|16-12-09, 08:57 AM||#1|
Join Date: May 2001
Location: New England
Peer-To-Peer News - The Week In Review - December 19th, '09
"Keep in mind that as the (intellectual property developer) it is our right to determine who will obtain rights to our technology and for what purpose." – Monsanto
"Congress took a major step forward by providing $30 million in funding for new FBI agents, federal prosecutors, and local and state law enforcement grants to protect American jobs and creativity by cracking down on the theft of movies and other intellectual property." – Dan Glickman
"Publishers are trying to herd Amazon back into their corner and keep it there but I think that this is going to be a very difficult situation for the big publishers to control." – Mike Shatzkin
"I guess I’ve stolen — I actually prefer the word 'borrowed' — as many ideas from Sol Price as from anybody else in the business." – Sam Walton
"I have to say, im a netflix whore now, the on demand is just too damn cool for watching movies I would just download...." – poisomike87
"When questioned about their future plans, current users of unauthorised [downloading] services reported that they actually intended to increase their illegal activities in the coming six months." – BBC
"The US topped the list with the highest P2P file sharing volumes of 45,350,427." – Anushree Madan Mohan
December 19th, 2009
Congress Earmarks $30 Mil to Fight Piracy
MPAA, RIAA also laud Operation Holiday Hoax
Congress agreed to provide $30 million in new funding for the battle against piracy as authorities on Monday also reported success with a recent year-end piracy crackdown code-named Operation Holiday Hoax.
The new funds target personnel and programs authorized by last year's Prioritizing Resources and Organization for Intellectual Property Act.
The funds include $20 million for new state and local economic, high technology and Internet crime prevention grants; $8 million for new FBI agents targeting IP crimes; and $2 million for new Department of Justice IP prosecutions.
"Congress took a major step forward by providing $30 million in funding for new FBI agents, federal prosecutors, and local and state law enforcement grants to protect American jobs and creativity by cracking down on the theft of movies and other intellectual property," MPAA chairman and CEO Dan Glickman said.
The MPAA and RIAA on Monday also lauded the recent Operation Holiday Hoax, which involved U.S. Immigration and Customs Enforcement and agencies that are part of the National Intellectual Property Rights Coordination Center. The crackdown targeted illegal vendors in big U.S. cities and led to seven arrests and the seizure of 79,796 counterfeit CDs and 79,610 DVDs, they announced.
Glickman argued the crackdown was key due to the negative domino effect on the industry and its employees. "Copyright industries in the U.S. lose $25.6 billion a year in revenue to piracy, the U.S. economy loses nearly 375,000 jobs either directly or indirectly related to the copyright industry, and American workers lose more than $16 billion in annual earnings," he said.
Israeli Internet Service Providers Block P2P Traffic
First of its kind research conducted by Ynet in collaboration with surfers, bloggers suggests two of Israel's largest internet service providers perform manipulation on file sharing traffic
Jonathan Klinger and Niv Lillian
Do Israeli Internet Service Providers (ISP) throttle, delay or block peer-to-peer traffic? This question has been spreading in Israeli forums and file-sharing networks, and has introduced theories from attempts to sell enhanced Internet packages to copyright infringement monitoring.
Ynet has received many complaints from internet surfers along the years claiming their rights as surfers and consumers of the product provided by the Internet providers were being violated. Ynet has conducted a first of its kind research in Israel with the assistance of bloggers, surfers and technology reporters which suggests that two of the largest Internet providers in Israel are interfering with their clients' traffic.
Our findings were that there is direct and deliberate interference in P2P traffic by at least two out of the three major ISPs and that this interference exists by both P2P caching and P2P blocking.
• For the full report click here
Peer-to-peer (P2P) file transfer protocols are commonly used by file sharers using such programs as eMule, Kazaa and BitTorrent. Initially used for sharing small music files and applications, P2P today is a legitimate and widely used system for the distribution of any electronic media, and multiple gigabyte files are commonly shared amongst users from around the world
Israeli ISPs acquire bandwidth in order to connect their clients to the world wide web. They operate under the assumption that the majority of clients would not make full use of the bandwidth at all times. A problem for the providers arises with clients who use file sharing programs and thus take up more traffic.
The ISPs address this problem by engaging in Traffic Shaping, which in practical terms reduces the flow of information allowing the providers to benefit and earn more from P2P use.
Since 2007 Ynet has received complaints according to which Israeli ISPs block P2P traffic. Those were brought to the media and were dismissed by the ISPs.
Netvision was found to perform partial interference with traffic and it likely operates both deep packet inspection.
Bezeq International’s results were inconclusive. It cannot be determined with certainty that Bezeq blocks or interferes in traffic.
Internet Zahav’s results were the hardest to obtain. Nevertheless, we found strong indication of traffic shaping.
The research has therefore indicated that at least two of the three major ISPs perform manipulation on traffic, and especially peer-to-peer traffic. Deep packet inspection and P2P-caching is performed by at least one ISP and that another one probably operates some kind of preference on specific ports.
The results indicate a possible trend which should be examined by the Communications Ministry. The findings also suggest that the ISPs are acting against the clinets' interests and possibly in violation of the license conditions.
Netvision stated in response, "We have recived the examinations' results and are reviewing them using the means at our disposal. Netvision 013 is making great efforts in providing its clients with the best surfing experience. "
Bezeq International's statement read, "We are pleased that Ynet's test results indicate the good surfing experience our clients are provided with. Bezeq International does not interfere with surfers' content. The company does not block ports, applications or any other traffic transported via the internet."
Internet Zahav / Smile 012 commented in response, "Smile 012 does not block ports, applications or protocols in any way. As suggested by recent polls, Smile 012 provides the best surfing experience for internet users in Israel."
Communications Ministry spokesman Dr. Yechiel Shabi said in response, "The research materials relayed to us paint a picture which arouses the need for thorough examination. After we become familiar with the study's findings, we shall consider the need for interference, supervision or regulation of the matter."
Ilana Brudo and Or Buton contributed to this report
India Among Top 10 in Net Piracy
The report, Internet Piracy in India: Responding to the Growing P2P Threat, shows that India was among the top 10 countries in the world with the highest P2P file sharing
Anushree Madan Mohan
Motion Picture Distributors Association released two separate studies in Mumbai on Tuesday that disclosed peer-to-peer (P2P) infringements, or illegal file sharing, in India is among the highest in the world.
The first report, “Internet Piracy in India: Responding to the Growing P2P Threat”, shows that India was among the top 10 countries in the world with the highest P2P file sharing. P2P networks account for most part of illegal downloads.
The US topped the list with the highest P2P file sharing volumes of 45,350,427 while India came eighth in the list with 9,658,357 in volumes.
The study tracked P2P networks during April-September, and was conducted by Internet research firm DtecNet. The second report, “Internet Piracy Landscape Audit” by Envisional Ltd, found that most illegal downloads take place through file-sharing networks such as BitTorrent or Web-based file hosts such as RapidShare.
No Decrease in Illegal Downloads
The number of people downloading music illegally is not decreasing, despite the availability of new legal services, according to a music industry research.
A survey for The British Phonographic Industry (BPI) revealed one in three consumers are using illegal sites.
BPI chief executive Geoff Taylor said the findings were "disappointing" and expressed concern at a rise in illegal downloads from blogs and newsgroups.
More than 3,000 people aged between 16 and 54 took part in the online poll.
When questioned about their future plans, current users of unauthorised services reported that they actually intended to increase their illegal activities in the coming six months.
The survey showed an increase in the use of web-based, or non-peer-to-peer methods, during the last six months. Filesharing through methods like BitTorrent remained level.
Mr Taylor said: "There are now more than 35 legal digital music services in the UK, offering music fans a great choice of ways to get music legally.
"It's disappointing that levels of illegal peer-to-peer use remain high despite this and the publicity surrounding imminent measures to address the problem. It's vital that those measures come into force as quickly as possible.
"The growth in other, non-peer-to-peer methods of downloading music illegally is a concern, and highlights the importance of including a mechanism in the Digital Economy Bill to deal with threats other than peer-to-peer."
Despite the levels of piracy, the BPI was able to announce in October that we are living in "the era of the digital single", after figures revealed 2009 was biggest ever year for UK singles, with more than 117m sold.
Of those, 98.6% were purchased in digital formats. However, the BPI estimate there are still more than a billion illegal downloads every year in the UK.
Mr Taylor said that figure demonstrated how the market could "explode" if the government tackled illegal filesharing.
Industry Leaders to the White House for Piracy Summit
Vice President Joseph Biden is leading a roundtable on Tuesday with Hollywood CEOs, music industry execs and legal experts in what is being billed as a first-of-its-kind discussion on piracy.
He'll be joined by Attorney General Eric Holder, Homland Security Secretary Janet Napolitano, Commerce Secretary Gary Locke, FBI director Robert Mueller and Secret Service director Mark Sullivan.
Among those expected are Sony's Michael Lynton, Warner Bros.' Barry Meyer, Viacom's Philippe Dauman, NBC Universal's Jeffrey Zucker, Warner Music Group's Edgar Bronfman, Harper Collins CEO Brian Murray, Universal Music Group's Zachary Horowitz, the MPAA's Dan Glickman, the RIAA's Mitch Bainwol, IATSE's international president Matthew Leob, AFTRA'S Kim Roberts Hedgepeth, DGA president Taylor Hackford, DGA exec director Jay Roth and SAG's David White.
Also present will be the administration's new "copyright czar," Victoria Espinel.
European Commission Welcomes Ratification of the WIPO Copyright Treaties
Today, the European Union and its Member States ratified the World Intellectual Property Organization (WIPO) Copyright Treaty and the WIPO Performances and Phonograms Treaty, the so-called "Internet" Treaties.
According to the EU official website (europa), these Treaties were concluded to make the world's copyright laws 'fit for the internet'.
Internal Market Commissioner Charlie McCreevy commented on the WIPO ratifications: "Today is an important day for the European Union and its Member States and WIPO. We, as a group have shown our attachment to the international system of protection of copyright and related rights. These two treaties brought protection up to speed with modern technologies. As the technological evolution accelerates, protecting creators and creative industries is more urgent than ever."
By ratifying these Treaties, the European Union and its Member States hope to breathe new vigor into the current treaty-making work of WIPO and encourage renewed commitment to moving forward on a high level of protection for creators and creative industries.
The European Union and its Member States participated fully in the Diplomatic Conference of 1996 that aimed to upgrade the rights of authors, performers and phonogram producers to withstand the challenges of the digital age. The two WIPO copyright treaties contain rules on distribution, rental, the right of public communication and the "making available" of protected content online.
In 2000, the European Union and its Member states took the formal decision to ratify the WIPO Treaties together. Indeed, negotiations on these two Treaties marked the first time that the European Union was accorded full Contracting Party status in the field of copyright, as opposed to the observer status it enjoyed so far in WIPO on copyright issues.
Immediately after the Diplomatic Conference in 1996, work started at the European level to adapt European copyright law to the WIPO "internet" Treaties. A European Copyright Directive was adopted in 2001. All EU Member States have meanwhile transposed the provisions of the 2001 Copyright Directive into their national legislation.
The World Intellectual Property Organization (WIPO) is a specialized agency of the United Nations. It is dedicated to developing an international intellectual property (IP) system, which rewards creativity, stimulates innovation and contributes to economic development while safeguarding the public interest.
NZ's Anti-Piracy Plan: Warnings, Fines, Suspension
The New Zealand Government has unveiled its plans for dealing with illegal copying of material over the Internet - primarily via peer-to-peer file sharing - saying it favours a three-notice procedure that would culminate in offenders paying a penalty up to $15,000 and losing their Internet access for six months.
Commerce minister, Simon Power, has released a cabinet paper that outlines the basis of new legislation, which will be introduced to Parliament early next year. It represents the Government's second attempt to review section 92A of the Copyright Act. Its initial proposals generated such a storm of protest that it was forced to withdraw them, in March this year, and start again.
Under the new proposals rights holders will be able to request that ISPs give alleged infringers notice to stop infringing activity. The first notice will inform the account holder that infringing has occurred and is illegal. Two further notices may be sent.
It will be incumbent upon rights holders to provide 'reasonable evidence' of an infringement. The 'reasonable evidence' required by the rights holder will be prescribed by regulation but it will include, the IP address, type of work illegally downloaded through P2P file sharing and date the P2Pcopyright infringement occurred. Legal tracking software is currently used by right holders to provide this evidence.
Rights holders will only be able to provide evidence to the ISP pertaining to activity occurring within 20 working days of the alleged copyright infringement. This is to prevent a rights holder from accumulating infringements and to avoid ISPs receiving thousands of notifications from right holders that are not recent and and likely to be costly to process.
If infringing continues after three notices, the rights holder may seek a penalty of up to $NZ15,000 at the Copyright Tribunal, with the amount be based on the damage to the copyright owner. Where serious and continued breaches occur, rights holders will be able to go to court to seek a range of remedies, including the suspension of accounts for up to six months. Account holders will be able to issue counter notices, and can request a hearing if they feel they should not be penalised.
The proposal has received a cautious initial approval from InternetNZ. Policy director, Jordan Carter, said: "The Government has taken on board many of the concerns we raised, concerns that were widely felt across the sector...Mr Power has recognised that this approach should lead to a large fall in illegal peer-to-peer file sharing. InternetNZ agrees. [We] will consider the detail in today's cabinet paper in more depth and offer further comment."
Power said: "The procedure will both educate and warn file-sharers that unauthorised sharing of copyright works is illegal, and in turn stop a large proportion of illegal file sharing." He claimed that "A great deal of work has gone into finding a fair, effective, and credible process for the enforcement of copyright against illegal peer-to-peer file-sharers."
He added: "This was a complex issue to work through, and industry groups, intellectual property experts, and officials worked hard to ensure the issues raised in the submissions were addressed." The public will be able to make further submissions at the select committee stage.
Australia: some internet content not suitable in civilised society
Green Light for Internet Filter Plans
The Federal Government will introduce compulsory internet filtering to block overseas sites which contain criminal content, including child sex abuse and sexual violence.
Communications Minister Stephen Conroy announced the changes today following a controversial trial to filter the internet which was conducted earlier this year.
Senator Conroy says some internet content is simply not suitable in a civilised society.
"It is important that all Australians, particularly young children, are protected from this material," he said.
"The Government believes that parents want assistance to reduce the risk of children being exposed to such material."
He says the Government will not determine what is blacklisted on the internet in Australia, rather an independent body will determine what sites are rated as RC for refused classification.
Legislation will be introduced into Parliament next year which will require all ISPs to block material which has been refused classification in other countries.
This would include sites containing child sex abuse, bestiality, sexual violence or detailed information about how to use drugs or commit crimes.
The filtering trial attracted criticism from some who said it would not work and would slow internet speeds.
But Senator Conroy says the trial has been successful.
"Our pilot, and the experience of ISPs in many western democracies, shows that ISP level-filtering of a defined list of URLs can be delivered with 100 per cent accuracy," he said.
"It also demonstrated that it can be done with negligible impact on internet speed."
Grants will also be offered to ISPs to voluntarily block other content.
After the legislation is passed the filter will take 12 months to implement.
But Electronic Frontiers Australia, which monitors online freedoms and rights, says the Government's plan is flawed.
"Although it may address some technical issues, what it leaves out is far more important," Electronic Frontiers Australia vice chair Colin Jacobs said.
"Exactly what will be blocked? Who will decide and why is it being attempted in the first place?"
Mr Jacobs says the ease with which users can circumvent the filtering raises questions about what it is actually trying to accomplish.
"What we're talking about is a filter that can only intercept accidental access to prohibited material," he said.
"Any motivated user will be able to get around it, it will be quite easy, so who is this being targeted at?
"If it's targeted at the people who traffic in illegal material, well, then clearly it's going to be worthless because they'll be able to get around it any time they want to.
"If it's teenagers the same is true unfortunately, and given the types of material that are going to be on the blacklist, younger children are unlikely to be affected one way or the other."
Senator Conroy says the Government will take steps to ensure the filter is transparent and people know why material is being blocked.
This may include measures which allow people to appeal the decision to block a page and notifications to websites that they have been blocked.
The Government has been trialling the filter since late May and was due to report in July on the outcomes of the trial.
It has faced fierce criticism that it will strangle free speech on the internet, is open to potential government abuse and will ban sites that should not be coming under scrutiny.
In March, an alleged list of about 1,000 sites already banned by the Australian Communications and Media Authority (ACMA) was leaked online, revealing that harmless sites had also been marked as unacceptable.
Nine ISPs originally agreed to take part but iiNet pulled out of the trial in March, saying the filter would not work and was a dead parrot.
However, Optus joined the trial in April.
In May 2008, the Government said it would spend $125.8 million over four years on several measures to strengthen cyber safety, including the filter.
The Government maintains the filter is not designed to curtail freedom of speech.
China's Anti-Porn Drive to Run Until May
The Chinese government's latest campaign against pornography on the Internet and through mobile WAP sites will continue through May next year, with an emphasis on breaking the business that support the sites, the Xinhua news agency said on Wednesday.
An anti-pornography drive since last summer has also netted many sites with politically sensitive or even simply user-generated content, in what many see as an effort by the Chinese government to reassert control over new media and its potential for citizens sharing information and organizing.
The website of a Chinese-language newspaper, Singapore Press Holding's Lianhe Zaobao, was blocked this week in China after it ran an article about China's tightening controls on the Internet.
The government will draft regulations covering WAP sites, which provide Internet service for mobile phones, before March next year, Xinhua said, citing a statement from the central government office in charge of fighting illegal publications and pornography. The statement has not yet been publicly released.
During the campaign, the government will make it harder to register WAP sites and verify their registration information, the statement said.
It aimed to "crack the interest chain behind pornographic WAP sites," including third-party payment providers, and would clarify the responsibilities of websites, telecom firms, access providers and content providers to curb pornography, it said.
"If they do not take up proper actions, they will be held for the breach of duty. In those serious cases, the corporate representatives will be forced to apologies to the public and promise to correct their wrong-doings in public," the statement said, according to Xinhua.
It will also ban WAP sites from setting up an access authorization system to escape regulation, the statement said.
Widespread protests in Iran last summer alerted China to the potential for protesters and dissidents to use social media to spread their message.
China has banned Google's Youtube since March, when a Tibetan exile film documenting the injuries and death of a Tibetan protestor was published on the video sharing site.
It banned Twitter, Flickr and Facebook this summer, and last week revoked permission for Hong Kong-based Sun TV, owned by Hong Kong-listed Sun Television Cybernetworks Enterprise to air in the mainland.
In addition to pornography, the government says it is also targeting rampant piracy of entertainment content in China. It recently shut some Chinese sites popular for downloading music and movies.
The entire western region of Xinjiang, home to more than 19 million people, has been without Internet or international telephone access since deadly ethnic riots rent its capital, Urumqi, in July.
(Reporting by Lucy Hornby; Editing by Bill Tarrant)
UK Government Wants New Powers to Block Wikileaks and Squeeze Web TV
Just over a week ago I wrote a fairly dry legal analysis of the Digital Economy Bill. I spotted an extremely serious provision — clause 11 — in the version being discussed in the House of Lords. Having looked at the amendments (which you can find on the Bill's document page) I am worried that no-one in Parliament appears to be taking the problem serious.
What is the problem with clause 11 that I am getting so alarmed about it? It amends the Communications Act 2003 to insert a new section 124H which would, if passed, give sweeping powers to the Secretary of State. It begins:
* order ISP's to block any web page found on the Internet Watch Foundation's list
* block specific undesireable sites (such as wikileaks)
* block specific kinds of traffic or protocols, such as any form of peer-to-peer
* throttle the bandwidth for particular kinds of serivce or to or from particular websites.
In short, pretty much anything.
I do not exagerrate. The definition of a "technical obligation" and "technical measure" are inserted by clause 10:
Surely something must limit this power you ask? It seems not. The Secretary of State may make an order if "he considers it appropriate" in view of:
What astonishes me is that there is no obligation for the Secretary of STate to even publish such an order, let alone subject it to the scrutiny of Parliament, yet he could fundamentally change the way the internet operates using it. Other orders made under other parts of the Bill will have to be made by statutory instrument and most will require Parliamentary approval. Not this one.
The only other amendment that has so far been tabled that might restrict the powers of the Secretary of State under clause 11 appears in a third tranche proposed by the liberal democrat Baroness Miller of Chilthorne Domer which deletes the paragraph (b) from the definition of a technical measure (i.e. "limits the service provided to a subscriber in another way") which does put some bounds, although not very tight bounds on what an imaginative Secretary of State might do.
The government is not at all imaginative. In their explanatory notes they envisage:
The problem, I think, is that people are skim-reading the Bill and thinking that this part has to do with copyright infringement. Clause 11 is nestled between provisions about notifications of copyright infringement (the "strikes" idea) and the technical obligations code. People seem to be assuming that the Clause 11 power will only get used in that context but there is nothing in the Bill to make that so. As fellow blogger Julian Todd pointed out the government froze the funds in the Landsbanki bank using powers contained in the Anti-terrorism, Crime and Security Act 2001. A future government might well think "that's a useful power" and use it for almost anything. Let us hope that the Lords wake up to this fast. I have much less hope of the Commons.
Italy Contemplates Web Restrictions after Berlusconi Attack
The proposal comes after a Facebook fan page draws thousands of users following the attack
The Italian government has proposed introducing new restrictions on the Internet after a Facebook fan page for the man who allegedly attacked Prime Minister Silvio Berlusconi on Sunday drew almost 100,000 users in under 48 hours.
But the planned clampdown on Internet hate speech sparked a heated debate over censorship and freedom of expression, leading Interior Minister Roberto Maroni to execute a partial U-turn Wednesday.
Maroni and Justice Minister Angelino Alfano promised swift action to punish those who instigate violence on the Web, suggesting the government might pass an emergency decree Thursday to create new sanctions for the offense. But Wednesday, Maroni was at pains to reassure the public that any new legislation would be fully debated in parliament and would not curtail freedom of expression.
The controversy followed the creation of several Facebook pages praising Massimo Tartaglia, the mentally disturbed man accused of hitting Berlusconi in the face with a statuette of Milan's gothic cathedral, sending the prime minister to the hospital with broken teeth and a broken nose.
Lawmakers from Berlusconi's People of Freedom party argued in parliament that the attack on the prime minister was the result of a climate of hate generated by virulent opposition criticism and expressed outrage that so many Italians could justify such a serious physical assault.
Facebook, which has been criticized for its slow reaction to previous complaints about groups that praised the Mafia or were titled "Let's Kill Berlusconi," moved rapidly to eliminate the most offensive sites.
"Promoting violence or posting threatening content is not permitted on Facebook," the company said in a statement. "We will take quick action to respond to reports and remove any content reported to us that makes direct threats against an individual."
Maroni originally indicated the government was considering measures that would speed up the removal of offensive material -- by allowing police to appeal directly to a judge without passing through a prosecutor -- impose fines on hate crime offenders, and introduce filters to prevent access to sites that instigate violence.
Members of his own party, however, were quick to warn against any curtailment of Internet freedom, suggesting that current laws already provide sufficient protection against the criminal use of the Web.
"Beware of the 'China Syndrome', of the temptation of preventive censorship," wrote the online magazine ffwebmagazine.it, controlled by Berlusconi's restive ally Gianfranco Fini, the speaker of the Chamber of Deputies. "The act of a madman (and the idiocy of those who praise him) cannot call into question, even in the most distant way, our freedom of expression."
Pierferdinando Casini, leader of the opposition Christian Democrat Union (UDC), warned against introducing illiberal measures in the wake of the Tartaglia controversy. "In the United States Obama receives constant intimidation via Internet but it never occurs to anyone to censor the Net," Casini told parliament Tuesday.
Speaking in a video-chat on the Corriere della Sera Web site Wednesday, Maroni praised Facebook's rapid intervention to take down the most offensive pages. "The collaboration of the service provider is fundamental. I want to avoid that my 12-year-old son, when he navigates online, could come across pages that exalt terrorism, Mafia or pedophilia," Maroni said.
The interior minister said he intended to create a working group representing all Internet stakeholders to develop a collaborative approach to tackling Internet crime.
Opponents of Berlusconi have also had reason for complaint following the Tartaglia attack. As well as sites advocating violence against the prime minister, Facebook users have created a site called "Let's bludgeon Antonio Di Pietro (one of Berlusconi's fiercest critics) to death". By Tuesday it had amassed some 90,000 members.
Opponents of the prime minister were also irate when they discovered that their names had been corralled into groups expressing solidarity with Berlusconi. The Rome daily La Repubblica reported that 2 million people who had joined a group in support of the Abruzzo earthquake victims found themselves diverted Tuesday into a pro-premier group.
Facebook has so far proved popular in Italy, notching up some 12 million active users in the 15 months since the Italian language site was introduced.
Angelo Bonelli, the head of the Green Party, said Wednesday his supporters would be staging a protest in front of parliament Thursday, despite a banning order from Rome's police chief. "We will protest anyway, peacefully and civilly, because what is happening to Internet and to WebTVs is an authoritarian crackdown unworthy of a democratic country," Bonelli said.
Mediaset Beats YouTube in Court
Broadcaster seeks damages of $730 million
Mediaset, the broadcaster controlled by Italo Prime Minister Silvio Berlusconi, has won a major legal battle against YouTube.
A Rome court ordered the video-sharing site to remove all illicitly uploaded Mediaset content on Wednesday.
The broadcaster began legal action in July 2008 after a trawl through the YouTube site revealed 4,643 clips and 325 hours of unauthorized Mediaset material, the company said.
In his written report, judge Tommaso Marvasi referred in particular to the prevalence on YouTube of Mediaset's Italo version of "Big Brother," which he described as the most important reality show on Italian television. It is also the Mediaset program most viewed on the Internet.
In a statement, Mediaset said that the ruling was historic because for the first time the rights of broadcasters and program editors to their exclusive products had been fully recognized.
Mediaset is seeking damages of at least E500 million ($730 million) from YouTube and its owner Google for "illegal distribution and commercial use of audio and video files" plus compensation for the effect that the lost viewing hours has had on advertising revenues.
Obama Plans to Sharply Boost U.S. Broadband Access
The Obama administration is to award $2 billion in grants and loans over the next 75 days as part of a plan to dramatically expand Americans' broadband Internet access and create tens of thousands of jobs.
Vice President Joe Biden is due to make the announcement in Dawsonville, Georgia on Thursday. He will give details of an initial $182 million investment in 18 broadband projects in 17 states, officials said.
The $2 billion is part of an overall $7.2 billion set aside in President Barack Obama's $787 billion economic recovery package to bring broadband access to unserved or underserved U.S. communities.
"Broadband touches nearly every aspect of the U.S. economy, providing Americans with unprecedented opportunities in employment, education, health care, entrepreneurship, and civic participation," the White House National Economic Council said in a report released to coincide with the announcement.
"These critical broadband investments will create tens of thousands of jobs and stimulate the economy in the near term," the report said.
Biden's chief economist, Jared Bernstein, told reporters in a briefing the administration was not able to provide more precise figures on exactly how many jobs would be created.
Officials said the names of the companies that would benefit from the grants and loans would be made public on Thursday.
The broadband expansion projects aim to link communities to the "Internet backbone," a network of large, high-bandwidth fiber-optic cables that span the country.
"The new broadband access will help underserved and often hard-hit communities overcome the distance and technology barrier by expanding connectivity between educational institutions, enabling remote medical consultations and attracting new businesses as well as the jobs that come with them," the White House said in a statement.
(Editing by Eric Walsh)
MySpace/Imeem Deal Leaves Thousands of Artists Unpaid
Eliot Van Buskirk
Independent artists who sold their music through imeem’s Snocap music storefronts on MySpace and other sites won’t be paid what’s owed even after MySpace Music’s acquisition of some — but not all — of imeem, Wired.com has learned.
MySpace Music bought “certain assets” from imeem, and they do not include imeem’s liability to more than 110,000 independent artists with Snocap storefronts, according to a source with inside knowledge of the deal. Those artists’ contracts mandate they be paid each month if they’re owed more than $20. Some artists have been owed money for more than a year, and the chance of them seeing any money now is, for all intents and purposes, zero, the source says.
Artists attempting to get paid for songs sold through Snocap stores — many or most of which were on MySpace itself — must get in line with imeem’s bank and other creditors. MySpace Music paid less than $1 million for imeem, so it’s doubtful much will remain for the artists.
“MySpace Music bought a limited set of imeem’s assets including the domain name and certain technology and trademarks,” a MySpace spokeswoman said in an e-mail to Wired.com. “The asset sale to MySpace Music was part of a foreclosure process which resulted from the lien certain secured creditors had on all the assets of imeem. MySpace Music did not acquire imeem’s outstanding debts, including the money imeem owed to artists under the Snocap relationship. Upon closing, users trying to access the Imeem website were redirected to MySpace Music. We did not acquire imeem’s contracts or relationships as we have our own in place. MySpace Music has its own distribution platform, which includes relationships with prominent aggregators and indie labels, that provides indie artists ways to monetize their music on our site.”
One source with inside knowledge of the deal said MySpace Music’s rushed purchase of imeem’s assets forced it to “leave behind anything that either had explicit liability or potential liability,” including Snocap and its debts to thousands of independent artists and bands.
Napster creator Shawn Fanning co-founded Snocap in 2002 to let artists sell their music through an embeddable storefront widget. At one point, the service was marketed as the exclusive way for artists to sell music on MySpace. Imeem bought Snowcap last summer. But because MySpace left most aspects of Snocap out of its acquisition of imeem’s assets, all 110,000 or so of those storefronts are gone. The server that hosts them is offline and so is the Snocap website.
Possibly the last band to be paid by imeem for music sold through a Snocap store embedded on MySpace was Javelin, which happens to be my brother’s and cousin’s band. After they inquired about money listed as owed in its online account, imeem sent them a check for about $400 for approximately a year and a half of sales.
That may not be “a princely sum,” as Tim Quirk put it. But for growing bands — many of whose income trickles in from a variety of sources — it matters, especially when you consider that imeem’s payments to major labels helped drive it out of business in the first place.
There’s nothing technically wrong with MySpace Music only acquiring certain assets from imeem, and teams of lawyers scrutinized the deal before it was done. Regardless, in this latest round of digital musical chairs, independent artists who set up music stores in good faith have been left holding the bag.
CD Seller Pleads Guilty to Breaking Copyright Law
The owner of a local record store said he had no choice but to plead guilty Tuesday to a charge of offering for sale 100 CDs that were illegal under Canadian copyright law.
David Nolan, 60, said he just couldn’t afford to fight the charges laid after the RCMP raided his Wellington St. shop, Legend Records, seizing 500 CDs in April 2009.
An undercover officer had previously bought CDs.
“I can’t believe I’m standing here right now,” Nolan said outside court. “I’ve never bought a pirated item in my life.”
Prosecutor Rob Zsigo said in an agreed statement of facts that the Canadian Recording Industry Association (CRIA), acting as experts for the RCMP, concluded that 294 discs — including live concerts, imports and CDs without UPC codes — violated Canadian copyright law.
Nolan will receive a conditional discharge if he makes a $1,000 charitable donation within three months.
Lawyer Mark Lazarovitz said it was outrageous that his client is being prosecuted when CRIA members, including such names as Sony, EMI and Universal, are the target of a class action lawsuit worth up to $6 billion for allegedly infringing artists’ copyright.
“Yet my client is before the court,” Lazarovitz said.
Nolan said the 100 CDs represent a tiny fraction of the hundreds of thousands of recordings in his collection and that the discs at issue are mostly imports.
An example is a recording of 1950s singer Gale Storm. Big labels don’t press them but seniors still want to buy them so he orders them from import distributers, Nolan said.
“I have to have the things the bigger chains don’t have,” Nolan said. “It’s kept my business alive.
“I feel like the RCMP has robbed me.”
Volume Turned Down on MP3 Players
The European Commission is calling for a suggested maximum volume to be set on MP3 players, to protect users' hearing.
The commission wants all MP3 players sold in the EU, including iPods, to share the same volume limits.
This follows a report last year warning that up to 10m people in the EU face permanent hearing loss from listening to loud music for prolonged periods.
EU experts want the default maximum setting to be 85 decibels, according to BBC One's Politics Show.
Users would be able to override this setting to reach a top limit of 100 decibels.
In January, a two-month consultation of all EU standardisation bodies will begin on these proposals, with a final agreement expected in the spring.
Some personal players examined in testing facilities have been found to reach 120 decibels, the equivalent of a jet taking off, and no safety default level currently applies, although manufacturers are obliged to print information about risks in the instruction manuals.
Modern personal players are seen as more dangerous than stationary players or old-fashioned cassette or disk players because they can store hours of music and are often listened to while in traffic with the volume very high to drown out outside noise.
Dr Robin Yeoh, an audiology consultant at the Epsom and St Helier NHS Trust, said: "More and more young people are referred to me by their GPs with tinnitus or hearing loss as a direct result to exposure to loud music.
"It's the sort of damage that in the old days would have come from industrial noise.
"The damage is permanent and will often play havoc with their employment opportunities and their personal lives."
DigitalEurope, the Brussels-based body representing the industry, agrees safety must be improved.
But according to their spokesman Tony Graziano, "the solution must lie in a balance between safety and enjoyment of the product by the consumer".
"Eighty five decibels would not be appropriate because noise coming from traffic, engines and so on would obliterate the sound," he said.
Conservative MEP Martin Callanan, who sits on the European Parliament's Environment, Public Health and Food Safety Committee, said: "Kids have always listened to their music loud and this is not going to stop them."
He added: "You have to educate them to the risks but ultimately you have to allow personal responsibility and personal choice."
Record Labels Seeking Profits in T-Shirts, Tours
Ravaged by dwindling music sales and rampant piracy, major music companies are bulking up expertise in an area of the business they used to ignore: T-shirts, baseball caps and other artist merchandise.
EMI Music said this week it is buying Loudclothing.com, a music merchandise distributor, for an undisclosed sum. The move comes after larger rival Vivendi's Universal Music Group spent the last year expanding its Bravado merchandising unit globally.
"Merchandising is a no-brainer because the labels have been supporting it for decades," said Bishop Cheen, an analyst at Wachovia.
Beyond merchandise, music labels have been seeking revenue in sectors like concerts, management and brand licensing rights.
It's called a 360-degree approach. Warner Music Group Chief Executive Edgar Bronfman has complained that labels spend millions of dollars to develop and market artists, but then when the artists become successful, the labels do not share in the ancillary revenue beyond music and publishing.
Warner Music now has half of its active artist roster signed up to 360-degree deals sharing in royalties and licensing rights with acts like Paramore.
"Royalties and licensing rights are really the future of today's music company because investors like sustainable, long-term and predictable revenue streams," said Cheen.
It can be profitable too. Wachovia points out that 8 percent of Warner Music's recorded music revenue came from licensing last quarter but it accounted for an impressive 43 percent of earnings before interest, taxes, depreciation and amortization (EBITDA).
"I think these 360 deals are a necessity," said Terry Dry, a former label executive who now runs Fanscape, a social media agency that works with music and film companies.
Music sales are down 8.5 percent in 2008, the seventh year of decline since peaking in 2001, so labels will try all options. Nearly a billion digital music files a year are shared for free on illegal file sharing sites.
"It's about protecting the investment they've made in the artists, but the jury is still out about whether these large companies can successfully pull it off," said Dry.
All music companies are struggling. Warner Music has seen operating cash flow shrink by more than 10 percent every quarter on a year-on-year basis in the last year. EMI is in a precarious situation, as its private equity owner Terra Firma tries to restructure a 2.5 billion-pound debt owed to Citigroup.
At Universal, the world's largest music company, earnings before interest, taxes and amortization were down some 34 percent in the first nine months of the year. Sony Corp's Sony Music Entertainment benefited from a "Michael Jackson bounce" last quarter helping Sony's overall music operations return to a profit as fans rushed out to buy the pop star's catalog following his sudden death.
"How many headlines have we seen saying Michael Jackson was worth more dead than when was alive? That's the hidden value of licensing rights," said Cheen.
(Reporting by Yinka Adegoke, editing by Matthew Lewis)
Audio Cassettes Make Comeback
Audio cassettes are making a comeback because elderly listeners are rejecting new technology.
After years of dwindling sales in the face of competition from CDs and digital downloads, the death knell for the format was sounded two years ago when retailers stopped stocking cassettes.
However, record companies are now releasing music on tape again due to growing demand from more senior music fans.
Island Records was surprised when it sold out a run of 4,000 copies of the album Words For You on cassette within weeks of going on sale last month.
The company has now ordered thousands more copies of the album, featuring stars including Joanna Lumley reciting poetry to classical music, to cash in on the growing power of the grey pound.
Ian Brown, from Island Records, said the label spotted the niche in the market after fans began emailing Amazon, the online retailer, requesting the album on cassette.
He said: "Many of our customers are over 85 and a lot won't even have upgraded to CDs, let alone mp3s, so we thought we would give it a go and made 4,000. They sold out in weeks of going on sale last month.
"What is exciting is that we don't know how big the market is because no one realised there was this demand.
There are a lot of elderly people and these are the ones who have regular pensions, who aren't affected by job losses in the recession, so they are still spending."
Mr Brown has now ordered another 3,000 copies to go on sale on Amazon but says they will remain a niche product and will not be stocked in shops for the foreseeable future.
There are now plans to put other classical albums on to cassette, including The Priests, three clergy from Northern Ireland who hit number one in the UK classical charts last year with their debut album, selling 1.5 million copies worldwide.
Other producers are also keen not to miss out on the trend. Brian Berg, managing director of the label Universal Musics UMTV said that some of his albums could be released on cassette next year.
He said: "It does make commercial sense given Words About You's success and its something that we will be investigating early next year.
"Our Dreamcoats and Petticoats series has sold 1.5 million albums with late 50s and early 60s music. These are the sort of albums that could be worth releasing on cassette."
Producers believe there could be a sizeable untapped market after studying sales figures that show buyers of classical music are not interested in the latest formats.
Words for You sold almost 200,000 copies, but just 768 were downloaded. The Priests sold more than 460,000 albums in Britain, with 3,825 downloads less than one per cent of the total.
This compares with the band Florence & The Machine who sold almost 400,000 albums in Britain, of which more than 20 per cent 82,309 were downloads.
In 2007, the cassette looked to be defunct after Curry's, the last major retailer stocking the format, announced it was stopping selling tapes.
The move provoked a nostalgic response from a generation of music fans, who had grown up listening to their favourite artists on cassette since the format's introduction in 1963.
Originally designed for dictation, tapes soon became used for home recording and even data storage for computers, before the first pre-recorded cassettes went on sale in Europe in 1965.
Offering a recordable alternative to LPs – heralding the beginning of the home made "mix tape" – their popularity soared in the 1970s, boosted by the launch of portable music players such as the Sony Walkman in 1979.
At their peak in 1989, annual tape sales reached 83 million in Britain, before being overtaken by CDs in the 1990s.
By 2006 the figure mere 100,000 tapes were sold in Britain prompting retailers to stop stocking them.
Apple Says Audiobooks Must Have DRM
Audio DRM has all but dissapeared from MP3s. Apple said earlier this year that there would be no more DRM on music available via the ITunes music store. However, as prolific writer and blogger Cory Doctorow has found out, they still require DRM on their Audiobooks.
DRM doesn’t work. We know it, you know it and even the RIAA knows it. The FCC has had hearings on it, and even the retailers agree that it is useless, which was why Apple removed DRM from their music. Unfortunately, it’s still required for audiobooks that are sold through the iTunes Music Store.
Cory Doctorow, blogger, author and columnist, is not shy of technology or the Internet. His last book, Little Brother covered the internet, RFID, terrorism and even the Pirate Party. Doctorow also served as the European Director for the EFF and co-founded the ORG. When it comes to DRM, he knows his stuff, and he also knows that DRM doesn’t work
So, when he wanted to release an audio version of his new book ‘Makers’ without DRM, it seemed a fairly simple prospect. The publishers, Random House Audio, were amenable to it. The problem was one of distribution. There are two major players in this area, Audible and Apple. Unlike the publishers, they are not so keen on the ‘no DRM’ position.
Audible, writes Doctorow in Publishers Weekly, turned them down flat when it came to a DRM-free version of Little Brother last year. Since they’re the only retailer on the iTunes music store, that locked out an huge market. When it came time for ‘Makers,’ this time they said yes. Apple, however, said No. audiobooks have to have DRM.
Doesn’t matter what the author or publisher wants, Apple wants DRM, so it’s DRM or nothing.
The backup plan then was just to sell via Audible. The problem then, writes Doctorow, is that while the files might not contain DRM, they come with an End User Licensing Agreement (EULA), which effectively does the same thing – DRM by contract.
DRM might be be gone from music as apple proudly proclaimed early this year, but it’s still alive and kicking. Often not because of the artist or the publisher wants it, but because it’s a store requirement. Indeed, Mr Doctorow is very happy with his publisher, telling TorrentFreak “Random House Audio has been remarkably flexible and committed to letting me sell my audiobooks without DRM and I’m incredibly grateful to them and to my editor, Amy Metsch, for all their hard work.”
Now for Apple and Audible to similarly be flexible and hard working, after all, they didn’t create the work, they’re just selling it.
Office 2003 Rights Management Bug Locks up Files
It’s a nightmare scenario: Imagine coming into the office and not being able to access any of your organization’s vital documents. That scenario became reality today for an untold number of Microsoft Office 2003 customers who use Microsoft’s Rights Management Service (RMS), a technology for controlling access to documents.
Office 2003 users receive the error, “Unexpected error occurred. Please try again later or contact your system administrator,” when they attempt to open or save protected documents. The bug affects Office 2003 products including Excel 2003, Outlook 2003, PowerPoint 2003, and Word 2003. It does not affect Office 2007 or Office 2010 Beta, according to Microsoft.
A spokesperson said that the bug was caused by a Information Rights Management (IRM) certificate expiring.
Microsoft has posted a bulletin to TechNet alerting customers to the problem, and says that it is working “as quickly as possible” to provide its customers with a solution. Further announcements will be posted to the blog.
DRM Prevents 3D Premier of Avatar
All beginnings are difficult: The 3D preview of Avatar was because of DRM problems in many rooms.
The preview of the film avatar apparently fell yesterday from Wednesday, in some 3D theaters. As visitors to the ideas of the Cinestar chain in Eisenhuettenstadt, Mainz, Garbsen and the Potsdamer Platz in Berlin, told heise online reported that they were communicated to the performance begins in the hall, that unfortunately the digital copy of film on the projector server can not decode the cinema and the 3D version, therefore, could not be shown. Alternatively, one offered to the visitors in some theaters showing the 2D version that existed when the analog copy on film role. Who has not wanted to see them, which was the purchase price for the cards and 3D glasses back, in many cases but not the fee for the online rental service and have already bought popcorn and cola. Likewise, the Cinemaxx in Potsdamer Platz was affected. As a spokesman of us Cinemaxx chain announced, however, whether this was an isolated case. The audience could move from one room of the 3D cinema in a second 3-D room. All other 45 3D ideas are easily lost, assured the Cinemaxx spokesman.
The problem was obviously with the DRM keys for the digital movie files. The stripes are encoded in JPEG2000 from the sale of 20th Century Fox by courier on external hard drives AES128 encrypted delivered to the cinemas. Subsequently, the data must be copied (in the case of Avatar over 150 gigabytes) to the cinema server. Each digital projector server-generated combination of its own certificate and transmits it to the appropriate DRM service provider created for each film a unique key and returning it to the cinema. The key is only valid for a film print and a projector and can be limited to certain periods and times.
Obviously did not work yesterday Wednesday the transfer of the correct keys for the 3-D showings in several cases. Cinema technician tried for several hours, the huge mountain of information to decipher, but apparently was for the digital distribution of film provide competent service Deluxe on yesterday no longer valid Keys.
How large is the extent of the breakdown, it can not currently be estimated. First blogs speak with reference to cinema staff of a hundred ideas. Neither the rental nor 20th Century Fox, the digital distribution service Deluxe Digital stood on a statement made available. A spokeswoman for the Cinestar chain told heise online that one is still working to verify the full extent and will publish shortly, together with the hire an official announcement.
Obama Sides With Blind in Copyright-Treaty Debate
The Obama administration announced Tuesday it supports loosening international copyright protections to enable cross-border distribution of special-format reading materials for the blind, a move that puts it at odds with nearly all of U.S. industry.
The government announced its support for the underlying principle of the WIPO Treaty for Sharing Accessible Formats of Copyrighted Works for Persons Who are Blind or Have other Reading Disabilities. The announcement was made in Geneva (.pdf) before a subcommittee of the the World Intellectual Property Organization, which has about 180 members.
The move comes as a broad spectrum of American enterprise, ranging from major software makers and book publishers to motion picture and music companies, have opposed the proposed international treaty that would make books more accessible to the blind. The chief complaint is that the treaty creates a bad precedent by loosening copyright restrictions, instead of tightening them as have every other international copyright treaty.
“We recognize that some in the international copyright community believe that any international consensus on substantive limitations and exceptions to copyright law would weaken international copyright law,” Justin Hughes, a Department of Commerce senior adviser, told the WIPO on Tuesday. “The United States does not share that point of view.”
But the administration was careful Tuesday not to alienate U.S. industry even as it supported the blind and visually impaired. For example, Hughes acknowledged that the government was willing to strengthen international copyright laws in other regards.
“The United States is committed to both better exceptions in copyright law and better enforcement of copyright law,” Hughes said. “Indeed, as we work with countries to establish consensus on proper, basic exceptions within copyright law, we will ask countries to work with us to improve the enforcement of copyright. This is part and parcel of a balanced international system of intellectual property.”
Toward that end, the United States is one of the lead negotiators of a proposed international accord that the European Union suggested was too friendly to business. A leaked EU document connected to the Anti-Counterfeiting and Trade Agreement suggested that the Obama administration’s “overriding object” is to “facilitate the continued development of industry.”
The documents suggest the United States might want ISPs around the world to punish suspected, repeat downloaders with a system of “graduated response” — code for a three-strikes policy that results in digital copyright offenders eventually being disconnected from the internet, with the ISP alone deciding what constitutes infringement and fair use.
Regarding the treaty for the blind, the proposal would sanction the cross-border sharing of DRM-protected digitized books — without payment to the publisher — that tens of thousands of blind and visually disabled people read with devices and tools like the Pac Mate, Book Port and Victor Reader.
Many WIPO nations, most in the industrialized world including England, the United States and Canada, have copyright exemptions that usually allow nonprofit companies to market copyrighted works without permission. As it now stands, none of the nations may allow persons outside their borders to access these works, which are usually doled out for little or no charge by nonprofit groups.
The treaty seeks to free up the cross-border sharing of the books for the blind. Usually, they are published in a universal Daisy format, which includes features like narration and digitized Braille. It could take a year or more before an international consensus might be reached.
DIY Book Scanners Turn Your Books Into Bytes
For nearly two years, Daniel Reetz dreamed of a book scanner that could crunch textbooks and spit out digital files he could then read on his PC.
Book scanners, like the ones Google is using in its Google Books project, run into thousands of dollars, putting them out of the reach of a graduate student like Reetz. But in January, when textbook prices for the semester were listed, Reetz decided he would make a book scanner that would cost a fraction of commercially available products.
So over three days, and for about $300, he lashed together two lights, two Canon Powershot A590 cameras, a few pieces of acrylic and some chunks of wood to create a book scanner that’s fast enough to scan a 400-page book in about 20 minutes. To use it, he simply loads in a book and presses a button, then turns the page and presses the button again. Each press of the button captures two pages, and when he’s done, software on Reetz’s computer converts the book into a PDF file. The Reetz DIY book scanner isn’t automated–you still need to stand by it to turn the pages. But it’s fast and inexpensive.
“The hardware is ridiculously simple as long as you are not demanding archival quality,” he says. “A dumpster full of building materials, really cheap cameras and outrageous textbook prices was all I needed to do it.”
Reetz went on to upload a 79-step how-to guide for building a book scanner (.pdf). The guide has sparked more than 400 comments. It has also spawned a website, DIYbookscanner.org, where more than 50 independent book scanners spread across countries such as Indonesia, Russia and Britain have contributed hardware refinements and software programs.
Now wearing a large black coat and a carrying a duffel bag that’s stuffed with a scanner made from laser-cut plywood, Reetz goes to conferences to show how anyone can create a machine to scan all the books they own.
As consumers turn to e-readers — about 3 million are expected to be sold by the end of the year — they are also looking for ways to bring their old textbooks and paperbacks into the digital world. And a small group is discovering that the best way to do that is to create a scanner yourself. The scanner is also helping digitize out-of-print books and help people with disabilities get features like text-to-speech that publishers won’t offer or are downright opposed to.
A DIY book scanner also raises questions of piracy and copyright. The basic question being: Do you really own a book in all its forms when you buy a book?
At the same time, ironically, the DIY book scanner is helping new create new tools to make copyright information more accessible. Tulane University is building a scanner based on Reetz’s design that would let it digitize its collection of copyright documents. That is expected to help the university develop a web-based service called ‘Durationator’ that would allow anyone to search copyright information about any particular book, to see if it is currently in the public domain or not.
“It’s amazing that a DIY book scanner is helping create the very tool that will offer copyright information,” says Reetz. “It makes me very proud.”
Scanners are commonplace — just walk into a Target, and you can find a scanner-printer combo for $100– but those machines are designed to digitize photos and documents.
A flatbed scanner can take between 15 and 30 seconds to capture a single page, so a 400-page book could take about an hour-and-a-half to three hours of work. Not to mention that the design of the scanners means that you have to open the book binding wide and press it flat, which can damage the book.
Instead, book scanners are designed to hold the book open at a 90-degree angle. A cradle holds the book face up so that it is gentle on the binding. This kind of scanner is also faster, because it can capture images of two pages simultaneously, using a camera instead of a scanning element. But commercial book scanners that are completely automated cost anywhere from $5,000 to $50,000. The $50,000 Kirtas book scanner, for instance, can capture 3,000 pages an hour.
Reetz’s scanner cuts that cost to a bare minimum: All you need are two basic digital cameras and some readily available construction materials. All the software and post-processing programs are open source and available for free.
But creating the system required a few hacks and a dash of ingenuity. Inexpensive digital cameras are ideal, but they have limitations. For starters, you need to hold down a button to click a picture. And the two cameras in a book scanner need to be synchronized.
Reetz found a program called Stereodatamaker for Canon cameras that could synchronize multiple cameras and flash. All users have to do it is download it to a SD card and insert it into their camera.
“The cameras are running hacked firmware and it works pretty well,” he says.”Then we take it to a whole new level for processing the images.”
That would be with some help from Scan Tailor, an open source application written by 29-year old Russian programmer Joseph Artsimovich. Scan Tailor can take the raw, scanned images of the book and split the pages, add or remove borders and process all of the images into a single file.
“You absolutely need post-processing software for digitizing books,” says Artsimovich. “If you try
to digitize a book without such software, chances are you will give up because it’s just too much work.”
From there, a program called Page Builder — written by a friend of Reetz — can take the images and process them into a PDF file.
Reetz says the DIY book-scanning forum isn’t about distributing pirated content, but he can see the temptation.
“My project was founded in angry desperation,” he says. “It was a watershed moment when I realized getting an 8-megapixel Canon camera was cheaper than buying a bunch of textbooks.”
But is it legal?
So are Reetz and the builders of the DIY scanner pirates? That would depend on who you talk to, says Pamela Samuelson, a professor at University of California at Berkeley, who specializes in digital-copyright law. Trade publishers are almost certain to cry copyright infringement, she says, though it may not necessarily be the case.
Google was recently forced to pay $125 million to settle with angry book publishers and authors who claimed copyright infringement as a result of the search giant’s book-scanning project.
But not so individual users who already own the book, says Samuelson. If you scan a book that you have already purchased, it is “fine, and fair use,” she says. “Personal-use copying should be deemed to be fair, unless there is a demonstrable showing of harm to the market for the copyright at work,” says Samuelson.
For publishers, though, the growth of the DIY scanning community could hurt. Publishers today sell digital versions to customers who already own hardcover or paperback versions of the same book.
“You cannot look at this idea from the perspective of whether the publisher can make extra money,” says Samuelson. “Publishers would love it if you can’t resell books either, but that’s not going to happen.”
Instead, communities such as these are likely to force publishers to offer more value to customers, she says.
“There have to be things that you get with an e-book that you don’t get by making your own copies,” says Samuelson. “It’s not such as stark challenge for copyright owners, because not many people are going to take the trouble to make their own scanner system. Most of us want the convenience of buying digital books for the Kindle, Nook or Sony Reader.”
And unless, it becomes a hotbed of pirated content, the DIY scanner is unlikely to have a Napster-like end, says Samuelson.
Check out the video below of Daniel Reetz talking about why DIY scanner is fun.
Amazon's Kindle Reader Breaks Monthly Sales Record
U.S. Internet retailer Amazon.com Inc said on Thursday that its Kindle electronic book reader posted its best sales yet in the month of December, as the battle for the digital reader market heats up.
Without giving figures or comparisons and barely halfway through the month, the online retailer said that the Kindle was the most wanted product across the company during the holiday gift season of December.
Amazon sees the Kindle as a pivotal growth driver and is locked in a heated fight with rivals Sony Corp and Barnes & Noble over who will emerge with the best-selling electronic reading device.
Amazon on Thursday announced it would sell its product with free expedited shipping -- a contrast with its competitor Barnes & Noble, which has suffered delays in getting its Nook electronic reader into customers' hands.
Amazon's statement on the Kindle's success follows news on Thursday that its rival Sony Corp struck a deal with News Corp to make The Wall Street Journal and other publications available on its electric reader.
Shares of Seattle-based Amazon closed down 1 percent at $126.91 on Thursday on the Nasdaq.
(Reporting by Laura Isensee; Editing by Gary Hill)
Top Author Shifts E-Book Rights to Amazon.com
Brad Stone and Motoko Rich
Ever since electronic books emerged as a major growth market, New York’s largest publishing houses have worried that big-name authors might sign deals directly with e-book retailers or other new ventures, bypassing traditional publishers entirely.
Now, one well-known author is doing just that.
Stephen R. Covey, one of the most successful business authors of the last two decades, has moved e-book rights to two of his best-selling books from his print publisher, Simon & Schuster, a division of the CBS Corporation, to a digital publisher that will sell the e-books to Amazon.com for one year.
Amazon, maker of the popular Kindle e-reader and one of the biggest book retailers in the country, will have the exclusive rights to sell electronic editions of “The 7 Habits of Highly Effective People,” and a later work, “Principle-Centered Leadership.” Mr. Covey also plans to gradually make other e-books available exclusively to Amazon, which will promote them on its Web site.
The move promises to raise the already high anxiety level among publishers about the economics of digital publishing and could offer authors a way to earn more profits from their works than they do under the traditional system.
Mr. Covey is making his books available to Amazon through RosettaBooks, an electronic book publisher that primarily traffics in the older works of authors like Kurt Vonnegut and Virginia Woolf.
Arthur Klebanoff, chief executive of RosettaBooks, said that Mr. Covey would receive more than half of the net proceeds that RosettaBooks took in from Amazon on these e-book sales. In contrast, the standard digital royalty from mainstream publishers is 25 percent of net proceeds.
“There are superstars, and superstars are entitled to more,” Mr. Klebanoff said.
Sean Covey, a son of Mr. Covey and chief innovation officer for Franklin Covey, a training and consulting firm that also publishes business books, said that the higher royalty rate was “a factor” in the decision to switch to RosettaBooks.
The elder Mr. Covey was also particularly attracted by Amazon’s plans to heavily promote the e-book editions of both “7 Habits” and “Principle-Centered Leadership.”
His move comes as publishers ratchet up their efforts to secure the digital rights to so-called backlist titles — books published many years, if not decades, ago. These books can be vitally important to publishing houses because they are reprinted year after year and provide a stream of guaranteed revenue without much extra marketing effort.
“The 7 Habits of Highly Effective People,” originally published in hardcover in 1989, is a steady seller for Simon & Schuster. This year alone, it has sold 136,000 copies in paperback, according to Nielsen BookScan, which generally tracks about 70 percent of sales.
Many authors and agents say that because the contracts for older books do not explicitly spell out electronic rights, they reside with the author. Big publishing houses argue that clauses like “in book form” or phrases that prohibit “competitive editions” preclude authors from publishing e-books through other parties.
Adam Rothberg, a spokesman for Simon & Schuster, declined to comment directly on Mr. Covey’s moves, but said, “Our position is that electronic editions of our backlist titles belong in the Simon & Schuster catalog, and we intend to protect our interests in those publications.”
Other publishers have moved to stake their claim on e-book rights for older titles. On Friday, Random House sent a letter to dozens of literary agents stating that on all backlist books, it retained “the exclusive right to publish in electronic book publishing formats.”
Sean Covey said the decision to publish the e-book editions of the two older titles through RosettaBooks and Amazon was not a result of dissatisfaction with Simon & Schuster. He noted that both he and his father had continued to publish books through Simon & Schuster and would do so in the future.
But the younger Mr. Covey noted that Franklin Covey was also experimenting with self-publishing new books, another way of cutting out the traditional print publisher. In August, the company published “Predictable Results in Unpredictable Times” by Stephen R. Covey, Bob Whitman and Breck England. It released an e-book edition through RosettaBooks and exclusively for the Kindle.
Sean Covey said that his father was co-author of another book, “Great Work, Great Career” that Franklin Covey was self-publishing. Amazon is taking pre-orders for it. That book will also be released in an exclusive Kindle e-book edition.
The skirmish over e-books is part of a larger multidimensional chess match being played among publishers, authors, agents and book retailers. The big publishing houses hate the uniform e-book price of $9.99 that Amazon and others have set for newer titles. Although the retailers are subsidizing that price, executives say they believe that such pricing harms the market for more expensive hardcovers, and some publishers have reacted by announcing they will delay the publication of certain e-books by several months after they are made available in hardcover.
Last week, Simon & Schuster said it would delay by four months the e-book versions of 35 titles being published in hardcover from January to April. Both the Hachette Book Group and HarperCollins Publishers Worldwide have also indicated they will delay e-book editions.
Reacting to that move, Drew Herdener, an Amazon spokesman, directly criticized Simon & Schuster and its chief executive, Carolyn Reidy.
“Simon & Schuster is backward-leaning,” Mr. Herdener said. “Carolyn wants to corral readers, force them to buy what they wouldn’t buy if they had a choice. It won’t work. The better approach is to embrace the evolution of the book and give customers what they want. Forward-leaning publishers are going to clean up.”
Mr. Rothberg, the Simon & Schuster spokesman, said that his company wasn’t trying to upset anyone. “The notion that we have done anything other than wholeheartedly embrace the digital revolution, whether it be for e-books, new formats, reaching out to our readers wherever they may be, and every other opportunity provided in the new digital era, is patently absurd,” he said.
He added, however, “We understand that there’s a lot at stake and we look forward to further discussions with Amazon about how to grow this business without making our discussions of a personal nature.”
Mike Shatzkin, the chief executive of Idea Logical, which advises publishers on digital strategy, said that publishers were trying to minimize Amazon’s outsize influence in the book business and preserve their own. “Publishers are trying to herd Amazon back into their corner and keep it there,” he said. “But I think that this is going to be a very difficult situation for the big publishers to control.”
Authors Guild Fights Back on E-Book Rights
The Authors Guild, a trade group which represents writers, posted a memo to its Web site on Tuesday disputing efforts by Random House, the world’s largest English language trade publisher, to claim e-book rights on old titles published before 1994.
On Friday, Random House, reacting to moves by some authors, estates and their agents to move e-book editions of old books to parties other than their print publishers, sent a letter to dozens of literary agents claiming that “the vast majority of our backlist contracts grant us the exclusive right to publish books in electronic formats.” Although those contracts may not exclusively give the publisher the right to publish e-books, Markus Dohle, chief executive of Random House, wrote that the contracts contained language such as “in book form” or “in any and all editions.”
But in the letter to the more than 8,000 members of the Authors Guild on Tuesday, the Guild noted that Random House “quite famously” changed its contracts with authors in 1994 to explicitly include electronic book rights.
“Random House felt the need to change its contract, quite plainly, because its authors did not grant those rights to it under Random House’s standard contracts prior to 1994,” the Guild wrote.
The letter continued: “Publishers acquire only the rights that they bargain for; authors retain rights they have not expressly granted to publishers. E-book rights, under older book contracts, were retained by the authors.”
The Guild advised publishers to focus on promoting their marketing strengths and negotiating “a fair royalty” for e-books. “We’re confident that the current practice of paying 25 percent of net on e-books will not, in the long run, prevail.”
Agents have been arguing that the current industry standard where publishers pay authors 25 percent the net proceeds that publishers receive from retailers on the sale of electronic editions is insufficient. They argue that such royalties yield authors less than they receive on the sales of hardcover books. What’s more, agents say, since publishers spend less to produce and distribute e-books, they should share more of those savings with authors, not less.
UPDATE: Stuart Applebaum, a spokesman for Random House, issued a statement in response to the Author’s Guild memo:
“While Random House respectfully disagrees with the AG’s point of view, we look forward to further discussions with their members and with the agent community about the dynamic initiatives presented in Mr. Dohle’s letter and about the royalty rate for the backlist titles, whose rights we believe are ours to maximize.”
Google Faces a Different World in Italy
One morning in January 2008, Peter Fleischer, the chief privacy counsel at Google, was walking to the University of Milan to deliver a speech at a conference when someone shouted his name from behind. Shortly afterward, he was surrounded by five Italian police officers.
For Mr. Fleischer, it was the first indication that he had become ensnared in the outcry over online videos involving an autistic boy in Turin and some classmates who taunted him, filmed the scenes from a mobile phone and posted them on the Web.
“My first reaction was one of surprise — it was more than a little bit scary,” Mr. Fleischer said, though the police decided to let him proceed with his speech after a brief interrogation. “I’m not normally nervous about public speaking, but this was different.”
Along with three other Google executives, Mr. Fleischer now faces criminal charges of defamation and privacy violations in a case that could have far-reaching implications for Google — and, the company argues, a potentially chilling effect on other Internet companies operating in Italy and elsewhere in Europe.
The Google executives are scheduled to present their defense this week, after prosecutors pressed their case last month, seeking one-year prison sentences for Mr. Fleischer and David Drummond, senior vice president and chief legal officer, and George Reyes, a former chief financial officer. Arvind Desikan, a marketing executive, faces a six-month sentence.
The executives deny the charges, saying they had nothing to do with the videos. If found guilty, none of the four would serve jail time because sentences of less than three years are commuted in Italy for people without criminal records. Still, the stakes are high for the executives — who have been charged because Italian law holds individuals responsible for corporate actions — as well as for Google.
If found guilty, the executives might not be able to serve on corporate boards or fulfill other functions that generally require a clean record. For Google, such a verdict might be hard to square with the company’s motto, “Don’t be evil,” especially at a time when its business is coming under fire from European publishers, who are pressing regulators and lawmakers to curb Google’s growing online presence.
“It’s a political trial in the sense that there’s a political discussion going on about the role of Internet platforms,” Mr. Fleischer said during an interview in the company’s Paris offices, where he eschewed the suit-and-tie uniform of the corporate lawyer and sported New Balance sneakers and a baseball cap turned backward.
Prosecutors have framed the case differently, arguing that Google was negligent in allowing the clips to remain on the Italian version of Google Video for two months in 2006, even after a viewer posted a comment questioning the appropriateness of the videos. They were removed only after complaints from Vivi Down, an Italian organization representing people with Down syndrome, whose name was mentioned in the videos, prosecutors say.
Google says it removed the videos as quickly as possible; it also helped the authorities investigate the perpetrators, who have been disciplined under juvenile law.
But the so-called e-commerce directive dates to 2000, when concepts like Web 2.0 and user-generated content may not have featured prominently on regulators’ radar screens. At the time, the intention was to insulate technical intermediaries like Internet service providers and Web hosting services. Because Google generates the vast majority of its revenue from advertising and serves as a conduit to online content, it is more like a media company than a technical intermediary, publishers and other critics say.
Still, there have been legal precedents for including user-generated content sites under the protection of the e-commerce directive. For example, a French appeals court ruled in a copyright case last year that DailyMotion, a video platform like YouTube, was not liable for the contents of the clips posted on the site.
Mr. Fleischer said Google feared that a guilty verdict in the Italian case might embolden politicians to try to broaden Web 2.0 companies’ editorial liability — a change that is economically unviable, he added, given that 20 hours of video is uploaded onto YouTube every minute.
“We see this as an attempt to reopen the law in Italy and Europe that protects these platforms for freedom of expression,” he said. “It’s an attack on a decade of progress.”
Google already faces an antitrust investigation in Italy that was opened recently on behalf of newspaper publishers who contend that the company uses its dominance of the online search business to deny them a fair share of online advertising revenue. And Mediaset, the television company controlled by Prime Minister Silvio Berlusconi, recently sued Google, contending that YouTube infringes its copyrights.
“More control of the Internet is definitely an aim of our government,” said Paolo Brini, a Perugia-based spokesman for Scambio Etico, a group that campaigns for an unfettered Web.
Another U.S. Internet giant, eBay, recently complied with the Italian tax authorities’ requests for information on individuals who made large volumes of transactions via the service. Last year, the company scaled back its physical presence in Italy, but Iryna Pavlova, a spokeswoman, said that was part of a Europe-wide restructuring in which functions like marketing and customer service are now handled centrally; eBay’s operations in other countries, like Germany, also saw staff cuts, and the company’s business in Italy is still growing, she added.
Facebook, too, has had run-ins with regulators and lawmakers in Italy, even though it recently opened its first office there several weeks ago in support of an Italian-language site that has attracted 10 million users since it was introduced a little more than a year ago.
The company recently moved to block access to several groups with names like “Let’s Kill Berlusconi,” after government officials complained that it was unacceptable to threaten violence against the prime minister. Last winter, Facebook staved off proposed legislation that would have allowed the Italian authorities to shut down Facebook if the company did not block content deemed objectionable, like Mafia-related material.
Another measure, proposed by a parliamentary ally of Mr. Berlusconi, a former television hostess named Gabriella Carlucci, would outlaw anonymous contributions to user generated content sites. In the spring, after South Korea imposed a similar law, Google blocked users of its Korean-language YouTube service from uploading videos or posting comments on the site.
All of these clashes serve as reminders of the difficulty of reconciling the borderless nature of the Internet with national differences on matters like privacy or freedom of speech. Google has had other cultural clashes in Europe, where data protection standards, for example, are tighter than in the United States.
The judge hearing the case in Milan, Oscar Magi, may not be overly sympathetic to a U.S. worldview, having recently convicted a base chief for the Central Intelligence Agency and 22 other Americans of kidnapping a Muslim cleric in Milan in 2003, in a case stemming from the U.S. practice of “rendition” of terrorism suspects.
Mr. Fleischer declined to discuss Google’s possible responses to a guilty verdict in the trial in Milan, or to other adverse legal or legislative developments in Italy. Might the company scale back its presence in Italy, or pull out entirely? If the ruling went against the Google executives, “it would not be good for the development of Web 2.0 business models, that’s as clear as day,” he said.
The verdict, expected within weeks, might not be the final word in the case, because the decision could be appealed in the European Court of Justice. In the meantime, Mr. Fleischer said he had been advised not to set foot in Italy at least until a verdict is issued.
“That’s unfortunate, because it’s one of my favorite countries,” he said. “I feel like there’s this public debate going on, and I’d love to be a part of it.”
French Court Rules Against Google Over Book Copying
A Paris court on Friday found U.S. Internet giant Google guilty of violating copyright by digitizing books and putting extracts online, following a legal challenge by major French publishers.
The court found against Google after the La Martiniere group, which controls the highbrow Editions du Seuil publishing house, argued that publishers and authors were losing out in the latest stage of the digital revolution.
It ordered Google to pay 300,000 euros ($431,700) in damages and interest and to stop digital reproduction of the material.
La Martiniere, the French Publishers' Association and authors' groups SGDL had argued that scanning books was an act of reproduction that should be paid for and had demanded the U.S. company be fined 15 million euros.
They accused Google of scanning the books free of charge, letting users browse the content for free, reaping revenues from advertisers but not adequately compensating the creators and original publishers of the works.
"Even if we can't undo the process of digitalization, this means they cannot use any of the digitized material any more," Yann Colin, lawyer for La Martiniere told Reuters.
He said that even if Google decided to appeal, the ruling would be enforced immediately.
As electronic readers gain popularity and online libraries expand, companies and governments are keen to learn from the mistakes that the film and music businesses made when their content moved online.
French politicians including President Nicolas Sarkozy have been particularly vocal, pushing for a broader public digitization program that would be partly funded through a big national loan.
Google has so far scanned 10 million books through partnerships with libraries in its ambitious project to put the world's literature online. It displays searchable snippets of books in copyright and whole texts of out-of-copyright works.
Google has been praised for increasing access to books and breathing new life into out-of-print works but has attracted criticism and more than one lawsuit for scanning books that are still in copyright without permission from the rights holders.
It recently reached a settlement in the United States after lengthy negotiations with authors and publishers led by the U.S. Authors Guild who had sued Google for copyright infringement.
The settlement, which includes measures to track down and compensate authors, only covers books published in North America, Britain and Australia, and any books registered with the U.S. Copyright Office.
It still has to be approved by a U.S. court before it comes into force.
(Additional reporting by Thierry Leveque)
France to Digitize Its Own Literary Works
President Nicolas Sarkozy pledged nearly $1.1 billion on Monday toward the computer scanning of French literary works, audiovisual archives and historical documents, an announcement that underscored his government’s desire to maintain control over France’s cultural heritage in an era of digitization.
The French National Library announced in August that it was engaged in discussions with Google over the digitization of its collections, part of a global effort by Google to digitize the world’s literary works. This provoked an uproar among French officials and the publishing community here, and the discussions were suspended.
“We won’t let ourselves be stripped of our heritage to the benefit of a big company, no matter how friendly, big or American it is,” Mr. Sarkozy said last week, apparently in a reference to Google.
The money pledged Monday will finance a public-private partnership that will digitize the nation’s cultural works, Mr. Sarkozy said. Yet that partnership might well involve Google.
“The question remains open,” said Bruno Racine, president of the National Library, in a telephone interview. He emphasized the “necessity of a partnership with the private sector” in order to secure the capital needed for vast digitization projects.
He put the cost of digitizing the National Library’s collections, which include over 14 million books and several million other documents, at more than $1.5 billion.
Those who opposed the National Library’s discussions with Google were concerned primarily with its “dominant place” in the digital market, he said, noting, “It’s not so much that it is a private company.”
The French culture minister, Frédéric Mitterrand, met last week with David C. Drummond, a senior vice president and chief legal officer at Google, to express his concerns about a potential collaboration with the company.
France has long regarded Google warily. In 2005, French and German leaders announced plans, since abandoned, to develop a multimedia search engine to be called Quaero — “I seek,” in Latin — seen by many as a direct challenge to the company. The French government has also urged the European Union to undertake its own book digitization project.
The United States District Court for the Southern District of New York is currently assessing the legality of Google’s global digitization plan. In a September submission to the court, the French Ministry of Culture wrote that the plan did not conform either to “intellectual property law or to competition law and constitutes a threat to cultural diversity.”
A modified version of Google’s settlement with groups representing book publishers and authors, submitted last month to the court, would restrict its book scanning to works published in the United States, Britain, Australia and Canada.
The $1.1 billion pledged by Mr. Sarkozy is part of a $51 billion stimulus package, announced Monday, aimed primarily at French universities, researchers, manufacturers and telecommunications companies. France will finance the investments largely through government borrowing, against the urgings of the European Union and the country’s own audit authority. France’s debt and deficit are currently at record levels.
Libraries Ask for Oversight of Google Books Product
Three library associations have asked the Justice Department to oversee Google's plans to create a massive digital library to prevent an excessively high price for institutional subscriptions, the groups said on Thursday.
The American Library Association, the Association of College and Research Libraries and the Association of Research Libraries said that there was unlikely to be an effective competitor to Google's massive project in the near term.
It asked the government to urge the court to use its oversight authority to prevent abusive pricing of the online book project.
"The United States should carefully monitor implementation of the settlement, including the pricing of the institutional subscription," the library organizations said in their letter, which was dated December 15 but released on Thursday.
It was addressed to William Cavanaugh, deputy assistant attorney general for the Justice Department's antitrust division.
Google's plan to digitize millions of books has been criticized by a variety of sources.
In addition to the libraries' concerns about the product being a high-priced must-have, Amazon, along with Microsoft and other Google rivals, have vociferously criticized the plan.
The digitizing project spawned a lawsuit in 2005 brought by authors and publishers who accused Google of copyright infringement for scanning libraries of books.
Google, the Authors Guild and publishers have settled that lawsuit and last month submitted a revised agreement aimed at answering antitrust and copyright concerns raised by the U.S. Justice Department.
There will be a fairness hearing on the amended settlement, which must be approved by a court, on February 18, 2010.
The case is The Authors Guild et al v. Google, Inc., U.S. District Court, Southern District of New York, No. 05-08136.
(Reporting by Diane Bartz; Editing Bernard Orr)
BBC and British Library to Take Joint Approach to Building Digital Archive
Venture to digitise British Library's archive of more than 150m items plus nearly 1m hours of BBC output
The BBC and the British Library are collaborating on a digital technology project to open up the institutions' archives, with the aim of giving the public greater online access to a vast cultural treasure trove.
Under a memorandum of understanding to be signed by the two organisations today, they will collaborate on the task of provising greater digital access to the British Library's archive of more than 150m items collected over the past 250 years, as well as nearly 1m hours of TV and radio output from the BBC, which has been broadcasting since 1922.
The BBC and the British Library will establish a joint steering committee to develop a uniform approach across the two organisations on issues including rights management, distribution of archive content, and technical issues of digitisation and storage.
"Unlocking the wealth of content in the British Library and BBC archives is a great opportunity as well as an immense challenge," said the BBC director general, Mark Thompson, who will sign the agreement with the British Library chief executive, Dame Lynne Brindley. "It is vital we partner, harnessing the power of digital technology to give the public the access they deserve."
Brindley said: "Through this memorandum of understanding we aim to create a model of best practice which will allow the library to develop similar opportunities with other public institutions. This partnership not only demonstrates that we are keen to share content for the benefit of today's researchers and the knowledge economy, but also expresses our continued commitment to supporting the government's vision of building a digital Britain."
Nook Torn Open, Hacked, Rooted
Barely weeks after its launch, Barnes & Noble’s Android-based Nook e-reader has been hacked and ‘rooted’ (root, or full system access, has been obtained). A loose team of hackers reported the work on their wiki, Nook Devs.
If you tear open a Nook (which the team has done) you’ll find that the Android operating system is contained on a microSD card (separate from the microSD expansion slot). From here, it’s a simple matter of using a card reader to mount this card on your computer and changing a single word in the init.rc file (the file that’s in charge of which services are begun at startup, similar to a Linux boot).
This single hack will let you plug the Nook into your computer (once you have reassembled it) and access the OS, using the freely available Google Android developers kit. Right now you’ll have to be a hardcore nerd to make much use of this, but as we saw with the iPhone, these things progress to user-friendly applications fairly fast, especially when the hard work has already been done.
Before you tut, toss your head and mutter ’so what?’ like some petulant teenager, think about the uses. The Nook is now a computer running a full Android operating system, with a built-in, free cellular connection to the internet. It also has a battery that lasts days, not hours. Now are you getting excited? This could turn into the Roomba of e-readers, only it won’t suck.
Laredo Could Be Largest US City Without Bookstore
The final chapter has been written for the lone bookstore on the streets of Laredo.
With a population of nearly a quarter-million people, this city could soon be the largest in the nation without a single bookseller.
The situation is so grim that schoolchildren have pleaded for a reprieve from next month's planned shutdown of the B. Dalton bookstore. After that, the nearest store will be 150 miles away in San Antonio.
The B. Dalton store was never a community destination with comfy couches and an espresso bar, but its closing will create a literary void in a city with a high illiteracy rate. Industry analysts and book associations could not name a larger American city without a single bookseller.
''Corporate America considers Laredo kind of the backwater,'' said the city's most prolific author, Jerry Thompson, a professor at Texas A&M University International who has written more than 20 books.
Since the closing was announced, book lovers in Laredo have flocked to the small store located between City Trendz (''Laredo's No. 1 Underground Hip Hop Shop'') and a store that offers $4 indoor go-kart rides to stock up on their favorite titles.
Schoolchildren even wrote letters to the parent company, Barnes & Noble, begging for the store to stay open.
''Without that store, my life would be so sad and boring,'' wrote a fifth-grader named Bryanna Salinas, who signed her name with a heart.
The Laredo store is among 49 remaining B. Daltons nationwide that Barnes & Noble will close by next year.
The company believes a bookstore is viable in Laredo and has identified a location for a large-format Barnes & Noble, but the space will not be available for at least 18 months, said David Deason, Barnes & Noble vice president of development.
In the meantime, without a single independent bookseller, Laredo may be in a league of its own among big cities.
Though an independent bookstore is the only one of its kind in Newark, N.J., a city of nearly 288,000, big chains are nearby in the suburbs or New York City. Laredo is surrounded by nothing more than rural ranching towns on its side of the border.
''We suffer, but we don't suffer to the extent that a Laredo would,'' said Wilma Grey, director of the Newark Public Library.
Some worry that the closing could send a message that books and reading are not priorities in Laredo, a hot, steamy city of 230,000 that is choked by smog from trucks lining up at the border, which is home to the nation's biggest entry point for trucks and trains.
Nearly half of the population of Webb County, which includes Laredo, lacks basic literacy skills, according to the National Center for Education Statistics.
Fewer than 1 in 5 city residents has a college degree. And about 30 percent of the city lives below the poverty level, according to the 2000 census.
Laredo residents can still purchase books online, but civic leaders fear that without a bookstore, many residents will not have the opportunity to buy books.
Many also feel that the stigma of not having a bookstore hurts Laredo's reputation.
Outsiders, even other Texans, do not always distinguish between ''los dos Laredos,'' the relatively peaceful city in Texas, and Nuevo Laredo, across the border in Mexico, which has been wracked by drug-war violence.
But some bookstore supporters are undaunted.
Maria Soliz, Laredo Public Library director, is leading the charge to get a bookstore back. The city's library system was already planning to open two more branches over the next two years to meet demand. That's in addition to the two-story main library painted in bold, Mexican-inspired colors that serves about 400,000 visitors annually.
''It's not reflective of the city that they're closing,'' Soliz said. ''I know this city can support a bookstore.''
Deason said the Laredo store is profitable, but its profits are not significant when factoring in the expenses of running a chain that's being phased out.
Some people also question the city's priorities. As Elaine Perry walked out of the bookstore earlier this month with a heavy bag of hardcovers, she criticized a recent proposal to build an indoor snow park.
''A snowboarding park in Laredo,'' Perry said. ''Have you ever heard of anything so stupid?''
Bookstore customers tend to be well educated and to have disposable income, said Michael Norris, an analyst with Simba Information. But that demographic is hardly what makes or breaks the business, he said.
A bookstore is ''either the cultural center in its community, or it's a pile of books with a roof over it,'' Norris said.
The B. Dalton in Laredo certainly skews toward the latter. It has narrow aisles, no coffee for sale and not a single chair to sit and read.
City Trendz employee Seve Perez said much of the traffic at Mall del Norte comes from Mexico, both from Nuevo Laredo and deal-seeking shoppers bused in from the country's interior.
Standing behind a rack of sale T-shirts that read ''Save Texas Rap,'' the 66-year-old said his bookish daughters will be crushed when the bookstore leaves.
Next door, Laredo resident Misti Saenz walked out of B. Dalton with a sack of nine romance novels for her teenage daughter. She was stocking up before the store closes Jan. 16.
''It's going to be a total bummer,'' Saenz said. ''It made me wish I had shopped there more.''
With a New Phone, Google May Challenge Apple
Two titans of the tech world, Google and Apple, may soon be engaged in hand-to-hand combat. Or, more precisely, handset-to-handset combat.
Google plans to begin selling its own smartphone early next year, company employees say, a move that could challenge Apple’s leadership in one of the fastest-growing and most important technologies in decades.
Google’s new touch-screen Android phone, which it began giving to many employees to test last week, could also shake up the fundamentals of the cellphone market in the United States, where most phones work only on the networks of the wireless carriers that sold them.
The company, using the power of its brand, plans to market and sell the new phone directly to consumers over the Internet, and buyers would be able to sign up for service from any compatible provider, the employees say.
The introduction of a Google phone — manufactured to its hardware and software specifications by an Asian maker of handsets — would be an important and risky departure for Google. Until now, it has made software to power cellphones that are built and marketed by partners, and it has largely avoided selling hardware.
The apparent shift underscores the fact that mobile phones are quickly becoming the biggest technology battleground of the future, as consumers increasingly rely on their phones to browse the Internet and perform other computing tasks.
It also indicates Google’s determination to make its mark on yet another industry, as it has done previously in advertising, books and online videos.
But analysts say it is not clear that Google’s success on the Internet will carry over into the design, marketing and distribution of hardware. Many companies have tried to make similar shifts and stumbled. Microsoft turned the Xbox into a hit, but when it pushed aside its partners in the music-player business in favor of its own Zune, it failed to gain traction against Apple and its iPods.
The phone’s success could also depend on how Google chooses to price it. Most Americans buy phones that are subsidized by wireless carriers, which recoup that cost by locking customers into contracts. IPhones that cost consumers $199 actually cost AT&T about $550, analysts say.
Katie Watson, a Google spokeswoman, declined to comment on the company’s plans. She referred reporters to a blog post published Saturday in which Google said that the new device was a “mobile lab” that would let employees test out new technologies.
Google employees who spoke on the condition of anonymity because plans for the phone were supposed to be confidential said that the device, manufactured by the Taiwanese company HTC, was thinner than Apple’s iPhone, with a slightly larger touch screen. It could be available as early as January, they said.
Employees say the phone will be sold unlocked, meaning that buyers will be able to choose a service provider, and will be based on G.S.M. technology, which is used by AT&T and T-Mobile in the United States and by most other carriers around the world. It is named Nexus One, according to various reports and to digital traces that the phones have been leaving on Web sites.
Google had long insisted that it was not interested in building and selling phones, saying it preferred to rely on hardware partners and wireless carriers to market a wide variety of phones powered by Android, the operating system that it offers free.
In October, Andy Rubin, vice president of engineering for Android at Google, scoffed at the idea that the company would “compete with its customers” by releasing its own phone, according to the technology news service CNet.
Analysts say that the apparent shift signals a recognition by the company’s executives that Google needs to take more control of its destiny in the wireless world.
“They perceive mobile as the next major opportunity,” said Jeffrey Lindsay, an analyst at Sanford C. Bernstein. “It is too big a risk to drive the strategy through their partners. They want more say and more control.”
What’s more, analysts say that the iPhone, despite prominently featuring some Google services, makes the company nervous.
“They don’t want to have access to Google being controlled or influenced by one player like Apple,” said Ben Schachter, an analyst with Broadpoint AmTech, a research firm.
Google wants to get more people using Web-friendly phones in part because it depends on the growth of search advertising, which is slowing on PCs. On cellphones, however, use of Google’s mobile search engine grew 30 percent between the second and third quarters of this year, Mr. Schachter said. “That’s huge, and a majority of that growth is coming from the iPhone,” he said. “When that happens, Apple has a lot of power over influencing users’ behavior.”
Until recently, Google and Apple were considered close allies with a common enemy: Microsoft. They shared two board members, Eric E. Schmidt, the chairman and chief executive of Google, and Arthur Levinson, the former chief executive of Genentech.
But the rise of mobile phones has increasingly pitted the two companies against each other. More than a year ago, Mr. Schmidt began recusing himself from discussions of the iPhone in Apple board meetings.
Google and Apple compete in other areas, like online distribution of music and video, Web browsers, and soon, computer operating systems. But it is in mobile phones that the two companies appear to be battling most aggressively. In recent weeks, Google has unveiled a string of cutting-edge services for smartphones that run Android. They included an application that gives turn-by-turn driving directions, which Google is giving away free. A comparable application from the satellite navigation company TomTom for the iPhone costs $99.
“Finally, Apple will meet a worthy competitor,” said Ashok Kumar, an analyst with Northeast Securities, who predicted two months ago that Google would develop and market its own phone.
Natalie Kerris, an Apple spokeswoman, declined to comment on Google’s plans.
Analysts say that Google’s gamble is a risky one, in particular because it could alienate Google’s Android partners, which include handset makers like Motorola and Samsung, and carriers like Verizon Wireless, Sprint and T-Mobile.
Those partners are largely responsible for the recent momentum of Android. They have introduced a handful of new devices in recent months, including the Motorola Droid, a well-reviewed and powerful device. But Android phones continue to be outsold by the iPhone, which is also the phone of choice for developers of tens of thousands of cellphone applications.
Analysts say Google may believe that only its own backing could make Android into a viable competitor to the iPhone, which for now in the United States is available only through AT&T. That exclusivity is expected to end next year if the deal is not renewed.
It is not clear whether Google will team up with carriers to sell service plans for the phone, or whether Google will subsidize the devices in the hope of making up the difference with profits from mobile advertising.
“If it is not subsidized, then I suspect the impact will be small,” said Charles S. Golvin, a wireless industry analyst at Forrester Research. Mr. Golvin noted that Nokia had attempted to sell unsubsidized high-end phones in the United States without much success. “If they choose to sell it subsidized, then the impact could be very, very significant,” he added.
Analysts also noted that Google’s gambit might be aimed at important overseas markets, where unlocked, unsubsidized phones tend to be the norm.
Mr. Kumar said that while Google’s plans may upset carriers, the company could find ways to placate them and to continue to work with them. “As long as Google provides a platform that the carriers can profit from, they will be happy participants,” he said. “Google could share profits from advertising with the carriers.”
Much will depend, of course, on how appealing the phone is. Some people who say they have had an early look at it have gushed about it on Twitter, with one calling it “a sexy beast.”
Jenna Wortham contributed reporting.
Google Phone with T-Mobile Contract in Jan: Source
Nicola Leske and Alexei Oreskovic
Google Inc plans to sell two versions of its own-branded cell phone: one with a service contract with T-Mobile USA and another that is unlocked, a source familiar with the matter said.
The phone, manufactured by HTC, has a number of code names such as HTC Passion, Dream or Nexus One and could be available directly though the Google website as early as January 5, according to the source.
Google said on its official blog on Saturday that it was testing a new mobile device with its employees. Media reports have said that Google will sell an unlocked version of the touch screen phone, allowing consumers to pick a carrier of their choice to provide wireless service.
Another version will be linked to Deutsche Telekom's T-Mobile USA, which will subsidize the cost of the phone for U.S. consumers who agree to a service contract, the source said. Pricing details were not available.
"In the long term Google will become a seller and get commission from operators," the source said, adding that other operators are expected to follow T-Mobile's lead eventually and agree to Google's terms.
The phone is similar to Apple Inc's iPhone but has, among other features, an exchangeable battery, a somewhat larger screen and the ability for consumers to add a memory card to the device. Any operator who wants to make the phone available to its customers will have to go through Google, the source said.
"Apple had a phone so hot it changed the business model and got operators to agree to revenue sharing. This is going to change the business too," the person added.
A T-Mobile representative said the company does not comment on rumors or speculation.
A Google representative would not comment beyond the blog post on Saturday, which said that Google employees were testing an Android-based device to "experiment with new mobile features and capabilities."
Baird Research analyst Will Power said: "We expect the launch of a new competitive device to be directionally negative for most of the existing smart phone markers, including Apple, Research in Motion, Nokia Oyg, HTC, Motorola Inc, Palm Inc, Samsung and others, while perhaps most negative for the existing Android partners."
Until now, Google has partnered with many handset makers by offering its open-source Android software as a freely available operating system for smart phones.
As of last month, Google said that more than a dozen phones were available with Android, including the heavily promoted Motorola Droid phone that is available with Verizon Wireless, a unit of Verizon Communications and Vodafone.
(Reporting by Nicola Leske in Frankfurt, additional reporting by Alexei Oreskovic in San Francisco; Editing by Phil Berlowitz)
Mozilla: Firefox Mobile Will Kill Off App Stores
Mozilla claims that its new Firefox Mobile browser could be the beginning of the end for the hugely popular app stores created by Apple and its ilk.
Mozilla is releasing the first version of Firefox Mobile (codenamed Fennec) on Nokia's N900 handset, with versions for Windows Mobile and Android set to arrive next year.
Sullivan claims developers are frustrated by the difficulties of writing for multiple mobile platforms. "We look at the problems it creates for small innovators," he said. "You have to create an iPhone app, an Android app, a Windows Mobile app..."
"As developers get more frustrated with quality assurance, the amount of handsets they have to buy, whether their security updates will get past the iPhone approval process... I think they'll move to the web."
Sullivan says it will take time to wean developers away from the app store model, which has been heralded as one of the chief reasons for the iPhone's success. "In the interim period, apps will be very successful. Over time, the web will win because it always does."
Many of the features users have grown used to on Firefox's PC browser will be available in the mobile version. The Awesome Bar - which uses bookmarks and browsing history to auto-complete web addresses as users begin to type a website's URL or name - will appear in Firefox Mobile.
The mobile browser will be continually synchronised with the PC. "When you start typing [into the mobile browser], the website you went to on the desktop a week ago will just pop up," Sullivan said.
The synchronisation will extend beyond the Awesome Bar. "We will sync browser tabs in real time," Sullivan adds. "If you have five, 10, 20 tabs open on your PC and something happens and you have to leave, you can pick up where you left off on your phone."
Firefox Mobile will also support browser add-ons. "Some are existing add-ons for the PC, some are brand new," Sullivan claims.
Sullivan admits that features such as multiple tab support and add-ons will require Mozilla to carefully manage the browser's memory, so that it doesn't consume too much of the phone's limited resources. "We have to flush the memory more often [than on the desktop browser]," Sullivan said. "The goal is to create the feeling that we do for the desktop user."
Mobile Phones Become Essential Tool for Holiday Shopping
Claire Cain Miller
The mobile phone is quickly becoming Santa’s biggest helper.
Powerful software applications for devices like the Apple iPhone are making it easy for bargain-hunting consumers to see if another retailer is offering a better deal on a big-screen HDTV or pair of shoes and to use it to haggle at the cash register.
Online retailers are revamping the mobile versions of their sites so consumers can make purchases without tedious typing. And offline retailers, battling for every last dollar, are sending cellphone users electronic coupons to lure them away from competitors.
One in five shoppers said they intended to use their cellphones to shop this holiday season, according to an annual survey by Deloitte, the accounting and consulting firm. Of those, 45 percent said they would use their phone to research prices, 32 percent said they would use it to find coupons or read reviews and 25 percent said they would make purchases from their phones.
“We are at the cusp of this technology really driving a lot of activity during the shopping season,” said Stacy Janiak, United States retail practice leader at Deloitte. “It is both an opportunity and a challenge for a retailer, because you can have a consumer who can cross-shop your store with other bricks-and-mortar stores or online, all from the convenience of your aisle.”
Heather Reed, a mother in Cypress, Tex., is one of those mobile power-shoppers. She uses several apps on her Samsung Moment phone to whittle down her spending. She was recently considering a $29.99 Hot Wheels video game for her son at Wal-Mart. With a quick scan of the bar code, an application called ShopSavvy found it at Target, just across the freeway, for $19.99. Another app from MyCoupons.com provided a Target coupon that sliced off $10 more.
“It went from $29.99 to $9.99, all in five minutes, no searching the Internet or spending hours trying to find a deal or a coupon,” she said. “It’s all right there in your hand.”
Of course, mobile shopping technology is still somewhat clunky, between erratic Internet connections, outdated pricing data and balky product scanners.
But smarter phones and a heightened bargain-consciousness among consumers are spurring a level of innovation in e-commerce last seen during the height of the dot-com boom a decade ago.
In addition to ShopSavvy, mobile apps from RedLaser, TheFind, ShopStyle and PriceGrabber.com allow customers to compare prices across a range of retailers. Retrevo, an electronics review site, has a service called RetrevoQ that lets users send a text or Twitter message with the name of the product they are considering and get an immediate response with a recommendation of whether to buy it and a range of online prices.
While searching for prices is easy, buying from the screen of a cellphone is more difficult. It generally involves clicking to the retailer’s Web site, which is often not customized for a mobile phone’s tiny screen, and then entering shipping and billing information using the tiny keyboard.
To fix that, some retailers are building sites and applications specifically for cellphones. The iPhone app for the Tommy Hilfiger online store, for instance, shows select products based on what shoppers are looking for so they do not have to scroll through pages of clothes. Those who are registered on the Web site need only enter their e-mail address and password to check out.
“Retailers need to realize that if you give people a way to make it easy, people will shop on their phones,” said Kelly O’Neill, product marketing director for ATG, which provides e-commerce technology to retailers and built Tommy Hilfiger’s app.
EBay’s iPhone app sends people notifications if they are outbid in an auction and lets people check out with just a few clicks if they have a PayPal account. Mobile shoppers will spend $500 million on eBay this year, the company said.
By improving ease of use, savvy online retailers are snatching sales from bricks-and-mortar ones. Matthew Tractenberg, for example, was recently shopping in a Silicon Valley bookstore, where he picked out five books for a total of $80. Before taking them to the counter, he typed the titles into the Amazon app on his BlackBerry Curve. Amazon had the books for $50 and would not charge sales tax or shipping. He placed the order on the spot and left his small pile of books in the store.
“It’s almost easier than doing it on a computer,” Mr. Tractenberg said.
Offline retailers are feeling the pain. Armed with competitive price information, shoppers are haggling as never before.
Although most stores refuse to match prices, especially from Web retailers, it is difficult to simply allow a customer brandishing a lower price to walk out the door.
Best Buy, for example, officially says it will not match prices of online electronics retailers and will match offline prices only if the customer brings in an ad or receipt. But several ShopSavvy users report having luck getting individual stores to match prices they find using the app.
Pacific Sunwear, a clothing and accessories retailer, said it would match lower prices found in stores or online. According to Chad Petrillo, a clerk at the chain’s San Francisco store, more people have been showing him competing prices on their phones, most often for shoes. The store will honor them after calling the other store to verify the price, he said.
For most shoppers, price is only one factor, to be weighed against the time it takes to drive to another store or wait for a Web site to ship an item. That could be a boon for offline stores, according to Ron Levi, vice president of products at TheFind, a shopping comparison Web site. “Your proximity to that retailer gives them an advantage,” he said. “It’s theirs to lose.”
Michael Robison, a Coast Guard petty officer from Guernewood Park, Calif., routinely uses ShopSavvy to check prices, but that doesn’t mean he always goes with the lowest one. He just bought a Victorinox laptop case for $45 at Macy’s, even though it was $30 at eBags. For that amount of money, “I would much rather walk out with it than wait,” he said.
Another problem with the mobile apps is accuracy. When Mr. Robison scanned a Nintendo hand-held gaming device at Radio Shack recently, ShopSavvy told him he could get it for $110 online instead of paying $170 at the store. When he got home, he discovered that online bargain was for a used machine.
Aware of the power of mobile phones, some offline retailers are using the technology to fight back.
If someone standing in one store scans a product with ShopSavvy, for example, a retailer down the street could deliver the shopper a coupon for the same item. A major retailer is already doing that in a few test cities, including Seattle, said Alexander Muse, co-founder of Big in Japan, the start-up that created ShopSavvy.
Other applications, including Yowza, use the GPS location information in cellphones to send shoppers coupons for stores within walking distance of where they’re standing.
“This empowers consumers to make a smart decision,” Mr. Muse said. “Already, retailers are starting to figure out, ‘I need to be in this game.’ ”
I’ll tell you something — I’m really blown away by the way people have responded to AT&T’s bastardly behavior over bandwidth usage. Our engineers are friggin livid. And, because they’re engineers, which means they’re basically evil little pricks, they’ve come up with a plan to teach AT&T a lesson. They’re calling it Operation Chokehold. Last night I got this email that they’ve been sending around inside Apple, encouraging people to join the crusade:
If anyone has ideas, use the comment strings. Tell your friends. Get people involved. We have five days to create a movement and plan a major assault. As the Portuguese said during the Obama campaign: Si, se puede.
FWIW, many of you probably know that Woz and I got our start by selling boxes that hacked the old phone system back in the 1970s. I hate these idiots more than you can imagine. The idea of spanking them like this just gives me tingles all over.
As Prices Fall, Blu-Ray Players Are Invited Home
Eric A. Taub
Blu-ray, a high-definition variation of the DVD format introduced three years ago, was initially met by a collective shrug from most consumers. Who needed another black box to connect to the TV, the thinking went, even if it did promise to play movie discs in clear, crisp high-definition?
But this year, even as the country moves tentatively out of a recession, consumers are buying the devices at a faster pace than they bought previous generations of movie players like the VCR and the DVD player. Analysts predict that sales of Blu-ray machines will be up 112 percent over last year, one of the true bright spots in retailing this holiday season.
Blu-ray’s household penetration is higher than that of DVD for the same period after introduction, according to Shawn DuBravac, chief economist for the Consumer Electronics Association. Three years after introduction, Blu-ray stand-alone players, which excludes Sony’s PlayStation 3 game machines that also play Blu-rays discs, are in 7 percent of American homes.
Amazon.com reports that sales of Blu-ray players are outnumbering those of standard DVD units, according to Paul Ryder, the company’s vice president for consumer electronics. Among the top 10 disc players sold, eight were Blu-ray, and five of the top 10 movie titles sold were in the Blu-ray format.
At a Best Buy in Thousand Oaks, Calif., small mountains of Blu-ray players are stacked seven units high wherever flat-panel TVs are on display, while the handful of standard DVD players are in a distant aisle.
The main reason for the shift in thinking is right there on the stacks of Blu-ray players that Best Buy has piled at its video wall. Prices for high-quality models have dropped below $150, a steep drop from the $300-plus that retailers were charging when Blu-ray had its debut.
“The price for an impulse buy is under $100, and we’re getting there,” said Andy Parsons, president of the Blu-ray Disc Association, a trade group.
Amazon’s best-selling Blu-ray model, Panasonic’s DMP-BD60, is available for $129, while a no-frills Magnavox Blu-ray player is on sale at Wal-Mart Stores for $78.
“We’re sanguine about Blu-ray taking over as the physical disc format of choice,” said Tom Adams, the president of Adams Media Research. “The differences in cost between DVD and Blu-ray players and software is going away. So there will be a natural evolution from standard DVD to Blu-ray.”
It also helps that more Americans now have 1080p HDTV displays, sets with sufficiently high screen resolution to fully display the clarity of a Blu-ray disc. Forty percent of all TVs sold are 1080p, according to Riddhi Patel, an analyst at iSuppli. She says that number should rise to 46 percent next year.
In addition to superior picture quality, Blu-ray also offers features not available on standard DVD players, like pop-up menus during play. Some Blu-ray players can also connect to the Internet; the player can then receive additional information about a movie, offer movie-related games, provide updated trailers, and allow friends to simultaneously watch a film while writing comments on screen.
The newest generation of Blu-ray players lets viewers receive streaming movies and TV shows from online providers like Amazon Video on Demand, CinemaNow, Netflix and YouTube.
As a result, Blu-ray manufacturers have placed themselves in a seemingly awkward position: They are selling a device that relies on people to continue to buy discs, but the same device gives them a way to download videos — bypassing the discs the machines were built to play.
Consumer electronics companies believe that this strategy makes sense. The additional programming will add to the Blu-ray experience, executives say, which still offers superior picture and sound quality to what can be currently streamed over the Internet.
And since most HDTVs do not yet come with their own built-in Internet capability, a Blu-ray player can become an inexpensive but essential all-in-one content source, according to Todd Richardson, senior vice president for P&F USA, the marketing arm for Philips.
“These services are supplemental. They fill out the consumers’ demand for more and more content,” added Tim Alessi, LG’s director of new product development.
Yet, as high-speed broadband becomes ubiquitous, the ability to quickly download Blu-ray-quality content will become a reality. That day is probably 10 years off, according to Ross Rubin, an NPD Group analyst, as physical discs continue to provide a higher-quality image and an easier way to move programming throughout the house than by trying to create an in-home network.
But the consumer electronics industry is no stranger to product life cycles and planned obsolescence. Already, manufacturers are readying a new line of Blu-ray players and TVs that can display video in 3-D. They should be in place by next year’s holiday shopping season.
Price of Flat-Panel TVs Rivals the Old Tube Type
Eric A. Taub
If you listen to consumer electronics manufacturers, every year is the best year to buy a new TV. But this year is significant, as prices of several sizes of flat-panel TVs now cost the same as their picture-tube predecessors.
According to iSuppli, a research firm, the average selling price of a 23-inch LCD set is $451; three years ago it was $752. The average price of a 32-inch LCD is $600, about half of the $1,182 ticket in 2006.
In the stores, flat-panel prices are even better. Wal-Mart is selling a 32-inch Vizio LCD for $400, and a 22-inch HDTV from RCA for $250.
The price reductions are great for consumers, but not so good for the companies that manufacture the sets. “The manufacturers needed to keep sales momentum going when people cut back on spending, so they’re lowering prices,” said Riddhi Patel, an analyst at iSuppli. “They’re just trying to see if they can survive one more quarter.”
In addition, with less disposable income since the recession, consumers have cut back by buying smaller, less fancy TVs. “Entry-level price points have become more attractive to consumers,” said Bob Perry, Panasonic’s senior vice president for marketing. “There was the assumption that fewer 32-inch LCD TVs would be sold, but more were sold and that drove down prices.”
According to Paul Semenza, vice president at market researcher DisplaySearch, price cuts are occurring even while the cost of the LCD panels used in the TVs has risen. Because mass merchants can survive with smaller margins, the large retailers have been able to lower prices to keep sales going.
“The manufacturers’ attitude has been driven for a long time by market share, not profitability,” said Chris Chinnock, principal with Insight Media, a research firm.
According to Mike Abary, a Sony Electronics senior vice president, a new attitude has developed among consumers: one of “good enough.”
“Cheap and simple is what consumers are demanding now in consumer electronics,” Mr. Abary said. He pointed out that popular products like netbooks and inexpensive camcorders have fewer features than their older brethren. On the Friday after Thanksgiving, Sony’s least-expensive Blu-ray player, available for about $120, was one of the company’s top sellers.
“In TV and video, we’ve recognized that some house brands are moving the quickest,” Mr. Abary said. “I absolutely envision a time when we do a stripped-down line of TVs and a high-end line of 3-D-capable TVs.”
As prices erode further, it puts pressure on the smaller manufacturers; with smaller product lines, they are less likely to be able to weather the competitive storm.
“When a 32-inch TV sells for $249, it’s not possible to make money,” Ms. Patel said.
LG Sets 3D TV Target, to Offer New Lineup in 2010
LG Electronics Inc, the world's No. 2 TV brand by revenue, set an aggressive sales target for 3D televisions, aiming to build a leadership position in an emerging market where competition is expected to heat up.
Digital 3D TVs, which use double layered images and special glasses to trick viewers into seeing 3D, are set to become the next battlefield for top TV makers, including Samsung Electronics, LG and Japanese rivals Sony Corp and Panasonic Corp.
LG aimed to sell 400,000 3D TVs in 2010 and 3.4 million in 2011, the South Korean company said at a news conference on Tuesday.
It plans to unveil a full line-up of 3D TV models with new technology improvement in the second half of next year, targeting retail consumers. LG currently offers one 47-inch 3D TV, which is sold mostly to businesses due to a high price tag.
Some analysts were still cautious about the emerging segment, citing lack of 3D content that costs about 50 percent more to make than regular versions.
"3D TV sales and 3D content will go hands in hands. Content providers will be reluctant to boost 3D production before certain number of 3D TVs are sold, and TVs won't sell well unless there's enough content available," said J.M. Hong, an analyst at Kiwoom Securities.
LG's next year 3D TV target makes up a small portion of its entire TV sales. In LCD TV alone, LG expects to sell 25 million units in 2010.
Electronics and entertainment conglomerate Sony is expected to leverage its strength in content when it launches its first 3D TVs next year. Sony said last month it expected 3D TVs to account for up to 50 percent of its total TV shipments in the financial year to March 2013.
LG said it agreed to a partnership deal with Korea Digital Satellite Broadcasting, known as SkyLife, which will run a second trial 3D broadcasting in January in South Korea.
Japanese makers pin hopes on 3D TVs to revive their TV business after struggling under the strong yen and stiff competition with Korean competitors. Panasonic also plans to roll out 3D TVs in 2010.
Research firm DisplaySearch forecast the 3D TV market to reach $1.1 billion in 2010 and grow sharply to $15.8 billion by 2015, according to data provided by LG.
LG Electronics shares ended up 2.2 percent on Tuesday in a flat broader market.
(Editing by Ken Wills)
HDTV Tips, Bargains For Holiday Shopping
Time's running out, procrastinators.
The holidays will be gone, the New Year's resolutions abandoned and, before you know it, the Super Bowl will be here — and you still won't have an HDTV.
What are you waiting for?
If it's uncertainty about what to buy or which HDTVs offer the best value, we'll take care of that right here, right now.
Not too long ago, HDTV choices were clearly defined: LCD vs. plasma. Though plasmas are still around — they remain, to these eyeballs, the best-picture-per-dollar value — most consumers now choose between LCD and another type of LCD commonly called LED.
The hottest technology, and also the most expensive, is LED backlighting with local dimming. The Toshiba Regza 46SV670U, a handsome 46-inch HDTV I've been trying out in recent weeks, ranks among the lowest-priced 1080p LED sets of this kind, often available online for $2,000 or less. This is actually an LCD that uses groups of LEDs behind the set to illuminate the pixels, then reduce or eliminate light (local dimming) when a scene calls for dark or total black.
A traditional LCD, illuminated by fixed fluorescent lighting, can't do that. Because an LCD's pixels can't effectively block out all of the fluorescent light, the seepage makes it impossible to produce dark scenes or total black accurately. Consumers fall for an LCD's superior brightness, but purists know that a plasma's superior blacks produce a better picture.
Now, with LED backlight and local dimming, the LCD has finally matched plasma, blacks for blacks. Toshiba apparently kept costs down in the 46SV670U by eliminating Internet connectivity for viewing YouTube videos or checking the local weather and another common feature, picture-in-picture. The 46SV670U, however, has an extraordinary number of settings to fine-tune the picture (geek alert!).
But Toshiba ( www.tacp.toshiba.com) curiously disguises local dimming on this set as a feature called DynaLight. It's more necessity than feature, a primary reason to buy a 46SV670U. It's easy to see its profound difference, merely by watching a letterboxed movie, with black bars above and below the picture, and noting the difference in the black bars with DynaLight off and then engaged. Without DynaLight engaged, the black bars will look lighter, almost grayish.
The Regza and other new-issue LCD sets also try to address another problem inherent to the technology, motion blur, with a 240-hertz refresh rate. The idea: Repeat each frame from a standard 60-hertz source and hope it eliminates motion blur. Toshiba actually only repeats each frame twice, then doubles them, but who's counting? For now, 240-hertz refresh rate is more marketing hype than difference-maker.
If you've decided on LCD, and LED, make sure to ask what type of LED lighting you're getting. The backlighting with local dimming is better than the less-expensive edge-lit LED sets, because the edge-of-the-screen lighting isn't as precise as the behind-the-screen local dimming. Also, when shopping for an LED set that has backlighting with local dimming, do this simple test: Ask to see a movie's end credits that have white lettering against a black background. If the lettering appears to swell, blooming beyond its borders, you've just witnessed one of the technology's flaws.
This was not an irritant with the Regza. The LED sets do improve on an LCD irritant, though, with better off-axis viewing. If the family is flanked across the room in front of the TV, those sitting one either side will see a coherent picture, not a washed-out mess, but still lacking the consistency of a plasma.
Those particularly bothered by vampire power — the electricity-sucking TVs and other electronic devices that consume power even when shut down — should know that the 46SV670U drew no measurable power from a watts reader in standby-mode. That means less than 1 watt.
The 46SV670U might produce a plasma-like picture at an LED price, but it's an all-around best buy for a LED backlight with local dimming.
The HD Guru's Top 10 Bargains
Gary Merson, one of the Web's most authoritative voices on HDTV, tests dozens of televisions a year for his site, HDguru.com (and soon, hdguru3d.com, too), where he also posts consumer-reference stories on how to buy an HD set, where to find the best deals and the latest in HD technology.
We asked him for his Top 10 HDTV deals under $1,700 for this holiday season. Here are his picks, and comments. (Prices, sourced late last week, are subject to change.)
Panasonic TC-L26X1 (26 inches) offers the company's wide-angle-view IPS (in-plane switching) 720p LCD panel technology, iPod connectivity and an SD card reader for just $299 at Amazon.com. The X1 LCD series is also available in 32- and 37-inch screen sizes.
Panasonic TC-L32S1 (32 inches) uses the company's 1080p Alpha IPS LCD panel to provide some of the best LCD wide-angle images with excellent color and contrast on- or off-axis. The S1 series uses 120-hertz refresh for superior motion resolution. It's $569.97 at Amazon.com (also available in a 37-inch screen size).
Samsung's LN37B650 (37 inches) uses the company's own high-contrast, 120-hertz, 1080p LCD panel to create quality images with better motion resolution than its 60-hertz-refresh competitors. The LN37B650 sells at Amazon.com for $929.18. It is also available in 32-, 40-, 46- and 55-inch screen sizes.
Samsung UN40B6000 (40 inches) uses a 120-hertz, 1080p LCD panel and features LED edge lighting for bright, clear vivid images with low power consumption in a 1.2-inch-deep package. This 120-hertz LED LCD sells for $1466.98 at Amazon.com. The 6000 series also comes in 32-, 46- and 55-inch screen sizes.
Panasonic TC-P42S1 (42 inches) is the company's lowest-cost plasma to feature its energy-saving, high-contrast Neo PDP 1080p panel. This plasma beats any LCD in its ability to provide wide angle (off-center) viewing with superior contrast, deep black levels and color saturation. The TC-42S1 is available for $764.99 on Amazon.com. The S1 series also comes in 46" 50" 54" 58" and 65" screen sizes.
Mitsubishi LT-46151 (46 inches) uses a 120-hertz, 1080p high-contrast LCD panel. Mitsubishi includes its exclusive, built-in Unisen 16-speaker sound system to provide real Dolby five-channel surround sound without external speakers.
The LT-46151 is perfect for apartment dwellers, bedrooms and any room where plaster or concrete walls make mounting external speakers for surround sound a very expensive or impossible proposition. The Mitsubishi LCDs have the best sound quality of any flat panel we have tested.
The LT-46151 series, also available in 40- and 52-inch screen sizes, is $1,399 at Amazon.com.
LG 47LH90 (47 inches) uses state-of-the-art LCD technology incorporating a 240-hertz IPS LCD panel and local-dimming LED backlights for deep, inky blacks, high motion resolution, vivid colors and outstanding contrast.
The LH90 also includes a THX-certified mode for optimum picture settings without paying for an expensive television calibration. LG brings all these features at an affordable price. It's $1,500 at Sears.com. The LH90 series is also available in 42- and 55- screen sizes.
Panasonic TC-P50G15 (50 inches) uses the same energy-saving, high-contrast, Neo PDP plasma panel with the widest viewing angle and full motion resolution as Panasonic's S1 series. It adds Internet connectivity for access to YouTube, Amazon Video On Demand, Bloomberg News and more.
This flat-panel HDTV has AVCHD high-definition home video playback via an SD card and a THX-certified mode for ideal color and accurate picture settings without a professional calibration.
It's $1,329 at Amazon.com. The G15s are also available in 42-, 46- and 50-inch screen sizes.
Panasonic TC-P54G10 (54 inches) contains all the features of the G15 in a larger screen size at a very affordable price. LED LCDs in the 55-inch class (the closest size) usually sell for more than $2,000. A real bargain for a big screen with top features and performance, the TC-P54G10 is available at Amazon.com for $1,699.99.
Panasonic TC-P58S1 (58 inches) provides the same high-quality, high-contrast Neo PDP plasma panel as the G10 and G15 series without the Internet connectivity, THX-certified mode AVCHD playback at a great price. It's the most flat-panel HDTV performance for the least cost. The TC-P58S1 last week was selling at 6ave.com for $1,609.36 after entering coupon code (AFL5) in the shopping cart.
BBC HD Service Draws Complaints
The quality of pictures broadcast on the BBC High Definition (HD) channel has been criticised by viewers who complain of fuzzy and grainy images.
The head of the channel, Danielle Nagler, says that despite a series of tests, no technical fault can be found.
Not all HD programmes have the "bright, crisp look which for some is synonymous with HD", she wrote on the BBC's internet blog.
Camera and production techniques all affect the overall quality, she added.
The BBC replaced the encoders which process HD pictures in August 2009.
The replacement encoders work at a bitrate of 9.7Mbps (megabits per second), while their predecessors worked at 16Mbps, the standard for other broadcasters.
The BBC HD website describes HD as "exceptionally clear, crisp pictures with vivid colours and up to five times more detail than standard definition."
Some disgruntled viewers think the new encoders have affected this viewing experience.
"We did extensive testing on the new encoders which showed that they could produce pictures at the same or even better quality than the old encoders at the higher bitrate," a spokesperson told BBC News.
In her blog post, Ms Nagler said that the services was created to be at its best for "typical viewing set ups" and that user groups with standard equipment were happy with the service.
She told the BBC that "there is not a major issue with picture quality" and added the corporation had only received one formal complaint.
The majority of those leaving comments on her blog post disagreed.
"Even my wife can see a reduction in picture quality and she's got cataracts," wrote one.
I have to say, im a netflix whore now, the on demand is just too damn cool for watching movies I would just download...
plus being able to watch on demand movies on 3 diff computers plus the ps3 in the living room is just effin amazing!
Does Netflix think ur gay?
Netflix Spilled Your Brokeback Mountain Secret, Lawsuit Claims
An in-the-closet lesbian mother is suing Netflix for privacy invasion, alleging the movie rental company made it possible for her to be outed when it disclosed insufficiently anonymous information about nearly half-a-million customers as part of its $1 million contest to improve its recommendation system.
The suit known as Doe v. Netflix (.pdf) was filed in federal court in California on Thursday, alleging that Netflix violated fair-trade laws and a federal privacy law protecting video rental records, when it launched its popular contest in September 2006.
The suit seeks more than $2,500 in damages for each of more than 2 million Netflix customers.
In order to get a better movie recommendation algorithm, the online DVD rental company gave more than 50,000 Netflix Prize contestants two massive datasets. The first included 100 million movie ratings, along with the date of the rating, a unique ID number for the subscriber, and the movie info. Based on this data from 480,000 customers, contestants had to come up with a recommendation algorithm that could predict 10 percent better than Netflix how those same subscribers rated other movies.
But video records count among the most privacy protected records in the U.S. — a reaction to a reporter getting Supreme Court–nominee Robert Bork’s records from a video store. The lead attorney on the new suit, Joseph Malley, recently reached a multimillion-dollar settlement with Facebook over its failed Beacon program, which drew fire in part for sharing users’ Blockbuster rentals with their friends.
So it wasn’t surprising that just weeks after the contest began, two University of Texas researchers — Arvind Narayanan and Vitaly Shmatikov — identified several NetFlix users by comparing their “anonymous” reviews in the Netflix data to ones posted on the Internet Movie Database website. Revelations included identifying their political leanings and sexual orientation.
The complaint calls that the Brokeback Mountain factor, arguing that marketers will suck up the data, combine it with other data sets and start pigeon-holing people into marketing categories, based on assumptions about the movies they rated.
The contest ended this summer when two different teams passed the 10 percent improvement mark, with the prize money going to a team led by AT&T researchers.
The suit is also asking the court to stop Netflix from launching its promised second contest to improve the recommendations — this time giving out user data that includes ZIP codes, ages and gender, along with movie ratings and ID numbers substituted for user names.
That’s a foolish idea on Netflix’s part, according to University of Colorado law professor Paul Ohm, who in a blog post in September called the idea “a privacy blunder that could cost millions of dollars in fines and civil damages.” Ohm, a former Justice Department lawyer, recently authored a legal paper calling into question the practice of anonymizing data, essentially finding that if data is useful to researchers, it could also, by definition, be re-identified.
For instance, if a data set reveals a person’s ZIP code, birthdate and gender, there’s an 87 percent chance that the person can be uniquely identified.
Ohm did not however support a lawsuit against Netflix for the original contest, arguing the company made good faith efforts to hide identities, using a data-obfuscation technique called perturbation.
A Netflix spokesman said the company could not comment since it had not yet seen the suit.
Paramount to Start Online Service to Sell Movie Clips
Paramount Pictures, looking for new ways to turn its old movies into cash, especially as DVD sales continue to decline, is creating an online video clip service that will allow users to search hundreds of feature films on a frame-by-frame basis.
Feeling “the need for speed,” as Tom Cruise put it in “Top Gun”? Log on to ParamountClips.com, search for the exact video snippet you want and press the checkout button. Within minutes — with the price depending on the type of licensing use you have in mind — Paramount will electronically deliver the selection in the format and resolution desired. Most scenes are available in multiple languages.
The site, to be introduced on Tuesday, is powered by VideoSense, an automated indexing tool developed by the technology company Digitalsmiths. Using proprietary video interpretation systems, Digitalsmiths allows films to be quickly searched by specific actor, line of dialogue, location, genre or product, among other criteria.
Paramount will initially restrict use to business customers — advertising agencies, mobile carriers, foreign broadcasters — that want to license pieces of films for commercial use. The plan is to ultimately open the site to consumers. People wanting to embed a specific scene from “The Godfather” on their blog could go to ParamountClips.com and buy it.
The service reflects a renewed effort in Hollywood to create fresh content from existing libraries, much as ring tones became a blockbuster offering for the music industry. Movie and television studios, suffering from a steep drop in DVD sales, are hopeful that serving up clips can become a business in itself while also stoking demand for the films in their entirety.
Although clips from films like “The Godfather” are already available free on YouTube, analysts said the new service was a chance worth taking.
“This Digitalsmiths technology is very impressive because it gives the ability to slice and dice and remodify content in a safe, automated way,” said Bobby Tulsiani, a senior analyst at Forrester Research.
“It remains to be seen if it opens up a new business opportunity, but we didn’t think people were going to pay for ring tones, either,” he added.
Paramount’s new service will initially allow users to search 80 films, including “The Godfather,” “Forrest Gump,” “Grease” and “The Addams Family.” More than 200 films will follow, with the ultimate goal being about 1,000 movies, or about a third of the studio’s total library, according to Geremie Camara, vice president of product development for Paramount Digital Entertainment.
Ben Weinberger, chief executive of Digitalsmiths, which is based in North Carolina, would not discuss pricing or say how much it cost to index movies; Mr. Camara also refused to provide financial information. Generally speaking, however, clip pricing ranges from technically free (a foreign network buys a movie and as part of the deal gets usage of a certain number of clips for promotion) to hundreds of thousands of dollars for a clip used in a national advertising campaign. The bigger the movie, the more expensive the clip: “The Godfather” is almost certainly going to cost you more than “The Spiderwick Chronicles,” although it depends on the usage.
As for individual use, no pricing has been set but it will most likely follow the ring-tone model: Licensing a snippet of a song for a commercial is expensive, but a ring tone of the same snippet for personal use costs 99 cents.
Paramount Pictures Finds Long-Sought Balance
At 3:08 last Monday afternoon, a handful of workers on storm-soaked walks at the Paramount Pictures lot here saw something unlikely: A double rainbow arched over the executive building.
Five years into the uneasy reign of its chairman, Brad Grey, Paramount is at long last catching a moment in the sun.
Home entertainment revenue is up sharply in the fourth quarter, as the DVDs of three summer hits — “Star Trek,” “G. I. Joe: The Rise of Cobra” and “Transformers: Revenge of the Fallen,” the year’s biggest movie to date — flood the Christmas market. Ticket sales have been good, too: “Paranormal Activity,” made for $15,000 and marketed on the cheap, took in $107 million at the box office after opening in late September.
And costs have dropped, as Mr. Grey bumped one expensive release, Martin Scorsese’s “Shutter Island,” into next year, to focus on a $25 million Oscar contender, Jason Reitman’s “Up in the Air,” and on the December introduction of Peter Jackson’s “The Lovely Bones,” a film that will not get its big-budget marketing push until January.
“Yes, it will be our biggest,” Mr. Grey said of the profit potential in a quarter that caps a strong year for Paramount in a generally weak film industry.
Since taking charge of the studio from Sherry Lansing in January 2005, Mr. Grey has hired, fired, ramped up, scaled back, acquired a film company in DreamWorks SKG, then parted company with Steven Spielberg and its other principals as they chafed under his leadership and left the Paramount fold.
Along the way, he attracted attention, critical and otherwise, about his bid for prominence in the movie industry, after years spent mostly in television, both as a talent manager, and as an executive producer of shows like “The Sopranos” and “Politically Incorrect.”
Last week, Mr. Grey spoke back in a far-ranging, if cautious, conversation about both his tenure and his plans for Paramount, a Viacom unit where his contract as chief executive runs for four more years.
“I’m passionate about Paramount, I’m passionate about my colleagues here,” said Mr. Grey. He is trim at the age of 51, with a gray-flecked brush cut and a certain kinship with Ryan Bingham, the job termination expert played by George Clooney in “Up in the Air.”
At Paramount, Mr. Grey said, the job cuts have largely stopped — though not before about a third of the 3,000 employees there when he arrived had been pushed out.
The head count was 2,642 in September, as cutbacks in home video and other areas were offset by hiring to create an international distribution system to replace one that had been shared with Universal Pictures.
In a creative group now headed by a former DreamWorks executive, Adam Goodman, Mr. Grey insisted that the turmoil was over. In June, he fired John Lesher and Brad Weston, who only 18 months before had replaced another short-lived appointee, Gail Berman, as Paramount’s top film executives.
Asked to describe his greatest mistake while at Paramount, Mr. Grey at first deflected the question, then said that it lay with his hiring decisions. “Putting a team together that had time to jell was more challenging than I thought,” he said.
As for achievements, Mr. Grey is proud to have whittled Paramount’s release schedule to what he believes will be a profitable core of about 16 films a year. The studio expects to produce about a dozen, and acquire a handful from outside suppliers.
That film count is down from a peak of 22 two years ago, when Mr. Grey, eager to pull Paramount out of last place in box-office market share, had aggressively expanded production. Not least, he did so by building a specialty division, Paramount Vantage, that delivered a spate of awards contenders — including “Babel,” “Into the Wild,” and, with Miramax, “There Will Be Blood” and “No Country for Old Men” — only to shut it down quickly.
In closing Paramount Vantage, said Mr. Grey, he was backing away not from the awards game, but only from a costly structure that could not be supported in a deteriorating economy. “You have to evolve,” he said.
By year’s end, Paramount will have released just 14 movies, and a handful of remaining Paramount Vantage films, fewer than any of its major competitors. But it has been running second only to Warner Brothers in the box-office race, with almost $1.5 billion in domestic ticket sales, to $1.9 billion for Warner, which has twice as many pictures.
Richard Greenfield, a media analyst with Pali Capital, calls all of this a good start. “It’s still a studio in transition,” Mr. Greenfield said in a telephone interview.
“They’re now gaining some momentum in finding their own franchises,” said Mr. Greenfield, who pointed to the revitalization of the longstanding “Star Trek” series as an achievement akin to Warner’s rebooting of the “Batman” films. As to whether the good times can be sustained, Mr. Greenfield said “that can’t be answered today,” though he added: “They’re in a far, far better position than they were.”
Viacom’s filmed entertainment operation — principally Paramount — posted a $69 million operating profit in the third quarter, compared with a $19 million loss in the year-earlier period. For the nine months, it had an operating loss of $79 million, with revenue of $3.7 billion.
In 2008, filmed entertainment had just $26 million in operating income on about $5.8 billion in revenue, which included receipts from hits as big as “Iron Man” and “Indiana Jones and the Kingdom of the Crystal Skull.”
In speaking to investors last month, Philippe Dauman, Viacom’s chief executive, described Paramount’s current film portfolio as a “rationalized slate,” with a marketing and distribution organization tailored to what he said has been “a high ratio of big hits.”
It is a classic strategy, less freighted than that of, say, Disney, with its talk of digital transformation.
Over all, the idea is to pick winners and to do so without relying heavily on the kind of outside investors and other risk-sharing mechanisms that were common before the capital markets tightened last year.
In finding those hits — and avoiding misses, like “The Love Guru” or “The Soloist” — Mr. Grey’s staff will be increasingly on its own. A string of films from the now-departed DreamWorks team, which delivered movies as valuable as the “Transformers” series, is nearly played out. And Marvel Entertainment, though it still owes Paramount five movies, including “Iron Man 2,” under a distribution agreement, is now owned by Walt Disney.
But, said Mr. Grey, the profit potential from successes that are produced and owned entirely by Paramount is vastly higher than that from films that are distributed for a fee from suppliers like Marvel or DreamWorks Animation, whose own deal with Paramount runs to 2012. “We want that exponential profit,” said Mr. Grey.
In Paramount’s next round, one prospective new action franchise, “Max Steel,” is based on a Mattel toy. There is no script or director, but Taylor Lautner, the teenage heart-throb from “The Twilight Saga: New Moon,” has signed on for what people briefed on the deal said was $10 million. Mr. Grey declined to confirm the price.
There will be sequels, said Mr. Grey, to both “Paranormal Activity,” which had been overlooked by most of the industry, and “G. I. Joe.” That one was widely expected to be a flop — “We were worried, yes,” Mr. Grey acknowledged — until it opened in August to $54.7 million in weekend business, and eventually took in $150 million in the United States, matched by strong sales around the world.
From the director Gore Verbinski and the actor Johnny Depp, who worked together on Disney’s “Pirates of the Caribbean” films, he is expecting “Rango,” a computer-animated, Western-themed animal saga.
In an effort to create a kind of research and development arm, Paramount is also allotting about $1 million a year to produce about 10 movies in a new micro-budget division where budgets will be kept under $100,000. Building on the success of “Paranormal Activity,” the idea is to make films that can be released unconventionally — sometimes in theaters, sometimes not — without relying on expensive advertising. The investment is so small that a single success could cover the division’s expenses for the entire year, while also creating an environment where a new filmmaker might emerge or an established one could safely experiment.
On another front, Paramount is expected as early as this week to extend a trial period under which it has made films available to the discount video renter Redbox, even as several other studios have avoided dealing with the service
As for J. J. Abrams, a producer and the director of “Star Trek,” Mr. Grey is looking for “Star Trek 2.” And “Mission: Impossible IV.” And possibly before either, what he called another “tentpole” film to be directed by Mr. Abrams, and yet to be announced.
“We have been wildly ambitious,” Mr. Grey said of his plans. “It has much to do with the fact that we are feeling as strong as we are.”
"Avatar" Starts Long March Toward Profitability
"Titanic" director James Cameron releases his first dramatic feature in 12 years this weekend, and there's almost as much buzz about its costs as the film's groundbreaking motion-capture animation.
Distributor 20th Century Fox first claimed that its costs on "Avatar" totaled $237 million but more recently refused to confirm any number. Most industry observers believe the picture cost a minimum of $300 million to produce.
Even at the lower studio figure, that's a lot of green stuff to expect to make back from a mostly animated picture populated by blue aliens.
Cameron appears unfazed by such pressures.
"I don't think it means jack s--t," Cameron said. "To be perfectly honest, I think the studio has generated the myth about its costs to help in the selling of the movie. I have seen this happen with 'Terminator' and 'True Lies' and 'Titanic,' and it helps the film become a must-see film. By the way, doesn't that mean it's a bargain to see such an expensive film for the same amount it costs to see any other film? It's the deal of the century!"
So just how much can "Avatar" ring up during its all-important opening weekend? Broad consensus has the sci-fi actioner -- starring Sam Worthington ("Terminator Salvation") and Sigourney Weaver -- fetching $80 million or more through Sunday, though Fox has been floating much lower figures to tamp down expectations.
Toting a running time of 2 hours and 36 minutes, "Avatar" starts its long march toward profitability with 12:01 a.m. Friday performances set for more than 2,000 mostly 3D locations. For the rest of the weekend, "Avatar" will play in some 3,400 theaters boasting almost 3,000 3D screens and roughly an equal number of 2D auditoriums.
"Avatar" debuts simultaneously this week in most foreign markets, with more than 5,000 3D screens in place internationally for the release.
"Avatar" is likely to draw best among male moviegoers, but it will bear watching how it skews in the age demo. Heading into the weekend, prerelease tracking surveys indicate a good chance the film will draw well among both younger and older males.
As for the women, Sony is targeting older females in a counter-programing play with the romantic comedy "Did You Hear About the Morgans?" Starring Hugh Grant and Sarah Jessica Parker, "Morgans" will likely produce $10 million or so through Sunday.
Now, back to the question of "Avatar" costs.
Helpfully, Cameron has agreed to defer profits on "Avatar" until certain box office thresholds are reached. That makes its profit profile a bit easier to dissect.
The broad rule of thumb on profitability is that total domestic box office must equal production costs to reach break-even, with global marketing expenses -- totaling $150 million on "Avatar" -- covered by ancillary income such as home entertainment, TV revenue and merchandising. As an action picture, "Avatar" could overachieve internationally, and merchandising should prove unusually bountiful with partners including McDonald's and mass merchants.
So even if the studio's official budget estimate is, ahem, optimistic, prospects for profitability lie squarely in category of tough-but-doable.
Amy Miles, CEO of No. 1 U.S. exhibitor Regal Entertainment, recently predicted "Avatar" would make about $250 million in the U.S. and Canada. All things considered, that also could be the threshold at which executives at Fox and Cameron's Lightstorm Entertainment banner exchange lusty high fives.
Roy E. Disney, a Power at His Uncle Walt’s Studio, Dies at 79
Roy E. Disney, the nephew of Walt Disney who helped revitalize the Walt Disney Studio’s famed animation division and at times publicly feuded with top executives at the company, died on Wednesday at Hoag Memorial Presbyterian Hospital in Newport Beach, Calif., following a year-long battle with stomach cancer, according to a spokeswoman from the company. He was 79.
Mr. Disney served as a director emeritus and consultant to the company until his death. From 1984-2003, he held the post of vice chairman of the board of directors of the Walt Disney Company and chairman of the studio’s animation department. He resigned in 2003 citing “serious differences of opinion about the direction and style of management” and subsequently helped lead an investor uprising that culminated with the departure of Michael Eisner as chief executive and chairman.
“He was much more than a valued 56-year company veteran,” said Bob Iger, president and chief executive of the company. “Roy’s true passion and focus were preserving and building upon the amazing legacy of Disney animation that was started by his father and uncle. Roy’s commitment to the art of animation was unparalleled and will always remain his personal legacy and one of his greatest contributions to Disney’s past, present and future.”
John Lasseter, chief creative officer for Walt Disney and Pixar Animation Studios, added, “I first met Roy when I was still an animation student at CalArts. Not only did I consider him a personal friend, but he was a great man who believed deeply in the art of animation. He put his heart and soul into preserving Disney’s legendary past, while helping to move the art of animation into the modern age by embracing new technology.”
Mr. Disney was born in Los Angeles on Jan. 10, 1930, to Roy O. Disney and Edna Francis Disney. His father and his uncle co-founded the company. As a child, Roy E. Disney would often play in the animation studio hallways, with animators using him as a test audience as they toiled on films like “Pinocchio.”
He began his entertainment industry career in 1952, working as an assistant film editor on the “Dragnet” TV series. He joined the Walt Disney Company in 1953 as an assistant film editor, where his credits included the landmark Academy Award-winning “True-Life Adventures” features, “The Living Desert” and “The Vanishing Prairie.”
As a writer and production associate, he received an Oscar nomination for his work on the short subject “Mysteries of the Deep” in 1959, and in 2003 as producer for “Destino.” From writing, Disney went on to produce and direct some 35 other TV and theatrical productions, including the landmark 1968 documentary “Varda, the Peregrine Falcon,” before leaving in 1977 to become an independent producer and investor.
An avid sailor – he held numerous yacht racing records – Mr. Disney was also the chairman of Shamrock Holdings, a family investment enterprise that he organized in 1978.
“Roy and I enjoyed a 35-year friendship and partnership that was simply special,” said Stanley Gold, president of Shamrock Holdings. “We faced many business challenges together, had fun in the process and enjoyed a wide variety of professional successes. Roy was a man who was steadfastly loyal to his principles and to his friends. He was a gracious, humble gentleman who could make the tough decisions life sometimes requires.”
Competition At Heart of FCC Broadband Plan
What does the future of broadband in the U.S. look like? The Federal Communications Commission on Wednesday released an outline of what might be included in it upcoming national broadband plan, and encouraging competition was a top priority.
"Competition drives innovation and provides consumer choice," the FCC said in a statement. "Finding ways to better use existing assets, including Universal Service, rights-of-way, spectrum, and others, will be essential to the success of the plan. The limited government funding that is available for broadband would be best used when leverage with the private sector."
The stimulus plan provided $7.2 billion in broadband grants and $350 million for a broadband mapping program, but also directed the FCC to deliver a national broadband plan to Congress by February 17, 2010.
Now, two months before that deadline, the commission has released a glimpse into options it is considering – an outline that includes 10 specific areas of focus.
On the top of the list is reform of the Universal Service Fund (USF), a government-run program intended to provide all Americans with access to telecommunications service. Criticism about waste and abuse within USF and the accompanying E-Rate program have been rampant for years, but the FCC hopes to cut inefficient spending and extend the program's reach to cover broadband rather than just basic telecom services.
The commission is also looking at how much it costs to build out a network. To that end, they are considering rules that would set up uniform and fair rental rates for pole attachments, rules that speed up access to equipment needed to build networks, and options to fund city-owned networks.
Having the equipment set up is no good if there's no spectrum to handle the traffic, so the FCC wants to resolve ongoing spectrum proceedings and explore new proposals, while also preserving spectrum for unlicensed devices. Like USF, however, spectrum is another issue that has been debated for ages, so it'll likely take more than a report to Congress to resolve all the competing interests on that front.
What else is on tap? The commission also wants to establish a working group to improve broadband deployment and adoption on tribal lands, create more open options when it comes to set-top boxes, provide customers more information regarding their broadband service, assess the impact of universal broadband on media licensees, facilitate broadband adoption among people with disabilities, and improve first responder access to broadband.
Meanwhile, the FCC suggested the creation of a non-profit entity as well as public-private partnerships that would support broadband adoption efforts.
Washington-based interest group Public Knowledge said it was disappointed with the plan. "Nothing in the outline presented this morning would increase competition," said president and co-founder Gigi B. Sohn. "Reforming universal service and supporting municipal networks are worthwhile goals, but they would do nothing to reverse the slide caused by eight years of misbegotten telecommunications policies that have crippled most meaningful broadband competition for consumers."
During a press call with reporters, Blair Levin, who heads the FCC's broadband program, said he was not surprised by criticism of the plan.
"From the very beginning, a variety of people have expressed disappointment [about FCC plans] and then have been surprised by what happened later," Levin said.
There are a "lot of things designed to address competition" in the overview, he said.
"Spectrum is very much a part of addressing competition. One of the reasons we want more spectrum is to have a more competitive broadband marketplace," Levin said. "Set-top boxes [are] very much about competition on the device side, not the network side. Transparency [is] very much about competition. How can you have a competitive market if people don't know the actual performance of things they're getting? Rights-of-way – it's very unsexy, very unglamorous, but it has a lot to do with competition."
Google Says Ad Blockers Will Save Online Ads
Translation: People are lazy
Google - the world's largest online ad broker - sees no reason to worry about the addition of ad-blocking extensions to its Chrome browser. Online advertisers will ensure their ads aren't too annoying, the company says, and netizens will ultimately realize that online advertising is a good thing.
"We think about this a lot a Google, because we make [just about] all of our money from advertising," Google engineering director Linus Upson said on Friday at a browser-obsessed conference in Mountain View, California. "It's unlikely that ad blockers will get to the level where they imperil the advertising market, because if advertising is so annoying that a large segment of the population wants to block it, then advertising needs to get less annoying.
"There will always be some group of people who want to block ads for personal reasons. But if we do a good job on the advertising side, people won't want to block ads. People will find them actually useful.
"I think there will be a nice equilibrium. If people get too aggressive with ads, then ad blockers will become more popular and companies will get less aggressive with ads. The market will sort itself."
Last week, the Mountain View Chocolate Factory unveiled a Mozilla-like extensions gallery (https://chrome.google.com/extensions/) for its Google Chrome browser, and though there are some restrictions (https://chrome.google.com/extensions..._tos_text.html) on what developers can upload, Upson says there's no explicit ban on ad blockers. Indeed, such blockers are already available, and one - dubbed AdThwart - is listed as the gallery's second most popular offering.
AdBlock Plus has long been among the most popular extensions at Mozilla's Firefox gallery, AMO (aka addon.mozilla.org (http://addon.mozilla.org,)), and Upson expects a similar situation with Chrome. The difference is that whereas Firefox controls an estimated (http://marketshare.hitslink.com/brow...e.aspx?qprid=0) 25 per cent of the market, Chrome has a mere 4 per cent.
Let's also remember that the sugary sweet spin Google puts on its online ad platforms is absolute rubbish (http://www.theregister.co.uk/2008/11...ds_and_adobe/). Google may say that most people won't install ad blockers because ads are ultimately useful. But the truth of the matter is that most people won't install ad blockers on Chrome because people are fundamentally lazy. Inertia is the general rule on the web - as in life. That's why Google's ad-juicing technologies are opt-out - not opt-in.
And of course, there's no guarantee that Google will always allow ad blockers. At this point, Google wants more market share for Chrome, believing this is the best way to feed its online ad ambitions. The more people who use Chrome, the more people Google can point to Google services. That means Google can collect more user data, and with more user data, it's better able to target ads.
Certainly, allowing Chrome blockers is a path to more market share. Many use Firefox solely for its ad-blocking extensions. But once Chrome is ubiquitous, Google's thinking could change. What happens when Chrome controls 90 per cent of the market, for instance, and Google's largest advertisers start demanding satisfaction?
Not that this is a likely scenario. Like we said, people are lazy. They don't go out of their way to use anything other than what they already have. And you can bet that the epic amounts of data Google collects about the world's netizens says much the same thing.
News Corp. to Sell Subscriptions on Sony Reader
Sony on Thursday announced a partnership with Dow Jones, owned by the News Corporation, to deliver news from The Wall Street Journal and MarketWatch.com to Sony’s electronic reading devices.
The Wall Street Journal plans to offer two versions of its content for the Sony Reader, the companies said at a press conference in New York. One will cost $15 a month and includes a morning edition of The Journal, delivered through the wireless capabilities in some Reader devices or through a computer connection. The second offer, The Wall Street Journal Plus, will cost $20 and adds a “comprehensive update of the day’s world and business events after the close of the markets,” the company said.
News Corporation will also offer subscriptions to a daily package of material from MarketWatch for $11 a month. Sony will also offer subscriptions to The New York Post, also owned by News Corp., for $10 a month.
“We feel we’re riding to the rescue of news,” said Howard Stringer, Sony’s chief executive. Mr. Stringer cited a new Forrester report that estimates 10 million people will own e-readers next year. “I believe this is a watershed year for the e-reader market,” he said.
Amazon.com also offers subscriptions to magazines and newspapers, including The Journal and The New York Times, through its Kindle device. The once-a-day Journal subscription also costs $15 on the Kindle; the “Plus” version is not offered there.
But newspaper publishers have been unhappy with the percentage of revenue they get in their deals with Amazon, which some have said is about 30 percent of the sale price. Many of those deals are up for renewal, and publishers have been trying to negotiate more favorable terms.
Robert Thompson, editor in chief of Dow Jones and managing editor of The Wall Street Journal, said the company’s revenue deals with Sony were better than those with Amazon, although he would not give exact numbers.
“You can assume we’re getting a better split than the Kindle,” Mr. Thompson said. “I won’t actually say the price, but I wouldn’t be here today if it wasn’t a better deal.”
Mr. Stringer declined to offer details about the company’s plans for new reading devices. But when asked about the tablet device that Apple is said to be developing, he replied: “We’re all working on new things. We’re all working on color. You’ve seen our demos of flexible color displays that wrap around your arm.”
Rupert Murdoch, News Corporation’s chief executive, has recently been critical of the idea that media companies should give their content away online and support it with advertising. Mr. Stringer and Mr. Thompson clearly backed that sentiment, and they got in a few digs at Amazon for its less favorable pricing and revenue shares.
“Sony does understand the value of content, and this is going to be the year we bring it back,” Mr. Thompson said.
Under Murdoch, Tilting Rightward at The Journal
Sunday was the second anniversary of the sale of The Wall Street Journal to Rupert Murdoch’s News Corporation. At that time, a chorus of journalism church ladies (I was among them) warned that one of the crown jewels of American journalism now resided in the hands of a roughneck, and predicted that he would use it to his own ends.
Yet here we are, two years later, and The Wall Street Journal still hits my doorstep every morning as one of the nation’s premier newspapers.
But under Mr. Murdoch’s leadership, the newspaper is no longer anchored by those deep dives into the boardrooms of American business with quaint stippled portraits, opting instead for a much broader template of breaking general interest news articles with a particular interest in politics and big splashy photos. Glenn R. Simpson, who left the newspaper back in March, is not a fan of the newsier, less analytical Journal.
“Murdoch didn’t ruin The Wall Street Journal; he just rendered it into a much more ordinary paper,” he said.
But there are growing indications that Mr. Murdoch, a lifelong conservative, doesn’t just want to cover politics, he wants to play them as well.
A little over a year ago, Robert Thomson, The Journal’s top editor, picked Gerard Baker, a columnist for The Times of London, as his deputy managing editor. Mr. Baker is a former Washington bureau chief of The Financial Times with a great deal of expertise in the Beltway. The two men came of age in the more partisan milieu of British journalism.
According to several former members of the Washington bureau and two current ones, the two men have had a big impact on the paper’s Washington coverage, adopting a more conservative tone, and editing and headlining articles to reflect a chronic skepticism of the current administration. And given that the paper’s circulation continues to grow, albeit helped along by some discounts, there’s nothing to suggest that The Journal’s readers don’t approve.
Mr. Baker, a neoconservative columnist of acute political views, has been especially active in managing coverage in Washington, creating significant grumbling, if not resistance, from the staff there. Reporters say the coverage of the Obama administration is reflexively critical, the health care debate is generally framed in terms of costs rather than benefits — “health care reform” is a generally forbidden phrase — and global warming skeptics have gotten a steady ride. (Of course, objectivity is in the eyes of the reader.)
The pro-business, antigovernment shift in the news pages has broken into plain view in the last year. On Aug. 12, a fairly straight down the middle front page article on President Obama’s management style ended up with the provocative headline, “A President as Micromanager: How Much Detail Is Enough?” The original article included a contrast between President Jimmy Carter’s tendency to go deep in the weeds of every issue with President George W. Bush’s predilection for minimal involvement, according to someone who saw the draft. By the time the article ran, it included only the swipe at Mr. Carter.
On Aug. 27, a fairly straightforward obituary about Ted Kennedy for the Web site was subjected to a little political re-education on the way to the front page. A new paragraph was added quoting Rush Limbaugh deriding what he called all of the “slobbering media coverage,” and he also accused the recently deceased senator of being the kind of politician who “uses the government to take money from people who work and gives it to people who don’t work.”
On Oct. 31, an article on the front of the B section about estate taxes at the state level used the phrase “death tax” six times, but there were no quotation marks around it. A month later, the newspaper’s Style & Substance blog suggested that the adoption of such a loaded political term was probably not a good idea: “Because opponents of estate taxes have long referred to them as death taxes, the term should be avoided in news stories.”
In response to questions about bias in the newspaper, a Journal spokesman sent along the following statement: “The Journal has always provided its readers with unique, objective news reporting from our Washington Bureau.”
None of the reporters involved in those articles spoke to me, but several others did.
“A lot of it is about what goes into the pipeline and then what does, and does not, come out,” said a reporter who works at the Washington bureau and who, like others, did not want to be identified out of concern for retribution. The reporter said articles at The Wall Street Journal ended up looking out of step with other coverage because an agenda may have been at work.
Tension between Washington bureaus and headquarters is a common feature of newspapers, and none of the people I spoke to suggested that either Mr. Thomson or Mr. Baker lacked savvy as journalists or leaders — only that ideology was baked into the coverage through headlines, assignments and editing in a way that had never occurred in the past.
“When it was just Robert, we were able to win more arguments, but now that it is both he and Baker, it pretty much goes the way they say it will,” said another current member of the staff.
Several Washington staff members speculated that John Bussey, the current bureau chief, may soon be replaced by Gerald F. Seib, the former bureau chief. (Curiously, Mr. Seib is very much in the old Journal mold and hardly what anybody in the business would call a pushover.)
While blending politics and journalism may come as an unpleasant surprise to the people who work at The Journal, it is standard operating procedure for Mr. Murdoch, who sees newspapers in the British model — as players in the worlds they cover.
“For him, it is all about the fight,” said Sarah Ellison, a former media reporter at The Journal who has written a book due out in May, “War at The Wall Street Journal: Inside the Struggle to Control an American Business Empire.”
“It is an excellent paper,” Ms. Ellison said. “But it is entirely transformed from what it used to be.”
It certainly doesn’t appear that the $5 billion purchase of the newspaper was a big financial success — the News Corporation took a $2.4 billion write-down on the purchase — and Michael Nathanson of Sanford C. Bernstein said the Bancroft family, which sold the paper, “now look like geniuses” and described the purchase as “one of the worst media deals in history.”
But Mr. Murdoch and his lieutenants have made two significant bets: that the cachet and reputation of The Wall Street Journal are elastic enough to encompass a much broader array of news and that objectivity in a general-interest newspaper is a losing strategy.
Move to National ID Cards Delayed
The United States’ quest for a national identification database associated with driver’s licenses won’t be finished by year’s end.
The deadline was Dec. 31 for the states to create what would be the largest identification database of its kind under the auspices of the Real ID program. The law also mandates uniform anti-counterfeiting standards for state driver’s licenses.
None of the states are in full compliance with the law, first adopted in 2005, requiring state motor vehicle bureaus to obtain and internally scan and store personal information like Social Security cards and birth certificates for a national database, according to the American Civil Liberties Union. About half the states oppose the mandate, or have said they would never comply.
Beginning Jan.1, the law was supposed to have blocked anybody from boarding a plane using their driver’s license as ID if their resident state did not comport with the Real ID program. But the Department of Homeland Security is set to extend, for at least a year, the deadline of the Real ID program that has raised the ire of privacy advocates.
Homeland Security officials point to the 9/11 hijackers’ ability to get driver’s licenses in Virginia using false information as justification for the proposed $24 billion program.
The American Civil Liberties Union and the Electronic Frontier Foundation suggest the plan is misguided, and might pave the way for requiring such IDs to vote or purchase prescription drugs.
“Our biggest concern is that it is a national ID card. It changes the relationship between the citizen and the state,” Chris Calabrese, the ACLU’s legislative counsel, said in a telephone interview. “We see it as a potential mission creep, and an individual’s rights can be curtailed because of this.”
Richard Esguerra, the EFF’s residence activist, said in a telephone interview Monday and in a recent blog post that the giant database, if it ever comes to fruition, “threatens citizens’ personal privacy without actually justifying its impact or improving security.”
Q&A: Eugene Spafford on Cybercrime, Security Research
Threatpost editor Dennis Fisher talks with Eugene Spafford of Purdue's CERIAS center about cybercrime, funding for long-term security research projects and whether the federal cybersecurity coordinator position matters.
Fisher: Do you see any indications that there will be more funding coming from the federal government for longer term research projects in the near future?
Spafford: Not really. There are provisions for more research money in some draft legislation that's in Congress right now, but they are authorizations, not appropriations. And that's a big distinction. There are a lot of other priorities right now, obviously. We have two wars going on. I don't have high hopes of there being an influx of new money.
Fisher: You wrote a blog post a couple of months ago about the lack of leadership on cybersecurity in the federal government. At some point Obama will appoint the cyber coordinator. But will that even matter?
Spafford: I don't see how. It's a position that's going to report up to the economic council and the security council. It won't have any statutory authority. It won't have any budgetary authority. That does not give it much authority of any kind. The problem is that there are organizations in the government that have some part of the problem space, like DHS, Defense, the NSA. They have good people on it and they're making headway. But the structure of the government response misses portions of the problem. It isn't a coordinated effort and there's no awareness of the magnitude of the problem. There's certainly a recognition in the military that there needs to be a better response, and that's what we're seeing in the establishment of the cyber sub-command. That could be good. But a lot of it will depend on the managing authority. But it does show progress. The downside is that the military views the protection of military assets as their job and the protection of other assets is someone else's job. They're not going to protect the banks and the utilities and the telcos and the power grid and everything else. So whose job is it? Where's the coordination and overall picture of how this works? So when I hear that there are supposedly people who have been interviewed for this cyber coordinator job and didn't take it, I'm not surprised. It's not a winning position. I'm not at all surprised by the fact that it's empty. That position is a blame-taking position.
Fisher: So if getting that position filled won't really make much difference, what needs to be done to get things going in the right direction?
Spafford: Well, a lot of it is unfortunate timing. Twenty-five years ago when this issue was first being raised, the response was that it isn't really as big a problem as X, whatever X was at the time, and that the market will undoubtedly respond to a problem that's as big as what you say this is. So the problem doesn't appear to be as big as it it really is because it's hidden by other things. It's grown so big and the politics are much, much worse now. Terrorism was discussed in the '90s and it wasn't taken very seriously because it was seen as a problem that affected a certain region of the world until 2001. And we had our horrible attack and we had a massive reaction to it and we probably committed more resources to it than were really necessary to respond to the issue. We haven't had that incident in cybersecurity yet, and hopefully we won't. But if we look at online fraud and crime, we're talking a drain of tens of billions of dollars on the the U.S. economy. Look at that and compare it to the costs of what we're spending in Afghanistan. It's equal to what we're spending to everything we use to fund NASA, NIST, Energy and a bunch of other agencies. That's a big bundle of money that's going into the pockets of criminals.
Fisher: The cybercrime problem seems to really have gotten out of control in the last year or so. As you said, there's a lot of money involved these days. Obviously the FBI and other agencies are working on it, but it seems like the scope is too big for even them.
Spafford: Think about it in the context of the Mexican drug problem. A couple of years ago, Mexico didn't have much of a problem because all of the drugs were going north and Mexico was just a conduit. Now, their whole police structure is compromised. They're bringing in the army. They're staging gun battles in the streets with drug gangs. They just allowed it to go on too long. And that's a worry that many of us have [about cybercrime]. The problem is that you're institutionalizing it and allowing a criminal element to get established. How far away might we be from a criminal group extorting a government for money? Who would be responsible for responding? It's not a military problem. I don't think people are weighing the cost benefit and are thinking in terms of these problems. How do we know this hasn't been happening already? People are looking at narrow problems in their jurisdictions. No one looks at the big picture. They say it's too expensive to address the whole problem or that these attacks can't happen or won't happen. None of those is a good answer.
Gary McKinnon Challenges Extradition
Lawyers say new evidence shows computer hacker Gary McKinnon could not survive US prison system
Lawyers acting for the computer hacker Gary McKinnon today lodged papers for a fresh high court challenge to stop him being sent for trial in the US.
Last month the home secretary, Alan Johnson, wrote a letter ordering McKinnon's removal to the US on charges of breaching US military and Nasa computers, despite claims by his lawyers that extradition would make the 43-year-old's death "virtually certain".
"The secretary of state is of the firm view that McKinnon's extradition would not be incompatible with his [human] rights," said the letter, dated 26 November. "His extradition to the United States must proceed forthwith."
A judge will now decide whether there is an "arguable case" that should go to a full hearing.
McKinnon's solicitor Karen Todner said new evidence showed that McKinnon was suicidal and could not survive the American prison system.
After the home secretary's decision in November, Todner had said she planned to start a judicial review of the home secretary's decision. "We cannot give up because in some ways it's like dealing with a death row case, and we genuinely believe Gary's life is at stake here," she said.
McKinnon, from north London, was accused in 2002 of using his home computer to hack into 97 American military and Nasa computers, causing damage that the US government claims will cost more than $700,000 (£425,000) to repair.
Globalizing the Fight Against a Hostile Internet
During my visit to Moscow last week, Kaspersky Lab CEO Eugene Kaspersky waxed poetically about the need for a global law enforcement agency to police the Internet against criminals and hackers. In his estimation, the Internet never will be free of threats so long as hackers are able to launch attacks against international targets from safe havens in their home countries.
Kaspersky isn't the only security executive calling for such an international cyber-security agency. McAfee CEO Dave DeWalt told partners and customers at his company's Focus conference in October that more international cooperation and a global police force is needed to combat the rising tide of threats and attacks against every aspect of the digital world.
It's ironic that Kaspersky, a Russian, would call for the creation of cyber-police when his own government opposes the notion of cross-border jurisdiction of hackers and cyber-criminals, as called for in the European Cybercrime Treaty.
But Kaspersky and DeWalt are essentially correct in that most successful hackers perpetrate their crimes not against domestic targets but rather against targets in other countries that would have a hard time—if any chance at all—of prosecuting suspected cyber-criminals. Consider the case of Gary McKinnon, the British citizen accused of hacking dozens of U.S. Navy systems in pursuit of UFO evidence. He was traced and caught in 2002 and is currently under indictment by U.S. authorities, but remains on British soil as he continually challenges extradition. (Last week, McKinnon lost his latest round, but his lawyers plan another appeal, saying he wouldn't survive the U.S. prison system.)
Even if local authorities are willing to investigate and prosecute cyber-crimes, many countries' domestic laws are inadequate to the task. Think back nearly a decade to what remains the worst computer virus to ever hit the Internet - LoveLetter. Onel de Guzman, a computer science student in the Philippines, “accidentally” released the virus, and within 24 hours it was infecting tens of millions of Internet-connected machines. The amateurish code made tracking the virus to its source relatively easy, but de Guzman walked free because he hadn't broken any of the existing laws.
Over the weekend, the Obama administration reversed U.S. policy and opened dialogue with Russia on curbing the militarization of the Internet. The talks, which Russia has been proposing for several years, would limit nations from developing offensive weapons in cyber-space and aim to curb rogue, terrorist use of the Internet for disrupting commerce and communications. (It's kind of ironic that these talks are happening, since the original Internet was designed by the U.S. military as a redundant communications system in the event of nuclear war.) These talks, some observers say, could lead to an international cyber-crime treaty.
Is there a model in which governments could root out hackers and cyber-criminals without violating sovereignty? In the U.S. such a model exists between states prosecuting child pornographers. Several states, such as Connecticut, require computer technicians to report evidence of child porn and other malicious materials. A similar model could be employed in which governments deputize security solution providers, VARs, hosting companies and ISPs to find, report and, in some cases, investigate hacking and criminal activity. It would then be up to prosecutors to press charges locally or allow extradition.
So the question is this: Would you be willing to be a deputy sheriff in the global effort to police hacking?
Insurgents Hack U.S. Drones
$26 Software Is Used to Breach Key Weapons in Iraq; Iranian Backing Suspected
Siobhan Gorman, Yochi J. Dreazen and August Cole
Militants in Iraq have used $26 off-the-shelf software to intercept live video feeds from U.S. Predator drones, potentially providing them with information they need to evade or monitor U.S. military operations.
Senior defense and intelligence officials said Iranian-backed insurgents intercepted the video feeds by taking advantage of an unprotected communications link in some of the remotely flown planes' systems. Shiite fighters in Iraq used software programs such as SkyGrabber -- available for as little as $25.95 on the Internet -- to regularly capture drone video feeds, according to a person familiar with reports on the matter.
U.S. officials say there is no evidence that militants were able to take control of the drones or otherwise interfere with their flights. Still, the intercepts could give America's enemies battlefield advantages by removing the element of surprise from certain missions and making it easier for insurgents to determine which roads and buildings are under U.S. surveillance.
The drone intercepts mark the emergence of a shadow cyber war within the U.S.-led conflicts overseas. They also point to a potentially serious vulnerability in Washington's growing network of unmanned drones, which have become the American weapon of choice in both Afghanistan and Pakistan.
The Obama administration has come to rely heavily on the unmanned drones because they allow the U.S. to safely monitor and stalk insurgent targets in areas where sending American troops would be either politically untenable or too risky.
The stolen video feeds also indicate that U.S. adversaries continue to find simple ways of counteracting sophisticated American military technologies.
U.S. military personnel in Iraq discovered the problem late last year when they apprehended a Shiite militant whose laptop contained files of intercepted drone video feeds. In July, the U.S. military found pirated drone video feeds on other militant laptops, leading some officials to conclude that militant groups trained and funded by Iran were regularly intercepting feeds.
In the summer 2009 incident, the military found "days and days and hours and hours of proof" that the feeds were being intercepted and shared with multiple extremist groups, the person said. "It is part of their kit now."
A senior defense official said that James Clapper, the Pentagon's intelligence chief, assessed the Iraq intercepts at the direction of Defense Secretary Robert Gates and concluded they represented a shortcoming to the security of the drone network.
"There did appear to be a vulnerability," the defense official said. "There's been no harm done to troops or missions compromised as a result of it, but there's an issue that we can take care of and we're doing so."
Senior military and intelligence officials said the U.S. was working to encrypt all of its drone video feeds from Iraq, Afghanistan and Pakistan, but said it wasn't yet clear if the problem had been completely resolved.
Some of the most detailed evidence of intercepted feeds has been discovered in Iraq, but adversaries have also intercepted drone video feeds in Afghanistan, according to people briefed on the matter. These intercept techniques could be employed in other locations where the U.S. is using pilotless planes, such as Pakistan, Yemen and Somalia, they said.
The Pentagon is deploying record numbers of drones to Afghanistan as part of the Obama administration's troop surge there. Lt. Gen. David Deptula, who oversees the Air Force's unmanned aviation program, said some of the drones would employ a sophisticated new camera system called "Gorgon Stare," which allows a single aerial vehicle to transmit back at least 10 separate video feeds simultaneously.
Gen. Deptula, speaking to reporters Wednesday, said there were inherent risks to using drones since they are remotely controlled and need to send and receive video and other data over great distances. "Those kinds of things are subject to listening and exploitation," he said, adding the military was trying to solve the problems by better encrypting the drones' feeds.
The potential drone vulnerability lies in an unencrypted downlink between the unmanned craft and ground control. The U.S. government has known about the flaw since the U.S. campaign in Bosnia in the 1990s, current and former officials said. But the Pentagon assumed local adversaries wouldn't know how to exploit it, the officials said.
Last December, U.S. military personnel in Iraq discovered copies of Predator drone feeds on a laptop belonging to a Shiite militant, according to a person familiar with reports on the matter. "There was evidence this was not a one-time deal," this person said. The U.S. accuses Iran of providing weapons, money and training to Shiite fighters in Iraq, a charge that Tehran has long denied.
The militants use programs such as SkyGrabber, from Russian company SkySoftware. Andrew Solonikov, one of the software's developers, said he was unaware that his software could be used to intercept drone feeds. "It was developed to intercept music, photos, video, programs and other content that other users download from the Internet -- no military data or other commercial data, only free legal content," he said by email from Russia.
Officials stepped up efforts to prevent insurgents from intercepting video feeds after the July incident. The difficulty, officials said, is that adding encryption to a network that is more than a decade old involves more than placing a new piece of equipment on individual drones. Instead, many components of the network linking the drones to their operators in the U.S., Afghanistan or Pakistan have to be upgraded to handle the changes. Additional concerns remain about the vulnerability of the communications signals to electronic jamming, though there's no evidence that has occurred, said people familiar with reports on the matter.
Predator drones are built by General Atomics Aeronautical Systems Inc. of San Diego. Some of its communications technology is proprietary, so widely used encryption systems aren't readily compatible, said people familiar with the matter.
In an email, a spokeswoman said that for security reasons, the company couldn't comment on "specific data link capabilities and limitations."
Fixing the security gap would have caused delays, according to current and former military officials. It would have added to the Predator's price. Some officials worried that adding encryption would make it harder to quickly share time-sensitive data within the U.S. military, and with allies.
"There's a balance between pragmatics and sophistication," said Mike Wynne, Air Force Secretary from 2005 to 2008.
The Air Force has staked its future on unmanned aerial vehicles. Drones account for 36% of the planes in the service's proposed 2010 budget.
Today, the Air Force is buying hundreds of Reaper drones, a newer model, whose video feeds could be intercepted in much the same way as with the Predators, according to people familiar with the matter. A Reaper costs between $10 million and $12 million each and is faster and better armed than the Predator. General Atomics expects the Air Force to buy as many as 375 Reapers.
Adobe Warns of Reader, Acrobat Attack in the Wild
Adobe is investigating new reports that hackers are attacking a previously unknown bug in the latest version of the company's Reader and Acrobat software.
"This afternoon, Adobe received reports of a vulnerability in Adobe Reader and Acrobat 9.2 and earlier versions being exploited in the wild," Adobe wrote in a post to its Product Security Incident Response Team (PSIRT) blog Monday afternoon. "We are currently investigating this issue and assessing the risk to our customers."
Adobe had few details on the reported problem. "As soon as we have additional details, we will update the PSIRT blog," a spokeswoman said in an e-mail message.
Adobe learned of the attack on Monday, said Brad Arkin, Adobe's director of product security and privacy. "Three different partners in the security community shared samples of the same attack with us within a few minutes of each other this afternoon," he said via instant message.
The criminals are exploiting this flaw by sending malicious PDF files to victims, according to the volunteer-run malware tracking group Shadowserver.
"This is legit and is very bad," Shadowserver said in a post to its Web site late Monday. Shadowserver could not be reached immediately for comment.
Shadowserver said that several "tests have confirmed this is a 0-day vulnerability affecting several versions of Adobe Acrobat [Reader] to include the most recent versions of 8.x and 9.x. We have not tested on 7.x, but it may also be vulnerable."
The attack has been used by cybercriminals since at least Friday, but has not seen any widespread use, Shadowserver said. "Expect the exploit to become more wide spread in the next few weeks and unfortunately potentially become fully public within the same timeframe."
Most antivirus products do not yet detect the attack, Shadowserver noted.
With Reader and Acrobat installed on most of the world's PCs, the products have become an increasingly attractive target for computer hackers who take advantage of flaws in the system to run unauthorized programs on victims' PCs.
Holy Bouncing Autonomous Intelligent Botnets Batman
Thought that 2009 was the year that botnets died, well think again Batman, it was actually the year they bounced back. Compromised computers were responsible for distributing 83.4% of the 107 billion spam messages sent around the world, every single day, during 2009 according to a new Symantec report.
Indeed, the Symantec MessageLabs Intelligence 2009 report suggests that the shutdown of botnet hosting ISPs such as McColo towards the end of 2008 and Real Host in August this year didn't destroy the botnet threat but rather simply made those behind them re-evaluate and enhance command and control backup strategies so as to be able to recover from damage in hours rather than weeks.
Symantec predicts that botnets will become autonomous intelligent, with each node containing an inbuilt self-sufficient coding in order to coordinate and extend its own survival, during the course of 2010.
Cutwail, Mega-D, Rustock and handful of other botnets already have control of upwards of five million compromised computers. Cutwail alone was responsible for issuing 29% of all spam, that's 8,500 billion individual spam messages, between April and November 2009.
Cutwail also distributed the Bredolab Trojan dropper, disguised in the form of a .ZIP file attachment, designed to give the sender complete control of the target computer which then could be used to deploy other botnet malware, adware or spyware onto the victim’s computer. It is estimated that during the month of October, some 3.6 billion Bredolab malware emails were in circulation.
"2009 was the year that the threat landscape sharpened its skills, rather than just relying on large spam runs and malware attacks. We intercepted more variants with increased sophistication, efficiency as well as improvements in technology" said Paul Wood, MessageLabs Intelligence Senior Analyst, Symantec. "We stopped more than 21 million different types of spam campaigns in 2009, more than twice the amount seen in 2008, and saw a 23 percent increase in malware variants year-on-year. The significant increases suggest that, thanks to the increased availability of specialized criminal toolkits, it was easier to create, distribute and use spam and malware than ever before".
10 Years After Y2K -- Stories From the IT Battlegrounds
"This really could have screwed up our lives, and you know, a whole bunch of little geeks saved us."
- Paul Saffo. Director of the Institute for the Future in Menlo Park, California, in an interview with American RadioWorks
It was a fear fest of epic proportions. Magazine headlines predicted that the end of the world would shortly befall us. They told harrowing tales of feral computer systems going awry the minute the clock struck midnight on January 1st, 2000--planes would fall from the sky, power grids would fail, the global economy would crash, nuclear power plants would go into meltdown mode, lines of communication would be cut, and the contents of bank accounts would vanish.
"I cannot be optimistic...It's clear we can't solve the whole problem, so we have to allow some systems to die so mission-critical systems can work... Pay attention to the things that are vulnerable in your life and make contingency plans.... Don't panic, but don't spend too much time sleeping, either."
- Senator Robert Bennett, then-Chairman of the Senate's Special Committee on the Year 2000 Problem, Y2K Citizens Action Guide
The cause of all this excitement was the purported Y2K bug. In response to dealing with computers that were about as capable as the iPhone, programmers prided themselves on being thrifty with their code to ensure it didn’t stress memory or capacity. One way to do this was to skip putting a “19” in front of the year and use only the last two numerals. And why not? These programs would be long retired by the time 2000 rolled around.
However, not only were many expired programs, operating systems, and applications still chugging away as 2000 crept around the corner, they were also running critical systems like power grids, government agencies and financial systems, hospitals and airports, elevators and public transportation. And so, the race was on to fix the code before the bug bit.
Often the fix was a simple patch, but in some cases, programmers struggled to figure out what little time bombs lurked in ancient and undocumented code. Around the world, attempts to squash the bug are estimated to have cost over $300 billion.
Mac users were mostly immune as the system software was programmed to accept dates as far into the future as 29940. Assuming third-party applications didn’t go nuts, Macs would be fine. Apple happily pointed this out by airing a commercial during the 1999 Superbowl featuring the poster boy for naughty computers, Space Odyssey’s HAL.
At the time, Apple's "acting chief executive" Steve Jobs had issued a statement saying: "HAL is the perfect spokesperson to address the Y2K issues because he lives in the year 2001 and speaks from experience. Plus, HAL is the foremost expert on things that can go wrong with computers."
As the big day drew closer, gas masks, radiation kits, safes and water purification systems were hawked in magazine ads and late night commercials. People even began to horde survival supplies. An October 15, 1998 story in the New York Times shared the results of a poll stating that “10 percent of the nation's top executives are stockpiling canned goods, buying generators and even purchasing handguns.” Ominous quotes from experts seemed to indicate that life as we knew it might cease to exist for awhile.
"Suddenly, those individuals who have insisted that they will be withdrawing all their cash from the bank before the end of the year do not seem quite so misguided. The prospect of the millennium bug eating your savings may be more than just the nightmare of overactive imaginations. At a meeting in Washington recently, delegates were stunned to hear Henry Kissinger announce that he intended to withdraw all his money from the bank as 2000 nears."
- The Times, London, March 20th, 1999
But 1/1/2000 arrived and nothing dire happened. Perhaps enough code was fixed in time, perhaps the whole thing was insanely overhyped. Probably both. Even those who were on the frontlines of Y2K lunacy disagree about what might have happened. This is how they remember it.
What's All the Fuss About?
I'd like you to do me a favor. Get a steaming mug of coffee, herbal tea, or whatever beverage puts you in that relaxed, contemplative mood. Now close your eyes and drift back in time with me to early Spring of the year 1998. William Jefferson Clinton occupies the Oval Office, Dale Earnhardt still dominates NASCAR, Denver dethroned Green Bay in the Super Bowl, the U.S. unemployment rate is 4.3%, and the federal budget is enjoying a rare $70 billion surplus. Life is, all things considered, good.
Fade in on a second floor conference room of the John Wesley Powell federal building on Sunrise Valley Drive in Reston, Virginia, headquarters for the U.S. Geological Survey. Around the table sit a half dozen (mostly) somber business casually-dressed technical types. The urgent mission that has brought them together is a discussion of the threat posed by and mitigation strategies for the impending Y2K disaster, looming a scant twenty months into a forbidding future.
Speculation has been rampant, even this far from the target date. Voices of doom permeate the airwaves, print, and cyberspace. Aircraft will tumble, willy-nilly, from the skies. Trains will crash headlong into one another at high speed. Satellites will cease to communicate. Bank accounts will be drained. Personal information will be lost forever, or exposed for all to see. Twenty-four times, at the top of every hour, on average a little over 4% of the world's computers will freeze up or begin to spit out random nonsense as midnight processes along its inexorable westward path.
The damage, the carnage, the impact on humanity will be horrifying. Society's misguided reliance on doped silicon semiconductors will lead to our downfall. All is lost. Cash in your 401(k) now and spend it all on Friends laserdiscs before Y2K drags us clawing and screaming into the slavering jaws of oblivion.
One by one, the grim-faced custodians of the information systems that help guard our nation against a plethora of natural hazards--flood, volcanoes, earthquakes, invasive species, and more--give their candid assessments of the situation. The prognoses are poor. There is no cost-effective way to dodge the Y2K demon. Large-scale models are being created to simulate the event and ameliorate the consequences to whatever degree possible, but no one really knows what will happen on that fateful day. As we go around the table, administrators of the agency's thousands of Windows NT4 and 3.1 machines shake their ashen-countenanced heads at the terrifying uncertainty presented by this technological monster. Finally, it is my turn to report. I’m the Y2K coordinator for the Telecommunications Services Branch of the Office of Program Support at USGS HQ
I am reading ;Login: magazine and don't hear my name called the first time. They try again, with more stridency.
I look up, eyebrows raised questioningly. "Please give the Y2K status for the Telecommunications Services Branch," the facilitator commands.
I clear my throat. "We have two Sun 4500 clusters and about 250 Data General AViiON workstations. All of them are running some flavor of UNIX, whose designers intelligently provided the date function 32 bits to work with while Bill Gates was still mucking about in prep school. At 03:14:07 UTC on Tuesday, 19 January 2038, when this issue has some relevance to TSB, I will be long retired and quite possibly dead. I really don't see any good reason to make a fuss over it at this point. End of report."
And that, dear children, is how I got excused/banned from all future meetings.
Robert G. Ferrell is still an Information Systems Security Professional for the US Government and, ironically, now writes the /dev/random column for ;Login: magazine.
A High Stress Non Event
I was one of the senior network engineers at Long Beach Memorial hospital in Los Angeles. We had five hospitals in our circle of responsibilities. Long Beach which was the home site, Orange Coast, Anaheim, Saddleback and Miller's Children's Hospital. Plus there were many small offices, labs and remote sites that "kinda of sort of" fell under our roof.
There was a very chaotic assortment of very old software and new software with a lot of it falling between the two extremes. One of our oldest applications was the surgery scheduling software which ran on even then "old" Netware 3.1 servers using Btrieve. This was akin to a "made in the garage" application and was not well supported even in the best of times. This was not the best of times.
We had new software down in Radiology where they were using high speed networks to digitize and read x-rays etc remotely. Not to mention all the odd appliances like routers, switches, print servers, neonatal data transponders, wireless, security systems and so on. And I'm not even counting all the COBOL applications that had been custom written by long past employees or consultants, DOS, Visual Basic apps, home brew Access Databases and yes, the rogue server or two. Or three…or four.
In a word, messy.
We spent over a year and a lot of effort trying to identify problem apps and put fixes in place either from the vendors or hacking it ourselves in the case of the unsupported applications. The idea was make this as much of a non-event as we could.
When it came time for the actual roll over, all IT staff were required to be on site, not on call, be ON SITE which really tweaked more than a few spouses. In my department, we had our own itty bitty party and we got to see the fireworks from the Queen Mary from a parking structure.
Right after 9PM we got a call from a sister facility back east saying one of their business scheduling apps died on the stroke of midnight. We used this same application, as did many other facilities, and we got calls as each time zone rolled over. Since it was a business app, I did not have anything to do with it. I was much more worried about my servers and network hardware. Happily midnight came and went and all my stuff was running fine. There were some instances where the date got jacked up but the firmware still ran even though the log files were nuts insisting it was 1961 or other silly things like that.
In the end, Y2K was a high stress non-event for most of the IT staff at all our facilities.
Mike Sweeney is now a Network Security Manager at an undisclosed location.
Beanie Babies And Tulip Wars
(Note: Mac|Life changed two names in the story below to protect the ignorant)
Prior to joining True North at the end of 1998 (now InterPublic Group), which is the largest ad agency in the world, I was the CIO of Fallon McElligott, a much smaller ad agency.
Fallon's CFO, Mr. X, and I began the "Y2K is like the Tulip Craze of the 1600s" war. My argument was that Y2K was just an end of the millennia mania, much like the Beanie Babies at the current time and the Dutch Tulipmania of 1633. All hype and not much reality. I argued that Beanie Babies were as worthless as the Dutch Tulip bulbs and in the same vein, Y2K would come and go with as many or as little problems as every other year. Mr. X, being a member of the bow-tie wearing, afraid of everything crowd, thought that Y2K would cause everything from elevator stoppages to airplanes falling out of the sky. I remember asking if he was related to Chicken Little. I was summarily let go from Fallon, only to "fail up" to being named the CIO of the world's largest ad agency.
There I fell in with a much more enlightened crowd -- at least at the level of Management Executive Committee, or MEC (which was comprised of the CEO, the CEOs of the 14 major holding companies, the CFO, Chief Legal Officer, and myself). When I came on board at True North, the Y2K plan was like any other. We had the requisite letter-to-the vendors campaign (asking what they were doing), review of all software and OS configurations, and review of our Unix mainframe code.
Because we were an ad agency, many of the thousands of computers were Macintoshes. No problems there. Many were PCs, and Microsoft was already addressing any patches there. That left outside vendors, physical plants, and our Unix mainframe. A quick call to the mainframe guys told me the one thing I needed to know -- if there was going to be a glitch, they'd catch it the day after, patch it, and we'd be back billing just fine. Besides, if someone doesn't get a bill for a couple of days, it wouldn't kill us.
An hour or two of research on my part found that:
1. International monetary float would not be affected -- no international financial downside to any Y2K problems
2. Nobody would be billing the first few days after the 1st of the year anyway -- no world-wide downside to any Y2K problems
3. Our ad system (the system that runs ads on more TVs, print, and radio than you'd ever expect worldwide) was always pre-bought anyway, and I was assured by all TV stations that "every ad would run, even if we have to manually push a button" -- no client problems there, even if Y2K did go crazy.
In short, if we could bill, and we could put client product out the door -- who cared what else would happen? Well, that was the logic that the MEC shared with me.
Then I started to meet the IT team. Our CTO wannabe, Mr, Z, was convinced, much like Mr. X back at Fallon, that the sky was going to fall down."Microsoft is going to have more holes than Swiss Cheese" he would run around saying.
Our EDS contractor thought that his letter campaign would help any liabilities (at $150 an hour on his part). Our security guys thought that someone would find some date-based loophole to break into our systems. Our physical security guys wanted signs on all elevators saying "do not enter on 12/31/99 unless you want to be here for awhile." My own IT-CFO (my budget was in the high tens of millions) thought that every billing system we had would fail. I had found Mr. X’s missing flock of Chicken Littles.
To ease everyone's nerves, I promised not to do anything "radical" until we convened my own CIO's council, made up of all of the holding company CIOs and the national CIOs. Over 100 people. We all met in Chicago at the beginning of 1999. Think over 100 Chicken Littles. Squawking in 40 to 50 languages that the sky was going to fall.
I couldn't believe it.
It took me until June to convince my own IT staff to transfer the EDS $150 per hour letter-writer to the legal side of the house so I could fire him.
I had to permanently assign my CTO wannabe to the Unix mainframe programmers (after taking them out for a great Steak and Wine dinner in NYC and promising that I'd make it up to them) so that he could randomly test any code with dates in it. We purposely set up the tests for twice a month because there were really only about a dozen or so places where a date could be entered. We figured that would keep him busy until at least December 15th and they only had to deal with him twice a month.
I even had to acquiesce (because of the rabid IT leadership complainers) to sending out an "international testing task force" to review all of the Y2K binders in each country and at each of the major holding companies. A wry note here -- I noticed in the travel bills that no one went to countries like Canada, Mexico, Bolivia, Congo or Ethiopia for testing. Of course the UK, France, Italy, Australia, Japan, Brazil and China; i.e., the "fun" places were visited.
In short, I slashed the Y2K budget as much as possible. I would have killed it all had I been given the chance.
By August the IT betting pool had me being "canned for short sited Y2K stupidity" at 2-1 odds.
By October they upped the odds to 4-1. I took the bet.
By November my CTO wannabe was writing "an official memoranda for posterity" and sending it to the head of HR and Legal that I should be canned for "Y2K Ostrich-like behavior". And he had additional signatures.
The odds were now 6-1 against my making it to December 1st.
However, our security analyst stopped staring at the sky and he convinced our IT CFO (who liked the "savings compared to our peers"), telephony, and physical plant staff to do the same.
December 1st rolled around and the CEO and I had dinner on that night just for laughs (and to show support that leadership wasn't falling for any of the complaints). December 15th rolled around and the odds makers were now betting "for" me. I hedged my bet just in case.
December 31st I held a party at my house in Chicago for anyone in IT leadership who wanted to attend. My CTO was at our HQ's call center "just in case." At "minutes after midnight" in every country in the world, I would get a phone call saying "all is fine". I told the CEO that by the time it hit Chicago, if I was still sober, I'd call him. About the time the fireworks on Lake Michigan died off, I called the CEO. I was semi-sober. He wasn't even close.
When we got back to work I shipped everyone who had complained about my Y2K attitude a little "Clucky the Chicken" Beanie Baby and a Tulip Bulb (paid for by the big payoff on the bet I wouldn't be canned). Most didn't get the joke.
Every December when I plant my Tulip bulbs here in California, I can't help but laugh.
Dorian J. Cougias is now the founder and Lead Analyst of Network Frontiers and is the co-creator of the Unified Compliance Framework.
Tiny Parachutes for Sale
What really stands out in my mind about Y2K all these years later was the overriding unreasonable expectation of what could happen rather than what actually happened.
Starting in about 1998 there were suddenly so many people who knew nothing about programming and next to nothing about technology explaining frantically why the Y2K bug was important and that programmers like myself really needed to pay attention to it. We were aware, thank you. I remember working on Y2K issues in 1981 for a product that was off the market long before 2000.
I equated it to being in an airplane in bumpy weather. It’s then you wonder how good the pilot is. If you start screaming, “I wonder if the pilot knows about this” I’ll bet you could sell parachutes (even tiny ones that don’t work will help people overcome the fear you instilled). There was a lot of money made on Y2K, some of it was put to good use.
But what everyone missed during the whole Y2K debacle is that your life depends on programmers honesty, intelligence and diligence. Yes, your life. That was true in 1999, it’s still true and everyone still misses the point.
Geoffrey Feldman is now a software developer and senior problem solver at Seabase Consulting.
We Learned Nothing
We were hearing that Y2K was the end of the world, computers would crash, critical systems would fail, planes would fall out of the sky and we’d swiftly devolve to, at best, a pre-industrial age lifestyle. The newspapers were filled with stories about how people were building bomb shelters and stocking up on water and canned goods.
And then Y2k happened but there was no meltdown because we fixed the issues beforehand.
There were some minor problems around the world, passwords that thought they were expired, programs that figured their licensing period was up -- but no major issues. It made some people wonder if the superbug that they first created and then they fixed was worth all that money. Some people point to it as a problem that didn't exist. It existed, and we did a good job of fixing it.
At the time I was dealing with Y2K planning for several years at IBM as a Development Manager and Certified IT Architect, focusing on their products and customers’ systems. IBM was taking Y2K quite seriously as far back as 1995. We had a local conversion center with more than 1,000 professionals working with IBM mainframe systems to solve the customers Y2K problem.
I saw many IT executives inflating their budgets, under the umbrella of preparing for Y2K issues. This was the only time that I remember when IT executives were strongly encouraged to spend money. Suddenly there was a way to get the hardware and software you needed or wanted if you used Y2K to justify it. And as anxiety levels ramped up once the general public started hearing about Y2K you could justify buying almost anything by chanting those magic three letters.
There was definitely a lot of cynicism after the fact, and some of it was justified.
The whole thing reminded me about how important computers had become in our daily lives and how a small problem could have really big consequences. It sharpened my focus on doing quality work. Overall though, we really learned nothing because only failure teaches.
It was one of the only times in recent memory that the world has come together and spent a ton of money and time to prevent disaster. We can't seem to do this now with other impending crises like dangerous economic bubbles, resource scarcity and climate change. I guess it’s because those deadlines can’t be clearly marked on a calendar.
Ulf Mattsson is now the CTO at Protegrity.
Rockyou.com Exposed More than 32 Millions of Passwords in Plaintext
So i was reading this shit about how some lol company Imperva found a SQLi on Rockyou.com. Yea, right, you’re the best. Too late guys, too late. I’ve got every account downloaded from this shitty site. You were too slow, but what can i expect from you?
There is 32 603 388 customers. Pretty nice list with plain text passwords. It’s so lame, and I’m sure that more than half does work for myspace and other sites.
Don’t lie to your customers, or i will publish everything
Viruses That Leave Victims Red in the Facebook
It used to be that computer viruses attacked only your hard drive. Now they attack your dignity.
Malicious programs are rampaging through Web sites like Facebook and Twitter, spreading themselves by taking over people’s accounts and sending out messages to all of their friends and followers. The result is that people are inadvertently telling their co-workers and loved ones how to raise their I.Q.’s or make money instantly, or urging them to watch an awesome new video in which they star.
“I wonder what people are thinking of me right now?” said Matt Marquess, an employee at a public relations firm in San Francisco whose Twitter account was recently hijacked, showering his followers with messages that appeared to offer a $500 gift card to Victoria’s Secret.
Mr. Marquess was clueless about the offers until a professional acquaintance asked him about them via e-mail. Confused, he logged in to his account and noticed he had been promoting lingerie for five days.
“No one had said anything to me,” he said. “I thought, how long have I been Twittering about underwear?”
The humiliation sown by these attacks is just collateral damage. In most cases, the perpetrators are hoping to profit from the referral fees they get for directing people to sketchy e-commerce sites.
In other words, even the crooks are on social networks now — because millions of tightly connected potential victims are just waiting for them there.
Often the victims lose control of their accounts after clicking on a link “sent” by a friend. In other cases, the bad guys apparently scan for accounts with easily guessable passwords. (Mr. Marquess gamely concedes that his password at the time was “abc123.”)
After discovering their accounts have been seized, victims typically renounce the unauthorized messages publicly, apologizing for inadvertently bombarding their friends. These messages — one might call them Tweets of shame — convey a distinct mix of guilt, regret and embarrassment.
“I have been hacked; taking evasive maneuvers. Much apology, my friends,” wrote Rocky Barbanica, a producer for Rackspace Hosting, an Internet storage firm, in one such note.
Mr. Barbanica sent that out last month after realizing he had sent messages to 250 Twitter followers with a link and the sentence, “Are you in this picture?” If they clicked, their Twitter accounts were similarly commandeered.
“I took it personally, which I shouldn’t have, but that’s the natural feeling. It’s insulting,” he said.
Earlier malicious programs could also cause a similar measure of embarrassment if they spread themselves through a person’s e-mail address book.
But those messages, traveling from computer to computer, were more likely to be stopped by antivirus or firewall software. On the Web, such measures offer little protection. (Although they are popularly referred to as viruses or worms, the new forms of Web-based malicious programs do not technically fall into those categories, as they are not self-contained programs.)
Getting tangled up in a virus on a social network is also more painfully, and instantaneously, public. “Once it’s delivered to everyone in three seconds, the cat is out of the bag,” said Chet Wisniewski of Sophos, a Web security firm. “When people got viruses on their computers, or fell for scams at home, they were generally the only ones that knew about it and they cleaned it up themselves. It wasn’t broadcast to the whole world.”
Social networks have become prime targets of such programs’ creators for good reason, security experts say. People implicitly trust the messages they receive from friends, and are inclined to overlook the fact that, say, their cousin from Ohio is extremely unlikely to have caught them on a hidden webcam.
Sophos says that 21 percent of Web users report that they have been a target of malicious programs on social networks. Kaspersky Labs, a Russian security firm, says that on some days, one in 500 links on Twitter point to bad sites that can infect an inadequately protected computer with typical viruses that jam hard drives. Kaspersky says many more links are purely spam, frequently leading to dating sites that pay referral fees for traffic.
A worm that spread around Facebook recently featured a photo of a sparsely dressed woman and offered a link to “see more.” Adi Av, a computer developer in Ashkelon, Israel, encountered the image on the Facebook page of a friend he considered to be a reliable source of amusing Internet content.
A couple of clicks later, the image was posted on Mr. Av’s Facebook profile and sent to the “news feed” of his 350 friends.
“It’s an honest mistake,” he said. “The main embarrassment was from the possibility of other people getting into the same trouble from my profile page.”
Others confess to experiencing a more serious discomfiture.
“You feel like a total idiot,” said Jodi Chapman, who last month unwisely clicked on a Twitter message from a fellow vegan, suggesting that she take an online intelligence test.
Ms. Chapman, who sells environmentally friendly gifts with her husband, uses her Twitter account to communicate with thousands of her company’s customers. The hijacking “filled me with a sense of panic,” she said. “I was so worried that I had somehow tainted our company name by asking people to check their I.Q. scores.”
Social networking attacks do not spare the experts. Two weeks ago, Lee Rainey, director of the Pew Internet and American Life Project, a nonprofit research group, accidentally sent messages to dozens of his Twitter followers with a link and the line, “Hi, is this you? LOL.” He said a few people actually clicked.
“I’m worried that people will think I communicate this way,” Mr. Rainey said. “ ‘LOL,’ as my children would tell you, is not the style that I want to engage the world with.”
Student Banned from U after Facebook Posts
Amanda Tatro was banned from campus because three instructors in the mortuary science program felt threatened after being made aware of her Facebook posts, prompting a police investigation.
The University of Minnesota mortuary science student was upset and angry after breaking up with her boyfriend, and told her Facebook friends that she was "looking forward to Monday's embalming therapy. ... Give me room, lots of aggression to be taken out with a trocar [a sharp surgical instrument used in embalming]."
Now she's banned from campus because three instructors in the mortuary science program felt threatened after being made aware of her Facebook posts, prompting a police investigation.
According to the police report, Amanda Tatro, 29, followed her first posting with one that read: "I still want to stab a certain someone in the throat with a trocar though. Hmmm ... perhaps I will spend the evening updating my 'Death List #5' and making friends with the crematory guy. I do know the code ..."
"Death List #5" is a reference to the movie "Kill Bill."
When Tatro got to class Monday, she was patted down and questioned by University of Minnesota police.
The instructors had shared their concerns with police, with one saying that she "did not feel comfortable having [the student] in the lab due to the remarks on Facebook," according to the police report.
Tatro told police that the posts were "just me venting," she said. "I got dumped, which is never a nice thing. I was bitter and really angry about it. For whatever reason, this professor took it personally."
Police are not filing charges and consider the matter closed, U spokesman Daniel Wolter said by e-mail.
Privacy law prevents the U from commenting on the specifics of Tatro's case, but Wolter said that "in a case such as this, the case is typically referred to our Office for Student Conduct and Academic Integrity, which will interview the student, review evidence and make some kind of finding."
It's hardly the first time a posting on the popular social media site has led to police being alerted. Nationwide, more dire threats have led to charges.
Because sometimes nothing’s cooler than high school,
when there isn’t enough drama at home.
Best Man Rigs Newlyweds' Bed To Tweet During Sex. Not Kidding.
When a man in the UK was asked to be the best man at his friend's wedding, he was touched. So touched, that he promised not to pull any pranks before or during the wedding. After the wedding though, that's another story.
This man, who is choosing to stay anonymous, has set up this Twitter account for the sole purpose of automatically tweeting when the newlyweds are having sex. I'm not kidding. Read the entire tweet stream from the bottom up if you want the full story. But basically, this guy was watching his friend's house while they went on their honeymoon and he placed a device under their mattress. This device, which is similar to the one found here, is a pressure-sensitive pad that tweets out when sexual activity starts, when it ends, the force of the "action," and a "frenzy" rating.
December 9 saw the first such action. This is the first report:
They?re on the job! #1 ¿ Action commenced at 12.21GMT. Weight: 84KG.
And then it was over ? 3 minutes later:
They?re off the job! #1 ? Action concluded at 12.24GMT. Duration: 3 m.15 s. Frenzy Index: 8 (scary). Judge?s Comment: "Is that it?"
But alas, that was just a test of the guy jumping on the bed to make sure it would work. It did. So the real first action is as follows:
They?re on the job! #2 ¿ Action commenced at 15.50GMT. Weight: 151KG.
22 minutes later:
They?re off the job! #2 ? Action concluded at 16.12GMT. Duration: 22 m.05 s. Frenzy Index: 4 (easy listening). Judge?s Comment: "Good work!"
Before everyone goes crazy over this, remember that all of this is being done anonymously. Neither the friend nor the couple are known. In fact, who knows if this is even real, and who cares, it's hilarious. Still, the man claims he will let his friend in on the fun soon. "What you will NEVER know is who they are. Or who I am.I figure I?ll tell my mate in due course that he?s had an audience.So spread the word!," writes the anonymous man. Consider it spread.
So why's he doing this? "BTW ¿ he stitched me up something rotten when he was my best man so I reckon this is reasonable payback ," he tweets.
Oh Twitter, the joys never end. What will they think of next?
Twitter Hacked by "Iranian Cyber Army"?
Micro-blogging site Twitter said its domain name system records were temporarily "compromised" Thursday night, but that the problem was fixed later.
Twitter.com was redirected for a while, but some applications were working, the company said on its blog.
Twitter was investigating the issue and would provide more information when available, it said.
According to media reports, the site was hacked for about two hours Thursday night by a group calling itself the "Iranian Cyber Army."
The group also hacked an Iranian opposition website, the reports said.
(Reporting by A.Ananthalakshmi in Bangalore)
Hackers Brew Self-Destruct Code to Counter Police Forensics
Hackers have released an application designed to thwart a Microsoft-packaged forensic toolkit used by law enforcement agencies to examine a suspect’s hard drive during a raid.
The hacker tool, dubbed DECAF, is designed to counteract the Computer Online Forensic Evidence Extractor, aka COFEE. The latter is a suite of 150 bundled, off-the-shelf forensic tools that run from a script. Microsoft combined the programs into a portable tool that can be used by law enforcement agents in the field before they bring a computer back to their forensic lab. The script runs on a USB stick that agents plug into the machine.
The tools scan files and gather information about activities performed on the machine, such as where the user surfed on the internet or what files were downloaded.
Someone submitted the COFEE suite to the whistleblower site Cryptome last month, prompting Microsoft lawyers to issue a take-down notice to the site. The tool was also being distributed through the Bit Torrent file sharing network.
This week two unnamed hackers released DECAF, an application that monitors a computer for any signs that COFEE is operating on the machine.
According to the Register, the program deletes temporary files or processes associated with COFEE, erases all COFEE logs, disables USB drives, and contaminates or spoofs a variety of MAC addresses to muddy forensic tracks.
The hackers say that later releases of the program will allow computer owners to remotely lock down their machine once they detect that it has fallen into law enforcement hands. The hackers, however, have not released source code for the program, which would make it easy for anyone to see if the program contains malware that might also harm a computer or allow the attackers to take control of it.
Update: The developers of DECAF have taken issue with Threat Level referring to them as hackers. “We’re just two developers who support the free flow of information and privacy,” one of them wrote Threat Level in an anonymous e-mail. “You could say we’re just average joes.”
Handing Tickets Out for God
We want to thank every media outlet, financial supporter, security expert, and forensic investigator that showed us support.
As you probably noticed, your copy of DECAF no longer works. We have disabled every copy of DECAF. We hope that as you realize this was a stunt to raise awareness for security and the need for better forensic tools that you would reconsider cutting corners on corporate security. Also, governments should not rely on a tool to automate the process of forensics but rather invest in the education of investigators and forensic tool experts. If we were able to assist every government agency in their computer crime investigations, we would. The problem is DECAF is just two people. As a security community at large, we need to band together and start relieving some of the burden off our government by giving back.
It also goes to show that if two people can make an impact as big as DECAF did; imagine how much positive we could all do together. Lately our media has been presenting many individual people (balloon boy, white house visitors, etc) who have been manipulating media outlets for selfish publicity in hopes of being "successful". The problem is that America has grown to be selfish, self-reliant, prideful, and a arrogant monster. We leave our marriages, neglect our kids, chase positions/status at work, chase materialistic property and only think of ourselves. In the mean time our whole country goes down the tubes.
These problems individuals are facing are not new. They are due to you trying to fill the void in your life with things of this world. Most everyone has bitter roots, some have been victimized, others are just neglected. You go through the woes of life with no life support.
I too would still be swallowed up in my prideful and selfish ways. I would still be with my addictive behaviors; womanizing, pornography, stealing, hacking, lieing, manipulating, and fighting. DECAF would have been a perfect way to feed my addictions. Instead I used it as a way to bring you a message. A message of freedom, a message of peace, a message of transparency and a message of unity. As you learn a little about me, understand I faced the same things I am speaking about. I didn't address the fruits of my life, I addressed the bitter roots of my life. Religion didn't do it for me. Catholicism didn't do it for me. Athiesm didn't do it for me. Agnostic didn't do it for me. Unity and education did it for me. Only one man gets credit for it. Jesus Christ. Once I learned Christ wasn't about that foolishness I seen on t.v. or seen in other "Christians", I realized I was missing the point. I couldn't look past the Christians to see the CHRIST. I accepted Him as my savior and then started putting Him in positions over my life. My life changed and yours can too. It was about relationship.
Romans 10:9 - "That if you confess with your mouth, "Jesus is Lord," and believe in your heart that God raised him from the dead, you will be saved."
Stay tuned for the release of the forum and if you are interested in joining, please send an email to email@example.com
Gizmodo Plagiarizes Blogger
So, I follow this great lighting blog JimOnLight.com and last week he did a great three part series on Christmas lights Part One, Part Two, Part Three. Jim put quite a bit of research and work into his piece, and I think that the finished article definitely shows that work.
However, it seems that Gizmodo doesn't value the work of hard working bloggers as much as the people who read said blogs. While the text isn't a direct copy, its pretty damn close. Gizmodo just found some new flickr images without Jim's watermark and removed the background on a few others to try.
Seriously guys, this makes me sick. I would expect this from some of the other Gawker properties or PerezHilton. Not Gizmodo. Maybe I should switch back to Engadget?
Microsoft Suspends Juku after Plagiarism Claims
Microsoft said it was temporarily suspending its MSN China microblogging site, Juku, as it investigates a complaint of plagiarism from a start-up, Plurk.
Microsoft is working with the MSN China joint venture to investigate the situation, the company said in a statement on its website.
In a blog post on Monday, Plurk, considered a rival to Twitter, said about 80 percent of the client and product codebase for Microsoft's Juku appears to be a copy of its own service.
"Plurk was never approached nor collaborated in any capacity with Microsoft on this service," Plurk said in the blog.
Microsoft launched MSN Juku, which was created with an independent vendor, in November, allowing users to find friends via microblogging and online games.
(Reporting by A.Ananthalakshmi in Bangalore; Editing by Lisa Von Ahn)
Best Buy, JVC, Samsung, More Hit With Lawsuit
The Software Freedom Law Center on Monday filed a copyright infringement suit against 14 top consumer electronics companies, including Samsung and JVC.
The Center, which represents free and open-source sofware (FOSS) developers, filed on behalf of the Software Freedom Conservancy and its BusyBox software application. The Conservancy says that it owns the rights to a license for a component found in products sold by the defendants.
Also named in the suit are Best Buy, Westinghouse Digital Electronics, Western Digital Technologies, Robert Bosch, Phoebe Micro, Humax USA, Comtrend Corp., Dobbs-Stanford Corp., Versa Technology, Zyxel Communications, Astak Inc., and GCI Technologies Corp.
Specifically, the suit references the GNU General Public License version 2 (GPLv2). The SFLC says that under the terms of the GPLv2, anyone can view, modify, and use the program for free on the condition that they distribute the source code to customers.
"We try very hard to resolve these types of issues privately with companies, as we always prefer cooperation" SFLC counsel Aaron Williamson said in a statement. "We brought this suit as a last resort after each of these defendants ignored us or failed to meaningfully respond to our requests that they release the source code."
Among the products named in the suit are Best Buy's Insignia Blu-ray DVD player, Westinghouse's TX-52F480S LCD HDTV, and the Western Digital WD TV HD Media Player.
The suit also takes aim at a JVC HDTV and IP network camera, a Bosch DVR, a Phoebe Micro wireless router and IP motion wireless camera, a Humax DVR, a Comtrend modem, a Dobbs-Stanford digital media player, a Versa Tech outdoor wireless access point, a Zyxel router, an Astak DVR, and a GCI digital music controller.
JVC said it does not comment on pending litigation. Best Buy, Samsung, Westinghouse, and Western Digital did not immediately respond to a request for comment.
The SLFC has sued six companies since 2007 for violations of the GPL, including Verizon and Cisco, and dealt with hundreds of compliance issues, the group said. "The vast majority of these matters usually end with violators voluntarily coming into compliance," according to the center.
"As embedded computer systems become more commonplace in everyday consumer electronics and more companies recognize the zero-cost licensing of Free Software over proprietary alternatives, it is more important than ever for manufacturers to learn to comply with the GPL," Bradley M. Kuhn, Conservancy's president and the SFLC's technology director, said in a statement.
The Killer App of 1900
It’s instructional to look back 100 years, not long after the first electrical generation plants were built to bring power to towns and cities, to assess the situation we find ourselves in with broadband availability today.
At the turn of the century, electricity was largely used for electrical lighting to replace gas lighting. Gas required distribution of a flammable substance all over a city, and wasn’t practical outside of dense, urban areas. Electrical power also needed to be distributed, but the generation source—coal or water—could be in one place.
A hundred years ago, lighting was the killer app for electricity, the thing that made it worthwhile to have installed. No one particularly understood what else electricity might bring to the mass market, because other uses were generally specialized, the province of experts, the wealthy, or industry. Compressors to allow refrigeration and freezing, electric heat, and other innovations came later to homes.
Arguments raged from the start of electrical power generation against municipal ownership of utilities, partly for practical reasons: Many early efforts around the world had led to huge debt and poor operations when cities got involved. But the experience wasn’t uniform, and neither was the quality of privately owned enterprises.
In researching a KUOW segment airing soon about the digital divide and Seattle’s particular problems with broadband, I found this marvelous statement from Oct. 24, 1905, in the Richmond, Virginia, Times-Dispatch newspaper. A lawyer named Henry Anderson was arguing on behalf of two clients of the city who didn’t want to be taxed to pay for a municipal utility. Among other arguments against municipal ownership, he said, eloquently:
The opinion of the lawyer wasn’t unusual, either: Electricity should go to people who had money, not hooked up willy-nilly to everyone. And why should a city support through tax dollars–regardless of the potential of repaying costs through revenue later—such universal availability?
Rural America, where 60 percent of the US population lived in 1900 and 45 percent by 1930, didn’t get electricity on any broad scale until the 1930s with FDR’s initiatives. Only 10 percent of rural homes had electricity in 1930; nearly half by 1945—at which point under 40 percent of Americans lived outside cities.
FDR powered the Tennessee Valley Authority and the Rural Electrification Administration, which were federally mandated to bring power, and which led to municipally owned entities many of which remain public today.
The argument FDR made was that the quality of life—and clearly the economic output—of rural Americans would suffer without electricity, which in the space of a few decades had become immensely profitable for private utilities, and an absolute necessity.
Undoubtedly, you see where I’ve been going with all this. Broadband in 2009 is electricity in 1900. We may think we know all the means to which high-speed Internet access may be put, but we clearly do not: YouTube and Twitter prove that new things are constantly on the way and will emerge as bandwidth and access continues to increase.
Like electricity, the notion of whether broadband is an inherent right and necessity of every citizen is up for grabs in the US. Sweden and Finland have already answered the question: It’s a birthright. Hong Kong, Japan, South Korea, and many European countries aren’t far behind in having created the right regulatory and market conditions to bring better and affordable broadband to a greater percentage of its citizens than in the US.
In Seattle, we’ll see how Mayor-Elect McGinn proceeds with a broadband plan cooked up under his predecessor (where it languished) that would let anyone in Seattle ask for and receive a fiber-optic hookup for Internet, TV, and voice at competitive rates to today’s slower and funkier cable and DSL services. (As I said in today’s Morning Fizz, I’m encouraged that McGinn has kept Nickels’ technology guy, Bill Schrier (the guy who came up with the plan), on board.)
The future of broadband for all is also in front of the FCC right now, with the commission soon to release recommendations about bringing broadband to all rates fast enough to support video, two-way communication, distance learning, entertainment, education, and telephony.
Interestingly, the FCC chair, Julius Genachowski, is thinking along the lines of electricity. The Washington Post says he’s reading Nicholas Carr’s book about the birth of electrical generation, The Big Switch, which I have not yet read.
The FCC head said recently, “Our electric grid was the platform for innovation that, as much as anything, helped propel the United States to global economic leadership in the 20th century. Our broadband grid has the potential to play the same role for the 21st century. Where we once had electricity-driven appliances, we now have information-fueled applications.”
Of course, maybe that’s only for those that can afford it.
AP Investigation: Monsanto Seed Biz Role Revealed
Confidential contracts detailing Monsanto Co.'s business practices reveal how the world's biggest seed developer is squeezing competitors, controlling smaller seed companies and protecting its dominance over the multibillion-dollar market for genetically altered crops, an Associated Press investigation has found.
With Monsanto's patented genes being inserted into roughly 95 percent of all soybeans and 80 percent of all corn grown in the U.S., the company also is using its wide reach to control the ability of new biotech firms to get wide distribution for their products, according to a review of several Monsanto licensing agreements and dozens of interviews with seed industry participants, agriculture and legal experts.
Declining competition in the seed business could lead to price hikes that ripple out to every family's dinner table. That's because the corn flakes you had for breakfast, soda you drank at lunch and beef stew you ate for dinner likely were produced from crops grown with Monsanto's patented genes.
Monsanto's methods are spelled out in a series of confidential commercial licensing agreements obtained by the AP. The contracts, as long as 30 pages, include basic terms for the selling of engineered crops resistant to Monsanto's Roundup herbicide, along with shorter supplementary agreements that address new Monsanto traits or other contract amendments.
The company has used the agreements to spread its technology — giving some 200 smaller companies the right to insert Monsanto's genes in their separate strains of corn and soybean plants. But, the AP found, access to Monsanto's genes comes at a cost, and with plenty of strings attached.
For example, one contract provision bans independent companies from breeding plants that contain both Monsanto's genes and the genes of any of its competitors, unless Monsanto gives prior written permission — giving Monsanto the ability to effectively lock out competitors from inserting their patented traits into the vast share of U.S. crops that already contain Monsanto's genes.
Monsanto's business strategies and licensing agreements are being investigated by the U.S. Department of Justice and at least two state attorneys general, who are trying to determine if the practices violate U.S. antitrust laws. The practices also are at the heart of civil antitrust suits filed against Monsanto by its competitors, including a 2004 suit filed by Syngenta AG that was settled with an agreement and ongoing litigation filed this summer by DuPont in response to a Monsanto lawsuit.
The suburban St. Louis-based agricultural giant said it's done nothing wrong.
"We do not believe there is any merit to allegations about our licensing agreement or the terms within," said Monsanto spokesman Lee Quarles. He said he couldn't comment on many specific provisions of the agreements because they are confidential and the subject of ongoing litigation.
"Our approach to licensing (with) many companies is pro-competitive and has enabled literally hundreds of seed companies, including all of our major direct competitors, to offer thousands of new seed products to farmers," he said.
The benefit of Monsanto's technology for farmers has been undeniable, but some of its major competitors and smaller seed firms claim the company is using strong-arm tactics to further its control.
"We now believe that Monsanto has control over as much as 90 percent of (seed genetics). This level of control is almost unbelievable," said Neil Harl, agricultural economist at Iowa State University who has studied the seed industry for decades. "The upshot of that is that it's tightening Monsanto's control, and makes it possible for them to increase their prices long term. And we've seen this happening the last five years, and the end is not in sight."
At issue is how much power one company can have over seeds, the foundation of the world's food supply. Without stiff competition, Monsanto could raise its seed prices at will, which in turn could raise the cost of everything from animal feed to wheat bread and cookies.
The price of seeds is already rising. Monsanto increased some corn seed prices last year by 25 percent, with an additional 7 percent hike planned for corn seeds in 2010. Monsanto brand soybean seeds climbed 28 percent last year and will be flat or up 6 percent in 2010, said company spokeswoman Kelli Powers.
Monsanto's broad use of licensing agreements has made its biotech traits among the most widely and rapidly adopted technologies in farming history. These days, when farmers buy bags of seed with obscure brand names like AgVenture or M-Pride Genetics, they are paying for Monsanto's licensed products.
One of the numerous provisions in the licensing agreements is a ban on mixing genes — or "stacking" in industry lingo — that enhance Monsanto's power.
One contract provision likely helped Monsanto buy 24 independent seed companies throughout the Farm Belt over the last few years: that corn seed agreement says that if a smaller company changes ownership, its inventory with Monsanto's traits "shall be destroyed immediately."
Quarles, however, said Sunday he wasn't familiar with that older agreement, obtained by the AP, but said, "as I understand it," Monsanto includes provisions in all its contracts that allow companies to sell out their inventory if ownership changes, rather than force the firms to destroy the inventory immediately.
Another provision from contracts earlier this decade— regarding rebates — also help explain Monsanto's rapid growth as it rolled out new products.
One contract gave an independent seed company deep discounts if the company ensured that Monsanto's products would make up 70 percent of its total corn seed inventory. In its 2004 lawsuit, Syngenta called the discounts part of Monsanto's "scorched earth campaign" to keep Syngenta's new traits out of the market.
Quarles said the discounts were used to entice seed companies to carry Monsanto products when the technology was new and farmers hadn't yet used it. Now that the products are widespread, Monsanto has discontinued the discounts, he said.
The Monsanto contracts reviewed by the AP prohibit seed companies from discussing terms, and Monsanto has the right to cancel deals and wipe out the inventory of a business if the confidentiality clauses are violated.
Thomas Terral, chief executive officer of Terral Seed in Louisiana, said he recently rejected a Monsanto contract because it put too many restrictions on his business. But Terral refused to provide the unsigned contract to AP or even discuss its contents because he was afraid Monsanto would retaliate and cancel the rest of his agreements.
"I would be so tied up in what I was able to do that basically I would have no value to anybody else," he said. "The only person I would have value to is Monsanto, and I would continue to pay them millions in fees."
Independent seed company owners could drop their contracts with Monsanto and return to selling conventional seed, but they say it could be financially ruinous. Monsanto's Roundup Ready gene has become the industry standard over the last decade, and small companies fear losing customers if they drop it. It also can take years of breeding and investment to mix Monsanto's genes into a seed company's product line, so dropping the genes can be costly.
Monsanto acknowledged that U.S. Department of Justice lawyers are seeking documents and interviewing company employees about its marketing practices. The DOJ wouldn't comment.
A spokesman for Iowa Attorney General Tom Miller said the office is examining possible antitrust violations. Additionally, two sources familiar with an investigation in Texas said state Attorney General Greg Abbott's office is considering the same issues. States have the authority to enforce federal antitrust law, and attorneys general are often involved in such cases.
Monsanto chairman and chief executive officer Hugh Grant told investment analysts during a conference call this fall that the price increases are justified by the productivity boost farmers get from the company's seeds. Farmers and seed company owners agree that Monsanto's technology has boosted yields and profits, saving farmers time they once spent weeding and money they once spent on pesticides.
But recent price hikes have still been tough to swallow on the farm.
"It's just like I got hit with bad weather and got a poor yield. It just means I've got less in the bottom line," said Markus Reinke, a corn and soybean farmer near Concordia, Mo. who took over his family's farm in 1965. "They can charge because they can do it, and get away with it. And us farmers just complain, and shake our heads and go along with it."
Any Justice Department case against Monsanto could break new ground in balancing a company's right to control its patented products while protecting competitors' right to free and open competition, said Kevin Arquit, former director of the Federal Trade Commission competition bureau and now a antitrust attorney with Simpson Thacher&Bartlett LLP in New York.
"These are very interesting issues, and not just for the companies, but for the Justice Department," Arquit said. "They're in an area where there is uncertainty in the law and there are consumer welfare implications and government policy implications for whatever the result is."
Other seed companies have followed Monsanto's lead by including restrictive clauses in their licensing agreements, but their products only penetrate smaller segments of the U.S. seed market. Monsanto's Roundup Ready gene, on the other hand, is in such a wide array of crops that its licensing agreements can have a massive effect on the rules of the marketplace.
Monsanto was only a niche player in the seed business just 12 years ago. It rose to the top thanks to innovation by its scientists and aggressive use of patent law by its attorneys.
First came the science, when Monsanto in 1996 introduced the world's first commercial strain of genetically engineered soybeans. The Roundup Ready plants were resistant to the herbicide, allowing farmers to spray Roundup whenever they wanted rather than wait until the soybeans had grown enough to withstand the chemical.
The company soon released other genetically altered crops, such as corn plants that produced a natural pesticide to ward off bugs. While Monsanto had blockbuster products, it didn't yet have a big foothold in a seed industry made up of hundreds of companies that supplied farmers.
That's where the legal innovations came in, as Monsanto became among the first to widely patent its genes and gain the right to strictly control how they were used. That control let it spread its technology through licensing agreements, while shaping the marketplace around them.
Back in the 1970s, public universities developed new traits for corn and soybean seeds that made them grow hardy and resist pests. Small seed companies got the traits cheaply and could blend them to breed superior crops without restriction. But the agreements give Monsanto control over mixing multiple biotech traits into crops.
The restrictions even apply to taxpayer-funded researchers.
Roger Boerma, a research professor at the University of Georgia, is developing specialized strains of soybeans that grow well in southeastern states, but his current research is tangled up in such restrictions from Monsanto and its competitors.
"It's made one level of our life incredibly challenging and difficult," Boerma said.
The rules also can restrict research. Boerma halted research on a line of new soybean plants that contain a trait from a Monsanto competitor when he learned that the trait was ineffective unless it could be mixed with Monsanto's Roundup Ready gene.
Boerma said he hasn't considered asking Monsanto's permission to mix its traits with the competitor's trait.
"I think the co-mingling of their trait technology with another company's trait technology would likely be a serious problem for them," he said.
Quarles pointed out that Monsanto has signed agreements with several companies allowing them to stack their traits with Monsanto's. After Syngenta settled its lawsuit, for example, the companies struck a broad cross-licensing accord.
At the same time, Monsanto's patent rights give it the authority to say how independent companies use its traits, Quarles said.
"Please also keep in mind that, as the (intellectual property developer), it is our right to determine who will obtain rights to our technology and for what purpose," he said.
Monsanto's provision requiring companies to destroy seeds containing Monsanto's traits if a competitor buys them prohibited DuPont or other big firms from bidding against Monsanto when it snapped up two dozen smaller seed companies over the last five years, said David Boies, a lawyer representing DuPont who previously was a prosecutor on the federal antitrust case against Microsoft Corp.
Competitive bids from companies like DuPont could have made it far more expensive for Monsanto to bring the smaller companies into its fold. But that contract provision prevented bidding wars, according to DuPont.
"If the independent seed company is losing their license and has to destroy their seeds, they're not going to have anything, in effect, to sell," Boies said. "It requires them to destroy things — destroy things they paid for — if they go competitive. That's exactly the kind of restriction on competitive choice that the antitrust laws outlaw."
Some independent seed company owners say they feel increasingly pinched as Monsanto cements its leadership in the industry.
"They have the capital, they have the resources, they own lots of companies, and buying more. We're small town, they're Wall Street," said Bill Cook, co-owner of M-Pride Genetics seed company in Garden City, Mo., who also declined to discuss or provide the agreements. "It's very difficult to compete in this environment against companies like Monsanto."
As Patent Ends, a Seed’s Use Will Survive
Facing antitrust scrutiny over its practices in the biotechnology seed business, Monsanto has said it will not stand in the way of farmers eventually using lower cost alternatives to its genetically modified soybeans.
In letters to seed companies and farm groups this week, Monsanto said that it would allow farmers to continue to grow its hugely popular Roundup Ready 1 soybeans even after the patent protecting the technology expires in 2014.
The letter countered a widespread impression in the agriculture business that Monsanto planned to force farmers and seed companies to migrate to a successor product called Roundup Ready 2 Yield, which will remain under patent and is more expensive.
The issue has potentially broad implications for the agriculture industry because Roundup Ready soybeans will be the first widely grown biotechnology crop to lose patent protection since gene splicing became a mainstay of crop science in the 1990s.
Because farmers and seed companies would no longer have to pay royalties to Monsanto on the gene after 2014, Roundup Ready soybeans would become agricultural biotechnology’s equivalent of a generic drug.
Monsanto’s statement comes as the Justice Department is investigating possible antitrust concerns in the seed business, looking in particular at Monsanto, which dominates the business of supplying crop traits developed through genetic engineering. Critics, including some competitors, say that Monsanto has great leverage over the seed business and growers through restrictive contracts that must be signed to use Monsanto’s genes or to grow the genetically modified crops.
Monsanto calls such criticisms baseless. But it certainly is getting harder for seed companies to avoid using the Roundup Ready bacterial gene, which makes the plants impervious to the widely used herbicide glyphosate, which Monsanto sells as Roundup.
That allows farmers to spray their fields to kill weeds without harming the crops. More than 90 percent of the soybeans grown in the United States contain it. So do about two-thirds of the nation’s corn and cotton crops, though those are protected by different patents that expire later than the soybean patent.
Gerald A. Steiner, executive vice president for corporate affairs at Monsanto, said Thursday that Monsanto was not changing its policy on how it would handle the soybean patent expiration, but was merely clarifying its intentions.
“What’s different,” he said, “is we have made a very comprehensive communication of what we are going to do.”
But the widespread impression in the seed business was that Monsanto was backing away from a previous policy.
“The only thing we were told was that as of 2014 you would not be able to sell any more Roundup Ready 1,” said Jack Debolt, manager of Advanced Genetics, a coalition of small Ohio seed companies that license the Roundup Ready gene from Monsanto to put in their seeds.
Monsanto’s biggest competitor, DuPont’s Pioneer Hi-Bred seed company, has also accused Monsanto of antitrust violations including, as it says in a lawsuit, an effort to “remove Roundup Ready from the market prior to the time when competitors will be able to produce a generic product.”
Mr. Steiner of Monsanto said one reason for the company’s letters this week was to counter statements made by Pioneer, which Monsanto has sued alleging patent infringement.
Roundup Ready seed can cost as much as $75 an acre compared with $30 to $35 for soybean seeds that are not genetically modified, according to James Beuerlein, a soybean specialist at Ohio State University. The difference in price is thought to reflect mainly royalties paid to Monsanto.
While Monsanto sells Roundup Ready seeds itself, it also licenses the technology to other seed companies. Some seed industry executives and academic soybean specialists say that Monsanto was not planning to renew licenses for that Roundup Ready 1 trait that expired before 2014, so that seed companies would have no choice but to move to Roundup Ready 2.
But in its letters this week, Monsanto said it would now extend all contracts for Roundup Ready 1 until the patent’s expiration date. It also said it would not enforce language in some contracts that would have required seed companies to destroy or return Roundup Ready seed when the patent expired.
And Monsanto said seed companies could continue to sell seeds containing the Roundup Ready 1 trait without jeopardizing their access to the successor technology.
Monsanto also said that after the patent expired it would allow farmers to save Roundup Ready 1 seeds from one year’s crop to plant the next. Monsanto said it would not enforce other patents that might protect those seeds.
Many soybean farmers used to save seeds, but with Roundup Ready seeds they have been contractually obliged to buy new seeds each year. Monsanto has taken legal action against hundreds, if not thousands, of farmers it has accused of saving seed.
“This is a pretty big concession for Monsanto,” said Shawn Conley, a soybean specialist at the University of Wisconsin, who said saving seed could save farmers a lot of money.
Still, it is uncertain how long Roundup Ready 1 would survive in generic form. Some nations require licenses for the import of genetically engineered crops to be periodically renewed. Monsanto said it would maintain those licenses through 2017. But if they expired after that, American farmers would not be permitted to export the Roundup Ready 1 generic soybeans to certain countries, which would discourage them from growing those crops.
Monsanto said it was confident that most farmers and seed companies would move to Roundup Ready 2, which uses the same bacterial gene but places it in a different location in the soybean DNA. Monsanto said that Roundup Ready 2 crops would have higher yields, and that other desirable traits would be added to those crops over time.
Russians Buy Stake in Web Games
Brad Stone and Claire Cain Miller
The Russian firm that invested more than $200 million in Facebook this year is making another bet on the United States Internet industry.
Digital Sky Technologies, or D.S.T., an investment firm with offices in Moscow and London, is leading a group that is buying a $180 million stake in Zynga, a fast-growing San Francisco company whose online games, like FarmVille, Café World and Mafia Wars, are extremely popular on Facebook.
An unusual investment structure, by an unorthodox foreign investor, might shake up many of Silicon Valley’s traditional venture capital and private equity firms, which are losing out on another promising Internet opportunity.
The investment could also raise further questions about the pedigree of D.S.T., which lists a prominent Russian billionaire with a criminal record among its major shareholders.
As with Facebook, D.S.T. will invest directly in Zynga while also buying stock from shareholders, including the company’s employees. The move is aimed at giving employees and shareholders of the prominent start-up a way to cash out before an initial public offering.
Tiger Global, a New York hedge fund, and the venture capital firms Institutional Venture Partners and Andreessen Horowitz also invested.
Zynga had previously raised $39 million.
The companies did not disclose Zynga’s valuation as a result of the new capital, but the game company’s annual revenue has been reported to be around $250 million and growing quickly.
Two experts in Internet company finance said it would be reasonable for Zynga to command a valuation of two and a half to six times its annual revenue. That could put the value of the two-year-old Zynga at $1.5 billion; one industry insider believes the value could be as much as $3 billion.
With the investment, D.S.T. is doubling down on its billion-dollar bet on social networks and online games, which draw people who do not normally play video games into virtual simulations that they can play with friends. Players might spend only a few minutes each day in the game, and are persuaded to pay real money to buy virtual goods, like bales of hay and gasoline for their tractors in FarmVille, a game in which players run a farm.
D.S.T. began investing in 2005, mostly in Internet firms based in Russia and Eastern Europe, where, as in Asia, people have adopted social games and virtual goods marketplaces faster than in the United States.
“People did not believe that this Chinese model of micropayments and social games was real,” said Yuri Milner, D.S.T.’s chief executive. “I am pretty convinced this market will have tremendous pick-up on the Western side of the world.”
Part of D.S.T.’s appeal to start-ups is that it has shown unusual patience in waiting for a return on its investment. Traditional venture capital firms invest money from limited partners, like university endowments, which expect a return on their capital every few years. But D.S.T. operates more like a holding company and invests its own capital. It also does not require a seat on the company’s board.
D.S.T. first came to people’s attention in the United States in May, with its unusual investment in Facebook. As it did with Zynga, D.S.T. agreed to buy preferred shares at a high valuation, while also buying, at a lower valuation, the employee-owned common stock that traditional Silicon Valley investors typically shun.
In the past, company shareholders cashed out when the company was sold, either to a bigger company or to the public. Today, though, companies are increasingly figuring out how to offer shareholders liquidity much earlier by letting them sell shares when the company is still private. Though Zynga and Facebook are among the best-known examples, other venture capital firms have been making similar deals.
“I believe that many successful Internet companies just went public too early,” Mr. Milner said. “We’re almost like making them public companies for a short while.”
D.S.T.’s investment in Facebook also brought it some added scrutiny. Alisher Usmanov, a Russian industrialist billionaire who spent six years in an Uzbek jail for fraud and embezzlement in the 1980s, owns 35 percent of D.S.T. Mr. Usmanov has said he was jailed for political reasons.
Responding to questions about Mr. Usmanov and his role at D.S.T., Mr. Milner said that he and his partner owned 40 percent of the firm and made all of its management decisions.
Bing Gordon, a partner at Kleiner Perkins Caufield & Byers, which previously invested in Zynga, said that Zynga’s board did the customary due diligence on D.S.T. and that he was impressed by the firm.
Mr. Milner is a “brilliant entrepreneur,” Mr. Gordon said. “He saw within Russia the importance of social media and the new social Web, and he’s got a global point of view, which is still rare even in Silicon Valley.”
For Zynga, which has 712 full- and part-time employees, the investment gives it extra capital with which to compete with newly enriched rivals.
“The opportunity every quarter is proving to be bigger than we imagined and we always thought it was prudent to keep adding to the capital of the company as we grow,” said Mark Pincus, Zynga’s founder and chief executive, who has started three other companies.
Playfish, which competes with Zynga but has a smaller user base, was recently sold to the video game giant Electronic Arts for $300 million in cash and stock, and shareholders could receive an additional $100 million if it performs well. Slide and Playdom, other Bay Area start-ups in the social games and virtual goods arena, are also well financed.
The capital infusion also indicates that Zynga survived relatively unscathed after recent criticism from bloggers. They said that Zynga and other social gaming companies were deceiving users by selling them offers from advertisers, some of which were deceptive. Zynga has since suspended all such offer advertising.
Sales of Music Video Games Plummet in 2009
What a difference a year makes.
The music-game category raked in $1.4 billion in revenue last year, according to Wedbush Morgan Securities analyst Michael Pachter, driven largely by sales of "Rock Band 2" and "Guitar Hero World Tour." By the time 2009 comes to a close, Pachter expects the category to make half that -- $700 million -- despite such high-profile releases this fall as "The Beatles: Rock Band," "Guitar Hero 5," "DJ Hero" and "Band Hero," not to mention "Guitar Hero: Van Halen," which is due Tuesday (December 22).
According to data from market analyst NPD Group, sales of these games haven't met expectations. The Beatles game, while selling a respectable 800,000 units of its various versions so far, missed the 1 million mark analysts expected in just the first month after its September 9 debut. "Guitar Hero 5" sold 500,000 units in its first month, compared with the 1.4 million "Guitar Hero III" moved two years ago in its first month.
"DJ Hero," the game that was meant to expand the category into the hip-hop genre, moved 123,000 units in the first few days after its late-October release, and analysts at Cowen & Co. slashed their sales forecast for the game from 1.6 million this year to 600,000.
So what happened to this once-promising category, which so many in the music industry looked to for much-needed revenue? According to Pachter, the answer is: Too many games with too much music in too short a time.
'Too Much Value'
"(Game) publishers have probably done themselves a disservice by giving us way too much value for our money with each of these games," Pachter says. "You just get way too much content. The installed base has a lot of music, and they don't really need a lot more. It's sort of like buying more books when you have a stack of books left to read. You just don't."
Pachter points to the disappointing sales of "The Beatles: Rock Band" as proof of this theory.
"There isn't a game that we would expect to have more widespread appeal than that," he says. "And yet with the installed base of music-game owners at around 20 million, it boggles the mind that only 800,000 bought 'Beatles: Rock Band.'"
But this doesn't mean the music-game category is a quickly fading fad with no future. No one expected the same level of record-breaking sales achieved in 2008, and Pachter expects the category will level off at about $500 million-$600 million per year, which he calls a "nice, healthy" genre on par with the "Call of Duty" action-game franchise. That doesn't take into account the revenue earned from in-game music sales, which "Rock Band" and "Guitar Hero" have yet to report.
Hand in hand with the decline of music-based game sales is a softening of the impact those games have on digital downloads.
A sampling of the songs included on soundtracks to "Guitar Hero 5," "Band Hero" and "DJ Hero" shows no significant increases in track sales as a result of their inclusion in each respective game, according to Nielsen SoundScan data.
The game with the most impact on sales was "Brutal Legend" -- which isn't a music simulation game but an action/adventure title with a strong heavy metal theme and soundtrack. But while songs from acts like Motorhead and Judas Priest saw sales spikes as high as 700 percent, the volumes were too low to make much of a real impact -- in many cases from single-digit or double-digit weekly sales to low triple-digit sales.
To re-create the blockbuster sales of last year, the category needs a new innovation. One idea: Dahni Harrison -- the son of the Beatles' George Harrison, who worked closely on the development of "Beatles: Rock Band" -- told the Chicago Tribune he is working with Harmonix to create a version of "Rock Band" with new controllers that could actually help teach gamers to play guitar rather than just simulating the experience. Such new motion-capture devices as Microsoft's Project Natal may also play a role in evolving the gameplay.
Until these innovations come to fruition, though, the music and video-game industries will have to live with a music-game market that has fallen back to Earth.
US Games Company Sues British Blogger
The US based online game company Evony is suing a British blogger for defamation
In an internet defamation case that lawyers say could set an "extraordinary precedent", an American games company is suing a British blogger in the Australian courts.
Evony, an online games company registered in the US state of Delaware, is suing Coventry-based blogger Bruce Everiss for libel over a series of allegations made on his website. In a bizarre twist, however, Evony has decided not to pursue its case in Britain or America, but 10,000 miles away.
A hearing in Sydney on Monday will determine whether or not the supreme court of New South Wales has jurisdiction – with the potential to set a precedent for the way defamation laws are applied to the online world.
Evony's owners, who boast that the game has more than 11 million players worldwide, have accused Everiss – a 30-year veteran of the computer games industry – of damaging their reputation with a series of claims made on his blog. Among the allegations that Evony is objecting to are claims that the game is exploitative and has links to another company that is already being sued for fraud by Microsoft.
Evony – which has also threatened legal action against the Guardian for similar claims made in an article published in July – says that the assertions made by Everiss are completely untrue and damaging to its business, and that neither the company nor its owners are associated with fraud or implicated or involved with the Microsoft case.
Before the case against Everiss reaches court, however, Evony must first argue why a company registered in the US should use the Australian courts to take action against a British citizen.
"It would be quite an extraordinary precedent," Damian Sturzaker, a partner with Sydney-based law firm Marque who is acting for Everiss, told the Guardian.
"It is a great stretch of the Australian court's jurisdiction to require Bruce – an individual with limited, if any, means – to defend a claim here in Australia by a multinational company."
Evony's lawyers did not respond to a request for comment, but have previously said that the company intends to seek worldwide damages – a move believed to be a first in a case of this kind.
"[Everiss's] actions bring an enormous discredit to all online journalists internationally and have substantially impacted Evony's reputation in Australia," said the lawyer acting for Evony, Dean Groundwater of Warren McKeown Dickson, at the time.
The blogger himself, who does not intend to make an appearance in Sydney, has responded angrily to the action and accused Evony of libel tourism.
He has suggested that if the case is allowed to proceed "it will create a precedent and open the floodgates for anyone to litigate anywhere against anyone they don't like".
Australia has proven a testing ground for online libel cases before – most notably in 2002, when local mining magnate Joseph Gutnick used the high court in Victoria to sue American publisher Dow Jones over a series of allegations made in its financial magazine, Barron's.
Although the printed magazine was only for sale in the US, the article was also published online and available to readers worldwide – leading Gutnick to claim, successfully, that his reputation had been damaged in his home country.
Evony first came to prominence earlier this year, when it launched with a spurt of online promotion – including a risqué advertising campaign which drew widespread condemnation. The adverts, which feature women in various states of undress beckoning players to "save your lover now" and "play secretly", led to an outpouring of criticism on the web.
One blogger called the campaign the "absolute rock bottom" of online advertising, while prominent video games blog Kotaku said that the "boobs smorgasbord" was a "pathetic attempt at enticing people to play".
Sturzaker suggested that a victory for the US company could mark a major shift in the way laws around the world applied to the internet.
"It's about whether an Australian court can say that the simple fact that something can be posted on a blog and downloaded in Australia is enough."
UK Court Issues Injunction in Woods Case
A British judge has barred journalists in the country from publishing some material about golfer Tiger Woods.
An injunction issued Thursday even blocks media including The Associated Press from revealing the details of the order itself. As a result, media who obey the order cannot tell the public what they have been barred from revealing.
News organizations based outside of the UK ignored the order, however. The celebrity Web site TMZ published a copy of the injunction.
The order was imposed Thursday afternoon by High Court Justice David Eady after it was sought by Schillings, the firm representing Woods in Britain.
London-based media lawyer Nigel Tait said such an injunction would have been unlikely in the United States, where reporting on the private lives of public figures is given greater protection.
Britain has no formal privacy law but it is a signatory to the European Convention on Human Rights, which guarantees the right to respect for privacy and family life. Celebrities have increasingly used this clause to fight media exposes.
They also have sought redress in British laws governing libel, which have traditionally been seen as friendlier to claimants than those in the United States.
Many foreigners have sued the media over articles they would likely have lost in their own countries. Libel laws in the United States, for example, require someone to prove that an article was both false and published maliciously. British law places the burden of proof on the publisher.
Woods has been dogged by questions about his personal life in the weeks since a car accident outside his home in the middle of the night led to the release of sordid allegations about multiple affairs.
The world's No. 1 golfer issued a public apology after disclosing his "personal failings" and acknowledged he had "not been true to my values and the behavior my family deserves."
Though he has appealed for privacy, allegations of illicit liaisons by Woods have been regularly appearing in global media.
This has been especially true in Britain, where the tabloid press seized upon the story, offering a daily account of the number of women who have claimed affairs with Woods, often along with the purported details.
"The lawyers are trying to put a lid on these allegations, to contain them before they get to a level that's perhaps just salacious," media lawyer Ambi Sitham said. "Levels of privacy still exist."
Ex-Lawmaker Convicted of Rape: Name Is Copyrighted
A former South Dakota lawmaker convicted of raping his two foster daughters has sent news organizations what he claims is a copyright notice that seeks to prevent the use of his name without his consent.
A letter and an accompanying document labeled ''Common Law Copyright Notice'' said former state Rep. Ted Alvin Klaudt is reserving a common-law copyright of a trade name or trademark for his name. It said no one can use his name without his consent, and anyone who does would owe him $500,000.
Klaudt was convicted in 2007 on four counts of second-degree rape for touching his teenage foster daughters' breasts and genitals in phony examinations he said could help them sell their eggs to infertile couples. He was sentenced to 44 years in prison for rape and 10 more years after pleading guilty to two counts of witness tampering.
The notice, received by The Associated Press and several other news organizations Monday, carried a return address that matched that of the state prison in Springfield, where Klaudt is being held.
Klaudt's daughter, Roxy, reached by telephone at the family ranch near Walker, confirmed that her father had sent the copyright notice but would not explain why.
The former lawmaker could not immediately be reached for comment because inmates must be contacted initially by letter and asked to write or call, said Michael Winder, a spokesman for the state Corrections Department.
Laura Malone, associated general counsel for intellectual property at The Associated Press, said names of people, companies and products cannot be protected under copyright law. Names can be protected under trademark law, but only in association with goods or services used in commerce, she said.
''Even if there was a valid trademark, the mere use of the name in a news story is not an infringement of trademark,'' Malone said Tuesday.
''There is no legal substance to these claims,'' she added.
The letter and copyright notice Klaudt sent to The Associated Press carried a postmark of Dec. 11 from Mobridge, a city near his ranch. The notice was signed July 13, 2008, and notarized in Bon Homme County, the location of the Springfield prison. It also included a seal indicating it was filed with the register of deeds in Corson County, where the family ranch is located, on July 31, 2008.
The letter said anyone seeking to use Klaudt's name would have to file a written request 20 days in advance. It also said he would pursue charges and other legal action against anyone who violated the notice.
South Dakota's Supreme Court upheld Klaudt's convictions in August for the events that occurred in his Pierre motel suite during the 2005 and 2006 legislative sessions. Klaudt served in the state House from 1999-2006 and left because of term limits. He ran for a state Senate seat in 2006 but lost to the Democratic candidate.
His lawyer had argued in the appeal that while Klaudt's actions were terrible, they did not amount to rape because the girls gave their consent in the belief they could make money by donating eggs to infertile couples.
A state prosecutor countered that Klaudt did rape the girls because he coerced the two into fake medical examinations and they did not consent to what Klaudt was really doing.
A Deluge of Data Shapes a New Era in Computing
THE FOURTH PARADIGM
Data-Intensive Scientific Discovery. Edited by Tony Hey, Stewart Tansley and Kristin Tolle. Microsoft Research. 252 pages.
In a speech given just a few weeks before he was lost at sea off the California coast in January 2007, Jim Gray, a database software pioneer and a Microsoft researcher, sketched out an argument that computing was fundamentally transforming the practice of science.
Dr. Gray called the shift a “fourth paradigm.” The first three paradigms were experimental, theoretical and, more recently, computational science. He explained this paradigm as an evolving era in which an “exaflood” of observational data was threatening to overwhelm scientists. The only way to cope with it, he argued, was a new generation of scientific computing tools to manage, visualize and analyze the data flood.
In essence, computational power created computational science, which produced the overwhelming flow of data, which now requires a computing change. It is a positive feedback loop in which the data stream becomes the data flood and sculptures a new computing landscape.
In computing circles, Dr. Gray’s crusade was described as, “It’s the data, stupid.” It was a point of view that caused him to break ranks with the supercomputing nobility, who for decades focused on building machines that calculated at picosecond intervals.
He argued that government should instead focus on supporting cheaper clusters of computers to manage and process all this data. This is distributed computing, in which a nation full of personal computers can crunch the pools of data involved in the search for extraterrestrial intelligence, or protein folding.
The goal, Dr. Gray insisted, was not to have the biggest, fastest single computer, but rather “to have a world in which all of the science literature is online, all of the science data is online, and they interoperate with each other.” He was instrumental in making this a reality, particularly for astronomy, for which he helped build vast databases that wove much of the world’s data into interconnected repositories that have created, in effect, a worldwide telescope.
Now, as a testimony to his passion and vision, colleagues at Microsoft Research, the company’s laboratory that is focused on science and computer science, have published a tribute to Dr. Gray’s perspective in “The Fourth Paradigm: Data-Intensive Scientific Discovery.” It is a collection of essays written by Microsoft’s scientists and outside scientists, some of whose research is being financed by the software publisher.
The essays focus on research on the earth and environment, health and well-being, scientific infrastructure and the way in which computers and networks are transforming scholarly communication. The essays also chronicle a new generation of scientific instruments that are increasingly part sensor, part computer, and which are capable of producing and capturing vast floods of data. For example, the Australian Square Kilometre Array of radio telescopes, CERN’s Large Hadron Collider and the Pan-Starrs array of telescopes are each capable of generating several petabytes of digital information each day, although their research plans call for the generation of much smaller amounts of data, for financial and technical reasons. (A petabyte of data is roughly equivalent to 799 million copies of the novel “Moby Dick.”)
“The advent of inexpensive high-bandwidth sensors is transforming every field from data-poor to data-rich,” Edward Lazowska, a computer scientist and director of the University of Washington eScience Institute, said in an e-mail message. The resulting transformation is occurring in the social sciences, too.
“As recently as five years ago,” Dr. Lazowska said, “if you were a social scientist interested in how social groups form, evolve and dissipate, you would hire 30 college freshmen for $10 an hour and interview them in a focus group.”
“Today,” he added, “you have real-time access to the social structuring and restructuring of 100 million Facebook users.”
The shift is giving rise to a computer science perspective, referred to as “computational thinking” by Jeannette M. Wing, assistant director of the Computer and Information Science and Engineering Directorate at the National Science Foundation.
Dr. Wing has argued that ideas like recursion, parallelism and abstraction taken from computer science will redefine modern science. Implicit in the idea of a fourth paradigm is the ability, and the need, to share data. In sciences like physics and astronomy, the instruments are so expensive that data must be shared. Now the data explosion and the falling cost of computing and communications are creating pressure to share all scientific data.
“To explain the trends that you are seeing, you can’t just work on your own patch,” said Daron Green, director of external research for Microsoft Research. “I’ve got to do things I’ve never done before: I’ve got to share my data.”
That resonates well with the emerging computing trend known as “the cloud,” an approach being driven by Microsoft, Google and other companies that believe that, fueled by the Internet, the shift is toward centralization of computing facilities.
Both Microsoft and Google are hoping to entice scientists by offering cloud services tailored for scientific experimentation. Examples include Worldwide Telescope from Microsoft and Google Sky, intended to make a range of astronomical data available to all.
Similar digital instruments are emerging in other fields. In one chapter, “Toward a Computational Microscope for Neurobiology,” Eric Horvitz, an artificial intelligence researcher for Microsoft, and William Kristan, a neurobiologist at the University of California, San Diego, chart the development of a tool they say is intended to help understand the communications among neurons.
“We have access to too much data now to understand what’s going on,” Dr. Horvitz said. “My goal now is to develop a new kind of telescope or microscope.”
By imaging the ganglia of leeches being studied in Dr. Kristan’s laboratory, the researchers have been able to identify “decision” cells, responsible for summing up a variety of inputs and making an action, like crawling. Someday, Dr. Horvitz hopes to develop the tool into a three-dimensional display that makes it possible to overlay a set of inferences about brain behavior that can be dynamically tested.
The promise of the shift described in the fourth paradigm is a blossoming of science. Tony Hey, a veteran British computer scientist now at Microsoft, said it could solve a common problem of poor use of graduate students. “In the U.K.,” Dr. Hey said, “I saw many generations of graduates students really sacrificed to doing the low-level IT.”
The way science is done is changing, but is it a shift of the magnitude that Thomas Kuhn outlined in “The Structure of Scientific Revolutions”?
In his chapter, “I Have Seen the Paradigm Shift, and It Is Us,” John Wilbanks, the director of Science Commons, a nonprofit organization promoting the sharing of scientific information, argues for a more nuanced view of data explosion.
“Data is not sweeping away the old reality,” he writes. “Data is simply placing a set of burdens on the methods and the social habits we use to deal with and communicate our empiricism and our theory.”
Why are Laptop Batteries More Expensive than Lawnmower Batteries?
A battery-powered lawnmower brings a rant from the normally placid Paul Ockenden
I normally restrain myself from ranting in this column – I prefer to concentrate on the sunny side of mobile technology – but this month is an exception thanks to a problem that’s been bugging me for a while, but came to a head this month when I bought a new lawnmower.
Now you’re thinking “Didn’t he do lawnmowers last month?”, but allow me to explain further. As I’m a certified gadget-addict, this wasn’t just any old lawnmower but a Bosch Rotak 43LI. The clue is in that two letter suffix LI – yep, a lawnmower powered by lithium-ion batteries.
If you browse the Screwfix catalogue, you’ll see there’s recently been a flood of new lithium-ion-powered garden and workshop tools – they’re rapidly taking over from NiCd and NiMH thanks to lighter weight, longer life and lack of the pernicious “memory effect”.
It’s pretty much the same battery technology used in laptops, mobile phones and MP3 players, so volume manufacture is already established.
I’m really chuffed with my new mower, but what most intrigued me were the two batteries it came with, each rated at 36V and 2,600mAh.
You might remember from school physics that when comparing battery capacities what really matters is Watt hours, which you get by multiplying ampere-hours and voltage, so these lawnmower batteries have a capacity of 93,600mWh or 93.6 watt-hours. That’s enough to light a 100W bulb for nearly an hour, or to boil two cups of water – a staggering amount of power from a battery.
If you shop around you can pick up these Bosch batteries for around £140 (although I paid £340 for the mower itself, plus a fast charger and twin batteries).
But I digress: £140 for 93.6 watt-hours is around £1.50/Wh, and that’s where I start to get angry (and this column gets back on brief!), because I’m typing this on a Sony VAIO TT laptop for which Sony will happily charge me £220 for an extended-use battery. That 10.8V, 8,100mAh battery costs approximately £2.50/Wh, so why exactly should a laptop battery cost this much more than a lawnmower one?
Both are intended for rugged use (far more so for the mower, which is packaged in high-impact rubber); both have deep-discharge and thermal protection; both include a battery gauge; and don’t forget the mower is made by Bosch, a German company not known for positioning its products at the cheap end.
This 66% premium on laptop batteries would be annoying enough – perhaps not enough to power a full-blown rant – but I also have a few power and garden tools made by Ryobi from its excellent ONE+ range, which are also powered by lithium-ion batteries. The same calculation on their replacement batteries comes out at around £1.16/Wh, significantly below half the price of Sony’s laptop batteries.
And I’m not just singling out Sony, because other business-class laptop vendors such as HP and Toshiba charge similarly exorbitant amounts for replacement batteries.
Before sitting down to write this column, I emailed enquiries to major laptop manufacturers and their PR agencies, asking for comment on this discrepancy between the cost of laptop and power-tool batteries. I hadn’t received a single relevant response until the very last minute (a day after deadline) when David Sapaeth, a product specialist at Sony VAIO Europe, sent me the following prepared statement:
“VAIO does use lithium-ion batteries in the majority of its laptops, but they differ from those used in power tools in a number of ways.
“Power tools typically require a high power output, but for very short periods of time only (long enough to drill a hole, tighten a screw, saw a board and so on). Then they pause again at zero output until the next task. Notebooks require a stable output for hours in a row.
“If we look at the batteries of a power drill for example, they’re ten times heavier than a notebook battery. Notebook batteries are extremely condensed in terms of cells. If we were to use the same cells as power tools in a notebook with the continuous power demand, the cells would likely melt!”
I’m grateful for David’s response, and he raises some interesting points, but I’m not sure I accept all of them. David claims power tool batteries don’t need to deliver continuous power, but that’s exactly what the batteries in my Bosch mower do (and my Ryobi strimmer and hedge cutter).
And these power tool batteries deliver such continuous power at much higher currents – the mower runs flat in about 40 minutes while the similar capacity VAIO battery has six to eight hours, and I’ve used my mower and strimmer without ever seeing their batteries melt down.
I do take David’s point about weight – my Bosch battery is about three times the weight of the VAIO one, and although how much of this is due to more rugged packaging remains unknown, I’ll accept that the cells inside appear a bit heavier.
Because of the last-minute nature of David’s response, I haven’t had a chance for much debate, but I’ll raise the issues above and report back in a future column.
I’ll also be keeping an eye on this whole arena over the coming months, but to be honest I’m expecting the price gap to become even bigger. The laptop industry is a mature one in which prices have pretty well stabilised, and batteries cost much the same as they did a couple of years ago.
The lithium-ion power tool market on the other hand is relatively new, innovative and competitive, and as a result lower price points are regularly being broached. I expect battery weights to start to converge too.
What we really need is for someone to come up with a laptop that can be powered by power tool batteries. Just plug in one of Ryobi’s ONE+ power packs and get another three or four hours use from your machine.
If that were to happen we’d have the best of both worlds. I can’t see any major laptop manufacturer slaughtering their milch-cow, though, so it will probably be some homebrew fiddler who comes up with it. Pass that Ryobi angle grinder...
Breaking News !, Echo V Several Different Defendants, Re: IKS Server Lawsuits
Gunsmoke2 - GS2
There was a major Entitlement Control Message (ECM) by the EchoStar Corporation that targeted Internet Key Sharing (IKS) providers in the last two weeks. Different reports of shut downs. It was also reported that the ECM provided a method where Echo was able to obtain the Conditional Access Module (CAM) Id information leading to the shut down of CAMs running on IKS servers.
Echo has filed up to eight separate lawsuits on people in the US running IKS servers. This could be linked to the ECM and the information they obtained but I do not know as there is no mention in the lawsuits filed. Echo could have got the information and quickly prepared lawsuits then at a later time shut down the Cams.
Microsoft to Offer Up to 12 Browsers Under Binding Deal to Avoid New EU Fines
The European Union said Wednesday it is dropping antitrust charges against Microsoft Corp. after the company agreed to give Windows users a choice of up to 12 other Web browsers.
Under the terms of the deal with regulators, Microsoft will avoid further EU fines if it provides a pop-up screen that lets European users — from March — replace Microsoft's Internet Explorer or add another browser such as Mozilla's Firefox or Google's Chrome.
This will also allow computer manufacturers to ship PCs without Internet Explorer in Europe.
Neelie Kroes, the EU's competition commissioner, said it was an "early Christmas present for more than hundreds of millions of Europeans" who stood to benefit from having "effective and unbiased choice" between Microsoft's Internet Explorer and competing browsers.
"The (European) Commission has resolved a serious competition concern for a key market for the development of the Internet," she told reporters.
"It is as if you went to the supermarket and they only offered you one brand of shampoo on the shelf, and all the other choices are hidden out the back, and not everyone knows about them," she said. "What we are saying today is that all the brands should be on the shelf."
Microsoft general counsel Brad Smith said the company was pleased with "final resolution of several long-standing competition law issues in Europe" and looked forward to building "on the dialogue and trust that has been established between Microsoft and the Commission."
Microsoft is not out of the woods yet though, as it was warned it can still be fined up to 10 percent of yearly global turnover without regulators having to prove their case if it doesn't stick to this commitment for the next five years.
The deal comes after more than a decade of EU antitrust action against the world's biggest software company that has already seen it pay euro1.7 billion in fines.
Kroes also warned that she was still looking at complaints from software rivals that the company wasn't sharing key information that help others make products compatible with Microsoft software.
In January, the EU charged Microsoft with monopoly abuse for tying its browser, Internet Explorer to the Windows operating system software used on most desktop computers — this, they said, was an "artificial distribution advantage" that rivals didn't have.
Kroes said since Internet Explorer was present "on virtually every PC in Europe," a lot of Internet content was specially adapted to Internet Explorer. Other software makers complain that this caused technical problems that made it hard to use other browsers.
The EU said Monday that a pop-up choice screen would eliminate those concerns when it is downloaded as an automatic update to all users of Windows XP, Windows Vista and Windows 7 in Europe who have Internet Explorer set as their default browser. Other users will be asked if they want it.
The choice screen will list the 12 most-widely used Web browsers running on Windows — listing five prominently. Users can pick and download one or several of them, choosing from Apple's Safari, Chrome, Internet Explorer, Firefox, Opera, AOL, Maxthon, K-Meleon, Flock, Avant Browser, Sleipnir and Slim Browser.
Some 100 million computers will likely display the screen by mid-March and around 30 million new computers will show it over the next five years, the EU said.
People can keep Internet Explorer if they want — but they will for the first time be exposed to other browsers, providing a massive new audience to many smaller browser makers.
The choice of browsers will be updated every six months on the basis of several independent sources of market share information.
Microsoft will report back regularly to the European Commission, starting in six month's time, on how the rollout of the screen is going — and could make changes if the EU asks. The EU is also able to review the entire deal at the end of 2011.
Microsoft will also provide more information to help software developers make products compatible with Windows, Windows Server, Office, Exchange and SharePoint and will publish what the EU says is an "improved version" of an offer that Microsoft first made in July.
The EU says it is still investigating whether Microsoft is holding back some of the key data that developers need to make products that work with its software.
Regulators said they welcomed Microsoft's move but that the offer was still "informal" and wouldn't end their probe. But they offered some hope saying they would "carefully monitor the impact" of the deal on the market.
Thomas Vinje, a lawyer for browser company Opera and the European Committee for Interoperable Systems, said it was "not yet clear" that Microsoft's offer would create "a more level competitive playing field where open source software is not subject to Microsoft patent fear uncertainty and doubt."
Vinje helped file the complaints to EU regulators that triggered the investigations into Microsoft's browsers and interoperability sharing.
F.T.C. Accuses Intel of Trying to Stifle Competition
The Federal Trade Commission on Wednesday sued the chip maker Intel, accusing it of using its dominant market position “to stifle competition and strengthen its monopoly.”
In its complaint, the F.T.C. accused the chip maker of a systematic campaign to block rivals from selling their microchips by cutting off access to the market.
In doing so, the agency said in a statement, Intel “put the brakes on superior competitive products that threatened” its microchip market share.
“Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly,” said Richard A. Feinstein, director of the agency’s Bureau of Competition. “It’s been running roughshod over the principles of fair play and the laws protecting competition on the merits.”
The F.T.C. action comes after a yearlong investigation and follows recent antitrust complaints against Intel by European regulators and the New York attorney general, Andrew M. Cuomo. But the F.T.C. move also comes a month after Intel reached a sweeping $1.25 billion settlement with its longtime rival in the chip market, Advanced Micro Devices.
That settlement, covering both private antitrust and patent claims, was seen as possibly deterring the F.T.C. from moving ahead. In its long-running legal fight with Intel, A.M.D. was both the leading victim of the giant chip maker and its investigation generated most of the evidence that was then used by government regulators around the world.
A law professor at Howard University, Andrew I. Gavil, said the start of the case was “very significant because it is broader in scope than any of the current cases.”
Tuesday’s complaint is being made under a statute giving the agency powers to combat anticompetitive conduct that might not fit neatly or immediately into the nation’s main antitrust laws, the Sherman Act and the Clayton Act. In its complaint, the F.T.C. noted that the statute covering the commission gives it “a unique role in determining what constitutes unfair methods of competition.”
The complaint is an administrative action, which will be heard before a single administrative law judge within the F.T.C., with the trial starting in September 2010. That ruling can be appealed to the commissioners acting as judges, and later to a federal appeals court — unless Intel reaches a settlement somewhere along the way.
The F.T.C. staff filing is a 24-page enumeration of Intel’s reported anticompetitive acts. It contains no quotes from seemingly incriminating e-mail messages or notes of conversations between Intel executives and personal computer makers, as did the New York state complaint, for example.
But the F.T.C. accusations seem to be broader than the other pending complaints, which have focused mainly on claims that Intel has systematically used large rebates and co-marketing arrangements to persuade computer makers to use its chips instead of those by A.M.D. And those cases centered on the market for microprocessors, the chips that sit at the heart of personal computers. Intel supplies about 80 percent of PC microprocessor chips worldwide.
The F.T.C. complaint accuses Intel of taking a series of steps to hinder competition in the market for graphics processing chips, which are increasingly important in running video and movies on computers. These graphics processing chips are made by companies including Nvidia, A.M.D. and Via.
In a statement, Nvidia said Wednesday that it was “particularly pleased to see scrutiny being placed on Intel’s behavior” toward the graphics chips.
The F.T.C. filing also asserts that Intel “secretly redesigned key software” in a way that deliberately stunted the performance of competitors’ chips.
Sol Price, Who Founded Price Club, Is Dead at 93
Sol Price, a retail magnate who three decades ago altered both the American landscape and the American way of shopping by founding Price Club, the first nationwide members-only discount warehouse, died on Monday at his home in La Jolla, Calif. He was 93.
Mr. Price died of natural causes, his son Robert said.
With Robert, Mr. Price started the first Price Club in 1976 in a cavernous former airplane parts factory in an unfashionable part of San Diego. The business, which offered consumer goods as varied as tires, books and household appliances at extremely low prices, proved to be the leading edge in the multibillion-dollar influx of discount big-box stores, among them Costco, BJ’s Wholesale Club and Sam’s Club.
By 1990, members-only retail clubs had become the fastest-growing sector of retailing, The Associated Press reported.
Price Club merged with Costco in 1993. Afterward, Sol and Robert Price founded PriceSmart, which operates more than two dozen membership warehouse clubs in the Caribbean and Central America.
The Price Club philosophy was simple: Keep overhead to an absolute minimum. Mr. Price accomplished this by doing no paid advertising, sharply curtailing inventory (his stores typically carried only a few thousand products, with limited brand selection), saving on real estate (most stores were in out-of-the-way locations) and, for many years, refusing to accept major credit cards.
“We think the secret of good mass merchandising is the intelligent loss of sales,” Mr. Price told The New York Times in 1986. “It means you have to decide what sales you are prepared to live without. Can you live without credit cards that cost you two points? Can you live without advertising? Can you live without $35-to-$40-a-foot occupancy costs for a prime location?”
Mr. Price made it up in volume. By 1993, shortly before merging with Costco, Price Club comprised 94 stores in the United States, Canada and Mexico, with annual revenue of more than $6 billion. Mr. Price, who was long active in philanthropic affairs, had an estimated net worth of $500 million, The San Diego Business Journal reported in 2006.
Sol Price was born in the Bronx on Jan 23, 1916. His parents worked in New York City’s garment industry. (The original family surname has been lost to time. It was changed, prophetically, to Price at Ellis Island.) After moving with his family to San Diego as a youth, he did undergraduate study at several colleges before earning a law degree from the University of Southern California in the late 1930s.
Mr. Price worked as a business lawyer in San Diego before starting FedMart, a local discount warehouse, with several partners in 1954. Membership in FedMart, which eventually sold liquor, pharmacy items, household goods and premium gasoline, cost $2 and was limited to government employees and their families. (At first, the $2 fee bought membership for life, but the term was later changed to a year.) The FedMart chain grew to include more than 40 stores throughout the Southwest.
In the mid-1970s FedMart was sold to a German retailer, and before long, at the age of 59, Mr. Price found himself out of a job. He and his son founded Price Club, which was originally aimed at small-business owners. For an annual membership fee of $25, for instance, an accountant could buy inexpensive office stationery, or a saloonkeeper could buy cigarettes and toilet paper.
In its first year, Mr. Price’s business lost $750,000. Only after membership was extended to the general consumer did it began to thrive, and before long Price Club had become an integral part of the American retail experience.
Vast, concrete-floored and teeming with shopping carts, Price Clubs exuded a certain spartan cachet. Industrial shelves were stocked with a variety of products, including cigarettes, auto parts, alcohol, clothing, Robert Ludlum paperbacks, Rolex Oyster watches, 10-pound bags of rice and gallon jars of mayonnaise.
For a time, many Price Club warehouses had attached tire installation centers, an operation owned by Mr. Price’s son Laurence. But in a widely reported feud with his father, Laurence Price filed for arbitration after Sol Price canceled the leases on those centers in 1985; Laurence was awarded $3.7 million.
In 1987 Laurence Price sued his father for emotional distress, contending that the elder Mr. Price had interfered with the raising of Laurence’s sons. The suit was thrown out of court in 1989.
Besides his sons Robert and Laurence, Mr. Price is survived by five grandchildren and four great-grandchildren. His wife, the former Helen Moskowitz, whom he married in 1938, died last year.
Mr. Price’s legacy is visible nationwide. In 2007, Investor’s Business Daily reported that membership wholesale clubs were a $70 billion industry in the United States, with more than 40 million members.
One of the chief beneficiaries of Mr. Price’s legacy, Sam Walton, acknowledged the debt in his 1992 memoir, “Made in America” (Doubleday, 1992; with John Huey). Mr. Walton, the founder of Wal-Mart and Sam’s Club, wrote, “I guess I’ve stolen — I actually prefer the word ‘borrowed’ — as many ideas from Sol Price as from anybody else in the business.”
Teen Runs Up Dad's Cell Bill to Nearly 22,000
A 13-year-old teen was probably in hot water with his father after running up a cell phone bill of nearly $22,000. Ted Estarija said he was expecting his bill to be higher this month after adding his son to his plan, but wasn't expecting a bill of $21,917 in data usage charges. The Hayward man said his Verizon Wireless bill soared after his son apparently downloaded about 1.4 million kilobytes of data last month.
His plan didn't cover data usage, so he was charged by the megabyte.
Estarija said after the first media reports, Verizon said they would credit his account for the entire amount.
He has also suspended his son's account.
A spokeswoman for Verizon said the company investigates cases with exceptionally large bills.
Ohio Justices: Cell Phone Searches Require Warrant
The Ohio Supreme Court said Tuesday police officers must obtain a search warrant before scouring the contents of a suspect's cell phone, unless their safety is in danger.
The American Civil Liberties Union of Ohio described the ruling as a landmark case. The issue appears never to have reached another state high court or the U.S. Supreme Court.
The Ohio high court ruled 5-4 in favor of Antwaun Smith, who was arrested on drug charges after he answered a cell phone call from a crack cocaine user acting as a police informant.
Officers took Smith's cell phone when he was arrested and, acting without a warrant and without his consent, searched it. They found a call history and stored numbers that showed Smith had previously been in contact with the drug user.
Smith was charged with cocaine possession, cocaine trafficking, tampering with evidence and two counts of possession of criminal tools.
During his trial, Smith argued that the evidence obtained through the cell phone search was inadmissible because it violated the constitutional ban on unreasonable search and seizure.
Smith's attorney, Craig Jaquith, said the law needs to account for technological advances.
"People keep their e-mail, text messages, personal and work schedules, pictures, and so much more on their cell phones," Jaquith said in a statement. "I can't imagine that any cell phone user in Ohio would want the police to have access to that sort of personal information without a warrant. Today, the Ohio Supreme Court properly brought the Fourth Amendment into the 21st century."
Stephen Haller, a Greene County prosecutor, said the court created a new section of law pertaining to cell phones. He said he will decide within two weeks whether to appeal the decision to the U.S. Supreme Court.
"The majority here has announced this broad, sweeping new Fourth Amendment rule that basically is at odds with decisions of other courts," Haller said.
The trial court that admitted Smith's phone records cited a 2007 federal court decision that found that a cell phone is similar to a closed container found on a suspect and therefore subject to search without a warrant. Smith was convicted of all charges and sentenced to 12 years in prison.
A state appeals court upheld the trial judge's ruling in a 2-1 decision.
Writing for the majority in Tuesday's ruling, Supreme Court Justice Judith Ann Lanzinger said the only case law available to guide the court appeared to be conflicting federal court decisions. The U.S. Supreme Court hasn't taken up the issue and there appeared to be no decisions from top-level state courts on the matter, she wrote.
Lanzinger said the majority didn't agree with the state's argument that a cell phone was akin to a closed container.
"We do not agree with this comparison, which ignores the unique nature of cell phones," Lanzinger wrote. "Objects falling under the banner of 'closed container' have traditionally been physical objects capable of holding other physical objects. ... Even the more basic models of modern cell phones are capable of storing a wealth of digitized information wholly unlike any physical object found within a closed container."
The majority's decision sends the case back for a new trial in which the evidence from Smith's cell phone can't be admitted.
Justice Robert R. Cupp wrote the dissenting opinion. He argued that the contents of a cell phone are similar to a traditional address book and therefore open to search without a warrant when obtained during an arrest. He said the majority "needlessly theorized" about what a cell phone is capable of doing and the data it can store.
Geeks Drive Girls Out of Computer Science
Research says women don't feel they would fit in and so steer clear of jobs
The stereotype of computer scientists as geeks who memorize Star Trek lines and never leave the lab may be driving women away from the field, a new study suggests.
And women can be turned off by just the physical environment, say, of a computer-science classroom or office that's strewn with objects considered "masculine geeky," such as video games and science-fiction stuff.
"When people think of computer science, the image that immediately pops into many of their minds is of the computer geek surrounded by such things as computer games, science-fiction memorabilia and junk food," said lead researcher Sapna Cheryan, an assistant professor of psychology at the University of Washington. "That stereotype doesn't appeal to many women who don't like the portrait of masculinity that it evokes."
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The upshot: Women don't feel they would fit in and so steer clear of computer-science majors and jobs, the researchers say. Such avoidance could help to explain why just 22 percent of computer-science graduates are women, a percentage that has been steadily decreasing, according to 2008 data from the National Science Foundation.
Not only are women missing out on some of the "best career opportunities, but computer science is missing out on female perspectives," Cheryan and her colleagues wrote in a recent issue of the Journal of Personality and Social Psychology.
The results come from four studies with more than 250 students who weren't studying computer science.
In the first experiment, about 40 male and female students entered a small classroom that either contained objects stereotypically associated with computer science, such as Star Trek posters, video game boxes and Coke cans, or non-stereotypical items such as nature posters, art, a dictionary and coffee mugs. (The students were told to ignore these objects because the room was being shared with another class.)
Then, the students filled out questionnaires about their attitudes toward computer science.
In the geeky environment, women were significantly less interested than men in computer science, while there was no gender difference for the non-stereotypical classroom. Female students in the stereotypical environment said they felt less similar to computer-science majors than did those in the classroom that wasn't geeked out.
In three other experiments, two of which involved about 90 students each, participants were told to imagine stereotypical and non-stereotypical objects in various environments. Here are some of the results:
• When women were given the choice of joining one of two all-female teams at a company, with the only difference between the teams being the objects found in respective workrooms, 82 percent of the women picked the team with the non-stereotypical workroom.
• Male and female participants were given the choice between similar jobs at one of two companies with the only difference being the description of objects (either nerdy or generic) for each company. Both genders preferred the job in the non-stereotypical work environment, but women's preferences for the non-geeky environment were significantly stronger than men's.
• In another similar job-position experiment, women were more likely to accept an offer with a neutral Web-design company while men had the opposite preference, choosing the stereotypically nerdy company. The more women perceived the stereotypical environment as masculine, the less interested they were in that company.
Changing computer science
There was a subset of women in the study who didn't view the stereotypical objects as masculine and geeky and aren't turned off by the associated office or classroom.
"That tells me that it's a cultural phenomenon," Cheryan told LiveScience. "These objects are not inherently masculine or geeky; they've been constructed that way. That means to me we can reconstruct the objects or more importantly the whole field."
Cheryan added one way to change the lopsided field would be, "broadening the image of computer science to make it so that other people feel a connection to the field."
Not Enough Women in Computing?
Cultural attitudes, gender discrimination, and educational opportunities are serious subjects but beware misleading reporting
"Geeks drive girls out of computer science", reads the headline of a recent article MSNBC published in its "Science" section.
Don't believe it--at least, not uncritically. I smell something--OK, a lot of things--out of place. I don't think "gender issues in computing" is important enough to merit the attention it gets, and I'm certain that I've already given MSNBC more weight than it deserves. Rather than fully investigate everything I suspect is wrong with this piece, I'll just recite what I know from my own experience:
• To my own astonishment, I've already felt complelled to write on this subject a couple of times for Smart Development. Read the examples of how thinking on this topic goes off-course.
• MSNBC articles use hyperlinks to pop up advertisements, but not meaningful content. Think about that for a while. In the form I currently see, the article has a link from "computer" in "computer scientists" to printer deals, but not to the abstract of the article on which the MSNBC piece is based. MSNBC's purpose is to sell stuff its advertisers want you to buy; it is not for you, as a reader, to understand things. Articles exist to attract attention, not to reach toward truth.
• While a reporter has a byline for the MSNBC article, and one of the four co-authors of the academic piece is mentioned, we really know very little about who said what. What the reporter wrote likely was rewritten by at least one editor. The reporter might never have read the academic article, nor talked to even one researcher; much--in my experience, a majority--of transmission of scientific research to mass media goes by way of college publicity departments. There's essentially no connection between the headlines on news outlets and the research to which they claim to refer. There's good reporting, and even good science reporting, but it's always in the minority.
• To the extent that the MSNBC article communicates anything, it's at best tendentious. The claims are based on experiments "with more than 250 students ..." Presumably these were at US universities; judge for yourself how far you want to generalize any conclusions.
As Professor Cheryan is quoted, "... it's a cultural phenomenon."
Part of the justification for research in this area is that "women missing out on some of the 'best career opportunities ...'" (bolding copied from the MSNBC article) concerns the researchers. I'm waiting to read the headline: "Women too smart for careers with computers", where another researcher concludes that only "boys" are stupid enough to go into a field that's globally-fungible, where entry-level salaries are declining, and it's common to think that staying up all night for a company-paid pizza is a good deal.
Computing operations "strewn with video games ..." are a little more common in the business world at large than, say, forensic investigators who accurately identify fingerprints in forty seconds of automated look-up, or doctors who aren't disappointed when they discover that most of their daily work amounts to running a retail store--but only a little. These are all Hollywood images. Reality is a lot different.
Cultural attitudes, gender discrimination, and educational opportunities are serious subjects. Don't fool yourself that what the mass media have to say on them aims to be anything other than traffic-driven entertainment.
Disclaimer: what's my motivation? Who am I to sniff at journalistic outlets that have millions of repeat customers? It's too complex to detail today; perhaps I'll follow-up some time with more on my own background. I do hope, though, that you'll read what I write, that you recognize I ground it in facts, and you'll come back for more.
Report: The Most Active Online Are The Most Educated.
Students using computers Report: The Most Active Online Are The Most Educated.People who spend the most time online are in fact the most educated claims a recent report from Eurostat.
The study, that covered households containing at least one person aged 16-74 across Europe, shows that nearly 90 % of the EU population with high formal education used the internet regularly, more than twice as much as the share of the population with low formal education.
The figures remained similar irrelevant of age group although the relatively uneducated 16-24’s did seem the most active online in comparison with their older and younger counterparts.
There are clearly a number of possibilities as to why this might be the case. The most immediate being the IT education you receive at school plays a significant role in your desire (and confidence) to explore computers and the web. Additionally, if you’ve had little or no formal education, it’s highly likely you aren’t in financially able to own a computer or subscribe to Internet access – and therefore access to any form of Internet connect is limited.
The web clearly playing an increasingly more significant role in our daily lives, and it seems the importance of education, at least by these findings, is as important as ever.
Never Listen to Céline? Radio Meter Begs to Differ
American men have a naughty little secret. Sometimes, they like to relax with a little Céline Dion. Professed classical music fans have one, too: as it turns out, they don’t tune into classical radio nearly as much as they claim.
These are two of many findings shaking up the radio industry as it converts from measuring ratings through surveys to monitoring listeners electronically using so-called Portable People Meters.
As radio executives are discovering, what people say they do and what they actually do is different — especially where “My Heart Will Go On” is concerned.
That more men are mellowing out to Air Supply than are willing to admit it is a curious discovery, but the new system has serious repercussions, especially for classical radio. When 12 major areas, including New York and Los Angeles, switched to the system last year, classical radio’s market share fell 10.7 percent in those areas, a significant drop, according to a study by Research Director, a ratings consultancy.
The numbers are part of what an industry consultant, Marc Hand, calls “a smorgasbord of issues” facing commercial classical music stations. In the last year, major commercial stations including WCRB in Boston and WQXR in New York were sold to public radio operators, while KFUO in St. Louis was sold to a Christian broadcaster. (WQXR was owned by The New York Times Company.) There are now only about 20 commercial classical stations in the country, said Mr. Hand, the managing director of Public Radio Capital, which advises nonprofit stations on acquisitions.
The decline has concerned classical fans, who see radio as an important civilizing force.
“It’s education but also expanding horizons, understanding the existence of a whole host of art forms that are extremely related and important to our cultural history,” Joseph W. Polisi, president of the Juilliard School, said.
Talk radio, a largely conservative format, turns out to have fewer fans than previously thought. Talk radio’s market share declined 2.6 percent in the study of areas where the meters were used. Talk radio (excluding sports and news) is about 80 percent conservative, says Michael Harrison, publisher of the trade magazine Talkers. He cautioned that the sample size in markets using meters was relatively small.
The new ratings have contributed to other shifts. Mainstream formats like oldies, news and country have fared better.
Meanwhile, smooth jazz has hit a low note. Clear Channel jettisoned such programming from eight of its stations after dismal ratings. Some Spanish-language stations’ ratings declined sharply — at Univision’s KLVE in Los Angeles, for example, ratings fell 54 percent in the first quarter of 2009 from the same period the year before, leading it and other broadcasters to testify before Congress on Dec. 2 that the new system is discriminatory.
The television industry had switched from diary entries to metered ratings in 1987 and had seen similarly surprising changes — young men, for instance, watched cartoons much more heavily than they had reported doing, said Gary Holmes, a spokesman for Nielsen. But it took the radio industry almost two decades to catch up.
Since the 1960s Arbitron, the main radio ratings company, has relied on paper diaries. It currently asks about 800,000 people annually to log a week of listening habits. Problems have been numerous: people’s recollection was imperfect, if they listened to a station briefly they could forget it, and they might overstate listening to stations that they felt reflected better taste.
“People tended to look at it almost like an election — they would vote for the things they liked,” said Jaye Albright, an industry consultant with Albright & O’Malley, a radio consultancy.
In 2007, Arbitron formally introduced the Portable People Meter, a pagerlike device that about 57,000 survey participants carried around all day. After introducing the device in 2007 in two cities, Philadelphia and Houston, last year Arbitron moved it to 12 major areas including New York, Chicago and Los Angeles, added 19 more this year and expects most major markets to be measured by the end of 2010.
“Advertisers were demanding it,” said Alton L. Adams, Arbitron’s chief marketing officer.
Now, with a year of data from the early converts, researchers are finding intriguing patterns. Men had been thought to make up 34.7 percent of the soft-rock audience, according to Arbitron Radio Today 2008, based largely on paper entries. This month, Research Director and the publication Inside Radio released their analysis of meter-only cities from July through October, showing men make up 40.1 percent of the total light-rock audience, a jump of 16 percent. “It caught people by surprise,” said Charlie Sislen, president of Research Director.
“It may be a case where men didn’t want to admit they were listening to a light A.C.,” said Greg Ashlock, president and market manager for Los Angeles at Clear Channel, using industry shorthand for adult contemporary, or soft rock. “ ‘No, I don’t listen to Céline Dion. I’m a sports guy.’ ”
Some male soft-rock listeners say they simply like the music.
Ezra Feinberg, 33, a psychologist in San Francisco, listens to KOIT, a soft-rock station, on his commute. “One in 10 songs on soft-rock radio resonates, but it really resonates,” he said.
Then there are the unwilling listeners, like Reece Carter, 40, an architectural designer in Roswell, Ga. Mr. Carter dreads driving with his wife in the evening, when she tunes into the love-laden Delilah show on B98.5 “My wife gives me my recommended daily allowance,” he said.
The surprising gender makeup of soft-rock listeners has already shifted some advertising dollars.
“I see it gaining traction with Pontiac, GMC, Dodges,” said Joe Puglise, president and market manager of Clear Channel Radio New York, which owns Lite-FM. However, he said, it was a subtle change. “It’s not like all of a sudden on Lite-FM we’re getting biker bars and Harley-Davidson dealerships,” Mr. Puglise said.
The makeup and size of Arbitron’s sample is an issue for some Hispanic and urban broadcasters, who say metered readings undercount minority audiences and hurt their stations disproportionately. Mr. Adams of Arbitron said the company was responding to concerns by adding more panelists who had cellphones rather than landlines, and investing in in-person coaching to make sure all panel members use the devices correctly.
Whatever the problems with the new system, it is becoming the standard for ratings among advertisers. Researchers say that, in general, niche stations suffer under the meter. Mass stations do well because they have a broad signal and because they are played at businesses and in malls. Niche stations’ fans may not appear as frequently in the metered ratings because of the smaller sample size.
“The meter is sort of making radio more homogenous, because the stations that do best are the mass appeal stations,” Ms. Albright said. That may be another explanation for why men are listening to soft rock.
“There’s no good radio,” said Jason Pontius, 39, a technology executive in Oakland, Calif. “Soft rock radio is like, ‘Am I really listening to this?’ But it’s the best thing that’s on.”
Music Business Heads Into Virtual World
Brad Stone and Claire Cain Miller
With its deal this month to buy the Web music service Lala, Apple may be pointing the way to the future of music.
In this future, the digital music files on people’s computers could join vinyl records, cassette tapes and CDs in the dusty vault of fading music formats.
Instead, music fans will use their always-online computers and smartphones to visit a vast Internet jukebox, where Gregorian chants, Lady Gaga tracks and the several centuries of music in between are instantly available.
For a small but growing cadre of music lovers, the vision is not that outlandish. Josh Newman, a 30-year-old technology consultant from Toronto who travels widely, pays $16 a month for Spotify, a subscription music service that, for now, is officially available only in Europe. Spotify allows unlimited listening to its online music library.
Since Spotify introduced an application for the iPhone over the summer, Mr. Newman has begun listening to the service almost exclusively, even though he has 35,000 songs on hard drives at home.
“The irony is, I don’t even go back to that music,” Mr. Newman said. “I’m almost too lazy. If there’s an artist I want to check out, I’d rather listen to it on Spotify than have to dig through my collection.”
The idea of a limitless jukebox in the sky — or in tech-speak, “in the cloud” — has been around for some time, but it is consuming music executives who now associate the word “funk” with more than just a musical genre. The recording industry, which had $40 billion in annual sales a decade ago, is now bringing in half that. More ominously, the growth of revenue from digital downloads, still only a fifth of the total sales pie, is slowing.
The deal for the little-known Lala was a small one from Apple’s perspective; the price was more than $80 million, according to a person briefed on the deal terms. But it is generating a lot of interest because of what it may say about Apple’s plans for streaming music.
With an estimated $2 billion in annual revenue from iTunes, Apple is in a good position to guide consumers through the process of storing their music collections on Web servers and listening to them in new ways. It can also tightly integrate such a music service into the iPhone, the iPod Touch and all other existing and future Apple gadgets that connect to the Internet.
Users would no longer have to synchronize their music collections between devices, would not have to worry about running out of storage space on their phone, and could more easily share playlists and recommendations with friends.
Apple could also ask users to pay a monthly subscription fee for access to a Spotify-like cloud-based catalog of music. Two music industry executives said Apple had been considering such a subscription service for years, but could never agree on the right revenue split with labels.
“We generally don’t comment on our purpose and plans,” said Steve Dowling, an Apple spokesman.
David Pakman, a partner at the venture capital firm Venrock and the former chief executive of the download service eMusic, said that Apple “could accelerate the move to media in the cloud more quickly than any other company can.” The acquisition of Lala, he said, “tells us they’re doing it.”
Other recent developments in the music and technology businesses also suggest an impending shift in a century-long approach to music, in which people considered it to be something they owned, either in physical formats or digitally on their computers.
In August, Spotify introduced its iPhone application, which stores temporary copies of songs and playlists on the phone so that music keeps playing even when the device drops off the network. Spotify’s chief executive, Daniel Ek, said subscriber numbers had jumped significantly since the introduction of the app; he would not give exact figures.
The iPhone application “was a huge step toward a paradigm shift where it’s no longer about à la carte purchases, but access to music,” Mr. Ek said.
Spotify, based in London, hopes to introduce its service in the United States at the beginning of next year, although people briefed on its discussions with music companies say that the labels were resisting a component of the service in which music would be available free, supported by ads.
Pandora, the free Internet radio service, offers an application that continues to be among the most popular apps for the iPhone, and the company says that 30 percent of its listeners connect over cellphones.
Meanwhile, MySpace, owned by the News Corporation, has acquired two cloud music services in the last month, iLike and Imeem. People briefed on discussions inside MySpace say it is developing a subscription music service to complement its free, ad-supported MySpace Music, a joint venture with the four major music labels.
Courtney Holt, president of MySpace Music, would not discuss specific plans. But he said consumers care less about how music is delivered and more about finding new ways to share and discover music with their friends.
Technology start-ups have hoped for years that the vast selection and convenience of Web-based music offerings would lure people into spending a few dollars a month in subscription fees. That business, for companies like Rhapsody, jointly owned by RealNetworks and MTV, and Napster, a division of Best Buy, has not yet shown real promise.
But with the added appeal that such services can now be accessed on smartphones, many entrepreneurs are reconsidering that model. “There’s nothing sexy about an MP3 on your computer,” said David Hyman, chief executive of Mog, which introduced a subscription service this month called Mog All Access. “I don’t think consumers care where the music is stored, as long as they can get it when they want it.”
Not everyone agrees that music in the cloud will constitute a silver lining for the music industry. Critics say wireless connectivity, particularly on overtaxed networks like AT&T’s in the United States, is still too unreliable to provide a constant stream of music on mobile devices. They also worry that wireless companies will increase charges for data as the streaming of music and video becomes more popular.
It seems likely that the idea of music ownership will never go away, and that newer methods of accessing music will exist alongside old ones. Bobby Mohr, a 23-year-old music fan from Brooklyn who has accumulated 100 gigabytes of songs, keeps some of them on free Web-based storage services, so he can download tracks when he travels and burn them onto CDs to play in the car.
But Mr. Mohr is hesitant to abandon the idea of owning music altogether, citing the unreliability of wireless networks and the fact that his collection would be inaccessible at his job at a police oversight agency, where he is not allowed to use the Internet.
“I like having external hard drives that are troves of my music,” he said. “You just collect it, you have this library. You discover new genres every year and you go through it and look at what you have, and that’s nice.”
Bob Lefsetz, who writes an influential music industry newsletter, the Lefsetz Letter, acknowledged that some people bristle at the idea of not owning their music, but he compared them to people who once said they would never rent a videotape.
“If you ask anybody today, they’ll tell you, ‘I need to own it.’ But once you have these services, you get to the point of, ‘Why would I own it, because I have access to everything?’ ”
Study: Digital Streaming Radio Brings In Coveted Demographic
On Monday, Clear Channel Radio will unveil the results of a study done by Ando Media examining listener demographics of the company’s digital streaming stations. The study shows that a large concentration of advertisers’ most coveted demographic - Adults 25-54 - are listening to radio online. The opt-in study, conducted earlier this year, had an incredibly high 47.9 percent opt-in rate. Formats seeing a more than 20 point gain include Urban Adult Contemporary, Classic Hits, Adult Contemporary, Country, Urban Contemporary, News/Talk and Oldies. Hot AC also saw a 19.5 percent gain, Alternative was up 15.7 percent, and Rhythmic CHR was up 15.5 percent.
"The big news here is that our digital listening audience is highly concentrated with 25-54 year olds," stated Evan Harrison, EVP of Clear Channel Radio and president of the company’s digital unit. "We can now share with our ad partners the quality of our audience as well as the quantity in real-time, which adds up to 15 percent to our terrestrial broadcasts."
Ando Media surveyed listeners clicking the "Listen Live" button on Clear Channel Radio websites. No user saw the survey more than once.
Pandora Planning To Hit The Road With In-Car Access
Popular Internet radio site Pandora has its sights set on moving beyond computers and mobile devices, and in to automobiles. SlashGear.com reports that Pandora Chief Technology Officer Tom Conrad revealed at the SF Music Tech Summit that the company is working on a plan to offer free, in-car streaming.
Conrad said that approximately half of Pandora's users listen to the service in their car, via mobile devices and other means. Pandora is in talks with the auto companies, including Ford, to develop some sort of hands-free methods of getting the service into cars.
Pandora's long-term, in-car goal is to be integrated into vehicle entertainment systems, complete with a subscription price tag included in the cost of the vehicle itself. Conrad said such a service would be positioned to challenge terrestrial and satellite radio. He said there is no time table for this project, but did note that Pandora would be making some announcements about such a service at January's Consumer Electronics Show.
Skype, Kazaa Founders Launch Rdio Streaming App (Beta)
Eliot Van Buskirk
Janus Friis and Niklas Zennstrom think they can succeed where others have failed, in convincing music fans to spend a few dollars each month on an unlimited music subscription service. If these were any two regular Joes, we’d be inclined to shrug off their upcoming Rdio service, whose iPhone app appeared in iTunes Thursday, as yet another me-too effort destined to be driven into the ground by high music-licensing costs, a slim advertising market and consumer indifference to yet another music service.
Rdio users can browse their cloud-based music collections by scrolling or tapping through the alphabet on the right.
But Janus and Niklas have two big megahits under their belt already — the Kazaa file sharing network and the Skype VOIP service — so we’re inclined to take their San Francisco–based Rdio service seriously, even in advance of its launch early next year.
“We have watched many ad-supported music businesses come and go,” conceded Friis in a statement in October announcing the upcoming service. “We felt the time was right to revisit this space, this time with a compelling offering and a sustainable subscription model.”
Rdio is currently restricted to a private beta, to which the press does not appear to be invited. (If you have an invite, we would love to hear from you.) But late Thursday, Music Ally (subscription required) spotted the Rdio app in the iPhone store, which offers additional hints about what this subscription (i.e., ad-free) service will look and feel like.
The Rdio iPhone app includes tabs for Collection, Search, Playlists and Notifications. The Collection tab lets users find music in their cloud-based account by artist, while the Search tab links up to the service’s online catalog so that users can find new music to add to their accounts. The Playlists tab offers access to the play queue, user-created playlists and collaborative playlists — a feature also available in Spotify. Also like Spotify, changes made to playlists on the mobile will almost certainly show up on the computer-based version of the service and vice versa, providing seamless switching between the mobile and computer versions of the service.
The Notifications tab is a bit more mysterious, but our screenshot to the right sheds a sliver of light on the situation. Rdio’s Notifications feature relies on the iPhone’s relatively recently acquired ability to receive push notifications to pull in “alerts, sounds and icon badges” from the service or other users. Rdio likely includes social features that let users zing tracks, playlists and albums to each other, and badges denoting status or membership in groups.
Unlike Spotify, the computer version of Rdio will be web- rather than application-based. This means that unlike their other two major creations, Kazaa and Skype, Rdio will lack a peer-to-peer component. (Spotify’s use of an application allows it to save on bandwidth by having users stream music to each other.)
Rdio’s official description of its iPhone app paints it as another contender for the celestial jukebox crown:
Eminem Named Artist of Decade on U.S. Charts
Eminem has earned Billboard's artist of the decade title, just slightly more than 10 years after he made his Billboard Hot 100 debut.
The decade-end artist recap ranks the best-performing acts of the past 10 years (from December 4, 1999, to November 28, 2009) based on activity on two charts: the Billboard 200 albums list and the Billboard Hot 100 songs tally.
The hip-hop king first graced the Hot 100 chart February 27, 1999, with "My Name Is," then racked up another 27 entries from 2000 onward. On the Billboard 200, all five of his sets released in the decade reached No. 1. Additionally, his album "The Slim Shady LP" debuted and peaked at No. 2 in the spring of 1999, but continued to chart in 2000.
Eminem is also the top male artist of the decade. The female honor goes to Beyonce, while the top duo/group is Nickelback.
Beyonce's solo career began in the 2000s, notching 23 Hot 100 singles and five No. 1s. On the Billboard 200, she's racked six entries, including three studio efforts that all went to No. 1.
As for Nickelback, its entire Hot 100 history is contained in the '00s, and it started off well with its first No. 1, "How You Remind Me." The rock act has since earned five more top 10 singles. The group's last four albums reached the top 10 on the Billboard 200, including the No. 1 set "All the Right Reasons," which spent 156 weeks on the list.
Though Eminem is the decade's top artist, he was not the top performer for any single year. In 2000 and 2001, Destiny's Child netted the prize, followed by Nelly in '02, 50 Cent in '03 and '05, Usher in '04, Chris Brown in '06 and '08, Akon in '07 and Taylor Swift in '09.
Eminem helped kick off the decade with a bang, as "The Marshall Mathers LP" was one of five albums in 2000 to sell at least 1 million copies in one week. On the Billboard 200 dated June 10, 2000, it opened at No. 1 with 1.8 million, just a week after Britney Spears' "Oops! ... I Did It Again" debuted at No. 1 with 1.3 million and two months after 'N Sync set the one-week Nielsen SoundScan sales high of 2.4 million with "No Strings Attached."
"Strings," the pop quintet's second album, tops the decade-end Billboard 200 albums tally, ahead of Usher's "Confessions" (No. 2) and Eminem's "The Eminem Show" (No. 3).
All told, of the 20 biggest one-week sales frames for an album in SoundScan's 18-and-a-half-year history, 14 of them were in the 2000s. On the flip side, of those 14 weeks, only three of them came in the last half of the decade, thanks to the debut weeks of 50 Cent's "The Massacre" (2005, 1.1 million), Kanye West's "Graduation" (2007, 957,000) and Lil Wayne's "Tha Carter III" (2008, 1 million).
So what happened in the late '00s? The collision of supernova-bright pop stars in the early 2000s with the limited availability of commercial singles yielded tremendous album sales achievements and Billboard 200 triumphs. But by the middle of the decade, those wild and crazy days were mostly a thing of the past, thanks to the single biggest thing to change the music industry and Billboard's charts in 2000s: the Internet.
Once consumers popularized file-sharing services and used digital retailers like Apple's iTunes store, the Billboard 200 started to reflect many music buyers' desire for single-song purchases instead of a full album.
In the first half of the 2000s, the No. 1 album on the Billboard 200, on average, sold 399,947 copies in a week. On the Hot 100 Singles Sales chart -- which tracked physical singles -- the average at No. 1 was just 43,895. Move forward to the second half of the decade, and the No. 1 on the Billboard 200 averaged 286,540, while the No. 1 on Hot Digital Songs averaged 154,445.
Digital retailers provided a jolt of energy to the charts after SoundScan began including download sales in its tallies in 2003. By that point, physical singles were essentially absent from the market, so the availability of individual song downloads juiced the sales/airplay hybrid Hot 100 chart. In turn, the 51-year-old list transformed from a ranking of officially promoted singles to an all-encompassing, anything-goes tally where numerous songs from one act could chart concurrently.
Case in point: The young, digitally oriented fans of 15-year-old singer Justin Bieber recently drove all seven of the songs on his debut CD, "My World," onto the Hot 100, even though not all of them were being officially promoted to radio stations or retailers as "singles."
Among digitally driven feats, the reigning best-selling digital song of all time, Flo Rida's "Low" (5.2 million and counting), is anything but low on the decade-end Hot 100 songs recap, as it's ranked No. 3.
Ahead of it at No. 2 is Usher's inescapable 2004 single "Yeah!," while Mariah Carey's "We Belong Together" tops the decade-end list.
Usher takes the title of the Top Hot 100 Artist of the Decade, which can't be much of a surprise considering his stranglehold on the tally from 2001 through 2008. In that time, he racked up 13 consecutive top 20 singles, with seven of them reaching No. 1. And, those seven chart-toppers collectively spent 41 weeks at No. 1 -- the most weeks atop the list for any act in the decade.
With Carey's crowning of the decade-end Hot 100 songs list with "We Belong Together," she now owns the most popular songs of the '90s and the '00s, as her duet with Boyz II Men, "One Sweet Day," was No. 1 on the '90s-end recap.
"We Belong Together" spent 14 weeks at No. 1 on the Hot 100 chart during the decade, tying the Black Eyed Peas' "I Gotta Feeling" for the most weeks atop the list in that span. The Peas' anthem is at No. 5 on the decade-end Hot 100 Songs retrospective, one step below the duo/group of the decade, Nickelback, with "How You Remind Me."
Collectively, the top nine finishers on the Hot 100 Songs recap spent 90 cumulative weeks at No. 1, thanks in part to the one-two punch of "Together" and "Feeling." The highest-ranked non-No. 1 song on the Hot 100 songs review is at No. 10: "Apologize" by Timbaland featuring OneRepublic. The song peaked at No. 2 for a month, but due in part to its lengthy 47-week chart run, it ranks higher on the Hot 100 Songs recap than many No. 1 hits. "Apologize" not only lingered for nearly a year on the Hot 100, but it spent 25 weeks in the top 10 -- the most of any single in the past decade.
On the Hot 100 Songwriters decade-end tally, Timbaland finishes atop the list, courtesy of the performance of the 63 charted hits he wrote or co-wrote in the decade. Directly below Timbaland at No. 2 on the list (viewable in full at Billboard.biz) is Pharrell Williams, one-half of the production duo the Neptunes.
EMI: Vimeo Non-Compliant
Who would want to sue Vimeo? The video-sharing site was never meant to be a hub for illicit Simpsons clips and films broken into 10-minute increments; it was supposed to be about original content and community. "From the beginning, Vimeo was created by filmmakers and video creators who wanted to share their creative work, along with intimate personal moments of their everyday life," is how the site describes itself.
Since its founding in 2004, Vimeo has largely avoided the content-related problems (and lawsuits) that have dogged similar services like Veoh and YouTube. But, according to major music label EMI, Vimeo has a double standard: its video content is indeed original, but the audio tracks to those videos are too often unlicensed copies of full songs. EMI has filed a pair of lawsuits in federal court, alleging all manner of copyright violations.
Lip synching and indie films
EMI is upset about "official music videos, live concert footage, videos consisting entirely of individuals 'lip-synching' musical compositions (also known as 'lip dubs,' a phrase coined by Vimeo and a practice encouraged by Vimeo and its staff), and videos featuring prominent musical soundtracks."
Vimeo will take down clips with infringing audio after receiving a DMCA notice from EMI, but the label complains that Vimeo won't even take down other clips that feature the exact same song, and it won't preemptively filter out videos that contain full audio tracks. YouTube does such filtering, and Vimeo does it for video, but refuses to take "simple measures" to protect music.
NewTeeVee's (otherwise worthwhile) description of the case makes it sound like this is an issue about lip dubs in particular—videos in which some random person films themselves lip synching to a favorite song. But EMI's actual concern is with all the full-song verbatim audio available on Vimeo. EMI isn't going after mash-ups, and is careful to say that it is "not seeking to stifle creativity or preclude members of the public from creating original, lawful audiovisual works." But it does want to stop usage of "the entire musical work deliberately and carefully synchronized into the video."
EMI even says that Vimeo allows uploads of "videos that consist of nothing more than a 'record player' playing a commercial recording."
From EMI's perspective, Vimeo or its users need to license such full tracks in exactly the same way that a TV producer would have to do it. "Many of these videos are equivalent to television programs or independent films, with music synchronized with the dialog or the visual material," says the lawsuit. Even YouTube takes out such licenses—recall its recent spat with Warner Music in which the two sides couldn't agree to the terms for a license renewal and Warner pulled its music from the site. User videos which contained such music had their audio muted.
So is this another case doomed to wreck itself on the jagged rocks of Vimeo's DMCA "safe harbor" immunity? Not according to EMI.
Leaving the safe harbor
The core assertion here is that Vimeo staff had actual knowledge of such infringement; that they exercise control over uploaded videos; that they have uploaded such videos themselves; and that staffers have even told community members that unlicensed music was fine to use.
"Our website is about original videos, not original music," said one Vimeo staffer quoted in the lawsuit. And EMI isn't pleased that Vimeo founder Jakob Lodwick actually coined the term "lip dubs" and has produced some of his own. Video clips featuring complete songs have also been featured as "Staff Picks" on the site. Vimeo staff also monitor the site for pornographic content and other violations of its guidelines.
Taken together, EMI argues that Vimeo has abandoned its safe harbor protections by having actual knowledge of infringement occurring on its site, and then profiting from that infringement. Other video-sharing sites have generally remained hands-off when it came to removing content or posting their own videos for precisely this reason.
In a recent case against video-sharing hub Veoh, Universal Music Group was unsuccessful in making the same argument—but UMG was also trying to argue the much more general point that Veoh "must have known" infringing content existed on the site. In the Vimeo suit, however, EMI appears to believe it has caught Vimeo with its hand in the cookie jar; Vimeo-sponsored lip dubs and staff encouragement of unlicensed music could well amount to specific knowledge of infringement.
As the DMCA says in section 512(c), operators must not have "actual knowledge that the material or an activity using the material on the system or network is infringing."
Police Shoot U.S. Student's Laptop Upon Entry to Israel
Bar Ben Ari and Or Hirshauga
Israel Border Police officers shot at an American student's laptop as she entered Israel via Taba, Egypt, two weeks ago.
Lily Sussman, 21, wrote on her blog that border police subjected her to two hours of questioning and searches prior to shooting her Apple Macbook three times.
"They had pressed every sock and scarf with a security device, ripped open soap and had me strip extra layers. They asked me tons of questions?where are you going?" Sussman wrote, describing the experience.
"Who do you know? Do you have a boyfriend? Is he Arab, Egyptian, Palestinian? Why do you live in Egypt? Why not Israel? What do you know about the 'conflict' here? What do you think? They quizzed me on Judaism, which I know nothing about," she continued.
Sussman said that she then heard an announcement on the loudspeaker. "It was something along the lines of, 'Do not to be alarmed by gunshots because the Israeli security needs to blow up suspicious passenger luggage,'" she wrote on her blog.
Moments later a man came to her and introduced himself as the manager on duty. "I'm sorry but we had to blow up your laptop," Sussman said he told her.
"The security officers did not ask about my laptop prior to shooting it," Sussman told Daily News Egypt. "They used the word 'blew up' when they told me they destroyed my laptop. I don't know why they shot it."
Sussman said the guards also looked through the photos saved on her camera, flipped through her journal and asked her about a map a friend had drawn for her that pointed out a main street, central bus station and the hostel where she was planning on stayig in Jerusalem.
She added that she had also been carrying an Arabic phrasebook, stamps from Syria, Qatar and the UAE and a Palestinians in Palestine guidebook.
The Israel Airports Authority said in response to the story: "A check that the lady's luggage underwent raised an indication that required security figures to act according to procedures. A police, who carried out the stated operation, was called to the scene. We suggest that the Israel Police be approached for any additional information."
Sussman managed to salvage the hard and guards gave her an address where she would be reimbursed for her mangled laptop, she told Daily news Egypt. "I'm going through the process of compensation," she said. "It supposedly will take about one month to receive the money."
House Delays Patriot Act Spy Vote
The House of Representatives tabled on Wednesday legislation to reform U.S. surveillance law. The two-month delay puts off a collision with a competing Senate version.
The move automatically extends provisions of the Patriot Act that would otherwise expire at year’s end. The Senate is likewise expected to delay the matter.
The act, hastily adopted six weeks after the 2001 terror attacks, greatly expanded the government’s ability to spy on Americans in the name of national security.
A key difference between the House and Senate packages concerns the standard by which the FBI may issue so-called National Security Letters — although Wednesday’s vote prolongs the time for more backroom negotiations. Reforming NSL powers is a key bone of contention in the Patriot Act debate, even though it is not one of the three Patriot Act provisions that was scheduled to expire Dec. 31.
NSLs allow the FBI, without a court order, to obtain telecommunication, financial and credit records relevant to a government investigation. The FBI issues about 50,000 NSLs annually, and an internal watchdog has found repeated abuses of the NSL powers.
A House version permits NSLs in cases concerning terrorism or spy activities of an agent of a foreign power. If it became law, such a plan would vastly reduce whom the government could target. The Senate version generally would leave NSLs under the status quo.
Under Wednesday’s action, the NSL-reform vote is also delayed until the New Year. And the three expiring provisions will remain in force at least through February. The extension came as House Speaker Nancy Pelosi (D-California) balked at a Senate plan to include Patriot Act amendments into a $636 billion Pentagon funding measure, saying doing so would create “revolt on the left.”
One of the Patriot Act provisions that was set to expire concerns the FBI obtaining wiretaps from a secret court — known as the Foreign Intelligence Surveillance Act Court or FISA court — without having to identify the target or what method of communication is to be tapped.
Another provision in question is the so-called “lone wolf” measure that allows FISA court warrants for the electronic monitoring of a person for whatever reason — even without showing that the suspect is an agent of a foreign power or a terrorist. The government has said it has never invoked that provision, but that it wants to retain the authority to do so.
The third and final provision concerns one of the more controversial provisions of the Patriot Act — Section 215. The section allows the secret FISA court to authorize broad warrants for most any type of record, including those held by banks, libraries and doctors without requiring the government to show a connection between the items sought under a Section 215 warrant and a suspected terrorist or spy.
A Senate version and a House version require such a connection when it comes to library records.
Intelligence Improperly Collected on U.S. Citizens
Charlie Savage and Scott Shane
In February, a Department of Homeland Security intelligence official wrote a “threat assessment” for the police in Wisconsin about a demonstration involving local pro- and anti-abortion rights groups.
That report soon drew internal criticism because the groups “posed no threat to homeland security,” according to a department memorandum released on Wednesday in connection with a Freedom of Information Act lawsuit. The agency destroyed all its copies of the report and gave the author remedial training.
That was just one of several cases in the last several years in which the department’s intelligence office improperly collected information about American citizens or lawful United States residents, the documents show.
In March 2008, the office produced a “terrorism watch list” report about a Muslim conference in Georgia at which several Americans were scheduled to speak, even though it “did not have any evidence the conference or the speakers promoted radical extremism or terrorist activity,” and such speech is constitutionally protected, an internal report said.
And in October 2007, the office sent a report, “Nation of Islam: Uncertain Leadership Succession Poses Risks,” to hundreds of federal officials. Department guidelines had called for the files to be destroyed because the assessment of the group had lasted more than 180 days without uncovering evidence of potential terrorism.
In all three cases, after other Homeland Security Department officials raised concerns, copies of the reports were destroyed. The agency also held a workshop on intelligence-gathering “while ensuring the protection of civil rights and civil liberties” after the Nation of Islam incident.
The documents were released by the Justice Department in connection with a lawsuit filed by the nonprofit Electronic Frontier Foundation. It had sought reports to the Intelligence Oversight Board, a watchdog panel appointed by the president, by various agencies documenting violations of law, executive orders or presidential directives.
Marcia Hofmann, a staff lawyer with the foundation, praised agency officials for destroying the reports but said the public needed to know about such incidents.
“I think it’s a positive sign that these agencies responded to this and took steps to correct the situation,” Ms. Hofmann said, adding, “We would never have known that this happened had we not seen these internal reports.”
Matt Chandler, a spokesman for the Homeland Security Department, said, “We take very seriously our responsibility to protect the civil rights and liberties of the American people while” protecting the country.
Other documents released Wednesday were heavily censored because they involved classified information.
A February 2008 report from the National Security Agency, for example, has four pages almost entirely redacted, under the heading of intelligence activities “that violate law, regulation, or policy substantiated during the quarter, as well as actions taken as a result of the violations.”
In a 2007 report, top security agency officials said “intelligence oversight training is not managed effectively” at the N.S.A. and called procedures regarding training “confusing.”
A spokeswoman for the N.S.A., Judith A. Emmel, said that since 2007 the agency had “improved its oversight training program and continues to refine it.”
“Ensuring our work force is thoroughly and properly trained is something we take very seriously,” Ms. Emmel said.
Another memorandum disclosed that a Defense Intelligence Agency employee said that in May 2002, in response to a Congressional inquiry, the Joint Forces Intelligence Command provided false information about its activities related to Al Qaeda and the Sept. 11 attacks. The document offered few details.
The Justice Department also released other documents Wednesday from other Freedom of Information Act lawsuits related to national security policies during the Bush administration.
Among them was a letter written in 2002 by George J. Tenet, who was the director of the Central Intelligence Agency at the time, suggesting that a C.I.A. ban on using journalists as spies was not airtight.
After Islamic militants killed Daniel Pearl, a Wall Street Journal reporter whom they had falsely accused of working for the C.I.A., leaders of the American Society of Newspaper Editors asked Mr. Tenet to “declare unequivocally” that the agency’s spies never posed as journalists.
Mr. Tenet replied that for 25 years, the agency’s policy had been “that we do not use American journalists as agents or American news organizations for cover.” But he refused to make what he described as “a blanket statement that we would never use journalistic cover.”
Instead, he wrote, “the circumstances under which I would even consider any exception to this policy would have to be truly extraordinary.”
Computer Says No: Google Slams Filter
Internet search giant Google has come out in opposition to the Federal Government's push to introduce mandatory ISP filtering.
In a post on Google Australia's official blog, the company said the plan raised concerns about censorship.
"At Google we are concerned by the Government's plans to introduce a mandatory filtering regime for Internet Service Providers (ISP) in Australia, the first of its kind amongst Western democracies," the post said.
"Our primary concern is that the scope of content to be filtered is too wide."
While Google accepted there must be some limits on internet content, it condemned the Government's filtering approach as heavy-handed.
"We have a bias in favour of people's right to free expression," the post said.
"While we recognise that protecting the free exchange of ideas and information cannot be without some limits, we believe that more information generally means more choice, more freedom and ultimately more power for the individual.
"Some limits, like child pornography, are obvious. No Australian wants that to be available - and we agree. Google, like many other internet companies, has a global, all-product ban against child sexual abuse material and we filter out this content from our search results.
"But moving to a mandatory ISP filtering regime with a scope that goes well beyond such material is heavy-handed and can raise genuine questions about restrictions on access to information."
Citing a recent report into filtering, Google said the use of refused classification (RC) as a screening tool would go far beyond restricting illegal content.
"The recent report by Professors Catharine Lumby, Lelia Green and John Hartley - Untangling The Net: The Scope of Content Caught By Mandatory Internet Filtering - has found that a wide scope of content could be prohibited under the proposed filtering regime," the post said.
"Refused classification is a broad category of content that includes not just child sexual abuse material but also socially and politically controversial material - for example, educational content on safer drug use - as well as the grey realms of material instructing in any crime, including politically controversial crimes such as euthanasia.
"This type of content may be unpleasant and unpalatable but we believe that government should not have the right to block information which can inform debate of controversial issues."
But the Federal Government maintains the new filter rules are not intended to curtail freedom of speech.
Google said the Government should instead focus on education and providing effective filtering tools for individuals.
"While the discussion on ISP filtering continues, we should all retain focus on making the Internet safer for people of all ages," the post said.
"Our view is that online safety should focus on user education, user empowerment through technology tools, and cooperation between law enforcement and industry partners. The Government has committed important cyber safety education and engagement programs and yesterday announced additional measures that we welcome."
Google also defended weighing into the controversy, saying discussion on contentious issues was needed for effective democracy.
"Exposing politically controversial topics for public debate is vital for democracy," it said.
"Homosexuality was a crime in Australia until 1976 in ACT, NSW in 1984 and 1997 in Tasmania. Political and social norms change over time and benefit from intense public scrutiny and debate.
"The openness of the internet makes this all the more possible and should be protected.
"The Government has requested comments from interested parties on its proposals for filtering and we encourage everyone to make their views known in this important debate. "
Until next week,
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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.
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