, said Anderson. The pop-up does not display any commonly used markers, such as a colour-coded browser bar or 'https' in the URL, that demonstrate the box has been secured using the Transport Layer Security (TLS) protocol.

Because of this, online buyers have no visual verification that the box is a valid part of the credit-card transaction. If they enter their password when asked without knowing for certain it is protected, that is a bad security habit, the paper's authors argue.

The password-activation process for 3DS is also a weak spot, according to the researchers. Shoppers are asked to set up a password the first time they try to use a 3DS-enabled card for an online transaction. The process used for this is known as activation during shopping, or ADS. However, the ADS form presented to the buyer may use only weak authenticators, such as date of birth, in the process, said the researchers. Dates of birth are readily available online.

By training people to enter personal details into a form they may not fully trust, the 3DS system lays the groundwork for criminals to ask for more sensitive information, such as banking details, in a fake form, the researchers argue. A spoofed version of the form has been used in phishing attacks, they added.

Visa Europe on Wednesday rejected the researchers' criticisms. "Visa does not wholly agree with the premise and conclusions set out in the new paper by Cambridge researchers, which describes theoretical scenarios in which they believe Verified by Visa could be compromised," the credit-card company said. "Verified by Visa is one layer of security that makes fraud more difficult by helping to prove that a genuine cardholder is taking part in the transactions."

In isolation, the security feature cannot solve the problem of online fraud, Visa noted. However, as part of a verification system with several layers of security, Verified by Visa limits opportunities for fraudulent transactions, it said.

In addition, card-not-present fraud has fallen, according to figures from Financial Fraud Action UK. Visa attributed this fall to the implementation of online security procedures such as Verified by Visa.

Courts, Congress Shun Addressing Legality of Warrantless Eavesdropping
David Kravets

Court documents allege that behind this door at a AT&T office in San Francisco, the National Security Agency siphoned Americans' electronic communications without warrants.

The National Security Agency allegedly siphoned Americans' communications without warrants from behind this door at an AT&T office in San Francisco.

Heads spun four years ago this weekend, when AT&T was accused of funneling every one of its customers’ electronic communications to the National Security Agency — without warrants.

A Jan. 31, 2006, lawsuit alleged major violations of the Fourth Amendment right to be free from warrantless searches and seizures. Such a sweeping breach seemed far-fetched.

Yet months after the lawsuit was lodged, the Electronic Frontier Foundation produced internal AT&T documents allegedly outlining secret rooms in AT&T offices connected to the NSA, which was siphoning all internet traffic, from e-mails to Voice Over Internet Protocol phone conversations.

But four years and a mountain of court briefs and rulings later, the legal system has never addressed the merits of the allegations — and likely never will. Even Congress has weighed in and passed legislation to prevent the allegations from being heard.

And many — including the former AT&T technician who produced the documents in the case and the EFF — believe the alleged dragnet surveillance program continues unabated today.

“Nothing has stopped the dragnet,” said Cindy Cohn, the EFF’s legal director, whose case had grown to include all of the nation’s leading internet service providers.

The Bush administration and now the Obama administration have neither admitted nor denied the allegations. Instead, they have declared the issue a state secret — one that would undermine the nation’s national security if exposed.

U.S. District Judge Vaughn Walker, the San Francisco judge presiding over the litigation, did not agree. The judge ruled two years ago the allegations against the nation’s telcos could proceed.

But a major obstacle stopped the case dead in its tracks, before the merits of the allegations could be litigated, and before the judge could consider ordering a halt to the alleged dragnet.

That roadblock was an act of Congress, one voted for by Sen. Barack Obama of Illinois and then signed by President George W. Bush in July 2008. The legislation handed the telcos retroactive immunity from being sued for participating in the alleged program. Judge Walker tossed the case.

That same legislation also approved Bush’s once-secret warrantless electronic-eavesdropping arrangement — The Terror Surveillance Program.

Under the program, which The New York Times disclosed in December 2005, the NSA was eavesdropping on Americans’ telephone calls without warrants if the government believed the person on the other line was overseas and associated with terrorism.

Eyebrows were raised when the newspaper exposed the now-legalized program — a program considered by many as a breach of Americans’ privacy and an abuse of executive power.

In his defense, Bush said his war powers granted the presidency the authority to bypass Congress and undertake the Terror Surveillance Program.

The internal AT&T documents, however, suggest the TSP was just the tip of an eavesdropping iceberg.

That’s what Mark Klein believes. He’s the former AT&T technician who provided EFF with the documents — which were exposed by Wired.com while they were under court seal.

“They show an untargeted, massive vacuum cleaner sweeping up millions of peoples’ communications every second automatically,” Klein said in a telephone interview.

“That’s inherently illegal,” he added.

The alleged dragnet operation apparently is having some success, according to a redacted Justice Department internal audit.

To be sure, Congress’ and the executive’s zeal to prevent litigation on the alleged surveillance dragnet was countered by the EFF and others. They then named the government, instead of the telcos, as the defendant.

It was ill-fated legal jockeying to skirt the immunity legislation.

The Obama administration claimed the government was immune from the latest litigation. Or if it wasn’t, the administration argued, the lawsuit could expose government secrets and should be barred. This despite Obama announcing he would limit the use of the state secrets privilege.

Again, the government and the courts declined to address the merits of the allegations.

This time, the same judge in the original EFF case sided with the government for reasons the government never claimed. Judge Walker likened the newest allegations to a “general grievance” from the public.

Walker ruled that the courts are not available to the public to mount such a challenge. The suits were barred, Walker ruled, because they seek “to employ judicial remedies to punish and bring to heel high-level government officials for the allegedly illegal and unconstitutional warrantless electronic-surveillance program or programs now widely, if incompletely, aired in the public forum.”

The EFF said it would appeal Walker’s latest decision. The appellate courts are also weighing whether Congress overstepped its boundaries when it killed the original allegations targeting the telecommunication companies.

Still, pending before Walker is another more-limited privacy case, one concerning the legality of the Terror Surveillance Program before Congress approved it.

That case, which tests presidential powers, is nearing its fourth year. It has bounced from an Oregon federal court to San Francisco federal court to the appellate courts and back — without ever addressing the allegations.

“The government,” said Jon Eisenberg, the plaintiffs’ lawyer in the case, “has been largely successful in evading a ruling on the merits of all these cases.”

Voice Encryption: 9 out of 10 Products are Worthless

Today I am going to describe a very simple but highly effective attack which worked against every vendor I tested with the exception of Rohde & Schwarz and PhoneCrypt.

Well I knew I would not likely be able to break any encryption algorithms such as 256-bit AES which seemed to be the standard among the vendors. Although based on some research studies, distributed computing is making it more feasible to break encryption.
I have been working in Information Security for awhile, but I think it is pretty common knowledge if I want to compromise any type of security; I am going to look for the weakest link or the easiest target. i.e. if I am trying to get into your network I will check your firewall for mis-configurations, but know I would have a better chance coming in via another system or take advantage of an unsuspecting user.

It is no different than a thief dumpster diving through your trash versus trying to come through the front door which is designed to be secure just like the firewall if what he wants is your identity (Credit Card #s, Social Security, Phone Numbers, Account #s etc. ) As this relates to my tests, I know I would not be successful in breaking the encryption so I looked at other vectors.

I knew if I was able to compromise the security I just had to determine if it was as, less or more effective than breaking the encryption and which method was the most efficient. Unfortunately for virtually all of solutions they failed and I was able to simply compromise their security, intercept a phone call in real time bypassing the entire encryption. The really surprising element was, how extremely simple it is.

All of the products have basic system requirements (i.e. OS, data connection etc) Well, they also all depend on the spoken voice being fed into the microphone. This is the basic concept of some of the commercial wiretapping tools available on the market, so I thought I would take the same approach.
At what point does the software begin to encrypt the voice input and audio output ? So lets capture it before that happens. This way I do not have to bother or worry about what encryption algorithms or key exchanges are being used, it really becomes a non issue.

I proceeded to download FlexiSpy, a popular commercial wiretapping utility. It is off the shelf and costs anywhere from $100 (basic) to $350 for their professional version. Anyone can install and configure the software; it is wizard based. They simply tap the microphone and it can be used in a wiretap mode to listen in to an active phone conversation or simply as a remote electronic bug for proximity eavesdropping. FlexiSpydoes a great job because it allows to you remotely listen or monitor conversations from any phone device. It suppresses any rings, notifications or call logs when you call the target from the phone you pre-define in the software (Trojan) which makes the attack completely undetected.

I installed FlexiSpy on the cryptophone and would later call it from my 3rd party phone to activate the listening mode. (Again, the user has no idea). FlexiSpy silently picks up my phone call and allows me to eavesdrop undetected. If the user has a call in progress (even if it is encrypted!), I am able to hear anything being said into the microphone. I noticed with many encryption solutions there is always a little bit of a persistent echo which the microphone picks up as well so even if I only tapped one phone, I can often still hear the full conversation. I encourage you to test this yourself…it is really simple.

I liked FlexiSpy’s architecture so I then developed my own Trojan to tap both the microphone and speaker. As voice enters the microphone I have an opportunity to capture it before it is processed by the software codecs to encrypt it, but this happens in reverse with the handset speaker so I decided to take advantage of it. On some products FlexiSpy had some problems due to conflicts on the audio handler or/and voice recording module… however on my own Trojan I was able to resolve this, and was able to capture the conversation in full duplex even with an encrypted call in progress. You can take this a step further and actually record the conversation into a local audio file for later retrieval or delivery.

The attack concept was successful on almost all of the vendors as it is architecture vulnerability, but a couple of vendors did a really good job defending it or at least thought about it when they built their products.

For CryptoPhone and SecuSmart that use CSD (which in many countries is already obsolete and is quickly becoming obsolete in the countries who still offer CSD channels), the attack was still effective, but I was not able to have it in active listening mode (real time conversation), so I had to simply record the conversation on the phone for later retrieval.

Rohde & Schwarz (TopSec) & PhoneCrypt successfully blocked these attacks as their architecture prevented the attack. The main difference is, that TopSec is a hardware solution (you have to use their device) and they use the obsolete CSD channel. PhoneCrypt offers both choices , a hardware and a Software solution. Both their hardware and software was not susceptible to the attack. PhoneCrypt actually alerted me when it detected my Trojan and FlexiSpy respectively which was pretty cool.

I was not yet able to test all the hardware solutions available, but I actually found a couple on ebay and a few gray retail sites. Prestige, which looks like it is from SecurStar (the PhoneCrypt guys), TopSec (Rohde & Schwarz) and SnapCell, all did well against this attack. SnapCell and Prestige disable the integrated microphone and speaker preventing the attack.


Most of the popular vendors out there selling voice encryption solutions ranging from $1,000 to $4,000 dollars (on average) are worthless. They all marketed pretty comparable security features but don’t be fooled by glossy brochures and buzz words. (Just snake oil and smoke and mirrors.)

I hope my review helps if you are considering or already using voice encryption. Maybe I will just start travelling with Paul or at least use a solution that is actually secure.

Parallel Algorithm Leads to Crypto Breakthrough

Massively parallel algorithm iteratively decrypts fixed-size blocks of data

Pico Computing has announced that it has achieved the highest-known benchmark speeds for 56-bit DES decryption, with reported throughput of over 280 billion keys per second achieved using a single, hardware-accelerated server.

"This DES cracking algorithm demonstrates a practical, scalable approach to accelerated cryptography," says David Hulton, Pico Computing Staff Engineer and an expert in code cracking and cryptography. "Previous methods of acceleration using clustered CPUs show increasingly poor results due to non-linear power consumption and escalating system costs as more CPUs are added. Using FPGAs allows us to devote exactly the amount of silicon resources needed to meet performance and cost goals, without incurring significant parallel processing overhead."

Hulton's DES cracking algorithm uses brute force methods to analyze the entire DES 56-bit keyspace. The massively parallel algorithm iteratively decrypts fixed-size blocks of data to find keys that decrypt into ASCII numbers. This technique is often used for recovering the keys of encrypted files containing known types of data. The candidate keys that are found in this way can then be more thoroughly tested to determine which candidate key is correct.

Such brute force attacks are computationally expensive and beyond the reach of software algorithms running on standard servers or PCs, even when equipped with GPU accelerators. According to Hulton, current-generation CPU cores can process approximately 16 million DES key operations per second. A GPU card such as the GTX-295 can be programmed to process approximately 250 million such operations per second.

The 56-bit Data Encryption Standard (DES) is now considered obsolete, having been replaced by newer and more secure Advanced Encryption Standard (AES) encryption methods. Nonetheless DES continues to serve an important role in cryptographic research, and in the development and auditing of current and future block-based encryption algorithms.

When using a Pico FPGA cluster, however, each FPGA is able to perform 1.6 billion DES operations per second. A cluster of 176 FPGAs, installed into a single server using standard PCI Express slots, is capable of processing more than 280 billion DES operations per second. This means that a key recovery that would take years to perform on a PC, even with GPU acceleration, could be accomplished in less than three days on the FPGA cluster.

"Our research efforts in cryptography and our real-world customer deployments have given us unique insights into parallel computing methods for other domains, including genomics and simulations," added Pico Computing's Robert Trout. "The use of an FPGA cluster greatly reduces the number of CPUs in the system, increases computing efficiency and allows the system to be scaled up to keep pace with the data being processed."

Survey Finds Growing Fear of Cyberattacks
John Markoff

A survey of 600 computing and computer-security executives in 14 countries suggests that attacks on the Internet pose a growing threat to the energy and communication systems that underlie modern society.

The findings, issued Thursday by the Center for Strategic and International Studies and the computer-security company McAfee, echoed alarms raised this month by Google after it experienced a wave of cyberattacks.

“One of the striking things we determined is that half of the respondents believe they have already been attacked by sophisticated government intruders,” said the study’s director, Stewart A. Baker. “It tells us that this is a serious problem right now.”

More than half of the executives called their own nation’s laws inadequate for deterring cyberattacks. Half identified the United States as one of the three most vulnerable countries; the others were China and Russia.

Moreover, the United States was identified most frequently as a potential source of cyberattacks.

“When they were asked which country ‘you worry is of greatest concern in the context of network attacks against your country/sector,’ 36 percent named the United States and 33 percent China — more than any other country on a list of six,” the report said.
China’s security measures also came in for praise from the executives.

“It was striking how much of an outlier China is on a number of measures,” said Mr. Baker, a Washington lawyer who formerly served as assistant secretary for policy at the Department of Homeland Security and as general counsel for the National Security Agency. “They have confidence in their government, and they are adopting security measures at a higher rate than other countries.”

The report focuses on “critical infrastructure” — essential networks and services that include the financial system, transmission lines for gas and electricity, water supply, and voice- and data-communication networks. At the heart of these systems are networks known as Scada systems, which are the basis for manufacturing, power generation, refining and other basic operations in advanced economies. (The acronym stands for supervisory control and data acquisition.)

The increasing use of Internet-based networks “creates unique and troubling vulnerabilities,” the report says. In the past, the data used by such industrial systems was largely carried on proprietary networks that were often better insulated from the outside world.

The advantage of the Internet lies largely in the lower cost of developing systems because of the low cost of commodity products. But the report’s authors stopped short of calling for a complete separation between those systems and the open Internet.

“Remote access to control systems poses a huge danger,” said Phyllis Schneck, McAfee’s vice president for threat intelligence. “We must either protect it appropriately or move it to more private networks and not use the open Internet.”

The report found considerable pessimism among the executives, whose responses were anonymous.

“Remarkably, two-fifths of these I.T. executives expected a major cybersecurity incident (one causing an outage of ‘at least 24 hours, loss of life or ... failure of a company’) in their sector within the next year,” the report said. “All but 20 percent expected such an incident within five years. This pessimism was particularly marked in the countries already experiencing the highest levels of serious attacks.”

Pentagon Searches for ‘Digital DNA’ to Identify Hackers
Noah Shachtman

One of the trickiest problems in cyber security is trying to figure who’s really behind an attack. Darpa, the Pentagon agency that created the Internet, is trying to fix that, with a new effort to develop the “cyber equivalent of fingerprints or DNA” that can identify even the best-cloaked hackers.

The recent malware hit on Google and other U.S. tech firms showed once again just how hard it is to pin a network strike on a particular person or group. Engineers are pretty sure the attack came from China, and it sure was sophisticated enough to come from a state military like China’s. But it’s hard to say conclusively that the People’s Liberation Army launched the strike.

It’s the kind of problem Darpa will try to solve with its “Cyber Genome” project. The idea “is to produce revolutionary cyber defense and investigatory technologies for the collection, identification, characterization, and presentation of properties and relationships from collected digital artifacts of software, data, and/or users,” the agency announced late Monday.

These “digital artifacts” will be collected from “traditional computers, personal digital assistants, and/or distributed information systems such as ‘cloud computers’,” as well as “from wired or wireless networks, or collected storage media. The format may include electronic documents or software (to include malicious software - malware).”

Ultimately, Darpa wants to develop the “digital equivalent of genotype, as well as observed and inferred phenotype in order to determine the identity, lineage, and provenance of digital artifacts and users.”

“In other words,” The Register’s Lew Page notes, “any code you write, perhaps even any document you create, might one day be traceable back to you - just as your DNA could be if found at a crime scene, and just as it used to be possible to identify radio operators even on encrypted channels by the distinctive ‘fist’ with which they operated their Morse keys. Or something like that, anyway.”

The Cyber Genome project kicks off this week with a conference in Virginia.

In Digital Combat, U.S. Finds No Easy Deterrent

This article was reported by John Markoff, David E. Sanger and Thom Shanker, and written by Mr. Sanger.

On a Monday morning earlier this month, top Pentagon leaders gathered to simulate how they would respond to a sophisticated cyberattack aimed at paralyzing the nation’s power grids, its communications systems or its financial networks.

The results were dispiriting. The enemy had all the advantages: stealth, anonymity and unpredictability. No one could pinpoint the country from which the attack came, so there was no effective way to deter further damage by threatening retaliation. What’s more, the military commanders noted that they even lacked the legal authority to respond — especially because it was never clear if the attack was an act of vandalism, an attempt at commercial theft or a state-sponsored effort to cripple the United States, perhaps as a prelude to a conventional war.

What some participants in the simulation knew — and others did not — was that a version of their nightmare had just played out in real life, not at the Pentagon where they were meeting, but in the far less formal war rooms at Google Inc. Computers at Google and more than 30 other companies had been penetrated, and Google’s software engineers quickly tracked the source of the attack to seven servers in Taiwan, with footprints back to the Chinese mainland.

After that, the trail disappeared into a cloud of angry Chinese government denials, and then an ugly exchange of accusations between Washington and Beijing. That continued Monday, with Chinese assertions that critics were trying to “denigrate China” and that the United States was pursuing “hegemonic domination” in cyberspace.

These recent events demonstrate how quickly the nation’s escalating cyberbattles have outpaced the rush to find a deterrent, something equivalent to the cold-war-era strategy of threatening nuclear retaliation.

So far, despite millions of dollars spent on studies, that quest has failed. Last week, Secretary of State Hillary Rodham Clinton made the most comprehensive effort yet to warn potential adversaries that cyberattacks would not be ignored, drawing on the language of nuclear deterrence.

“States, terrorists and those who would act as their proxies must know that the United States will protect our networks,” she declared in a speech on Thursday that drew an angry response from Beijing. “Those who disrupt the free flow of information in our society or any other pose a threat to our economy, our government and our civil society.”

But Mrs. Clinton did not say how the United States would respond, beyond suggesting that countries that knowingly permit cyberattacks to be launched from their territories would suffer damage to their reputations, and could be frozen out of the global economy.

There is, in fact, an intense debate inside and outside the government about what the United States can credibly threaten. One alternative could be a diplomatic démarche, or formal protest, like the one the State Department said was forthcoming, but was still not delivered, in the Google case. Economic retaliation and criminal prosecution are also possibilities.

Inside the National Security Agency, which secretly scours overseas computer networks, officials have debated whether evidence of an imminent cyberattack on the United States would justify a pre-emptive American cyberattack — something the president would have to authorize. In an extreme case, like evidence that an adversary was about to launch an attack intended to shut down power stations across America, some officials argue that the right response might be a military strike.

“We are now in the phase that we found ourselves in during the early 1950s, after the Soviets got the bomb,” said Joseph Nye, a professor at the Kennedy School at Harvard. “It won’t have the same shape as nuclear deterrence, but what you heard Secretary Clinton doing was beginning to explain that we can create some high costs for attackers.”

Fighting Shadows

When the Pentagon summoned its top regional commanders from around the globe for meetings and a dinner with President Obama on Jan. 11, the war game prepared for them had nothing to do with Afghanistan, Iraq or Yemen. Instead, it was the simulated cyberattack — a battle unlike any they had engaged in.

Participants in the war game emerged with a worrisome realization. Because the Internet has blurred the line between military and civilian targets, an adversary can cripple a country — say, freeze its credit markets — without ever taking aim at a government installation or a military network, meaning that the Defense Department’s advanced capabilities may not be brought to bear short of a presidential order.

“The fact of the matter,” said one senior intelligence official, “is that unless Google had told us about the attack on it and other companies, we probably never would have seen it. When you think about that, it’s really scary.”

William J. Lynn III, the deputy defense secretary, who oversaw the simulation, said in an interview after the exercise that America’s concepts for protecting computer networks reminded him of one of defensive warfare’s great failures, the Maginot Line of pre-World War II France.

Mr. Lynn, one of the Pentagon’s top strategists for computer network operations, argues that the billions spent on defensive shields surrounding America’s banks, businesses and military installations provide a similarly illusory sense of security.

“A fortress mentality will not work in cyber,” he said. “We cannot retreat behind a Maginot Line of firewalls. We must also keep maneuvering. If we stand still for a minute, our adversaries will overtake us.”

The Pentagon simulation and the nearly simultaneous real-world attacks on Google and more than 30 other companies show that those firewalls are falling fast. But if it is obvious that the government cannot afford to do nothing about such breaches, it is also clear that the old principles of retaliation — you bomb Los Angeles, we’ll destroy Moscow — just do not translate.

“We are looking beyond just the pure military might as the solution to every deterrence problem,” said Gen. Kevin P. Chilton, in charge of the military’s Strategic Command, which defends military computer networks. “There are other elements of national power that can be brought to bear. You could deter a country with some economic moves, for example.”

But first you would have to figure out who was behind the attack.

Even Google’s engineers could not track, with absolute certainty, the attackers who appeared to be trying to steal their source code and, perhaps, insert a “Trojan horse” — a backdoor entryway to attack — in Google’s search engines. Chinese officials have denied their government was involved, and said nothing about American demands that it investigate. China’s denials, American officials say, are one reason that President Obama has said nothing in public about the attacks — a notable silence, given that he has made cybersecurity a central part of national security strategy.

“You have to be quite careful about attributions and accusations,” said a senior administration official deeply involved in dealing with the Chinese incident with Google. The official was authorized by the Obama administration to talk about its strategy, with the condition that he would not be named.

“It’s the nature of these attacks that the forensics are difficult,” the official added. “The perpetrator can mask their involvement, or disguise it as another country’s.” Those are known as “false flag” attacks, and American officials worry about being fooled by a dissident group, or a criminal gang, into retaliating against the wrong country.

Nonetheless, the White House said in a statement that “deterrence has been a fundamental part of the administration’s cybersecurity efforts from the start,” citing work in the past year to protect networks and “international engagement to influence the behavior of potential adversaries.”

Left unsaid is whether the Obama administration has decided whether it would ever threaten retaliatory cyberattacks or military attacks after a major cyberattack on American targets. The senior administration official provided by the White House, asked about Mr. Obama’s thinking on the issue, said: “Like most operational things like this, the less said, the better.” But he added, “there are authorities to deal with these attacks residing in many places, and ultimately, of course, with the president.”

Others are less convinced. “The U.S. is widely recognized to have pre-eminent offensive cybercapabilities, but it obtains little or no deterrent effect from this,” said James A. Lewis, director of the Center for Strategic and International Studies program on technology and public policy.

In its final years, the Bush administration started a highly classified effort, led by Melissa Hathaway, to build the foundations of a national cyberdeterrence strategy. “We didn’t even come close,” she said in a recent interview. Her hope had been to recreate Project Solarium, which President Dwight D. Eisenhower began in the sunroom of the White House in 1953, to come up with new ways of thinking about the nuclear threats then facing the country. “There was a lot of good work done, but it lacked the rigor of the original Solarium Project. They didn’t produce what you need to do decision making.”

Ms. Hathaway was asked to stay on to run Mr. Obama’s early review. Yet when the unclassified version of its report was published in the spring, there was little mention of deterrence. She left the administration when she was not chosen as the White House cybersecurity coordinator. After a delay of seven months, that post is now filled: Howard A. Schmidt, a veteran computer specialist, reported for work last week, just as the government was sorting through the lessons of the Google attack and calculating its chances of halting a more serious one in the future.

Government-Corporate Divide

In nuclear deterrence, both the Americans and the Soviets knew it was all or nothing: the Cuban missile crisis was resolved out of fear of catastrophic escalation. But in cyberattacks, the damage can range from the minor to the catastrophic, from slowing computer searches to bringing down a country’s cellphone networks, neutralizing its spy satellites, or crashing its electrical grid or its air traffic control systems. It is difficult to know if small attacks could escalate into bigger ones.

So part of the problem is to calibrate a response to the severity of the attack.

The government has responded to the escalating cyberattacks by ordering up new strategies and a new United States Cyber Command. The office of Defense Secretary Robert M. Gates — whose unclassified e-mail system was hacked in 2007 — is developing a “framework document” that would describe the threat and potential responses, and perhaps the beginnings of a deterrence strategy to parallel the one used in the nuclear world.

The new Cyber Command, if approved by Congress, would be run by Lt. Gen. Keith B. Alexander, head of the National Security Agency. Since the agency spies on the computer systems of foreign governments and terrorist groups, General Alexander would, in effect, be in charge of both finding and, if so ordered, neutralizing cyberattacks in the making.

But many in the military, led by General Chilton of the Strategic Command and Gen. James E. Cartwright, the vice chairman of the Joint Chiefs of Staff, have been urging the United States to think more broadly about ways to deter attacks by threatening a country’s economic well-being or its reputation.

Mrs. Clinton went down that road in her speech on Thursday, describing how a country that cracked down on Internet freedom or harbored groups that conduct cyberattacks could be ostracized. But though sanctions might work against a small country, few companies are likely to shun a market the size of China, or Russia, because they disapprove of how those governments control cyberspace or use cyberweapons.

That is what makes the Google-China standoff so fascinating. Google broke the silence that usually surrounds cyberattacks; most American banks or companies do not want to admit their computer systems were pierced. Google has said it will stop censoring searches conducted by Chinese, even if that means being thrown out of China. The threat alone is an attempt at deterrence: Google’s executives are essentially betting that Beijing will back down, lift censorship of searches and crack down on the torrent of cyberattacks that pour out of China every day. If not, millions of young Chinese will be deprived of the Google search engine, and be left to the ones controlled by the Chinese government.

An Obama administration official who has been dealing with the Chinese mused recently, “You could argue that Google came up with a potential deterrent for the Chinese before we did.”

Airline Passengers Have 'No Right' to Refuse Naked Body Scanners

Ministers ignore human rights advice and rule out option of pat-down search when scanner goes on trial at Heathrow next week
Alan Travis and Dan Milmo

A worker at Manchester airport demonstrates a point of threat revealed on a 'naked body scan'. Photograph: Dave Thompson/PA

Airline passengers will have no right to refuse to go through a full-body search scanner when the devices are introduced at Heathrow airport next week, ministers have confirmed.

The option of having a full-body pat-down search instead, offered to passengers at US airports, will not be available despite warnings from the government's Equality and Human Rights Commission that the scanners, which reveal naked bodies, breach privacy rules under the Human Rights Act.

The transport minister Paul Clark told MPs a random selection of passengers would go through the new scanners at UK airports. The machines' introduction would be followed later this year by extra "trace" scanners, which can detect liquid explosives. A draft code of practice covering privacy and health issues is being discussed in Whitehall.

Clark dealt with concerns raised by the Commons home affairs select committee about the ability of airports abroad to upgrade their security to similar levels by indicating that extra support and help was under discussion.

Lord West, the counter-terrorism minister, told the MPs the government had firmly ruled out the introduction of "religious or ethnic profiling" into transport security. Instead, he said, airport security staff were being trained in "behavioural profiling", which meant spotting passengers who had paid cash, were travelling with only a book for luggage on a long-haul flight or were behaving erratically at the airport.

He said the decision to raise the terror threat level to "severe" – meaning an attack was highly likely but not imminent – had been taken by security service officials at the Joint Terrorism Analysis Centre last Friday.

The decision, thought to be based on an increase in intelligence traffic on threats from Yemen, was confirmed by the home secretary, Alan Johnson.

West refused to discuss the intelligence behind the decision, saying he was not going to jeopardise "getting the bastards".

The body scanner trials, which are due to start at Heathrow next week, will involve a machine that has spotted the type of concealed device used in the Detroit airline bombing attempt.

The airport's owner, BAA, is preparing to install a scanner in each of its five #terminals. The trials will use two different technologies that see through passengers' clothing. One trial will involve "backscatter" technology, which exposes travellers to low-level x-rays. This is already in use at Manchester airport. Security staff at Manchester recently replicated the underwear bomb that Umar Farouk Abdulmutallab smuggled on to Northwest Airlines flight 253. The machine singled out elements of the fake weapon.

"We could see that there was something on the person that would have required a further search," said a spokesman for Manchester airport, whose machine requires passengers to stand between two Tardis-like blue boxes.

Under the new security regime, due next month, the suspect passenger would then be led away for a secondary examination that would include using chemical swabs to test for explosives. Pat-down searches of passengers and hand luggage inspections will also increase.

The second type of machine uses a "millimetre wave" system, which bounces radio waves off the human body to form a 3D image of the passenger. Both types of technology have raised privacy concerns owing to the graphic nature of the passenger images, with civil liberties campaigners calling the process "virtual strip-searching".

The Department for Transport has drawn up a preliminary code of conduct for using the machines, and it will follow some guidelines used in the US. These state that the security officer guiding the passenger through the machine never sees the image, and that the employee viewing the scan must be based away from the passenger, in a secure room. The two officers communicate with wireless headsets; and, once viewed, the scan cannot be saved, printed or transmitted.

CCTV in the Sky: Police Plan to Use Military-Style Spy Drones

Arms manufacturer BAE Systems developing national strategy with consortium of government agencies

Police in the UK are planning to use unmanned spy drones, controversially deployed in Afghanistan, for the #"routine" monitoring of antisocial motorists, #protesters, agricultural thieves and fly-tippers, in a significant expansion of covert state surveillance.

The arms manufacturer BAE Systems, which produces a range of unmanned aerial vehicles (UAVs) for war zones, is adapting the military-style planes for a consortium of government agencies led by Kent police.

Documents from the South Coast Partnership, a Home Office-backed project in which Kent police and others are developing a national drone plan with BAE, have been obtained by the Guardian under the Freedom of Information Act.

They reveal the partnership intends to begin using the drones in time for the 2012 Olympics. They also indicate that police claims that the technology will be used for maritime surveillance fall well short of their intended use – which could span a range of police activity – and that officers have talked about selling the surveillance data to private companies. A prototype drone equipped with high-powered cameras and sensors is set to take to the skies for test flights later this year.

The Civil Aviation Authority, which regulates UK airspace, has been told by BAE and Kent police that civilian UAVs would "greatly extend" the government's surveillance capacity and "revolutionise policing". The CAA is currently reluctant to license UAVs in normal airspace because of the risk of collisions with other aircraft, but adequate "sense and avoid" systems for drones are only a few years away.

Five other police forces have signed up to the scheme, which is considered a pilot preceding the countrywide adoption of the technology for "surveillance, monitoring and evidence gathering". The partnership's stated mission is to introduce drones "into the routine work of the police, border authorities and other government agencies" across the UK.

Concerned about the slow pace of progress of licensing issues, Kent police's assistant chief constable, Allyn Thomas, wrote to the CAA last March arguing that military drones would be useful "in the policing of major events, whether they be protests or the #Olympics". He said interest in their use in the UK had "developed after the terrorist attack in Mumbai".

Stressing that he was not seeking to interfere with the regulatory process, Thomas pointed out that there was "rather more urgency in the work since Mumbai and we have a clear deadline of the 2012 Olympics".

BAE drones are programmed to take off and land on their own, stay airborne for up to 15 hours and reach heights of 20,000ft, making them invisible from the ground.

Far more sophisticated than the remote-controlled rotor-blade robots that hover 50-metres above the ground – which police already use – BAE UAVs are programmed to undertake specific operations. They can, for example, deviate from a routine flightpath after encountering suspicious #activity on the ground, or undertake numerous reconnaissance tasks simultaneously.

The surveillance data is fed back to control rooms via monitoring equipment such as high-definition cameras, radar devices and infrared sensors.

Previously, Kent police has said the drone scheme was intended for use over the English Channel to monitor shipping and detect immigrants crossing from France. However, the documents suggest the maritime focus was, at least in part, a public relations strategy designed to minimise civil liberty concerns.

"There is potential for these [maritime] uses to be projected as a 'good news' story to the public rather than more 'big brother'," a minute from the one of the earliest meetings, in July 2007, states.

Behind closed doors, the scope for UAVs has expanded significantly. Working with various policing organisations as well as the Serious and Organised Crime Agency, the Maritime and Fisheries Agency, HM Revenue and Customs and the UK Border Agency, BAE and Kent police have drawn up wider lists of potential uses.

One document lists "[detecting] theft from cash machines, preventing theft of tractors and monitoring antisocial driving" as future tasks for police drones, while another states the aircraft could be used for road and railway monitoring, search and rescue, event security and covert urban surveillance.

Under a section entitled "Other routine tasks (Local Councils) – surveillance", another document states the drones could be used to combat "fly-posting, fly-tipping, abandoned vehicles, abnormal loads, waste management".

Senior officers have conceded there will be "large capital costs" involved in buying the drones, but argue this will be shared by various government agencies. They also say unmanned aircraft are no more intrusive than CCTV cameras and far cheaper to run than helicopters.

Partnership officials have said the UAVs could raise revenue from private companies. At one strategy meeting it was proposed the aircraft could undertake commercial work during spare time to offset some of the running costs.

There are two models of BAE drone under consideration, neither of which has been licensed to fly in non-segregated airspace by the CAA. The Herti (High Endurance Rapid Technology Insertion) is a five-metre long aircraft that the Ministry of Defence deployed in Afghanistan for tests in 2007 and 2009.

CAA officials are sceptical that any Herti-type drone manufacturer can develop the technology to make them airworthy for the UK before 2015 at the earliest. However the South Coast Partnership has set its sights on another BAE prototype drone, the GA22 airship, developed by Lindstrand Technologies which would be subject to different regulations. BAE and Kent police believe the 22-metre long airship could be certified for civilian use by 2012.

Military drones have been used extensively by the US to assist reconnaissance and airstrikes in Afghanistan and Iraq.

But their use in war zones has been blamed for high civilian death tolls.

U.S. Bans "Texting" by Truckers, Bus Drivers

The U.S. government on Tuesday banned hand-held "texting" by drivers of large commercial trucks and buses to avoid the danger of distracted driving.

Transportation Secretary Ray LaHood said in a statement the prohibition takes effect immediately. It follows a similar ban in December for drivers of federal government vehicles.

"We want the drivers of big rigs and buses and those who share the roads with them to be safe," LaHood said. "This is an important safety step and we will be taking more to eliminate the threat of distracted driving."

The new ban carries fines of up to $2,750.

Research by trucking regulators show that drivers take their eyes off the road for much of the time that they send and receive text messages, and they are significantly more at risk of getting into an accident than someone who is not texting.

The National Safety Council, a research and advocacy group, estimates that 200,000 crashes of all types on U.S. roads are caused by drivers who are "texting."

Nearly two dozen U.S. states ban "texting" while driving for all motor vehicles and others are considering similar action. Legislation has also been introduced in Congress to prohibit the practice.

Many U.S. companies also ban "texting" by their employees while driving on the job.

(Reporting by John Crawley, editing by Anthony Boadle)

SCOTUS Decision Allows Foreign Influence of U.S. Elections

That’s the warning coming today from the folks at the Center for Public Integrity, who caution that the recent High Court decision empowering corporations to spend unlimited sums on federal election ads could also have the unintended consequence of ending the ban on foreigners buying influence over U.S. elections. Some foreign companies, the authors write, are owned by foreign governments and also have U.S. subsidiaries. The result?

“One prominent example is CITGO Petroleum Company — once the American-born Cities Services Company, but purchased in 1990 by the Venezuelan government-owned Petróleos de Venezuela S.A. The Citizens United ruling could conceivably allow Venezuelan President Hugo Chavez, who has sharply criticized both of the past two U.S. presidents, to spend government funds to defeat an American political candidate, just by having CITGO buy TV ads bashing his target.”

And it’s not just CPI that’s concerned about that possibility.

“In his dissent in Citizens United, Justice John Paul Stevens cautioned that the decision “would appear to afford the same protection to multinational corporations controlled by foreigners as to individual Americans.”

And here we were worried that the biggest threats to American democracy, post-decision, were AT&T and Goldman Sachs.

Court's Campaign Finance Decision a Case of Shoddy Scholarship
Ruth Marcus

In opening the floodgates for corporate money in election campaigns, the Supreme Court did not simply engage in a brazen power grab. It did so in an opinion stunning in its intellectual dishonesty.

Many of those commenting on the decision in Citizens United v. Federal Election Commission have focused on the power-grab part. I agree with them. It was unnecessary for the court to go so far when there were several less-radical grounds available. It was audacious to seize the opportunity to overrule precedents when the parties had not pressed this issue and the lower courts had not considered it. It was the height of activism to usurp the judgments of Congress and state legislatures about how best to prevent corruption of the political process.

"If it is not necessary to decide more, it is necessary not to decide more," a wise judge once wrote. That was Chief Justice John G. Roberts -- back when -- and dissenting Justice John Paul Stevens rightly turned that line against him.

As bad as the court's activism, though, was its shoddy scholarship.

First, the majority flung about dark warnings of "censorship" and "banned" speech as if upholding the existing rules would leave corporations and labor unions with no voice in the political process. Untrue. Under federal election law before the Supreme Court demolished it, corporations and labor unions were free to say whatever they wanted about political candidates whenever they wanted to say it. They simply were not permitted to use unlimited general treasury funds to do so. Instead, they were required to use money raised by their political action committees from employees and members. This is hardly banning speech.

Second, in the face of logic and history, the majority acted as if there could be no constitutional distinction between a corporation and a human being. Untrue. The Supreme Court has long held that corporations are considered "persons" under the Constitution and are therefore entitled to its protections. For more than a century, Congress has barred corporations from making direct contributions to political candidates, with no suggestion that it must treat corporate persons the same as real ones; that prohibition stands, at least for now. The "conceit" of corporate personhood, as Stevens called it, does not mandate absolute equivalence. That corporations enjoy free-speech protections does not mean they enjoy every protection afforded an actual person. Is a corporation entitled to vote? To run for office?

Third, misreading its precedents and cherry-picking quotations, the majority acted as if the chief case it overturned was an outlier. In that 1990 case, Austin v. Michigan Chamber of Commerce, a six-member majority came to the unsurprising conclusion that a state law prohibiting corporations from making unlimited independent expenditures from their general funds was constitutional. The court dismissed this ruling as "a significant departure from ancient First Amendment principles." Again, untrue.

In a 1982 case, the court -- in a unanimous opinion by then-Justice William Rehnquist -- noted that Congress, in writing campaign finance law, was entitled to "considerable deference" in taking into account "the particular legal and economic attributes of corporations and labor organizations" and had made "a permissible assessment of the dangers posed by those entities to the electoral process." Four years later, even as it carved out an exception for nonprofit corporations, the court reaffirmed "the need to restrict the influence of political war chests funneled through the corporate form."

The Citizens United majority relied heavily on a 1978 case overturning a Massachusetts law that prohibited corporations from spending their own money to defeat certain referendums. But that decision specifically noted that "a corporation's right to speak on issues of general public interest implies no comparable right in the quite different context of participation in a political campaign for election to public office."

Fourth, the majority bizarrely invoked the "Mr. Smith Goes to Washington" defense. Under the Austin ruling, Justice Anthony M. Kennedy argued, lawmakers unhappy with being lampooned in the movie "could have done more than discourage its distribution -- they could have banned the film." Beyond untrue. There is no scenario under which works of art about fictional lawmakers could be limited by campaign finance laws.

That the majority would stoop to this claim underscores the weakness of its case -- and the audacity of the result it has inflicted on the political process.

Library Explores Ways to Release Open Source Software

In the spirit of transparency and community, the Library of Congress has established an internal process to create open source software. This will make it easier for software developers and sponsors within the Library to produce software that can be freely redistributed to users worldwide.

"The overall effect will be to clarify and streamline the process for releasing software as open source," said Michelle Springer, a digital initiatives project manager at the Library, "allowing the Library and its partners to more fully participate in the open source development community."

The Library has been especially active in developing tools that support digital preservation processes, including the secure transfer of digital files. This includes the release of a full suite of digital content transfer tools that support the Bagit specification.

These tools marked the first release of Library-authored open source software to a public repository. The tools were first registered on SourceForge in December 2008 and are available at http://sourceforge.net/projects/loc-xferutils/. While Sourceforge was the first external repository to host Library code, other repositories may be used in the future.

Source code originating from the Library may only be distributed as open source if developed by Library staff or under a contract granting the Library the necessary distribution rights. Additionally, the code cannot be based or dependent on any proprietary software and must be releasable without restrictions or cost.

Works created by Library of Congress staff will be designated in the code comments as a work within the public domain. The addition of the public domain notation in the code comments serves the function of letting developers know that section of the code is free for reuse even if the Library's code is incorporated into a software project with a more restrictive license.

Not all software repositories offer the option of a public domain designation. Under those circumstances the Library will apply the most permissive license possible. BSD-style licenses are being used by multiple National Digital Information Infrastructure and Preservation Program partners.

Study Finds Drop in Age-Related Hearing Problems
Malcolm Ritter

Sweet news for baby boomers: Despite all those warnings that loud rock music would damage their ears, their generation appears to have better hearing than their parents did.

In fact, a new study suggests that the rate of hearing problems at ages ranging from 45 to 75 has been dropping for years, at least among white Americans.

"I'm less likely to have a hearing loss when I get to be 70 years old than my grandmother did when she was 70," said Karen Cruickshanks of the University of Wisconsin-Madison.

She's an author of the study — and a baby boomer who remembers taking guff from her mother for listening to loud music.

Apart from giving her generation some satisfaction, the new work implies that what people do and experience may help them prevent or delay hearing loss as they get older. Experts theorize there may be several reasons for the finding, like fewer very noisy jobs and better ear protection at worksites, immunizations and antibiotics that prevented certain diseases, and maybe even a decline in smoking.

Experts praised the work, but agreed that scientists now must see if the pattern holds up outside of its largely white participants. They also said the result doesn't mean it's safe to blast loud music into your ears from an iPod for hours on end.

Cruikshanks, colleague Weihai Zhan and others at her university reported their work recently in the American Journal of Epidemiology.

They analyzed the results of hearing tests given to about 5,300 people who were at least 45 years old and born between 1902 and 1962. The tests were done between 1993 and 2008, and many participants were tested at five-year intervals. Participants were residents of Beaver Dam, Wis., and their sons and daughters, who lived in a variety of places.

The researchers noted how many tests showed at least mild hearing loss. Then they looked to see if the rate of impairment at given ages was affected by when the person was born.

For example, take the results for men in their early 60s. The impairment rate was 58 percent for men born between 1930 and 1934. For men born just five years later, the rate was about 50 percent. And for men born between 1945 and 1949, the oldest baby boomers, the rate was only about 36 percent.

Overall, for a given age group, men showed on average a 13 percent drop in the risk of impairment for every five-year increase in the date of their birth. For women, the decrease was about 6 percent.

The researchers are now trying to uncover reasons for the decline. Cruickshanks said the explanation will probably be complex and hard to pin down because the pattern has been going on for decades.

But factors could include fewer people with long-term exposure to very loud noise at work, and a decline in smoking, a habit some studies link to ear damage, she said. Maybe changes in health care, including immunizations and use of antibiotics, play some role too, she said.

The study is "very impressive," said Elizabeth Helzner, an epidemiologist who studies age-related hearing loss at the State University of New York Downstate Medical Center in Brooklyn.

The findings make sense in light of declines in long-term exposure to loud noise without ear protection in the workplace and perhaps in hunting and battle, she said. Those exposures would have happened more to men than women, which would help explain why the results were more dramatic in men, she said.

Another possible factor is better control of diabetes and heart disease, both of which are linked to hearing loss, she said.

Now the question is whether the decline will continue with today's young people, who often play loud music in their earbuds for hours at a time, day after day, she said. That chronic exposure may prove more hazardous than the briefer bouts baby boomers had, she said.

Verizon Mobile Subs Strong But Wireline Disappoints

Verizon Communications Inc <VZ.N> reported stronger-than-expected mobile customer growth thanks to wholesale partners like America Movil's <AMXL.MX> Tracfone, but its fixed-line business disappointed investors.

Hefty severance costs pushed Verizon into the red in the fourth quarter, though results excluding the costs, and revenue were in line with Wall Street expectations. Shares of the company were slightly higher in premarket trading.

"It was a solid quarter but not great," said Piper Jaffray analyst Christopher Larsen. "Retail wireless subscribers were in line with expectations. Wholesale was meaningfully ahead but they tend to be lower value customers."

Verizon Wireless, which Verizon owns with Vodafone Group Plc <VOD.L>, added 2.2 million customers in the quarter, well above the average forecast of 1.5 million from four analysts contacted by Reuters. But the surprise was driven largely by wholesale partners, which attract lower value customers.

Verizon's addition of 1.2 million retail customers was slightly ahead of analyst expectations, and was likely driven by heavy marketing of Motorola Inc's <MOT.N> Droid phone, which runs on Google Inc's <GOOG.O> Android operating system.

Larsen said this meant that Verizon probably gained back some market share previously lost to AT&T Inc <T.N>, the exclusive U.S. provider for the Apple Inc <AAPL.O> iPhone.

Verizon posted a net loss of $653 million, or 23 cents per share, compared with net income of $1.24 billion, or 43 cents a share in the same quarter a year ago.

Before items such as $3 billion in charges for workforce reductions, Verizon said it would have earned 54 cents per share, matching the average analyst forecast. Verizon said its headcount fell by 7,400 in the fourth quarter, or 17,000 in the full year 2009.

Revenue rose to $27.1 billion from $24.65 billion in the year-earlier quarter, before it bought mobile service Alltel.

This compared with the average analyst estimate for $27.33 billion, according to Thomson Reuters I/B/E/S.

Verizon, which has spent billions of dollars building the FiOS home video and Internet service to compete better with cable rivals, said it added 153,000 FiOS customers, missing analyst expectations for more than 200,000.

Verizon shares rose to $30.83 in premarket trading on Tuesday after closing on the New York Stock Exchange at $30.68 on Monday.

(Reporting by Sinead Carew; Editing by Derek Caney, Dave Zimmerman)

Google Releases New Google Voice for iPhone

Google Inc unveiled a new version of its Internet phone service on Tuesday in its latest effort to bypass Apple Inc's gatekeepers and make Google Voice a popular service on the iPhone.

The new version of Google Voice can only be accessed through a smartphone's Web browser, unlike the so-called native apps that can be downloaded directly onto an iPhone.

In July, Google said that Apple had turned down its application to offer Google Voice as a native iPhone app. The rare public spat underscored the growing competition between the two tech giants and prompted the U.S. Federal Communications Commission to request more information from the companies on the matter.

Apple responded at the time that the Google Voice app had not been rejected, but that it was under review.

Google Voice allows users to make cheap long-distance calls and to forward calls from a single phone number to multiple phones, among other things.

The disagreement over Google Voice comes as Google, the world's No. 1 search engine, and Apple are increasingly encroaching into each other's markets. Earlier this month, Google began selling the Nexus One smartphone directly to consumers, and Google is developing an operating system for PCs that could compete with Apple's line of Mac PCs.

In August, Google CEO Eric Schmidt resigned from Apple's board of directors.

Google already had a version of Google Voice available through mobile Web browsers.

But Google described the new version of Google Voice as a "Web app," noting that it is much more interactive than the previous browser-based version of the service, with the ability to listen to voice mails directly from within the browser and to dial phone numbers on an interactive on-screen keypad.

Google said the new version of Google Voice is designed for iPhone 3.0 and higher and Palm Inc Web OS smartphones.

A Google spokeswoman said the company had not received any updates from Apple regarding offering a native app version of Google Voice on the iPhone. An Apple representative could not be reached for comment.

(Reporting by Alexei Oreskovic; Editing by Gary Hill)

AT&T Will Improve Network for iPhone, Apple Says
Amy Thomson and Connie Guglielmo

AT&T Inc., the exclusive U.S. wireless carrier for the iPhone, plans to improve the performance of its network to reverse declining customer satisfaction with the service, an Apple Inc. executive said.

The carrier has shown Apple its plans for the wireless network, Chief Operating Officer Tim Cook said yesterday on the Cupertino, California-based company’s earnings call.

“We have personally reviewed these plans, and we have very high confidence that they will make significant progress toward fixing them,” Cook said in a conference call.

He didn’t directly answer an analyst’s question about whether Apple intended to stick with a single partner or expand to other U.S. wireless carriers. Analysts say Apple may offer the phone this year through additional U.S. mobile-phone carriers, including market leader Verizon Wireless.

AT&T has an exclusive, multiyear agreement to offer U.S. service for the iPhone, which went on sale in June 2007. Neither Apple nor AT&T has disclosed the terms of that contract.

AT&T spokesman Mark Siegel declined to comment on Cook’s remarks.

Apple rose 12 cents to $203.19 at 9:39 a.m. New York time in Nasdaq Stock Market trading. Dallas-based AT&T dropped 29 cents to $25.29 in New York Stock Exchange composite trading.

--Editors: Stephen West, Nick Turner.

Report: Apple, Major Labels Negotiating New Streaming Service

Executives from Apple and the four major labels are reportedly negotiating plans for a new free streaming music service. Sources tell CNet that the iTunes software could be used to store users' music on Apple's servers, with the ability to back up music and access songs online from anywhere in the world.

According to CNet, Apple has told label executives that the streaming plan is a "value add" that could give a boost to purchasing downloads. The new service could be launched as soon as the Spring of 2010, though will probably not be announced at next Wednesday's Apple press event. That event is all but certain to focus on the long-rumored Apple "iTablet" device.

Earlier this week, MP3.com founder Michael Robertson wrote on TechCrunch that "Apple plans to upgrade their users almost over night to a cloud music service in an ambitious move to beat Amazon and others." Robertson cites anonymous music industry sources in his guest blog post, which can be read here.

This all ties into a report last month in the Wall Street Journal that Apple was considering revamping iTunes and merging it with the recently-acquired Lala streaming service.

When Phones Are Just Too Smart
Katie Hafner

IF Caroline Cua’s iPhone looked anything like her closet, where she keeps her dozens of pairs of shoes, she would have screen after screen of applications.

But instead her iPhone is nearly empty. Since she bought it nearly a year ago, Ms. Cua, 27, who works for a transportation service in San Francisco, has downloaded precisely five programs. And though she uses four of those apps “religiously,” she says, the ones she favors — Pandora, the Internet radio service, and Shazam, the music identifier — are your basic black pumps.

And that’s just fine with her, until she finds herself among friends whose iPhones are studded with icons. When a fellow iPhone owner asked recently to see her apps, she grew self-conscious. “I said to him, ‘O.K., now I’m officially feeling like a loser,’ ” she recalled.

Ms. Cua is not an exception. She is the rule. The average iPhone or iPod Touch owner uses 5 to 10 apps regularly, according to Flurry, a research firm that studies mobile trends. This despite the surfeit of available apps: some 140,000 and counting.

Last week’s announcement of the Apple iPad, a tablet device that runs iPhone applications and will not be available until March, has already spurred the development of more, including a version of a drawing app called Brushes; Nova, a shooter game; and Apple’s own app called iBooks, which will connect to its new online e-bookstore.

But that doesn’t mean that people will change their habits. Actually, it may just make them feel a tad more overwhelmed. The next generation of gadget users might prove different, but for now it is clear that people prefer fewer choices, and that they gravitate consistently toward the same small number of things that they like. Owners of iPhones are no different from cable TV subscribers with hundreds of channels to choose from who end up watching the same half-dozen.

So, for every zealous owner whose iPhone is loaded with little-known programs that predict asteroid fly-bys, there are many more Caroline Cuas, who seldom venture outside the predictable. Most say they’re too busy, too lazy or just plain flummoxed by the choices.

“I think I’m supposed to want more of them than I have,” said Julie Graham, a psychotherapist in San Francisco who echoed Ms. Cua’s vague anxiety. “There’s this sense that I’m missing out on something I didn’t know I needed.”

Ms. Graham, 50, said friends were shocked when she confessed to having failed to download Urbanspoon, a compendium of restaurant reviews. She now has it — and seldom uses it. “I don’t have time,” she said.

Since apps were introduced in 2008, rivals like Palm, Microsoft, Google and Research in Motion have all rushed out their own catalogs of mobile applications.

A survey of iPhones, iPod Touch and Android users conducted in July 2009 by AdMob, an advertising network that helps people promote their applications on smartphones, found that people discover apps most often by browsing app stores. And even though the iTunes store is bloated with offerings, people tend to gravitate to the most popular.

“For all the tens of thousands of apps out there, the odds of being exposed to more than a thousand are very small,” said Stewart Putney, the founder and chief executive of Moblyng, a company in Redwood City, Calif., that develops applications for mobile devices.

“The top apps featured at the store do change out,” Mr. Putney said. “But most users will never see more than 1 percent of the total apps available.”

A study last year by Pinch Media found that most people stop using their applications pretty quickly, particularly if those apps are free. And three out of every four applications people download are free, even though analysts say that Apple and its developers receive $1 billion a year in revenue from selling applications (Apple itself won’t say).

Jon Lebkowsky, 60, who runs a technology company in Austin, Tex., has a few dozen apps on his phone but uses only a handful, he said. He discovered a few when he saw friends using them. Others he found by searching the app store. “I’m a Buddhist, so I searched for ‘Buddhism’ and ‘Buddha’ to see what I could find,” he said. “I found a cool meditation app and a set of the Buddha’s writings.”

Some apps become the electronic equivalent of comfort food. Ms. Cua said her social inclinations were well served by a game called Words With Friends, a popular Scrabble derivative that she plays with others. Dana Delany, the actress, has the same game, which Ms. Delany said is played among word-oriented people on the set of “Desperate Housewives.”

“Your personal interests certainly drive what you’re interested in,” said Peter Farago, vice president for marketing at Flurry. “But people can’t always find the things they’re interested in.”

At the app-happy end of the spectrum is Phil Minasian, 18, a freshman at Purdue in West Lafayette, Ind. Mr. Minasian said his iPhone is loaded with games, including racing games, Texas hold ‘em, and numerous word puzzles. He said that while the majority of his games are free, he still pays about $15 a month for those that aren’t.

Mr. Minasian said he believed that people who don’t download apps in abundance are missing out. “If people put the time in, they can definitely find apps they’ll like, and that help with everyday life,” he said. With the help of — you guessed it — an app for finding apps, he found the Weather Channel app, which he prefers to the weather program that came with his iPhone.

Simon Sinek, 36, a leadership and management consultant in New York, has 130 apps, having collected them with a tried-and-true strategy.

Every night, Mr. Sinek said, he goes to the iTunes store to look at the most popular apps. “If one looks appealing, I see if there is a free version to try first,” he said. He also looks at the number of stars next to the app. If more than 5,000 people have downloaded an app, and 60 percent have given it the maximum of five stars, Mr. Sinek downloads it. “I might even pay for it, even if it’s over 99 cents,” he said.

Sometimes he goes completely rogue, entering random words in the search box, just to see what pops up. Typing “brain” yielded one of his favorite apps, a simple, elegant and free program called 3D Brain. John Connolly, a media producer who created 3D Brain for the Dolan DNA Learning Center of Cold Spring Harbor Laboratory in Cold Spring Harbor, N.Y., said he was delighted to hear that Mr. Sinek downloaded the app, which is used mostly by science educators and students.

“I think most people are inherently interested in how their brain works, in what makes them tick,” he said. And, of course, there’s an app for that.

iPad Blurs Line Between Devices
Brad Stone

After months of feverish speculation, Steven P. Jobs introduced Wednesday what Apple hopes will be the coolest device on the planet: a slender tablet computer called the iPad.

For all the hoopla surrounding it, however, the question is whether the iPad can achieve anything close to the success of the iPhone, which transformed the cellphone and forced the industry to race to catch up.

Apple is positioning the device, some versions of which will be available in March, as a pioneer in a new genre of computing, somewhere between a laptop and a smartphone. “The bar is pretty high,” Mr. Jobs acknowledged. “It has to be far better at doing some key things.”

Half an inch thick and weighing 1 1/2 pounds, the device will vividly display books, newspapers, Web sites and videos on a 9.7-inch glass touch screen. Giving media companies another way to sell content, it may herald a new era for publishing.

But the iPad, costing $499 to $829, also lacks some features common in laptops and phones, as technology enthusiasts were quick to point out. To its instant critics, it was little more than an oversize iPod Touch. A camera is notably absent, and Flash, the ubiquitous software that handles video and animation on the Web, does not work on the device.

Another thing missing is an alternative to the AT&T data network, which is already buckling under the strain of traffic to and from iPhones. Some versions of the iPad can, for a monthly fee, use a 3G data connection like cellphones, but the only carrier mentioned was AT&T.

The event, in typical Apple style, was tightly scripted and heavy on theatrics and hyperbole. But the success of the iPhone, and the hive of rumors and leaks surrounding the iPad, raised expectations and made this perhaps Mr. Jobs’s most highly anticipated product unveiling yet.

It was one that he clearly cared deeply about. Mr. Jobs, a consummate showman, presented the iPad to an enthusiastic crowd of around 800 employees, business partners and journalists, some of whom shoved their way in when the doors opened to grab the best seats. It was only his second public appearance since a leave of absence for health reasons last year.

Mr. Jobs posited that the iPad was the best device for certain kinds of computing, like browsing the Web, reading e-books and playing video.

The iPad “is so much more intimate than a laptop, and it’s so much more capable than a smartphone with its gorgeous screen,” he said in presenting the device to a crowd of journalists and Apple employees here. “It’s phenomenal to hold the Internet in your hands.”

One question Apple faces is whether there is enough room for another device in the cluttered lives of consumers.

“I think this will appeal to the Apple acolytes, but this is essentially just a really big iPod Touch,” said Charles Golvin, an analyst at Forrester Research, adding that he expected the iPad to mostly cannibalize the sales of other Apple products.

Mr. Golvin said book lovers would continue to opt for lighter, cheaper e-readers like the Amazon Kindle, while people looking for a small Web-ready computer would gravitate toward the budget laptops known as netbooks.

But other analysts say they have heard similar criticism before — once aimed at the iPhone, which has now been bought by more than 42 million people around the world. These believers say Apple’s judgment on the market is nearly infallible.

“The target audience is everyone,” said Michael Gartenberg, vice president for strategy and analysis at Interpret, a market research firm. “Apple does not build products for just the enthusiasts. It doesn’t build for the tens of thousands; it builds for the tens of millions.”

Apple says the iPad will run the 140,000 applications developed for the iPhone and the iPod Touch, but the company expects a new wave of programs tailored to the iPad.

One of the most significant applications for the iPad may be Apple’s own creation, called iBooks, an e-reading program that will connect to Apple’s new online e-bookstore.

Mr. Jobs said Apple so far had relationships with five major publishers — Hachette, Penguin, HarperCollins, Simon & Schuster and Macmillan — and was eager to make deals with others. Publishers will be able to charge $12.99 to $14.99 for most general fiction and nonfiction books.

Apple’s announcement that it was diving into the growing e-book business put the company on a collision course with Amazon. Mr. Jobs credited Amazon with pioneering e-readers with the Kindle but said “we are going to stand on their shoulders and go a little bit farther.”

John Doerr, a Silicon Valley venture capitalist who serves on Amazon’s board and is also an adviser to Apple, said there could be room for both companies, noting that Amazon sells many books to iPhone owners who use its Kindle application, which will also work on the iPad.

“I don’t think Jeff Bezos is going to leave the e-book business,” he said, referring to Amazon’s chief executive, “and I don’t think it will be confined to the Kindle.”

Three models of the iPad, $499 to $699, will connect to the Internet only via a local Wi-Fi connection. Three other versions will include 3G wireless access and will be available later in the spring, costing an additional $130 and requiring a data plan from AT&T. Owners of the iPhone who already pay at least $70 a month to AT&T will not be getting any breaks.

Other companies have sold tablet computers for years, but they never caught on with consumers. In 2001, Bill Gates predicted at an industry trade show that tablets would be the most popular form of PC sold in America within five years.

“The fact that he and Microsoft didn’t deliver is surprising,” said Tim Bajarin, a longtime industry analyst. “It has taken Apple to bring this to consumers and make it work.”

Apple has been working on a tablet computer for more than a decade, according to several former employees. Improved technology has helped the company to finally bring a model to market, as has the ubiquity of wireless networks.

The success of the iPhone and its cousin, the iPod Touch, have shown a path for tablets. People have been willing to pay to customize those devices with applications, turning them into video game machines, compasses, city guides and e-book readers.

The iPad will be a big opportunity for software developers, said Raven Zachary, president of Small Society, an iPhone development company based in Portland, Ore. “Although I think some of us were a bit surprised we only have 60 days until it launches to develop for it.”

Jenna Wortham contributed reporting from New York.

Our Take: Does The iPad Deliver On The Hype?
Shawn Oliver

As you've no doubt heard by now, Apple launched a new mobile computing device and it's within a product category that is all-new territory for the traditionally tight-lipped company. It's a bit of an odd choice for a company that revels in innovation, and after today's announcement, we're left with more questions than answers on whether or not it can truly deliver in the way that Apple CEO, Steve Jobs thinks it can. The iPad simply isn't as revolutionary as the iPhone and iPod, and that alone is at least initially limiting the general perception of the product. For better or worse, Apple has worked itself into a corner where people simply expect each and every new product release to change that product category for the better; to revolutionize things in a way that no other company has done so far.

On almost every front, the iPad doesn't do that. It doesn't revolutionize, and it doesn't change the way we personally feel about mobile computing. Apple's approach was to find a device that could be reasonably retrofitted into a lifestyle as a "third device" between the smartphone (preferably the iPhone, if you're Apple) and the notebook (preferably a MacBook or MacBook Pro, if you're Apple). There are a few problems with that approach. First, Jobs himself thinks that netbooks "aren't good at anything." He said as much in his January 27th keynote for the world to hear. Netbooks are arguably that "third device" between someone's phone and someone's main computer, and when you really look critically at the situation, netbooks are actually far more capable than the iPad in its existing form.

And in this corner, the Netbook and Tablet World Challenger - The iPad:
Let's think about it. Netbooks can be had for as little as $200 if you play your cards right, with most priced at or around $299. Either way, that's $200 less than the base iPad, which only ships with 16GB of storage compared to the 160GB+ hard drives in netbooks. Netbooks can also play back Flash video content, while the iPad cannot. Like it or not, Flash is still a huge part of the web, and it plays a vital role in being able to enjoy the "whole" Internet. Apple's making a huge mistake by promising a "great browsing experience" while at the same time not letting users view Flash-based pages or Flash encoded video content. Furthermore, you can basically install any application your heart desires on a Windows 7-based netbook. Try installing anything on an iPad. You can't. If it's not in the App Store, you can't install it on the iPad, and as great as the App Store is for the iPhone and iPod touch, we can't say we enjoy being limited to these mini apps on what should be a full-blown tablet PC.

And that's just the tip of the iceberg. Users can't remove the battery of the iPad, so you're forced to recharge when it dies rather than swapping a new battery pack in. There's no physical keyboard and no proper file system, so actually handling e-mail in a "real world" working scenario is impossible. For instance, you can't easily create a PDF from a web page printout, save to your desktop, and send as an attachment to four people in your address book. To us, that is very basic, core functionality that has to be included if you're selling a device as a "computer." Maybe Apple is just selling the iPad as a toy, but if you watched Steve Jobs' keynote today, you'd know he was aiming far higher with this device.

It's a Jungle Out There for The iPad eReader -
Then there's the glossy display. While pretty, this panel is going to be much more limited outdoors. The reflections will be so significant that actually working/reading will be limited to shady areas. What makes the Kindle (and similar e-readers) great for reading is that they are viewable in any lighting conditions, even outdoors where many go to read. If Apple was hoping to make a device that was half e-reader, half computer, it has slipped up again by introducing a compromise that really hinders the iPad's ability to be used completely as a reader. What's interesting is that Apple clearly has the reading public in mind. It announced content deals with at least five publishing firms, and it even introduced an iBook store where users can go to buy books. But how can Apple reasonably expect people to enjoy these books everywhere if the sun will wash out the iPad's glossy panel?

Tell Me About Your Childhood -
The bottom line is this: the iPad has an identity crisis. It's not quite a serious e-reader, and it's not quite a serious tablet PC. It's probably great at handling multimedia, but it's not nearly portable enough to be considered a portable media player. It's great for tabletop use, but it can't multitask, so you're left with a machine that's seriously limited in what can do well. It's also inherently limited by whatever applications are delivered in the App Store; users can't just customize this to their liking by installing whatever software they want. For $499 (and up, if you want more than 16GB of storage and/or AT&T 3G capabilities), the iPad is tough to take seriously without a serious operating system built-in. This is merely an enlarged iPod touch at the end of the day, with the only gleam of hope coming from the CPU within. The 1GHz Apple A4 is technically a brand new introduction into the processor space, and it's one of the most overshadowed parts of today's introduction. We're highly interested in the A4 and what it can potentially do for Apple's mobile computing line-up in general, so stick with us for that analysis in the pages ahead...

Nuts And Bolts: The Hardware Analysis
From a nuts and bolts perspective, the iPad isn't quite as amazing as Steve Jobs said it was during this week's presentation, though it is impressive on some levels. Hardware-wise, it's one of the more interesting devices we have seen in recent years. Apple has always proven their ability to innovate on the design front, so we're not at all surprised here. The iPad is far and away the most aesthetically stunning tablet/slate we have ever seen. Of course, most tablets and slates died out soon after the tech burst a few years ago, but still, it's one fine piece of machinery and there definitely has been a resurgence in this product category lately.

The overall form factor won't be foreign to anyone who has laid eyes on an iPod or iPhone. In fact, it actually looks like a blown-up iPod touch. There's just a single "Home" button at the bottom and a larger-than-expected bezel around the glossy display. Apple intentionally designed this product to be immediately familiar to anyone who has owned or even played with an iPhone or iPod touch. Apple has shown its love for simplicity, so the keyboard-less, single Home button approach is--again--not shocking.

Size Matters (yes, it had to be said) -
Let's break down the specifications. From the top, the entire device measures 0.5" thick and weighs 1.5lbs. To put this in perspective, the similarly sized Kindle DX weighs 1.2lbs., so it's not too much heavier than existing e-readers with larger displays. 1.5lbs. still isn't what we would consider "lightweight" for an e-reader though we suspect Apple wanted to make this device feel solid and hefty in the hand. Frankly, a $499 product that felt like a cheap, plastic toy obviously wouldn't go over well. We also suspect the battery--which lasts for an amazing 10 hours even playing video--added to this. Personally, we like the design. It's simple, clean and looks like it fits in Apple's lineup. The only problem is that it's not truly portable--but let us qualify that statement. A MacBook Air weighs only 3lbs. and is only 0.76" thick at its thickest spot. Sure, it's much, much more expensive, but it's also a far more capable machine. In fact, the MacBook Air is a real computer with a real operating system, unlike the iPhone OS-equipped iPad. The biggest issue here is that the iPad is too large to fit in a cargo pocket (like a smartphone or portable media player), but it's not capable enough to warrant lugging around like a notebook. If we're going to carry around something that requires a separate bag, we want it to have a real desktop and real multitasking capabilities.

The Eyes Have It; iPad Made For The Shade -
The display is a 9.7" LED-backlit panel with Multi-Touch and an industry-standard 1024x768 resolution. There's nothing remarkably wrong with this setup, but a few points annoy us. We should start by saying that Apple's Multi-Touch implementation is nothing short of first-class. We have no doubts that breezing around the OS here with your fingers will be a delightful experience, much like it already is on the iPhone and iPod touch. That said, a 4:3 display in a widescreen aspect world doesn't make much sense. This device was clearly made for multimedia viewing, and as it stands, users will be dealing with huge black bars and tiny strips of movie footage when watching cinema-bound flicks. We understand that a 16:9 tablet wouldn't be exactly functional from a design standpoint, but selling a 4:3 screen on a multimedia device seems a bit counter-intuitive. The screen is also glossy, which certainly hurts its chances as a real Kindle competitor. And we aren't the only ones noticing. Amazon's stock closed up on the day after Apple's announcement, signaling that even Wall Street doesn't think that the iPad has a chance of knocking Amazon from their top spot in the e-book market. Glossy panels are generally quick to wash out in outdoor use, and the reflections can be extremely annoying when trying to focus on small lines of text. Glossy panels are pretty in the store, but in real-world outdoor use, they definitely aren't ideal.

Storage For The Masses? -
Onto capacity. Apple will sell three iPad models (each of which will have a 3G and non-3G flavor). You can get 16GB, 32GB or 64GB of flash storage, and that's it. No SD expansion slots, no internal hard drive slot for you to upgrade. Even the most basic netbooks on the market have 120GB hard drives, and while they don't usually have SSDs, we're guessing by the netbook sales figures that most users just don't care. They'll happily take more room over a boost in speed, and we can't say we blame them. Of course, 64GB is plenty of room when you don't have a full-scale operating system to play with. 64GB of apps and music will be fine for most, but if Apple ever decides to allow OS X on this thing, those capacity points will need simply need to increase.

Highly Connected, Capable, AT&T Limited -
Wireless connectivity? Check. Bluetooth 2.1 + EDR and 802.11a/b/g/n Wi-Fi are included on all models, so you'll be able to use your Bluetooth keyboard as well as your home router to get this device working overtime. Unfortunately, Apple didn't include Intel's new WiDi technology, which is something that would've definitely pushed it over the edge in terms of innovation. The iPad would serve a much greater purpose with a suitable video-output solution. There's a VGA dongle you can buy separately, but that's too cumbersome to deal with in many situations. If this could automatically beam images to one's display without wires, we could actually see using this as a living room iTunes/movie player. Consider it an opportunity missed.

For around $129 more, Apple will allow you to buy any of the three iPad models with AT&T 3G wireless. The good news is that none of them are tied to a contract; you can buy data on a monthly, as-needed basis. The bad news is that data pricing is steep, and it's is inexplicably still tied to AT&T. Users can get 250MB per month for $14.99 (rather high!), while "unlimited" (which likely means 5GB) will cost $29.99 per month. If the iPad had a full operating system, the $29.99 plan wouldn't sound bad; as it stands, you won't be able to take full advantage given the limits of iPhone OS. Also, AT&T has proven to be a bad partner for Apple. Despite both companies claiming that "most users" are happy with the iPhone/AT&T deal, there are a small but vocal minority that are turning the masses off of AT&T. True or not, AT&T is taking a lot of heat for iPhone failures in large cities. How does Apple expect AT&T to handle the iPad 3G load when it can't even handle the iPhone load in major cities like New York and San Francisco?

Accesorize It, But The Apple Way Of Course...and Bring Your Checkbook -
Other, less featured but key components include an accelerometer, digital compass and Assisted GPS (aGPS), with the latter only available on the 3G/Wi-Fi models. The accelerometer enables the device to be used in any direction, and early reports suggest that the "flipping" from one orientation to another is extremely swift and clean. This also allows the device to be tilted for gameplay usage. The compass is similar to the one in the iPhone 3GS; while cute, not too many people are going to bust out their iPad to use a compass. That's what Google Maps are for. Speaking of, the Assisted GPS option is great to have, but again, how practical is this? Are people really doing to whip out a nearly-10" device while walking down the street in an attempt to locate a nearby shop? Why not just use the mapping software on your existing smartphone, or better still, a portable GPS unit that's probably already stuck to your car's windsheild? The iPad just feels entirely too big to be used as a mapping device, particularly on crowded sidewalks in major cities. That said, in the coffee shop or restaurant, if you have it in your bag and your bag is with you, it's perhaps a much larger, easier to read view of the area perhaps.

The 1024 x 768 resolution display supports video output via a Dock Connector to VGA Adapter, as well as 576p/480p with the Apple Component A/V Cable and 576i/480i with the Apple Composite Cable. It will play back H.264 video at up to 720p (30fps), and it supports AAC, Protected AAC, MP3, Audible, Apple Lossless, AIFF and WAV audio files. Thankfully, it can view Office documents that are e-mailed in, and a 3.5mm headphone jack is provided for audio output. There are built-in speakers for times when headphones aren't an option, and there's a Dock Connector for syncing with existing accessories, your PC and a few new accessories. Finally, there's a Microphone (though voice calling over cellular networks and video chatting aren't supported), and the only other external hardware switches include On/Off, Mute and Volume Up/Down.

The Dock Connector also leads to a few other things here. The iPad Keyboard Dock is definitely the highlighted accessory of the week, as it provides a docking solution and an iPad-centric keyboard to those who wish to use this like a laptop at home. Unfortunately, it has little purpose in the real world. For starters, you can already connect your existing Bluetooth keyboard to this. Second, it's $69 for a keyboard that's designed to work with iPhone OS. You can only do so much with a keyboard in iPhone OS, you know. Then there's the Apple iPad Case, a $39 cover that is extremely spartan, though it does double as an iPad kickstand. We have to imagine that far superior third-party cases will be out soon. One of the more baffling choices here is the lack of a real USB connector. Not even a miniUSB connector is included on the device itself; instead, you're forced to order a $29 Camera Connection Kit which includes two dongles that plug into the Dock Connector; one for USB and one for SD cards. A multimedia device that doesn't natively have a USB or SD port? Forgive us for stating the obvious, but only Apple could get away with this.

The only remaining specification? The 1GHz Apple A4 processor, which we'll highlight on its own in the final page.

The Apple A4 CPU and Its Future In Mobile Computing
A few years back, Apple engaged in a rather quiet deal that enabled it to acquire P.A. Semi, which was a relatively unknown technology and engineering firm. To date, nothing has really come of the acquisition, but people have been opining on its significance ever since the transaction was completed. It's impossible to say if the P.A. Semi pickup had anything to do with Apple building a processor in-house for the iPad, but there's a decent chance some of the IP it purchased went into the development of this chip.

Apple describes the silicon that's powering this machine as a "1GHz Apple A4 custom-designed, high-performance, low-power system-on-a-chip." That's a lot of words, but essentially it's a super-low power chip designed to handle basic applications for extended lengths of time. You can tell from the one month standby estimate and the claim of 10 hours of video viewing that this chip isn't an energy hog, and frankly, those figures are astounding. Even the most long-lasting netbooks flicker out after 7 or 8 hours of intense usage, if you're lucky. We don't recall a similar device ever hitting the market with battery claims such as this, and there are really only a few things one can do to increase longevity. There are however many devices that could be coming, based on NVIDIA's competitive Tegra 2 platform that NVIDIA claims will offer 16 hours of HD video playback. However, those devices aren't here yet and we have to hand it to Apple getting to market first with this class of capability in low power consumption.

Hardware-wise for the iPad, we already know that IPS LCD panels drain batteries fairly hard in mobile devices, as does video playback. The iPad's flash storage (versus traditional hard drives) certainly helps the power equation some, as does the lightweight OS instead of a full-on version of Mac OS X. Still, we have to believe that some of the magic lies in the silicon, and we'd be shocked if Apple didn't leverage that power-saving technology in some of its future devices. Or possibly even non-Apple devices, though that could be a reach.

The A4's Future -
Let's just ponder the possibilities for a moment. The iPad runs on iPhone OS. The iPad uses a 1GHz Apple A4. It doesn't take a rocket scientist to conclude that a next-generation iPhone, which would undoubtedly run iPhone OS, could easily run on a scaled-back version of the A4 chip, if space/heat issues are managed properly. Wouldn't Apple rather design its own chips for the next iPhone rather than relying on another supply chain? We can't say for certain, but considering just how much Jobs enjoys keeping things close to the vest, we bet the answer is "yes." Smartphones have already hit the 1GHz point. Qualcomm's Snapdragon chipset is making waves across the industry, and Toshiba's TG01 (which runs Windows Mobile 6.5) is already widely available in some parts of the globe with a 1GHz CPU. Having such power within a phone certainly makes sense, and given that Apple has already pushed its power plant once on its iPhone 3G when it introduced the iPhone 3GS, one would conclude that Apple is planning to bump the next-gen version as well.

Responsive with Cat-Like Reflexes -
Early reports from the event show floor indicate that the iPad has one of the smoothest, most responsive interfaces going. Many were enamored by the device's ability to flick from application to application, and we even heard some say that they couldn't get the iPad to lag regardless of what they tried. That speaks volumes. Even the mighty iPhone 3GS can be sluggish under the right circumstances, and as we've seen in our netbook reviews, even those machines can be ground to a halt with intense 1080p videos and first-person shooters. For a mobile computing device to honestly operate "lag-free" -- well, that historically has been a rarity, though NVIDIA again has enabled this platform for the better. Apple's A4 is obviously to thank for the iPad's snappy ways, but we can only hope that the chip is set free from being used in just a single product.

The Future Looks Bright In Steve's Shades -
Imagine if Apple were to really cut the A4 loose. What would the iPad look like then? We can even believe that Apple is pushing out the iPad with iPhone OS in order to just test the boundaries of the one-app-at-a-time approach, and it could then update the device with iPhone OS 4.0 later this year with multitasking enabled. Picture this: a next-gen iPhone powered by the A4, with multitasking enabled courtesy of iPhone OS 4.0. Obviously if that build of the OS would be ported to the iPad, and just like that, it would become entirely more capable. It's not that far-fetched. Apple is on a religious 2-year update cycle with the iPhone line, and that means a new model should be coming this summer. A new OS is almost guaranteed to launch alongside of it, and the culmination of all of this looks like the perfect time to introduce multitasking to its iPhone (and in turn, the iPad). Palm's webOS has had multitasking from day one, and it's about time Apple woke up and realized that it best improve in order to keep pace with one of its most serious competitors.

Aside from that, think about what the A4 could do for the tablet industry in general. The UMPC/MID world has struggled to find a decent CPU that could push high-res video, yet be energy efficient. The A4 could very well be a viable answer moving forward. It sounds far-fetched, but in these challenging, changing market dynamics, one can only guess how the A4 will be productized in future Apple efforts. We highly doubt that Apple spent millions of dollars and years of research producing a chip that's only meant for a single product. That just doesn't add up. The A4 could help restart the lagging MID/UMPC sector, and it could provide a second wind to a mobile computing industry that's growing old and tired due to a lack of real innovation. Apple obviously has significant competition here though in the form of NVIDIA and Intel. Not to mention, there would have to be a monumental cultural and mindset shift at Apple for this scenario to occur.

Unfortunately, we still can't properly benchmark and test the limits of the A4 while it's trapped within the iPad. We know already that it blazes through iPhone OS, and in the near term, our best hope is that Apple releases iPhone OS 4.0 with multitasking so that we get a good look at how the A4 manages multiple chores at once. If Apple ever releases the A4 to the masses though, watch out. A powerful, energy-efficient chip has plenty of places to go in today's market place: in-car entertainment centers, nettops, netbooks, point-of-sale machines, smartphones, MIDs, UMPCs, smartbooks, heads-up displays, advanced watches, GPS/PND units, tablets, slates, ultraportables...and the list goes on. We never really viewed Apple as a chipmaker before today, but who knows--maybe this iPad thing is just a cover-up for Apple's real intentions. Maybe the iPad is just a trial device to see how the A4 does in the real world. Here's hoping that we really get the see the full potential of the A4 outside of the iPad, as we think that there's plenty of shake-up that needs to be done in the mobile computing space and . You hear that, Mr. Atom? We know Tegra-Man has been listening, that's for sure.

IPad? That's So 2002, Fujitsu Says
Hiroko Tabuchi

It’s sleek. It’s mobile. It has a touchscreen.

It’s Fujitsu’s iPad from 2002.

Sold mainly in the United States, the multifunctional device from the Tokyo technology company helps shop clerks verify prices, check real-time inventory data and close sales on the go.

Fujitsu, which applied for an iPad trademark in 2003, is claiming first dibs, setting up a fight with Apple over the name of the new tablet device that Apple plans to sell starting in March.

“It’s our understanding that the name is ours,” Masahiro Yamane, director of Fujitsu’s public relations division, said Thursday. He said Fujitsu was aware of Apple’s plans to sell the iPad tablet and that the company was consulting lawyers over next steps.

Fujitsu’s iPad, which runs on Microsoft’s CE.NET operating system, has a 3.5-inch color touchscreen, an Intel processor and Wi-fi and Bluetooth connections; it also supports VoIP telephone calls over the Internet, a technology also used by Skype.

“Mobile is a keyword for Fujitsu’s iPad, too,” Mr. Yamane said. “With the iPad, workers don’t have to keep running back to a computer. They have everything right at their fingertips.”

Apple may have an edge on pricing, however: the iPads from Fujitsu can sell for more than $2,000, compared with $499 for an entry-model iPad from Apple.

Fujitsu’s application to trademark the iPad name stalled because of an earlier filing by Mag-Tech, an information technology security company based Seal Beach, California, for a handheld number-encrypting device.

The U.S. Patent and Trademark Office listed Fujitsu’s application as abandoned in early 2009, but the company revived its application in June.

The following month, Apple used a proxy to apply for an international trademark for the iPad. It has since filed a string of requests with the U.S. Patent Office for more time to oppose Fujitsu’s application. Apple has until Feb. 28 to say whether it will oppose Fujitsu’s claims to the iPad name.

While the dispute between Fujitsu and Apple centers on the United States, there are other iPads around the world. The German conglomerate Siemens uses the name for engines and motors, while a Canadian lingerie company, Coconut Grove Pads, has the right to market iPad padded bras.

Apple faced a similar spat three yeas ago with Cisco Systems over the iPhone name. The two companies eventually negotiated a settlement.

IPad DRM "Huge Step Backwards"

As Steve Jobs and Apple prepared to announce their new tablet device, activists opposed to Digital Restrictions Management (DRM) from the group Defective by Design were on hand to draw the media's attention to the increasing restrictions that Apple is placing on general purpose computers. The group set up "Apple Restriction Zones" along the approaches to the Yerba Buena Center for the Arts in San Francisco, informing journalists of the rights they would have to give up to Apple before proceeding inside.

DRM is used by Apple to restrict users' freedom in a variety of ways, including blocking installation of software that comes from anywhere except the official Application Store, and regulating every use of movies downloaded from iTunes. Apple furthermore claims that circumventing these restrictions is a criminal offense, even for purposes that are permitted by copyright law.

Organizing the protest, Free Software Foundation (FSF) operations manager John Sullivan said, "Our Defective by Design campaign has a successful history of targeting Apple over its DRM policies. We organized actions and protests targeting iTunes music DRM outside Apple stores, and under the pressure Steve Jobs dropped DRM on music. We're here today to send the same message about the other restrictions Apple is imposing on software, ebooks, and movies. If Jobs and Apple are actually committed to creativity, freedom, and individuality, they should prove it by eliminating the restrictions that make creativity and freedom illegal."

The group is asking citizens to sign a petition calling on Steve Jobs to remove DRM from Apple devices. The petition can be found at: http://www.defectivebydesign.org/ipad

"Attention needs to be paid to the computing infrastructure our society is becoming dependent upon. This past year, we have seen how human rights and democracy protesters can have the technology they use turned against them by the corporations who supply the products and services they rely on. Your computer should be yours to control. By imposing such restrictions on users, Steve Jobs is building a legacy that endangers our freedom for his profits," said FSF executive director Peter Brown.

Other critics of DRM have asserted that Apple is not responsible, and it is the publishers insisting on the restrictions. However, on the iPhone and its new tablet, Apple does not provide publishers any way to opt out of the restrictions -- even free software and free culture authors who want to give legal permission for users to share their works.

"This is a huge step backward in the history of computing," said FSF's Holmes Wilson, "If the first personal computers required permission from the manufacturer for each new program or new feature, the history of computing would be as dismally totalitarian as the milieu in Apple's famous Super Bowl ad."

iPad Board Games: Apple has Created a 'Jumanji Platform'
Andrew Lim

While many people struggle to understand why they would ever buy an iPad, we think we've come up with a pretty exciting reason - digital board games. If you've ever tried to play a board game on a games console, computer or mobile phone you'll know that it's just not the same as sitting around a table with your friends and family. Enter the iPad, the perfect device to play board games on.

The multi-touch display is perfect for moving pieces around a board and because the iPad is a computer it can store thousands of games and add a variety of interactive features. In addition to animated Monopoly playing pieces, for example, you could also use the iPad's Wi-Fi or 3G to play games with friends and family across the world. There's even scope to create an iPad board game that works with iPhones.

Imagine a Scrabble iPad game that used iPhones as letter holders. You could hold up your iPhone so that no one else could see your letters and when you were ready to make a word on the Scrabble iPad board, you could slide them on to the board by flicking the word tiles off your iPhone. What we're trying to say is that Apple has opened the door for people to create Jumanji-style games - music-filled, fun-packed experiences that can be shared in a novel way. The iPad is an interactive board game platform that could easily revive board game culture and introduce new generations to classic family games. It's up to developers though to take advantage of this opportunity and show us the future of family-based digital games.

With Apple Tablet, Print Media Hope for a Payday
Brad Stone and Stephanie Clifford

With the widely anticipated introduction of a tablet computer at an event here on Wednesday morning, Apple may be giving the media industry a kind of time machine — a chance to undo mistakes of the past.

Almost all media companies have run aground in the Internet Age as they gave away their print and video content on the Web and watched paying customers drift away as a result.

People who have seen the tablet say Apple will market it not just as a way to read news, books and other material, but also a way for companies to charge for all that content. By marrying its famously slick software and slender designs with the iTunes payment system, Apple could help create a way for media companies to alter the economics and consumer attitudes of the digital era.

This opportunity, however, comes with a sizable catch: Steven P. Jobs.

Mr. Jobs, the chief executive, made Apple the most important distributor of music by imposing its own will on the music labels, bullying them into accepting Apple’s pricing and other terms. Apple sold lots of music, but the music labels claimed that iTunes had destroyed the concept of the album and damaged their already deteriorating bottom lines.

With the new tablet, media companies could be submitting themselves to similar pricing restrictions and sacrificing their direct relationship with customers to Apple.

For now, at least, the technology and media industries are looking at the brighter side. “Steve believes in old media companies and wants them to do well,” said a person who has seen the device and is familiar with Apple’s marketing plan for it, but who did not want to be named because talking about it might alienate him from the company. “He believes democracy is hinged on a free press and that depends on there being a professional press.”

Part of the media industry’s high hope for the tablet comes from descriptions of the device from analysts and others who have been briefed on it.

It will run all the applications of the iPhone and iPod Touch, have a persistent wireless connection over 3G cellphone networks and Wi-Fi, and will be built with a 10-inch color display, allowing newspapers, magazines and book publishers to deliver their products with an eye to the design that had grabbed readers in print.

Their optimism for the tablet also stems from consumers’ willingness to spend money using mobile devices. In the last decade, while people downloaded music illegally to their desktop computers, they happily paid small amounts of money on their cellphones to download ring tones and send text messages.

The iPhone has provided further proof that the economics of mobile devices are unique: the Apple App Store is expected to generate an estimated $1.4 billion this year, according to an analysis by Piper Jaffray.

“The iPhone was a harbinger,” said Trip Hawkins, a founder of Electronic Arts and now chief executive of Digital Chocolate, which makes games for cellphones. “When you have a device that is this convenient and fun for consumers to use, you can get a lot more people interested in paying for and engaging with the content. Big media companies should be all over this like a cheap suit.”

Indeed, they already are. The New York Times Company, for example, is developing a version of its newspaper for the tablet, according to a person briefed on the effort, although executives declined to say what sort of deal had been struck.

On Monday, The Times also announced that its media group division had created a new segment for “reader applications,” and named Yasmin Namini, the senior vice president for marketing and circulation, to head it. Executives said the timing was coincidental, prompted not by the Apple device specifically, but by the growing importance to The Times of electronic reading devices in general.

At least three publishers, Hearst, Condé Nast and Time, have also created mockups of their magazines for tablets, even before such devices have hit the market. “Apple upended the smartphone market with the introduction of the iPhone, and it’s likely that they will, if they enter the tablet market, lead the pace there,” said Thomas J. Wallace, editorial director of Condé Nast. He said that “2010 is going to be the year of the tablet, and we feel we are in a very good position for it.”

To successfully sell their material on the coming wave of tablets from Apple and other hardware makers like Hewlett-Packard, media companies may first have to adjust other parts of their digital strategies — so consumers don’t simply use the tablet’s browser to get the same content free on the Web.

Such shifts are under way.

In October, The Wall Street Journal, which is owned by the News Corporation, began charging for access for certain elements of its iPhone application. Esquire and GQ have taken steps toward charging for digital content, offering iPhone versions of their magazines for $2.99 for each issue.

The December issue of GQ was downloaded from the app store almost 7,000 times, and twice as many times for its January issue. Last week, The New York Times announced plans to begin charging, by next year, frequent Web site visitors who are not also newspaper subscribers to read the online version.

Media companies may have to swallow hard before tethering their futures to any high-tech company, let alone Apple. Many publishers believe their economic health depends on finding a direct line to their customers, and it is not clear whether Apple — and other aggregators of Internet content — will allow that.

Magazine publishers, for example, maintain sophisticated databases about their customers, which lets them cross-sell products, renew subscriptions and entice advertisers with statistics about their wealthy readers. A big part of the business is automatic renewals charged to credit cards.

But when magazine publishers sell applications through the iTunes store, they do not get credit card information or even the name of the buyer.

However, Apple, which makes most of its money selling devices, not content, has shown itself in some cases to be a more benevolent warden of online content, than, say, Amazon.com. Unlike Amazon with the Kindle, Apple allows application makers to set their own prices; some, like The Financial Times, give away applications for the iPhone, but then bill customers directly for repeat use.

Nevertheless, concern over preserving the customer relationship is one reason, late last year, that major publishers including Time, Condé Nast, Meredith, the News Corporation and Hearst announced they had formed a consortium, called Next Issue Media, that plans to run its own online store selling digital issues and collecting consumer information.

“It’s fundamental to the business model of publishers,” John Squires, the interim managing director of the consortium, said last month. “We’ve always enjoyed an opportunity to know exactly where our consumers are, and be able to market other products to them. It’s a very key issue for the founding members of this business.”

One branch of big media whose fortunes may not be lifted by an Apple tablet, at least initially, is the TV business. Apple has also talked to television networks about offering access, for a monthly fee, to a selection of their hit shows, bypassing traditional distributors.

But perhaps smarting from their experiences with Apple, many of the old-line media companies — NBC Universal, Viacom and Discovery among them — shrugged at (or totally dismissed) Apple’s plans for a TV subscription package, according to executives briefed on the talks. A person briefed on Apple’s plans confirmed that such a subscription video option was not part of any immediate offering.

Brad Stone reported from San Francisco and Stephanie Clifford from New York. Richard Pérez-Peña contributed reporting from New York and Brian Stelter from Las Vegas.

The Book Club With Just One Member
Motoko Rich

Early in the novel “When You Reach Me,” which last week won the John Newbery Medal for the most outstanding contribution to children’s literature, the narrator, Miranda, falls into an uncomfortable conversation with a schoolmate about her favorite book, “A Wrinkle in Time” by Madeleine L’Engle.

Miranda, who is 11, doesn’t want to have the discussion. “The truth is that I hate to think about other people reading my book,” she thinks. “It’s like watching someone go through the box of private stuff that I keep under my bed.”

Clearly, “When You Reach Me,” which the author Rebecca Stead set in 1970s New York City, does not take place in the era of Facebook, Goodreads, Shelfari or book clubs.

Reading might well have been among the last remaining private activities, but it is now a relentlessly social pursuit. Gaggles of readers get together monthly to sip chardonnay and discuss the latest Oprah selection. On fan sites for the Harry Potter and “Twilight” series, enthusiastic followers dissect plot lines, argue over their favorite scenes and analyze characters. Publishers, meanwhile, are fashioning social networking sites where they hope to attract readers who want to comment on books and one another.

The collective literary experience certainly has its benefits. Reading with a group can feed your passion for a book, or help you understand it better. Social reading may even persuade you that you liked something you thought you didn’t.

There is a different class of reader, though. They feel that their relationship with a book, its characters and the author is too intimate to share. “The pursuit of reading,” Virginia Woolf wrote, “is carried on by private people.”

Ms. Stead remembers having had especially intense feelings about books when she was young. “For me, as a kid, a book was a very private world,” she said. “I didn’t like talking about books with other people very much because it almost felt like I didn’t want other people to be in that world with me.”

Particularly with the books we adore most, a certain reader wants to preserve the experience for reflection, or even claim the book as hers and hers alone. Lois Lowry, an author of books for children and a two-time winner of the Newbery for “Number the Stars” and “The Giver,” said she recently read that Katherine Paterson, also a two-time Newbery winner and now the national ambassador for young people’s literature, had named “The Yearling,” by Marjorie Kinnan Rawlings, as the most influential book of her childhood. “I felt a twinge of ‘no fair, that’s mine!’ ” Ms. Lowry said. “I hastily backed off from that feeling because I know and love Katherine, and it’s O.K. that we share the same book.”

For sheer commercial purposes, the more people talk about a book, the better. Some of the biggest sellers of recent years — “Eat, Pray, Love,” by Elizabeth Gilbert; “The Kite Runner,” by Khaled Hosseini; “The Help,” by Kathryn Stockett — were propelled by word of mouth. Book clubs, blogs and customer reviews on Amazon.com all helped foment a feeling that if you wanted to be part of the “it” culture, you should be reading these books.

Laura Miller, a staff writer for Salon and the author of “The Magician’s Book: A Skeptic’s Adventures in Narnia,” speculated that it was the more bookish people who tended to fiercely guard their private reading worlds. Casual readers, by contrast, are drawn by the social aspects.

“If you want to build a culture where people who could just as easily watch a movie are going to instead say, ‘Oh, I’m going to read this Tracy Chevalier book or ‘The Kite Runner,’ ” Ms. Miller said, “then they do need that kind of stuff like the book groups and discussion guides.”

Publishers are trying to use the increasingly social media landscape to stimulate a new reading culture. “I don’t think they are walking into bookstores in droves, so how do you get to teens and how do you get an author in front of a teen?” said Diane Naughton, vice president for marketing for HarperCollins Children’s Books, which has initiated enterprises including the Amanda Project, a Web site affiliated with a young-adult mystery series, and inkpop, where teenagers can upload their writing and receive commentary from peers and HarperCollins editors.

The concern with some of these sites is that users will spend their time talking to one another rather than reading books — just as some book groups spend more time drinking wine and gossiping than discussing the month’s title. Ellie Hirschhorn, chief digital officer at Simon & Schuster, said executives were concernedwhen they started PulseIt!, a Web site where teenagers can read advance galleys and comment on them. “Did they just want to use our bandwidth to hang out and chat with each other?” Ms. Hirschhorn wondered. But by tracking page views on the digital galleys, she said, “what we found is that they are voracious readers.”

Some books particularly lend themselves to collective reading — partly, of course, because everybody is reading them. Emerson Spartz, who founded MuggleNet.com, one of the biggest Harry Potter fan sites, said that J. K. Rowling wrote the books in such a way that readers wanted to pore over them and then share their findings. “Because of the loving and painstaking care that she took to drop hints about what was going to happen in the future and to subtly allude to subplots and character motivation,” Mr. Spartz said, “you couldn’t help but want to share whenever you made an observation.”

Communal reading can also help for books that are challenging to approach on your own. How many people actually got through “Ulysses” outside of a college class? Matthew Bucher, a textbook editor in Austin, Tex., who administers “Wallace-L,” an online discussion group for fans of David Foster Wallace, said that the expertise of mathematicians, linguists and other fans sharing insights with the online group vastly improved his reading of “Infinite Jest.”

That doesn’t stop Mr. Bucher from having a deeply intimate relationship with books. “I still read the book at home at night by myself with one lamp,” he said. “The next day it does enhance my experience to talk about it.”

'Catcher in the Rye' Author J.D. Salinger Dies
Hillel Italie

J.D. Salinger, the legendary author, youth hero and fugitive from fame whose "The Catcher in the Rye" shocked and inspired a world he increasingly shunned, has died. He was 91.

Salinger died of natural causes at his home on Wednesday, the author's son said in a statement from Salinger's longtime literary representative, Harold Ober Agency. He had lived for decades in self-imposed isolation in the small, remote house in Cornish, N.H.

"The Catcher in the Rye," with its immortal teenage protagonist, the twisted, rebellious Holden Caulfield, came out in 1951, a time of anxious, Cold War conformity and the dawn of modern adolescence. The Book-of-the-Month Club, which made "Catcher" a featured selection, advised that for "anyone who has ever brought up a son" the novel will be "a source of wonder and delight -- and concern." Enraged by all the "phonies" who make "me so depressed I go crazy," Holden soon became American literature's most famous anti-hero since Huckleberry Finn. The novel's sales are astonishing -- more than 60 million copies worldwide -- and its impact incalculable. Decades after publication, the book remains a defining expression of that most American of dreams: to never grow up.

Salinger was writing for adults, but teenagers from all over identified with the novel's themes of alienation, innocence and fantasy, not to mention the luck of having the last word. "Catcher" presents the world as an ever-so-unfair struggle between the goodness of young people and the corruption of elders, a message that only intensified with the oncoming generation gap.

Novels from Evan Hunter's "The Blackboard Jungle" to Curtis Sittenfeld's "Prep," movies from "Rebel Without a Cause" to "The Breakfast Club," and countless rock `n' roll songs echoed Salinger's message of kids under siege. One of the great anti-heroes of the 1960s, Benjamin Braddock of "The Graduate," was but a blander version of Salinger's narrator.

The cult of "Catcher" turned tragic in 1980 when crazed Beatles fan Mark David Chapman shot and killed John Lennon, citing Salinger's novel as an inspiration and stating that "this extraordinary book holds many answers." By the 21st century, Holden himself seemed relatively mild, but Salinger's book remained a standard in school curriculums and was discussed on countless Web sites and a fan page on Facebook.

Salinger's other books don't equal the influence or sales of "Catcher," but they are still read, again and again, with great affection and intensity. Critics, at least briefly, rated Salinger as a more accomplished and daring short story writer than John Cheever.

The collection "Nine Stories" features the classic "A Perfect Day for Bananafish," the deadpan account of a suicidal Army veteran and the little girl he hopes, in vain, will save him. The novel "Franny and Zooey," like "Catcher," is a youthful, obsessively articulated quest for redemption, featuring a memorable argument between Zooey and his mother as he attempts to read in the bathtub.

"Catcher," narrated from a mental facility, begins with Holden recalling his expulsion from a Pennsylvania boarding school for failing four classes and for general apathy.

He returns home to Manhattan, where his wanderings take him everywhere from a Times Square hotel to a rainy carousel ride with his kid sister, Phoebe, in Central Park. He decides he wants to escape to a cabin out West, but scorns questions about his future as just so much phoniness.

"I mean how do you know what you're going to do till you do it?" he reasons. "The answer is, you don't. I think I am, but how do I know? I swear it's a stupid question." "The Catcher in the Rye" became both required and restricted reading, periodically banned by a school board or challenged by parents worried by its frank language and the irresistible chip on Holden's shoulder.

"I'm aware that a number of my friends will be saddened, or shocked, or shocked-saddened, over some of the chapters of `The Catcher in the Rye.' Some of my best friends are children. In fact, all of my best friends are children," Salinger wrote in 1955, in a short note for "20th Century Authors." "It's almost unbearable to me to realize that my book will be kept on a shelf out of their reach," he added.

Salinger also wrote the novellas "Raise High the Roof Beam, Carpenters" and "Seymour -- An Introduction," both featuring the neurotic, fictional Glass family that appeared in much of his work.

His last published story, "Hapworth 16, 1928," ran in The New Yorker in 1965. By then, he was increasingly viewed like a precocious child whose manner had soured from cute to insufferable. "Salinger was the greatest mind ever to stay in prep school," Norman Mailer once commented.

In 1997, it was announced that "Hapworth" would be reissued as a book -- prompting a (negative) New York Times review. The book, in typical Salinger style, didn't appear. In 1999, New Hampshire neighbor Jerry Burt said the author had told him years earlier that he had written at least 15 unpublished books kept locked in a safe at his home.

"I love to write and I assure you I write regularly," Salinger said in a brief interview with the Baton Rouge (La.) Advocate in 1980. "But I write for myself, for my own pleasure. And I want to be left alone to do it." Jerome David Salinger was born Jan. 1, 1919, in New York City. His father was a wealthy importer of cheeses and meat and the family lived for years on Park Avenue.

Like Holden, Salinger was an indifferent student with a history of trouble in various schools. He was sent to Valley Forge Military Academy at age 15, where he wrote at night by flashlight beneath the covers and eventually earned his only diploma. In 1940, he published his first fiction, "The Young Folks," in Story magazine.

He served in the Army from 1942 to 1946, carrying a typewriter with him most of the time, writing "whenever I can find the time and an unoccupied foxhole," he told a friend.

Returning to New York, the lean, dark-haired Salinger pursued an intense study of Zen Buddhism but also cut a gregarious figure in the bars of Greenwich Village, where he astonished acquaintances with his proficiency in rounding up dates. One drinking buddy, author A.E. Hotchner, would remember Salinger as the proud owner of an "ego of cast iron," contemptuous of writers and writing schools, convinced that he was the best thing to happen to American letters since Herman Melville.

Holden first appeared as a character in the story "Last Day of the Last Furlough," published in 1944 in the Saturday Evening Post. Salinger's stories ran in several magazines, especially The New Yorker, where excerpts from "Catcher" were published.

The finished novel quickly became a best seller and early reviews were blueprints for the praise and condemnation to come. The New York Times found the book "an unusually brilliant first novel" and observed that Holden's "delinquencies seem minor indeed when contrasted with the adult delinquencies with which he is confronted." But the Christian Science Monitor was not charmed. "He is alive, human, preposterous, profane and pathetic beyond belief," critic T. Morris Longstreth wrote of Holden.

"Fortunately, there cannot be many of him yet. But one fears that a book like this given wide circulation may multiply his kind - as too easily happens when immortality and perversion are recounted by writers of talent whose work is countenanced in the name of art or good intention." The world had come calling for Salinger, but Salinger was bolting the door. By 1952, he had migrated to Cornish. Three years later, he married Claire Douglas, with whom he had two children, Peggy and Matthew, before their 1967 divorce. (Salinger was also briefly married in the 1940s to a woman named Sylvia; little else is known about her.) Meanwhile, he refused interviews, instructing his agent not to forward fan mail and reportedly spending much of his time writing in a cement bunker. Sanity, apparently, could only come through seclusion.

"I thought what I'd do was, I'd pretend I was one of those deaf-mutes," Holden says in "Catcher." "That way I wouldn't have to have any ... stupid useless conversations with anybody. If anybody wanted to tell me something, they'd have to write it on a piece of paper and shove it over to me. I'd build me a little cabin somewhere with the dough I made." Although Salinger initially contemplated a theater production of "Catcher," with the author himself playing Holden, he turned down numerous offers for film or stage rights, including requests from Billy Wilder and Elia Kazan. Bids from Steven Spielberg and Harvey Weinstein were also rejected.

Salinger became famous for not wanting to be famous. In 1982, he sued a man who allegedly tried to sell a fictitious interview with the author to a national magazine. The impostor agreed to desist and Salinger dropped the suit.

Five years later, another Salinger legal action resulted in an important decision by the U.S. Supreme Court. The high court refused to allow publication of an unauthorized biography, by Ian Hamilton, that quoted from the author's unpublished letters. Salinger had copyrighted the letters when he learned about Hamilton's book, which came out in a revised edition in 1988.

In 2009, Salinger sued to halt publication of John David California's "60 Years Later," an unauthorized sequel to "Catcher" that imagined Holden in his 70s, misanthropic as ever.

Against Salinger's will, the curtain was parted in recent years. In 1998, author Joyce Maynard published her memoir "At Home in the World," in which she detailed her eight-month affair with Salinger in the early 1970s, when she was less than half his age. She drew an unflattering picture of a controlling personality with eccentric eating habits, and described their problematic sex life.

Salinger's alleged adoration of children apparently did not extend to his own. In 2000, daughter Margaret Salinger's "Dreamcatcher" portrayed the writer as an unpleasant recluse who drank his own urine and spoke in tongues.

Margaret Salinger said she wrote the book because she was "absolutely determined not to repeat with my son what had been done with me."

Associated Press writer Norma Love in Concord, N.H., contributed to this report.

The Night Belongs to Us
Tom Carson


By Patti Smith

Illustrated. 284 pp. Ecco/HarperCollins Publishers. $27

Apart from a certain shared apprehension of immortality — complacent in one case, but endearingly gingerly in the other — the skinny 28-year-old on the cover of Patti Smith’s seismic 1975 album, “Horses,” doesn’t look much at all like Picasso’s portrait of Gertrude Stein. But because the shutterbug was Robert Mapplethorpe, who was soon to become fairly legendary himself, that exquisite photograph of Smith on the brink of fame is as close as New York’s 1970s avant-garde ever came to a comparable twofer. The mythmaking bonus is that the latter-day duo were much more genuinely kindred spirits.

Born weeks apart in 1946, Smith and Mapple#thorpe played Mutt and Jeff from their first meeting in 1967 through his death from AIDS more than 20 years later. They were lovers as well until he came out of the closet with more anguish than anyone familiar with his bold later career as gay sexuality’s answer to Mathew Brady (and Jesse Helms’s N.E.A. nemesis) is likely to find credible. Yet his Catholic upbringing had been conservative enough that he and Smith had to fake being married for his parents’ sake during their liaison.

Though Smith moved on to other partners, including the playwright Sam Shepard and the Blue Oyster Cult keyboardist-guitarist Allen Lanier, her attachment to Mapplethorpe didn’t wane. After years of mimicking her betters at poetry, she found her calling — “Three chords merged with the power of the word,” to quote the memorable slogan she came up with — at around the same time he quit mimicking his betters at bricolage to turn photographer full time. “Patti, you got famous before me,” he half-moped and half-teased when “Because the Night,” her only genuine hit single, went Top 20 in 1978. Even so, his “before” turned out to be prescient.

All this is the subject of “Just Kids,” Smith’s terrifically evocative and splendidly titled new memoir. At one level, the book’s interest is a given; to devotees of downtown Manhattan’s last momentous period of 20th-century artistic ferment, Patti Smith on Robert Mapplethorpe is like Molly Pitcher on Paul Revere. The surprise is that it’s never cryptic or scattershot. In her rocker incarnation, Smith’s genius for ecstatic racket has generally defined coherence as the rhythm section’s job. The revelation that she might have made an ace journalist had she felt so inclined isn’t much different from the way the lucidity of “The Autobiography of Alice B. Toklas” upended everything Stein was renowned for.

Nonetheless, she can’t help being the Patti Smith her fans know and love. If a given event occurs within hailing distance of Arthur Rimbaud’s or some other demigod’s birthday, she won’t fail to alert us. Just as predictably, her reverential visit to Rimbaud’s grave on a 1973 trip to France is only a warm-up for the main event: visiting Jim Morrison’s. For that matter, anyone willing to buy her claim that she learned of Mapplethorpe’s death as “Tosca” played on early-morning TV — and not just any old bit of “Tosca,” but the heroine declaiming “her passion for the painter Cavaradossi” — lives in a happier, sweeter world than mine.

The reason nobody will care about Smith’s occasional fatuities — except to decide they add period flavor, which by my lights they do — is that “Just Kids” is the most spellbinding and diverting portrait of funky-but-chic New York in the late ’60s and early ’70s that any alumnus has committed to print. The tone is at once flinty and hilarious, which figures: she’s always been both tough and funny, two real saving graces in an artist this prone to excess. What’s sure to make her account a cornucopia for cultural historians, however, is that the atmosphere, personalities and mores of the time are so astutely observed.

No nostalgist about her formative years, Smith makes us feel the pinched prospects that led her to ditch New Jersey for a vagabond life in Manhattan. Her mother’s parting gift was a waitress’s uniform: “You’ll never make it as a waitress, but I’ll stake you anyway.” That prediction came true, but Smith did better — dressed as “Anna Karina in ‘Bande à Part,’ ” a uniform of another sort — clerking at Scribner’s bookstore. That job left Mapplethorpe free to doodle while she earned their keep, which she didn’t mind. “My temperament was sturdier,” she explains, something her descriptions of his moues confirm. Even when they were poor and unknown, he spent more time deciding which outfit to wear than some of us do on our taxes.

Soon they were ensconced at “a doll’s house in the Twilight Zone”: the Chelsea Hotel, home to a now fabled gallery of eccentrics and luminaries that included Harry Smith, the compiler of “The Anthology of American Folk Music” and the subject of some of her most affectionately exasperated reminiscences. For respite, there was Coney Island, where a coffee shack gives Smith one of her best time-capsule moments: “Pictures of Jesus, President Kennedy and the astronauts were taped to the wall behind the register.” That “and the astronauts” is so perfect you wouldn’t be sure whether to give her more credit for remembering it or inventing it.

Valhalla for them both was the back room at Max’s Kansas City, where Andy Warhol, Mapplethorpe’s idol, once held court. By the time they reached the sanctum, though, Warhol was in seclusion after his shooting by Valerie Solanas in 1968, leaving would-be courtiers and Factory hopefuls “auditioning for a phantom.” Smith also wasn’t as smitten as Mapple#thorpe with Warhol’s sensibility: “I hated the soup and felt little for the can,” she says flatly, leaving us not only chortling at her terseness but marveling at the distinction. Yet Pop Art’s Wizard of Oz looms over “Just Kids” even in absentia, culminating in a lovely image of a Manhattan snowfall — as “white and fleeting as Warhol’s hair” — on the night of his death.

Inevitably, celebrity cameos abound. They range from Smith’s brief encounter with Salvador Dalí — “Just another day at the Chelsea,” she sighs — to her vivid sketch of the young Sam Shepard, with whom she collaborated on the play “Cowboy Mouth.” Among the most charming vignettes is her attempted pickup in an automat (“a real Tex Avery eatery”) by Allen Ginsberg, who buys the impoverished Smith a sandwich under the impression she’s an unusually striking boy. The androgynous and bony look she was to make so charismatic with Mapplethorpe’s help down the road apparently confused others as well: “You don’t shoot up and you’re not a lesbian,” one wit complains. “What do you actually do?”

Even when Smith tempts a skeptical reader to say “Uh-huh” to anecdotes like the one implying she was the first to call Janis Joplin “Pearl,” her forthright presentation of herself as the minor hanger-on she then was restores our trust. “I was there for these moments, but so young and preoccupied with my own thoughts that I hardly recognized them as moments,” she writes. Most often, you’re simply struck by her intelligence, whether she’s figuring out why an acting career doesn’t interest her — actors are soldiers, and she’s a born general — or sizing up the ultra-New York interplay between the city’s fringe art scenes and the high-#society sponsorship to which Mapple#thorpe was drawn. “Like Michelangelo,” she sweetly but not unshrewdly comments, “Robert just needed his own version of a pope” — which he found, more or less, in the form of the art collector Samuel Wagstaff, who became his lover and patron.

Peculiarly or not, the one limitation of “Just Kids” is that Mapplethorpe himself, despite Smith’s valiant efforts, doesn’t come off as appealingly as she hopes he will. When he isn’t candidly on the make — “Hustler-hustler-hustler. I guess that’s what I’m about,” he tells her — his pretension and self-romanticizing can be tiresome. Then again, the same description could apply to the young Smith, and we wouldn’t have the older one if she’d been more abashed in her yearnings. This enchanting book is a reminder that not all youthful vainglory is silly; sometimes it’s preparation. Few artists ever proved it like these two.

When it Comes to News, Why Won't People Eat Their Vegetables?

Chris Lee thinks that people don't get enough news they need, as opposed to want.
James Turner

One of the basic questions in journalism these days is, "What news do consumers actually want?" Chris Lee believes that today's citizenry is getting too much of what they want, and too little of what they need. With the Tools of Change for Publishing conference approaching, it seemed appropriate to talk to Lee, who has spent his professional life in the trenches of broadcast journalism, about where the industry is going and what the future of news looks like.

James Turner: Why don't you give us your background.

Chris Lee: I've been a journalist for most of my career, or at least the first part of my career. Then I gradually got interested in the technology, and have tended to go back and forth between the journalism and news management side, and the production technology side; asking what are the new devices that stations and journalists could use. I haven't been frightened of the technology like most journalists have been along the way. Sometimes you can see things earlier, or you understand how to turn something sideways and turn it into a new newsgathering tool.

James Turner: So, clearly print journalism is on the ropes right now.

Chris Lee: And TV, also. Local TV, in particular, in the United States.

James Turner: What are the factors playing into that in your mind?

Chris Lee: Well, on the newspaper side, you start with Craigslist. This is all pretty well-documented, but the audience is gone. They can't support the news organizations on the ad revenue, given that there are fewer eyeballs watching the ads on the newspaper side. And frankly, on television, it's the same story. It's caused not by Craigslist, although other internet sites have contributed, but largely through the boom of cable television. Thirty years ago, cable was a way to get a cleaner, clearer picture. Now basic cable channels beat the broadcast networks quite handily in primetime ratings.

James Turner: We have started to see that even in the "news networks," MSNBC, CNN, and FOX, they're shutting down their bureaus. They're consolidating because even they don't seem to have the budget for it.

Chris Lee: I can't speak to what's going on right now in detail at CNN. MSNBC has some GE issues, and now change of ownership issues, so you might need to exclude them. But whatever's happening at the basic cable channel CNN-like level is far kinder than what's happening at the networks or the local stations, meaning broadcast networks. In the end, the broadcast networks are only as healthy as the station business, and the station business is in big trouble.

The whole delivery concept in the United States, where you would have an affiliate that accepts the network programming, adds some of its own things, and then passes it on to local viewers, is a distinctly American approach. These individual local transmitters in most of the rest of the world aren't separate businesses; they're just relay points. So you've got these separate local transmitters that were once very important in our culture. That's the channel I watch Walter Cronkite on, or what have you. Now they're unnecessary technologically.

You've got 2/3 or 3/4, depending on where you live, of the households watching other signal instead of theirs, via cable TV or DBS [direct broadcast satellite]. And it's just that much more competition. These guys, all of a sudden, used to have four other people to fight and now they've got 400.

James Turner: Just to play devil's advocate though, I could say, "You know something? The local news was never really anything to write home about anyway. And maybe we can get by with what remains of print journalism in a city, that does all of the real investigative work, which isn't six things that could give you cancer at 11:00."

Chris Lee: I'm not going to disagree. I think one of the reasons local news is where it is today is because they didn't respect their audience enough in these teases and this sensationalism, "Can bikinis cause cancer? Tune in in February when it's a ratings hook." In the end, that stuff helped erode an audience. But as business, it was quite profitable.

People used to watch local news and read newspapers in great number. Now there are many more ways to get information or choose not to get information, because there's so many other media out there. Or you can get information that's specific to you rather than the news of the day, if you will. I think the really interesting and kind of scary question is so just how much consumption of what we traditionally call news is still a requirement of citizenship (I don't mean in the immigration sense), of being a productive member of a community. It's as if people were in the habit of eating their vegetables, but now there's so many other good things out there that they skip them.

James Turner: The other interesting question is that if you say, "Okay, great. I'm going to have my customized news feed that's going to give me my local news, maybe even based on my geolocation, and it's going to give me whatever the national news is," where is this content going to come from once everything has dried up?

Chris Lee: Good question. You rightly observe that when people go to alternate sources to look for news, they're very frequently looking at news produced by people who get paid by organizations that aren't making any money from that particular viewer choosing to read or consume that article. In the end, you're right. Those people go away, unless they're replaced by something else.

Citizen journalism has its place, it ought to be one of the tools in any professional journalism organization's outfit. That doesn't mean you take something an unknown person does and necessarily publish it immediately, or maybe you put it on a website, but you indicate it's not yet vetted and then you fact-check. If you can really get volunteers out there who know a community and can start the newsgathering machine, I think that's good.

But I think what we've seen by and large is that if you look at what citizen journalists are typically doing, they're opining; they're not reporting. Those who are reporting often have an ax to grind, and that ax is not necessarily out there and for all to see. I find it hard to argue that we don't need real journalists. I think we got into a war because we didn't have enough real journalists, or all of the real journalists were working on a deadline because there wasn't enough money to give somebody more time to think about or ask one more question.

James Turner: What I have observed is that "citizen journalism" is really good for breaking news. You can see that with the Haiti today. A guy with a cell phone takes a picture; he is better than any reporter sitting at a desk at that moment because --

Chris Lee: Oh, absolutely.

James Turner: -- he's got the picture. If he's taking a picture of a bridge that collapsed somewhere, that's great. But he's not going to do the six-month investigative on why there was faulty cement in that bridge.

Chris Lee: Exactly. There are those huge investigative things, but the truth is, with very few exceptions, nobody's doing that today. There are, maybe, the big national news organizations and some of this foundation-funded stuff that's starting. I think the bigger worry is the nuts and bolts. As you know, the meat and potatoes of daily journalism is that you've got to ask six people the same question; you've got to go to a council meeting. People get paid to do it for a reason. But I would agree.

And that's why I say, certainly, if a citizen journalist is at a scene and has a camera and can take some video or you can interview them, by all means, you do it. But that's not to say that some network of citizen journalists is going to tell you why your education system doesn't work.

James Turner: When you were talking about bias earlier, it struck a chord, because this is something that I run into a lot. I hear people say all the time, "Yeah, but every news organization is biased, too."

Chris Lee: I think the bias of almost all news organizations is a bias about the economy in which they operate. A local TV newsroom today has a bias to assign a story that they have a high confidence can be completed in a short number of hours because they can't afford to send people out on stories that fall apart. That's the reason why the TV news doesn't cover complicated things, or doesn't do the investigation on why the bad cement was in the bridge. But I really don't think, with the possible exception of two national news channels I will say that come from a political left and right perspective, there aren't very many news organizations where you can organize a bias and drive it through the organization and have people fall in line. I really don't believe that happens.

James Turner: I wanted to turn to another one of your interests, and how it ties into this. We've heard for a long time about how we're going to have this conjunction between traditional media, set top devices, computers, networking; it's all going to come together. It's all going to be one device. With things like Boxee and Hulu, we're starting to see that occur now. To some extent that means, for example, if you had all of your CNN segments for the last two days on Hulu, you could watch it on demand whenever you wanted. Does that basically turn broadcast or cable news into the same reaggregated content that we're seeing with print news now?

Chris Lee: Well, the first thing I've got to say is what you describe I love. I have built one of those or two of those, and want to be able to one day sit down in front of my television set or my computer screen or whatever and say, "Show me a newscast." That newscast should not require me to lean forward and push a button every time I want a next thing to happen, and the newscast should be some mix of the things I need and the things I want, just like news has always been.

Having worked on some of those schemes, and some other simpler things that would integrate broadcast television and the cable television infrastructure, the problem is there's lower-hanging fruit that is more profitable. There's not much attention to how to deliver customized news via Boxee or anything else, because they've all got their eye on the prize of how to deliver Hollywood movies. People have demonstrated they'll pay for that. And if anything, what's happening right now in consumer behavior makes you wonder whether people will watch news that's free, let alone news that they would have to pay for or that would be sponsored.

James Turner: That brings us around to another thing that's happened recently which is that we've seen Rupert Murdock say, "Well, I'm just going to paywall all of my stuff." In the past, the New York Times tried to paywall their site, failed, and had to end up making it a registration-only site. The only sites I know of that really has a successful paywall is the Wall Street Journal, professional journals and things like that.

Chris Lee: I would bet you most of those journal subscriptions are being put on somebody's expense account.

James Turner: The thing we always heard was that micropayments would be the solution there, and you'd buy the stories you wanted for a couple of cents a piece. The reality is when you look at how much they charge per article today, it's usually a buck or more. So they're charging you more than the cost of buying the newspaper.

Chris Lee: They forgot the micro.

James Turner: Well, part of it was the reality of credit card processing, that a two-cent transaction didn't make any sense. And it's only through things like PayPal, that can aggregate it, that they're starting to see a solution. But do you think that paywalls can work? Advertising doesn't seem to have worked as a model, the click-view model. Not getting paid at all doesn't seem to be a good revenue model. So is paywalling going to be the way that we get some news generated in the future?

Chris Lee: Well, somebody has to figure out a way to pay the journalists. I think there's a lot of hope, probably overly optimistic hopes, on whether tablets, iSlates, what have you, can come to market as a sort of breakfast table friendly news consuming devices. Whether there, like on the iPhone, consumers will accept that it's a different device; it's not a PC, and that some services have subscription fees. If we go the model of all information is free on the web, we're, I think, going to be beholden to foundations for a lot of our journalism. And that does not make it bias-free. Or we can wait for some of these start-ups that are working on hyper-local to try to develop into something that is sort of nominally paying someone's salary and get our news there.

James Turner: Do you think there would be a place for a model where I said, "I know more about Derry, New Hampshire than anybody else who can report about it. So I will just start a subscription site for anybody who wants to know about Derry"? Essentially, launch my own online newspaper by subscription and charge little enough that I'm making it up on volume. Could that work, or is that going to suffer from the same "getting the word out" problem that all the other disintermediation strategies seem to be hitting?

Chris Lee: I don't know. I'd like to see it work. I guess I'm skeptical. I think one of the observations about how consumers are behaving in the past five years that has surprised me the most is, again, this lack of feeling responsible for knowing the news of their country and their local government of that day. I don't think it's just a technology question. I think if you asked people now versus the same age group 20 years ago, I think they'd be stunningly less informed now about boring news, and tremendously more knowledgeable about bits of news that really interest them.

I'm not sure that's entirely bad. But the guy in Darien, Connecticut is going to be churning out a lot of news of the day. And if everybody'd rather dig into their little content niche for what they really care about, Mr. Darien's going to have trouble making money.

James Turner: One of the other strategies we've been hearing a lot about lately is automated news generation. Taking things that are available out there as public information and grinding it into news. So, for example, I saw that there's a project now that'll take the line from a baseball game and turn it into news copy.

Chris Lee: [Laughter]

James Turner: We've also heard about experiments where people tried to outsource the reporting of town council meetings to people in India, or other places, because it was just watching the meeting and then reporting on it.

Chris Lee: Yeah. And there another thing that I think of that's happening in a lot of government agencies, and most prominently I think in professional sports. I'm a San Francisco Giants fan and my son is, too. My son just goes to SFGiants.com to find out what's going on. I go to the people who blog for the newspapers who are beat writers. There are a lot of people who don't grasp that the news you get from, in effect, the officialdom that you're interested in is not without its biases. I think that's a real concern.

James Turner: I can remember a few years ago there was this whole thing with local news outlets running these reports which were essentially given to them by the government.

Chris Lee: Oh, yeah. That was bad. In reality, in probably 80 percent of the cases, they were just ripping off the file tape and talking over the pictures. I can't speak to newspapers so much. But I'm sure the same thing is going on. Actually, television in some respects is worse because the news hole hasn't gotten any smaller. The business gets bad in the newspaper and you print fewer pages.

In broadcast journalism, the problem is you've got a smaller staff. The same amount of time has to be filled. There's more pressure. And it leads to more corner-cutting. It's not just running video news releases, but it's doing these stories that are guaranteed to work, which means they're probably boring; you've seen them 50 times before. There's no chances. There's no risk-taking. It's no wonder people aren't watching local news because these evergreens that we're putting on don't have much to them.

James Turner: I have to say I was very pleased to see that AP actually did a really nice piece of investigative journalism recently about cadmium and toys. Maybe it's because they are still a big enough resource, they really are almost like an aggregator. But they are an aggregator that can make some money off their content. So what's different with AP?

Chris Lee: Well, AP is such a weird business model, you almost have to throw them out in terms of how they make their money. But you're right. There's an advantage of scale. If you've still got a lot of reporters, you can afford to have a couple of them not file a story this week. That's really what it comes down to, how many reporters do you need filing a story today to fill the hole? In a lot of news organizations, I'd say probably almost every local news organization of any media around the country, you pretty much need everybody to file everyday. That means there's not much extra time to do investigations or news that's just harder to dig up.

James Turner: So it sounds like you don't have an answer for where this goes in, say the next five or ten years?

Chris Lee: I think what ends up happening is that the magazine people and the newspapers begin to figure out how to make money. They're not going to let all content be free on the slates, and they begin to make some revenue there. I don't know whether they really make any revenue from paywalls on the web or not. I think the local news organizations in each American market will dwindle. Where there's four or five doing news now, they'll maybe do two.

If the television stations were smart, there would be some real opportunities for A, making content that would be useful and interesting on the web and B, understanding how to build websites and RSS services that would allow people to see those stories. I've tried, but it's hard to make the dinosaurs learn. I don't think they're going to get there.

A real key for making money out of video news is to enable a smart aggregation device that will select the stories, hopefully not just what you want but also some of the stories that you need to know, what's going on in the world, and combine those in a personalized newscast. And the reason that's useful is, I think, twofold. One, I don't think people want to lean forward and click every time to watch a news story, particularly if they're watching it on a big screen. And the other thing is, that provides a context where a commercial or a commercial break seems fair and reasonable and is what they're expecting, based on years of viewing. So it gives you a context where maybe you can make some money.

James Turner: Isn't the danger of that, though, that you can get even more of an echo chamber effect than you get today if people really can personalize?

Chris Lee: Oh, absolutely. I built this little system in 1994. The thing that the journalists all liked the most about it is there were several knobs you could twist to make different sorts of newscasts come out. There was one knob that, on one end of the scale would give them what they want; on the other end of the scale, give them what they need. You can set it anywhere you want and you'll get out a newscast that has a different level of ultra personalized versus important.

In the end, it's not really a technology issue. It comes down to viewer behavior, because there are fewer and fewer people out there in journalism management who are prepared to spin the dial anywhere but where it will make the most revenue. I look everyday for a sign that we as a culture are interested in a little bit of news that we need, not just the news that we want.

Newspapers Block Aggregator Site

The Daily Mirror has joined an increasing number of newspapers to block news aggregator NewsNow from trawling its website.

The paper objects to NewsNow offering a subscription service that charges clients for digital press clippings, including links to Mirror stories.

The Sun and Times Online have also recently blocked the service.

NewsNow chairman Struan Bartlett called the move "an unacceptable restraint of freedom of expression".

He told BBC News that the aggregator - which collates links from various news sites - stopped linking to mirror.co.uk content in December 2009.

The Daily Mirror now uses robot.txt - a file which limits what search engines can index on a site - to block the aggregator.

The paper claims that by blocking the site it is protecting its investment in online material and has no objection to aggregators such as Google News, who do not make money from their feeds.

"Mirror Group invests significant sums to fund the journalism and produce the content that NewsNow has been selling by subscription for quite some time now," said Matt Kelly, Digital Content Director at Mirror Group.

"We'll thrive without NewsNow. The question is, will they thrive without us and our fellow content producers?"

Mr Bartlett said that NewsNow would be examining the impact of Mirror Group's decision on "internet freedom and the wider economy".

No licence

NewsNow has been unpopular in some newspaper circles since declining to pay for a licence from the Newspaper Licensing Agency (NLA) to distribute lists of news stories that it is paid to collate.

Services like this tend to be popular with companies and PR agents who wish to track mentions of their brands or products.

Andrew Hughes, Commercial Director of the NLA said it was "disappointing" but that NewsNow was within its rights to operate without the licence, which would have cost an estimated £36,000 ($58,000) including individual fees on a per client basis.

"We have no dispute with NewsNow," he told BBC News.

"But it's important to respect the creators of content and share the value that comes out of content creation."

The news comes as various newspapers - including many owned by Rupert Murdoch's News Corp - consider forcing people to pay for content.

Mr Murdoch has also said he may block Google from indexing and displaying news content from his companies.

After Three Months, Only 35 Subscriptions for Newsday's Web Site
John Koblin

In late October, Newsday, the Long Island daily that the Dolans bought for $650 million, put its web site, newsday.com, behind a pay wall. The paper was one of the first non-business newspapers to take the plunge by putting up a pay wall, so in media circles it has been followed with interest. Could its fate be a sign of what others, including The New York Times, might expect?

So, three months later, how many people have signed up to pay $5 a week, or $260 a year, to get unfettered access to newsday.com?

The answer: 35 people. As in fewer than three dozen. As in a decent-sized elementary-school class.

That astoundingly low figure was revealed in a newsroom-wide meeting last week by publisher Terry Jimenez when a reporter asked how many people had signed up for the site. Mr. Jimenez didn't know the number off the top of his head, so he asked a deputy sitting near him. He replied 35.

Michael Amon, a social services reporter, asked for clarification.

"I heard you say 35 people," he said, from Newsday's auditorium in Melville. "Is that number correct?"

Mr. Jimenez nodded.

Hellville, indeed.

The web site redesign and relaunch cost the Dolans $4 million, according to Mr. Jimenez. With those 35 people, they've grossed about $9,000.

In that time, without question, web traffic has begun to plummet, and, certainly, advertising will follow as well.

Of course, there are a few caveats. Anyone who has a newspaper subscription is allowed free access; anyone who has Optimum Cable, which is owned by the Dolans and Cablevision, also gets it free. Newsday representatives claim that 75 percent of Long Island either has a subscription or Optimum Cable.

"We're the freebie newsletter that comes with your HBO," sniffed one Newsday reporter.

Mr. Jimenez was in no mood to apologize. "That's 35 more than I would have thought it would have been," said Mr. Jimenez to the assembled staff, according to five interviews with Newsday staffers.

"Given the number of households in our market that have access to Newsday's Web site as a result of other subscriptions, it is no surprise that a relatively modest number have chosen the pay option," said a Cablevision spokeswoman.

Nevertheless, traffic has fallen. In December, the web site had 1.5 million unique visits, a drop from 2.2 million in October, according to Nielsen Media Online.

In the short time that the Dolans have owned Newsday, it's been a circus. When they were closing the deal to buy the paper in May 2008, they had their personal spokesman scream at an editor who assigned a reporter to visit the Dolans, seeking comment; there was a moment back in January of last year, when Newsday editor John Mancini walked out of the newsroom because of a dispute over how the paper was handling the Knicks; in the summer, the paper refused to run ads by Verizon, a rival; Tim Knight, the paper's publisher, and John Mancini, the editor, eventually both left.

The paper, which traditionally has been a powerful money maker, lost $7 million in the first three quarters of last year, according to Mr. Jimenez at last week's meeting.

In October, the web site relaunched and was redesigned. One of the principals behind the redesign is Mr. Mancini's replacement, editor Debby Krenek.

To say the least, the project has not been a newsroom favorite. "The view of the newsroom is the web site sucks," said one staffer.

"It's an abomination," said another.

And now the paper is in the middle of a labor dispute in which it wants to extract a 10 percent pay cut from all employees. The cut was turned down by a lopsided vote of 473 to 10, this past Sunday.

Things are bleak in old Hellville, the pet nickname some reporters have established for life on Long Island.

"In the meeting with Terry, half the questions weren't about labor issues, but about why isn't this feature in the paper anymore?" said one reporter. "People are still mad about losing our national correspondents, our foreign bureaus and the prestige of working for a great newspaper. The last thing we had was a living wage, being one of the few papers where you're paid well. And to have that last thing yanked from you? It's made people so mad."

Until next week,

- js.

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