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

Peer to Peer The 3rd millenium technology!

Thread Tools Search this Thread Display Modes
Old 17-03-10, 08:29 AM   #1
JackSpratts's Avatar
Join Date: May 2001
Location: New England
Posts: 9,921
Default Peer-To-Peer News - The Week In Review - March 20th, '10

Since 2002

"P2P networks, as a mere transmission of data between Internet users, do not violate, in principle, any right protected by [Spain’s] Intellectual Property Law." – Judge Raul N. García Orejudo

"The [E Ink] color will be better than the color in most newspapers." – T.H. Peng

"The iPhone vision of the mobile Internet's future omits controversy, sex, and freedom, but includes strict limits on who can know what and who can say what. It's a sterile Disney-fied walled garden surrounded by sharp-toothed lawyers. I hate it." – Tim Bray

"Content sharing has become a huge driving force online. People want information from friends they trust." – Matt Tatham

March 20th, 2010

File-Sharing and Link Sites Declared Legal in Spain

After early calls to shut down a Spanish file-sharing site were dismissed, music group SGAE pinned its hopes on success at the full trial. But, the outcome for them was nothing short of a disaster. The judge declared that both non-commercial file-sharing link sites and non-profit use of P2P networks are legal in Spain.

Despite many rulings which have declared file-sharing sites legal if they don’t profit directly from copyright infringements, in recent years its become something of a custom in Spain for music rights groups to attempt to close down sites in advance of a full hearing to assess their legality.

One such case involves eDonkey link site elrincondejesus.com and although fairly low profile worldwide, the site will now start to set headlines.

Back in May last year, site and bar owner Jesus Guerra received a complaint from music group SGAE (Sociedad General de Autores y Editores) which alleged the site abused the copyrights of its members.

In a June court appearance, SGAE hoped to get an early injunction to shut Elrincondejesus immediately in advance of a full hearing which would happen at a later date. Guerra protested that his site is legal, carries no advertising and simply provides links like any other search engine.

Judge Raul N. García Orejudo threw out the request for an immediate closure of the site in July, declaring: “P2P networks, as a mere transmission of data between Internet users, do not violate, in principle, any right protected by Intellectual Property Law.”

Now the full case has been heard and the outcome is nothing short of a disaster for SGAE.

In order to assess if there had been a breach of Spain’s Intellectual Property Act, the court had to decide if simply providing links to copyrighted works was the same as making those works available to the public. Judge Raul N. García Orejudo decided that offering an index of links and/or linking to copyright material is not the same as distribution and noted that under current law there is nothing which prohibits such sites from operating.

In making his decision the judge also looked at the finances of the site. He said the site was not a business since the operator of Elrincondejesus made no direct or indirect profits from its operation. Apparently on a roll after confirming non-profit file-sharing sites are legal, he gave users of those sites a nice surprise too.

“P2P networks are mere conduits for the transmission of data between Internet users, and on this basis they do not infringe rights protected by Intellectual Property laws,” he declared. Therefore, if an individual uses P2P networks like eDonkey or BitTorrent to obtain copyright material for non-profit reasons, the act is completely legal.

The outcome of this case is such bad news for SGAE it’s expected they will appeal the decision. Or get the law changed. Or both.

Pirate Bay Legal Action Dropped in Norway

Copyright holders fail to compel ISP to block filesharing site
Mikael Ricknäs

Copyright holders have given up legal efforts to force Norwegian ISP Telenor to block filesharing site The Pirate Bay, one of the parties to the case said.

The copyright holders, led by Norway's performing rights society TONO and by the International Federation of the Phonographic Industry Norway (IFPI Norge) Norway have lost two rounds in the Norwegian court system, and have now decided against appealing the case to Norway's supreme court, the organisations said.

The goal was to see if it under Norwegian law is possible to order an ISP to block access to The Pirate Bay, and two clear court decisions have now said that is not the case, according to TONO. Spending more resources on the case would at this point be a waste, according to IFPI.

The copyright holders' interpretation of the courts' verdicts is that Telenor contributes to The Pirate Bay's illegal acts, but that this action is not itself illegal in Norway. This, the organisations said, raises the question of whether Norwegian law adequately implements the European Union Copyright Directive, a matter they would like Norwegian legislators look into.

Although Norway is not a member of the EU, it has agreed through its membership of the European Economic Area to implement certain EU directives in national legislation, including the EUCD.

The battle between Telenor and the copyright holders started in February last year, when Telenor received a letter from copyright holders, including IFPI and TONO, demanding that it block access to The Pirate Bay.

Telenor has throughout this process maintained that there is no legal basis for any ISP to act in the interests of digital intellectual property rights holders by blocking individual websites. ISPs blocking sites doesn't solve the problem of illegal file sharing, it just moves the problem elsewhere, according to Telenor.

Pirate Bay Appeal In September
Andre Paine

The appeal by four defendants convicted April 2009 for their involvement with the BitTorrent tracker the Pirate Bay has been scheduled for Sept. 28.

The appeal in Stockholm has been allocated nine days of court time.

One defendant, Peter Sunde, has commented via Twitter that the timing is "political" as the appeal has been scheduled after Swedish parliamentary elections on Sept. 19.

The Pirate Party campaigns for a reform of copyright law, and if the defendants lost their appeal before an election it could conceivably boost support for the party. The Pirate Party received 7.1% of the vote in last June's European Parliament elections.

uTorrent Accused of Unfairness, Banned by Trackers

The uTorrent team released the long-awaited version 2.0 of their popular application last month. The overall reception has been very positive, but critics have labeled the new release as unfair, which has resulted in the client being banned from several private BitTorrent trackers.

utorrent bannedOne of the most significant changes in the new uTorrent is uTP, the ‘micro transfer protocol’. UTP is a new and improved implementation of the BitTorrent protocol which is designed to be more network-friendly than its predecessor.

With uTP, uTorrent has become more network aware as it will throttle itself if congestion is detected in the network. The uTorrent teams hopes this improvement will eliminate the need for ISPs to throttle BitTorrent traffic, while its users should see less interference with other local applications.

The effectiveness of uTP is still being debated, but some people in the BitTorrent community have noticed another issue. According to some owners of private BitTorrent trackers, uTorrent is no longer playing fair. Since uTorrent users are the only ones using the new protocol, uTorrent favors its own kind over other clients.

This means that when connecting to other clients, uTorrent users will give preference to other uTorrent users, behavior that some have characterized as unfair. As a result, several private BitTorrent trackers have refused to put the newer uTorrent releases on their whitelists, effectively banning the client and forcing their users to stick with the older versions.

Simon Morris, BitTorrent’s VP of Product Management admits that the tracker owners have a point, but says that it is very hard to innovate without having to face such technical downsides. “This is part of the challenge of innovation… but hopefully a challenge we’ll overcome,” Morris told TorrentFreak.

“We’re well aware of these discussions and have been very receptive to the feedback we have received. uTP is being constantly tuned and like any advanced technology on the internet there are edge cases where there’s room for improvement,” Morris adds.

BitTorrent Inc. has opened up the specifications of the uTP protocol and hosted a conference in their San Fransisco offices a few weeks ago to discuss uTP in detail with developers of some of the most popular Bittorrent clients. According to Morris, other popular client developers have shown interest in implementing uTP into their own applications.

Widespread support for the new protocol would of course be the easiest way to get rid of the unfairness allegations, but uTorrent’s major competitor Vuze has no plans to support uTP in the short term. On the other hand, Vuze doesn’t believe the unfairness will result in a noticeable disadvantage for its users.

“In terms of speed, we do not buy-in to the ‘threat’ cited by some, claiming that uTP can result in slower downloads for non-uTP clients due to uTP clients favoring each other during the torrent cold start phase,” Olivier Chalouhi, CTO told TorrentFreak.

Vuze is keeping a close eye on how uTP evolves and will consider adding it to their own client as the technology matures. For now Vuze will continue to work on their own congestion solutions and speed improvements. They have already added UDP transfer support, but not as the primary protocol.

“Vuze added support for UDP transport a few years ago, as a fallback for when TCP connection attempts fail. To date, Vuze chose not to implement UDP as a first-class protocol, as we consciously wanted to avoid claims of a Vuze-specific protocol bias, which we do not believe serves the BitTorrent community at large,” Chalouhi said.

Whether uTorrent’s choice to push uTP forward results in any significant disadvantages for users of other clients is still open for debate. BitTorrent Inc. is, however, committed to play fair and will make the necessary adjustments where needed.

Thus far, only a few private trackers have decided to ban uTorrent and there are currently no signs that it will spread out to more.

Lib Dems to Change their Amendment to the Digital Economy Bill

Rights group calls for bill to be abandoned as peers reverse key changes
Charles Arthur

The Liberal Democrats are preparing to change their controversial amendment to the digital economy bill, which has its third and final reading in the House of Lords on Monday.

The change would give sites blocked under the bill the power to challenge it in the courts, and to demand legal costs and damages from any copyright owner that caused it to be wrongly blocked through court procedings.

But the Open Rights Group, which campaigns on digital rights and freedoms, said that the amendment would not solve deeper problems with the bill – which may be rushed into law with barely any debate in the Commons – and called for it to be abandoned.

Amendments tabled to the bill show that the Liberal Democrats now want to alter amendment 120A, which was shown last week to have been copied almost word-for-word from a lobbying paper prepared by the music industry, but which was also widely criticised as giving copyright holders too much power to close down sites on limited evidence.

The Liberal Democrat peer Lord Razzall has moved an amendment to the amendment created by another Lib Dem peer, Lord Clement-Jones, which would give sites that have been blocked some legal recourse.

The amendment deals with powers given under subsection 1 of an amendment to the Copyright, Designs and Patents Act 1988, which gives the high court (in Scotland, the court of session) the power "to grant an injunction against a service provider, requiring it to prevent access to online locations specified in the order of the court for the prevention of online copyright infringement".

The BPI has lobbied strongly for such powers, on the basis that a growing number of sites offer "cyberlocker" facilities which allow people to swap files without their being publicly visible. The Liberal Democrat amendment was seen as agreeing with that stance – but other groups said that it was extreme because it would be impossible to prove what content is stored on cyberlockers without inspecting their contents, which would break their own agreements with users.

At present, the bill obliges internet service providers to pay the costs of copyright owners who apply for successful blocking of sites "unless there were exceptional circumstances justifying the service provider's failure to prevent access despite notification".

The suggested amendment says that where a service provider has blocked access to an online location, "any person aggrieved may apply to the court on notice to the copyright owner and service provider to require the service provider to remove or vary the nature of the block" and that if a block is rescinded, the courts "may also on request make an order if it sees fit requiring the copyright owner to imburse any loss or damages, including costs and legal fees, incurred by the applicant ... or by the service provider".

But Jim Killock, head of the Open Rights Group, said that while the change was "some improvement", the flaw was that the changes have not been properly debated.

"The bill is now out of line with Liberal Democrat policy, which is against web blocking in this manner following a motion that was passed at their conference at the weekend," Killock said.

"The problem is that this could now go to the Commons, and because of the budget it could be pushed through to a second reading which will mean it gets debated for a total of an hour." That would only leave time for deletions, but not amendments, in the bill. Once the election is called, the bill would then go into a "wash-up" in which legislation is passed without any debate in order to get it onto the statute books.

Killock said that "it's now too late to do anything about this bill except get rid of it. We are calling on people to complain vociferously about it because the disconnection policies in it are still flawed."

Lords Pass Internet Piracy Bill

Legislation to tackle internet piracy, including bans for illegal file-sharers, has been passed by the Lords.

The Digital Economy Bill is now expected to be rushed through the Commons before the general election.

Peers had earlier rejected a bid by ministers to include wide-ranging powers over future online piracy law.

But despite criticism, the government said it was still committed to giving courts the power to block websites which are infringing copyright.

The bill, put forward by Business Secretary Lord Mandelson, has been welcomed by the music industry because it includes plans to suspend the internet accounts of people who persistently download material illegally.

But firms such as British Telecom, Google and Facebook say that would be unfair and illegal file-sharers should be fined instead of cut off.

Earlier this month, peers defeated the government when they rejected a clause giving ministers the power to change laws on online copyright in future without the need for further legislation.

'Unintended consequences'

But their chosen replacement - a measure allowing courts to use injunctions to force internet service providers (ISPs) to block certain websites - also prompted criticism from companies, consumer rights campaigners and academics.

They argued it would lead to "blocking based on accusation rather than a court injunction" and could shut down sites like Google and YouTube.

Liberal Democrat media spokesman Lord Clement-Jones, who led the moves for the replacement clause, offered "clarifications and improvements" during the bill's third reading on Monday evening.

He did not, however, put them to the vote.

Instead, junior business minister Lord Young of Norwood Green said the Lib Dem amendment was incompatible with the EU Technical Standards Directive.

He said it would "not be capable of being enforced" and could lead to "unforeseen and unintended consequences".

But Lord Young told peers: "It is our intention to try to bring forward, as the bill moves to the Commons, a clause that would seek to ultimately achieve the same effect."

This would include a power for the secretary of state "to bring forward regulations to achieve the desired effect of site blocking", he added.

And it would allow for "proper consultation and consideration of the evidence for the need and the proportionality of the measure".

Lord Young said his offer was a "sincere and constructive commitment" and he had "tried to address the genuine concerns that have been expressed".

Lord Clement-Jones, while warning of "many a slip between cup and lip", agreed to wait for the government's amendment.

Amendment wording

Jim Killock, executive director of the Open Rights Group, said Lord Mandelson was "preparing to rush through this draconian legislation without democratic debate".

"We are calling for massive campaign of citizens to demand that their MPs debate this dangerous bill."

Last week, it emerged that the wording of the Lib Dem amendment was almost identical to a draft written by the BPI, which lobbies on behalf of the British music industry.

The BPI said opposition parties "saw it as a good framework for what they wanted to put down" .

Chief executive Geoff Taylor welcomed the bill's passing, adding: "It is vital for the future of the UK's creative sector that the Digital Economy Bill is adopted."

But Andrew Robinson, from Pirate Party UK, which campaigns on the issue, said: "The public will not respect a law that was quite literally written by the record industry, for the record industry.

"As it stands, the bill is fatally flawed, and fundamentally unjust."

Download Growth Boosts 2009 UK Music Royalties

British songwriters, composers and music publishers earned 623 million pounds ($944.8 million) in royalties in 2009, up 2.6 percent on 2008 and the first time the growth in digital revenues outperformed the drop in CD and DVD earnings.

But PRS for Music, the group which compiled the figures and which is responsible for collecting and distributing royalties for 65,000 musicians and publishers, said it was too early to talk of a turning point in the industry.

The global music business has been shrinking steadily in recent years, hit by online piracy and the rapid decline in physical format sales like CDs, which have more than made up for the rapid growth in legal digital revenues.

"2009 was the first year in which the growth in revenues from the legal digital market compensated for the decline in revenues from traditional CDs and DVDs, though we remain cautious as to whether this represents a true turning point," said PRS for Music chief executive Robert Ashcroft.

"The next decade does, however, promise further growth in earnings from the legal digital market as well as the use of British music overseas."

And despite the growth in digital revenues last year, they still represent a small proportion of the overall market.

In 2009 online revenues grew 73 percent, or 12.8 million pounds to 30.4 million pounds, while earnings from CDs and DVDs fell by 8.7 million pounds.

The overall increase in the market was largely due to a sharp rise in British music use abroad, increasing 19 percent to 166.9 million pounds.

The UK music market fell slightly, hit by a drop in advertising revenues and the ringtone market among other factors.

(Reporting by Mike Collett-White, editing by Paul Casciato)

Broadband Plan Aims to Boost Speed, Wireless
John Poirier

U.S. regulators released a blueprint for upgrading Internet access for all Americans, with Internet speeds up to 25 times the current average, expanded coverage and more airwaves for mobile services.

The U.S. Federal Communications Commission plan released on Monday comes as the Internet increasingly delivers everything from telephone service to movies, music and banking services.

Nearly 200 million Americans had fast Internet access at home last year, but about 100 million do not, says the FCC document. "Like electricity a century ago, broadband is a foundation for economic growth, job creation, global competitiveness and a better way of life."

Requested by Congress, the plan of over 350 pages looks set to touch off intense lobbying by communications companies over legislation and FCC rules that will underpin the goals.

A shift in airwaves from broadcasters like CBS Corp could benefit wireless providers like AT&T and Verizon Wireless.

While upgrading the nation's wireless and wireline networks would be a boost for companies like equipment maker Alcatel Lucent SA, wireless chip maker Qualcomm and fiber optic providers like Corning Inc.

Several elements of the plan had emerged in the past few weeks but the five members of the FCC are due to vote Tuesday on issuing a summary of "Connecting America: The National Broadband Plan."

A House Energy and Commerce Committee panel will hold a March 25 hearing on the FCC's proposals.

Expanding Coverage

A Connect America Fund would receive up to $15.5 billion over the next decade, using money shifted from the Universal Service Fund that currently supports telephone service for the poor and rural areas.

The plan aims to have 100 million American households get Internet speeds of 100 megabits per second (Mbps) by 2020 -- a speed that would allow a consumer to download a two-hour, high-definition movie in less than 10 minutes.

As an interim goal, the plan calls for 100 million U.S. homes have 50 Mbps Internet speeds by 2015.

The current household average speed is about 4 Mbps. Even homes with cable or fiber Internet access only achieve speeds averaging 5 Mbps to 6 Mbps.

Cisco Systems Inc recently announced it would introduce a router that can handle Internet traffic up to 12 times faster than rival products. Google Inc has said it plans to build a super-fast Internet network to show that it can be done. The FCC has praised both announcements.

Shifting Airwaves

The plan stresses the need to devote more airwaves to the anticipated explosion of handheld devices capable of playing movies and music in addition to handling emails and voice calls.

The agency says it is seeking expanded authority from Congress to hold auctions that would provide incentives for broadcasters to give up some of their airwaves for purchase by wireless companies.

The FCC said it would leave open the possibility of taking action if broadcasters do not voluntarily give up spectrum.

Analysts said meeting even the FCC's 50 Mbps interim goal would likely take a lot more investment by companies like AT&T and Qwest Communications International Inc.

"Five years from now it would be tough for them to get anything of any size done," said Stifel Nicolaus analyst Christopher King, "they would really need to start today."

Some analysts have also been skeptical about whether the airwaves reallocation would appeal to broadcasters unless the FCC offers them a big percentage of the auction proceeds.

FCC Chairman Julius Genachowski told Reuters on Friday that "a number of broadcasters" were open to his "win-win" plan, which would have them give up airwave licenses for auction in exchange for receiving a share of the proceeds.

Verizon Wireless is a joint venture between Verizon Communications Inc and Britain's Vodafone Group Plc

(Reporting by John Poirier; Additional reporting by Sinead Carew; Editing by Tim Dobbyn)

F.C.C. Questioned on Its Far-Reaching Plan to Expand Broadband Access
Matt Richtel and Brian Stelter

Federal regulators on Tuesday made public the details of their ambitious policy to encourage the spread of high-speed Internet access. But their 376-page proposal, the National Broadband Plan, was met with a chorus of questions, even from the staunchest advocates of its goals.

Telecommunications companies praised the intent but worried that new regulations might impede rather than encourage their progress in expanding Internet access. Industry analysts said the plan was both too ambitious and not detailed enough, and consumer advocates doubted it alone would lead to more affordable broadband service at adequate speeds.

The criticisms were largely tempered by a strong embrace of what is by far the most aggressive effort to date by regulators to encourage widespread adoption of broadband at much higher speeds than most Americans have today.

The plan, put forth by the Federal Communications Commission, also proposes to allot more wireless spectrum for mobile devices, redirect some subsidies toward broadband access, develop a nationwide network for emergency first responders and create a “digital literacy corps” to train new users.

“They should be commended for the document’s remarkable breadth,” said Craig Moffett, a telecommunications industry analyst with Sanford C. Bernstein & Company, but he added that such scope could also be a liability. The plan “sets up a hundred different battles over funding and spectrum and even set-top box design, and each on its own would represent an ambitious agenda.”

He added, “The risk is that the plan’s very scope will limit its real-world impact.”

For its part, the F.C.C. on Tuesday characterized its Congressionally mandated plan as a much-needed step for keeping the nation competitive. The policies echo a generations-old effort to provide every home with a telephone, itself once seen as a communications tool central to economic and social development.

The broadband proposal, which the agency sent to Congress on Tuesday, “is necessary to meet the challenges of global competitiveness, and harness the power of broadband to help address so many vital national issues,” the agency chairman, Julius Genachowski, said in a statement.

President Obama said the plan recalled the way “past generations of Americans met the great infrastructure challenges of the day, such as building the transcontinental railroad and the Interstate highways.”

For most Americans who already have broadband access the most important part of the 10-year plan may involve speed. The F.C.C. hopes that by 2020 at least 100 million households will have access to broadband capable of running 100 megabits a second, and for community institutions like schools and hospitals to have access at 10 times that speed.

The average at-home connection is three to four megabits a second now, speeds seen as ultimately unable to deliver increasingly rich multimedia content. But industry analysts say that the government’s ability to influence access speeds is limited.

Some aspects will take years to put into place and require Congressional action. Notably, legislators would have to allow some proceeds from the spectrum auctions to be diverted to broadcasters. The F.C.C. hopes to use that spectrum to lead to the creation of wireless Internet access, to enhance competition and keep consumer costs in check.

But some television station owners are wary of the auction plans. That is one of the little battles that seems likely to emerge involving deep-pocketed advocates, industry analysts said.

One F.C.C. commissioner, Mignon Clyburn, said in a statement that she was “very concerned” about the tradeoff. “It is unclear at this point whether the Internet can currently replace these trusted sources,” she said.

And some analysts said that even if the spectrum ultimately became available, it might create wireless access but fail to create competition for the much higher-speed Net access. Wireless access is roughly one-twentieth of the speed of the envisioned 100-megabit lines, said Dave Burstein, editor of DSL Prime, an industry newsletter.

“They talk, talk, talk about affordability, but when you look at the plan, most peoples’ prices are going to go up,” Mr. Burstein said. It typically costs $100 a month for Net access at speeds of 50 megabits to 100 megabits.

Mr. Burstein said those prices were double the cost in places like France and England and yet the plan, he added, does little to bring those down.

He also asserted that the goal of getting high-speed access to 100 million homes was already within reach. About 50 million homes have access to broadband service of 50 to 100 megabits, and the cable industry says 100 million homes will have such access within five years.

Chief among its goals, the F.C.C. wants future broadband investment to be focused on the areas where gaps in service remain. It will direct this investment in part through the Universal Service Fund, a program for telephone and Internet access, costing $8 billion annually, paid through a phone bill surcharge. Over time, the subsidies for Internet will increase and those for phone will dissipate, with the knowledge that people can make online calls.

“Some of the details are lacking, particularly on Universal Service Fund reform,” said Dan Mitchell, a vice president for the National Telecommunications Cooperative Association, a group that represents rural providers and worries that the proposals to change phone carrier costs will curtail the providers’ abilities to expand infrastructure.

“Broadly, they’re stating the right things,” he added. “But the devil is always in the details.”

Jenna Wortham contributed reporting.

Factbox: Details of U.S. Broadband Plan

The U.S. Federal Communications Commission released its National Broadband Plan, a roadmap to faster and more widespread broadband access over the next decade. The five members of the FCC are due to discuss the plan at an open meeting on Tuesday.

Here are some of the plan's major recommendations and goals:


* Free up to 500 megahertz of spectrum for broadband within 10 years; 300 megahertz of that spectrum should be made available for mobile broadband within five years

* Airwaves held by broadcasters and other licensees could be reallocated to wireless companies under a voluntary program that would allow licensees to receive some auction proceeds

* FCC would need expanded authority from Congress to proceed with auctions

* Some spectrum called "D-block," originally set aside for public safety, would be auctioned for commercial purposes

* Consider licensing a block of spectrum with a condition to offer free or low-cost broadband service

Internet Speed

* "100 Squared Initiative" would bring download speeds of 100 megabits per second (Mbps) to 100 million American households by 2020 and actual upload speeds of at least 50 Mbps

* By 2015, goal is to bring up download speeds of 50 Mbps to 100 million homes and upload speeds of 20 Mbps

* Anchor institutions would get faster speeds of about 1 gigabit per second by 2020. They include government buildings, schools, libraries and healthcare facilities


* Collect, analyze, benchmark and publish detailed market-by-market information and data on broadband pricing and competition

* Disclosure requirements for broadband service providers on pricing and performance; data on actual speeds versus advertised speeds could help inform consumers and improve competition

* Comprehensive review of wholesale competition rules for fixed and mobile broadband services to ensure special access rates, terms and conditions are "just and reasonable"

* Amend video set-top box policy to allow for the innovation of a "simple and inexpensive" gateway device that connects cable programing and the Internet

Universal Service Fund Reform

* Create a Connect America Fund to support affordable broadband

* Shift up to $15.5 billion over the next decade from the Universal Service Fund that currently supports phone service to low-income and rural families

* FCC recommends to Congress a one-time $9 billion infusion could help speed broadband reach in about three years

* Phases out intercarrier compensation for connecting long-distance phone calls

* Big carriers like Verizon Communications Inc, AT&T Inc support USF reform

Public Safety

* FCC is asking Congress to fund between $12 billion and $16 billion to create an emergency public safety broadband system for front-line responders over 10 years

National Purposes

* Promotes telemedicine, use of electronic health records, a move that could save hospitals $371 billion and save physician practices $142 billion over 15 years

* Ease rules that act as barriers to practice medicine across state lines

* States should require electric utilities to provide consumers real-time online information on their energy use

* Urges Congress to consider legislation to encourage copyright holders to grant digital rights for educational purposes

(Reporting by John Poirier; Editing by Tim Dobbyn)

Mobile Fees Under Pressure With Network Rollout
Kevin J. O'Brien

The next generation of faster mobile networks is poised to lower costs for operators and potentially unleash a new price war in the industry in Europe.

As European operators prepare to install the networks, which use a technology called Long Term Evolution, or L.T.E., they are fighting to keep fees for connecting calls to other operators.

That system makes mobile calling in Europe particularly pricey, to the advantage of big operators with large bases of customers.

“Mobile voice calls and short text messages are some of the most expensive forms of data in the world,” said J. Scott Marcus, an analyst at WIK-Consult in Germany. “There is a debate in the industry over whether operators can justify the prices with L.T.E.”

Observers say the technological leap could pave the way in Europe for U.S.-style flat-rate calling plans to all networks.

The world’s largest operators agreed in February to devise a new technical standard for transmitting voice calls between competing L.T.E. networks, which would preserve Europe’s existing grid of regulated termination rates, the per-minute interconnection fees paid by callers. The fees range from 2 euro cents a minute in Cyprus to 15 cents in Bulgaria.

But the superior efficiency of L.T.E. networks will tend to minimize the overall cost of transmitting voice calls, as conversations are converted into tiny packets of 1s and 0s in a process similar to that used by Internet voice services like Skype that give away some Internet voice service free.

Operators, which generate about 80 percent of their revenue from voice services, want to hinder a new downward price spiral. Revenue from termination fees makes up 15 percent of an operator’s sales and profit, said Jacques de Greling, an analyst at Natixis, a Paris bank.

At the mobile industry’s annual convention in Barcelona, a group of the world’s biggest operators endorsed an industry effort to develop the new standard, called Voice over L.T.E., or VoLTE, by March 2011. The group includes Verizon Wireless and AT&T in the United States, Vodafone, Telefónica, Deutsche Telekom and Orange in Europe, NTT Docomo in Japan, and China Mobile.

The standard will define the arbitrary technical parameters operators use to interconnect L.T.E. calls, which is necessary to ensure that L.T.E. devices work in any country. VoLTE, however, is also being devised to function in the current system of termination rates.

Dan Warren, the technical director at the GSM Association, the London-based industry group that is coordinating the project, said the project’s participants — engineers from large and midsize global operators — had based their efforts on the existing European business model of termination rates.

“We have taken the existing commercial principles on the basis that we have to start somewhere,” Mr. Warren said. “We don’t expect L.T.E. coverage to be ubiquitous for some time.”

But some smaller operators are wary.

“By starting with this assumption, we are developing a standard that could make the extension of the termination-rate model a fait accompli,” said an executive at one of the operators that has signed on to support the VoLTE drive. He did not want to be identified because he was not authorized to speak for the group.

The executive said his company was officially backing the effort because it would eventually have to use whatever standard is developed.

“This is an ongoing debate,” said Erik Ekkudden, the vice president for technology and industry at Ericsson, the market leader in network equipment. “We have not seen any major signs of big changes coming in the billing regimes, but that of course could happen.”

Many smaller operators would rather adopt the billing regime used by Internet service providers and mobile operators in the United States, called “bill and keep,” which splits the costs of interconnection between the caller and person being called, eliminating additional costs for callers. The U.S. system has enabled flat-rate mobile plans and has promoted cellphone use.

Despite the push by large operators for an L.T.E. standard that would preserve their lucrative billing status quo, it is uncertain whether they will be able to extend the European system of termination rates into the L.T.E. era.

European regulators began questioning the necessity for termination rates in 2006. That year, operators like T-Mobile, France Télécom and Vodafone lobbied in Brussels against any change, arguing that it would penalize larger operators and hinder investments in new network technology.

But last year, the European Commission, seeking to encourage the greater use of mobile technology, raised pressure on the operators by adopting rules that would require countries to develop a uniform method of calculating an operator’s costs for delivering voice service when determining the termination rates charged in a country. The new rules are expected to reduce E.U. termination rates from a current average of 7 cents a minute to less than 2 cents by 2012.

But already, there are signs that the decline will be even more precipitous.

In January, the Belgian telecommunications regulator proposed lowering mobile termination rates to 1.07 cents by January 2013 from almost 9 cents now.

In Brussels, an advisory council made up of European national telecom regulators is scheduled to consider a plan in May to switch the European regime from termination rates to one akin to the U.S. system. Most operators remain opposed to the change. But given the rapid decline in mobile termination rates, such a changeover may be superfluous.

“We have serious doubts and reservations about the arguments supporting such a change,” said Eric Debroeck, the regulatory director at Orange, the mobile unit of France Télécom. “Termination rates are coming down in some cases sharply anyway.”

YouTube’s Bandwidth Bill Is Zero. Welcome to the New Net
Ryan Singel

YouTube may pay less to be online than you do, a new report on internet connectivity suggests, calling into question a recent analysis arguing Google’s popular video service is bleeding money and demonstrating how the internet has continued to morph to fit user’s behavior.

In fact, with YouTube’s help, Google is now responsible for at least 6 percent of the internet’s traffic, and likely more — and may not be paying an ISP at all to serve up all that content and attached ads.

Credit Suisse made headlines this summer when it estimated that YouTube was binging on bandwidth, losing Google a half a billion dollars in 2009 as it streams 75 billion videos. But a new report from Arbor Networks suggests that Google’s traffic is approaching 10 percent of the net’s traffic, and that it’s got so much fiber optic cable, it is simply trading traffic, with no payment involved, with the net’s largest ISPs.

“I think Google’s transit costs are close to zero,” said Craig Labovitz, the chief scientist for Arbor Networks and a longtime internet researcher. Arbor Networks, which sells network monitoring equipment used by about 70 percent of the net’s ISPs, likely knows more about the net’s ebbs and flows than anyone outside of the National Security Agency.

And the extraordinary fact that a website serving nearly 100 billion videos a year has no bandwidth bill means the net isn’t the network it used to be.

casestudygoogleBut the lack of a monthly bill in the mailbox doesn’t mean Google’s internet connection is free — it’s just that it has purchased unused fiber optic cable known as “dark fiber” — and uses it to carry its traffic to other networks where it “peers” or trades traffic with other ISPs. Its costs for bandwidth are then amortized across the life of its fiber and routers.

YouTube has been mum on its actual costs, for competitive reasons, but did say in blog post in July that it has homegrown infrastructure and that traditional pricing models don’t apply.

There’s been a lot of speculation lately about how much it costs to run YouTube…. The truth is that all our infrastructure is built from scratch, which means models that use standard industry pricing are too high when it comes to bandwidth and similar costs. We are at a point where growth is definitely good for our bottom line, not bad.
In fact, YouTube’s low or nonexistent bandwidth bill points to a very important shift in the structure of the internet, which is rapidly becoming much more complicated.

Traditionally the net has been shaped like a pyramid with small ISPs at the bottom, connecting up to regional carriers, that connect to backbone and transcontinental carriers. It’s much more complicated now with the top 30 websites serving up 30 percent of net traffic, either from their own sets of pipes or from data centers around the world that connect much closer to your computer — and for much cheaper — than ever before.

It’s just one of many changes in how the net is structured, a change that started in 2007, according the report.

In 2007, the majority of the internet’s traffic came distributed by 30,000 blocks of servers around the net (technically Autonomous System Numbers).

In 2009, 150 blocks served up half of the net’s traffic.

“What we mean by the internet is changing and it’s happening really quickly,” Labovitz said. “I was blown away to find out that one-tenth of the internet is going [to] or coming from Google.”

Those blocks include Google and increasingly popular and cheap content-delivery networks, such as Akamai and Limelight, which serve content from websites such as Wired.com from server farms around the net — often at rates far cheaper than self-hosting.

Which is to say that the real money is in the ads and services in the packets, not in moving the bits from computer to computer. The cost of bandwidth has fallen and so too have the profit margins for moving bits, even as traffic grows at an estimated 40 percent a year.

With the growth of Google’s network and Content Delivery Networks, the economics of who pays whom to connect grows more complicated than the early days of the net when money flowed upwards — little ISPs paid regional ISPs who paid major ISPs who paid backbone operators.

Now if you are Google, you might even begin asking Comcast to pay up to connect its Google Tubes straight to their local cable ISP networks. That way, YouTube videos and Google search results would show up faster, letting the ISP brag that YouTube doesn’t stutter on their network, a potential commercial advantage over its DSL competitors.

“Who pays whom is changing,” Labovitz said. “All sorts of negotiations are happening behind closed doors.”

Unfortunately, few will know the outcomes of those talks, since most of the net’s architecture, let alone the financial machinations behind them, remain a secret cloaked in nondisclosure agreements.

But Labovitz says the changes will have a big upside for typical net users, who are already seeing faster downloads. For instance, many videos on YouTube now come in HD, an option that would have been unthinkable in the days when its video always seemed to be stuttering and buffering.

Labovitz also expects ISPs to react to falling margins for moving internet traffic by continuing to offer more and better services, such as backup services, smartphone apps to control their in-the-cloud cable DVRs or online video services like the controversial ESPN 360. That’s all part of their attempts to become something other than just dumb pipes ferrying YouTube videos — and Google’s ads — to your computer.

A full report, co-written with select academics, will be presented at the end of the month at the NANOG47 meeting, a gathering of net traffic engineers from North America. However, the Arbor Networks data is not available to other researchers due to confidentiality agreements, according to Labovitz.

Smoking Guns, Dark Secrets Aplenty in YouTube-Viacom Filings
Nate Anderson

Court documents in the $1 billion lawsuit between Viacom and YouTube were unsealed today, finally shedding some light on key questions: did Viacom have "smoking gun" evidence that YouTube was deliberately profiting from 62,637 Viacom clips that were watched more than 507 million times on the site? Was Google aware of the copyright infringement problems when it purchased YouTube in 2006? Were YouTube's own founders involved in uploading unauthorized materials?

On all three counts, Viacom says yes—and it offers up a host of e-mails to prove it:

* "In a July 19, 2005 e-mail to YouTube co-founders Chad Hurley and Jawed Karim, YouTube co-founder Steve Chen wrote: 'jawed, please stop putting stolen videos on the site. We’re going to have a tough time defending the fact that we’re not liable for the copyrighted material on the site because we didn’t put it up when one of the co-founders is blatantly stealing content from other sites and trying to get everyone to see it.'"
* "Chen twice wrote that 80 percent of user traffic depended on pirated videos. He opposed removing infringing videos on the ground that 'if you remove the potential copyright infringements... site traffic and virality will drop to maybe 20 percent of what it is.' Karim proposed they 'just remove the obviously copyright infringing stuff.' But Chen again insisted that even if they removed only such obviously infringing clips, site traffic would drop at least 80 percent. ('if [we] remove all that content[,] we go from 100,000 views a day down to about 20,000 views or maybe even lower')."
* "In response to YouTube co-founder Chad Hurley’s August 9, 2005 e-mail, YouTube co-founder Steve Chen stated: 'but we should just keep that stuff on the site. I really don’t see what will happen. what? someone from cnn sees it? he happens to be someone with power? he happens to want to take it down right away. he get in touch with cnn legal. 2 weeks later, we get a cease & desist letter. we take the video down.'"
* "A true smoking gun is a memorandum personally distributed by founder Karim to YouTube’s entire board of directors at a March 22, 2006 board meeting. Its words are pointed, powerful, and unambiguous. Karim told the YouTube board point-blank: 'As of today episodes and clips of the following well-known shows can still be found: Family Guy, South Park, MTV Cribs, Daily Show, Reno 911, Dave Chapelle. This content is an easy target for critics who claim that copyrighted content is entirely responsible for YouTube’s popularity. Although YouTube is not legally required to monitor content (as we have explained in the press) and complies with DMCA takedown requests, we would benefit from preemptively removing content that is blatantly illegal and likely to attract criticism.'"
* "A month later, [YouTube manager Maryrose] Dunton told another senior YouTube employee in an instant message that 'the truth of the matter is probably 75-80 percent of our views come from copyrighted material.' She agreed with the other employee that YouTube has some 'good original content' but 'it’s just such a small percentage.'"
* "In a September 1, 2005 email to YouTube co-founder Steve Chen and all YouTube employees, YouTube co-founder Jawed Karim stated, 'well, we SHOULD take down any: 1) movies 2) TV shows. we should KEEP: 1) news clips 2) comedy clips (Conan, Leno, etc) 3) music videos. In the future, I’d also reject these last three but not yet.'"

The limits of the DMCA

The basic argument here is a simple one. YouTube's founders hoped to build a massive user base as quickly as possible and then sell the site. "Our dirty little secret... is that we actually just want to sell out quickly," said Karim at one point. In an e-mail, Chen talked about “concentrat[ing] all of our efforts in building up our numbers as aggressively as we can through whatever tactics, however evil.”

As the e-mails collected in this suit make clear, numerous YouTube employees had direct knowledge of infringing material on the site, and in fact even altered tools like the community "flagging" feature so as to purposely find out about fewer incidents.

The strategy worked. One-and-one-half years after launching, Google purchased YouTube and made all of the founders incredibly wealthy. Given the obvious appeal of unauthorized content on YouTube, Viacom argues that the startup's strategy was, at its core, a decision to profit from copyright infringement. It doesn't matter whether YouTube showed ads on its video pages or not (for years, it did not, apparently concerned about just this issue); to Viacom, the entire business strategy was a way of profiting from infringement.

That's important because the Digital Millennium Copyright Act protects service providers that engage in "storage at the direction of the user." It has been a huge boon to user-generated content sites, and it is YouTube's key defense. But the DMCA puts limits on the generous safe harbors it provides: operators cannot have actual knowledge of infringement, they must take down infringing materials when asked, and they cannot profit from the infringement.

In the very first sentence of the summary judgment motion, Viacom makes clear it will attack YouTube's safe harbor protection head-on: "Plaintiffs Viacom International Inc. et al. (“Viacom”) move for partial summary judgment on Defendants’ liability for copyright infringement and concurrently to invalidate Defendants’ reliance on the Digital Millennium Copyright Act (“DMCA”) as a defense to that infringement."

Viacom argues that YouTube did know about infringement on the site, and not just in a general, "surely there's some infringement going on here" sort of way. No, as the e-mails collected in this suit make clear, numerous YouTube employees had direct knowledge of infringing material on the site, and in fact even altered tools like the community "flagging" feature so as to purposely find out about fewer incidents.

Under this argument, YouTube is like Grokster, the P2P site whose case went all the way to the Supreme Court and resulted in a seminal ruling that shut down the site on the grounds that the huge majority of its activity produced infringement.

But there's a second argument. Viacom also claims that YouTube is not covered by the law for a more fundamental reason: it is not engaged in "storage," as a file locker might be, but is in the business of displaying and broadcasting content, which also includes making numerous back-end copies. This behavior involves YouTube in "direct infringement of copyrights."

This appears to be the weakest part of Viacom's case, and it's unclear why the company would bother making it in the wake of a federal court's recent Veoh ruling. That decision noted (correctly, in our view) that automated back-end processes to cache or transcode or display a video did not involve the site operator in such direct infringement.

A curious case of amnesia

The story of how this material came to light is itself an intriguing one. Key e-mails from YouTube's founders were not produced by YouTube, which claimed to have lost them. Much of the material in the suit comes from co-founder Jawed Karim, who "preserved these materials on his own personal computer, discharged his duties to [the] Court and produced them. Otherwise they would have never surfaced in this litigation."

Clearly, Viacom is suspicious about what happened, and its suspicion is not just directed at YouTube but also at its corporate parent, Google. Google CEO Eric Schmidt was asked to produce a host of e-mails and documents about the decision to purchase YouTube, and Schmidt came up with... 19 documents for the $1.8 billion deal.

Other executives practiced "similar bizarre practices." YouTube co-founder Chad Hurely "developed serial amnesia" when asked about Karim's e-mail chains.

"This is no lawyer’s exaggeration," writes Viacom. "We include pages 177-317 of Mr. Hurley’s testimony and invite the Court to review it. To the same effect is the testimony of Larry Page, one of Google’s two co-founders and top three executives, who essentially disclaimed memory on any topic relevant to this litigation, even including, for example, whether he was in favor of Google’s acquisition of YouTube, even though it was Google’s largest corporate transaction to date and viewed as transformative to its business... This Court can decide whether these key executives and witnesses behaved with the level of candor and respect for the legal process that this Court has a right to expect from senior executives of important public companies."

It's not an outright accusation of deceit, but it comes pretty close.

Google's "high-tech extortion"

Viacom wanted information from Google, because it hoped to show that the company knew exactly what it was doing when it purchased YouTube and that it was fully aware of the site's copyright issues. To that end, Viacom produced numerous documents, including a Google memorandum from the Google Video team about YouTube.

The team told senior Google execs that YouTube was "a ‘rogue enabler’ of content theft," that its "content is all free, and much of it is highly sought after pirated clips," and that "YouTube’s business model is completely sustained by pirated content."

In May 2006, Ethan Anderson, international business product manager for Google Video, told other execs, "I can’t believe you’re recommending buying YouTube... they’re 80 percent illegal pirated content.” Schmidt, when asked about it, couldn't recall discussions of "piracy" on the site.

In addition, Viacom says that it was essentially extorted by Google after the sale. For a while, the two companies were in negotiations over a content licensing deal that would also have covered all past infringement. Google offered a $590 million deal to Viacom that included an offer to use fingerprinting technology to block unauthorized uploads of Viacom material. When the deal fell apart, Google refused to use the fingerprinting technology for Viacom "in the absence of a license agreement."

Viacom called the move "high-tech extortion" and saw it as a way for Google to pressure rightsholders into licensing deals. Google eventually relented and implemented fingerprinting technology for companies that would not license content, but not until 2008.
Google's response

Google dissents from every one of these arguments, and then drops a few bombshells of its own. Saying that Viacom misconstrued "isolated lines from a handful of e-mails," Google goes on the warpath:

For years, Viacom continuously and secretly uploaded its content to YouTube, even while publicly complaining about its presence there. It hired no fewer than 18 different marketing agencies to upload its content to the site. It deliberately "roughed up" the videos to make them look stolen or leaked. It opened YouTube accounts using phony email addresses. It even sent employees to Kinko's to upload clips from computers that couldn't be traced to Viacom. And in an effort to promote its own shows, as a matter of company policy Viacom routinely left up clips from shows that had been uploaded to YouTube by ordinary users. Executives as high up as the president of Comedy Central and the head of MTV Networks felt "very strongly" that clips from shows like The Daily Show and The Colbert Report should remain on YouTube.

Viacom's efforts to disguise its promotional use of YouTube worked so well that even its own employees could not keep track of everything it was posting or leaving up on the site. As a result, on countless occasions Viacom demanded the removal of clips that it had uploaded to YouTube, only to return later to sheepishly ask for their reinstatement. In fact, some of the very clips that Viacom is suing us over were actually uploaded by Viacom itself.

Given Viacom’s own actions, there is no way YouTube could ever have known which Viacom content was and was not authorized to be on the site. But Viacom thinks YouTube should somehow have figured it out.
The argument here rests on the fact that all books, music, and videos are automatically copyrighted in the US at the moment of their creation. This was a change introduced in the 1976 Copyright Act, one that did away with the need to register a work in order to gain copyright protection. The upshot of this change is that nearly every single item on YouTube is copyrighted; the real question is not whether the clips are copyrighted, but whether they are "authorized" by the rightsholder for display on YouTube.

Because Viacom was involved in using YouTube for promotional use, Google lawyers point out that YouTube employees had no way of knowing whether any particular clip was authorized or not. Clips don't carry legal authorization information. Even if it was clear (and it was) that many of the clips on the site were copyrighted, YouTube insists that it could not know in advance whether those clips were authorized.

This isn't "turning a blind eye to infringement," in Google's view; it is simply a practical reality. Instead, YouTube relied (and continues to rely) on rightsholders to send it takedown notices as specified in the DMCA. Sure, this placed a huge burden on rightsholders, especially since Google required a separate letter for every infringing URL and would not prevent the re-uploading of the same material by other users, but it was the only way the company could know if authorization for a specific clip had been granted.

Viacom had even hired marketers to confuse the issue of authorization. These marketers "lack[ed] any discernable connection to Viacom" and use account names like "MysticalGirl8" and "Demansr." Viacom "has deliberately used email addresses that 'can’t be traced to [Viacom]' when registering for YouTube accounts," says YouTube, and "Viacom employees have made special trips away from the company’s premises (to places like Kinko’s) to upload videos to YouTube from computers not traceable to Viacom."

In addition, "Viacom has altered its own videos to make them appear stolen, like 'footage from the cutting room floor, so users feel they have found something unique.'" The final result, says Google, is that there's just no way to tell, short of a notice from the company, what works must be taken down.

The situation was so confusing that Viacom lawyers weren't able to fully identify which clips were authorized and which were not for this lawsuit; Viacom even had its own YouTube account suspended over confused copyright notices.

This fact is powerfully demonstrated by examining the countless errors that Viacom and many other content owners make in sending takedown notices to YouTube. YouTube routinely received takedown requests that were subsequently withdrawn after the media companies who sent them realized that their notices had been targeted to content that they themselves had uploaded or authorized. #Both before and well into this litigation, Viacom’s own monitoring agent, BayTSP, identified as “infringing” many videos that had in fact been posted to YouTube with Viacom’s permission. These self#-inflicted infringement claims led to counter#notices from Viacom’s marketers, sheepish retractions from BayTSP, and even to the suspension of Viacom’s own authorized YouTube accounts for supposed copyright violations.
In Google's view, Viacom made use of the service, confused the issue of authorization, and is now trying to subvert the DMCA. "YouTube and sites like it will cease to exist in their current form if Viacom and others have their way in their lawsuits against YouTube," Google warned darkly in a blog post today.

Viacom says that its marketing wasn't that confusing. "This whole exercise is a red herring. First, none of the infringing clips at issue in this lawsuit were uploaded to YouTube by Viacom or its authorized agents. Second, the number of uploads to YouTube that Viacom did authorize (for which Viacom is not suing for infringement) was very limited compared to the 63,000 unauthorized infringing clips claimed by Viacom in this litigation. Third, of that small number of authorized clips, virtually all were uploaded to YouTube using official Viacom account names, and YouTube was fully aware of this fact."

Both sides have asked the judge for summary judgment based on the undisputed facts of the case.

Web Guru Tim Bray Takes Google Android Job
Stephen Shankland

Tim Bray--co-inventor of XML, notable tech blogger, and until recently a Sun Microsystems employee--has joined Google's Android team in part to show the world what he thinks is wrong with Apple's iPhone.

The move puts a personal face on the cultural, technical, and business issues central to Silicon Valley companies. In a blog post titled "Now A No-Evil Zone," Bray said Monday he's in philosophical alignment with Google in general and in opposition to Apple's iPhone specifically.

"The reason I'm here is mostly Android. Which seems to me about as unambiguously a good thing as the tangled wrinkly human texture of the Net can sustain just now," Bray said.

Specifically, he likes Android's developer-friendliness, its full suite of interfaces, its open-source nature, its strong Google backing, its open market--and its competition to the iPhone. Bray offers the following tirade against Apple's ways:

The iPhone vision of the mobile Internet's future omits controversy, sex, and freedom, but includes strict limits on who can know what and who can say what. It's a sterile Disney-fied walled garden surrounded by sharp-toothed lawyers. The people who create the apps serve at the landlord's pleasure and fear his anger.

I hate it.

I hate it even though the iPhone hardware and software are great, because freedom's not just another word for anything, nor is it an optional ingredient...

The big thing about the Web isn't the technology, it's that it's the first-ever platform without a vendor (credit for first pointing this out goes to Dave Winer). From that follows almost everything that matters, and it matters a lot now, to a huge number of people. It's the only kind of platform I want to help build.

Apple apparently thinks you can have the benefits of the Internet while at the same time controlling what programs can be run and what parts of the stack can be accessed and what developers can say to each other.

I think they're wrong and see this job as a chance to help prove it.
Google in some areas is allied with Apple, but with Android increasingly is in competition. Google Chief Executive Eric Schmidt resigned from Apple's board in 2009. And in March, Apple sued handset maker HTC for patent infringement, a move that has repercussions for Google since HTC builds its Nexus One and other Android phones.

Early on, Google famously adopted a "don't be evil" motto, attempting to build into its corporate culture a motivation besides merely maximizing shareholder value. Although this appeals to Bray, he said he recognized the time for absolutes is over for Google.

It's now too big to be purely good or in fact purely anything. I'm sure that tendrils of stupidity and evil are even now finding interstitial breeding grounds whence they will emerge to cause grief. And there are some Google initiatives that I feel no urge to go near.

But there are those Ten Things and you know, I'm down with 'em. Unreservedly.
Bray had been at Sun Microsystems since 2004; Sun had a strong corporate culture endorsing open interfaces and, eventually, open-source software as well.

But Sun of course didn't remain independent. Bray decided against staying with the company as it becomes part of Oracle.

"I'd had an offer to stay with Oracle which I decided to decline," Bray said. "I'll maybe tell the story when I can think about it without getting that weird spiking-blood-pressure sensation in my eyeballs."

Google's Nexus One Trademark Application Rejected

A small U.S.-based firm already owns the trademark for the word 'Nexus'

It was with much fanfare that Google launched its phone, the "Nexus One" back in January. However, what was not known back then was that a small company known as Integra Telecom based in Oregon, U.S. owns the trademark for the word "Nexus".

It makes roughly $60 million a year off the Nexus trademark. Google, who had applied for ownership of the "Nexus One" trademark, has seen its application rejected. According to the USPTO, the cause was probably "a likelihood of confusion." A Google official has, however, confirmed that they will continue to claim the rights to the Nexus One trademark in U.S., and plan to respond to the office action from the U.S. Patent Trademark Office

With the Google Phone already being sold with the Nexus One badge, it would be interesting to see if Google does manage to get the rights to use the trademark. Back in 2007, Cisco and Apple were involved in a similar controversy when Apple found out that Cisco already had a device called the iPhone. That was, however, settled amicably with Apple paying Cisco a decent amount of money. Will Google too take the same route this time? We shall wait and watch.

HTC Says Confident Can Defend Against Apple Suit

Cellphone developer HTC Corp said it is confident it can fight off a recent technology patent infringement lawsuit from iPhone maker Apple Inc and promised to issue a formal response in the next few weeks.

The comments released on Thursday follow a lawsuit from Apple earlier this month, accusing HTC of infringing on 20 iPhone related technology patents. HTC makes phones based on software from Apple's archrivals Google Inc and from Microsoft Corp.

Taiwan's HTC said it would use every means possible to fight off the suit.

"We feel confident in our innovation and our ability to defend ourselves in this case," Jason Mackenzie, vice president for HTC's U.S. business said in an interview.

Mackenzie declined to go into detail about how HTC will defend itself except to say the company would issue a formal response in the next few weeks.

"HTC strongly disagrees with Apple's actions. We plan to use all the legal tools we have at our disposal to both defend ourselves and set the record straight," Mackenzie said.

While Apple's lawsuit did not name Google as a defendant, the case was viewed by many analysts as a proxy for an attack on Google, whose operating system powers many phones made by HTC, including Nexus One, which Google sells directly.

Mackenzie declined comment on this aspect of the case and suggested directing such questions at Apple.

Apple's suit was filed with both the U.S. International Trade Commission and the U.S. District Court in Delaware on March 2, and seeks to prohibit HTC from selling, marketing or distributing infringing products in the United States.

The complaint filed with the International Trade Commission said infringing products include Nexus One, which was launched in January, and other HTC phones such as the Hero, Dream and myTouch -- which run on Google's Android mobile software.

The executive said product innovation was one of the cornerstones around with HTC was founded in 1997.

He said the company had been first to market new product categories, including its 2002 Pocket PC and a phone it introduced last year for WiMax, an emerging high-speed wireless technology.

HTC issued a statement from its Chief Executive Peter Chou listing the company's history of innovation.

"From day one, HTC has focused on creating cutting-edge innovations that deliver unique value for people looking for a smartphone," Chou said.

"In 1999 we started designing the XDA and T-Mobile Pocket PC Phone Edition, our first touch-screen smartphones, and they both shipped in 2002 with more than 50 additional HTC smartphone models shipping since then."

(Reporting by Sinead Carew; editing by Andre Grenon)

Malware Infected Memory Cards of 3,000 Vodafone Mobiles

The company is now investigating how the malware programs ended up on the phones.
Jeremy Kirk

Malware-tainted memory cards may have ended up on as many as 3,000 HTC Magic phones, a greater number than first suspected, Vodafone said Friday.

The problem came to light earlier this month after an employee of Panda Security plugged a newly ordered phone into a Windows computer, where it triggered an alert from the antivirus software.

Further inspection of the phone found the device's 8GB microSD memory card was infected with a client for the now-defunct Mariposa botnet, the Conficker worm and a password stealer for the Lineage game.

Vodafone said then it was an isolated incident, but an employee at Spanish security company S21sec discovered another phone with an infected card, which it sent to Panda. That phone was purchased directly from Vodafone's Web site in the same week as the first phone, according to Panda.

It is unclear how the batch of memory cards became infected although an investigation is under way, said a spokesman for Vodafone in Spain. There are no problems with either the HTC Magic phone or its Android OS. The malware only affected phones sold in Spain.

Vodafone will send a letter along with a new memory card to affected customers, the spokesman said. The letter will contain instructions for how customers can give their PCs free antivirus scans on Panda's Web site, which partners with Vodafone. He said Vodafone will give security software to people whose computers have become infected as a result of plugging in an infected HTC phone.

With the first phone, the Mariposa botnet code automatically ran and attempted to infect a computer. Mariposa was at one time one of the largest botnets, but security researchers were able to shut it down in December after disabling its command-and-control servers.

Conficker is a worm that still infects millions of machines worldwide, but its autorun capability may have been disabled by Mariposa, Panda said. The password-stealing program would not run unless someone double clicked the file.

Forbidden Fruit: Microsoft Workers Hide Their iPhones

Steve Ballmer Sours on Apple Product; Work for Ford, Drive a Ford
Nick Wingfield

Microsoft Corp. employees are passionate users of the latest tech toys. But there is one gadget love that many at the company dare not name: the iPhone.

The iPhone is made, of course, by Microsoft's longtime rival, Apple Inc. The device's success is a nagging reminder for Microsoft executives of how the company's own efforts to compete in the mobile business have fallen short in recent years. What is especially painful is that many of Microsoft's own employees are nuts for the device.

The perils of being an iPhone user at Microsoft were on display last September. At an all- company meeting in a Seattle sports stadium, one hapless employee used his iPhone to snap photos of Microsoft Chief Executive Steve Ballmer. Mr. Ballmer snatched the iPhone out of the employee's hands, placed it on the ground and pretended to stomp on it in front of thousands of Microsoft workers, according to people present. Mr. Ballmer uses phones from different manufacturers that run on Microsoft's mobile phone software.

A Microsoft spokeswoman declined to comment and declined to make executives available for this story.

Apple CEO Steve Jobs referred an email asking about iPhone use at Microsoft to a spokeswoman, who declined to comment.

Despite Mr. Ballmer's theatrics, iPhone users are in plain sight at Microsoft. At the sprawling campus here in a Seattle suburb, workers peck away on their iPhone touch-screens in conference rooms, cafeterias and lobbies. Among the top Microsoft executives who use the iPhone is J Allard, who helped create the Xbox game console and is chief experience officer for the entertainment and devices division.

Nearly 10,000 iPhone users were accessing the Microsoft employee email system last year, say two people who heard the estimates from senior Microsoft executives. That figure equals about 10% of the company's global work force.

Employees at Apple, in contrast, appear to be more devoted to the company's own mobile phone. Several people who work at the company or deal regularly with employees there say they can't recall seeing Apple workers with mobile phones other than the iPhone in recent memory.

IPhone usage at Microsoft is the latest twist in the rivalry between Apple and Microsoft, tech-industry titans that have mixed it up in everything from computer operating systems to digital music players.

For many top Microsoft executives, seeing so many iPhones around the office is a bit like how a Coca-Cola Co. manager might feel seeing underlings drink Pepsi—especially since Microsoft makes its own operating system, Windows Phone, that powers handsets.

Employee iPhone use has led to some spirited discussions among Microsoft executives. At a retreat last March for dozens of senior Microsoft executives at its corporate campus, someone asked about employee use of iPhones in a question-and-answer period.

According to several people present, Andy Lees, a Microsoft senior vice president who oversees development of the mobile-phone software business, and his boss, Robbie Bach, explained that Microsoft workers often use rival products to better understand the competition.

Kevin Turner, chief operating officer, scoffed at that explanation, these people said. Mr. Turner said he discouraged Microsoft's sales force from using the iPhone, they added. "What's good for the field is good for Redmond," Mr. Turner said, recalls one of the people who heard his comments.

Mr. Ballmer took a similar stance at the meeting.

He told executives that he grew up in Detroit, where his father worked for Ford Motor Co., and that his family always drove Fords, according to several people at the meeting.

In what some employees interpreted as a sign that Microsoft was clamping down on the iPhone, the company in early 2009 modified its corporate cellphone policy to only reimburse service fees for employees using phones that run on Windows Phone software.

Microsoft has said it made the change as part of a broader cost-cutting plan.

Some Microsoft workers take pains to hide their iPhones. While rank-and-file workers tend to use the iPhone openly around peers, some conceal them within sight of more senior executives. One Microsoft worker said he knows several colleagues who try to disguise their iPhones with cases that make them look more like generic handsets.

"Maybe once a year I'm in a meeting with Steve Ballmer," said this employee. "It doesn't matter who's calling, I'm not answering my phone."

Some executives have openly renounced their iPhones. Stephen Elop, president of Microsoft's business division, used Apple products before Mr. Ballmer lured him to Microsoft in early 2008. But at a meeting of Microsoft sales representatives after joining, Mr. Elop placed his personal iPhone into an industrial-strength blender and destroyed it in a reenactment of a popular Internet video, says one witness.

Others remain less shy about their iPhones. Microsoft software engineer Eugene Lin recently gave a public talk in Seattle about developing software for the iPhone in his spare time. One of his creations: a racy application called Peekaboo that lets people ogle scantily clad cartoon women. A YouTube video of the Seattle talk by Mr. Lin, who didn't respond to messages seeking comment, has been viewed more than 73,000 times.

Microsoft isn't uniformly opposed to employees using Apple products, in part because it makes some software and services for them. Apple's Macintosh computers are common in the Microsoft group that makes the Mac version of its Office software.

Still, Apple's ascendancy in mobile phones has been tough to stomach.

The iPhone accounted for 25.1% of the U.S. smartphone market during the three months ending Jan. 31, compared with 15.7% for phones running Windows Phone software, according to comScore Inc.

Windows mobile phones have lagged some of the innovations of the iPhone, including Apple's slick Web browser and the App Store for downloading software onto the device.

But there's positive buzz among Microsoft employees and others in the technology industry about an overhauled version of its software, Windows Phone 7 Series, expected to be on handsets in time for the holidays.

One person who isn't jumping on the iPhone bandwagon is co-founder and chairman Bill Gates. In an appearance on "The Daily Show" in January, host Jon Stewart asked Mr. Gates if he can have an iPhone since leaving full-time duties at Microsoft in 2008 to focus on philanthropy.

"I'm a very loyal Microsoft user," Mr. Gates replied.

Skype Publishes SILK Audio Codec Source Code

Skype Logo Skype has announced that it has published the source code for its SILK audio codec, introduced last year, which the company uses in its internet telephony applications for Windows and Mac OS X. Daniel Berg, Skype’s Chief Technology Officer said "This represents a key step in the development of an international standard for a wideband codec for use on the Internet,". The release of the source code comes as part of Skype's recent submission of an an Internet Draft to the Internet Engineering Task Force (IETF).

According to the announcement post on the Skype blog, the SILK audio codec is the result of three years of development and "enables super-wideband audio and optimises call quality, even in low network bandwidth environments". It also reportedly uses 50% less network bandwidth than previously required to transmit audio over the network.

Berg says that the developers focused on four things during the development of the codec, including improving audio bandwidth from 8 kHz to 12 kHz, real-time bandwidth scalability to deal with various network conditions and "balancing codec optimisation between voice, music and background noise". The company's fourth goal was to be able to deliver "a more consistent audio experience, regardless of network conditions and an individual’s voice signature".

The SILK source code is licensed for non-commercial use and is intended for "internal evaluation and testing purposes only". Companies wanting to use the codec for commercial products must request a SILK IP License (requires registration).

Copyright Case Referred to Europe

The High Court has asked the European Court of Justice (ECJ) to decide legal issues raised in proceedings brought in an effort to have hotel operators pay a charge for playing copyright music in guest bedrooms.

The organisation which collects royalties for recording artists, Phonographic Performance Ireland Ltd (PPI), initiated an action last year against the State over its alleged refusal to amend a law which exempts hotels from having to pay copyright fees for music played in hotel bedrooms.

The PPI wants to charge €1 per bedroom per week. With around 50,000 hotel bedrooms nationwide, it estimates it is losing some €2.6 million annually. The PPI claims the Copyright and Related Rights Act 2000, which provides the disputed exemption, is contrary to EU law.

Section 97(1) of that Act provides there is no infringement of copyright where recorded music is heard “in part of the premises where sleeping accommodation is provided for the residents”.

Last October, the High Court directed that the issue of whether the State is in breach of its obligations under European law should be decided prior to any claim for damages.

Yesterday, in an interim ruling in the proceedings, Ms Justice Mary Finlay Geoghegan said she believed it was necessary to refer a number of questions in the case to the ECJ.

Among the issues the ECJ will have to decide is whether a hotel operator, as a result of providing TVs and radios in guestrooms, is a “user” of copyrighted music that can be played in a broadcast for the purposes of EU directive 2006/115/EC.

If the operator is such a user, the ECJ will then have to decide whether the same directive require the operator to pay a charge additional to royalties already being paid by TV and radio station operators.

The ECJ also has to decide whether hotel operators are exempt from such payments on grounds the playing of such music is for “private use” as provided for under the same directive.

A further issue is whether the directive permits the exemption of hotel operators from paying if the music is played by means other than TV or radio.

Ms Justice Finlay-Geoghegan said she would give the parties an opportunity to examine her interim judgment before making further orders and she adjourned the matter to next week.

Europe’s Public Broadcasters Ask Lawmakers to Make It Easier to Offer Programs Online
Eric Pfanner

European public broadcasters are calling on lawmakers to make it easier to offer their programming over the Internet, saying cumbersome copyright practices restrict their ability to develop new digital services and prolong the fragmentation of the European television landscape.

The European Broadcasting Union, which represents public television and radio providers, said its proposals were intended to push cross-border online video services, which have been slow to develop in Europe.

“The more you facilitate the system, the more likely it is that you will have content available transfunctionally,” said Peter Weber, chairman of the broadcasting union’s legal and public affairs committee. The group plans to present the proposals to the European Commission and the European Parliament on Wednesday.

The broadcasters want to streamline a copyright system that requires them to obtain separate agreements from actors, directors, musicians and others if they want to use programs on the Internet. Under the proposal, rights deals would cover digital use, much as they already do for cable and satellite broadcasting.

Broadcasters say the burden of identifying all the copyright holders discourages them from putting content online. That barrier has impeded the development of popular “catch-up” services that offer, for example, a week’s worth of scheduled television programming on demand.

Under the proposal, a broadcaster could potentially offer programs online across the 27-member European Union after clearing the rights in a single member country, the broadcasting union said.

But the changes would not remove a bigger barrier to cross-border broadcasting: country-by-country licensing deals for exclusive content like sporting events and movies, which commercial and public broadcasters have fought to retain.

It was not immediately clear how the European Commission, which is considering a revision of copyright rules, would react to the proposals. The commission, which is expected to introduce legislation this year, has said it wants more audiovisual content to be made available across Europe rather than restricted to individual markets.

“It will be my key priority over the next years to work, in cooperation with other commissioners, on a simple, consumer-friendly legal framework for making digital content available across borders in the E.U.,” said Viviane Reding, who was the European media commissioner last fall when the commission published an invitation for proposals on how to achieve this goal.

But European commercial broadcasters have questioned the need for legislation to make more content available across borders.

“While we are aware of the political appeal of pan-European services, we would call for a sense of perspective as to the likely impact of such services on the audiovisual market,” the Association of Commercial Television in Europe, a trade group based in Brussels, said in January in response to the commission’s call for proposals. “For simple reasons of language, many television services will remain primarily national.”

Commercial broadcasters have also clashed with European public broadcasters over investments in new media, saying public financing gives them an unfair advantage in the race to develop digital services.

China Warns Google to Obey Rules Even if it Pulls Out

Google should obey Chinese government rules even if it decides to retreat from the country over hacking and censorship complaints, a Chinese government spokesman said on Tuesday.

Investors sold off Google Inc shares a day earlier after signs the company could soon shut its Web search site in China, Google.cn, two months after saying it would not abide by Beijing's censorship rules and was alarmed by hacking from inside China.

Shares of Google fell nearly 3 percent in regular trading on Monday to close at $563.18. Shares of Baidu, the No.1 search engine in China, rose 4.8 percent to $576.84.

Google has not unveiled any plans, leaving users to guess whether the company may seek to unilaterally do away with the Chinese-mandated filters that censor content on google.cn or announce it is shutting down the site.

In what appeared to be a reminder that China would not welcome any abrupt steps, a spokesman for the Ministry of Commerce said Google should follow rules even if it decides not to stay in the country.

"On entering the Chinese market in 2007, it clearly stated that it would respect Chinese law," the spokesman, Yao Jian, told reporters in answer to a question about Google.

Google opened its Chinese search portal in 2006.

"We hope that whether Google Inc continues operating in China or makes other choices, it will respect Chinese legal regulations," Yao told a regular news conference.

"Even if it pulls out, it should handle things according to the rules and appropriately handle remaining issues," he said.

Uncensored Search Engine

Yao said those rules included one that a foreign company report to the Commerce Ministry about plans to pull out.

If Google does decide to leave China, it could unnerve other foreign investors in the country. But Chinese Foreign Ministry spokesman Qin Gang downplayed the significance of such an action.

"I think this would just be the individual act of one company, and will not affect China's investment environment," Qin told a regular news briefing. "It will not change the fact that most foreign companies, U.S. ones included, have a good business in China and generate large profits."

Google's chief executive, Eric Schmidt, said last week he hoped to have an outcome soon from talks with Chinese officials on offering an uncensored search engine in that country of 384 million Internet users.

Many experts doubt China's ruling Communist Party would compromise on censorship. The Financial Times reported at the weekend the talks had reached an impasse and Google was "99.9 percent" certain to shut Google.cn.

A Google spokesperson said on Monday that talks with Chinese authorities had not ended, but added that the company was adamant about not accepting self-censorship.

China requires Internet operators to block words and images the ruling Communist Party deems unacceptable.

Internationally popular websites Facebook, Twitter and YouTube are entirely blocked in China, which uses a filtering "firewall" to block Internet users from other overseas website content banned by authorities.

(Reporting by Chris Buckley, Wang Lan and Ben Blanchard)

Report Names 'Enemies of the Internet'
Lance Whitney

China and Iran are among the world's top "Internet enemies" tagged by Reporters Without Borders for restricting Internet freedom. But even democratic countries like Australia and South Korea are raising concerns.

The fight to restrict freedom is increasingly being fought on the Internet as certain governments continue to censor what content their citizens can see online and try to target those who resist such efforts. The current skirmish between Google and China over filtering search results is just one example.

But it's not only repressive regimes like China that are the culprits, according to a report released Monday by Reporters Without Borders. The group, which fights for freedom of the press across the world, has cited several nations for their attempts to restrict freedom on the Net.

The list of Internet enemies includes what Reporters Without Borders calls "the worst violators of freedom of expression on the Net." Those nations are Saudi Arabia, Burma, China, North Korea, Cuba, Egypt, Iran, Uzbekistan, Syria, Tunisia, Turkmenistan, and Vietnam. This year's roster of Internet enemies is similar to 2008's roster, with China, Iran, Cuba, and North Korea among the usual list of suspects. But this year, Reporters Without Borders found 60 countries censoring the Internet, twice as many as last year.

A few of these countries isolate themselves from the rest of the world and so are particularly fearful of the open nature of the Internet. Others restrict development of their Internet or purposely shut or slow it down at times, says Reporters Without Borders.

But certain countries are on the list not only for repressing and restricting Web content but for harassing and arresting bloggers and Internet activists. Close to 120 bloggers, cyberdissidents, and others, are currently in jail for expressing their ideas online, says Reporters Without Borders. China is the worst offender, having put 72 people behind bars, according to the group, followed by Vietnam and Iran.

Turkey and Russia are also countries to watch--they're currently on Reporters Without Borders "Under Surveillance" list. In Russia, the Kremlin has arrested and prosecuted bloggers and censored Web sites that it considers extremist, says the group. In Turkey, Web sites that discuss the army, the Kurds and Armenians, and other topics considered taboo are blocked.

Further, two democratic countries are on the "Under Surveillance" watch list. Reporters Without Borders has cited Australia, which has been trying to push through an Internet filtering system, and South Korea, which sets up laws that are imposing too many restrictions on Internet users.

In authoritarian countries, traditional print and TV media are typically controlled by a government that restricts any open exchange of ideas and information. But since the Internet can't as easily be controlled, Reporters Without Borders sees it as a important medium for discussion and sharing information, and one in which "repressed civil societies can revive and develop."

Activists increasingly use sites such as Twitter, Facebook, and YouTube to get their messages across. That's why the group sees Internet freedom as a crucial outlet for repressed societies, and why certain countries see it as a medium that must be controlled.

But there is cause for optimism, says Reporters Without Borders. More Netizens in certain authoritarian countries are effectively using decryption tools and proxy setups to sneak past censorship. More bloggers and other users are organizing themselves into groups as a form of collective resistance. Finally, more pressure is being put on repressive regimes by the United States and other global powers to loosen the reins of censorship.

Naming and Shaming ‘Bad’ ISPs
Brian Krebs

Roughly two years ago, I began an investigation that sought to chart the baddest places on the Internet, the red light districts of the Web, if you will. What I found in the process was that many security experts, companies and private researchers also were gathering this intelligence, but that few were publishing it. Working with several other researchers, I collected and correlated mounds of data, and published what I could verify in The Washington Post. The subsequent unplugging of malware and spammer-friendly ISPs Atrivo and then McColo in late 2008 showed what can happen when the Internet community collectively highlights centers of badness online.

Fast-forward to today, and we can see that there are a large number of organizations publishing data on the Internet’s top trouble spots. I polled some of the most vigilant sources of this information for their recent data, and put together a rough chart indicating the Top Ten most prevalent ISPs from each of their vantage points. [A few notes about the graphic below: The ISPs or hosts that show up more frequently than others on these lists are color-coded to illustrate consistency of findings. The ISPs at the top of each list are the "worst," or have the most number of outstanding abuse issues. "AS" stands for "autonomous system" and is mainly a numerical way of keeping track of ISPs and hosting providers.]

What you find when you start digging through these various community watch efforts is not that the networks named are entirely or even mostly bad, but that they do tend to have more than their share of neighborhoods that have been overrun by the online equivalent of street gangs. The trouble is, all of these individual efforts tend to map ISP reputation from just one or a handful of perspectives, each of which may be limited in some way by particular biases, such as the type of threats that they monitor. For example, some measure only phishing attacks, while others concentrate on charting networks that play host to malicious software and botnet controllers. Some only take snapshots of badness, as opposed to measuring badness that persists at a given host for a sizable period of time.

Also, some organizations that measure badness are limited by their relative level of visibility or by simple geography. That is to say, while the Internet is truly a global network, any one watcher’s view of things may be colored by where they are situated in the world geographically, or where they most often encounter threats, as well as their level of visibility beyond their immediate horizon.

In February 2009, I gave the keynote address at a Messaging Anti-Abuse Working Group (MAAWG) conference in San Francisco, where I was invited to talk about research that preceded the Atrivo and McColo takedowns. The biggest point I tried to hammer home in my talk was that there was a clear need for an entity whose organizing principle was to collate and publish near real-time information on the Web’s most hazardous networks. Instead of having 15 or 20 different organizations independently mapping ISP reputation, I said, why not create one entity that does this full-time?

Unfortunately, some of the most clear-cut nests of badness online — the Troyaks of the world and other networks that appear to designed from the ground up for cyber criminals — are obscured for the most part from surface data collation efforts such as my simplistic attempt above. For a variety of reasons, unearthing and confirming that level of badness requires a far deeper dive. But even at its most basic, an ongoing, public project that cross-correlates ISP reputation data from a multiplicity of vantage points could persuade legitimate ISPs — particularly major carriers here in the United States — to do a better job of cleaning up their networks.

What follows is the first in what I hope will be a series of stories on different, ongoing efforts to measure ISP reputation, and to hold Internet providers and Web hosts more accountable for the badness on their networks.

Playing With Fire

I first encountered the Web reputation approach created by the researchers from the University of California Santa Barbara after reading a paper they wrote last year about the results of their having hijacked a network of drive-by download sites that is typically rented out to cyber criminals. Rob Lemos wrote about their work for MIT Technology Review last fall.

Shortly after the Atrivo and McColo disconnections, the UCSB guys started their own Web reputation mapping project called FInding RoguE Networks, or FIRE.

Brett Stone-Gross, a PhD candidate in UCSB’s Department of Computer Science, said he and two fellow researchers there sought to locate ISPs that exhibited a consistently bad reputation.

“The networks you find in the FIRE rankings are those that show persistent and long-lived malicious behavior,” Stone-Gross said.

The data that informs FIRE’s Top 20 comes from several anti-spam feeds, such as Spamcop, Phishtank, and includes data on malware-laden sites from Anubis and Wepawet, open-source tools that let users scan suspicious files and Web sites. Stone-Gross said the scoring is computed based on how many botnet command and control centers, phishing and malware exploit servers for drive-by downloads are at those ISPs, but only when those have been hosted at a given ISP over a certain number of days.

“The threshold is about a week. Basically you get points for each bad server you have, and then it’s scaled according to size,” he said. “We take the inverse of the network size (the approximate number of hosts) and multiple it by the aggregate sum of the network’s malicious activities.”

Stone-Gross said about half of the Top 20 are fairly static. “GigeNET, for example, seem to be leaders in hosting IRC botnets, and this has roughly been the case as long as we’ve been keeping track.” GigeNET did not return calls seeking comment.

Even compensating for size, FIRE lists some of the world’s largest ISPs and hosts conspicuously at the top (worst) of its badness index. However, FIRE’s findings are consistent with those that measure badness from other perspectives, and two major US-based networks show up time and again on most of these lists: Houston-based ThePlanet.com, and Plano, Texas based Softlayer Technologies.

Stone-Gross said a major contributor to the badness problem at many big hosts is the fact that most of their tenants are absentee landlords, some of whom have rented and sub-let their places out to itinerant riff-raff.

“What happens is they’ll have maybe a few hundred or even thousand resellers, and those resellers often sell to other resellers, and so on,” he said. “The upstream providers don’t like to shut them off right away, because that reseller might have one bad client out of 50, and they’re not law enforcement, and they don’t feel it’s their job to enforce these kinds of things.”

Sam Fleitman, chief operating officer at Softlayer, said the company has been trying to become more proactive in dealing with abuse issues on its network. Fleitman said his abuse team has been reaching out to a number of groups that measure Web reputation to see about getting direct feeds of their data.

“Most hosting companies are reactive…finding and getting rid of problems that are reported to them,” Fleitman said. “We want to be proactive, our goals are aligned, and so we’ve been trying to get that information in an automated way so we can take care of these things quicker.”

Indeed, not long after the UCSB team posted their FIRE statistics online, Softlayer approached the group to hear suggestions for reducing their ranking, Stone-Gross said.

“They came to us and said, ‘We’d like to improve that,’ so we had a talk with them and gave them a whole bunch of suggestions,” Stone-Gross said. “That was about three weeks ago, and they’ve since gone from being consistently in the Top 3 worst to usually much lower on the list.”

What’s probably most unique about FIRE’s approach is it allows users to view not just the volume of reported abuse issues at a given network, but also to drill down into specific examples and even chart the life of said abuse examples over time.

For instance, if you click this link you will see the reputation history for ThePlanet.com. The graphic in the upper right indicates that, aside from a brief period in the middle of 2009, ThePlanet has been at or near the top of the FIRE list for most of the last 18 months. Brett-Stone said that one gap corresponds to a time last April when the university’s servers crashed and stopped recording data for a few days.

Click on any historic points in the multicolored line graphs in the bottom left and you can view the IP addresses of phishing Web sites, malware and botnet servers on ThePlanet.com over that same time period, as recorded by UCSB.

ThePlanet’s Yvonne Donaldson declined to discuss FIRE numbers, the abuse longevity claims, or the company’s prevalence on eight out of ten of the reputation lists that flagged it as problematic. In a statement e-mailed to Krebs on Security, she said only that the company takes security very seriously, and that it takes action against customers that violate its acceptable use policies.

“When we find issues of a credible threat, we notify the appropriate authorities,” Donaldson wrote. “We may also take action by disabling or removing the site, and also notify customers if a specific site they are hosting is in violation.”

Charter Communications Rep Says Cable Companies Taking Over All Streaming Video On May 1st
Chris Walters

The Charter Communications CSR who spoke with Dustin has some pretty astounding news about what's on the horizon for all of us. It looks like starting May 1st, cable companies will have total, FCC-sanctioned control over streaming video and will take down all competing services.

Here's what happened when Dustin called to cancel his cable TV with Charter:

Just wanted to let you guys in on the absurd story I was told today by someone named "Guy" when I called Charter to see what I could do about the cost of my cable tv and internet, since it had recently changed from the promo price to a ridiculous regular price.

After making a payment over the phone, I told Guy that I wanted to go ahead and turn off tv service since I don't watch it enough to justify the cost, unless he could get me a deal on my cable tv w/ cable box and extended basic service and 10mbps internet.

Guy proceeded to ask the expected question of why I wanted to get rid of tv, to which I responded that I can stream pretty much anything I like to watch over the internet.

At this point, he said he would see what the cost of internet alone was, and said there would be a $10 "no cable TV" fee (sounds like b.s. to me), which would make it $49.95 a month for internet alone. Then he went on to say that he strongly suggested that I keep the tv service because come May 1, all of the online streaming services would be shut down because the cable TV providers are taking over, and that the FCC regulations are changing so that the cable companies will have total control over streaming video.

Here is a screenshot of the chat.

Knowing that he was giving me a completely false story, I considered stopping him there and letting him know that I knew it was a lie, but I let him go on. He went on to say that after May 1, the only thing that would be available similar to Hulu is video on demand through a cable provider, which meant that I would have to have the cable box to receive this, so he "really suggested" keeping my box and TV service so that I could have that available to me.

After I let him finish his "suggestions" I just played dumb and said I would consider it, then asked what was the best price he could give me on a bundle of TV and internet. The price he gave me for the bundle was (conveniently) cheaper than me going to just internet at $45/month for basic cable w/ box and internet. I was short on time, so I told him to just put it at that rate for now, but the experience today with him really left a bad taste in my mouth about Charter and how the employees will make up completely false statements to deceive customers in hopes that they can make them order more expensive services. Now that I'm home for the day, I'm going to be researching my options in this area and look at completely getting away from Charter entirely.
Dustin! Agggh! Dustin! Why would you reward Guy for lying like that? You should have pointed out that you knew he was lying and that you were going to report him. You should still report him to Charter management, and while you're at it file a complaint with the FCC and your state's attorney general. Just because you caught the lie doesn't mean every customer who calls in will know better, which means Guy may be deliberately misleading Charter customers in order to sell services.

Does HTML5 Really Beat Flash? The Surprising Results of New Tests
Sarah Perez

With the impending launch of the Apple iPad, the Cupertino-based company's shunning of Adobe Flash technology has been brought to the forefront of technological discussions. While it was one thing to forgo Flash on a small, mobile device such as the iPhone or iPod Touch, some are questioning whether lack of Flash support is going to be a make-it-or-break it feature for the new slate devices arriving next month - devices which, if you believe Apple CEO Steve Jobs - are "better than netbooks."

On the flip side, Apple supporters echo the company's sentiments that "Flash is a CPU hog" and including support for the technology in Apple's mobile line-up would negatively impact battery life.

However, recent tests have put Flash up against HTML5, the new web markup language that eliminates the need for the Adobe plugin. The results of these tests show that this is not a simple black-and-white issue. Is Flash really a CPU hog? Yes, in some cases. But, surprisingly, not all the time. In fact, sometimes HTML5 actually performed worse.
Testing Flash and HTML5

Jan Ozer is an expert in video encoding technologies, has worked in digital video since 1990 and is the author of 13 books related to the subject [Editor's Note: some people have pointed out that Ozer has done seminars and written books featuring Adobe products, so therefore he makes money from the success of Adobe Flash. We don't think that has any effect on the test outcomes, but we thought it was worth updating the post to note it.] Recently, he put HTML5 up against Flash in a series of tests that pitted the two technologies against each other on both the Mac and PC and in different web browsers including Internet Explorer 8, Google Chrome, Apple Safari and Mozilla Firefox.

The results of the tests in their entirety are published here on StreamingLearningCenter.com. The summary in a nutshell? Flash isn't always a CPU hog, sometimes that honor goes to HTML5.

Some of the highlights of Ozer's findings are below, broken up into both Mac and Windows test results.

Mac Tests

* With Safari, HTML5 was the most efficient and consumed less CPU than Flash using only 12.39% CPU. With Flash 10.0, CPU utilization was at 37.41% and with Flash 10.1, it dropped to 32.07%
* With Google Chrome, Flash and HTML5 were both equally inefficient (both are around 50%)
* With Firefox, Flash was only slightly less efficient than in Safari, but better than in Chrome

Windows Tests

* Safari wouldn't play HTML5 videos, so there was no way to test that. However, Flash 10.0 used 23.22% CPU but Flash 10.1 only used 7.43% CPU
* Google Chrome was more efficient on Windows than Mac. Playback with Flash Player 10.0 was about 24% more efficient than HTML5, while Flash Player 10.1 was 58% more efficient than HTML5.
* On Firefox, Flash 10.1 dropped CPU utilization to 6% from 22% in Flash 10.0
* In IE8, Flash 10.0 used 22.41% CPU and Flash 10.1 used 14.62% CPU

Hardware Acceleration Key to Flash Performance

In analyzing the results of the tests, Ozer determined that the key to better Flash performance was dependent upon whether or not it could access hardware acceleration. This feature, launched in Flash 10.1, allows the plugin to use the graphics processing unit (GPU) on some computers to decode video. Depending on the video card and drivers, (NVIDIA, AMD/ATI and Intel offer products that support this), the video decoding process in Flash 10.1 can now work for all video playback, not just full-screen playback as was available in Flash 10.0.

According to Adobe, hardware acceleration is not supported under either Linux or Mac OS X, the latter because Mac OS X does not expose access to the required APIs. Adobe goes on to say "The Flash Player team will continue to evaluate adding hardware acceleration to Linux and Mac OS X in future releases."

Here's what this all means in layman's terms: Apple isn't allowing Flash to become more efficient on their Mac OS X/Safari platform (or their iPod/iPhone/iPad one, either) by not providing the access to the hardware it needs to reduce its CPU load. Adobe is waiting and watching to see if they do, but, as Ozer says "the ball is in Apple's court."

Will Apple budge? At this point, it's unlikely. In blocking Flash on Apple devices, the company can easily claim that it's simply not an efficient technology...and that's true for now, considering how it's set up. But if the company wanted to allow it and make it work, it seems reasonable to believe that they could. This is what leads some insiders to believe that the decision to block Flash is less of a technological one and more of a business-minded one. After all, if you could easily visit Hulu.com to stream TV shows and movies, then why would you need to buy them from the iTunes Store?

So while Flash's "CPU hogging" may be a contributing factor in Apple's decision to not support the technology on their mobile devices, that's probably not the only reason behind the block.
http://www.readwriteweb.com/archives...ew_tests .php

Ron Lundy, a Rock D.J. in New York, Is Dead at 75
Dennis Hevesi

Ron Lundy, who wrapped his on-air exuberance in a soft Southern drawl during more than 30 years as a rock ’n’ roll D.J. in New York City, died Monday in Oxford, Miss. He was 75 and lived in Bruce, Miss. (population 2,097).

The cause was a heart attack, said his wife, Shirley.

“Hello, Love — this is Ron Lundy from the greatest city in the world!” was his longtime catchphrase.

“He made everybody feel good with that signature,” said Joe McCoy, who was Mr. Lundy’s program director at WCBS-FM for 13 years. “He laughed and laughed while he was on the air.”

Along with the likes of Bruce Morrow (known as Cousin Brucie), Dan Ingram, Dan Daniel, Scott Muni, Herb Oscar Anderson and Jack Spector, Mr. Lundy was among the popular broadcasters in New York during the heyday of rock radio. He was at WABC-AM from 1965 to 1982, and was at the microphone beside Mr. Ingram when the station played its last Top 40 tune on May 10, 1982, before switching to a talk-radio format.

From February 1984 to September 1997, he filled the 9 a.m.-to-noon slot at WCBS, reprising oldies from the ’50s and ’60s.

Fred Ronald Lundy was born in Memphis on June 25, 1934, the only child of Fred and Mary Lundy. His father was a railroad engineer. Besides his wife of 53 years, the former Shirley Barnes, he is survived by a daughter, Jana Haggerty; a son, Fred Jr.; and two grandchildren.

After graduating from high school, Mr. Lundy served in the Marine Corps in the early 1950s, then returned to his hometown. “To be quite truthful, he didn’t want to work, so he went to radio school in Memphis on the G. I. Bill,” his wife said.

Soon after, Mr. Lundy landed an off-air job at WHHM in Memphis. “He was working in the record library at the station and somebody didn’t show up that night, so he went on air, and that was it,” Mrs. Lundy said.

Mr. Lundy went on to work at stations in Greenville, Miss.; Baton Rouge, La.; and St. Louis before being hired by WABC in New York. After retiring from WCBS 13 years ago, he and his wife returned to the South.

“We put our feet up on the porch,” Mrs. Lundy said. “It’s so quiet down here, no fire engines; and dark, not like New York City.”

Music Biz Insiders say Sony-Jackson Deal Makes Sense
Gail Mitchell

The magnitude of Sony Music Entertainment's landmark recording contract with the estate of Michael Jackson raises an inevitable question: Is it a smart deal for the label?

Given Jackson's superstar status, his influential creative legacy and the market's seemingly insatiable appetite for all things MJ, the consensus of executives who handle works of other deceased music stars is an overwhelming "yes."

Under the contract, which guarantees the estate between $200 million and $250 million, Sony will issue 10 releases of Jackson's music through 2017, with the double-CD "This Is It" soundtrack counting as the first of these. Already in the pipeline is the planned November release of a collection of previously unreleased tracks and a 2011 reissue of Jackson's seminal 1979 Epic album, "Off the Wall."

The Jackson/Sony deal eclipses such recent headline-making unions as Live Nation Entertainment's pacts with Madonna and Jay-Z, pegged at $120 million and $150 million, respectively. And it places Jackson among a select group of artists who posthumously remain major wage earners: Elvis Presley, Ray Charles, Frank Sinatra and Jimi Hendrix, whose new album of unreleased material, "Valleys of Neptune," debuted at No. 4 on the Billboard 200.

Since Jackson's June 25 death, his catalog has generated sales of 8.7 million albums in the United States, according to Nielsen SoundScan, and a reported total of 31 million worldwide. To date, the "This Is It" double CD has sold 1.5 million units domestically, according to SoundScan, and more than 5 million worldwide, according to Sony.

Long-Term Goals

Sony has been in talks with the estate since late last summer, when they came together to discuss the "This Is It" movie and soundtrack, according to Columbia/Epic Label Group chairman Rob Stringer. The new contract renews Jackson's 30-year association with the company, which dates back to 1979.

"My first premise for wanting to do something long-term," Stringer says, "was there was music that was out there post the term of our contract, and I wanted that wrapped up as part of our forward-going structure with the estate. For instance, it would have been a very strange process if we had to deal with the estate and then another record label signed the material post the term after 'Invincible.' It was a much-needed process for both sides to have everything in place. Both the 'This Is It' movie soundtrack and DVD exceeded our expectations. We knew we had something incredibly buoyant in terms of the legacy of a fantastic artist."

John Branca, who with John McClain serves as special administrator for the Jackson estate, says the contract is in keeping with future projects and other ideas he and Jackson had discussed before his death. "What John (McClain) and I have been trying to do is execute a game plan Michael would have been comfortable with," Branca says. "We have turned a lot of things down; we have been very selective. And yet we're also very aggressive about wanting to do these kinds of deals that Michael would have been proud of."

Tony Gumina, president of the Ray Charles Marketing Group, calls the Jackson/Sony agreement a great deal for the major. "The $250 million figure sounds incredible, but so did the $60 million that Columbia Pictures guaranteed for the footage used in the 'This Is It' film," Gumina says. "It has since grossed more than $200 million in worldwide box office and DVD sales."

Bob Sillerman, chairman/CEO of CKX, which oversees Presley's estate, doesn't view the contract as much of a gamble because of Jackson's unique appeal. "If their experience with the Jackson catalog is anything like our experience with the Elvis catalog -- where ... there has been a treasure trove of unreleased material and the ability to repackage material -- then the label and the estate have done something unique and will be immensely successful."

Moving Quickly

A senior executive at another major label agrees that the deal is a wise investment, while observing that the speed at which it was completed suggests "just how much debt pressure there must be on the heirs." The executive adds that "the important thing now is for Sony to handle the assets and fans with care and respect and not overlook the demand at the moment."

The contract is also a testament to Jackson's worldwide appeal, Gumina says.

"When you're dealing with icons like Michael Jackson and Ray Charles," he says, "their appeal in the international markets is remarkable, so you're not just selling product in North America. If there are some great Michael Jackson recordings in the Sony vaults, this should be the best catalog investment they have ever made."

The key to maximizing this kind of material is respecting the artist's legacy and recognizing that less is more. "There is no urgency to rush these out," Sillerman says. "Being respectful of the integrity of the original creation and the original audience is something that the estate and the label know as well as anything."

Sustaining interest in any legacy act in the long term remains a challenge. But not every legacy act carries Jackson's cachet. "This deal shows you the power of the Michael Jackson brand," says Larry Mestel, CEO of Primary Wave Music Publishing, which owns a stake in Kurt Cobain's song catalog. "There are only a handful of artists who have that type of power. That's why Sony was very smart to make that deal."

Sillerman adds, "There are other world-class acts that I don't think have the reach and impact that Michael and Elvis have. I would put the Beatles up there and also the Rolling Stones."

Branca says there will always be interest in Jackson. "Look what happened with Elvis," he says. "To this day, there's interest in Elvis. And I think there will be enduring interest in Michael. It's our job to continue to expose Michael to new generations."

(Additional reporting by Louis Hau, Craig Marks and Ray Waddell)

Sam Adams Is The Talk Of The Mainstream Music Industry
Eric R. Danton

There's a buzz lately around Boston rapper Sam Adams, and not the kind of buzz he raps about: A swift undercurrent of skepticism in the music industry runs beneath prominent iTunes music rankings for "Boston's Boy," his new EP.

Adams, 22, whose full name is Sam Adams Wisner, is a senior political science major and captain of the soccer team at Trinity College in Hartford.

His eight-song collection debuted at No. 1 in the hip-hop/rap category, and at No. 7 overall, after its release March 4. Or did it?

Could a college kid with no significant presence in the industry do a large-enough volume in sales to rank so high on iTunes (only about 8,000 copies of the EP, as it turns out)?

If so, is it indicative of the growing obsolescence of the capital-M, capital-I Music Industry in how young people find and consume music?

A handful of music-biz insiders doubt it.

One skeptic, Jay Frank, senior vice president of strategy for CMT and author of the book "FutureHit.DNA," uses his blog to examine various disparities between Adams' alleged iTunes numbers and other sales indicators. Another doubter, music-industry observer Bob Lefsetz, wrote last week that "a little birdie" told him that Adams' numbers were faked. Lefsetz has insider connections at Apple, which runs iTunes.

Billboard magazine, on the other hand, supports Adams' numbers, and the rapper himself has denied juicing the numbers, both in a statement and in a series of Twitter posts written in a vulgar frat-boy hip-hop patois that's unprintable here.

Regardless of the numbers, Adams follows proudly in the footsteps of party-rap acts such as Shwayze and LMFAO, with a touch of Asher Roth thrown in. His rhymes are an unsubtle collection of braggadocio, crude sexual allusions and drug references (surely a comfort to Trinity's soccer coach), and Adams delivers them with conversational flow in a rough (occasionally Auto-Tuned) voice that alternates between sounding smug and oddly belligerent.

His biggest song so far, "Driving Me Crazy," rides a synthesizer vamp cribbed from the Eurythmics' "Walking on Broken Glass," and he's also attracted attention for "I Hate College," a response to Roth's "I Love College."

What all this means for Adams' commercial prospects is anyone's guess, really. He's well positioned to appeal to the college-campus party crowd, but whether his act can translate to a wider audience remains to be seen. The controversy certainly won't hurt.

Adams, a descendant of the presidential Adamses, performs at a CD-release party tonight in a sold-out event at Harper's Ferry in Allston, Mass., just outside Boston.

UMG To Launch U.S. Pricing Test
Ed Christman

The Universal Music Group could rewrite U.S. music pricing when it tests a new frontline pricing structure, which is designed to get single CDs in stores at $10, or below.

Beginning in the second quarter and continuing through most of the year, the company's Velocity program will test lower CD prices. Single CDs will have the suggested list prices of $10, $9, $8, $7 and $6.

To accommodate the lower pricing, UMG labels also plan to step up deluxe versions of albums that can sell at higher prices for the more devout music fans and collectors. UMG is also banking that the lower price points will at the least be offset by increasing CD sales volume.

Most new releases will carry the new price points, although there will be the occasional exception, UMG sources say. At deadline, it was unclear exactly when the program would begin, because Universal Music Group still hadn't relayed that information to accounts.

"We think [the new pricing program] will really bring new life into the physical format," Universal Music Group Distribution president/CEO Jim Urie said.

25% profit margin

Retailers should respond well to the new price points. But the level of their acceptance will likely depend on the profit margins that the new UMG wholesale prices afford. According to sources, the new pricing structure will carry a 25% profit margin, which means that $10 list CDs will wholesale for $7.50; $9 for $6.75, $8 for $6, and so on.

Consequently, retailers who buy from wholesalers will likely be less enthusiastic about the move.

Newbury Comics CEO Mike Dreese gives the initiative "two thumbs up." But he adds that the industry still needs the other major labels and independents to make similar pricing moves for overall CD sales in order to be positively impacted.

"We are happy to see that a major music vendor has made a decision to lower his price substantially, because it's what the customer wants today if we are going to see a viable CD business," Trans World Entertainment CEO Bob Higgins said.

Reaction from industry

On March 16, executives at the other majors were nervous about the UMG move, calling around to accounts for information on the move. Privately, some appeared annoyed by the move. "Why does Universal feel the need to get below $10?" a senior distribution executive at a competing major asked.

Yet merchants have long clamored that lower pricing will prolong the life of the CD, which is down 15.4% so far this year. Album sales were down 18.2% last year, and 19.7% in 2008, when CD sales totaled 360.6 million, as opposed to the 706.3 million units CDs scanned in 2000.

In response to declining sales, the majors and indies have responded by lowering catalog pricing across the board -- either formally, like Sony Music Entertainment's Accel program does (Billboard, Sept. 5), or through promotional vehicles like UMG's XL promotion -- to bring wholesale cost price down to the $7-$8 range. Frontline pricing, however, still remains a mixed bag, with UMG main wholesale price point at $10.35; Sony at $10.50, EMI at $12.04 and the Warner Music Group at $12.05.

Between all the retail circulars touting hit titles at $9.99, and iTunes selling albums at that same price point, it became conventional wisdom among merchants that $10 is the magic price point that will induce consumers to buy more CDs.

The new UMG pricing structure for CDs won’t impact its digital pricing; the company plans to keep its current pricing for digital.

Pricing programs

UMG was the first major to address declining sales when it initiated Jumpstart pricing in September 2003, which put frontline pricing at $10.35. But the other majors condemned that move and refused to lower prices until years later.

As CD sales continued its decline, merchants began renewed requests for the labels to respond yet again beyond the catalog pricing moves, JumpStart and Accel. In the last few months, Trans World Entertainment began testing the $9.99 price point in over 100 stores, while Wal-Mart has been telling the majors to release shorter albums at lower prices more frequently.

The Trans World test -- in which most independents and every major except for the Warner Music Group participated -- produced units sales increase of more than 100%, according to label executives who participated in the tests. The Trans World test helped sell the new pricing model to the Universal labels, sources say.

On the reluctance by other majors to so far address the $10 retail price point issue, one source says, "The definition of idiocy is doing the same thing over and over and expecting a different result. Things are not going to get better for CD sales unless the price point is addressed. One thing that the Trans World test shows for sure, $10 will drive sales and traffic."

The Girls Who Kicked in Rock’s Door
Sia Michel

THE most striking thing about “The Runaways,” a new film about the trailblazing bad-girl rock band from the 1970s that spawned Joan Jett, is how authentic it feels. The clubs are properly scuzzy. The dialogue is properly raunchy. The actors can properly sing. The hair is fried and feathered, the skin spotty from weeks of running on little but potato chips and estrogen. From the adrenaline rush of performing to the monotony of rehearsal, it’s a vivid snapshot of life on the road for ambitious teenagers who are constantly told that rock ’n’ roll “is the sport of men.” (And that’s their own manager talking.)

One reason may be that the movie is partly based on “Neon Angel: A Memoir of a Runaway” (Harper Collins), a newly revamped autobiography by the group’s lead singer Cherie Currie, whose chillingly quick self-destruction is relived through Dakota Fanning. Another may be that Ms. Currie and Ms. Jett (played by Kristen Stewart) put the actors through hard-rock boot camp for several weeks before filming. And Floria Sigismondi, the writer and director, has “been around music all my life,” as she said in an interview in a hotel room in Midtown. Along with making videos for artists like David Bowie (Ms. Currie’s musical hero) and the White Stripes, she’s worked in clubs and gone on tour with her husband’s band, the Living Things. “I wanted it all to look real. I wanted bed head. I wanted freckles and pimples,” she said of the film, her first feature. The words she kept repeating on the set were “raw” and “gritty.”

The rock lifestyle has been notoriously difficult to get right on film. The mainstream fantasy — sex, drugs, hard-core partying — usually trumps the more tedious reality of musicians striving for success but often becoming trapped by it. The result has been films that end up either bloated and cartoonish (see the American Indian shaman following Jim Morrison around “The Doors”), sweetly sanitized (see the intercourse-avoiding groupies of “Almost Famous”) or as road-to-ruin predictable as “Behind the Music.” But since 2002, when the hyperactive “24 Hour Party People” captured the dance-oriented music scene in ’70s and ’80s Manchester, England, there has been a trickle of rock biopics that get the milieu and the music just right, like “Control,” the story of Joy Division, and “What We Do Is Secret,” the story of the Germs.

“The Runaways” is the rare movie to address the female rock experience. Until now the touchstone has been the fictional 1982 cult film “Ladies and Gentlemen, the Fabulous Stains,” a look at three skunk-haired female punks who make proclamations like “Every girl should be given an electric guitar on her 16th birthday.”

“It’s very hard to make a film about popular musicians, or music as the subject in any context,” said Jack White of the White Stripes in an e-mail message. “You could trust Floria to find the right angle because she has no need to oversell the subject.”

Ms. Sigismondi, 44, earned her first big buzz as a video director in 1997 after strapping Marilyn Manson into stilts and gruesome dental gear for the “Beautiful People” clip. She looks like a rock star herself, dressed in slim-fitting black pants and a black sweater, her long, slightly-goth hair fanning over a furry caveman vest. Simultaneously cool and effervescent, she is easy to imagine directing arty musicians like Bjork, Sigur Ros and Interpol as well as pop divas like Christina Aguilera, which she did.

Born in Italy to opera singers, Ms. Sigismondi moved to Canada with her family when she was 2. She grew up doing her homework in opera houses, surrounded by people in costume, she said, and dreamed of becoming a painter. After art college she embarked on a career as a fashion and art photographer; her work has been widely exhibited and collected in two books. In the early 1990s a production company suggested she make the leap into directing music videos. “Instead of coming up with one image, I had to come up with 100 images,” she said. “But I loved it right away. Now I was able to be more conceptual.”

The biggest legend she has ever worked with is Mr. Bowie. The video for his 1997 song “Little Wonder” is a quick-cut barrage of eyeballs, eye patches and aliens. “Floria is a real force of nature, never short of ideas, and meticulous in the way she brings them into play,” Mr. Bowie said in an e-mail message. “She’s also a little bit crazy, in a dark way, which in a working situation is just fine with me.”

While shooting a video for the Living Things in Prague in 2004, she met her future husband, Lillian Berlin, the lead singer and guitarist of the alternative rock band. They married in a park in Toronto and exchanged their vows on a cross made of red rose petals. Their daughter is named Tosca, after the opera.

Based in Los Angeles, Ms. Sigismondi came to the project, made for less than $10 million, after her manager introduced her to two of the producers, Art and John Linson. (Art produced films like “Fast Times at Ridgemont High” and “Fight Club”; John, his son, produced “Lords of Dogtown,” about ’70s skaters.)

“When we met Floria she was undeniable, even though she hadn’t directed a film before,” Art said in a telephone interview. “If you’ve met her and you’ve seen her work, you see that she’s got a spectacular eye, she’s got great style and she’s got the heart of a girl.” Both producers thought a female director was crucial. “We felt from the beginning that this is really a tale of two young girls” — Cherie and Joan — “getting in way over their heads in a world they knew very little about, a man’s world, and there’s a price to pay for that,” he said. “We thought: It’s got to come from the heart of another woman.”

Though “The Runaways” follows the general trajectory of the band, Ms. Sigismondi also considers the movie more of a coming-of-age story than a definitive biopic, focusing on the relationship among Cherie, Joan and Kim Fowley, the band’s insult-spewing male manager (Michael Shannon). In the film Cherie struggles with her twin sister, a sick alcoholic father, addiction and instant notoriety. Above all, Ms. Sigismondi said, she is a young girl trying to define herself in a high-pressure world of excess, with little adult guidance. “It’s a cautionary tale on Cherie’s side and an inspirational tale on Joan’s side,” she said. (After the Runaways broke up in 1979, Ms. Jett had a monster No. 1 hit with a 1982 cover of “I Love Rock ’n Roll.”)

In a telephone interview Ms. Fanning said the anarchic world the Runaways inhabited drew her to the Cherie role. “Working in the film industry, there are so many people in control, lots of authority and rules about so much, including school,” she said. “And there the Runaways were with no rules at all, out on the road with no supervision, making it up as they go along.”

The Runaways’ classic hit from their four-year career is the 1976 jailbait anthem “Cherry Bomb”; the quintet’s combative sexuality — surprising for rock at the time — seemed to both alienate and titillate audiences. Though they were talented musicians who helped write their songs and were ferocious live, they were often written off as a slutty, manufactured novelty act by the dude-dominated ’70s rock press and heckled by male musicians, even those they appeared with. (Creem magazine infamously dismissed them with three unprintable words.) “The attitude was that women couldn’t rock ’n’ roll,” said Ms. Currie, who joined when she was 15. “We were a real threat, especially being teenagers.”

In a typical scene in the movie Joan, the rhythm guitarist and a singer, and Sandy West (Stella Maeve), the drummer, are mocked by two craggy-faced longhairs during sound check at the kind of club where pipes threaten to fall from the ceiling. “One day you’ll be opening for us,” the girls say, ready to fight. “Opening your legs, maybe,” the men sneer. To get revenge, Joan sneaks into the guys’ dressing room and urinates on a guitar.

While writing the script, Ms. Sigismondi interviewed Ms. Jett, Ms. Currie and members of her family, along with Mr. Fowley.

The producers didn’t immediately imagine Ms. Fanning as Cherie, who sleeps with Joan (while wearing roller skates) and snorts cocaine in an airplane bathroom. After all, she was only about 12 at the time and was best known for playing plucky yet innocent characters in films like “Uptown Girls” and “The Cat in the Hat.” But in the years it took to get the film financed, “she literally grew up during that time,” Art Linson said. “It was pure luck that it took that long, because she’s spectacular.” (She also appeared as a young rape victim in “Hounddog.”)

After the actors were signed, rock school began. The women took lessons in their characters’ instruments so they knew how to hold and wield them correctly, and Ms. Fanning and Ms. Stewart trained to sing exactly like the women they were portraying. “The first time I heard a tape of Kristen singing ‘I Love Playing With Fire,’ I thought it was me,” Ms. Jett said with a husky laugh in an interview at a rehearsal studio in Chelsea, an eternal rocker in skinny gray jeans and Converse, winkingly barking orders at her all-male band and crew. (She’s an executive producer of the film.)

“I sent it back and said, ‘You’ve got to send me a new mix with Kristen higher up, because I just hear me.’ And someone finally said, ‘Joan, that is Kristen.’ She had nailed all of my inflections to such a degree that I couldn’t tell.”

Meanwhile Ms. Fanning got onstage with the Living Things to learn the ways of a rock goddess, from the force of her voice to Cherie’s microphone twirling strut. “I had never sung with a band before and felt the power of something like that behind me,” Ms. Fanning said.

Ms. Sigismondi was exacting about period authenticity too, trying hard to avoid what she called the kitschy ’70s “Brady Bunch” effect. “I wanted to tone it down a bit,” she said, and make it look a “little bit dirty.” Instead of shooting digitally, Ms. Sigismondi opted for Super 16 film, which has a grainy, more retro texture.

It would have been easy to go over the top with the Runaways, given their stranger-than-fiction back story. But the filmmakers were relatively restrained. Look at what was left out: in Ms. Currie’s memoir, she is raped at 15 and later impregnated by a much-older crew member; some of the girls are arrested in Britain and assailed by a flying Bowie knife at a club.

Ms. Currie hopes the film will bring a reconsideration of the Runaways’ legacy. (“When I saw Madonna in a corset for the first time, I was like, ‘Hey, I did that first,’ ” she said.) The band’s pioneering status is often underplayed in music histories, even though Ms. Jett, a platinum-selling rocker with the Blackhearts in the ’80s, went on to become a feminist symbol, embraced by the riot grrrl movement of the 1990s. Lita Ford, the lead guitarist, became the rare female heavy-metal shredder.

And after forays into acting in films like 1980’s “Foxes,” substance abuse counseling and other endeavors, Ms. Currie may have the most appropriate post-Runaways career of all: She is a chain-saw artist, carving sculptures out of wood. “It’s just me, a chain saw and a log,” she said. “And no one’s telling me what to do.”

Behind "Runaways" Film, Legal Battle Simmers
Matthew Belloni

At the Los Angeles premiere of "The Runaways" last week, screams reminiscent of a rock concert greeted real-life band members Cherie Currie and Joan Jett as they were introduced with stars Dakota Fanning and Kristen Stewart.

Not enjoying a Hollywood moment that night: Jacqueline Fuchs, the fiery bass player who performed in the 1970s all-girl quintet as Jackie Fox but whose absence from the premiere mirrors her disappearance from the story of the Runaways, as told in the new film.

Producers of the punk biopic, which opens Friday, chose to move forward on the project without obtaining Fuchs' life rights or those of Runaways guitarist Lita Ford. As a result, the bassist character was minimized, Fuchs' name was changed and Jett even dropped a cherry bomb of a lawsuit on her former bandmate when she raised a stink about the movie.

"Fuchs tried to have the ... film halted, and has demanded to see the script, even though there is no character based on her," claims a lawsuit for tortious interference with business relationships, quietly filed against Fuchs in December by Jett, her label Blackheart Records and music producer Kenny Laguna. Jett and Laguna are executive producers on the Floria Sigismondi-directed, Apparition-released film.

The story of Jackie Fuchs and "The Runaways" provides timely instruction for producers hoping to develop biopics and other fact-based projects without getting life rights from everyone involved. It also highlights one of the hottest debates in entertainment law: With the rise in popularity of real-life, ripped-from-the-headlines film and TV, what rights are necessary to make a film based on actual people?

Too Many Rights?

Despite the occasional legal dustup (or, more likely, because of them), producers and studios often overcompensate by securing more rights than are actually required.

"I can think of four or five good reasons to acquire life-story rights, but needing them to make a movie isn't one of them," says David Halberstadter, a rights expert at Los Angeles law firm Katten.

Halberstadter says First Amendment protections are generally stronger than producers realize and are often enough to allow depictions of real people, assuming they're not defamatory and don't unlawfully invade someone's privacy. Life rights can be useful to take a person off the market or to gain access to materials that might not be public. Rights deals also typically require a subject to participate in marketing efforts, and they can give producers permission to fictionalize a story, which can help prevent complaints from people who don't like the way they're portrayed in the final product.

But even a legally sound project isn't immune from litigation. In the 1990s, Michael Polydoros, a schoolmate of the writer-director of "The Sandlot," sued 20th Century Fox claiming the movie invaded his privacy by including a character based on him (named Michael Palledorous). He lost.

Still, necessary or not, studios often snap up life rights as an insurance policy against potential lawsuits.

Minimizing Risk

To make "The Runaways," producers Art and John Linson optioned Currie's book "Neon Angel: A Memoir of a Runaway" and secured her life rights. They got rights from Jett and drummer Sandy West, as well as producer Kim Fowler, who, along with Jett and Laguna, owned music publishing rights that would be necessary to include the band's hit songs in the film.

Production company River Road Entertainment then commissioned a legal opinion that analyzed the life rights issues that might arise, and the script was adjusted to minimize risk.

Even if producers ultimately didn't need Fuchs' involvement, they had reason to be afraid of her. The bassist split from the Runaways in 1977 (there is disagreement about when exactly that happened, a debate explored in the 2004 documentary "Edgeplay: A Film About the Runaways") and has since squabbled with her former bandmates about merchandising and other issues.

And unlike Jett, who went on to a successful post-Runaways music career, Fuchs went to Harvard Law School. Yes, Jackie Fox is now a lawyer. Focusing on showbiz, she spent years in the legal trenches at places like Columbia Pictures and Miramax and now works for a Los Angeles-based film company, which means she's as knowledgeable as anyone about legal issues that can arise during production.

"She was sending letters around to producers and others who were involved," says Oren Warshavsky, Jett's lawyer. "'Sounds like you're doing something including my name and likeness; what are you going to do about it?' That kind of thing."

The Hollywood Reporter talked to Fuchs, who wouldn't comment on the Jett lawsuit. The complaint, originally filed in New York, was rejected by a judge in February on jurisdictional grounds. But Warshavsky says it might be refilled in California, so Fuchs is treating it as pending litigation.

Fuchs says she hasn't spoken to Jett in a decade. And no, she hasn't seen the film. Given the drama behind the scenes, we're curious whether it's on her to-do list.

"I'm curious whether I'm going to see it too," she says.

How Oscar Found Ms. Right
Manohla Dargis

KATHRYN BIGELOW’S two-fisted win at the Academy Awards for best director and best film for “The Hurt Locker” didn’t just punch through the American movie industry’s seemingly shatterproof glass ceiling; it has also helped dismantle stereotypes about what types of films women can and should direct. It was historic, exhilarating, especially for women who make movies and women who watch movies, two groups that have been routinely ignored and underserved by an industry in which most films star men and are made for and by men. It’s too early to know if this moment will be transformative — but damn, it feels so good.

No matter if they’re a source of loathing and laughter, the Oscars matter as a cultural flashpoint, perhaps now more than ever. All those Oscar viewers might not be ticket buyers, but when they watched the show this year they would have heard, perhaps even for the first time, the startling, shocking, infuriating or uninteresting news — pick your degree of engagement — that Ms. Bigelow was the first woman in Oscar’s 82 years to win for best directing. Real discussions about sexual politics don’t usually enter the equation during the interminable Oscar “season,” which is why her nomination was almost as important as her double win.

Even before the nominations were announced on Feb. 2, as she picked up one award after another, including from her peers at the Directors Guild, people who don’t usually talk about women and the movies were talking about this woman and the movies. Uncharacteristically, the issue of female directors working — though all too often not working — was being discussed in print and online, and without the usual accusations of political correctness, a phrase that’s routinely deployed to silence those with legitimate complaints. I don’t think I’ve read the words women and film and feminism in the same sentence as much in the last few months since “Thelma & Louise” rocked the culture nearly two decades ago.

Written by Callie Khouri and directed by Ridley Scott, “Thelma & Louise” galvanized critics and audiences on its release in 1991. Time magazine put them on its cover and one very smart entrepreneur put them on T-shirts (“Thelma & Louise Live Forever.”) Some critics embraced its portrait of a powerful female friendship, while others denounced it. In U.S. News & World Report a male writer accused the film of having “an explicit fascist theme, wedded to the bleakest form of feminism.” Commentators seemed as interested in policing the women’s behavior, their hard-drinking and driving, as their criminal actions. Ms. Khouri insisted that Thelma and Louise were outlaws not feminists, though they were both.

Thelma and Louise didn’t need to tote around “The Second Sex” to confirm their credentials as feminist inspirations; the way viewers received the characters proved they were. The same goes for Ms. Bigelow, who doesn’t like to talk about being a feminist touchstone — she doesn’t need to, she has been one for decades — much less her role a female director. Her refusal, along with the types of movies she makes, have not always sat well with some. Like Thelma and Louise, Ms. Bigelow refuses to behave the way she’s supposed to.

A recent failed takedown of Ms. Bigelow in Salon titled “Kathryn Bigelow: Feminist Pioneer or Tough Guy in Drag?” and written by Martha P. Nochimson exposes some of the issues at stake. The heart of Ms. Nochimson’s critique is the charge that Ms. Bigelow and her “masterly” technique have been lauded while Nancy Meyers and Nora Ephron have endured “summary dismissal.” The differences between how they have been received, Ms. Nochimson wrote, “reveal an untenable assumption that the muscular filmmaking appropriate for the fragmented, death-saturated situations of war films is innately superior to the technique appropriate to the organic, life-affirming situations of romantic comedy.”

Putting aside whether “Julie & Julia” is organic or crammed with artificial flavors, it’s too bad Ms. Nochimson didn’t choose a brilliant director who makes films about women, like Jane Campion, rather than lesser talents like Ms. Meyers and Ms. Ephron to make her argument. Because there is a valid point here: Unless they star Meryl Streep, movies about women are routinely dismissed because they’re about women, as the patronizing term “chick flick” affirms every time it’s reflexively deployed. But chick flicks are often the only movies that offer female audiences stories about women and female friendships and a world that, however artificial, offers up female characters who are not standing on the sidelines as the male hero saves the day. It might not be much and usually isn’t, at least in aesthetic terms, but it’s sometimes all there is. Ms. Bigelow doesn’t make those kinds of movies. (Her vampires don’t sparkle, they draw blood.) She generally makes kinetic and thrilling movies about men and codes of masculinity set in worlds of violence. Her technique might be masterly [sic], because she learned from the likes of Sam Peckinpah. But she is very much her own woman, and her own auteur. It’s a bummer that her success elicits such unthinking responses, though it’s also predictable because the stakes for women are high and the access to real filmmaking power remains largely out of their reach. But it isn’t her fault that women’s stories are routinely devalued any more than it’s her fault that these days female directors and female stars in Hollywood are too often ghettoized in romantic comedy.

Some women in film help perpetuate this ghetto, when they should be helping dismantle it or walking away from it altogether. One of the lessons of Ms. Bigelow’s success is that it was primarily achieved outside of the reach of the studios. She had help along the way, including from male mentors like James Cameron, her former husband, who helped produce “Strange Days.” But that movie did poorly at the box office, as did her next two features, “The Weight of Water” and “K-19: The Widowmaker.” It wasn’t until she went off to the desert to shoot “The Hurt Locker,” just as she had when she directed “Near Dark,” her 1987 cult vampire western, that she found a movie that hit on every level.

It was a long time coming, as Ms. Bigelow suggested when she appeared on “60 Minutes” on Feb. 28. Her appearance, for which she was interviewed by Lesley Stahl (Steve Kroft must have been busy), was a classic of its type. During the interview Ms. Bigelow explained to the apparently baffled Ms. Stahl the meaning of scopophilia, a significant word in feminist film theory, though Ms. Bigelow kept gender out of her definition (“the desire to watch and identify with what you’re watching”). She insisted that there was no difference between what she and a male director might do, even as she also conceded that “the journey for women, no matter what venue it is — politics, business, film — it’s, it’s a long journey.”

It’s instructive that she didn’t say it had also been a hard journey, because that might have pegged Ms. Bigelow as a whiner, as in whiny woman. Unsurprisingly, she again had to share her few minutes with Mr. Cameron, whose name Ms. Stahl invoked within seconds of starting and not only because he had directed two of the largest hits in history, including “Avatar.” He was the ex-husband, a powerful director and a representation of male authority who could vet Ms. Bigelow. “How sweet is this to be head to head with your ex-husband,” Ms. Stahl asked. “You couldn’t have scripted it,” Ms. Bigelow laughed. As she has these last months, she played it carefully. She seemed well-behaved.

Her cool has disturbed some, who have scrutinized Ms. Bigelow up and down, sometimes taking suspicious measure of her height and willowy frame, partly because these are the only personal parts of her that are accessible to nosy interviewers. Women in movies, both in front of and behind the camera, are expected to offer a lot more of themselves, from skin to confessions. All that Ms. Bigelow freely gives of herself for public consumption is intelligent conversation and her work. Her insistence on keeping the focus on her movies is a quiet yet profound form of rebellion. She might be a female director, but by refusing to accept that gendered designation — or even engage with it — she is asserting her right to be simply a director.

One of the strange truths of American cinema is that women thrived in the silent era — Mary Pickford was one of the first stars and helped start a studio, United Artists — but soon after the movies started to talk in the late 1920s, women’s voices started to fade, at least behind the scenes. Hollywood might have been partly built on the hard work and beauty of its female stars, but it was the rare female director, Dorothy Arzner starting in the 1920s, Ida Lupino beginning in the 1940s, who managed to have her say behind the camera. It hasn’t gotten better. According to Martha M. Lauzen, an academic who annually crunches numbers about women in American movies: “Women comprised 7 percent of all directors working on the top 250 films of 2009. Ninety-three percent of the films had no female directors.”

It’s impossible to tell what Ms. Bigelow’s Oscars will mean for her, much less whether it will help other women working in the American movie industry. Perhaps Amy Pascal, the Sony studio co-chairwoman who once suggested to me in an interview that men were better suited to direct action movies, will pay Ms. Bigelow a lot of money to make another war film. Or she can sign up Kelly Reichardt, the director of “Wendy and Lucy,” for a buddy movie, but, you know, with women. Maybe Sandra Bullock will take all the good will and power she has rightly accrued and, with Oprah Winfrey, produce that Hattie McDaniel biography that Mo’Nique wants to make. Kristen Stewart can play Vivien Leigh, who appeared alongside McDaniel in “Gone With the Wind,” the biggest movie that Hollywood ever made and, you know, a total chick flick.

"Alice" Leads Box Office, as "Green Zone" Flops

"Alice in Wonderland" raced to a $430 million haul at the worldwide box office on Sunday, while Matt Damon's new Iraq war conspiracy thriller "Green Zone" was one of the year's first big flops.

Director Tim Burton's 3D remake of "Alice" led the field for a second weekend after earning $138 million during the three days beginning on Friday, said distributor Walt Disney Co.

Moviegoers in the United States and Canada chipped in $62 million, a drop of just 47 percent from its opening weekend, and the total North American tally for "Alice" stood at $208.6 million. The foreign total rose to $221 million after a $76 million weekend in 48 markets.

"Green Zone" opened at a distant No. 2 in North America with $14.5 million. Distributor Universal Pictures, which axed its top executives last fall after a poor run at the box office, had hoped for a slightly better showing.

"It's a bit of a disappointment," said Nikki Rocco, president of distribution at the General Electric Co unit.

Damon plays a U.S. soldier questioning the supposed existence of weapons of mass destruction shortly after the U.S.-led invasion of Iraq. Reviews were mixed.

The $100 million movie was directed by British filmmaker Paul Greengrass, who collaborated with Damon on the second two movies in the "Bourne" action trilogy. Those opened to $52.5 million and $69 million, respectively.

Rocco noted "Green Zone" did better than most other entries in the Iraq war genre, including Oscar best picture winner "The Hurt Locker," which has earned about $16 million since June.

"Green Zone" grossed $9.7 million in 14 foreign countries, led by a $3.3 million showing at No. 3 in Britain. The film opened at No. 2 in Australia with $1.9 million.

Universal also underperformed with its last big picture, "The Wolfman," a $150 million monster movie that earned about $135 million worldwide.

The other newcomers in North America made even less of an impact.

"She's Out of My League," a comedy starring Jay Baruchel as a lucky loser, opened at No. 3 with $9.6 million; the romantic drama "Remember Me," starring "Twilight" pinup Robert Pattinson, came in at No. 4 with $8.3 million; and the ethnic comedy "Our Family Wedding" rounded out the rookies at No. 6 with $7.6 million.

"She's Out of My League" was released by Paramount Pictures, a unit of Viacom Inc. "Remember Me" was released by closely held Summit Entertainment. "Our Family Wedding" was released by Fox Searchlight Pictures, a unit of News Corp.

The Academy Awards on March 7 had little impact on the chart. Summit's "The Hurt Locker," already on DVD, earned $828,000 from just 349 theaters -- less than one-tenth of the 3,728 theater count for "Alice in Wonderland."

Fox's "Avatar," which ended up with just three Oscars, fell two places to No. 7 with $6.6 million in its 13th week. Its North American total rose to $730 million and its worldwide tally to $2.6 billion.

(Editing by John O'Callaghan)

News Corp to Net $350-400 Million from "Avatar": Report

Rupert Murdoch's News Corp will earn $350 million to $400 million from James Cameron's blockbuster "Avatar," once the movie is released on pay television and DVD, Bloomberg said, citing two people with knowledge of the financial performance.

The amount represents News Corp's about 40 percent share of as much as $1 billion that the film is expected to earn for its Twentieth Century Fox and "Avatar" investors, the people told the agency.

News Corp's share amounts to almost half of its average quarterly operating profit in the past year, according to the agency.

Fox's "Avatar," which ended up with three Oscars, fell two places to No. 7 with $6.6 million in its 13th week. Its North American total rose to $730 million and its worldwide tally to $2.6 billion.

In February, News Corp had said 50 percent or more of the profit from the James Cameron-directed film would show up over the next two or more quarters.

News Corp could not be immediately reached for comment by Reuters.

(Reporting by Sakthi Prasad in Bangalore; Editing by Hans Peters)

Fox to Mine "Avatar" DVD Release Three Times
Alex Dobuzinskis

Twentieth Century Fox on Tuesday set Earth Day, April 22, for the DVD and Blu-ray release of "Avatar". But fans will have to wait until November for another disc with all the usual extras, and even longer for a 3-D version.

Fox said it had chosen Earth Day as "Avatar's" U.S. and Canada home video release, because the film's theme matches the day's goal of environmental awareness.

The April release will be in 2-D and is thought to be one of the first major movies put out in home video format without any of the special features that are normally included, such as deleted scenes, trailers and behind-the-scenes footage.

The studio plans another home video release in November of the "Ultimate Edition" of "Avatar," and that will include extra features, said sources at Fox, a division of News Corp <NWSA.O>.

A third version, in 3-D, will likely come out next year, they said. By then, more consumers are expected to have 3-D televisions in their homes.

"Avatar" has made a record-breaking $2.64 billion so far at worldwide box offices since its Dec. 18 release, with a large bulk of that coming from 3-D showings.

Sources at Fox said the April disc will come without extra features so that all available storage space can be used for the best picture and sound possible.

"Avatar," which won three Oscars, is about a soldier from an environmentally degraded Earth who is sent to infiltrate a tribe of humanoids aliens living atop a rich mineral deposit on the distant moon Pandora.

The soldier's mission is to find a way to move the tribe so humans can mine the mineral, but he falls in love with a member of the tall, blue Na'vi and leads a revolt against the human colonizers.

Some U.S. conservatives criticized the film, with columnist John Podhoretz of the Weekly Standard faulting it for displaying "hatred of the military and American institutions."

The DVD and Blu-ray disc for "Avatar" will be released in the U.S., Canada and some other countries on April 22. In France, Spain, Belgium and the Netherlands, it will be available on April 21, and in Japan, Germany and Mexico it will hit stores April 23, with other dates varying by country. (Reporting by Alex Dobuzinskis: Editing by Jill Serjeant)

Hollywood Braces for Talks on DVD Releases
Alex Dobuzinskis

Top Hollywood executives and theater owners will seek this week to resolve a brewing dispute over DVD release schedules, a contentious question as the industry grapples with shifting viewer patterns and the advent of high-tech home entertainment.

At the annual ShoWest convention in Las Vegas, starting Monday, studio moguls and the country's largest theater chains hope to reach an understanding on the so-called "window" between a movie's screening and when its DVD is released.

The Walt Disney Co started the ball rolling when it announced it would push up the DVD release of its "Alice in Wonderland" by four weeks -- prompting threats by some theater chains to boycott the hugely marketed film.

Analysts say Disney and other studios want to reduce marketing expenses, adapt to audience's increasing need for on-demand content and boost flagging DVD sales. But theater owners, already facing the roll-out of 3-D TV as a potential competitor, have reacted nervously as studios such as Disney and Time Warner Inc's Warner Bros start to tinker with DVD release schedules.

Theater owners are fighting to protect ticket sales, which have decreased to 1.42 billion in 2009 for the United States and Canada from 1.57 billion in 2002. Chains such as Regal Entertainment Group and AMC Entertainment Inc are fearful that, if studios shorten the window, they could lose even more customers as audiences wait to watch films at home.

Matthew Harrigan, an analyst with Wunderlich Securities, said theater owners fear losses ahead.

"This is nothing right now, but people see a foot in the door. That's what got people spooked," Harrigan said.

Already, Warner Bros, is considering shortening the release window for its adventure movie "Legend of the Guardians" due out in September, said a source familiar with the situation.

Peter Guber, chairman and chief executive of Mandalay Entertainment Group, said studios are not likely to budge from their demand that theater owners accept shortened windows.

"We are not in an evolution anymore, we're in a revolution, and revolutions can be lethal," said Guber, former chairman of Sony Pictures Entertainment.

Representatives for Regal and AMC declined to comment.

Deal In Limbo

Before Disney upset theater owners by going public about moving up the DVD release on "Alice," studios and theaters had reached an unwritten agreement to limit moving up the DVD release to two movies per studio and only in the spring and winter, said a source familiar with the situation.

That unwritten agreement is now in limbo, but sources said that ironing out the dispute over release windows will be high on the agenda at ShoWest, which runs through Thursday.

In a speech at ShoWest on Monday, Michael Lynton, chairman and chief executive of Sony Corp's Sony Pictures Entertainment, said he will always view the theatrical run as the most important window, but that the industry must adapt.

"It is clear from the changing economic model of our industry that we're going to have to reevaluate the way in which the current window structure operates," he said.

"To meet audience demand for entertainment when and where they want it, and to keep ahead of the pirates who will fill any void we leave, we've all got to be open to experimenting with new and different windows, taking advantage of new and different technologies."

Studios want to shorten the theatrical window in part to offset rising marketing costs, Guber said. If the DVD comes out earlier, customers are more likely to remember the advertising campaign from when the movie hit theaters.

Also, studios are reacting to piracy because the longer consumers wait to get their movie at home, the more likely they will turn to illegal copies, Guber said.

Movie studios like the home entertainment market because they avoid having to split revenues with theaters, he added.

Just 10 percent of the U.S. and Canadian population goes to the movies at least once a month -- and 33 percent of the population does not go at all. But the average American watches one movie a week on DVD, according to research firm NPD.

Thus, DVD release dates are creeping up.

The National Association of Theater Owners reports the average theatrical window for major movies shrank to 4 months and 14 days in 2009 from 5 months and 19 days in 2000.

Meanwhile, "Alice" has made $430 million at worldwide box offices in less than two weeks since its March 5 debut.

A source at one Hollywood studio who declined to be named said studios can use that strong showing to argue moving up DVD releases does not hurt theaters.

"What do the theater owners lose from 'Alice' announcing they would go to DVD in three months. What did they lose? Nothing," the source said.

(Reporting by Alex Dobuzinskis; editing by Edwin Chan and Andre Grenon)

A Supersized Custody Battle Over Marvel Superheroes
Brooks Barnes and Michael Cieply

WHEN the Walt Disney Company agreed in August to pay $4 billion to acquire Marvel Entertainment, the comic book publisher and movie studio, it snared a company with a library that includes some of the world’s best-known superheroes, including Spider-Man, the X-Men, the Incredible Hulk and the Fantastic Four.

The heirs of Jack Kirby, the legendary artist who co-created numerous Marvel mainstays, were also intrigued by the deal. Mr. Kirby’s children had long harbored resentments about Marvel, believing they had been denied a share of the lush profits rolling out of the company’s superheroes franchises.

They spent years preparing for a lawsuit by enlisting a Los Angeles copyright lawyer, Marc Toberoff, to represent them. When the Marvel deal was struck, Mr. Toberoff — who helped win a court ruling last year returning a share of Superman profits to heirs of one of that character’s creators — sprang into action.

Pow! Wham! Another high-profile copyright fight broke out in Hollywood, and this one could be the broadest the industry has yet seen.

Last September in a prelude to a lawsuit, Mr. Toberoff — using a provision in copyright law that, under certain conditions, gives authors or their heirs the right to regain ownership of a product after a given number of years — sent 45 notices of copyright termination to Marvel, Disney and other studios. The notices expressed the family’s intent to regain copyrights to some of Mr. Kirby’s creations as early as 2014. By Mr. Toberoff’s calculation, as much as 88 percent of Marvel’s film earnings have been what he calls “Kirby related.”

Marvel and Mr. Toberoff entered settlement talks. But on Jan. 8, Marvel surprised the Kirbys with a lawsuit seeking to invalidate the notices — stunning Mr. Toberoff, who figured Disney, having just written a huge check for Marvel, would settle. His foes thought otherwise.

“We took the initiative because we have a very strong legal position,” said James W. Quinn, a Marvel lawyer. “There is no question that Kirby was a great artist. But that’s not the law.”

The family has since filed a lawsuit against Marvel and Disney. Aside from seeking dismissal of Marvel’s lawsuit, Mr. Kirby’s children accuse the company of depriving the Kirby estate of credit — and thus profits — from movies like “X-Men Origins: Wolverine,” which took in $373 million at the global box office. Mr. Quinn dismissed this claim as frivolous.

“The family has nothing to show for all of this,” said Mr. Toberoff, as he sipped hot chocolate in the lounge of the Peninsula Hotel here last month. “They just want what is fair.”

The dispute is also emblematic of a much larger conflict between intellectual property lawyers and media companies that, in Mr. Toberoff’s view, have made themselves vulnerable by building franchises atop old creations. So-called branded entertainment — anything based on superheroes, comic strips, TV cartoons or classic toys — may be easier to sell to audiences, but the intellectual property may also ultimately belong in full or in part to others.

“Any young lawyer starting out today could turn what he’s doing into a real profit center,” Paul Goldstein, who teaches intellectual-property law at Stanford’s law school, said of Mr. Toberoff’s specialty.

Mr. Goldstein said cases like the one involving Marvel are only the tip of an iceberg. A new wave of copyright termination actions is expected to affect the film, music and book industries as more works reach the 56-year threshold for ending older copyrights, or a shorter period for those created under a law that took effect in 1978.

Mr. Toberoff is tackling what could be one of the most significant rights cases in Hollywood history; it’s certainly the biggest involving a superhero franchise. Unlike his continuing fight with Warner Brothers over Superman, Mr. Toberoff’s rights-reclamation effort against Marvel involves dozens of stories and characters from about 240 comic books.

Complicating matters are licensing agreements Marvel has made over the years with rival studios for characters Mr. Kirby helped to create. Sony holds long-term movie rights to Spider-Man; 20th Century Fox has the equivalent for the X-Men and Fantastic Four. Universal Studios holds theme park rights to Spider-Man and the Incredible Hulk. And more films stemming from Mr. Kirby’s work are coming: Marvel is spending hundreds of millions to bring Thor and the Avengers to theaters.

If the Kirbys succeed in their reclamation effort — and that’s still an enormous if — they would be entitled to a share of profits from new works based on any of the copyrighted material.

And the four Kirby heirs (Lisa, Neal, Barbara and Susan) could acquire a nonexclusive right to initiate new projects based on characters partially created by their father, as long as they accounted to Marvel for its share in any of them.

“This is like the Superman case times five,” said Mr. Toberoff, who predicts a three- to five-year court battle, including appeals, if the case proceeds.

MR. TOBEROFF, 54, could be a movie character himself. Alternately described by lawyers who have worked with him as a brilliant crusader for the little guy and a Svengali who asserts a high degree of control over clients, he has evolved from his early years as a producer of low-budget films into his job as a high-stakes litigator with multiple wins.

With the Kirbys, Mr. Toberoff will square off against a squadron of corporate lawyers that includes Mr. Quinn, whose most recent claim to fame was quashing Dan Rather’s $70 million breach-of-contract suit against CBS. Disney is no stranger to intellectual property fights, having spent 18 years battling a rights-infringement case involving Winnie the Pooh and ultimately winning. The company pushed so hard for an extension of copyright terms in 1998 that the resulting law was derisively nicknamed the Mickey Mouse Protection Act.

There is nothing corporate about Mr. Toberoff. A graduate of Columbia’s law school, he practiced briefly in New York before ditching the law profession to become what he describes as “a glorified go-fer” for the director Robert Altman. Mr. Toberoff got a quick education in Hollywood’s rough-and-tumble ways in 1987 with “Zombie High,” a horror picture he made on a minuscule budget with student labor.

“I’ll cut your throat!” Mr. Toberoff recalls Aziz Ghazal, a partner on the project, screaming in one disagreement. Mr. Ghazal later became infamous, Mr. Toberoff noted, as the suspected killer of his own wife and daughter before he was found shot to death in an apparent suicide.

In 1994, Mr. Toberoff met an heir to the writer-producer Robert Pirosh. After looking through old papers with his new friend, he discovered that the Pirosh estate owned hitherto undetected movie rights to the TV series “Combat!” It was the first of about 10 old shows, including “Fantasy Island” and “My Favorite Martian,” that Mr. Toberoff helped to recycle as movie projects.

A short leap later and he was back in legal practice, handling film rights cases. One included a suit in which he won an injunction blocking Warner from releasing a big-screen version of “The Dukes of Hazzard.” A judge ruled in 2005 that Warner had failed to secure rights to an earlier movie, “Moonrunners,” on which the new film was partly based. Warner settled for a reported $17.5 million.

Three years later, Mr. Toberoff won a ruling that allowed the heirs to Jerome Siegel, a co-creator of Superman, to reclaim their copyright from Warner and its DC Comics unit, though complex accounting issues in the case have yet to be resolved and the studio recently hired a new legal team. The heirs still haven’t seen any money.

Mr. Toberoff’s aggressive style has been controversial at times. Edmée Reit, the widow of Seymour Reit, a co-creator of the character Casper the Friendly Ghost, said Mr. Toberoff called her soon after her husband died to propose a rights lawsuit.

“Seymour was literally not even buried yet when this man started calling,” Mrs. Reit said in an interview. “I just felt this man was really an exploiter.”

Mr. Toberoff sharply disagreed with Mrs. Reit’s version of events. He said he contacted her at a time when she was expected to be a witness in a court case involving Casper and told her that a rights waiver her husband had signed before his death ran counter to the law.

“I thought this was wrong and informed Mrs. Reit of her rights in the process of investigating this situation in defense of my clients,” Mr. Toberoff wrote in an e-mail message last week.

Lisa Kirby said Mr. Toberoff began representing her after they were introduced by a mutual friend some years ago. She says that she is braced for a long fight, and that she believes that her father, who died in 1994, would have wanted the copyrights terminated.

“In the end, my father became consumed with the fact that he was not properly compensated or recognized for his tremendous contributions to Marvel, and sadly, he died without either,” Ms. Kirby wrote.

IN many ways, the Marvel case is simple. It turns on whether Mr. Kirby was working as a hired hand or whether he was producing material on his own that he then sold to publishers. The Copyright Revision Act of 1976, which opened the door to termination attempts, bans termination for people who delivered work at the “instance and expense” of an employer.

Mr. Toberoff and Marvel disagree on the circumstances under which Mr. Kirby created or co-created the trove of characters.

Pressed by Mr. Toberoff for a settlement, Marvel got fed up and sent the first volley with its January filing against the Kirby children in Federal District Court in Manhattan, seeking to end their efforts to regain long-term rights to the various characters. “Any contributions made by Kirby to the works at issue,” the complaint reads, “were works made for hire.”

Case closed, as far as Marvel’s lawyers were concerned.

The Kirbys fired back on March 9, filing a lawsuit with the Federal District Court in Los Angeles that argues the opposite. From 1958 to 1963, the period of Mr. Kirby’s prolific career that is under scrutiny, “Kirby worked solely on a freelance basis out of his own home, with his own instruments and materials, and thereby bore the financial risk of creating his copyrighted materials,” according to the lawsuit.

Mr. Toberoff is poised to argue that Mr. Kirby — and, by extension, others like him — were selling their work on a freelance basis, rather than serving as hired hands.

THE Kirby case is virtually certain to reopen the much-chewed-over history of Marvel to an examination even more intense than it has received from comic book fans. Many fans believe that Marvel and Stan Lee — who once wore varied professional hats, including editor in chief and publisher at Marvel — assigned too little credit to the contribution of an artist they like to call “King Kirby.” Mr. Kirby has drawn lavish praise from such luminaries as the novelist Michael Chabon, who has described him as “the Shakespeare or Cervantes of comic books.”

Mark Evanier, who worked as an assistant to Mr. Kirby and wrote the book “Kirby: King of Comics,” said he expected to be called as a witness in the case and declined to comment. Mr. Evanier testified in support of the Jerome Siegel heirs in their suit against Warner.

Mr. Lee, now 87, will surely have his own version of past events and is almost certain to become a witness in the case if it goes to court. Mr. Lee — who notably fought and won a profit-participation lawsuit with Marvel a decade ago — declined to be interviewed for this article.

If Mr. Lee is called to testify about Mr. Kirby, his testimony could be complicated by an expanded business relationship with Disney. On Dec. 31, Disney announced that it had paid $2.5 million to increase an already existing stake in POW Entertainment (for Purveyors of Wonder), a company in which Mr. Lee is now a principal and the chief creative officer. POW develops new characters and stories for use in comic books, films, digital media and elsewhere. At the time, Disney said the investment was meant to obtain Mr. Lee’s help in mining the Marvel library.

If Mr. Toberoff has his way, the picture painted in court will be one of chaos. He says that during Marvel’s early days — when Mr. Kirby was creating his superheroes — the company was a shoestring operation that was barely afloat.

“There was no bullpen; there was a one-man office,” he said, contending that an industrywide decency code put so much pressure on Marvel that few at the company were worrying about contractual niceties with artists like Mr. Kirby that would have tidied up all of the legal issues surrounding work arrangements. “It’s easy to imagine that nobody at the time was thinking about work for hire.”

Montreal 'Movie Pirate' Jailed for Bootlegging

For the first time ever in Canada, a man who pirated movies has been sent to jail.

Geremi Adam, who the FBI dubbed Canada's biggest movie pirate, has been jailed two-and-a-half months for bootlegging Hollywood films he secretly videotaped from the back of Montreal theatres.

Quebec Court Judge Claude Parent on Tuesday sentenced the 27-year-old on two counts of violating Canada's Copyright Act, charges under which he pleaded guilty.

Adam, who is the first Canadian imprisoned for breaking cinematic copyright, could have faced four months behind bars and a fine.

Known online as MaVen — the Yiddish word for expert — Adam was arrested by the RCMP in September 2006 based on information provided by the distributors' association, a subsidiary of the Motion Picture Association of America representing the six major Hollywood studios.

He was nabbed at a downtown Montreal cinema, caught red-handed with a camcorder recording a number of Hollywood hits, including Fried Green Tomatoes.

Police said he would upload them to the Internet and charge users a fee to view them.

Adam's defence lawyer said his client didn't do it for money, but rather for the thrill.

The head investigator for the Canadian Motion Pictures Distributors Association testified at Adam's trial that 41 pirated films were traced to Montreal between July 2004 and July 2006.

Prosecutors said they hope the sentence will act as a deterrent for wannabe movie pirates. Film-distribution companies contend that pirating costs them tens of thousands of dollars each year.

Adam also will have to serve 100 hours of community service, but actually dodged a legal bullet because tougher anti-pirating legislation that has been introduced since carries prison terms of up to five years upon conviction.

An Invitation to Crime: How a Friendly Click Can Compromise a Company
Byron Acohido

"Hey Alice, look at the pics I took of us last weekend at the picnic. Bob". That Facebook message, sent last fall between co-workers at a large U.S. financial firm, rang true enough. Alice had, in fact, attended a picnic with Bob, who mentioned the outing on his Facebook profile page.

So Alice clicked on the accompanying Web link, expecting to see Bob's photos. But the message had come from thieves who had hijacked Bob's Facebook account. And the link carried an infection. With a click of her mouse, Alice let the attackers usurp control of her Facebook account and company laptop. Later, they used Alice's company logon to slip deep inside the financial firm's network, where they roamed for weeks. They had managed to grab control of two servers, and were probing deeper, when they were detected.

Intrusions like this one -- investigated by network infrastructure provider Terremark -- can expose a company to theft of its most sensitive data. Such attacks illustrate a dramatic shift under way in the Internet underground. Cybercriminals are moving aggressively to take advantage of an unanticipated chink in corporate defenses: the use of social networks in workplace settings. They are taking tricks honed in the spamming world and adapting them to what's driving the growth of social networks: speed and openness of individuals communicating on the Internet.

"Social networks provide a rich repository of information cybercriminals can use to refine their phishing attacks," says Chris Day, Terremark's chief security architect.

This shift is gathering steam, tech security analysts say. One sign: The volume of spam and phishing scams -- like the "LOL is this you?" viral messages sweeping through Twitter -- more than doubled in the fourth quarter of 2009 compared with the same period in 2008, according to IBM's X-Force security research team. Such "phishing" lures -- designed to trick you into clicking on an infectious Web link -- are flooding e-mail inboxes, as well as social-network messages and postings, at unprecedented levels.
An infected PC, referred to as a "bot," gets slotted into a network of thousands of other bots. These "botnets" then are directed to execute all forms of cybercrime, from petty scams to cyberespionage. Authorities in Spain recently announced the breakup of a massive botnet, called Mariposa, comprising more than 12 million infected PCs in 190 countries.

Three Spanish citizens with no prior criminal records were arrested. Panda Security, of Bilbao, Spain, helped track down the alleged ringleader, who authorities say has been spreading infected links for about a year, mainly via Microsoft's free MSN instant messenger service.

"It became too big and too noticeable," says Pedro Bustamante, senior researcher at Panda Security. "They would have been smarter to stay under the radar."

What happened to Bob and Alice, the picnickers at the financial firm, illustrates how social networks help facilitate targeted attacks. As a rule, tech-security firms investigate breaches under non-disclosure agreements. Honoring such a policy, Terremark used pseudonyms for the affected employees in supplying USA Today with details of what happened at the financial institution.

Investigators increasingly find large botnets running inside corporate networks, where they can be particularly difficult to root out or disable. "Social networks represent a vehicle to distribute malicious programs in ways that are not easily blocked," says Tom Cross, IBM X-Force Manager.

The attacks run the gamut. In just four weeks earlier this year, one band of low-level cyberthieves, known in security circles as the Kneber gang, pilfered 68,000 account logons from 2,411 companies, including user names and passwords for 3,644 Facebook accounts. Active since late 2008, the Kneber gang has probably cracked into "a much higher number" of companies, says Tim Belcher, CTO of security firm NetWitness, which rooted out one of the gang's storage computers.

"Every network we see today has a significant problem with some form of organized threat," Belcher says. The Kneber gang "happened to focus on collecting as many network-access credentials as possible."

Stolen credentials flow into eBay-like hacking forums where a batch of 1,000 Facebook user name and password pairs, guaranteed valid, sells for $75 to $200, depending on the number of friends tied to the accounts, says Sean-Paul Correll, researcher at Panda Security. From each account, cyberscammers can scoop up e-mail addresses, contact lists, birth dates, hometowns, mothers' maiden names, photos and recent gossip -- all useful for targeting specific victims and turning his or her PC into an obedient bot, Correll says.

On the high end, the Koobface worm, initially set loose 19 months ago, continues to increase in sophistication as it spreads through Facebook, Twitter, MySpace and other social networks. At its peak last August, more than 1 million Koobface-infected PCs inside North American companies were taking instructions from criminal controllers to carry out typical botnet criminal activities, says Gunter Ollmann, vice president of research at security firm Damballa.

In another measure of Koobface's ubiquity, Kaspersky Labs estimates that there are 500,000 Koobface-controlled PCs active on the Internet on an average day, 40 percent of which are in the U.S., 15 percent in Germany and the rest scattered through 31 other nations. "The personal information employees post day-by-day on Facebook is turning out to be a real gold mine," says Stefan Tanase, a Kaspersky Lab senior researcher.

Facebook, the dominant social network, with 400 million members and therefore the biggest target, says recent partnerships with Microsoft and security firm McAfee to filter malicious programs help keep compromised accounts to a small percentage. "We are constantly working to improve complex systems that quickly detect and block suspicious activity, delete malicious links, and help people restore access to their accounts," says spokesman Simon Axten.

Still, social networks have grown popular because they foster open communication among friends and acquaintances, which plays into the bad guys' hands, says Eva Chen, CEO of anti-virus firm Trend Micro.

"These new communication platforms are where people go, so that's where the hackers are going," Chen says.

Meanwhile, discussions about restricting workplace use of social networks and training employees to be more circumspect are just beginning to percolate at venues like the big tech security trade show held the first week of March in San Francisco sponsored by RSA, the security division of EMC. "Most larger businesses simply ask employees to watch their time spent on social-networking sites," says Ollmann.

Each infected PC in a corporate network represents a potential path to valuable intellectual property, such as customer lists, patents or strategic documents. That's what the attackers who breached Google and 30 other tech, media, defense and financial companies in January were after. Those attacks -- referred to in security circles as Operation Aurora -- very likely were initiated by faked friendly messages sent to specific senior employees at the targeted companies, says George Kurtz, McAfee's chief technology officer.

The attack on the picnicking co-workers at the financial firm illustrates how targeted attacks work. Last fall, attackers somehow got access to Bob's Facebook account, logged into it, grabbed his contact list of 50 to 60 friends and began manually reviewing messages and postings on his profile page. Noting discussions about a recent picnic, the attackers next sent individual messages, purporting to carry a link to picnic photos, to about a dozen of Bob's closest Facebook friends, including Alice. The link in each message led to a malicious executable file, a small computer program.

Upon clicking on the bad file, Alice unknowingly downloaded a rudimentary keystroke logger, a program designed to save everything she typed at her keyboard and, once an hour, send a text file of her keystrokes to a free Gmail account controlled by the attacker. The keystroke logger was of a type that is widely available for free on the Internet.

The attackers reviewed the hourly keystroke reports from Alice's laptop and took note when she logged into a virtual private network account to access her company's network. With her username and password, the attackers logged on to the financial firm's network and roamed around it for two weeks.

First they ran a program, called a port scan, to map out key network connection points. Next they systematically scanned all of the company's computer servers looking for any that were not current on Windows security patches. Companies often leave servers unpatched, relying on perimeter firewalls to keep intruders at bay. The attackers eventually found a vulnerable server, and breached it, gaining a foothold to go deeper.

A short time later, the attackers were discovered and cut off. One of Bob's Facebook friends mentioned to Bob that the picnic photos he had sent had failed to render. That raised suspicions. A technician took a closer look at daily logs of data traffic on the company's network and spotted the vulnerability scans.

Terremark's Day says two or three collaborators, each with different skill sets, most likely worked together to pull off the attack. "They were noisy about how they went about this," says Day. "Had they been quieter they would've gotten much further."

Filter Trial Vendor Sceptical Over Internet Clean-Feed

M86's Internet filter technology was originally designed for schools, not for an entire country
Spandas Lui

Internet filtering won't prevent people deliberately looking for inappropriate material from accessing blocked content, according to security vendor, M86 Security.

Six of the nine ISP participants in the URL-based Internet filter trial last year used M86’s R3000 filtering kit.

The technology was originally developed for the education sector and was then applied to enterprise businesses.

“When the filter was first launched 10 years ago, I don't think anybody would have thought it would be applied on a national scale,” M86 COO, Bruce Green, said.

“We talk hundreds of thousands of users and even the biggest enterprise might have half a million. Now we’re talking about millions of users when you go into the consumer section and it was never really designed for that purpose.”

Nonetheless, the technology can still be applied to ISP networks.

While a filter may be effective in guarding against accidental access of inappropriate content online, it may not be as useful in preventing people who are seeking to access such material, according to Green.

“To stop a child accidentally hitting a bunch of keys and accessing something, is doable,” he said. “But a lot of investment goes into cybercrime and if somebody is trying to bypass the filter to share something they want, they’re going to bypass anything you’ve got up.

“In some ways, because it is such a publicised issue, I’m sure people are already working to get around it.”

Having worked at UK telco giant, British Telecom, Green can understand ISPs' apprehension over a mandatory clean-feed.

“As soon as you step into any form of censorship – and some people do perceive it as that – companies would want to stay away because it then becomes political,” he said.

Green shares Prime Minister Kevin Rudd’s sentiments regarding the need to protect citizens against ‘indecent’ material but questions how far the filter will go in terms of deciding what content to block.

"But once you implement these sorts of things, I think what everybody is concerned with is how can you control where it goes then?" Green said.

The Federal Government conceded ISP-level filtering is not a silver bullet to preventing access to inappropriate material. It claimed the filter will only block refused classification content which will encompass content depicting child pornography.

M86 has yet to settle on pricing should it chose to supply technology for the proposed Internet filter. The vendor typically charges a set amount per user but due to the large scale of the project the company is contemplating a cost per server implementation pricing model for ISPs. But Green said it will depend on whether the Federal Government is paying for the technology and how much it is willing to fork out.

Marshal8e6 rebranded itself as M86 late last year.

Looking for Malware in all the Wrong Places?
Markus Jakobsson

Anti-virus products scan for malware in two ways. They look for sequences of bits that are found in programs that are known to be bad (but which are not commonly found in good programs). And they run programs in sandboxes and look for known malicious actions. The first approach only catches known malware instances, while the second can also catch variants of these. Still, many malware agents slip through the cracks undetected... until the rules of the anti-virus programs are updated, that is. It is a constant battle between the attackers and the defenders.

Instead of looking for known patterns -- whether of instructions and data, or of actions -- wouldn't it be great if we could look for anything that is malicious? That may sound like a pipe dream.

Not to me.

Let me tell you why. But first, let's agree about some things.

1) There are absolutely only three things malware can do when you scan for it. One: be active in RAM, maybe trying to interfere with the detection algorithm. Two: not be active in RAM, but store itself in secondary storage. It cannot interfere with the detection algorithm then, quite obviously. And option number three: erase itself.

2) Any program -- good or bad -- that wants to be active in RAM has no choice but to take up some space in RAM. At least one byte, right?

Assume now that we have a detection algorithm that runs in kernel mode, and that swaps out everything in RAM. Everything except itself. Well, malware may interfere, of course, as it often does, and remain in RAM. But if we know how big RAM is, we know how much space should be free. Assume we write pseudo-random bits over all this supposedly free space. Again, a malware agent could refuse to be overwritten. It could store those random bits somewhere else instead... like in secondary storage.

Then, let us compute a keyed hash of the entire memory contents -- both our detection program and all the random bits. Here is what could happen: If there is no malware in RAM, the results will be the expected result. An external verifier checks this, and tells us that the scanned device is clean. Or there could be malware in RAM, and the checksum will be wrong. The external verifier would notice and conclude that the device must be infected. Or malware could divert the read requests directed at the place it is stored to the place in secondary storage where it stored the random bits meant for the space it occupies. That would result in the right checksum... but a delay. This delay would be detected by the external verifier, which would conclude that the device is infected.

Why a delay, you ask? Because secondary storage is slower than RAM. Especially if the order of the reads and writes are done in a manner that intentionally causes huge delays if diverted to flash, hard drives, etc.

All we need is the help of an external verifier that knows how much RAM a device we want to protect has, and how fast its processor is. And ways to avoid latency variance when we measure the time to compute the checksum.

This tells us a few interesting things. We can guarantee detection of malware. And that includes zero-day attacks and rootkits. We can even guarantee that we will detect malware that infected a device before we installed our detection program. Think about it. Or read more here and here.

Microsoft Virtual PC Flaw Lets Hackers Bypass Windows Defenses
Ryan Naraine

An exploit writer at Core Security Technologies has discovered a serious vulnerability that exposes users of Microsoft’s Virtual PC virtualization software to malicious hacker attacks.

The vulnerability, which is unpatched, essentially allows an attacker to bypass several major security mitigations -- Data Execution Prevention (DEP), Safe Exception Handlers (SafeSEH) and Address Space Layout Randomization (ASLR) -- to exploit the Windows operating system.

As a result, some applications with bugs that are not exploitable when running in a not-virtualized operating system are rendered exploitable if running within a guest OS in Virtual PC, according to Ivan Arce, chief technology officer at Core.

The flaw, discovered by Core exploit writer Nicolas Economou, exists in the memory management of the Virtual Machine Monitor. It causes memory pages mapped above the 2GB level to be accessed with read or read/write privileges by user-space programs running in a Guest operating system.

Affected software includes Microsoft Virtual PC 2007, Virtual PC 2007 SP1, Windows Virtual PC and Microsoft Virtual Server 2005. On Windows 7 the XP Mode feature is also affected by the vulnerability.

In particular, a vulnerable application running in Windows XP Mode on Windows 7 may be exploitable in a virtual environment, while the same application running directly on a Windows XP SP3 operating system is not.

Microsoft Hyper-V technology is not affected by this problem.

Arce said Core reported the flaw to Microsoft last August — more than seven months ago — but after back-and-forth discussions, the company decided it would not issue a security bulletin to provide patches.

“They [Microsoft] said that they agreed with our assessment of the problem, that it makes DEP/SafeSEH and ASLR bypassable. However, they say it doesn’t meet their criteria for a security bulletin and that they’ll fix in a service pack or a future product update,” Arce explained in a telephone interview from his office in Buenos Aires, Argentina.

“Given that that’s their decision, we feel we have to inform people of the risk so they can make informed decisions,” he added. ”We consider this a vulnerability that needs to be fixed.”

Microsoft officials declined to comment until they had a chance to review Core’s advisory on the issue.

Microsoft’s Virtual PC hypervisor is an element of the company’s Windows Virtual PC package, which allows users to run multiple Windows environments on a single computer. The hypervisor is a key component of Windows 7 XP Mode, a feature in Microsoft’s latest desktop operating system aimed at easing the migration path into the new OS for users and enterprises that need to run legacy Windows XP applications on its native OS.

With this discovery, Arce said it may transform a certain type of common software bug into exploitable vulnerabilities. ”Certain vulnerabilities that have been dismissed as non-exploitable may now be exploitable on virtualized environments,” he said. “Let’s say someone found a vulnerability 2-3 years ago in a virtual application. They did the analysis and determined it was not exploitable because it only caused a crash in the client app. Now, you can bypass DEP and SafeSEH and that same vulnerability or a large list of vulnerabilities may be exploitable on on virtualized systems.”

Core recommends that affected users run all mission critical Windows applications on native iron or use virtualization technologies that aren’t affected by this vulnerability.

Windows operating systems and applications that must run virtualized using Virtual PC technologies should be kept at the highest patch level possible and monitored to detect exploitation attempts.

“This particular case provides a good example of how mechanisms designed to improve an operating system’s security over many years can eventually become ineffective when some of the basic underlying aspects of their operation are changed by virtualization technology,” Arce said.

Hacker Disables More Than 100 Cars Remotely
Kevin Poulsen

More than 100 drivers in Austin, Texas found their cars disabled or the horns honking out of control, after an intruder ran amok in a web-based vehicle-immobilization system normally used to get the attention of consumers delinquent in their auto payments.

Police with Austin’s High Tech Crime Unit on Wednesday arrested 20-year-old Omar Ramos-Lopez, a former Texas Auto Center employee who was laid off last month, and allegedly sought revenge by bricking the cars sold from the dealership’s four Austin-area lots.

“We initially dismissed it as mechanical failure,” says Texas Auto Center manager Martin Garcia. “We started having a rash of up to a hundred customers at one time complaining. Some customers complained of the horns going off in the middle of the night. The only option they had was to remove the battery.”

The dealership used a system called Webtech Plus as an alternative to repossessing vehicles that haven’t been paid for. Operated by Cleveland-based Pay Technologies, the system lets car dealers install a small black box under vehicle dashboards that responds to commands issued through a central website, and relayed over a wireless pager network. The dealer can disable a car’s ignition system, or trigger the horn to begin honking, as a reminder that a payment is due. The system will not stop a running vehicle.

Texas Auto Center began fielding complaints from baffled customers the last week in February, many of whom wound up missing work, calling tow trucks or disconnecting their batteries to stop the honking. The troubles stopped five days later, when Texas Auto Center reset the Webtech Plus passwords for all its employee accounts, says Garcia. Then police obtained access logs from Pay Technologies, and traced the saboteur’s IP address to Ramos-Lopez’s AT&T internet service, according to a police affidavit filed in the case.

Ramos-Lopez’s account had been closed when he was terminated from Texas Auto Center in a workforce reduction last month, but he allegedly got in through another employee’s account, Garcia says. At first, the intruder targeted vehicles by searching on the names of specific customers. Then he discovered he could pull up a database of all 1,100 Auto Center customers whose cars were equipped with the device. He started going down the list in alphabetical order, vandalizing the records, disabling the cars and setting off the horns.

“Omar was pretty good with computers,” says Garcia.

The incident is the first time an intruder has abused the no-start system, according to Jim Krueger, co-owner of Pay Technologies. “It was a fairly straightforward situation,” says Krueger. “He had retained a password, and what happened was he went in and created a little bit of havoc.”

Krueger disputes that the horns were honking in the middle of the night; he says the horn honking can only be activated between 9 a.m. and 9 p.m.

First rolled out about 10 years ago, remote immobilization systems are a controversial answer to delinquent car payments, with critics voicing concerns that debtors could suffer needless humiliation, or find themselves stranded during an emergency. Proponents say the systems let financers extend credit to consumers who might otherwise be ineligible for an auto loan.

Austin police filed computer intrusion charges against Ramos-Lopez on Tuesday.

US Intelligence Planned To Destroy WikiLeaks

An anonymous reader writes "This document is a classified (SECRET/NOFORN), 32-page US counterintelligence investigation into WikiLeaks (PDF). 'The possibility that current employees or moles within DoD or elsewhere in the US government are providing sensitive or classified information to Wikileaks.org cannot be ruled out.' It concocts a plan to fatally marginalize the organization. Since WikiLeaks uses 'trust as a center of gravity by protecting the anonymity and identity of the insiders, leakers or whistleblowers,' the report recommends 'The identification, exposure, termination of employment, criminal prosecution, legal action against current or former insiders, leakers, or whistleblowers could potentially damage or destroy this center of gravity and deter others considering similar actions from using the Wikileaks.org Web site.' [As two years have passed since the date of the report, with no WikiLeaks' source exposed, it appears that this plan was ineffective]. As an odd justification for the plan, the report claims that 'Several foreign countries including China, Israel, North Korea, Russia, Vietnam, and Zimbabwe have denounced or blocked access to the Wikileaks.org website.' The report provides further justification by enumerating embarrassing stories broken by WikiLeaks — US equipment expenditure in Iraq, probable US violations of the Chemical Warfare Convention Treaty in Iraq, the battle over the Iraqi town of Fallujah and human rights violations at Guantanamo Bay."

U.S. Army Worried About Wikileaks in Secret Report
Declan Mccullagh

A leaked U.S. Army intelligence report, classified as secret, says the Wikileaks Web site poses a significant "operational security and information security" threat to military operations.

Classified U.S. military information appearing on Wikileaks could "influence operations against the U.S. Army by a variety of domestic and foreign actors," says the report, prepared in 2008 by the Army Counterintelligence Center and apparently disclosed in its entirety on Monday.

The embarrassing twist: It was Wikileaks that published the 32-page document, but not before editor Julian Assange prepended a critique saying some details in the Army report were inaccurate and its recommendations flawed.

One section of the original document says "criminal prosecution" of anyone leaking sensitive information could "deter others considering similar actions from using the Wikileaks.org Web site." Another speculates that Wikileaks--which boasts that it is "uncensorable"--is "knowingly encouraging criminal activities," including violation of national security laws regarding sedition and espionage.

Lt. Col Lee Packnett, a spokesman for the U.S. Army on intelligence topics, said he was not familiar with the Wikileaks disclosure and would not immediately be able to comment. The National Ground Intelligence Center, which provides the Army with information about enemy weapons system and was mentioned in the report, did not immediately respond to a query from CNET.

Under the federal Espionage Act, it is a crime to disclose "information relating to the national defense which information the possessor has reason to believe could be used to the injury of the United States" (18 USC 793(e)). Another section says even indirect disclosures of national defense information to foreign citizens can be punished, in certain cases, by death (18 USC 794(a)).

Some First Amendment scholars have argued that those portions of the federal code cannot survive legal scrutiny--otherwise, as a few conservative commentators have claimed, The New York Times' disclosure of Bush-era warrantless wiretapping would have been a crime. In a since-abandoned prosecution of two former pro-Israel lobbyists charged with disclosing classified U.S. defense information, however, a federal judge had ruled that the balance struck by the Espionage Act "is constitutionally permissible."

Wikileaks has disclosed classified U.S. Defense Department information before. A 2004 report about Fallujah also marked secret was highlighted repeatedly as an example of damaging disclosure in the document released Monday.

The document no longer appears to exist on Wikileaks' Web site. A previous location now returns the error message: "The resource you are looking for has been removed, had its name changed, or is temporarily unavailable." (Wikileaks' Assange did not immediately reply when asked for an explanation.)

Wikileaks previously disclosed thousands of pages of pager logs from September 11, 2001, and won a case in federal court in San Francisco, after a Swiss bank attempted to pull the plug on the entire Web site. It shut down briefly last month because of lack of funds.

"While we will not comment on whether this is, in fact, an official document, we do consider the deliberate release of what Wikileaks believes to be a classified document is irresponsible and, if valid, could put U.S. military personnel at risk," Rear Adm. Gregory J. Smith, a spokesman for American military command in Baghdad, told The New York Times after Wikileaks posted a classified 2005 document about rules of engagement in that country.

Dismantling of Saudi-CIA Web Site Illustrates Need for Clearer Cyberwar Policies
Ellen Nakashima

By early 2008, top U.S. military officials had become convinced that extremists planning attacks on American forces in Iraq were making use of a Web site set up by the Saudi government and the CIA to uncover terrorist plots in the kingdom.

"We knew we were going to be forced to shut this thing down," recalled one former civilian official, describing tense internal discussions in which military commanders argued that the site was putting Americans at risk. "CIA resented that," the former official said.

Elite U.S. military computer specialists, over the objections of the CIA, mounted a cyberattack that dismantled the online forum. Although some Saudi officials had been informed in advance about the Pentagon's plan, several key princes were "absolutely furious" at the loss of an intelligence-gathering tool, according to another former U.S. official.

Four former senior U.S. officials, speaking on the condition of anonymity to discuss classified operations, said the creation and shutting down of the site illustrate the need for clearer policies governing cyberwar. The use of computers to gather intelligence or to disrupt the enemy presents complex questions: When is a cyberattack outside the theater of war allowed? Is taking out an extremist Web site a covert operation or a traditional military activity? Should Congress be informed?

"The point of the story is it hasn't been sorted out yet in a way that all the persons involved in cyber-operations have a clear understanding of doctrine, legal authorities and policy, and a clear understanding of the distinction between what is considered intelligence activity and wartime [Defense Department] authority," said one former senior national security official.

CIA spokeswoman Marie Harf said, "It's sheer lunacy to suggest that any part of our government would do anything to facilitate the movement of foreign fighters to Iraq."

The Pentagon, the Justice Department and the National Security Agency, whose director oversaw the operation to take down the site, declined to comment for this story, as did officials at the Saudi Embassy in Washington.

Precedent before policy

The absence of clear guidelines for cyberwarfare is not new. The George W. Bush administration was compelled in its final years to refine doctrine as it executed operations. "Cyber was moving so fast that we were always in danger of building up precedent before we built up policy," said former CIA director Michael V. Hayden, without confirming or denying the existence of the site or its dismantling.

Lawyers at the Justice Department's Office of Legal Counsel are struggling to define the legal rules of the road for cyberwarriors, according to current and former officials.

The Saudi-CIA Web site was set up several years ago as a "honey pot," an online forum covertly monitored by intelligence agencies to identify attackers and gain information, according to three of the former officials. The site was a boon to Saudi intelligence operatives, who were able to round up some extremists before they could strike, the former officials said.

At the time, however, dozens of Saudi jihadists were entering Iraq each month to carry out attacks. U.S. military officials grew concerned that the site "was being used to pass operational information" among extremists, one former official said. The threat was so serious, former officials said, that Gen. Ray Odierno, the top U.S. military commander in Iraq, requested that the site be shut down.

The operation was debated by a task force on cyber-operations made up of representatives from the Defense and Justice departments, the CIA, the Office of the Director of National Intelligence, and the National Security Council. Lt. Gen. Keith B. Alexander, who directs the National Security Agency, made a presentation.

The CIA argued that dismantling the site would lead to a significant loss of intelligence. The NSA countered that taking it down was a legitimate operation in defense of U.S. troops. Although one Pentagon official asserted that the military did not have the authority to conduct such operations, the top military commanders made a persuasive case that extremists were using the site to plan attacks.

The task force debated whether to go forward and, if so, under what authority. If the operation was deemed a traditional military activity, no congressional committee needed to be briefed. If it was a covert action, members of the intelligence committees would have to be notified.

The task force weighed possible collateral damage, such as disruption of other computer networks, against the risk of taking no action. Most thought that the damage would be limited but that the gain would be substantial.

"The CIA didn't endorse the idea of crippling Web sites," said a U.S. counterterrorism official. The agency "understood that intelligence would be lost, and it was; that relationships with cooperating intelligence services would be damaged, and they were; and that the terrorists would migrate to other sites, and they did."

Moreover, the official said, "the site wasn't a pipeline for foreign fighters, it was a broad forum for extremists."

But the concerns of U.S. Central Command and other defense officials prevailed. "Once DoD went to the extent of saying, 'Soldiers are dying,' because that's ultimately what the command in Iraq, what Centcom did, it's hard for anyone to push back," one former official said.

The matter appeared settled, ex-officials said. The military would dismantle the site, eliminating the need to inform Congress.

A group of cyber-operators at the Pentagon's Joint Functional Component Command-Network Warfare at Fort Meade seemed ideally suited to the task. The unit carries out operations under a program called Countering Adversary Use of the Internet, established to blunt Islamist militants' use of online forums and chat groups to recruit and mobilize members and to spread their beliefs.

"We were very clear in the meetings" that the goal was to upend the site, one participant said. "The only thing that caught us by surprise was the effect."

Unintended outcomes

A central challenge of cyberwarfare is that an attacker can never be sure that an action will affect only the intended target. The dismantling of the CIA-Saudi site inadvertently disrupted more than 300 servers in Saudi Arabia, Germany and Texas, a former official said. "In order to take down a Web site that is up in Country X, because the cyber-world knows no boundaries, you may end up taking out a server that is located in Country Y," the task force participant explained.

After the operation, Saudi officials vented their frustration about the loss of intelligence to the CIA. Agency officials said the U.S. military had upset an ally and acted outside its authority in conducting a covert operation, former officials said.

Efforts were made to mollify the Saudis and the Germans, they said. "There was a lot of bowing and scraping," one official said.

One early advocate for using cyber-operations against extremists was Gen. John P. Abizaid, former Central Command chief. He told a Senate committee in 2006, "We must recognize that failing to contest these virtual safe havens entails significant risk to our nation's security and the security of our troops in the field."

But some experts counter that dismantling Web sites is ineffective -- no sooner does a site come down than a mirror site pops up somewhere else. Because extremist groups store backup copies of forum information in servers around the world, "you can't really shut down this process for more than 24 or 48 hours," said Evan F. Kohlmann, a terrorism researcher and a consultant to the Nine/Eleven Finding Answers Foundation.

"It seems difficult to understand," he added, "why governments would interrupt what everyone acknowledges now to be a lucrative intelligence-gathering tool."

Staff writers Dana Priest and Karen DeYoung contributed to this report.

Iran Arrests 30 Over U.S.-Linked Cyber Ring: Report

Iran has arrested 30 people suspected of belonging to a U.S.-linked cyber network gathering information on Iranian nuclear scientists and sending people abroad for training, a news agency reported on Saturday.

It said the group sought to recruit people through the Internet for training in Iraq with the People's Mujahideen Organization, a leftist exile group which launched attacks on the Islamic Republic from Saddam Hussein's Iraq

"Thirty people were arrested in connection with an organized American cyber war network via a series of complex security measures in the field of information technology and communications," the Fars news agency said.

Tehran's general and revolutionary court said one of the group was linked to an outlawed sect -- a reference to the Baha'i religious minority, the agency said.

"Among the charges against this network are creating an intelligence gathering network, including identification of the country's nuclear scientists and staging illegal demonstrations and encouraging the public to take part in them after the presidential elections," it said.

Iran has seen its biggest domestic crisis since the 1979 revolution as supporters of candidates who lost to President Mahmoud Ahmadinejad last year took to the streets in protests, provoking a strong security clampdown.

Iran is locked in a dispute with Western countries who fear its nuclear energy program is a front for developing nuclear weapons. Washington and its allies have condemned Iran for its treatment of the opposition movement.

(Editing by Jon Hemming)

Emergency Internet Control Bill Gets a Rewrite
Declan McCullagh

Sen. Jay Rockefeller alarmed technology and telecommunications firms last year when he announced a plan for the president to seize "emergency" control of the Internet. Now the West Virginia Democrat is trying again with a new version that aides hope will be seen as less extreme.

During a closed-door meeting on Capitol Hill on Wednesday attended by about a dozen industry representatives, CNET has learned, Rockefeller's staff pitched a revised version of his controversial cybersecurity legislation.

It says that after the president chooses to "declare a cybersecurity emergency," he can activate a "response and restoration plan" involving networks owned and operated by the private sector. In an attempt to limit criticism, instead of spelling out the plan's details, the latest draft simply says that it must be developed by the White House in advance.

There is no requirement that the emergency response plan be made public, meaning it could still include a forcible disconnection of critical Web sites from the Internet--which is what the March 2009 version of the legislation had proposed.

Larry Clinton, president of the Internet Security Alliance, whose members include Verisign, Verizon, and Raytheon, says no disconnection language is explicitly in the bill: "We are pleased that the 'kill switch' allowing for the government to shut down private sector access to the Internet has been eliminated."

But, Clinton said, "We think the bill still has a long way to go." If the private sector is expected to help out with national security, he said, there ought to be liability protections, insurance breaks, and tax credits for small businesses.

A spokesman for Rockefeller did not respond to repeated requests for comment on Wednesday. Sen. Olympia Snowe, a Maine Republican, is a co-sponsor of the legislation.

The Senate Commerce Committee is scheduled to vote for March 24 on the Rockefeller bill, which will replace an existing measure known as S.773. Because Rockefeller is chairman of the committee, the bill is expected to be approved with little dissent.

Other portions of the 62-page draft bill would create certification requirements for "critical infrastructure information system personnel working in cybersecurity" and punish certain companies that "fail to demonstrate" that they comply with federal specifications. A third section would order the National Science Foundation to fund anti-anonymity research that aims to "to determine the origin of a message transmitted over the Internet."

Liesyl Franz, vice president for information security at TechAmerica, one of the industry's largest trade associations, said her group does not support the new version at this time and is still reviewing the language.

"We have to see whether that makes sense," Franz said, referring to the licensing and certification sections. "We've often talked about how companies and industries are very different."

Franz added: "Frankly, we'd rather not see a prescriptive plan. Seeing a process for developing a plan to get to a goal is a little bit more palatable for the industry."

The revised Rockefeller bill, called the Cybersecurity Act of 2010, does stress that the White House should develop its cyber-emergency plan "in collaboration" with the private sector. It also says "this section does not authorize...an expansion of existing presidential authorities."

How America Became a Surveillance State
Alexandra Silver

It reads like a spy novel, but in The Watchers: The Rise of America's Surveillance State, author Shane Harris lays out the U.S. government's real-life efforts to see and hear more in the face of growing terrorist threats. He pays particular attention to Total Information Awareness (TIA), a post-9/11 research project spearheaded by John Poindexter, once President Reagan's National Security Adviser. Harris, a reporter for National Journal, spoke to TIME about Poindexter, the fate of TIA and the state of surveillance in America. He didn't object, mind you, to being recorded.

Your book has an ominous title, but you're very sympathetic to many of the characters. Do you feel we can trust the "watchers"?
What did Reagan say — "Trust but verify"? I've yet to meet anybody in this particular space who I thought had nefarious intentions or was out to violate people's privacy or anything like that. I'm willing to trust, but at the same time there have to be checks put in place and there has to be transparency and accountability. Bureaucracies have a way of taking on lives and actions of their own. (See the top 10 crime stories.)

How did you zero in on John Poindexter as the protagonist in this story?
Back in 2002 and 2003, I was covering technology and the government, and I was writing about the Total Information Awareness program, which he was running at the Defense Department. I was never able to get an interview with him, but after he left government, I ran into him at a conference. I said, "Would you ever be willing to sit down with me and do interviews?" and he said he would do it on the condition that I would come out to his house and we would do multiple interviews and it would all be on the record. What a burdensome request.

What was unique about TIA?
One was the scope of it. No one to that point had ever proposed trying to go out and find patterns of suspicious activity in data that was held in private hands. He wasn't just talking about mining through CIA reports and FBI reports and NSA reports and all the three-letter agencies. He wanted to actually go out and plug into credit-card databases and bank transaction records and the telecom networks and plane and car reservation rental records and all of this kind of stuff.

The other piece of it that was unique and that nobody has ever replicated was this idea of using technology to enhance privacy by encrypting the identities of the people whose data you're collecting. In terms of scale, he'd often described it as sort of a Manhattan Project for counterterrorism, and I think that was an apt description. (See "FBI Broke Privacy Laws, Says Justice Department Probe.")

You trace the rise of the American surveillance state to the Beirut bombings in 1983?
There were all of these clues about terrorist attacks against the Americans in Lebanon that the intelligence community had failed to piece together. When I realized that this was sort of the beginning of suicidal terrorism, and there had been a failure to connect the dots, I thought, This is 9/11, only in 1983. This theme keeps repeating, so from the standpoint of a narrative, I realized you have to start in 1983 to understand how far back this actually goes and to know that what we know of as the "war on terror" is not something that began after 9/11. It really began almost 25 years ago. (Comment on this story.)

Reagan even used — or his Administration even used — the term "war against terrorism," right?
Yeah. In '84 they started pushing new legislation to try and do different things to counter terrorist groups and to freeze their assets and marshal the forces of government, and this is when they announced they were declaring a "war against terrorism." I remember going back to the Reagan records and seeing that and having this startling moment.

Congress recently extended the Patriot Act. What do you make of that?
We've crossed into this era where surveillance and surveillance capabilities in the government are just a reality, and I don't think you're going to see Congress taking away that authority. They'll try and tighten up the controls and the oversight. But you don't hear anybody seriously — or at least not any of the influential members of Congress — saying, Yeah, we need to get rid of the Patriot Act altogether and go back to the way it was before Sept. 11. That's not going to happen.

To what extent do you think the outrage over Total Information Awareness — with its name and its logo, the all-seeing eye — was a p.r. problem?
A lot of it was a p.r. problem. You had the name, which was scary, the logo, which was just preposterous — I mean, it really, really was. I repeatedly asked Poindexter, "You really don't understand how people thought that this was creepy and disturbing?" And he always kind of chuckled and said, "No, no, no. I thought it was a pretty neat idea." He clearly sees the world one way.

And, also, it was the scale of it. It was just the fact that they were talking about collecting all of this information — and this really was the idea — collecting everything that they could get their hands on.

And the fact of his history. He will forever be associated with Iran-Contra, and that means he will forever be associated with public deception. I don't think that he was ever going to be a credible spokesperson for a project with this kind of creepy ambition, if I can call it that. So it was sort of doomed from the start.

Telling Friends Where You Are (or Not)
Jenna Wortham

As Jordan Viator roams the conference rooms, dimly lit bars and restaurants here at the South by Southwest Interactive conference, she often pulls out her cellphone and uses the Foursquare service to broadcast her location.

Such a service might sound creepy to the privacy-minded. But it came in handy for Ms. Viator when she arrived Friday at a party in a bar called Speakeasy and could not find anyone she knew. Her friends who also use Foursquare could see where she was, and some joined her a few minutes later.

“I only share my location with people I am comfortable meeting up with, and when I want to be found,” said Ms. Viator, a 26-year-old communications manager at a nonprofit company.

Mobile services like Loopt and Google’s Latitude have promoted the notion of constantly beaming your location to a map that is visible to a network of friends — an idea that is not for everybody.

But now there is a different approach, one that is being popularized by Foursquare.

After firing up the Foursquare application on their phones, users see a list of nearby bars, restaurants and other places, select their location and “check in,” sending an alert to friends using the service.

This model, which may be more attractive than tracking because it gives people more choice in revealing their locations, is gathering speed in the Internet industry. Yelp, the popular site that compiles reviews of restaurants and other businesses, recently added a check-in feature to its cellphone application. And Facebook is expected to take a similar approach when it introduces location features to its 400 million users in coming months.

If checking in goes mainstream, it could give a lift to mobile advertising, which is now just a tiny percentage of overall spending on online ads. If a company was able to pitch offers to people who say they are at a particular spot, it would “allow for the sharpening of mobile advertising,” said Anne Lapkin, an analyst at the research firm Gartner.

The check-in idea got its start in 2004, when Foursquare’s predecessor, a service called Dodgeball, started to let people tell their friends where they were with a text-message blast.

Most cellphones at the time did not have GPS location features, “so using text to check in was a necessity,” said Dennis Crowley, who created the service with a classmate in the Interactive Telecommunications Program at New York University.

In 2005, Mr. Crowley sold Dodgeball to Google, which eventually shut it. He decided to expand on the idea with Foursquare.

“Each time you check in, you’re giving permission to share your location and get pinged with information about interesting things nearby,” Mr. Crowley said.

Since it was introduced at South by Southwest a year ago, Foursquare has swelled to more than 500,000 users. It now has 1.6 million check-ins a week. This year, Foursquare and other location services are the talk of the conference, which has become a launching pad and testing ground for Internet start-up companies.

One of the drawbacks to the check-in model, as opposed to constant tracking, is that people have to remember to use a service, said Josh Williams, co-founder of Gowalla, a location game. Gowalla revolves around finding virtual objects in real-world locations, something like a scavenger hunt.

“Just as people had to get into the habit of tweeting, they’ll have to learn the habit of checking in,” Mr. Williams said.

Many of these services are building in incentives to encourage regular use, often in the form of points and virtual badges.

Gowalla, which says about 100,000 people are using its application, is working with several companies to spread the word about its service at South by Southwest. Users who find a virtual drink coaster can redeem it at a participating bar for a free beverage. And the company teamed up with Palm to offer free cellphones to conference attendees who find a phone icon.

Other services are trying the check-in approach. Hot Potato allows users to create instant chat rooms around locations or events, like a concert. Whrrl hopes to lure users by treating check-ins as keys to exclusive virtual “societies.” And a service called MyTown lets people buy virtual property around them, in a twist on Monopoly.

For Yelp, check-ins are a way to make its users’ reviews more authoritative. Yelp users who check into a restaurant or bar can write a short review from the mobile application and earn points.

“If you go to a business often enough, you get a special badge deeming you a regular of a place,” said Eric Singley, a product manager at Yelp. “It adds an extra layer of credibility to a review online.”

Even Loopt, which since 2006 has relied on a live tracking approach, unveiled a new feature in November called Pulse, which allows users to check into locations to receive tips and suggestions on things to do nearby.

One big hurdle for tracking services like Loopt has been that the iPhone does not allow their applications to keep running in the background for continuous monitoring. Many early-adopter types who might try a new location service are iPhone owners.

But Sam Altman, a co-founder of Loopt, said the check-in model opened up some interesting advertising opportunities. Businesses can offer coupons and specials based on where people check in, he said, as they do with Loopt and Foursquare. “For advertisers, the places you go are much more interesting than the Web sites you click on,” he said.

Privacy is Not Dead, Just Evolving
Tony Bradley

It's a brave new world. Unfortunately--continuing the literary allusion--Big Brother is watching. As technology makes more information more accessible, it also threatens to expose information that is not intended to be shared. Privacy is a concept that is caught in the middle of the struggle.
People who read this also read:

Privacy is a hot topic at this year's South by Southwest interactive in Austin, TX.Danah Boyd, a social media expert for Microsoft Research, presented a keynote speech at the South by Southwest Interactive (SXSWi) festival in Austin spotlighting the fate of privacy. Boyd was clear that she does not feel privacy is dead. Contrary to Facebook CEO Mark Zuckerberg's claim, people do still care about privacy.

As one blog summed up her speech "Boyd says that privacy is not dead, but that a big part of our notion of privacy relates to maintaining control over our content, and that when we don't have control, we feel that our privacy has been violated."

So, where is the line, exactly? If the Google Street View cameras happen to catch you standing naked in your living room window and post it online for the world to see, does that violate your privacy? Some say yes.

However, others are quick to point out that Google is capturing its images from public roads, therefore whatever Google captures would also be viewable by anyone walking or driving down the street. The bottom line being, if you don't want the general public to see you in all your naked glory, perhaps you shouldn't be standing naked in the living room window.

Fair enough. What about employee monitoring? Is it OK for an employer to play Big Brother and monitor employee actions and communications? Established legal precedent suggests that the organization's right to monitor its own hardware and network resources trump the Fourth Amendment rights of employees. Some compliance requirements actually mandate monitoring and retention of communications for businesses obligated to follow them.

The Supreme Court of the United States is hearing a case that challenges that legal precedent, though. If the established policies of the organization allow for shared personal and business use of company-issued computers or other devices, the company may inadvertently be implying an expectation of privacy and surrendering its right to monitor. The decision in this case could have wide-ranging implications for compliance, and for corporate acceptable use policies.

Schools fall under an obligation to monitor activity as well. Doug Taylor, director of educational marketing for Spectorsoft, explains "Both filtering and monitoring are required by CIPA (Childhood Internet Protection Act) in order to protect students while on campus or away from the school network and district filtering servers. Monitoring and filtering of Internet activities is also a typical part of a school's written and signed Acceptable Use Policy."

Again, fair enough. However, the Lower Merion School District may have taken that responsibility a little too literally, and a lot too far, when it implemented the ability to enable the webcam on laptops issued to students without their knowledge or consent. Does the obligation of the school to monitor extend to a right for the school to watch students getting dressed in the morning?

Google recently unleashed a firestorm of privacy criticism after the initial launch of its social networking tool--Google Buzz. Like many of the criticisms of Facebook, the backlash was more about the lack of control over privacy than it was about the actual privacy itself.

That is really the crux of the issue. It is not that technology has killed privacy, but that privacy must evolve and adapt to keep up with technology. There are extreme points of view that see privacy as binary--either everything is kept private, or everything is shared.

Contrary to the extreme positions of the EFF--champion of the privacy cause--on one side, and Google and Facebook executives--preemptive coroners of privacy--on the other side, there is actually a very large gray area in the middle.

In an age where the majority of people around the world feel that Internet access is a right, and the FCC is pushing the envelope to expand broadband Internet access to more Americans, the challenge is to strike a balance between providing access to all of the information in the world, without exposing all of the information in the world.

What the EFF and social networking executives need to understand is that privacy is subjective. There is no clear answer because my definition of privacy may not be the same as your definition of privacy. As Boyd stressed in her SXSWi keynote address, people just want control over when and how their information is shared.

Social networking sites are an extreme example because, by definition, they exist to share information socially. However, all businesses are entrusted with data of some kind and have an obligation to protect it. It is important that organizations understand that privacy is not dead, and it is important to keep user concerns regarding privacy in mind while adapting to evolving technology.

How Privacy Vanishes Online, a Bit at a Time
Steve Lohr

If a stranger came up to you on the street, would you give him your name, Social Security number and e-mail address?

Probably not.

Yet people often dole out all kinds of personal information on the Internet that allows such identifying data to be deduced. Services like Facebook, Twitter and Flickr are oceans of personal minutiae — birthday greetings sent and received, school and work gossip, photos of family vacations, and movies watched.

Computer scientists and policy experts say that such seemingly innocuous bits of self-revelation can increasingly be collected and reassembled by computers to help create a picture of a person’s identity, sometimes down to the Social Security number.

“Technology has rendered the conventional definition of personally identifiable information obsolete,” said Maneesha Mithal, associate director of the Federal Trade Commission’s privacy division. “You can find out who an individual is without it.”

In a class project at the Massachusetts Institute of Technology that received some attention last year, Carter Jernigan and Behram Mistree analyzed more than 4,000 Facebook profiles of students, including links to friends who said they were gay. The pair was able to predict, with 78 percent accuracy, whether a profile belonged to a gay male.

So far, this type of powerful data mining, which relies on sophisticated statistical correlations, is mostly in the realm of university researchers, not identity thieves and marketers.

But the F.T.C. is worried that rules to protect privacy have not kept up with technology. The agency is convening on Wednesday the third of three workshops on the issue.

Its concerns are hardly far-fetched. Last fall, Netflix awarded $1 million to a team of statisticians and computer scientists who won a three-year contest to analyze the movie rental history of 500,000 subscribers and improve the predictive accuracy of Netflix’s recommendation software by at least 10 percent.

On Friday, Netflix said that it was shelving plans for a second contest — bowing to privacy concerns raised by the F.T.C. and a private litigant. In 2008, a pair of researchers at the University of Texas showed that the customer data released for that first contest, despite being stripped of names and other direct identifying information, could often be “de-anonymized” by statistically analyzing an individual’s distinctive pattern of movie ratings and recommendations.

In social networks, people can increase their defenses against identification by adopting tight privacy controls on information in personal profiles. Yet an individual’s actions, researchers say, are rarely enough to protect privacy in the interconnected world of the Internet.

You may not disclose personal information, but your online friends and colleagues may do it for you, referring to your school or employer, gender, location and interests. Patterns of social communication, researchers say, are revealing.

“Personal privacy is no longer an individual thing,” said Harold Abelson, the computer science professor at M.I.T. “In today’s online world, what your mother told you is true, only more so: people really can judge you by your friends.”

Collected together, the pool of information about each individual can form a distinctive “social signature,” researchers say.

The power of computers to identify people from social patterns alone was demonstrated last year in a study by the same pair of researchers that cracked Netflix’s anonymous database: Vitaly Shmatikov, an associate professor of computer science at the University of Texas, and Arvind Narayanan, now a researcher at Stanford University.

By examining correlations between various online accounts, the scientists showed that they could identify more than 30 percent of the users of both Twitter, the microblogging service, and Flickr, an online photo-sharing service, even though the accounts had been stripped of identifying information like account names and e-mail addresses.

“When you link these large data sets together, a small slice of our behavior and the structure of our social networks can be identifying,” Mr. Shmatikov said.

Even more unnerving to privacy advocates is the work of two researchers from Carnegie Mellon University. In a paper published last year, Alessandro Acquisti and Ralph Gross reported that they could accurately predict the full, nine-digit Social Security numbers for 8.5 percent of the people born in the United States between 1989 and 2003 — nearly five million individuals.

Social Security numbers are prized by identity thieves because they are used both as identifiers and to authenticate banking, credit card and other transactions.

The Carnegie Mellon researchers used publicly available information from many sources, including profiles on social networks, to narrow their search for two pieces of data crucial to identifying people — birthdates and city or state of birth.

That helped them figure out the first three digits of each Social Security number, which the government had assigned by location. The remaining six digits had been assigned through methods the government didn’t disclose, although they were related to when the person applied for the number. The researchers used projections about those applications as well as other public data, like the Social Security numbers of dead people, and then ran repeated cycles of statistical correlation and inference to partly re-engineer the government’s number-assignment system.

To be sure, the work by Mr. Acquisti and Mr. Gross suggests a potential, not actual, risk. But unpublished research by them explores how criminals could use similar techniques for large-scale identity-theft schemes.

More generally, privacy advocates worry that the new frontiers of data collection, brokering and mining, are largely unregulated. They fear “online redlining,” where products and services are offered to some consumers and not others based on statistical inferences and predictions about individuals and their behavior.

The F.T.C. and Congress are weighing steps like tighter industry requirements and the creation of a “do not track” list, similar to the federal “do not call” list, to stop online monitoring.

But Jon Kleinberg, a professor of computer science at Cornell University who studies social networks, is skeptical that rules will have much impact. His advice: “When you’re doing stuff online, you should behave as if you’re doing it in public — because increasingly, it is.”

In Bid to Sway Sales, Cameras Track Shoppers
Stephanie Rosenbloom

The curvy mannequin piqued the interest of a couple of lanky teenage boys. Little did they know that as they groped its tight maroon shirt in the clothing store that day, video cameras were rolling.

At a mall, a father emerged from a store dragging his unruly young son by the scruff of the neck, as if he were the family cat. The man had no idea his parenting skills were being immortalized.

At an office supply store, a mother decided to get an item from a high shelf by balancing her small child on her shoulders, unaware that she, too, was being recorded.

These scenes may seem like random shopping bloopers, but they are meaningful to stores that are striving to engineer a better experience for the consumer, and ultimately, higher sales for themselves. Such clips, retailers say, can help them find solutions to problems in their stores — by installing seating and activity areas to mollify children, for instance, or by lowering shelves so merchandise is within easy reach.

Privacy advocates, though, are troubled by the array of video cameras, motion detectors and other sensors monitoring the nation’s shopping aisles.

Many stores and the consultants they hire are using the gear not to catch shoplifters but to analyze and to manipulate consumer behavior. And while taping shoppers is legal, critics say it is unethical to observe people as if they were lab rats. They are concerned that the practices will lead to an even greater invasion of privacy, particularly facial recognition technology, which is already in the early stages of deployment.

Companies that employ this technology say it is used strictly to determine characteristics like age and gender, which help them discover how different people respond to various products. But privacy advocates fear that as the technology becomes more sophisticated, it will eventually cross the line and be used to identify individual consumers and gather more detailed information on them.

“I think it is absolutely inevitable that this stuff is going to be linked to individuals,” said Katherine Albrecht, founder of Consumers Against Supermarket Privacy Invasion and Numbering, an advocacy group.

Some degree of privacy, experts say, is necessary as a matter of decency.

“When someone’s watching me, I’m going to act differently than when I think I’m alone,” Ms. Albrecht said. “Did I pick my nose? What was I doing? What did they see?”

Some stores use existing security systems for such monitoring and others have installed entirely new systems.

The most basic surveillance setup has been around for a few years. It uses video cameras in ceilings and sensors near fitting rooms to learn how many customers pass through the doors and where they tend to go.

At the other extreme, some retailers are taping shoppers’ every movement and using specialized analysis to study the shoppers’ behavior. For example, after seeing scores of customers struggle to navigate a particular area, analysts might suggest that the retailer widen the aisle.

The companies that install and analyze video for retailers say that they are sensitive to privacy issues but that the concerns are overblown. They say they are not using the technology to identify consumers but to give them easier and more enjoyable shopping experiences. And, they added, they have the sales results to prove it.

For example, Cisco Systems, the supplier of networking equipment, said one of its clients, the outdoor recreation retailer Cabela’s, installed cameras to monitor how long sales clerks took to approach customers.

“Far fewer customers were being approached within their guidelines than they thought,” said Joanne Bethlahmy, a director at Cisco’s Internet business solutions group. Cabela’s took steps to change that, and performance improved. The chain said it was testing video analysis and plans to go ahead with it.

Some of Cisco’s clients are also experimenting with facial recognition technology. Cisco executives noted, however, that the technology was used only to look for general characteristics. “It’s not looking at individuals,” Ms. Bethlahmy said. “It registers as ‘old versus young.’ ”

Knowing that can help a retailer determine if a display is more appealing to men or to women, to baby boomers or members of Generation X.

Because of sensitivities surrounding privacy, some retailers are reluctant to discuss surveillance technology. And exactly how many cameras are tracking shoppers is not known, partly because cameras are installed and uninstalled during various studies. (The videotape is for internal use only.)

But industry professionals said interest in analyzing shoppers was growing. Video analysis companies said nearly every major chain was or had been a client, including giants like Wal-Mart Stores and Best Buy.

“In 1997, we were the only people doing this, and it was a somewhat risky business,” said Paco Underhill, a pioneer in the field of observational customer research and the founder of Envirosell, a research company that is considered the industry trailblazer. “In 2010, the concept of observational research is offered by hundreds of companies across the world.”

Many think they have just begun to tap its potential.

“This is truly the next big area to explode in terms of improving retail operations,” Ms. Bethlahmy said.

Bill Martin, a co-founder of ShopperTrak, which uses video sensors to help retailers count customers, said chains were asking about the technology to become more competitive in an economic slump. So far, more than 50,000 ShopperTrak sensors are in stores around the world.

Envirosell says this year is the busiest in its history.

The company uses video cameras as well as in-store researchers, or “trackers” in Envirosell parlance, to discreetly observe shoppers. They also interview customers.

At Mr. Underhill’s New York office, young acolytes — his 1999 book “Why We Buy” is read by marketing students the world over — watch hours of video. Information collected by the trackers and the cameras enables the team to draw conclusions about things retailers and manufacturers want to know, like which merchandise areas are least popular. To explain the process, Mr. Underhill showed a reporter surveillance videos of teenagers touching the buxom mannequin.

“We call this being busted,” he said dryly.

Such video has inspired malls to create inviting seating areas on the theory that if men stay out of trouble, women shop longer.

Privacy advocates know that stores are not public property, but they would still prefer to see ground rules like telling shoppers they are under a microscope.

But it may already be too late.

As Mr. Underhill pointed out, people are taped dozens of times each day doing routine chores like pumping gas. Cameras, it seems, are pervasive. Stores are merely the latest frontier.

“We live our lives surrounded by them,” he said.

Burglar Helps Washington Police Find Him by Using Store's Computer to Log Onto MySpace

A burglar who spent about five hours on a store's computer after breaking into the business gave police all the clues they needed to track him down. Investigators said the 17-year-old logged into his MySpace account while at Bella Office Furniture and that made it easy for them to find him. He also spent time looking at pornography and trying to sell stolen items, all while using the business' computer.

He was arrested Tuesday and charged with first degree burglary. Kennewick Police said he helped officers recover a cell phone stolen in the break-in.

Break the Law and Your New 'Friend' May be the FBI

The Feds are on Facebook. And MySpace, LinkedIn and Twitter, too.
Richard Lardner

U.S. law enforcement agents are following the rest of the Internet world into popular social-networking services, going undercover with false online profiles to communicate with suspects and gather private information, according to an internal Justice Department document that offers a tantalizing glimpse of issues related to privacy and crime-fighting.

Think you know who's behind that "friend" request? Think again. Your new "friend" just might be the FBI.

The document, obtained in a Freedom of Information Act lawsuit, makes clear that U.S. agents are already logging on surreptitiously to exchange messages with suspects, identify a target's friends or relatives and browse private information such as postings, personal photographs and video clips.

Among other purposes: Investigators can check suspects' alibis by comparing stories told to police with tweets sent at the same time about their whereabouts. Online photos from a suspicious spending spree — people posing with jewelry, guns or fancy cars — can link suspects or their friends to robberies or burglaries.

The Electronic Frontier Foundation, a San Francisco-based civil liberties group, obtained the Justice Department document when it sued the agency and five others in federal court. The 33-page document underscores the importance of social networking sites to U.S. authorities. The foundation said it would publish the document on its Web site on Tuesday.

With agents going undercover, state and local police coordinate their online activities with the Secret Service, FBI and other federal agencies in a strategy known as "deconfliction" to keep out of each other's way.

"You could really mess up someone's investigation because you're investigating the same person and maybe doing things that are counterproductive to what another agency is doing," said Detective Frank Dannahey of the Rocky Hill, Conn., Police Department, a veteran of dozens of undercover cases.

A decade ago, agents kept watch over AOL and MSN chat rooms to nab sexual predators. But those text-only chat services are old-school compared with today's social media, which contain mountains of personal data, photographs, videos and audio clips — a potential treasure trove of evidence for cases of violent crime, financial fraud and much more.

The Justice Department document, part of a presentation given in August by top cybercrime officials, describes the value of Facebook, Twitter, MySpace, LinkedIn and other services to government investigators. It does not describe in detail the boundaries for using them.

"It doesn't really discuss any mechanisms for accountability or ensuring that government agents use those tools responsibly," said Marcia Hoffman, a senior attorney with the civil liberties foundation.

The group sued in Washington to force the government to disclose its policies for using social networking sites in investigations, data collection and surveillance.

Covert investigations on social-networking services are legal and governed by internal rules, according to Justice Department officials. But they would not say what those rules are.

The Justice Department document raises a legal question about a social-media bullying case in which U.S. prosecutors charged a Missouri woman with computer fraud for creating a fake MySpace account — effectively the same activity that undercover agents are doing, although for different purposes.

The woman, Lori Drew, helped create an account for a fictitious teen boy on MySpace and sent flirtatious messages to a 13-year-old neighborhood girl in his name. The girl hanged herself in October 2006, in a St. Louis suburb, after she received a message saying the world would be better without her.

A jury in California, where MySpace has its servers, convicted Drew of three misdemeanor counts of accessing computers without authorization because she was accused of violating MySpace's rules against creating fake accounts. But last year a judge overturned the verdicts, citing the vagueness of the law.

"If agents violate terms of service, is that 'otherwise illegal activity'?" the document asks. It doesn't provide an answer.

Facebook's rules, for example, specify that users "will not provide any false personal information on Facebook, or create an account for anyone other than yourself without permission." Twitter's rules prohibit its users from sending deceptive or false information. MySpace requires that information for accounts be "truthful and accurate."

A former U.S. cybersecurity prosecutor, Marc Zwillinger, said investigators should be able to go undercover in the online world the same way they do in the real world, even if such conduct is barred by a company's rules. But there have to be limits, he said.

In the face-to-face world, agents can't impersonate a suspect's spouse, child, parent or best friend. But online, behind the guise of a social-networking account, they can.

"This new situation presents a need for careful oversight so that law enforcement does not use social networking to intrude on some of our most personal relationships," said Zwillinger, whose firm does legal work for Yahoo and MySpace.

Undercover operations aren't necessary if the suspect is reckless. Federal authorities nabbed a man wanted on bank fraud charges after he started posting Facebook updates about the fun he was having in Mexico.

Maxi Sopo, a native of Cameroon living in the Seattle area, apparently slipped across the border into Mexico in a rented car last year after learning that federal agents were investigating the alleged scheme. The agents initially could find no trace of him on social media sites, and they were unable to pin down his exact location in Mexico. But they kept checking and eventually found Sopo on Facebook.

While Sopo's online profile was private, his list of friends was not. Assistant U.S. Attorney Michael Scoville began going through the list and was able to learn where Sopo was living. Mexican authorities arrested Sopo in September. He is awaiting extradition to the U.S.

The Justice document describes how Facebook, MySpace and Twitter have interacted with federal investigators: Facebook is "often cooperative with emergency requests," the government said. MySpace preserves information about its users indefinitely and even stores data from deleted accounts for one year. But Twitter's lawyers tell prosecutors they need a warrant or subpoena before the company turns over customer information, the document says.

"Will not preserve data without legal process," the document says under the heading, "Getting Info From Twitter ... the bad news."

Twitter did not respond to a request for comment for this story.

The chief security officer for MySpace, Hemanshu Nigam, said MySpace doesn't want to be the company that stands in the way of an investigation.

"That said, we also want to make sure that our users' privacy is protected and any data that's disclosed is done under proper legal process," Nigam said.

MySpace requires a search warrant for private messages less than six months old, according to the company.

Facebook spokesman Andrew Noyes said the company has put together a handbook to help law enforcement officials understand "the proper ways to request information from Facebook to aid investigations."

The Justice document includes sections about its own lawyers. For government attorneys taking cases to trial, social networks are a "valuable source of info on defense witnesses," they said. "Knowledge is power. ... Research all witnesses on social networking sites."

But the government warned prosecutors to advise their own witnesses not to discuss cases on social media sites and to "think carefully about what they post."

It also cautioned federal law enforcement officials to think prudently before adding judges or defense counsel as "friends" on these services.

"Social networking and the courtroom can be a dangerous combination," the government said.

F.B.I. Faces New Setback in Computer Overhaul
Eric Lichtblau

The Federal Bureau of Investigation has suspended work on parts of its huge computer overhaul, dealing the agency the latest costly setback in a decade-long effort to develop a modernized information system to combat crime and terrorism.

The overhaul was supposed to be completed this fall, but now will not be done until next year at the earliest. The delay could mean at least $30 million in cost overruns on a project considered vital to national security, Congressional officials said.

F.B.I. officials said that design changes and “minor” technical problems prompted the suspension of parts of the third and fourth phases of the work, which is intended to allow agents to better navigate investigative files, search databases and communicate with one another.

The decision to suspend work on the $305 million program is particularly striking because the current contractor, Lockheed Martin, was announced to great fanfare in 2006 after the collapse of an earlier incarnation of the project with the Science Applications International Corporation.

“This is terribly frustrating,” Senator Charles E. Grassley, the Iowa Republican who has been a frequent critic of the F.B.I.’s computer systems, said in an interview Thursday. “We’ve been through this song and dance before. Wouldn’t you think after hundreds of millions of dollars being wasted that they’d finally get it right?”

Beyond the financial costs are concerns about the F.B.I.’s ability to handle its law enforcement and national security responsibilities with an information system still regarded as sub-par in some crucial areas.

In a paper-driven culture, the agency’s computers were so inadequate that many agents until several years ago could not send or receive e-mail messages, and had difficulty getting case histories and linking to other databases. In the aftermath of Sept. 11, 2001, agents in Florida had to send photographs of the hijackers by overnight mail to Washington because they could not send e-mail attachments.

The current project, known as Sentinel, has fixed some longstanding problems, including difficulties with e-mail and database searching, auditors have found.

But in examining recent work, officials realized that mundane problems — like slow response times, awkward display pages and screen print that was too small — were cropping up.

Posing added complications were guidelines on F.B.I. operations put in place in 2008 that gave agents more latitude to look at factors like ethnicity and religion in terrorism investigations. That type of data was not typically used by the F.B.I. when the project began, and officials said they were trying to find ways to incorporate the expanded criteria into their investigative files and computer reports.

F.B.I. officials said they viewed the issues more as minor kinks than serious problems. They said the problems had not compromised agents’ ability to respond to threats.

The officials said the decision to suspend work on other parts of the program reflected the lessons learned from previous setbacks. When Lockheed Martin won the contract, the F.B.I. ended the previous computer overhaul and started over because the problems had grown too big to fix.

Robert S. Mueller III, director of the F.B.I., acknowledged problems in the project when he was asked about it at a House appropriations hearing on Wednesday.

Mr. Mueller said the F.B.I. wanted to make the needed adjustment in the system now “so that when we roll it out, it would be successful.”

He added: “I’m the one who made the decision to delay until we got these issues addressed, and I am comfortable and confident that the system is working. It is a good system and will be beneficial when we are through.”

Kimberly Jaindl, a spokeswoman for Lockheed Martin, said that the company was “committed to our customer’s mission of delivering a flexible and affordable information management system,” adding, “We will continue working diligently toward that goal.”

While the F.B.I. described the problems as a minor setback, Congressional officials said they were alarmed.

Mr. Grassley and Senator Richard C. Shelby, Republican of Alabama, told Mr. Mueller in a letter this week that they viewed the problems as a “serious development” that threatened the entire project. They sought answers about the source of the problems and Lockheed Martin’s work.

“This is a red flag,” said a Congressional official briefed by the F.B.I. on the problems this month, “because they’ve failed so many times before.”

The work suspension comes at an awkward time, as Congressional committees begin reviewing F.B.I. requests for about a 4 percent budget increase, or an additional $317 million.

Mr. Grassley said he wanted a better understanding of what was causing the computer problems before agreeing to budget increases. “It’s just a simple waste of taxpayer money,” he said.

New Password-Stealing Virus Targets Facebook

Hackers have flooded the Internet with virus-tainted spam that targets Facebook's estimated 400 million users in an effort to steal banking passwords and gather other sensitive information.

The emails tell recipients that the passwords on their Facebook accounts have been reset, urging them to click on an attachment to obtain new login credentials, according to anti-virus software maker McAfee Inc.

If the attachment is opened, it downloads several types of malicious software, including a program that steals passwords, McAfee said on Wednesday.

Hackers have long targeted Facebook users, sending them tainted messages via the social networking company's own internal email system. With this new attack, they are using regular Internet email to spread their malicious software.

A Facebook spokesman said the company could not comment on the specific case, but pointed to a status update the company posted on its web site earlier on Wednesday warning users about the spoofed email and advising users to delete the email and to warn their friends.

McAfee estimates that hackers sent out tens of millions of spam across Europe, the United States and Asia since the campaign began on Tuesday.

Dave Marcus, McAfee's director of malware research and communications, said that he expects the hackers will succeed in infecting millions of computers.

"With Facebook as your lure, you potentially have 400 million people that can click on the attachment. If you get 10 percent success, that's 40 million," he said.

The email's subject line says "Facebook password reset confirmation customer support," according to Marcus.

(Additional reporting by Alexei Oreskovic; Editing by Bernard Orr)

Facebook Traffic Tops Google for the Week
Julianne Pepitone

Facebook topped Google to become the most visited U.S. Web site last week, indicating a shift in how Americans are searching for content.

Web analysis firm Experian Hitwise said Monday that the social networking site surpassed Google to take the No. 1 spot for the week ended March 13.

"It shows content sharing has become a huge driving force online," said Matt Tatham, director of media relations at Hitwise. "People want information from friends they trust, versus the the anonymity of a search engine."

Facebook accounted for 7.07% of U.S. Web traffic that week, while Google (GOOG, Fortune 500) received 7.03%. The study compared only the domains Facebook.com and Google.com -- not, for example, Google-owned sites like Gmail.com.

Though the traffic levels were close, Facebook's year-over-year growth far outpaced Google's that week. The number of visitors to Facebook spiked 185% compared with the same period last year, while Google's traffic climbed just 9%.

"It's definitely a big moment for Facebook, even though they beat by a small margin," Tatham said. "We've seen it coming for quite a long time."
0:00 /2:39Facebook's 6th birthday

Facebook had never before beaten Google over a full weeklong period, though it has been the most visited site on recent holidays: Christmas Eve, Christmas Day and New Year's Day. Facebook was also the top site on the weekend of March 6-7.

But Tatham noted that when he added up traffic on all Google properties like Google Maps and YouTube, the company's sites comprised 11.03% of visits. Yahoo (YHOO, Fortune 500) was second with 10.98%.

Google.com had been the No. 1 site each week since Sept. 15, 2007, when ironically it passed another social networking site, MySpace.com, in order to take the crown.

Of course, the MySpace connection could be a bad omen for Facebook. MySpace enjoyed dominance on the social networking scene for years until it saw traffic plummet following Facebook's rise.

"By nature, the Web is ever-changing," Tatham said. "The Internet can be a fickle crowd."

Facebook Considers 'Panic Button' after U.K. Outcry

Social networking platform Facebook says it is considering installing a "panic button" on its British Web site after government pressure.

A British child protection group and the government have been lobbying Palo Alto-based Facebook and other networking sites to install a one-click button that can allow children to report abuse and potentially get police help if they suspect they're at risk.

Calls for the button intensified following the kidnap, rape and murder of 17-year-old Ashleigh Hall, whose killer, Peter Chapman, used a bogus Facebook identity to befriend her online.

British Home Secretary Alan Johnson met with Facebook officials Thursday and said further talks would take place next month in Washington.

Facebook said it was open to the idea of a panic button.

Facebook Rules Out 'Panic Button'

Facebook says it will not install a "panic button" on its main pages for users to report suspected paedophiles, but will develop its existing system.

The company says it will have links to organisations including the Child Exploitation and Online Protection (Ceop) centre on its reporting pages.

But the director of Ceop says there should be a button on every page.

The conviction of Peter Chapman for the murder of 17-year-old Ashleigh Hall led to renewed calls for a "panic button".

The convicted sex offender lured the teenager to her death using Facebook.

Earlier, the Home Secretary said Facebook executives had told him they had "no objection in principle" to installing the safety button.

Alan Johnson said he and the site's executives had had a "frank exchange of views" during the meeting, following calls for Facebook to link to the Child Exploitation and Online Protection (Ceop) centre.

Complaints procedure

But Richard Allan, director of policy for Facebook Europe, made clear the company was not considering including the button on its main site.

He said the Ceop button might be effective in principle, but only "for other sites", and not Facebook.

Jim Gamble, head of Ceop, said the button needed to be on the front page of every Facebook profile page.

"So that children are reassured and empowered, so are their parents, and offenders are deterred. That's the key.

By Mark Ward, Technology reporter, BBC News

The "panic button" that Facebook is being asked to adopt is already used by other websites, including Bebo. Clicking on it takes people to a site that details how to handle cyberbullying, hacking, viruses, distressing material and inappropriate sexual behaviour.

By putting the button on sites, the Child Exploitation and Online Protection Centre (Ceop) hopes to make it easy for children to find and get help. Ceop says that currently children make about 500 reports a month by clicking on the button. Of those, four a day are from a child in immediate danger, it claims.

Facebook is under pressure to adopt the button because it is a huge source of problems, according to Ceop. Ceop estimates that in January about 75% of reports it received were about incidents on Facebook.

"Facebook is a great environment, they are experts on advertising and engaging with young people in those areas where you can get click-through. But they're not experts on child protection."

Emma-Jane Cross, head of Beatbullying, welcomed Facebook's proposed change to its reporting function, saying it was crucial people who felt they had been bullied online could get help quickly.

"That's why Beatbullying is pleased that Facebook are taking the right steps by working with third sector organisations like us and referring their users to a safe environment where they can get the correct support and advice they need," she said.

Speaking about the meeting, Mr Johnson said: "I emphasised that including the Ceop abuse reporting button on their site has the potential to transform child protection - and that the company should put this above all other considerations."

He said a high-level meeting would be held between Facebook and Ceop officials in Washington on 12 April to discuss it further.

Facebook 'deeply saddened'

Defending Facebook's current set-up, a spokesman said they had been pleased to provide Mr Johnson with further details about their "robust reporting system".

"This innovative system has been developed by analysing millions of reports submitted over the years and testing ways to continually improve our system.

"The system effectively handles all manner of potential abuse we see on the site, ranging from the common minor breaking of the rules, such as embarrassing pictures, to the extremely rare serious matters that are quickly escalated to law enforcement."

He said they had gone on to explain that the website was "exploring ways to improve safety", which included adding links to more organisations, including Ceop and Beatbullying, on Facebook's reporting pages.

"We will also explore adding the Ceop button to our safety centre," he added.

Peter Chapman, 33, was jailed for at least 35 years this month for killing Ashleigh Hall last October.

She was raped, suffocated and her body dumped in a field near Sedgefield, County Durham, after agreeing to meet Chapman.

Earlier that month, she had been attracted by a picture of a young, bare-chested man that Chapman - calling himself Peter Cartwright - had posted on Facebook.

Facebook said it was "deeply saddened by the tragic death".

One on One: Christopher Poole, Founder of 4chan
Nick Bilton

In 2003, while still in high school, Christopher Poole, known online as “Moot,” launched a message board called 4chan. The site includes content that many people find offensive. Nevertheless, or maybe because of it, the site has millions of users and has been responsible for many of the strange meme’s that have propagated on the Internet, including LOLcats.

The 4chan site is a jumble of content, hosting anything from pictures of cute kittens to wildly disturbing images and language. As Gawker’s Nick Douglas described in 2008, areas of the Web site involve people hoping to “shock, entertain, and coax free porn from each other.” One of the largest Web forums in the United States, the site continues to influence mainstream culture. Here is an edited and condensed version of my chat with Mr. Poole:

Nick Bilton: You go by the name “Moot.” Why?
Christopher Poole: As a teenager I used to use the nickname “Moo” as a moniker online, and then I turned into “Moot” for fun, which I didn’t even realize was a real word at the time, and it just stuck with me.

How old were you when you started 4chan?
I was 15. I’m 22 now.

What were you trying to do when you started the Web site?
On my Summer break I discovered Japanese animation and I started watching a lot of anime on online forums. I soon discovered an image-board Web forum called 2chan, and I had never seen anything like it before. What really struck me about it was how fast it moved, even back then you could sit and hit refresh on your browser and continue to see new content.

So then what happened?
The code for 2chan was publicly available and I took it and translated it from Japanese to English using tools online and I threw it up on the Web and sent it out to 20 people.

And why did you call it 4chan?
I wanted to keep with the 2chan naming and the URL for 3chan was taken at the time so I just jumped to the next number.

No one knew you had any involvement for a long time, right?
Yes, my parents only found out about it two years ago.

Were you living a double life?
Yes, I was “Moot” online, Chris in school and with my family and I used other real names with people I met online and told them my name was Robert.

Why did you stay quiet about your involvement for so long?
I didn’t want my parents to know about 4chan at first because of the adult content. By the time I was 18, and could talk about it, the site had become notorious for its exploits and the adult content on there.

How many users does 4chan have?
We started with 20 users, now we’re the largest active forum in the United States with 8.2 million unique visitors every month, and 600 million page loads per month. People are on the site are on for an average of 19 minutes at a time and look at 30 pages each. On top of that, we’re currently getting 800,000 new posts a day.

So do you make any money from the site?
Technically yes. Functionally no. The site is technically profitable, we do a little more than break even, but no-one is taking a paycheck.

You keep saying “we.” How many people work on the site?
The site doesn’t have any employees. I have a part-time developer in Georgia, and I also have 30 volunteer moderators. So technically there aren’t any employees receiving a paycheck, including me.

So how do you make money?
The site breaks even and I do some odd jobs.

Has anyone offered to buy 4chan?
When I was 17 years old I was approached by an online Japanese toy store and they offered me $15,000 for the Web site, I told them I wasn’t interested in selling so they bumped the price up to $45,000. I said No. I haven’t received another offer in the past 5 years.

Would you sell the site today?
It depends, if someone was looking to gut it for traffic, then absolutely not. But if they were committed to the site and its goals, then I’d consider it.

Have the police ever contacted you?
Yes, in late 2006 someone posted a bomb threat on the site that was a competition between some friends to propagate something into the news. He succeeded but was bragging about it at work and was arrested. Then last year a user was accused of compromising Sarah Palin’s e-mail account and posting it on 4chan before it ended up on Gawker.

4chan’s community can be very powerful. Can they be controlled?
Well, last year they voted me as Time’s most influential person of the year, but the community can also be very fickle. For example, I didn’t know about the Time Magazine stunt until it was well underway. If I asked the community to do this, they would have done everything in their power to make sure that I was at the bottom of that list — that’s just the way they work. I like to leave them to their own devices.

4chan members can be a bit ruthless too, right?
I get a lot of e-mails from people that say thanks for giving them a place to vent, an outlet to say what they can’t say in real life with friends and work colleagues–things that they know are wrong, but they still want to say. Is it right? No, off course not. People say some disgusting, vile things, but just because we are hosting it doesn’t mean we agree with it. I don’t support what they are saying, I just support that there is a site like that to say that.

Do you support anonymity online?
Someone I recently met at the TED conference told me “part of the magic of youth is that people are able to forgive and forget.” As kids, we say stupid things, and because there’s not a record of it, nobody is going to give you a hard time at 30 years old about something you said or did when you were 8 years old. Online, you have all these social networks that are moving to a state of persistent identity and in turn we’re sacrificing the ability to be youthful. In 10 years, everything you say and do will be visible online and I think it’s really unfortunate.

So what’s next?
I’m working on a new project to reimagine what an image board should be today using the current technologies available.

Can you tell me more about it?
Not really, sorry. But our code is a decade old, the foundation is really rickety and the layout is old, so imagine if you were to start 4chan today, what would it look like, how would it work with a modern browser. It’s kind of like a re-boot, but it will be something separate to 4chan.

New E Ink Leader Sees Colorful Future for Company Under Taiwan’s Prime View International
Wade Roush

A couple of weeks ago, Xconomy broke the news that Russ Wilcox, co-founder of Cambridge, MA-based E Ink, was leaving the company after eight years as CEO. Shortly after that report I caught up with the organization’s new leader, T.H. Peng, who is an executive vice president at Prime View International (PVI), the Taiwanese display maker that acquired E Ink last year for about $450 million.

We talked about Wilcox’s departure, as well as the division’s expansion plans as it tools up to produce even more of the electrophoretic displays that go into e-book reading devices made by Amazon, Barnes & Noble, Sony, and other companies. Currently the company has over 100 job openings in 37 different categories, from R&D engineers to manufacturing specialists, making it one of the fastest-growing technology organizations in Massachusetts.

The division definitely needs the help, considering forecasts that annual sales of e-book devices, which surpassed 1 million for the first time in 2008, are expected to rise to 18 million by 2012. It’s also in the midst of an aggressive push to perfect full-color displays to supplement today’s monochrome versions—an improvement that’s critical to PVI’s future if devices with electrophoretic displays are to keep pace with LCD-based competitors from the likes of Apple.

Here’s a writeup of my conversation with Peng. E Ink’s vice president of marketing, Sriram Peruvemba, was also on hand for the interview.

Xconomy: How has the acquisition of E Ink by Prime View International changed each company?

T.H. Peng: The first thing to know is that right now, the Cambridge office is one organization of a global company, and the name is Prime View International. The focus will not just be on Cambridge. It’s going to be a combination of the management team in Korea, Taiwan, and Cambridge, under the global organization. We have a CEO in Taiwan, Scott Liu. Right now in Cambridge, we are working very closely with a team in Taiwan on the integration effort, in which we want to come up with a very strong service to our customers as well as supply more and more advanced products to our customers.

X: What can you tell me about the thinking and the timing behind Russ Wilcox’s departure as CEO of the E Ink division? Why was this the time for the transition?

THP: I don’t want to speak for Russ. The thing I do want to say is that I really admire his capabilities. He’s one of the smartest persons that I have met. We still maintain very good relations after his departure. The decision was made jointly by both the company and by Russ himself. We believe it’s best for the company, and both are ready to move on.

I want to add one more thing: his departure is not a surprise to anybody in Cambridge. He basically announced his departure in January to all E Ink colleagues, so we were all aware of that back in early January, and we had a farewell party two weeks ago. All of the E Ink folks gathered to say goodbye. It was a very warm and cozy affair.

X: I understand he will still be involved as an advisor?

THP: He has been with the company for a very long time, and we really want to continue to have a relationship with him. Hopefully, he can continue to contribute his knowledge and his wisdom to the company. We will continue to have him present as an advisor in the company. That is his role in the future. He is not going to be involved with the day-to-day business. He is going to be providing us more of a long-term view about the business.

X: What are the highest priorities for the company in 2010?

THP: We are going to triple the capacity this year in Cambridge—this is the first thing we are going to do. So we are planning to hire in 2010 more than a hundred employees in both Cambridge and South Hadley. Then we are conducting several advanced projects. We believe we are now a leader in this business, and we want to continue that leadership and also contribute to the technology and provide better products. In the past we have had a lot of ideas for color, and for better ink, but the company was limited in its resources. Now, we are part of a global company, and the company has a lot of financial arms that can help us do a lot of different projects. All of our scientists and engineers are very excited. Among those 100 employees will be a lot of R&D people, so we are talking about continuing to expand our capabilities as well as our labor force to be able to meet the goals set by the company for the Cambridge team.

Sriram Peruvemba: Just to add to what T.H. said about capacity, to give you a feel, last year we expanded our capacity by 5X, because the market was also five times the market that it was in 2008. So this 3X expansion is on top of that 5X. In other words, we will be at 15 times our 2008 production.

X: Are most of the units you’re producing going into e-book reading devices like the Kindle 2 and the Barnes & Noble Nook?

SP: Most of the products we’re shipping right now, in terms or revenue, are in what we call the e-publishing space—e-books and e-newspapers and things like that. In the future, we hope that textbooks will become a large subset of that. But in terms of volume, the largest areas are the small segmented displays, for things like wristwatches and smartphones.

X: T.H. mentioned that your engineers have ideas about how to produce color versions of electronic-ink films. Where does that technology stand? Is it becoming more urgent for the company to come up with a workable color version of its technology given the impending debut of Apple’s iPad, which has a color LCD screen and will have a built-in e-book app?

THP: We have a lot to say about this. Sri and I have both been in the LCD industry for a long time. The iPad is not the first LCD-based e-book reader. More than 10 years ago, there were already a few e-book reading devices using LCD screens. But those products have never been quite successful in the market. There is more than one reason—for example, the infrastructure of digital publishing was not well established, and maybe the form factor was not as cool. But we believe one of the key reasons was that LCD screens do not provide a very good digital reading experience.

LCD can do full color and video rate animation, and the display looks very nice, but there are a lot of problems. One is that you just don’t feel comfortable when you’re reading on an LCD screen. Very often when I have a long e-mail to read I just print it on paper, because I want to comprehend it and I just feel more comfortable doing that. We believe that is the key reason the LCD-based e-book readers were not popular.

We believe the iPad is very well positioned to be a good product, but we think it’s better for movies and video, not necessarily for digital reading. Having said that, we believe the existence of the iPad product is good for us. Just think about it—in the next month before the launch of the iPad, how many articles are there going to be talking about digital publishing and e-books? That is all really good for us, because it’s helping to create a very strong consumer awareness of digital reading, and it’s also good for creating awareness among publishers.

We already have companies like Amazon and Barnes & Noble and Sony who are endorsing digital publishing, and now we have another very good company called Apple. So generally this is very good for us. Yes, we do see some potential competition, but we believe the positives resulting from the iPad are a lot more beneficial. So we actually welcome the iPad—we think it’s going to be a joint force with us in creating a stronger digital publishing industry.

X: Nonetheless, you’re working on color versions of electronic ink to compete with the LCD-based devices, right?

THP: Let me continue to talk about this issue. First off, our color is different from LCD color. It’s reflective and bistable, meaning that even if you switch off the power, the image will still be there. You feel more comfortable reading a reflective display versus reading a backlit, powered display, which produces eye strain.

Having said that, our color quality will not be as good as LCD, initially. But we have already received very encouraging signs from a few customers that they want to launch our color e-paper product by the end of this year or the beginning of 2011. The company has just announced at the CeBIT conference that Hanvon, a Chinese company that just got listed in the last week and received great support from the capital markets, will design a color e-book reader using E Ink’s technology. They’ve raised a lot of money and have received strong financial backing to do this and to deliver their new product, which will be in early 2011. That will be the first phase for our color product.

We also have quite a few advanced color projects now in the pipeline. As I’ve been saying, we are recruiting a lot of great scientists in the Boston area to continue to explore what would be the best technology solutions for us to do color, and we already have quite a lot of ideas about this. Initially, the display quality will not be as good as LCD, but it will provide a good reading experience vis a vis LCD, simply because it’s reflective and bistable. If you want to do gaming, movies, video, you will still go to a LCD. But we believe that if you want to do digital reading, the reflective color E Ink screen will give you a better solution than LCD. For the long term, what we really want to do is, hopefully in a couple of years, launch an advanced color product in which the performance will be a lot better than in our first phase of color products, and hopefully providing very good color. We are working very hard on that.

X: What can you tell me about your technical ideas for creating better color displays? Is adding color simply a matter of tweaking the company’s existing microcapsule technology, or do you have to go back to the drawing board and approach it in an entirely new way?

SP: Even if we slightly describe it, we will probably reveal stuff that we are not ready to talk about. There is more than one approach, and exactly which one we will choose in the future, we don’t know.

With the product that we are planning to launch by the end of this year, when you put it side by side with an ordinary newspaper, the color will be better than the color in most newspapers. So that market will be satisfied. For textbook markets, the color will also meet their expectations. Where we will likely fall short is in digital magazines, where there are glossy pictures.

The approaches we are taking include improving the monochrome display to have greater contrast, so that when you overlay the color layer, it will look at least as good as the current black and white screens, if not better. In other words, we need to preserve all the goodness of the monochrome layer, and put color over it without sacrificing anything.

Yes, It Was a Bad Year for Ad Spending, But It Got Less Worse in the Fourth Quarter
Stuart Elliott

Last year was, as expected, a terrible year for advertising spending in this country, according to a leading research company, but the year ended better than it began — still down, yet the rate of decline slowed significantly — and early signs for 2010 seem promising.

Ad spending in the United States fell 12.3 percent in 2009 compared with 2008, according to figures to be released on Wednesday morning by Kantar Media, part of WPP. The fourth quarter fell 6 percent compared with the same period the previous year — a marked improvement from declines of 14.2 percent in the first quarter, 13.9 percent in the second quarter and 15.3 percent in the third quarter.

“There are signs the advertising economy is beginning to improve,” said Jon Swallen, senior vice president for research at Kantar Media in New York. “In medical terms, the patient’s beginning to revive and show signs of life,” he added in an interview on Tuesday, “but is still not completely healthy and not off his bed.”

The decline of 12.3 percent last year stacks up this way with the last three years: There was a decline of 4.1 percent in ad spending in 2008 compared with 2007, a gain of 0.2 percent in 2007 compared with 2006 and a gain of 4.1 percent in 2006 compared with 2005.

“It’s sort of been a lost half-decade,” Mr. Swallen said. For January and February of the new year, the preliminary numbers “are encouraging,” Mr. Swallen said, with spending for television commercials and online ads — and to a lesser extent, radio spots — is “improving at a faster rate than magazines and newspapers are.”

Even so, those print media are “doing better than they were as recently as October,” he added, and have a chance to finish the first quarter with a gain compared with the same period last year. “And if it’s a minus sign,” Mr. Swallen said of the print ad category in the first quarter, “it would be a much smaller minus than in the last two or three years.” For the full year 2009, all but two media categories finished with declines, according to the Kantar Media report.

The exceptions were Internet display ads, up 7.3 percent from 2008, and coupon inserts in newspapers, up 3 percent. The worst performance for a media category last year was local magazines, down 27.7 percent compared with 2008, followed by business-to-business magazines, down 26.2 percent.

Looking at the leading ad categories, 7 of the top 10 fell compared with 2008. The exceptions were telecommunications, up 1.6 percent; food and candy, up 3.5 percent; and pharmaceuticals, up 3.9 percent. “Telecommunications has held up pretty well through the recession,” Mr. Swallen said, as wireless carriers have battled each other fiercely in a fight that was joined by cable and satellite companies.

The gain in the food category was fueled by lower prices for ads, Mr. Swallen said, which led packaged-goods marketers to spend more robustly than other advertisers. The largest decline in the top 10 ad categories came in the biggest category, automotive, down 23.4 percent, which was composed of a 14.6 percent cutback by auto makers and a stunning 36 percent decline among dealers.

Other large declines were in other categories hard hit by the weak economy: financial services, down 18.3 percent, and miscellaneous retail, down 14.8 percent. There was a surprise among the top 10 advertisers as General Motors, which suffered through an industry sales slump and a company bankruptcy, actually increased spending from 2008, albeit by a tiny 1.3 percent.

The increase pointed to the continued competition in the automotive category even as sales fell. Ford Motor, although not in the top 10, also spent more in 2009 than 2008, Mr. Swallen said. Three other advertisers in the top 10 joined G.M. in spending more in 2009 than the year before — and the trio really opened the spigots. They were Pfizer, up 32.7 percent; Sprint Nextel, up 29.9 percent; and Wal-Mart, up 35.4 percent.

The No. 1 ad spender, Procter & Gamble, cut its outlay last year by 15.6 percent compared with 2008. The second place finisher, Verizon Communications, fell 6.9 percent. General Motors was third, followed by AT&T, down 4.1 percent; Pfizer; News Corporation, down 10.6 percent; Johnson & Johnson, down 8.6 percent; Sprint Nextel; Time Warner, down 6.8 percent; and Wal-Mart.

Texts Without Context
Michiko Kakutani

In his deliberately provocative — and deeply nihilistic — new book, “Reality Hunger,” the onetime novelist David Shields asserts that fiction “has never seemed less central to the culture’s sense of itself.” He says he’s “bored by out-and-out fabrication, by myself and others; bored by invented plots and invented characters” and much more interested in confession and “reality-based art.” His own book can be taken as Exhibit A in what he calls “recombinant” or appropriation art.

Mr. Shields’s book consists of 618 fragments, including hundreds of quotations taken from other writers like Philip Roth, Joan Didion and Saul Bellow — quotations that Mr. Shields, 53, has taken out of context and in some cases, he says, “also revised, at least a little — for the sake of compression, consistency or whim.” He only acknowledges the source of these quotations in an appendix, which he says his publishers’ lawyers insisted he add.

“Who owns the words?” Mr. Shields asks in a passage that is itself an unacknowledged reworking of remarks by the cyberpunk author William Gibson. “Who owns the music and the rest of our culture? We do — all of us — though not all of us know it yet. Reality cannot be copyrighted.”

Mr. Shields’s pasted-together book and defense of appropriation underscore the contentious issues of copyright, intellectual property and plagiarism that have become prominent in a world in which the Internet makes copying and recycling as simple as pressing a couple of buttons. In fact, the dynamics of the Web, as the artist and computer scientist Jaron Lanier observes in another new book, are encouraging “authors, journalists, musicians and artists” to “treat the fruits of their intellects and imaginations as fragments to be given without pay to the hive mind.”

It’s not just a question of how these “content producers” are supposed to make a living or finance their endeavors, however, or why they ought to allow other people to pick apart their work and filch choice excerpts. Nor is it simply a question of experts and professionals being challenged by an increasingly democratized marketplace. It’s also a question, as Mr. Lanier, 49, astutely points out in his new book, “You Are Not a Gadget,” of how online collectivism, social networking and popular software designs are changing the way people think and process information, a question of what becomes of originality and imagination in a world that prizes “metaness” and regards the mash-up as “more important than the sources who were mashed.”

Mr. Lanier’s book, which makes an impassioned case for “a digital humanism,” is only one of many recent volumes to take a hard but judicious look at some of the consequences of new technology and Web 2.0. Among them are several prescient books by Cass Sunstein, 55, which explore the effects of the Internet on public discourse; Farhad Manjoo’s “True Enough,” which examines how new technologies are promoting the cultural ascendancy of belief over fact; “The Cult of the Amateur,” by Andrew Keen, which argues that Web 2.0 is creating a “digital forest of mediocrity” and substituting ill-informed speculation for genuine expertise; and Nicholas Carr’s book “The Shallows” (coming in June), which suggests that increased Internet use is rewiring our brains, impairing our ability to think deeply and creatively even as it improves our ability to multitask.

Unlike “Digital Barbarism,” Mark Helprin’s shrill 2009 attack on copyright abolitionists, these books are not the work of Luddites or technophobes. Mr. Lanier is a Silicon Valley veteran and a pioneer in the development of virtual reality; Mr. Manjoo, 31, is Slate’s technology columnist; Mr. Keen is a technology entrepreneur; and Mr. Sunstein is a Harvard Law School professor who now heads the White House Office of Information and Regulatory Affairs. Rather, these authors’ books are nuanced ruminations on some of the unreckoned consequences of technological change — books that stand as insightful counterweights to early techno-utopian works like Esther Dyson’s “Release 2.0” and Nicholas Negroponte’s “Being Digital,” which took an almost Pollyannaish view of the Web and its capacity to empower users.

THESE NEW BOOKS share a concern with how digital media are reshaping our political and social landscape, molding art and entertainment, even affecting the methodology of scholarship and research. They examine the consequences of the fragmentation of data that the Web produces, as news articles, novels and record albums are broken down into bits and bytes; the growing emphasis on immediacy and real-time responses; the rising tide of data and information that permeates our lives; and the emphasis that blogging and partisan political Web sites place on subjectivity.

At the same time it’s clear that technology and the mechanisms of the Web have been accelerating certain trends already percolating through our culture — including the blurring of news and entertainment, a growing polarization in national politics, a deconstructionist view of literature (which emphasizes a critic’s or reader’s interpretation of a text, rather than the text’s actual content), the prominence of postmodernism in the form of mash-ups and bricolage, and a growing cultural relativism that has been advanced on the left by multiculturalists and radical feminists, who argue that history is an adjunct of identity politics, and on the right by creationists and climate-change denialists, who suggest that science is an instrument of leftist ideologues.

Even some outspoken cheerleaders of Internet technology have begun to grapple with some of its more vexing side effects. Steven Johnson, a founder of the online magazine Feed, for instance, wrote in an article in The Wall Street Journal last year that with the development of software for Amazon.com’s Kindle and other e-book readers that enable users to jump back and forth from other applications, he fears “one of the great joys of book reading — the total immersion in another world, or in the world of the author’s ideas — will be compromised.” He continued, “We all may read books the way we increasingly read magazines and newspapers: a little bit here, a little bit there.”

Mr. Johnson added that the book’s migration to the digital realm will turn the solitary act of reading — “a direct exchange between author and reader” — into something far more social and suggested that as online chatter about books grows, “the unity of the book will disperse into a multitude of pages and paragraphs vying for Google’s attention.”

WORRYING ABOUT the public’s growing attention deficit disorder and susceptibility to information overload, of course, is hardly new. It’s been 25 years since Neil Postman warned in “Amusing Ourselves to Death” that trivia and the entertainment values promoted by television were creating distractions that threatened to subvert public discourse, and more than a decade since writers like James Gleick (“Faster”) and David Shenk (“Data Smog”) described a culture addicted to speed, drowning in data and overstimulated to the point where only sensationalism and willful hyperbole grab people’s attention.

Now, with the ubiquity of instant messaging and e-mail, the growing popularity of Twitter and YouTube, and even newer services like Google Wave, velocity and efficiency have become even more important. Although new media can help build big TV audiences for events like the Super Bowl, it also tends to make people treat those events as fodder for digital chatter. More people are impatient to cut to the chase, and they’re increasingly willing to take the imperfect but immediately available product over a more thoughtfully analyzed, carefully created one. Instead of reading an entire news article, watching an entire television show or listening to an entire speech, growing numbers of people are happy to jump to the summary, the video clip, the sound bite — never mind if context and nuance are lost in the process; never mind if it’s our emotions, more than our sense of reason, that are engaged; never mind if statements haven’t been properly vetted and sourced.

People tweet and text one another during plays and movies, forming judgments before seeing the arc of the entire work. Recent books by respected authors like Malcolm Gladwell (“Outliers”), Susan Faludi (“The Terror Dream”) and Jane Jacobs (“Dark Age Ahead”) rely far more heavily on cherry-picked anecdotes — instead of broader-based evidence and assiduous analysis — than the books that first established their reputations. And online research enables scholars to power-search for nuggets of information that might support their theses, saving them the time of wading through stacks of material that might prove marginal but that might have also prompted them to reconsider or refine their original thinking.

“Reading in the traditional open-ended sense is not what most of us, whatever our age and level of computer literacy, do on the Internet,” the scholar Susan Jacoby writes in “The Age of American Unreason.” “What we are engaged in — like birds of prey looking for their next meal — is a process of swooping around with an eye out for certain kinds of information.”

TODAY’S TECHNOLOGY has bestowed miracles of access and convenience upon millions of people, and it’s also proven to be a vital new means of communication. Twitter has been used by Iranian dissidents; text messaging and social networking Web sites have been used to help coordinate humanitarian aid in Haiti; YouTube has been used by professors to teach math and chemistry. But technology is also turning us into a global water-cooler culture, with millions of people sending each other (via e-mail, text messages, tweets, YouTube links) gossip, rumors and the sort of amusing-entertaining-weird anecdotes and photographs they might once have shared with pals over a coffee break. And in an effort to collect valuable eyeballs and clicks, media outlets are increasingly pandering to that impulse — often at the expense of hard news. “I have the theory that news is now driven not by editors who know anything,” the comedian and commentator Bill Maher recently observed. “I think it’s driven by people who are” slacking off at work and “surfing the Internet.” He added, “It’s like a country run by ‘America’s Funniest Home Videos.’ ”

MSNBC’s new program “The Dylan Ratigan Show,” which usually focuses on business and politics, has a “While you were working ...” segment in which viewers are asked to send in “some of the strangest and outrageous stories you’ve found on the Internet,” and the most e-mailed lists on popular news sites tend to feature articles about pets, food, celebrities and self-improvement. For instance, at one point on March 11, the top story on The Washington Post’s Web site was “Maintaining a Sex Life,” while the top story on Reddit.com, a user-generated news link site, was “(Funny) Sexy Girl? Do Not Trust Profile Pictures!”

Given the constant bombardment of trivia and data that we’re subjected to in today’s mediascape, it’s little wonder that noisy, Manichean arguments tend to get more attention than subtle, policy-heavy ones; that funny, snarky or willfully provocative assertions often gain more traction than earnest, measured ones; and that loud, entertaining or controversial personalities tend to get the most ink and airtime. This is why Sarah Palin’s every move and pronouncement is followed by television news, talk-show hosts and pundits of every political persuasion. This is why Glenn Beck and Rush Limbaugh on the right and Michael Moore on the left are repeatedly quoted by followers and opponents. This is why a gathering of 600 people for last month’s national Tea Party convention in Nashville received a disproportionate amount of coverage from both the mainstream news media and the blogosphere.

Digital insiders like Mr. Lanier and Paulina Borsook, the author of the book “Cyberselfish,” have noted the easily distracted, adolescent quality of much of cyberculture. Ms. Borsook describes tech-heads as having “an angry adolescent view of all authority as the Pig Parent,” writing that even older digerati want to think of themselves as “having an Inner Bike Messenger.”

For his part Mr. Lanier says that because the Internet is a kind of “pseudoworld” without the qualities of a physical world, it encourages the Peter Pan fantasy of being an entitled child forever, without the responsibilities of adulthood. While this has the virtues of playfulness and optimism, he argues, it can also devolve into a “Lord of the Flies”-like nastiness, with lots of “bullying, voracious irritability and selfishness” — qualities enhanced, he says, by the anonymity, peer pressure and mob rule that thrive online.

Digital culture, he writes in “You Are Not a Gadget,” “is comprised of wave after wave of juvenilia,” with rooms of “M.I.T. Ph.D. engineers not seeking cancer cures or sources of safe drinking water for the underdeveloped world but schemes to send little digital pictures of teddy bears and dragons between adult members of social networks.”

AT THE SAME time the Internet’s nurturing of niche cultures is contributing to what Cass Sunstein calls “cyberbalkanization.” Individuals can design feeds and alerts from their favorite Web sites so that they get only the news they want, and with more and more opinion sites and specialized sites, it becomes easier and easier, as Mr. Sunstein observes in his 2009 book “Going to Extremes,” for people “to avoid general-interest newspapers and magazines and to make choices that reflect their own predispositions.”

“Serendipitous encounters” with persons and ideas different from one’s own, he writes, tend to grow less frequent, while “views that would ordinarily dissolve, simply because of an absence of social support, can be found in large numbers on the Internet, even if they are understood to be exotic, indefensible or bizarre in most communities.” He adds that studies of group polarization show that when like-minded people deliberate, they tend to reinforce one another and become more extreme in their views.

One result of this nicheification of the world is that consensus and common ground grow ever smaller, civic discourse gets a lot less civil, and pluralism — what Isaiah Berlin called the idea that “there are many different ends that men may seek and still be fully rational, fully men, capable of understanding each other and sympathizing and deriving light” from “worlds, outlooks, very remote from our own” — comes to feel increasingly elusive.

As Mr. Manjoo observes in “True Enough: Learning to Live in a Post-Fact Society” (2008), the way in which “information now moves through society — on currents of loosely linked online groups and niche media outlets, pushed along by experts and journalists of dubious character and bolstered by documents that are no longer considered proof of reality” — has fostered deception and propaganda and also created what he calls a “Rashomon world” where “the very idea of objective reality is under attack.” Politicians and voters on the right and left not only hold different opinions from one another, but often can’t even agree over a shared set of facts, as clashes over climate change, health care and the Iraq war attest.

THE WEB’S amplification of subjectivity applies to culture as well as politics, fueling a phenomenon that has been gaining hold over America for several decades, with pundits squeezing out reporters on cable news, with authors writing biographies animated by personal and ideological agendas, with tell-all memoirs, talk-show confessionals, self-dramatizing blogs and carefully tended Facebook and MySpace pages becoming almost de rigeur.

As for the textual analysis known as deconstruction, which became fashionable in American academia in the 1980s, it enshrined individual readers’ subjective responses to a text over the text itself, thereby suggesting that the very idea of the author (and any sense of original intent) was dead. In doing so, deconstruction uncannily presaged arguments advanced by digerati like Kevin Kelly, who in a 2006 article for The New York Times Magazine looked forward to the day when books would cease to be individual works but would be scanned and digitized into one great, big continuous text that could be “unraveled into single pages” or “reduced further, into snippets of a page,” which readers — like David Shields, presumably — could then appropriate and remix, like bits of music, into new works of their own.

As John Updike pointed out, Mr. Kelly’s vision would in effect mean “the end of authorship” — hobbling writers’ ability to earn a living from their published works, while at the same time removing a sense of both recognition and accountability from their creations. In a Web world where copies of books (and articles and music and other content) are cheap or free, Mr. Kelly has suggested, authors and artists could make money by selling “performances, access to the creator, personalization, add-on information” and other aspects of their work that cannot be copied. But while such schemes may work for artists who happen to be entrepreneurial, self-promoting and charismatic, Mr. Lanier says he fears that for “the vast majority of journalists, musicians, artists and filmmakers” it simply means “career oblivion.”

Other challenges to the autonomy of the artist come from new interactive media and from constant polls on television and the Web, which ask audience members for feedback on television shows, movies and music; and from fan bulletin boards, which often function like giant focus groups. Should the writers of television shows listen to fan feedback or a network’s audience testing? Does the desire to get an article on a “most e-mailed” list consciously or unconsciously influence how reporters and editors go about their assignments and approaches to stories? Are literary-minded novelists increasingly taking into account what their readers want or expect?

As reading shifts “from the private page to the communal screen,” Mr. Carr writes in “The Shallows,” authors “will increasingly tailor their work to a milieu that the writer Caleb Crain describes as ‘groupiness,’ where people read mainly ‘for the sake of a feeling of belonging’ rather than for personal enlightenment or amusement. As social concerns override literary ones, writers seem fated to eschew virtuosity and experimentation in favor of a bland but immediately accessible style.”

For that matter, the very value of artistic imagination and originality, along with the primacy of the individual, is increasingly being questioned in our copy-mad, postmodern digital world. In a recent Newsweek cover story pegged to the Tiger Woods scandal, Neal Gabler, the author of “Life: the Movie: How Entertainment Conquered Reality,” absurdly asserts that celebrity is “the great new art form of the 21st century.”

Celebrity, Mr. Gabler argues, “competes with — and often supersedes — more traditional entertainments like movies, books, plays and TV shows,” and it performs, he says, “in its own roundabout way, many of the functions those old media performed in their heyday: among them, distracting us, sensitizing us to the human condition, and creating a fund of common experience around which we can form a national community.”

However impossible it is to think of “Jon & Kate Plus Eight” or “Jersey Shore” as art, reality shows have taken over wide swaths of television, and memoir writing has become a rite of passage for actors, politicians and celebrities of every ilk. At the same time our cultural landscape is brimming over with parodies, homages, variations, pastiches, collages and others forms of “appropriation art” — much of it facilitated by new technology that makes remixing, and cutting-and-pasting easy enough for a child.
It’s no longer just hip-hop sampling that rules in youth culture, but also jukebox musicals like “Jersey Boys” and “Rock of Ages,” and works like “The League of Extraordinary Gentlemen,” which features characters drawn from a host of classic adventures. Fan fiction and fan edits are thriving, as are karaoke contests, video games like Guitar Hero, and YouTube mash-ups of music and movie, television and visual images. These recyclings and post-modern experiments run the gamut in quality. Some, like Zachary Mason’s “Lost Books of the Odyssey,” are beautifully rendered works of art in their own right. Some, like J. J. Abram’s 2009 “Star Trek” film and Amy Heckerling’s 1995 “Clueless” (based on Jane Austen’s “Emma”) are inspired reinventions of classics. Some fan-made videos are extremely clever and inventive, and some, like a 3-D video version of Picasso’s “Guernica” posted on YouTube, are intriguing works that raise important and unsettling questions about art and appropriation.

All too often, however, the recycling and cut-and-paste esthetic has resulted in tired imitations; cheap, lazy re-dos; or works of “appropriation” designed to generate controversy like Mr. Shields’s “Reality Hunger.” Lady Gaga is third-generation Madonna; many jukebox or tribute musicals like “Good Vibrations” and “The Times They Are A-Changin’ ” do an embarrassing disservice to the artists who inspired them; and the rote remaking of old television shows into films (from “The Brady Bunch” to “Charlie’s Angels” to “Get Smart”), not to mention the recycling of video games into movies (like “Tomb Raider” and “Resident Evil”) often seem as pointless as they are now predictable.

Writing in a 2005 Wired article that “new technologies redefine us,” William Gibson hailed audience participation and argued that “an endless, recombinant, and fundamentally social process generates countless hours of creative product.” Indeed, he said, “audience is as antique a term as record, the one archaically passive, the other archaically physical. The record, not the remix, is the anomaly today. The remix is the very nature of the digital.”

To Mr. Lanier, however, the prevalence of mash-ups in today’s culture is a sign of “nostalgic malaise.” “Online culture,” he writes, “is dominated by trivial mash-ups of the culture that existed before the onset of mash-ups, and by fandom responding to the dwindling outposts of centralized mass media. It is a culture of reaction without action.”

He points out that much of the chatter online today is actually “driven by fan responses to expression that was originally created within the sphere of old media,” which many digerati mock as old-fashioned and passé, and which is now being destroyed by the Internet. “Comments about TV shows, major movies, commercial music releases and video games must be responsible for almost as much bit traffic as porn,” Mr. Lanier writes. “There is certainly nothing wrong with that, but since the Web is killing the old media, we face a situation in which culture is effectively eating its own seed stock.”

Opera: 'Dramatic' Rise Since Microsoft's Ballot Page

85% more downloads in UK
Patrick Goss

Opera has seen a massive increased in downloads of its browser following the introduction of the browser ballot 'choice screen' into Microsoft Windows.

Microsoft ended years of arguing by producing a ballot screen that was rolled out in Europe through Windows Update to people who used Internet Explorer – the default browser and another Microsoft product.

The ballot screen gave people the option of choosing a different default browser, listing Opera alongside the likes of IE, Chrome, Safari and Firefox.

Opera has already told TechRadar that it has been delighted by the change it has seen since the ballot page went live, and the statistics show why.

According to three days worth of Opera data, the ballot screen has handed the company a massive boost across Europe – with the UK seeing an 85% increase in downloads for Opera 10.5.

Choice is good

"This confirms that when users are given a real choice on how they choose the most important piece of software on their computer, the browser, they will try out alternatives" said Hakon Wium Lie, CTO of Opera Software.

"A multitude of browsers will make the web more standardised and easier to browse".

According to Opera, the increase represents a doubling from normal download numbers on average – and the impact in some countries has been larger still.

Poland (328%) Spain (215%) and Italy (202%) top the list of increases, with the UK's 85 per cent actually one of the smaller changes.

"Piracy" Sounds Too Sexy, Say Rightsholders
Nate Anderson

For years, we've heard complaints about using the term "piracy" to describe the online copyright infringement—but most have come from Big Content's critics.

As noted copyright scholar William Patry argued in his most recent book, "To say that X is a pirate is a metaphoric heuristic, intended to persuade a policymaker that the in-depth analysis can be skipped and the desired result immediately attained... Claims of piracy are rhetorical nonsense."

That may well be true, but copyright holders have long preferred the term, with its suggestions of theft, destruction, and violence. The "pirates" have now co-opted the term, adopting it with gusto and hoisting the Jolly Roger across the Internet (The Pirate Bay being the most famous example).

Some of those concerned about online copyright infringement now realize that they may have created a monster by using the term "piracy." This week, at the unveiling of a new study for the International Chamber of Commerce which argued that 1.2 million jobs could be lost in Europe as a result of copyright infringement by 2015, the head of the International Actors' Federation lamented the term.

"We should change the word piracy," she said at a press conference. "To me, piracy is something adventurous, it makes you think about Johnny Depp. We all want to be a bit like Johnny Depp. But we're talking about a criminal act. We're talking about making it impossible to make a living from what you do."

Translation: we should have chosen a less-sexy term.

Speaking at a very different event in Abu Dhabi last week, Rupert Murdoch's son James did his part to redefine the sexy "pirates" as common thieves and nothing more. "There is no difference with going into a store and stealing Pringles or a handbag and taking this stuff," he said. "It's a basic condition for investment and economic growth and there should be the same level of property rights whether it's a house or a movie. The idea that there's a new consumer class and you have to be consumer-friendly when they're stealing stuff. No. There should be the same level of sanctity as there is around property. Content is no different. They're not crazy kids. No. Punish them."


"Piracy" has certainly had negative effects on many sectors of the content industry, but some of the sturm und drang coming from people like Murdoch is just ridiculous. As Patry and writers like Steve Knopper point out, the disaggregation of the album has been one of the key drivers of lower music revenues—and movies are doing pretty well.

In fact, theaters are setting box office records. As departing MPAA Chairman Dan Glickman said in a speech to theater owners recently, "What a year! As John said, a 10 percent lift for the box office here at home...a 30 percent jump globally since 2005. Reversing a two-year trend, we have more people going to the movies...and more folks going more often...with a hard-core of movie fans—the 10 percent who go once or more a month—accounting for half of all ticket sales."

Net Piracy Takes 'Toll on Jobs'

The growth of illegal file-sharing could cost European countries 1.2m jobs and 240bn euros (£215bn) by 2015, an industry report claims.

The study, commissioned by an industry body and endorsed by trade unions, studied the impact of web piracy in Germany, UK, France, Italy and Spain.

It claims that without measures to curb piracy, the UK alone could lose up a quarter of a million jobs by 2015.

But campaigners described the report as "corporate propaganda".

'Need for action'

The study, conducted by economics firm TERA Consultants on behalf of the International Chamber of Commerce, said that the UK's creative industries experienced losses of 1.4bn euros in 2008 because of piracy.

Brendan Barber, General Secretary of the TUC, said that the results showed piracy was a "major threat to the creative industries in terms of loss of employment and revenues".

"If there was ever the proof needed to demonstrate why the Digital Economy Bill is imperative for the protection of our creative industries, this report is it," he said.

# Legal framework for tackling copyright infringement via education and technical measures
# New duties for Ofcom to assess the UK's communications infrastructure every two years
# Modernising spectrum to increase investment in mobile broadband
# Framework for the move to digital radio switchover by 2015
# Updating Channel 4 functions to encompass public service content, on TV and online
# Age ratings compulsory for all boxed video games aimed at those over 12 years

The Digital Economy Bill was outlined in the Queen's speech in November 2009.

It includes various proposals to tackle illegal file-sharing including a so-called "three strikes" element, which would see persistent pirates cut off from the net.

It also includes element that would give courts the power to block websites that facilitate copyright infringement.

The bill has been passed by the Lords and is now expected to be rushed through the Commons before the general election.

There has been a groundswell of opposition to the Bill from firms such as British Telecom, Google and Facebook, which say that elements of the bill could undermine free speech on the net without reducing copyright infringement.

A campaign has also started on the internet encouraging people to write to their MP to stop the government rushing the bill through "without proper debate"

Jim Killock of the Open Rights Group (ORG) is a vocal opponent of the Digital Economy Bill and the new research.

"I am fed up of hearing corporate propaganda being deployed in order to justify intrusions on our rights to freedom of speech, privacy and to a fair trial," he said.

"We have no truck with infringement of copyright, but it is shameful that anyone from the Labour movement can attempt to justify removal of vital services such as the internet as a punishment."

The ORG recently revealed that certain amendments to the bill proposed in the House of Lords - but not passed - had been drafted by music industry group the BPI.

"Members of the Labour movement spent decades fighting for people's rights to basic services, education, and political organisation: they need to ask themselves where their true values lie," said Mr Killock.

"Are they with Gordon Brown's call to recognise the internet as just as vital for the today's citizens as water, gas and electricity; or are they with music industry lobbyists, calling on Parliament to infringe people's human rights?"

Piracy plan

The new report used data from EU countries, the World Intellectual Property Organization and Eurostat, the EU's statistical gathering arm.

It said its figures were a worst case scenario based on consumer Web traffic growing 24% annually.

The report said that European creative industries generated 860bn euros and employed 14.4m million people in 2008. In the same year it estimates that 10bn euros and 186,000 jobs were lost across Europe.

Extrapolating that data, it suggests that up to 1.2 million jobs and 240 billion euros worth of European commerce could be wiped out by 2015.

In the UK alone, losses could be up to 254,000 jobs and 7.8bn euros, it said.

According to the UK government, the creative industries in the UK employ around 2 million people.

Agnete Haaland, the president of the International Actors' Federation, which supports the research, said that education was key to tackling piracy.

"We should change the word piracy," she said.

"To me, piracy is something adventurous, it makes you think about Johnny Depp.

"But we're talking about a criminal act. We're talking about making it impossible to make a living from what you do."

She urged the European Parliament to implement rules to tackle online piracy.

Cisco's New Router: Trouble for Hollywood
Erik Heinrich

Cisco's CRS-3 router made a bit of a splash when it was announced on March 9, but the power of this new device hasn't yet sunk in. Consider: The CRS-3, a network routing system, is able to stream every film ever made, from Hollywood to Bombay, in under four minutes. That's right — the whole universe of films digested in less time than it takes to boil an egg. That may sound like good news for consumers, but it could be the business equivalent of an earthquake for the likes of Universal Studios and Paramount Pictures.

Most people are familiar with routers, or desktop boxes used to provide connectivity between PCs, laptops and printers in a home or small office. These are tiny geckos compared with the T. rexes used by telcos such as Verizon and AT&T to distribute data among computer networks and provide Internet connectivity to millions of homes and wireless subscribers.

As it turns out, these megarouters sitting inside data centers of major telcos and cablecos are among the biggest bottlenecks of the Internet, because as bandwidth speed to end users has shot up in recent years, router technology has not kept up, resulting in traffic jams that can slow or freeze downloads.

Cisco's superrouter is expected to turn what is now the equivalent of a country road into an eight-late superhighway for Internet data traffic, including 3-D video, university lectures and feature films such as Harry Potter and the Half-Blood Prince and The Twilight Saga: New Moon. "Video is the big driver behind all this," says analyst Akshay Sharma of technology-research company Gartner Inc., noting that voice and texting will soon be overtaken by richer multimedia content and applications.

While it's already possible to stream a feature film in real time, in the best-case scenario it takes about two hours to download to a personal film archive, at home or on a mobile device, for repeat viewing. With the predictable slowdowns and interruptions now so common, the process can eat up four hours or more of computer time — to say nothing of time lost managing the process.

But routers are not the only cause of bottlenecks, and Cisco is not alone in working to maximize the Internet's full potential. Google is also concerned about the speed limitations imposed by wires that run to the home. Last month, Google, best known for its search engine, announced plans to test ultra-high-speed broadband networks that would deliver Internet content to residential subscribers at speeds of 1 gigabit per second — 100 times as fast as the top speed available today. This would allow consumers to complete a PC download of a Hollywood blockbuster like Avatar in about 72 seconds.

"If Google has real success with this trial, it will percolate, and people will need to copy it," says Sharma, who is based in Fort Lauderdale, Fla. However, such a quantum leap in bandwidth would need the support of Cisco-style routers in the background to deliver on its promise beyond the pilot stage.

The ability to download albums and films in a matter of seconds is a harbinger of deep trouble for the Motion Picture Association of America (MPAA) and the Recording Industry Association of America (RIAA), which would prefer to turn the clock back, way back.

Consider that the MPAA, whose members include Disney and Universal, attacked the VCR in congressional hearings in the 1980s with a Darth Vader–like zeal, predicting box-office receipts would collapse if consumers were allowed to freely share and copy VHS tapes of Hollywood movies. A decade later, the MPAA fought to block the DVD revolution, mainly because digital media could be copied and distributed even more easily than videocassettes.

Today the film and recording industries maintain an iron grip over distribution of their intellectual property through megaplexes and national retailers such as Best Buy, Tower Records and Walmart. These bricks-and-mortar distribution channels take a share of the profit, but they provide a steady and predictable stream of revenue.

By contrast, studios and music labels have experienced limited success and even less profitability in the few instances when they have grudgingly embraced the Internet bogeyman. The prospect of tying their future success to online distribution scares them because it means they will need to develop new distribution and pricing models. (For example, Netflix can stream an unlimited number of Hollywood films for a monthly subscription fee, but this does not include new releases.) They will also need to figure out how to stop people from setting up clone video and music stores with pirated content.

The MPAA declined to comment specifically on the Cisco breakthrough but said it supports technological innovation. Meanwhile, both the MPAA and the RIAA continue to fight emerging technologies like peer-to-peer file sharing with costly court battles rather than figuring out how to appeal to the next generation of movie enthusiasts and still make a buck. These younger consumers prefer to shop for movies online, watch them at their leisure on mobile devices and desktops and share them with friends. The studios and music labels have to figure out how to fit into that lifestyle, or else risk becoming obsolete.

The hard fact is that the latest developments at Cisco, Google and elsewhere may do more than kill the DVD and CD and further upset entertainment-business models that have changed little since the Mesozoic Era. With superfast streaming and downloading, indie filmmakers will soon be able to effectively distribute feature films online and promote them using social media such as Facebook and Twitter.

The upshot is that the high castle walls built over the past 100 years by the film industry to establish privilege and protect monopolistic profits may soon come tumbling down, just as they have for the music industry. In keeping with the old storyline, the nimble David looks set to vanquish the myopic and overconfident Goliath.

Shirky: Napster Tapped Into Our Primate Instincts
Caroline McCarthy

Author and New York University professor Clay Shirky thinks he's getting old, or in other words, "my average age has been going up at the alarming rate of about one year per year." Recently, he said, he had to explain Napster to a class of his students because they were too young to have known much about the groundbreaking music-sharing service in its heyday.

But that wasn't the point. Shirky's talk on Sunday morning at the South by Southwest Interactive Festival was called "Monkeys with Internet Access: Sharing, Human Nature, and Digital Data," and it covered a rambling range of topics from the Gutenberg printing press to the rise of sites like Patients Like Me that aim to transform shared information into a civic good.

But it was his point about Napster that was particularly interesting: Napster was what turned the sharing of music from sharing a physical good into sharing information, he said, and that's what was revolutionary about it.

"Back in the old days we used to have something called a CD collection," Shirky said facetiously. "It was something like keeping the box that the Amazon books came in, but you kept the container the music was in all the time...If somebody else came over to my house and said, 'That Vanilla Ice track is slammin'! Can I have that?' No! This is my copy of 'To The Extreme.' If I give it to you, I will no longer be ale to enjoy Vanilla Ice's music. That's sharing of goods."

In other words, sharing something physical makes us possessive. Sharing information is easier, and Shirky argued, biologically programmed dating back to our primate origins.

In the Napster era, some attributed the ascent of pirated digital music to a supposedly criminal-minded nature among American youth. The argument didn't work. "It coincided with the largest fall in the rate of crime in recorded history," Shirky said, "with one exception, which was theft of digital property."

He didn't offer a solution for the music industry, or for the regulatory bodies that he says are trying to put legislation in place that would make us "spiteful" about sharing digital goods (which are information, he'd argue) the same way that we'd share physical ones.

"Sharing information is something that we're not only biased to do, but it's something we're biased to like," he said. "This freaked the music industry out, and the thing that freaked them out is we didn't voluntarily withhold the ability to share things with other people that would make their lives better at no cost to themselves."

The music industry obviously has its own side of the argument. But some people in that camp might agree with the human origins connection: tackling the issue of digital music probably has been, indeed, like dealing with a room full of unruly monkeys.

Until next week,

- js.

Current Week In Review

Recent WiRs -

March 13th, March 6th, February 27th, February 20th

Jack Spratts' Week In Review is published every Friday. Submit letters, articles, press releases, comments, questions etc. in plain text English to jackspratts (at) lycos (dot) com. Submission deadlines are Thursdays @ 1400 UTC. Please include contact info. The right to publish all remarks is reserved.

"The First Amendment rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public."
- Hugo Black
JackSpratts is offline   Reply With Quote

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Forum Jump

Similar Threads
Thread Thread Starter Forum Replies Last Post
Peer-To-Peer News - The Week In Review - February 13th, '10 JackSpratts Peer to Peer 0 10-02-10 07:55 AM
Peer-To-Peer News - The Week In Review - January 30th, '10 JackSpratts Peer to Peer 0 27-01-10 07:49 AM
Peer-To-Peer News - The Week In Review - January 23rd, '10 JackSpratts Peer to Peer 0 20-01-10 09:04 AM
Peer-To-Peer News - The Week In Review - January 16th, '10 JackSpratts Peer to Peer 0 13-01-10 09:02 AM
Peer-To-Peer News - The Week In Review - December 5th, '09 JackSpratts Peer to Peer 0 02-12-09 08:32 AM

All times are GMT -6. The time now is 03:58 AM.

Powered by vBulletin® Version 3.6.4
Copyright ©2000 - 2022, Jelsoft Enterprises Ltd.
© www.p2p-zone.com - Napsterites - 2000 - 2021