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Old 10-02-10, 07:55 AM   #1
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Default Peer-To-Peer News - The Week In Review - February 13th, '10

Since 2002

"You've trusted this chip to hold your secrets, but your secrets aren't that safe." – Christopher Tarnovsky

"We therefore reject imposed censorship like this." – Atle Lessum

"The sense of entitlement of the American consumer is absolutely astonishing." – Douglas Preston

"I would be scared to death about a culture of piracy taking hold. I wouldn’t mess around with [e-book] price increases." – Joel Waldfogel

February 13th, 2010

Convictions Upheld in Max Hardcore Porn Case
Elaine Silvestrini

Pornographic materials sold over the Internet may be considered obscene in one community and perfectly acceptable in another.

A federal appeals court says communities that find the materials objectionable are within their rights to prosecute the pornography producers, even though the items were not specifically directed at those communities.

Ruling in the Tampa federal prosecution of Paul F. Little, also known as Max Hardcore, the 11th U.S. Circuit Court of Appeals says the law doesn't recognize a national community standard for Internet-based material.

The Atlanta-based court rejected arguments by Little's attorneys that applying a local community standard to the Internet violates the First Amendment because doing so means material can be judged according to the standards of the strictest communities.

In other words, the materials might be legal where they were produced and almost everywhere else. But if they violate the standards of one community, they are illegal in that community and the producers may be convicted of a crime.

The court upheld the 2008 convictions of Little and his production company on 10 violations of federal obscenity laws. But it ordered that Little be resentenced, ruling that the sentencing judge should not have considered the profits from sales of the obscene materials, whether or not they were sold in the Tampa court's jurisdiction.

Little, 53, is in a minimum security prison in Texas serving a 46-month sentence handed down by U.S. District Court Judge Susan Bucklew in January 2009. He has a projected release date of May 29, 2012.

Little is from California but was tried in Tampa after investigators here ordered his videos through the mail and downloaded them over the Internet.

Jurors in Little's trial were told to judge the materials on the basis of how "the average person of the community as a whole – the Middle District of Florida – would view the material."

Little's lawyers maintained that standard was unworkable when dealing with the Internet.

Federal courts are divided on the issue, which could mean it will ultimately be addressed by the U.S. Supreme Court.

The ruling in the Little case applies only in Florida, Alabama and Georgia.

A federal appeals court in California ruled in another case three months ago that a national community standard must be applied when regulating obscene materials over the Internet.

A three-judge panel of the 11th Circuit, however, wrote that they "decline to follow the reasoning" of the California court.

Because the materials in the Little case were ruled to be illegal only in the Middle District of Florida, the sentence had to be limited to the defendants' activities in the district, the Atlanta-based appeals court ruled.

Therefore, Bucklew should not have increased Little's sentencing level under federal guidelines, which penalize defendants for financial gain over $30,000. Little and his company made $40,000 selling the disputed materials.

But the appeals court said there was no evidence of how much of that money was generated in the Middle District of Florida. The panel ordered Little be resentenced at a lower level.

The court said Bucklew acted appropriately, however, when she increased Little's guideline level because the videos were sadistic, masochistic or violent.

The videos featured scenes of vomiting and urination, depicting women being forced to ingest various bodily fluids.

China Jails Man 13 Years For Running Porn Site

A man in southern China was sentenced to 13 years in jail for running a pornographic Web site, a state news agency reported Sunday, amid a national crackdown on lewd online content.

The court in the Guangdong province city of Jiangmen handed down the sentence to Huang Yizhong and fined him 100,000 yuan ($14,600), the official Xinhua News Agency said.

Huang pleaded guilty to charges of copying and spreading pornographic material on the Web site, which he ran since 2005 using a rented U.S. server, Xinhua said. Police caught him last July and his trial started Jan. 6.

It said Huang downloaded more than 1,000 pornographic movies and edited them into video clips for his site. With more than 4,000 paying members, he received profits of nearly $500,000, Xinhua said.

Last year, Chinese authorities caught nearly 5,400 people suspected of involvement in online pornography and vowed to strengthen Internet policing.

Beijing's pervasive policing of the Internet is already among the world's most stringent. Authorities have said the "purification of the Internet" and fighting of online crime are closely tied to the country's stability.

The Communist government says the main targets of its Web censorship are pornography, gambling and other sites deemed harmful to society. Critics, however, say those goals often act as a cover for detecting and blocking sensitive political content. China's restrictions of the Internet are often referred to as the "Great Firewall of China."

Chinese Video Takes Aim at Online Censorship
Loretta Chao, Juliet Ye And Aaron Back

The latest battle over Internet freedom in China is playing out in an online movie that pits an armored blue beast and his band of antiauthoritarian rogues against a sinister force called Harmony that seeks to clean up the Web.

The video, called "War of Internet Addiction," is a send-up of government censorship starring videogame characters that has become one of the hottest things on the Chinese Internet, epitomizing the unruly spirit that thrives on the Web despite an intensifying crackdown on free expression in China.

The 64-minute video consists entirely of footage shot in the virtual universe of "World of Warcraft," a wildly popular online game from Activision Blizzard Inc. in which millions of players around the world do battle via magical avatars.

The movie's plot centers on gamers' frustration with an actual bureaucratic battle over regulation of the Chinese edition of the game, but its subtext is a broad, biting allegory of the fight against government Internet controls, peppered with allusions to a list of real-world conflicts in China over the past year. The Chinese version of World of Warcraft is licensed by Netease.com Inc. and is operated independently from overseas versions of the game.

In the video's climactic scene, Kan Ni Mei, the blue, armored, ox-like hero, faces off with a villain sent by Harmony who threatens to destroy the gamers with the "power of Green Dam"—a reference to the Web-filtering software that the government last year tried to compel personal-computer makers to install on all PCs sold in China. Kan Ni Mei addresses his cohorts: "Please raise your hands up. I need your strength," he says. "When they blocked YouTube, you didn't act. When they blocked Twitter, you didn't act."

The other characters explain that they are afraid to speak out. But "silence absolutely doesn't mean obedience," they say, before sending Kan Ni Mei virtual bursts of energy that he uses to slay the Green Dam-wielding villain.

The government since last year has stepped up its controls by closing domestic Web sites, blocking foreign ones like Twitter and YouTube, and arresting online dissidents.

Last month, Google Inc. threatened to leave the Chinese market, in part because of frustration over censorship, and U.S. Secretary of State Hillary Clinton vowed to make fighting Web controls like those Beijing uses a priority of American foreign policy.

Within China, a country with a long history of political debate through allusion, the protests against censorship are sometimes less than explicit, but no less pointed. And if anything, the government's recent crackdown seems to have increased the spirit of defiance among many Internet users who bristle at the constraints imposed on them.

A small-but-growing number among China's nearly 400 million Internet users—the most of any country—are using proxy servers and other tools to "fan qiang," or "scale the wall" of government censorship tools that interrupt access to many overseas sites.

The biggest object of ridicule in "War of Internet Addiction" is clear: "Harmonious" is the watchword of China's current Communist Party leadership, which talks about "harmonious society" to describe its aim of eliminating social unrest, in part by stifling dissent. Chinese Web users frequently use "harmonize" as a euphemism for censorship.

The movie includes jokes about many controversial topics, such as tainted food, soaring home prices, and a bitter class controversy that erupted last year after a wealthy driver ran down and killed a poor young pedestrian. A common theme is frustration over injustice and a sense of powerlessness.

The movie follows Kan Ni Mei and fellow gamers as they seek ways to continue playing World of Warcraft in China. In real life, access to the game in China has been disrupted for months as its Chinese operator, Netease.com, waits for regulators to settle internalbureaucratic battles and approve it.

The video reserves special scorn for officials and others who criticize videogames as addictive and destructive for young people. The villain who hero Kan Ni Mei destroys in the climactic scene is called "Crying Beast Yang Yongxin," named after a Chinese psychiatrist who has been outspoken against "Internet addiction" and who has run clinics that have been accused of using shock therapy to treat the supposed affliction.

"War of Internet Addiction," which was made in December and January, has been enormously popular since it hit the Web last month.

Kaiser Kuo, a consultant for Youku.com, one of China's most popular online video Web sites, says the video was an instant hit, and estimates it has attracted at least several million views.

The video has spawned extensive analysis and commentary, with some viewers saying it brought them to tears. The response from viewers was "overwhelmingly positive," Mr. Kuo said.

Despite its subversive theme, the video was yet to be censored itself—at least as of late Thursday.

What content censors choose to expunge—and when—is often mysterious, because the government doesn't make its policies public.

One explanation: that the government might be hoping to avoid making the movie a greater cause célebre than it already is.

"War of Internet Addiction" was the brainchild of a Chinese World of Warcraft enthusiast who goes by the alias "Corndog." Corndog hasn't disclosed his real name, and he declined an interview request from The Wall Street Journal.

In interviews with Chinese media, though, he has said he produced the film with about 100 online volunteers.

The group would "shoot" scenes for the movie within the game while on an Internet-based conference call, with Corndog directing people on what to make their game characters say and do.

Corndog said he made the video for fellow World of Warcraft players, and didn't expect it to resonate with a wider audience.

"The last part of the video moved many people, including those who do not play the game, since we actually live in the same society and we are facing the same Internet environment," he said in an emailed response to questions from a Phoenix TV reporter last month. The strong response "should make decision-makers ponder."

The movie concludes with a sobering warning for opponents of Internet control. As celebration breaks out after the climactic victory of Kan Ni Mei and his allies over Crying Beast, the Harmony computer system warns them that "This war will never end." Then American rocker Jon Bon Jovi's "Bells of Freedom," a song about standing up against adversity, plays as the credits roll.

Google Baulks at Conroy's Call to Censor YouTube
Asher Moses

Google says it will not "voluntarily" comply with the government's request that it censor YouTube videos in accordance with broad "refused classification" (RC) content rules.

Communications Minister Stephen Conroy referred to Google's censorship on behalf of the Chinese and Thai governments in making his case for the company to impose censorship locally.

Google warns this would lead to the removal of many politically controversial, but harmless, YouTube clips.

University of Sydney associate professor Bjorn Landfeldt, one of Australia's top communications experts, said that to comply with Conroy's request Google "would have to install a filter along the lines of what they actually have in China".

As it prepares to introduce legislation within weeks forcing ISPs to block a blacklist of RC websites, the government says it is in talks with Google over blocking the same type of material from YouTube.

YouTube's rules already forbid certain videos that would be classified RC, such as sex, violence, bestiality and child pornography. But the RC classification extends further to more controversial content such as information on euthanasia, material about safer drug use and material on how to commit more minor crimes such as painting graffiti.

Google said all of these topics were featured in videos on YouTube and it refused to censor these voluntarily. It said exposing these topics to public debate was vital for democracy.

In an interview with the ABC's Hungry Beast, which aired last night, Conroy said applying ISP filters to high-traffic sites such as YouTube would slow down the internet, "so we're currently in discussions with Google about ... how we can work this through".

"What we're saying is, well in Australia, these are our laws and we'd like you to apply our laws," Conroy said.

"Google at the moment filters an enormous amount of material on behalf of the Chinese government; they filter an enormous amount of material on behalf of the Thai government."

Google Australia's head of policy, Iarla Flynn, said the company had a bias in favour of freedom of expression in everything it did and Conroy's comparisons between how Australia and China deal with access to information were not "helpful or relevant".

Google has recently threatened to pull out of China, partly due to continuing requests for it to censor material.

"YouTube has clear policies about what content is not allowed, for example hate speech and pornography, and we enforce these, but we can't give any assurances that we would voluntarily remove all Refused Classification content from YouTube," Flynn said.

"The scope of RC is simply too broad and can raise genuine questions about restrictions on access to information. RC includes the grey realms of material instructing in any crime from [painting] graffiti to politically controversial crimes such as euthanasia, and exposing these topics to public debate is vital for democracy."

Asked for further comment, a Google Australia spokeswoman said that, while the company "won't comply voluntarily with the broad scope of all RC content", it would comply with the relevant laws in countries it operates in.

However, if Conroy includes new YouTube regulations in his internet filtering legislation, it is not clear if these would apply to Google since YouTube is hosted overseas.

"They [Google] don't control the access in Australia - all their equipment that would do this is hosted overseas ... and I would find it very hard to believe that the Australian government can in any way force an American company to follow Australian law in America," Landfeldt said.

"Quite frankly it would really not be workable ... every country in the world would come to Google and say this is what you need to do for our country. You would not be able to run the kind of services that Google provides if that would be the case."

This week the Computer Research and Education Association (CORE) put out a statement on behalf of all Australasian computer science lecturers and professors opposing the government's internet filtering policy.

They said the filters would only block a fraction of the unwanted material available on the internet, be inapplicable to many of the current methods of online content distribution and create a false sense of security for parents.

CORE said the blacklist could be used by current and future governments to restrict freedom of speech, while those determined to get around the filters and access nasty content could do so with ease.

Google Shuts Down Music Blogs Without Warning

Bloggers told they have violated terms without further explanation, as years of archives are wiped off the internet
Sean Michaels

In what critics are calling "musicblogocide 2010", Google has deleted at least six popular music blogs that it claims violated copyright law. These sites, hosted by Google's Blogger and Blogspot services, received notices only after their sites – and years of archives – were wiped from the internet.

"We'd like to inform you that we've received another complaint regarding your blog," begins the cheerful letter received by each of the owners of Pop Tarts, Masala, I Rock Cleveland, To Die By Your Side, It's a Rap and Living Ears. All of these are music-blogs – sites that write about music and post MP3s of what they are discussing. "Upon review of your account, we've noted that your blog has repeatedly violated Blogger's Terms of Service ... [and] we've been forced to remove your blog. Thank you for your understanding."

Jolly as Google may be, none of the bloggers who received these notices are "understanding" in the least. Although such sites once operated on the internet's fringes, almost exclusively posting songs without permission, many blogs are now wined, dined and even paid (via advertising) by record labels. After the success of blog-buzzy acts such as Arcade Fire, Lily Allen and Vampire Weekend, entire PR firms are dedicated to courting armchair DJs and amateur critics.

Despite the de facto alliance between labels and blogs, not all of the record companies' legal teams have received the message. In a complaint posted to Google Support, Bill Lipold, the owner of I Rock Cleveland, cited four cases in the past year when he had received copyright violation notices for songs he was legally entitled to post. Tracks by Jay Reatard, Nadja, BLK JKS and Spindrift all attracted complaints under the USA's Digital Millennium Copyright Act, even when the respective MP3s were official promo tracks. As a publicist for BLK JKS' label, Secretly Canadian, told Lipold: "Apparently DMCA operate on their own set of odd rules, as they even requested that the BLK JKS' official blog remove the song." It's not clear who "DMCA" is in this case, as the act does not defend itself.

"I assure you that everything I've posted for, let's say, the past two years, has either been provided by a promotional company, came directly from the record label, or came directly from the artist," Lipold wrote to Google.

The company's first official response came only late yesterday, as #Musicblogocide2k10 sped up Twitter's trending charts. "When we receive multiple DMCA complaints about the same blog, and have no indication that the offending content is being used in an authorised manner, we will remove the blog," explained product manager Rick Klau. "[If] this is the result of miscommunication by staff at the record label, or confusion over which MP3s are 'official' ... it is imperative that you file a DMCA counter-claim so we know you have the right to the music in question."

The trouble with filing a formal, legal DMCA counter-claim is, that most bloggers don't know how. What's more, many of Blogger's DMCA notices allegedly omit the name of the offending song. Bloggers aren't even sure what they are denying.

Take the case of Masala, co-founded by Guillaume Decouflet in mid-2005. Together with his partners, Decouflet has introduced hundreds of thousands of readers to underground genres such as kuduro and funk carioca. Masala's writers weren't typical music bloggers, waxing lyrical about Neon Indian and the new Phoenix remix: mostly DJs, they shared South African electronica, Japanese dancehall, UK funky and Senegalese hip-hop. "We haven't been posting any Whitney Houston or anything," Decouflet explained. He only recalls receiving one DMCA notice – ever – from Blogger. As this email did not name the offending song, he says he doesn't know what caused the complaint. Masala's bloggers responded to Google's email, Decouflet insists, but never heard back. That is, until their entire site – and more than four years of archives – were deleted this week.

"It's just sad because we were documenting young people's music from all around the globe," Decouflet said. "For a lot of people, it was music they wouldn't have been able to discover elsewhere." Decouflet is now trying to "salvage" the Masala archive, using Google's own Reader tool to dig up old posts. Other banished blogs have taken similar steps. Living Ears, It's a Rap and Pop Tarts have relaunched at new URLs, generally without any older material.

Not all music blogs are as innocent as I Love Cleveland and Masala. Although the majority of bloggers share only single songs, showing particular affection for the obscure and out of print, some blogs are the most banal sort of pirates – offering links to download entire new releases. However, these sites are ostracised by the blogging mainstream, left off aggregators such as the Hype Machine. No one protests when Google quietly removes their Blogspot accounts and yet ironically, amid the "musicblogocide", dozens of these still remain online.

The two largest Blogspot-hosted music blogs, Gorilla vs Bear and My Old Kentucky Home, show no sign of being affected, although they will still find these developments alarming. "I don't post anything that's not approved, and obviously nothing on major labels," said Gorilla vs Bear's Chris Cantalini. "But apparently that doesn't matter in some of these cases."

In a press release last year, Google seemed to recognise this distinction, announcing a new policy vis-a-vis music bloggers. From now on, it wrote, DMCA notices would not result in the instant deletion of offending blogs. Instead, individual posts would be temporarily removed, with a prominent notice to help bloggers respond to the allegations. "Music bloggers are a large segment of our users – and we know that for those who've received one or more DMCA complaints in the past, this may have been a frustrating experience," Klau wrote in August. Almost six months later, the experience doesn't appear to have become any less frustrating.

Decouflet sounds weary. "Google is treating bloggers like Big Brother," he said. "Shoot first, ask questions after."

Iceland to be 'Journalism Haven'
Chris Vallance

Iceland could become a "journalism haven" if a proposal put forward by some Icelandic MPs aided by whistle-blowing website Wikileaks succeeds.

The Icelandic Modern Media Initiative (IMMI), calls on the country's government to adopt laws protecting journalists and their sources.

It will be filed with the Althingi - Iceland's parliament - on 16 February.

If the proposal succeeds it will require the Icelandic government to consider introducing legislation.

Julian Assange, Wikileaks' editor, told BBC News that the idea was to "try and reform Iceland's media law to be a very attractive jurisdiction for investigative journalists".

He has been in Iceland for a number of weeks and is advising MPs on the IMMI.

The hope is that journalist-friendly laws will encourage media businesses to move to Iceland.

"If it then has these additional media and publishing law protections then it is likely to encourage the international press and internet start-ups to locate their services here," Mr Assange said.

He believes the political mood in Iceland is receptive to the need for change.

"The Icelandic press has itself suffered from libel tourism, so there does seem to be the political will to push this through."

Wikileaks is a non-profit website that has established a reputation for publishing leaked material.

In October 2009, it posted a list of names and addresses of people said to belong to the British National Party (BNP).

Other high-profile documents hosted on the site include a copy of the Standard Operating Procedures for Camp Delta, a document that detailed restrictions placed on prisoners at Guantanamo Bay.

It recently had to suspend operations because of a lack of funding.

Legal threats

The IMMI aims to pull together good practice from around the world and incorporate it into a single body of law.

"We've found good laws in different countries but no country that has all of these laws put together," said Mr Assange.

The proposal has been informed by Wikileaks' experience in fighting legal threats to publication.

"In my role as Wikileaks editor, I've been involved in fighting off many legal attacks," Mr Assange said in an e-mail.

"To do that, and keep our sources safe, we have had to spread assets, encrypt everything, and move telecommunications and people around the world to activate protective laws in different national jurisdictions.

"We've become good at it, and never lost a case, or a source, but we can't expect everyone to go through the extraordinary efforts that we do."

Measures in the IMMI include legal protection for sources and whistleblowers and the protection of communications between sources and journalists.

'Transparent nation'

The proposals also include steps to end so-called "libel tourism", the practice of pursuing libel actions in the most favourable legal jurisdiction irrespective of where the parties are based.

But legal threats are faced not just by journalists, but by publishers, internet hosts and other "intermediaries", Wikileaks said. As a result, the proposals include plans to clarify the protection for "mere conduits".

Wikileaks has been working with a small group of Icelandic legislators on the issue.

One of the proposal's supporters, Birgitta Jonsdottir of The Movement, a political party with 3 MPs in the Icelandic parliament, told the BBC that she was confident the measure would become law.

"From what I have experienced from discussions with MPs from all the different parties, there is incredible good will," she said.

But the troubles of the financial sector may lead some Icelanders to be sceptical of efforts to transform their country and Ms Jonsdottir is aware of the need not to make exaggerated claims,

"We don't want to be the Vikings of transparency in the way the bankers presented themselves," she said.

But Ms Jonsdottir believes that making a strong statement in favour of freedom of expression could be a way for Iceland to create a positive new identity.

"There are still very many Icelanders who feel ashamed. I think it is part of the self-recovery we have to go through," she said.

'Positive support'

At a meeting with a small group of Icelandic MPs about the IMMI, to which the BBC had exclusive access, Mr Assange stressed how Iceland's image would benefit from becoming a champion of free speech.

For example, one of the proposals calls for the creation of The Icelandic Prize for Freedom of Expression which "promotes Iceland and the values represented in this proposal".

Whether arguments like that are persuasive enough to convince a majority of Iceland's legislators remains to be seen. Mr Assange says that at present around 14 MPs are known to support the proposal.

There is also interest in the IMMI among some members of the Icelandic government.

The Icelandic Minister for Education Culture and Sports Katrin Jakobsdottir told the BBC that she thought that "the general idea was good" and said that she thought that it "might get positive support".

But she stressed that it was very early days and that the changes would involve many ministries.

She said that elements of the proposal coincided with changes to media law currently being considered by her department.

But not everyone is convinced of the need for an Icelandic "journalism haven".

Andrew Scott Senior, lecturer in law at the London School of Economics and a critic of the need for extensive libel reform in the UK, said that caution was needed.

"The provisions allowing defendants to counter-sue 'libel tourists' in their home courts could transform the humble Icelander into a legal superman, virtually untouchable abroad for comment written - and uploaded - at home," he said.

"Its debatable whether such laws are ever appropriate."

His view is not shared by Mr Assange.

"We have received approximately 100 legal threats in the past 18 months so we are keen to see legislation that protects the press and quality reporting", he said.

At present Wikileaks operates in a number of different jurisdictions to "take advantage of good laws," he said.

"It seems the Icelandic proposal is going to pull all those laws together and put them in one place."

You can hear more about Wikileaks during the BBC's season on the BBC World Service.

Italy Changes Tack on Internet Regulation

U-turn likely as Parliament calls for change
Philip Willan

Observers and operators gave a cautious welcome Monday to proposed changes to a draft Italian broadcasting law that has been criticised as a menace to freedom of expression on the internet.

The draft decree was approved last Thursday by lawmakers on committees in the Senate and Chamber of Deputies (upper and lower houses of parliament) but with a request for sweeping changes, particularly in the section governing the internet, which had aroused widespread condemnation.

Deputy Communications Minister Paolo Romani, who was responsible for promoting the decree, said the government would "take rigorous account" of the lawmakers' suggestions.

"Given the differences in the texts approved by the Chamber and the Senate it is clear that we will have to find a way of harmonising them," Romani said.

Lawmakers said there would be no web censorship under the new rules.

"Blogs with amateur videos, online newspapers, search engines and the online versions of magazines are free, and editorial responsibility does not fall on providers who host content generated by others," Alessio Butti, the government lawmaker who drew up the text approved by the Senate committee, told reporters.

"The Chamber and Senate Commissions have proposed significant and positive changes to the draft broadcasting law," Marco Pancini, senior European public policy counsel for Google Italy, said in a prepared statement Monday.

Google's YouTube subsidiary is being sued by Prime Minister Silvio Berlusconi's Mediaset broadcasting company for alleged copyright violation for allowing users to post videos taken from the company's three national TV networks. Under the original draft of the broadcasting law, which the government says enacts a European Union directive, YouTube risked being treated as a conventional television broadcaster, requiring a special licence from the government and assuming editorial responsibility for all material uploaded to its website.

"It is premature to give a definitive verdict. The text still needs to be finalised and the government still needs to accept the amendments," Pancini's statement said.

Paolo Nuti, president of the Association of Italian internet Providers (AIIP), said he welcomed the change of heart expressed by the parliamentary committees but pointed out that their recommendations were not binding on the government.

"What counts is the text that comes out from the government. There is just one problem: that the recommendations of the European Union directive on electronic commerce are incorporated into Italian law. If I don't have that written down in black and white I can't be satisfied," Nuti said in a telephone interview.

"My impression is that the government realised its text went well beyond the terms of the EU directive. Certainly the parliamentary committees have realised that."

Bloggers were also quick to welcome the government's apparent U-turn.

"This is a new U-turn made necessary by the incompetence of the geriatric ward that, unfortunately for us, on both sides of the political spectrum, occupies Italy's seats of power," said Andrea Guida, writing on the blog geekissimo.

"It seems that asking that a law on a delicate subject like the web be written by someone aged under 60 is asking too much."

The government's initial attempt to tighten control of the internet was also decried by Nicola D'Angelo, a commissioner in the Communications Authority, which is likely to be given a role in policing internet video content under the new law.

"Personally I am opposed to sheriffs of the web," D'Angelo said in an interview published Saturday by the Turin daily La Stampa. "There is a general tendency to try to exercise greater control over internet. That is particularly grave in a country like ours where other forms of communication already show signs of a heavy concentration."

Much of that concentration is in the hands of Silvio Berlusconi, whose family owns newspapers, magazines, book publishers and three national TV networks, and who exercises indirect control of the state broadcaster RAI through parliament.

It will be reassuring for Berlusconi to know that one of the people responsible for rewriting the law in the Chamber of Deputies committee is Deborah Bergamini, a member of his People of Freedom Party and his former personal assistant. Bergamini was briefly suspended from her duties as a director of marketing when she worked previously for RAI over allegations that she maintained telephone contact with colleagues at Mediaset to coordinate coverage of major news events.

The Pirate Bay Blocked in Italy, a Second Time
Andre Yoskowitz

The Pirate Bay blocked in Italy, a second time After first being blocked in 2008, an Italian court has once again ruled that ISPs in the nation must block access to the infamous torrent tracker The Pirate Bay, leaving millions of users without access to one of the most popular sites on the planet.

In the original case, after an appeal by the Pirate Bay, the Court of Bergamo ruled that foreign websites cannot be blocked over alleged copyright infringement. Fast forward until today and the Supreme Court has ruled that ISPs can indeed be forced to block torrent sites, even if they are foreign-based.

The ruling says any site that offers torrent links to connect to copyrighted material is "engaging in criminal activity," says TF.

Of course there are proxies, and thousands of other smaller sites that are not yet blocked, so it is not as if Italian torrent fans are in complete trouble.

Norway Court Rejects Industry Bid to Block The Pirate Bay

A Norwegian court has rejected a record industry appeal against telecoms operator Telenor for refusing to block access to popular file sharing website The Pirate Bay, a plaintiff said Wednesday.

The Oslo court of appeal said that it is not currently possible, under Norwegian law, for a judge to order an Internet service provider to halt traffic to websites from which illegal downloading happens.

"In the spirit of the law on intellectual property, Telenor does not contribute to behaviour that is reprehensible or could be subject to awarding compensation" by letting its customers access The Pirate Bay.

The extract of the court's verdict was published by Tono which is Norway's Performing Rights Society and one of the plaintiffs in the case.

Tono argues that the European directive on intellectual property "has not been correctly implemented in Norwegian law."

Before the case was first heard in November last year, Telenor argued that it refused to implement what it called "censorship."

"You cannot sue a ladder manufacturer because someone used one of his ladders to commit a burglary," Atle Lessum, a spokesman for Telenor, told the newspaper Verdens Gang before the hearing.

"We therefore reject imposed censorship like this," he added.

The Norwegian government has announced it would review its intellectual property law in the light of new technologies.

Founded in 2003, The Pirate Bay makes it possible to skirt copyright fees and share music, film and computer game files using bit torrent technology, or peer-to-peer links offered on the site.

None of the material can be found on The Pirate Bay server itself.

In Secret, Nations Work Toward Crackdown on Piracy
Eric Pfanner

Behind a veil of secrecy, the United States, the European Union, Japan and other countries are forging ahead with plans to coordinate an international crackdown on illegally copied music, movies, designer bags and other goods that change hands in sidewalk souks and Internet bazaars.

Negotiators, under intense pressure from media companies, luxury brands and other corporate victims of piracy, are scrambling to complete a so-called Anti-Counterfeiting Trade Agreement by the end of the year.

But the process is running into growing criticism from Internet campaigners, lawmakers and even some people involved in it.

After the most recent round of negotiations late last month in Guadalajara, Mexico, news of disagreements has been trickling out, despite an official vow of silence from the participants, which has itself become a main source of friction.

E.U. negotiators, for example, are said to have balked at a U.S.-backed proposal to require Internet service providers to take tough steps against digital piracy.

Under such a structure, leaked papers from the Union show, Internet providers might be required to filter out illegally copied songs and films from their networks or to sever copyright violators’ Internet connections.

Many nations are said to have drafted alternatives to the U.S.-backed proposal, seeking alternatives to those demands.

“Our system allows for flexibility,” said one person with knowledge of the E.U. position, who insisted on anonymity because of nondisclosure agreements governing the talks. “The E.U. cannot accept an agreement that mandates a single solution.”

Within Europe, different countries have pursued a range of approaches to dealing with Internet piracy. Last year, France approved a so-called three-strikes system, under which illegal file-sharers who ignored two warnings to quit could face the loss of Internet access.

Britain has proposed similar legislation. But German and Swedish officials have ruled out such measures, and politicians elsewhere in Europe have sought to enshrine Internet access as a fundamental human right.

Details of what has actually been discussed remain sketchy. Though the talks have been going on for two years, texts of the proposed deal have been sealed from public view.

Critics say the lack of transparency is highly unusual for a trade agreement with so many parties involved, especially since the deal could influence the workings of the Internet and affect hundreds of millions of people around the world.

“You’d think it was nuclear weapons kind of stuff, not intellectual property law,” said Eddan Katz, international affairs director at the Electronic Frontier Foundation, which campaigns against regulation of the Internet. “The fact that there are 30 or 50 people sitting around a table deciding the laws of the world’s nations, when there are major areas of disagreement, seems like a wholesale contravention of the democratic process.”

Lawmakers have also largely been kept out of the loop.

In the United States last month, Senator Ron Wyden, a Democrat from Oregon, wrote to Ron Kirk, the U.S. trade representative, whose office is negotiating on behalf of the United States, to seek information about the negotiations.

In Britain, members of the three main political parties have signed a parliamentary motion calling on their government to release details. National lawmakers elsewhere in Europe, and at the European Parliament, have also demanded greater openness.

Even some participants want to ease the secrecy that surrounds the process.

“The Swedish government believes that we should release a consolidated text as soon as possible,” said Stefan Johansson, a Swedish Justice Ministry official who has been involved in the talks.

After the latest round in Mexico, the participants issued only a bland communiqué saying, among other things, that the negotiations had been “productive” and had “focused on civil enforcement, border enforcement and enforcement of rights in the digital environment.”

“Recalling their shared view of the importance of providing opportunities for meaningful public input, the participants reaffirmed their commitment to intensify their respective efforts to provide such opportunities and collectively enhance transparency,” the statement said.

The person with knowledge of the talks said one idea under consideration would be to invite groups with concerns to meet on the sidelines of the next round, scheduled for Wellington in April.

Despite the haze surrounding the proposed agreement, some of the most alarmist speculation appears to have been exaggerated. For example, several people with knowledge of the talks said there was no truth to one early rumor — that the accord would empower customs officials to search digital music players for illegally copied songs at border crossings.

Business groups say fears have been fanned by people with a vested interest in weakening copyright protection in the proposed Anti-Counterfeiting Trade Agreement, or ACTA.

These groups say that greater international coordination is needed to protect businesses that rely on creativity, brand names and other easily copied assets, particularly in export markets.

“Given the importance of this agreement to our economy and to consumers, we must not allow ACTA to be derailed by a minority opposed to protecting the rights of artists, inventors and entrepreneurs,” Mark T. Esper, executive vice president of the Global Intellectual Property Center, an affiliate of the U.S. Chamber of Commerce, said in a statement.

Critics of the process say that if protecting industrialized countries’ economies is the goal, the talks ought to include developing countries like China, India and Indonesia, where intellectual property laws or enforcement are sometimes weaker. In addition to the United States, the European Union and Japan, the parties to the talks are Australia, Canada, South Korea, Mexico, Morocco, New Zealand, Singapore and Switzerland.

“Some might see it as an anti-counterfeiting deal without the counterfeiters,” said Michael Geist, a law professor at the University of Ottawa who has been mustering critics of the negotiations via his blog.

Portions of the negotiations dealing with the Internet have attracted more attention than proposals for cracking down on piracy of physical goods and other trademark violations.

In an interview with World Trademark Review, a trade journal, the assistant U.S. trade representative for intellectual property and innovation, Stan McCoy, lamented what he called a “misperception that this agreement will focus mostly or exclusively on copyright infringement in the digital environment.”

“The threat of physical goods bearing counterfeit trademarks is a real one, and it is a priority for ACTA,” Mr. McCoy said. “Americans do not want to brush their teeth with counterfeit toothpaste or drive a car with knockoff brakes.”

His office did not respond to requests for elaboration on the U.S. position.

One supporter of the talks, the Motion Picture Association of America, is urging U.S. negotiators not to back down on proposals for fighting the unauthorized digital copying of movies.

“Internet piracy has emerged as the fastest-growing threat to the filmed entertainment industry,” Dan Glickman, chief executive of the association, said in a recent letter to Senator Patrick J. Leahy, the Vermont Democrat who is the chairman of the U.S. Senate Judiciary Committee. “M.P.A.A. firmly believes that a strong ACTA should address this challenge, raising the level and effectiveness of copyright enforcement in the digital and online marketplaces.”

Tell USTR Balanced Copyright is Important
Rashmi Rangnath

A balanced copyright regime that respects the rights of creators and users is vital for innovation and advancement of learning. The carefully balanced regime that has existed in the U.S. for the past 200 years has allowed libraries to lend books, teachers to educate their students, and innovators to bring products such as the VCR, the TiVO, and the Sling Box to the market. Sadly, agreements such as the Anti-Counterfeiting Trade Agreement and several Free Trade Agreements show that the U.S. has given short shrift to this balance in pursuit of copyright policy abroad. Another process that shapes intellectual property (IP) policy abroad, called the Special 301, is currently underway in the Office of the United States Trade Representative (U.S.T.R.).

Under the Special 301 process the U.S.T.R. seeks input from U.S. copyright, trademark, and patent owners about whether policies and practices in foreign countries deny them adequate IP protection. The process has generally been used by IP holders to complain not only about lax enforcement in other countries, but also about limitations and exceptions in their laws that are beneficial to libraries, to education, to innovation, and to the public interest generally. The ability to comment in the Special 301 process is not limited to IP owners only. Any member of the public is free to file comments. If you believe in the importance of balanced copyright policies, file comments with the USTR and make your voice heard.

Comments can be filed electronically via http://www.regulations.gov, docket number USTR-2010-0003. You have to include the term “2010 Special 301 Review” in the “Type Comment and Upload File” field. More information about the Special 301 process is available here. Deadline for filing is February 16 by 5 p.m.

Pirate Bill Could 'Breach Rights'

An influential group of MPs and peers has said the government's approach to illegal file-sharing could breach the rights of internet users.

The Joint Select Committee on Human Rights said the government's Digital Economy Bill needed clarification.

It said that technical measures - which include cutting off persistent pirates - were not "sufficiently specified".

In addition, it said that it was concerned that the Bill could create "over-broad powers".

"The internet is constantly creating new challenges for policy-makers but that cannot justify ill-defined or sweeping legislative responses, especially when there is the possibility of restricting freedom of expression or the privacy of individual users," said Andrew Dismore MP and chair of the Committee.

A spokesperson for the Department for Business, Innovation and Skills (BIS), which oversees the Digital Economy Bill, said that government had "always been clear that [its] proposals to deal with unlawful file-sharing should not contravene human rights".

'Sweeping powers'

The Select Committee only examined the parts of the Bill that focus on plans to tackle illegal file-sharing as well as a controversial amendment to copyright law.

"The concern we have with this Bill is that it lacks detail," said Mr Dismore. "It has been difficult, even in the narrow area we have focussed on, to get a clear picture of the scope and impact of the provisions."

The Digital Economy Bill was outlined in the Queen's speech in November 2009.

One of the most hotly-debated elements is the so-called "three strikes rule" that would give regulator Ofcom new powers to disconnect or slow down the connections of persistent net pirates.

The Committee said it had concerns about "technical measures" like these and how they would be applied.

# Legal framework for tackling copyright infringement via education and technical measures
# Ofcom given powers to appoint and fund independently funded news consortia
# New duties for Ofcom to assess the UK's communications infrastructure every two years
# Modernising spectrum to increase investment in mobile broadband
# Framework for the move to digital radio switchover by 2015
# Updating Channel 4 functions to encompass public service content, on TV and online
# Age ratings compulsory for all boxed video games aimed at those over 12 years

For example, the government has not specified whether a whole household could be cut off if only one member of a family was identified as a persistent file-sharer.

The committee said that measures such as this have "the potential to breach internet users' rights" and had not been "sufficiently specified to allow for an assessment of proportionality".

Jim Killock of the Open Rights Group, which has campaigned against the measures, said that disconnecting alleged file-sharers was "draconian and unpredictably damaging".

A spokesperson for BIS said: "slowing down or suspending peoples broadband would only be invoked following several clear warnings".

Any technical measures would require "secondary legislation", he added.

"There will be no technical measures imposed at all if the initial measures taken are as successful as we expect."

The Committee also examined Clause 17 of the bill, which would give the government the power to amend the copyright law without passing further primary legislation.

The clause has proved controversial. In late 2009, a consortium of web companies including Facebook, Google, Yahoo and eBay wrote to the business secretary Peter Mandelson objecting to the clause.

The web firms urged MPs to remove the clause, which they said could give government "unprecedented and sweeping powers" to amend copyright laws.

The Select Committee said that it had been told that changes would be made to the clause to ensure that any amendments to copyright law would be "better scrutinised by Parliament".

"Despite this the Committee remains concerned that Clause 17 remains overly broad and that parliamentary scrutiny may remain inadequate," it said.

The BIS spokesperson said that government had already tabled "a series of amendments which aim to clarify the breadth and scope of clause 17".

The Digital Economy bill is currently being scrutinised by the House of Lords.

It was dealt a blow recently when Sion Simon, one of the MPs charged with pushing it through parliament, announced he was standing down.

Conroy Calls for Piracy Code of Conduct
Ben Grubb

In the wake of iiNet's recent court win, Minister for Broadband, Communications and the Digital Economy Stephen Conroy has said that he wants the film and internet industries to sit down and try and work out a code of conduct to prevent pirating of copyrighted works rather than working towards legislation changes.

"I would hope to encourage the [internet service providers] and the movie industries to sit down and try and come up with a code of conduct and let's see where that goes before we start leaping off down that path," he told the ABC's Hungry Beast program on Friday.

"I think that a mature approach by both the movie industry and the internet industry sitting down, having a conversation, and coming up with a code of practice is the absolute preferable outcome. The problem is at the moment in Australia there is no agreement, there is no discussion, there is no dialogue and people resorted to court," he said.

His comments followed Thursday's decision by NSW Federal Court Judge Justice Dennis Cowdroy that internet service provider (ISP) iiNet did not authorise copyright infringement allegedly occuring on its network, as had been claimed by a consortium of film and television players, represented by the Australian Federation Against Copyright Theft (see last week’s WiR – Jack).

"I think it's always disappointing when situations like this end up in court in the first place," Conroy said.

He pointed out that it was a worldwide battle, with other countries such as the UK and France talking about introducing relevant laws. "In Australia, unfortunately, because of a refusal to hold a dialogue — and I've been trying for two years to encourage the sectors to have a dialogue — they've got themselves into a court battle of which there was a decisive outcome in favour of iiNet and the ISPs," the Minister said.

"But what I would still hope is that we can bring them together to sit down and settle their differences [and] create a code of practice that actually protects both parties."

The Sydney Morning Herald previously reported a spokesperson for the Minister saying the government was considering a three-strikes rule — if a user infringes copyright three times they would be cut off by an internet service provider — depending on the outcome of the trial.

Race Against Time For U.K. Digital Bill
Andre Paine

The U.K. government's Digital Economy Bill, which includes measures to tackle copyright infringement online, is progressing through the U.K. parliament but still has to pass a number of stages to become law before a general election is called in the spring.

The House of Lords completed the committee stage on Feb. 8 and the first day of the report stage, where the Lords will go through line-by-line examination of the Bill, is scheduled for March 1.

There were concerns about clause 15 of the Bill, detailing how rights holders and Internet Service Providers would divide the cost of identifying and notifying broadband subscribers suspected of copyright infringement. But the government clarified this by proposing that labels would bear 75% of the costs.

Parliamentary procedure requires at least two weeks between the committee and report stages, so that ministers and officials can rewrite changes into the Bill. After it clears the House of Lords, the Bill could reach the House of Commons by March 15 - but ministers still have a tight schedule to pass it through the Commons before the Easter recess.

The election is likely to take place May 6 and parliament would be dissolved in April.

The Digital Economy Bill includes measures to oblige Internet Service Providers to write educational letters to subscribers suspected of illegally downloading or uploading content. The law will also give ministers the authority to introduce a graduated response system, which could suspend Internet accounts, if there is no reduction in the level of file-sharing as a result of the letters.

There are also measures aimed at encouraging the switchover of U.K. radio from analog to digital.

Ford Ennals, chief executive of trade body Digital Radio U.K., today (Feb. 10) urged a gathering of MPs to support the Digital Economy Bill when it reaches the House of Commons.

Speaking at a parliamentary breakfast briefing hosted by John Whittingdale MP, chairman of the Culture Media and Sport Select Committee, Ennals said the Bill would benefit small radio networks.

"The radio clauses of the Digital Economy Bill will enable a host of benefits for small stations including deregulatory measures for small-scale commercial stations, more licensing certainty for local stations, the licensing of further community stations, as well as allowing for the re-plan of the local digital multiplex map to take place," said Ennals. "A healthy radio sector is good for stations of all sizes and a digital future will certainly mean a more competitive, compelling and attractive radio industry."

Brazil to Sanction U.S. on Goods, Intellectual Rights
Iuri Dantas

Brazil may break patents on U.S. goods in accordance with a World Trade Organization ruling allowing it to impose trade sanctions in retaliation for U.S. cotton subsidies, a Brazilian trade official said.

“We intend to retaliate on intellectual property rights and services,” Marcio Cozendey, head of the economic department of Brazil’s foreign ministry, told reporters in Brasilia. “Breaking patents is a possibility,” he added without providing additional details.

The WTO ruled in August that Brazil has the right to impose $294.7 million annually in sanctions against the U.S. because of subsidies paid to American cotton farmers, the second highest amount ever permitted by the Geneva-based trade arbiter.

Brazil says that amount has since grown as U.S. payments to cotton farmers exceed a specific cap. Cozendey said Brazil can impose up to $830 million in sanctions, including $560 million on goods and the rest on intellectual property rights and services.

Brazil’s government will take a decision this month on which of 222 eligible products it will impose the sanctions, Celio Porto, an agricultural ministry trade official said in an interview.

The list of potential targets includes agricultural and textile products as well as U.S. exports such as electronics, cosmetics, ketchup, cars, chewing gum, medical equipment and pharmaceuticals.

“The broader our retaliation the better it will be, as it increases the pressure on the U.S.,” Cozendey said, adding that U.S. trade officials have cited difficulties in winning congressional approval to end the cotton program. “Many sectors of the American society will want their government to follow WTO rules.”

As much as $4 billion in annual U.S. payments to cotton farmers violate global trade rules by encouraging excess production and driving down world prices, the WTO found in 2004. The U.S., the world’s largest exporter of the fiber, hasn’t done enough to scrap aid to its cotton producers, the WTO found in 2008.

The U.S. told the trade arbiter in November that it “intends to comply” with WTO recommendations and “don’t believe it will be necessary” that Brazil impose the sanctions.

Subsidies help commodity buyers -- such as Archer Daniels Midland Co., Bunge Ltd. and ConAgra Foods Inc. -- while distorting trade and harming economic development in poorer nations, according to groups such as Boston-based Oxfam America and the Washington-based Environmental Working Group, which favors subsidy reductions and keeps a database of farm payments.

--With assistance from Mark Drajem in Washington.--Editor: Joshua Goodman

Nintendo Pirate to Pay $1.5m

A Queensland man will have to pay Nintendo $1.5 million in damages after illegally copying and uploading one of its new games to the internet ahead of its release, the gaming giant says.

James Burt, 24, of Sinnamon Park in Queensland will pay Nintendo $1.5 million after an out-of-court settlement was struck to compensate the company for the loss of sales revenue.

Nintendo said the loss was caused when Burt made New Super Mario Bros for the Wii gaming console available for illegal download a week ahead of its official Australian release in November last year.

Under Australian law, copying and distributing games without the permission of the copyright holder is a breach of the Copyright Act.

Nintendo applied and was granted a search order by the Federal Court forcing Burt to disclose the whereabouts of all his computers, disks and electronic storage devices in November.

He was also ordered to allow access, including passwords, to his social networking sites, email accounts and websites.

The matter was settled between Burt and Nintendo last month.

Burt will have to pay Nintendo's legal bill of $100,000, the Federal Court in Melbourne ordered on January 27.

Nintendo said in a statement today it was able to trace Burt by using sophisticated technological forensics after the game was uploaded to the internet.

"Nintendo will pursue those who attempt to jeopardise our industry by using all means available to it under the law," it said.

Piracy was a significant threat to the gaming business and the 1400 game development companies who contribute to providing games for the company's platform.

Nintendo Australia managing director Rose Lappin said the illegal upload had marred the release of the new game, which Australia was able to get ahead of other countries, which was unusual.

"It wasn't just an Australian issue, it was a global issue. There was thousands and thousands of downloads, at a major cost to us and the industry really," Ms Lappin said.

"It's not just about us. It's about retailers and if they can't sell the games then they have to bear the costs associated with that.

"Once it's on the internet it's anyone's really."

Ms Lappin said globally the company had a major network against piracy.

RIAA Stands Firm On High Damages For File-Sharing
Wendy Davis

Should Web users who share music for free have to face the same potential liability as those who sell pirated music? The record labels say the answer is yes.

"The notion that an infringer who does not make a profit should automatically be entitled to better treatment than an infringer who does make a profit is found nowhere in the law," the Recording Industry Association of America said this week in papers rejecting U.S. District Court Judge Michael Davis's decision to slash the damages Jammie Thomas-Rasset must pay from a "monstrous and shocking" $1.92 million to a "significant and harsh" $54,000.

Davis found that because Thomas-Rasset wasn't acting with a profit motive when she shared 24 tracks on Kazaa, she shouldn't face more than $2,250 per incident -- three times the statutory maximum of $750. Davis gave the RIAA until this week to decide whether to accept that award or seek another trial just on damages.

The RIAA then offered to settle with Thomas-Rasset if she would donate $25,000 to a charity for musicians and agree to ask Davis to withdraw his opinion. Thomas declined. The upshot: this long-running case isn't going to end any time soon. The RIAA is now seeking another trial just on damages.

The RIAA says in its new papers that an upper limit of $2,250 per infringement is so low that it will leave some content owners without an incentive to file suit. "The court's cap would set a new ceiling such that no copyright owner could effectively enforce their rights unless they could and did sue on numerous works. No copyright owner would be motivated to enforce its rights where it could only sue on a handful of works because the potential recovery would be too limited," the organization argues.

That argument might hold up in theory, but in practice it's long been the case that copyright owners don't always have a financial motive to sue non-commercial users because many won't be able to pay damage awards. The RIAA itself has already acknowledged that it's lost far more than it recovered by suing non-commercial users. Separately, the organization already said it was going to stop suing individual non-commercial users.

For their part, Thomas-Rasset's lawyers say that any damages that total more than it would cost to purchase a track -- around $1 -- are unconstitutional. One of her attorney, Kiwi Camara, tells MediaPost that it isn't fair, or legal, to hold an individual like Thomas responsible for any decline in profits that the record industry has suffered as a result of file-sharing.

Strategy Against File-Sharing Strays Far from Reality

Pursuing a legal strategy that has largely lost touch with reality, a music industry trade group continues to hound a woman for sharing songs on the Internet.

The record labels have abandoned their strategy of launching high-profile lawsuits against college students and grandmothers for file-sharing, but the Recording Industry of America continues to doggedly pursue cases already filed. Last month the RIAA seemed to hit the jackpot when a federal jury imposed damages of $1.92 million on a middle-aged Minnesota woman who shared 24 songs.

But these damages were set aside by the judge on the case, who called them “monstrous and shocking.”

Who could argue otherwise? If the defendant, Jammie Thomas-Rasset, had actually stolen something, she would have been hit with a small fine. For violating the small print of a copyright notice she was hit with damages of $80,000 per song.

Presumably these damages were meant to represent Thomas-Rasset’s role in the industry’s downfall. But many believe this is simply the excuse of industry executives who couldn’t find a way to keep up with their customers. The growing success of commercial downloads shows that the record industry was unable to change with the times.

Like their marketing failures, the industry continues to cling to a litigation strategy that only encourages resentment. But it now appears that the RIAA is caught in a case from which extrication will be difficult.

When District Judge Michael Davis threw out the $1.92 million judgment against Thomas-Rasset, he proposed damages of $54,000. The RIAA can’t accept this. It doesn’t object to lower damages, but is determined to oppose the idea that a jury’s damage award can be thrown out by a judge. It was willing to settle for just $25,000, so long as the defendant rejected the judge’s proposed settlement.

Thomas-Rasset refused. Her lawyers said even the reduced penalty was far beyond her means. And now the RIAA has said it will appeal the judge’s award and pursue another trial against her.

It will be the third trial, and the next jury will have a lot of history to consider as it begins to deliberate, including damage awards ranging from a few thousand dollars into the millions. As time goes on and the uproar over “stealing” music fades, there may be greater acceptance of the idea that bad management, not file-sharing, has been the bane of the record industry.

Netflix Says ISPs Could Threaten Web Video
Greg Sandoval

Netflix, the Web's hottest video rental service, is worried that bandwidth providers could abuse their position as the gatekeepers of Internet access to hamstring competing Web-video distributors.

As the Federal Communications Commission continues to consider proposals for Net neutrality regulations, Netflix recently asked the agency to adopt rules that protect Web video fans from anti-competitive practices.

"Network operators control the delivery pipes and generate significant revenue from content that travels over those pipes," Netflix wrote to the FCC. These operators "provide both the means and motive for discriminating against new ventures that might threaten revenue sources of the network operators."

Netflix's comments to the FCC, first reported by The Washington Post on Monday, is a signal that the company sees a showdown coming with Comcast, Time Warner, and other broadband providers over the distribution of online video.

While seemingly everyone predicts the Web will one day be the preferred means of distribution for on-demand film and TV shows, Netflix has aggressively prepared for that day by building up its Web-streaming service and partnering with set-top box makers that enable users to watch Internet-video on TV sets. But in the future, cable and satellite companies may have the upper hand when it comes to acquiring Internet rights to films and TV shows.

The bigger network operators possess huge numbers of subscribers (for example, Comcast boasts 25 million cable TV subscribers and 15 million Internet customers), and can afford to pay big bucks for content. The cable guys have also established strong ties to the studios after decades of heavy spending in Hollywood.

Netflix has 12 million subscribers--many of whom pay only $10 a month for the service--and has at times clashed with the studios over acquiring access to content. Typically, Hollywood sees far better returns from cable and satellite providers than Web services, such as Netflix and Apple.

In comments to the FCC, Netflix wrote: "There is substantial discrimination and consumer harm if a network operator uses its ownership affiliation with a (studio or TV network) or even its bulk buying leverage with a video content provider, to deny attractive programming to a competing online video service."

The "ownership affiliation" that Netflix is obviously referring to is Comcast's proposed merger with NBC Universal. The deal would give Comcast, the nation's largest cable company, a huge say in where NBC's content goes. /p>

Comcast has said that it has no intention of hurting NBC by limiting how the company distributes shows. Another concern for Netflix is that ISPs could use the so-called TV Everywhere initiative as another means to control distribution. TV Everywhere calls for cable and satellite companies to offer subscribers Web access the same content they can watch on their TVs--just as long as they keep paying that subscription fee.

In a statement last summer about TV Everywhere, Comcast said that it intends to roll out the service in a "manner that is consumer-friendly, pro-competitive and non-exclusive."

This is what Netflix would like to see the FCC do nonetheless.

First, Netflix supports a proposed rule known as a "transparency principle" that calls for network operators to disclose "practices that affect the consumers' ability to access content, use devices or services, and run applications," Netflix wrote.

"The Commission and consumer and other watchdog groups can monitor these disclosures," Netflix added, "to ensure that the associated practices do not violate the other open Internet rules."

Netflix wants the FCC to create a group assigned to determine what kind of information network operators must disclose.

Finally, Netflix doesn't want the proposed "managed services" exception to be able to circumvent the FCC's open Internet policies.

In the FCC's Notice of Proposed Rulemaking (NPRM), the group ponders the idea of "managed services." The FCC asks whether some services should be exempt from some or all of the Net neutrality rules. Netflix is very wary of this one.

The company wrote in its comments that a task group "would help assure that the 'managed services' exception does not become so extensive as to in effect create a 'fast lane' for service offerings from network operators and their affiliates while relegating all unaffiliated entities to the 'slow lane' of the open public Internet.

Class Action Lawsuit Filed Against AT&T Over-Tax on Internet

A suburban man filed a federal class-action lawsuit Friday against AT&T, claiming the company’s practice of charging sales tax on data plans allowing remote internet access is illegal.

Todd Herst, of north suburban Lincolnshire, IL, alleges in the suit that, “despite the fact that federal and Illinois law prohibit taxation on internet access, AT&T improperly has and continues to illegally charge Illinois customers state and local sales tax on internet access on its monthly bills.”

The suit cites the 1998 Internet Tax Fairness Act, claiming the law currently prohibits state and local governments from imposing taxes on internet access, including access offered by a service provider.

The suit was also filed on behalf of all other Illinois consumers who signed a contract with AT&T and were charged tax for internet access. Monetary damages to consumers are “likely in the millions of dollars,” the suit claims.

The six-count suit seeks judgment against AT&T for breach of contract, unjust enrichment and damages under the Illinois Consumer Fraud Act, among others, and seeks an unspecified amount in damages.

Spain's Telefonica Considers Charging Google, Yahoo

Spanish telecommunications operator Telefonica says it is considering charging Internet search companies like Google and Yahoo for network use.

In comments published Monday from a press conference in the northern city of Bilbao, President Cesar Alierta said companies like Google use a lot of network bandwidth for free, something which was good for them but not for Telefonica.

Alierta says his company, which operates in Spain and across Latin America, provides the network, product sale, customer care, installation and maintenance to search engine companies that profit from using them.

He says things had to change. Telefonica spokesman Miguel Angel Garzon told The Associated Press on Monday the ideas expressed by Alierta were not new and had been talked about by many network service providers around the world.

Think Big with a Gig: Our Experimental Fiber Network

Imagine sitting in a rural health clinic, streaming three-dimensional medical imaging over the web and discussing a unique condition with a specialist in New York. Or downloading a high-definition, full-length feature film in less than five minutes. Or collaborating with classmates around the world while watching live 3-D video of a university lecture. Universal, ultra high-speed Internet access will make all this and more possible. We've urged the FCC to look at new and creative ways to get there in its National Broadband Plan – and today we're announcing an experiment of our own.

We're planning to build and test ultra high-speed broadband networks in a small number of trial locations across the United States. We'll deliver Internet speeds more than 100 times faster than what most Americans have access to today with 1 gigabit per second, fiber-to-the-home connections. We plan to offer service at a competitive price to at least 50,000 and potentially up to 500,000 people.

Our goal is to experiment with new ways to help make Internet access better and faster for everyone. Here are some specific things that we have in mind:

* Next generation apps: We want to see what developers and users can do with ultra high-speeds, whether it's creating new bandwidth-intensive "killer apps" and services, or other uses we can't yet imagine.
* New deployment techniques: We'll test new ways to build fiber networks, and to help inform and support deployments elsewhere, we'll share key lessons learned with the world.
* Openness and choice: We'll operate an "open access" network, giving users the choice of multiple service providers. And consistent with our past advocacy, we'll manage our network in an open, non-discriminatory and transparent way.

Like our WiFi network in Mountain View, the purpose of this project is to experiment and learn. Network providers are making real progress to expand and improve high-speed Internet access, but there's still more to be done. We don't think we have all the answers – but through our trial, we hope to make a meaningful contribution to the shared goal of delivering faster and better Internet for everyone.

As a first step, today we're putting out a request for information (RFI) to help identify interested communities. We welcome responses from local government, as well as members of the public. If you'd like to respond, visit this page to learn more, or check out our video.

Linus Torvalds Loves His New Google Nexus One

Self-described cellphone cynic and "father of Linux" Linus Torvalds decided to get a Google Nexus One the other day. And while the customer service lines may be clogged over the phone's performance, Daddy Linux is positively pleased as punch.

Unsurprisingly, the man who invented the most popular open source operating system in the world is a "happy camper" over the fact that this cellphone runs Linux. But Linux alone wasn't enough to get Linus on board with the rest of the smartphone crazy 21rst century, no sir. His previous phones, in fact—the ones he mostly used to "play Galaga" on long flights—also had various versions of Linux, but lacked that certain spark.

Pinch to zoom touch capability and GPS were what finally got Torvalds to commit, and commit he has. The Nexus One "is a winner" he wrote yesterday, adding that it no longer feels as though he's forced to drag along a cellphone for "just in case" emergencies.

So, Google, as you frantically work the phones in that customer support center and stare longingly at other company's smartphone sales, take some solace in the fact that the Father of Linux is out there, somewhere, playing games on your Linux phone.

Wi-Fi Turns Rowdy Bus Into Rolling Study Hall
Sam Dillon

Students endure hundreds of hours on yellow buses each year getting to and from school in this desert exurb of Tucson, and stir-crazy teenagers break the monotony by teasing, texting, flirting, shouting, climbing (over seats) and sometimes punching (seats or seatmates).

But on this chilly morning, as bus No. 92 rolls down a mountain highway just before dawn, high school students are quiet, typing on laptops.

Morning routines have been like this since the fall, when school officials mounted a mobile Internet router to bus No. 92’s sheet-metal frame, enabling students to surf the Web. The students call it the Internet Bus, and what began as a high-tech experiment has had an old-fashioned — and unexpected — result. Wi-Fi access has transformed what was often a boisterous bus ride into a rolling study hall, and behavioral problems have virtually disappeared.

“It’s made a big difference,” said J. J. Johnson, the bus’s driver. “Boys aren’t hitting each other, girls are busy, and there’s not so much jumping around.”

On this morning, John O’Connell, a junior at Empire High School here, is pecking feverishly at his MacBook, touching up an essay on World War I for his American history class. Across the aisle, 16-year-old Jennifer Renner e-mails her friend Patrick to meet her at the bus park in half an hour. Kyle Letarte, a sophomore, peers at his screen, awaiting acknowledgment from a teacher that he has just turned in his biology homework, electronically.

“Got it, thanks,” comes the reply from Michael Frank, Kyle’s teacher.

Internet buses may soon be hauling children to school in many other districts, particularly those with long bus routes. The company marketing the router, Autonet Mobile, says it has sold them to schools or districts in Florida, Missouri and Washington, D.C.

Karen Cator, director of education technologyat the federal Department of Education, said the buses were part of a wider effort to use technology to extend learning beyond classroom walls and the six-hour school day. The Vail District, with 18 schools and 10,000 students, is sprawled across 425 square miles of subdivision, mesquite and mountain ridges southeast of Tucson. Many parents work at local Raytheon and I.B.M. plants. Others are ranchers.

The district has taken technological initiatives before. In 2005, it inaugurated Empire High as a digital school, with the district issuing students laptops instead of textbooks, and more than 100 built-in wireless access points offering a powerful Internet signal in every classroom and even on the football field.

“We have enough wireless to make your fillings hurt,” says Matt Federoff, the district’s chief information officer.

District officials got the idea for wiring the bus during occasional drives on school business to Phoenix, two hours each way, when they realized that if they doubled up, one person could drive and the other could work using a laptop and a wireless card. They wondered if Internet access on a school bus would increase students’ academic productivity, too.

But the idea for the Internet Bus really took shape in the fall, when Mr. Federoff was at home, baby on his lap, and saw an advertisement in an electronics catalog offering a “Wi-Fi hotspot in your car.”

“I thought, what if you could put that in a bus?” he said. The router cost $200, and came with a $60 a month Internet service contract. An early test came in December, when bus No. 92 carried the boys’ varsity soccer team to a tournament nearly four hours away. The ride began at 4 a.m., so many players and coaches slept en route. But between games, with the bus in a parking lot adjacent to the soccer field, players and coaches sat with laptops, fielding e-mail messages and doing homework — basically turning the bus into a Wi-Fi cafe, said Cody Bingham, the bus driver for the trip.

Mariah Nunes, a sophomore who is a team manager, said she researched an essay on bicycle safety.

“I used my laptop for pretty much the whole ride,” Mariah said. “It was quieter than it normally would have been. Everybody was pumped about the games, and there were some rowdy boys. But the coach said, ‘Let’s all be quiet and do some homework.’ And it wasn’t too different from study hall.”

Ms. Bingham recalled, “That was the quietest ride I’ve ever had with high schoolers.”

Since then, district officials have been delighted to see the amount of homework getting done, morning and evening, as Mr. Johnson picks up and drops off students along the highway that climbs from Vail through the Santa Rita mountains to Sonoita. The drive takes about 70 minutes each way.

One recent afternoon, with a wintry rain pelting the bus, 18-year-old Jeanette Roelke used her laptop to finish and send in an assignment on tax policy for her American government class.

Students were not just doing homework, of course. Even though Dylan Powell, a freshman, had vowed to devote the ride home to an algebra assignment, he instead called up a digital keyboard using GarageBand, a music-making program, and spent the next half-hour with earphones on, pretending to be a rock star, banging on the keys of his laptop and swaying back and forth in his seat.

Two seats to the rear, Jerod Reyes, another freshman, was playing SAS, an online shooting game in which players fire a machine gun at attacking zombies.

Vail’s superintendent, Calvin Baker, says he knew from the start that some students would play computer games.

“That’s a whole lot better than having them bugging each other,” Mr. Baker said.

A ride through mountains on a drizzly afternoon can be unpredictable, even on the Internet Bus. Through the windows on the left, inky clouds suddenly parted above a ridge, revealing an arc of incandescent color.

“Dude, there’s a rainbow!” shouted Morghan Sonderer, a ninth grader.

A dozen students looked up from their laptops and cellphones, abandoning technology to stare in wonder at the eastern sky.

“It’s following us!” Morghan exclaimed.

“We’re being stalked by a rainbow!” Jerod said.

Texting Is the Scourge Of This Generation

Nielsen stats put the average teen's texting rate at about ten per hour during the day. This, and basic math, leads to some terrifying conclusions!

For example: Nielsen says that this rate of texting results in somewhere over 3000 text per month, per teen, on average. This means that nearly half of every day is texting time for these people, which, assuming they sleep at all, means that they're either texting steadily all day, or a ton during after-school hours. And let's say these texts average out to about 80 characters, which is half the maximum length for a text message: Even if the average word length is very generous five characters (that's six, including a space), these kids are tapping out about 40,000 words of ephemeral nothingness every month, or roughly one Catcher in the Rye's worth of "WILL UR BRTHR BUY US SUM BEER?" and "R U REDDY 2 DO IT YET?" every two months.

What happens when these people get old? Nielsen, for what it's worth, says they'll just keep texting.

Chatroulette’s Creator, 17, Introduces Himself
Brad Stone

This week my colleagues Jenna Wortham, Nick Bilton and I have been utterly fascinated with, and sometimes repulsed by, a suddenly popular new Web site called Chatroulette.

The site, which gets about 20,000 users on a typical night, generates one-on-one Webcam connections between you and another randomly chosen user. The results are occasionally serendipitous, putting you face to face with an interesting person from another corner of the planet. More often though, the site is reminiscent of those old anything-goes AOL chat rooms, only with video. Let’s put it this way: Parents, keep your children far, far away. The site was well described in a New York magazine article recently and, oddly enough, was featured on “Good Morning America” on Saturday.

The lingering mystery, though, was who was behind the site. The question was answered on Saturday when Andrey Ternovskiy responded to the questions we sent to an e-mail address on Chatroulette. Mr. Ternovskiy said he was a 17-year-old high school student in Moscow.

“I was not sure whether I should tell the world who I am mainly because of the fact that I am under age. Now I think that it would be better to reveal myself,” Mr. Ternovskiy wrote.

I asked Mr. Ternovskiy about the origin of the idea for ChatRoulette, how he manages the technical challenges of running the site, whether he viewed it as a business, and about the way some people were using Chatroulette in, as he put it, “some not very nice ways.” Here are his e-mailed responses, slightly edited and condensed:

“I created this project for fun. Initially, I had no business goals with it. I created this project recently. I was and still am a teenager myself, that is why I had a certain feeling of what other teenagers would want to see on the Internet. I myself enjoyed talking to friends with Skype using a microphone and webcam. But we got tired of talking to each other eventually. So I decided to create a little site for me and my friends where we could connect randomly with other people.

It wasn’t so easy to create it for me, but I have been coding since 11 (thanks to my father who introduced me to the Internet early – most of my knowledge comes from it).

I didn’t advertise my site or post it anywhere, but somehow, people started to talk to each other about the site. And the word started to spread. That’s how the simultaneous user count grew from 10 to 50, then from 50 to 100 and so on. Each time the user count grew, I had to rewrite my code completely, because my software and hardware couldn’t handle it all. I never thought that handling the heavy user load would be the most difficult part of my project.

As the user base grew, bandwidth and hosting bills started to show bigger sums. I am glad that my relatives helped me with it by ‘investing’ some money in my idea.

It wasn’t very much money, so I couldn’t just buy new servers just like that, I had to optimize my code as much as possible instead. I must say that lots of people have helped and still are helping me when I have questions about coding. I am very thankful to them. I still code everything myself, though. I’d love to share work with someone else, but I am not in the USA, and most of the interested people are located far away from me, because I live in Moscow. So I still have to do all the things myself. But I am not worried.

I enjoy what I do. It is like a game for me. I discover new things and solve interesting problems.

Right now Chatroulette uses seven high-end servers all located in Frankfurt, Germany. Network throughput is 7 gigabits a second. I use various technologies to minimize bandwidth consumption. But a lot of bandwidth is still consumed. Bandwidth bills show sums which shock me as a teenager, but I am not very worried.

I am glad that people show attention to my project, and there were interesting offers I’ve received that probably might help my project to survive and improve.

Advertising on Chatroulette is kept to a minimum, because there are a lot of sites full of advertisements, which distract you from what you want to do on those sites. I also love minimalism. That’s why I have put only four links on the bottom as advertisements. And what is interesting, is that these advertisements almost cover all expenses, just those four links on the bottom!

I think it’s wonderful that I do not have to put a lot of advertisements on my site to keep it running. I am not sure why it is so. Maybe because Google AdSense (the thing I use to show the advertisements) shows links to various video chats. I don’t think this is a bad thing. I actually think it is a good thing, because only people not interested or tired of using my site click those links, to explore other services.

I am aware that Chatroulette is popular in USA. It is interesting, but I have never been to the USA myself. Yet most of my site users come from it. I would love to visit the United States.

I actually think that it would be best to found Chatroulette as a U.S.-based company. But this is just an idea.

I have always wanted Chatroulette to be an international thing. That’s why I chose Germany for hosting, because it is in the middle between Russia and U.S.A. It is also at the center of various backbone European networks. I think this is a good place for hosting a project which connects people around the world with each other.

However, I am planning to get other servers in other countries soon. With it I will add more interesting and “weird” (in a good sense) features which will make my site even more entertaining.

What is currently stopping me from adding other features which have been suggested by many and have been in my mind is that I am not even sure what Chatroulette is now.

Everyone finds his own way of using the site. Some think it is a game, others think it is a whole unknown world, others think it is a dating service.

I think it’s cool that such a simple concept can be useful for so many people. Although some people are using the site in not very nice ways – I am really against it. Others do really unbelievable things I could never think of. They make up songs about strangers and sing to them, draw them, listen to music, broadcast them their own music. Two groups of teenagers can party together. That’s just great in my opinion. I am glad that I made this project and it is a pleasure for me to work on it.”

Buy Now, Pay Later (Maybe With Your Allowance)
Randall Stross

BUSINESSES don’t let 13-year-olds pay for purchases with a promise. At least they didn’t before last week.

A new payment option for anyone without a credit card or a debit card, no matter how young, has just become available. It’s initially offered by FooPets and Puzzle Pirates, online game companies that are business partners of Kwedit.com, a start-up based in Mountain View, Calif.

Minors as well as adults can buy items in the games with a “Kwedit Promise,” which can be paid off later in a number of ways — with a credit or debit card, for example, or with cash sent in a mailer that Kwedit supplies.

But here’s an entirely new payment option: A user can print out a barcode and head to a 7-Eleven store, which will accept cash, scan the code and notify Kwedit that payment has been made. In the next three months, a Kwedit logo will join those for credit cards and other payment methods on the doors of all 7-Elevens, a company spokesman says.

As game purveyors, Kwedit’s current partners sell virtual goods whose marginal cost is virtually zero, so there’s no risk of real financial loss if the promise is not repaid. But by offering Kwedit’s service, the game publishers capitalize on the most frictionless form of sales: buy now, pay later.

At FooPets, users “adopt” lifelike digitally animated pets and then buy virtual goods for them, including food, beds and chew toys. The site’s core demographic is 12- to 14-year-old girls, said Scott Sorochak, a co-founder of FooMojo, which operates the site. The company says that FooPets has one million active members and that it is signing up 20,000 to 25,000 new members daily.

“Kwedit is the first payment system we’ve used that doesn’t require getting a parent involved,” Mr. Sorochak said.

Now an eighth grader, on her own, can use a Kwedit Promise to buy a virtual 40-pound bag of Purina Puppy Chow. The chow exists only as a photograph of a Purina package, but FooPets instructs its users that the care and feeding of the digital pets they’ve adopted should be regarded as a serious matter. “Your FooPet is a real creature that lives online,” the company’s Web site says.

It’s ontological nonsense, but the money that is paid for the pixels is certainly real. (The big bag of virtual puppy chow costs $3. For parents with deep pockets, a “rustic bungalow” is $333.)

Systems like these — known in the industry as nurturing games — are built to require regular investments of time and, for fullest enjoyment, money. The games are usually hosted by social networks like Facebook, or can connect to such networks so friends can follow one another’s progress. They feature living digital property — the crops in FarmVille or the fish in Happy Aquarium — that can die without care and feeding. At FooPets, death is averted because, after a short period of neglect, the pet goes to a FooShelter. (And reclaiming it becomes an expensive proposition.)

In 2008, about $510 million was spent on virtual goods in the United States, and last year the amount almost doubled, to $1.03 billion, according to a report prepared last month by Inside Network, a research firm based in San Francisco. Justin Smith, the company founder, estimates that the market will grow to $1.6 billion this year.

Kwedit’s system rewards users for repayment. Initially, the credit extended is modest, only $2 to $5. And a Kwedit score, modeled on a credit score for use by game publishers as a guide to how much credit should be extended, is set low.

“If you pay off your promise, your Kwedit score rises — and your Kwedit limit then rises,” said Loree Hirschman, Kwedit’s vice president for marketing. As more partner sites use Kwedit, users’ scores become more consequential.

Ms. Hirshman says it is refining an algorithm for setting credit limits. It seeks a sweet spot: high enough to encourage buying, but low enough so a debtor won’t be overwhelmed by the balance due.

Because Kwedit has just begun its service, there are no repayment data to examine. But users’ interest in protecting their scores may be powerful motivation. “That Kwedit score will go with you,” Mr. Sorochak said, “so, long run, if Kwedit is successful, that becomes the de facto virtual credit score, like Experian’s and the other FICO scores.”

In addition to FooPets and Puzzle Pirates, more than 1,000 games now let players use Kwedit’s arrangement with 7-Eleven as a way to pay cash for game currency, but their publishers insist that users pay before using the currency.

JOSEPH DePINTO, the C.E.O. of 7-Eleven, said that in the future, Kwedit barcodes could be used for actual goods as well as virtual dog food. A consumer would place an order online and pay in cash at a 7-Eleven; the scanned barcode would then instruct the seller to ship the item.

Kwedit Promise seems most likely to succeed, because it offers immediate gratification, allowing a user to buy while continuing to play a game. The Kwedit Promise is about as real as a FooPet. Even the company says that it’s just marketing and not an enforceable contract. But Kwedit is a way to become acquainted with credit early, while still on training wheels.

As Data Flows In, the Dollars Flow Out
Jenna Wortham

John Anderson and Sharon Rapoport estimate they spend $400 a month, or close to $5,000 a year, keeping their family of four entertained at home.

There are the $30-a-month data plans on their BlackBerry Tour cellphones. The Roanoke, Va., couple’s teenage sons, Seth and Isaac, each have $50 subscriptions for Xbox Live and send thousands of texts each month on their cellphones, requiring their own data plans.

DirecTV satellite service, high-speed Internet access and Netflix for movie nights add more.

“We try to be aware of it so it doesn’t get out of control,” said Mr. Anderson, who with his wife founded an advertising agency. “But, yeah, I would say we’re pretty wired.”

It used to be that a basic $25-a-month phone bill was your main telecommunications expense. But by 2004, the average American spent $770.95 annually on services like cable television, Internet connectivity and video games, according to data from the Census Bureau. By 2008, that number rose to $903, outstripping inflation. By the end of this year, it is expected to have grown to $997.07. Add another $1,000 or more for cellphone service and the average family is spending as much on entertainment over devices as they are on dining out or buying gasoline.

And those government figures do not take into account movies, music and television shows bought through iTunes, or the data plans that are increasingly mandatory for more sophisticated smartphones.

For many people, the subscriptions and services for entertainment and communications, which are more often now one and the same, have become indispensable necessities of life, on par with electricity, water and groceries. And for every new device, there seems to be yet another fee. Buyers of the more advanced Apple iPad, to cite the latest example, can buy unlimited data access for $30 a month from AT&T even if they already have a data plan from the carrier.

“You don’t really lump these expenses into a discretionary category,” said Robert H. Frank, an economics professor at the Johnson Graduate School of Management at Cornell University. “As the expectation of connectedness increases, it’s what is expected for people to be functional in society.”

Americans are transforming their homes into entertainment hubs, which is driving up the amount of money they spend, said Lee Rainie, director of the Pew Internet and American Life Project.

“More people are creating experiences in their homes that are very similar to the kinds of public experiences they enjoy in movie theaters and concert halls,” he said. “Our homes are bristling with technology.”

Most people think home entertainment is cheaper. “Every time I want to go to Fenway Park or see the Killers in concert, I’m paying $50 to $100 each time. But once you build and install that home system, its basically pennies per minute of enjoyment,” said James McQuivey, an analyst with Forrester Research.

But they do not take into consideration the long-term economic effect — both in the maintenance and operational costs — of the devices they purchase. “A subscription model is the perfect drug,” Mr. McQuivey said. “People see $15 per month as a very low amount of money but it quickly adds up.”

Kate Goodall, for example, a 32-year-old director of fund-raising for museums, in Alexandria, Va., said the high costs of home cable and other subscriptions began to eat into her budget. “We saw the writing on the wall in terms of the cost,” she said. “It was getting ridiculous.”

She and her husband disconnected their cable and home phone line so they could more easily afford frequent dinners out and swimming, ballet and art lessons for their two small sons. Instead, they catch shows like “The Daily Show With Jon Stewart” free at Hulu.com and rely on their cellphones as their primary phone lines.

Her husband, Mike Hughes, 37, a project manager, has both an Xbox and a Wii game console, but, in an effort to keep their bills down, she would not let him sign up for any gaming subscription services.

Consumers will have to make tough choices like Ms. Goodall and her husband as the next generation of connected devices — TVs and various mobile devices — that have their own data plan or subscription service come to market. The cable TV companies battle the phone companies by bundling cable, landline phone and Internet services, but most wireless carriers do not yet have any programs to bundle the data plans and offer discounts for myriad mobile devices.

Ms. Goodall says she dreads the day when her sons, 1 and 4, get bitten by the texting craze, as her 12-year-old nephew has.

“We’ll probably have to sign our sons up for cellphones even sooner than we’d like because we don’t have a home phone,” she said. “I’m not looking forward to dealing with that set of issues.”

The Fight Over Who Sets Prices at the Online Mall
Brad Stone

Where’s the price?

On some pages of e-commerce sites selling products like televisions, digital cameras and jewelry, a critical piece of information is conspicuously missing: the price tag.

To see how much these items cost, shoppers must add the merchandise to their shopping carts — in effect, taking it up to the virtual register for a price check.

The missing prices are part of a larger battle sweeping the world of e-commerce. Wary of the Internet’s tendency to relentlessly drive down prices, major brands and manufacturers — and now, book publishers — are striking back, deploying a variety of tactics and tools to control how their products are presented and priced online.

“You are seeing firms of all types test the waters” with strategies to control online pricing, said Christopher Sprigman, associate professor of intellectual property at the University of Virginia School of Law and a former antitrust lawyer at the Justice Department. “They feel they have more freedom to do it now.”

In many cases that freedom stems from a 2007 Supreme Court ruling in the case of Leegin Creative Leather Products v. PSKS. The ruling gave manufacturers considerably more leeway to dictate retail prices, once considered a violation of antitrust law, and it set a high legal hurdle for retailers to prove that this is bad for consumers.

Ever since that decision, retailers say manufacturers have become increasingly aggressive with one tool in particular: forbidding retailers from advertising their products for anything less than a certain price.

For offline retailers like Wal-Mart Stores and Best Buy, that means not dropping below those prices in the circulars and ads in newspapers. But online retailers have a greater burden. Manufacturers consider the product pages on sites like eBay and Amazon.com to be ads, and they complain whenever e-commerce sites set prices below the minimum price.

This leads the sites to replace prices with notes that say things like “To see our price, add this item to your cart.” One day last week, prices were missing on Amazon.com for an array of products like the Milwaukee Sub-Compact Driver drill kit, a Movado men’s Esperanza watch and an Onkyo 7.2-channel home theater receiver.

As a result, those prices also did not show up on search sites like Google Product Search and PriceGrabber.com. The trend has arguably weakened one of the implicit promises of e-commerce: that quick searches and visits to comparison shopping sites will yield the best deals.

Most online retailers complain that the missing prices confuse consumers and give an advantage to big chains like Wal-Mart, which do not bear the same burden in their stores. They also say the practice of enforcing minimum advertised prices has gradually spread from the consumer electronics business to companies in other industries like sporting goods and jewelry, which are also trying to stem the downward pressure of prices online.

Amazon declined to comment on the issue, but the company’s feelings on the matter are public. “Retailers like Amazon have the legal right to set their own prices independently, but some manufacturers place restrictions on how those prices may be communicated,” reads an explanation on Amazon product pages that lack prices. “We realize that this is an inconvenience and are regularly working to educate manufacturers on how their policies impact our customers.”

A few online retailers, like Buy.com, say advertising restrictions have not measurably affected sales. But most other e-commerce companies volubly protest.

“We think consumers are best served when the retail marketplace is open and transparent and retailers have an opportunity to offer the best prices and services, and are not controlled from above by manufacturers,” said Brian Bieron, eBay’s senior director for domestic government relations.

Manufacturers, of course, have a different view. They say the competitiveness of the Internet has unlocked a race to the bottom — with everyone from large corporations to garage-based sellers ravenously discounting products, and even selling them at a loss, in an effort to capture market share and attention from search engines and comparison shopping sites. They also worry that their largest retail partners may be unwilling to match the online price cuts and could stop carrying their products altogether.

“If there isn’t that back-and-forth between manufacturer and retailer, it’s just a natural tendency to drive the price down to nothing,” said Wes Shepherd, chief of Channel Velocity, which sells software that allows companies to scour the Web looking for violations of pricing agreements.

Southern Audio Services, based in Baton Rouge, La., sets a suggested retail price of $80 for its Woodees Inner-Ear Stereo Earphones, while their minimum advertised price is $50. Most online retailers sell them for around $50, but Amazon sells them for $48.40, keeping the price off the product page.

“At the end of the day, it will become a race to zero if you don’t do anything to manage the issue,” said Jon C. Jordan, chief executive of Southern Audio Services. “Then you’ve devalued your product to the point where it’s difficult to get distribution and consumers lose interest in it.”

The battle may shift back to Washington. Companies like eBay and Amazon are asking Congress to override aspects of the Leegin ruling. One bill that would repeal provisions of the ruling is now being considered in the House. In October, 41 state attorneys general wrote a letter to members of the House Judiciary Committee, arguing that the court’s decision had resulted in higher prices for shoppers.

Just like other product makers, book publishers have also been emboldened by the Leegin decision. In their case, they want to prevent low prices on electronic books from cannibalizing their more profitable hardcover sales.

Instead of selling e-books wholesale to retailers like Amazon.com, the publishers want to sell them directly, setting prices and having the retailer act as an agent, taking a fixed 30 percent commission. Macmillan recently struck such an agreement with Amazon.com after a protracted dispute that led Amazon to remove, briefly, Macmillan’s electronic and physical books from its site. Deals with the other major publishers will most likely follow.

Book publishers “are using a different set of levers, and a different vocabulary, to get what they want,” said Scot Wingo, chief executive of ChannelAdvisor, which helps companies sell online. “But it’s the same outcome. Manufacturers are effectively controlling the price that the consumer sees on the Web.”

Free vs. Paid, Murdoch vs. Rusbridger
Eric Pfanner

Welcome to the liveliest fight on Fleet Street. In the blue corner, we have Rupert Murdoch, chief executive of News Corp. In the red corner, Alan Rusbridger, editor of The Guardian. Each wants to knock out the other’s vision of the future of journalism.

On paper, it’s no contest. Mr. Murdoch is the heavyweight champion of the media world; an old-fashioned brawler whose prizes include newspapers like The Sun, The Times of London, The Wall Street Journal and The New York Post. Mr. Rusbridger is a relative flyweight, a Harry Potter lookalike who runs a single, modest-size publication.

But paper is passé. This battle is over cyberspace, which has a way of leveling the odds. And when Mr. Murdoch or his newspapers are involved, Mr. Rusbridger doesn’t pull his punches.

He drew the first blood in the current round, which centers on whether newspaper Web sites should charge their readers; Mr. Murdoch says yes, Mr. Rusbridger, no.

Having “ruthlessly cut the price of his papers to below cost in order to win audiences or drive out competition,” Mr. Rusbridger said in a recent speech, “this same Rupert Murdoch is being very vocal in asserting that the reader must pay a proper sum for content — whether in print or digitally.”

Mr. Rusbridger said so-called pay walls would be a bad idea for The Guardian’s journalism, which has benefited from the free exchange of ideas on the Web, and for its business, which hopes to translate growth in readership into increased advertising revenue.

Newspapers that defy these trends, he said, risk “sleepwalking into oblivion.”

Until recently, with online advertising growing at double-digit rates and print revenue in decline, Mr. Rusbridger’s position reflected the conventional wisdom of the news industry. But Internet ad growth stalled during the recession, prompting many publishers to rethink their business models.

Mr. Murdoch says he plans to start erecting pay walls for all of News Corp.’s newspaper Web sites this year. One of them, The Wall Street Journal, already charges online readers.

News Corp. is not alone. The New York Times, which owns the International Herald Tribune, says it intends to start charging some Web readers in 2011 under a metered system that will offer users a limited number of free articles. Publishers like Axel Springer of Germany say they are also moving ahead with plans for paid digital content.

But Mr. Murdoch has been the most outspoken proponent of pay walls, and he responded to Mr. Rusbridger’s jabs with an uppercut.

When asked, during a conference call last week on News Corp.’s earnings, for his opinion on Mr. Rusbridger’s view, Mr. Murdoch responded with an expletive.

If Mr. Murdoch and Mr. Rusbridger are on opposite sides of an ideological divide, it is in part because of profound differences in the enterprises they oversee. The Guardian is owned by a nonprofit trust, and Mr. Rusbridger acknowledged in his speech that it lost money. News Corp. looks out for its shareholders, even if some of its newspapers, like The Times, remain unprofitable.

The divide is about more than business models. Mr. Murdoch clearly has no time for the brand of liberalism represented by Mr. Rusbridger and The Guardian. Michael Wolff, an American journalist, writes in a recent biography that Mr. Murdoch described Mr. Rusbridger as “kooky” in an interview. Mr. Rusbridger’s newspaper, meanwhile, wastes no chance to take a swing at Mr. Murdoch. Last summer, it published a series of front-page stories alleging that a News Corp. tabloid, The News of the World, had engaged in widespread telephone surveillance of British celebrities and public figures. News Corp. says The Guardian was simply dredging up an old story in which it had already admitted to hacking into some mobile phones.

Despite all the current bluster, Mr. Rusbridger and Mr. Murdoch may not be as far apart as they would like to think on the issue of paid vs. free. The Guardian already charges for an iPhone application. It seems unlikely, meanwhile, that Mr. Murdoch will erect ironclad walls around his newspaper sites. More likely some of the content will remain free, with the paid services perhaps including offerings from other News Corp. Web sites or partners. But the sparring between Mr. Murdoch and Mr. Rusbridger should continue to entertain.

Kindle Books in Snack Sizes
Motoko Rich

Who has time to read a whole book anymore?

The FT Press, a unit of Pearson, has introduced two series of short, digital-only titles for professionals who want quick snippets of advice for $2.99 or less.

The publisher, through a new imprint named FT Press Delivers, has quietly begun selling what it is calling Elements and Shorts through the Kindle electronic bookstore on Amazon.com and Barnes & Noble’s e-bookstore. The Elements, which the publisher has priced at $1.99, are stripped-down, 1,000- to 2,000-word versions of already-published books, while the Shorts are newly written essays of about 5,000 words, priced at $2.99.

Titles include “Reengineering the Rules of Management,” by James Champy, the co-author, with Michael Hammer, of “Reengineering the Corporation,” one of the biggest business best sellers of the 1990s, and “Keeping It Honest, From Kitchen to Coca-Cola,” by Seth Goldman, co-founder and chief of Honest Tea, the maker of organic drinks.

Amazon.com is already discounting the prices of the Shorts to $2.39 and the Elements to $1.59. So far, Barnes & Noble has kept the publisher’s pricing.

“It’s a good idea to be able to provide people with shorter, more expedient, more time-sensitive” content, said Timothy C. Moore, publisher of the FT Press.

Mr. Moore said the company had already published 242 titles and planned to have 500 by the end of the year. For the Shorts, the company is working with New Word City, a digital publisher. Mr. Moore acknowledged that sales of the new short-form titles could cannibalize traditional book sales. But, he said, “other sources of information that aren’t books are already causing upheaval” in the book market.

Mr. Champy, a consultant, said demand for longer books had fallen. “There are people who only want to access pieces of what you write,” he said. “I don’t think they have an appetite for reading a long, serious business book.”

According to Mr. Goldman, FT Press is not paying advances to authors and is offering royalties equivalent to 20 percent of the publisher’s net proceeds from each sale. Mr. Moore declined to comment, saying that such details were proprietary.

Mr. Goldman said he hoped the new mini e-books were priced cheaply enough to lure readers. “There is size and substance to it, but it’s not a full meal,” Mr. Goldman said. “It’s a healthy lunch on the go as opposed to the seven-course meal.”

Publishers Win a Bout in E-Book Price Fight
Motoko Rich

Could book publishers suddenly be in the position of telling Google what to do?

With the impending arrival of digital books on the Apple iPad and feverish negotiations with Amazon.com over e-book prices, publishers have managed to take some control — at least temporarily — of how much consumers pay for their content.

Now, as publishers enter discussions with the Web giant Google about its plan to sell digital versions of new books direct to consumers, they have a little more leverage than just a few weeks ago — at least when it comes to determining how Google will pay publishers for those e-books and how much consumers will pay for them.

Google has been talking about entering the direct e-book market, through a program it calls Google Editions, for nearly a year. But in early discussions with publishers, Google had proposed giving them a 63 percent cut of the suggested retail price, and allowing consumers to print copies of the digital books and cut and paste segments. After Apple unveiled the iPad last month, publishers indicated that Apple would give them 70 percent of the consumer price, which publishers would set.

According to several publishers who have been talking to Google, the book companies had balked at what they saw as Google’s less generous terms, and basically viewed printing and cut-and-paste as deal breakers.

Now that both Apple and Amazon have agreed to terms more to the book companies’ liking, several publishers said that their conversations with Google have taken on a more flexible tone.

These publishers, who requested anonymity because their discussions with Google are confidential, said Google had relaxed its plans to allow customers to print or cut and paste.

“Google has always been open to working with publishers as part of Google Editions, in terms of supporting an open and competitive e-book market,” said Daniel Clancy, director of Google Books.

How e-books are sold — and for how much — has been a crucial topic of debate among publishers and retailers for the last two years, as digital books have taken off. Led by Amazon.com’s Kindle electronic reading device, the e-book market is growing at a fast clip, fueled partly by cheap digital editions. Amazon and several other retailers now offer new releases and best sellers for $9.99, far less than the typical $26 cover price on hardcovers.

Publishers have been fretting that such pricing has devalued books in the minds of consumers and have been looking for ways to regain control of what readers pay. When Apple unveiled its iPad, it said it had agreements with five of the country’s six largest publishers. Under those agreements, publishers would set e-book prices — within limits — so that new releases of most general fiction and nonfiction would sell for $12.99 to $14.99. Apple will act as an agent of the publishers — a set-up known in the publishing world as the agency model — and take a 30 percent cut of each sale, leaving the rest for publishers to split with authors.

In early negotiations, the 63 percent Google had been offering publishers was based on a wholesale model, but executives briefed on the discussions said that Google was now open to talking about an agency model and was also prepared to discuss paying publishers 70 percent of each sale.

Even Amazon has been forced to back off its $9.99 pricing in an agreement with Macmillan, one of the country’s six largest publishers. In a recent dust-up after Macmillan told Amazon it was moving to the 30 percent agency model with higher consumer pricing, Amazon removed direct access to Macmillan’s physical and electronic books from its site for a week. Amazon later surrendered to the publisher’s terms.

Google’s e-book retail program would be separate from the company’s class-action settlement with authors and publishers over its book-scanning project, under which Google has scanned more than seven million volumes — mostly out of print — from several university libraries. That settlement was recently imperiled by a filing from the Department of Justice that said it still had significant legal problems with the agreement, even after a round of revisions. The settlement is subject to court approval.

Google users can already search up to about 20 percent of the content of many new books that publishers have agreed to enroll in a search program. According to publishers, Google originally said it would automatically enroll any book sold through Google Editions in the search program. An executive from at least one of the six largest publishers said the company did not agree with those terms. Mr. Clancy said that Google would not require books sold through Google Editions to be part of the search program.

Last May Tom Turvey, director of strategic partnerships at Google, told publishers at the annual BookExpo convention in New York that Google’s program for selling new e-book editions would allow consumers to read books on any device with Internet access, including mobile phones, rather than being limited to dedicated reading devices like the Amazon Kindle.

Google, without its own e-reader, wants to be a Switzerland of sorts, competing with Barnes & Noble and other e-book sellers to become the preferred digital bookstore on devices other than the iPad or the Kindle, such as Android smart phones.

In general, publishers are eager for Google to enter the e-book market because they want more competition. “We would love to have a diverse marketplace for e-books,” said Maja Thomas, senior vice president for the digital division of Hachette Book Group, which publishes blockbuster authors like James Patterson and Stephenie Meyer. Since Google would contribute to such diversity, Ms. Thomas said, “we welcome them.”

If Google does enter the e-book market, it would be one of a handful of programs under which the company sells content directly to consumers. Google generates the majority of its revenue from ad sales on its search pages and on the Web sites of publishing partners. It is now charging for content through its YouTube unit, renting digital versions of independent films tied to the Sundance Film Festival.

E-Book Price Increase May Stir Readers’ Passions
Motoko Rich and Brad Stone

In the battle over the pricing of electronic books, publishers appear to have won the first round. The price of many new releases and best sellers is about to go up, to as much as $14.99 from $9.99.

But there may be an insurgency waiting to pounce: e-book buyers.

Over the last year, the most voracious readers of e-books have shown a reflexive hostility to prices higher than the $9.99 set by Amazon.com and other online retailers for popular titles.

When digital editions have cost more, or have been delayed until after the release of hardcover versions, these raucous readers have organized impromptu boycotts and gone to the Web sites of Amazon and Barnes & Noble to leave one-star ratings and negative comments for those books and their authors.

“This book has been on the shelves for three weeks and is already in the remainder bins,” wrote Wayne Fogel of The Villages, Fla., when he left a one-star review of Catherine Coulter’s book “KnockOut” on Amazon. “$14.82 for the Kindle version is unbelievable. Some listings Amazon should refuse when the authors are trying to rip off Amazon’s customers.”

The angry commenters on Amazon and online message boards could just be a vocal minority. But now, with e-books scheduled to cost $12.99 to $14.99 under new deals that publishers negotiated with Apple and Amazon, a broader swath of customers may resist the new pricing. The higher prices will go into effect within the next few months.

Predicting the behavior of consumers is always tricky. In the case of e-books, publishers are hoping that a vast majority of people who have not yet tried e-reading devices will not have any expectation of the low pricing now available from Amazon and others, including Barnes & Noble and Sony. They argue that new e-book shoppers will welcome the chance to buy digital editions at a level significantly lower than the typical price tag on a hardcover book.

“With the iPad, the whole notion of e-book reading is probably going to become way more mainstream than it ever has,” said Harvey Chute, who runs KindleBoards, a popular discussion forum for readers of electronic books. “And a majority of people may be coming to it new, and may only see that they are getting $7 off the price they would see at a bookstore.”

But some e-book buyers say that since publishers do not have to pay to print, store or distribute e-books, they should be much cheaper than print books.

“I just don’t want to be extorted,” said Joshua Levitsky, a computer technician and Kindle owner in New York. “I want to pay what it’s worth. If it costs them nothing to print the paper book, which I can’t believe, then they should be the same price. But I just don’t see how it can be the same price.”

Just what e-books are worth is a matter of debate. Publishers argue that printing and distribution represents a small proportion of the total cost of making a book.

“There are people who don’t always understand what goes into an author writing and an editor editing and a publishing house with hundreds of men and women working on these books,” said Mark Gompertz, executive vice president of digital publishing at Simon & Schuster. “If you want something that has no quality to it, fine, but we’re out to bring out things of quality, regardless of what type of book it is.”

To consumers who do not pay much attention to the economics of publishing, though, such arguments are trumped by the fact that e-books have been available for $9.99 for more than a year.

“As far as I’m concerned, Amazon has committed to the $9.99 price,” said Wilma Sanders, a 70-year-old retiree who has homes in Plymouth, Mass., and Marco Island, Fla. She said that if e-book prices rose, she would stop buying. “I’m still a library-goer. There are enough good books out there that I don’t need to pay more than I want to. I already can’t keep up with what I have.”

Authors have been taken aback by some of the vehemence of the reader protests.

“The sense of entitlement of the American consumer is absolutely astonishing,” said Douglas Preston, whose novel “Impact” reached as high as No. 4 on The New York Times’s hardcover fiction best-seller list earlier this month. “It’s the Wal-Mart mentality, which in my view is very unhealthy for our country. It’s this notion of not wanting to pay the real price of something.”

Amazon commenters attacked Mr. Preston after his publisher delayed the e-book version of his novel by four months to protect hardcover sales. Mr. Preston said he was not sure whether the protests were denting his sales. But, he said, “It gives me pause when I get 50 e-mails saying ‘I’m never buying one of your books ever again. I’m moving on, you greedy, greedy author.”‘

One reason consumers may be sensitive to pricing is that they have so many other types of entertainment to occupy their time.

“Entertainment and media companies keep forgetting that consumers have a choice. They can decide not to buy the book at all,” said David Pakman, a venture capitalist and former chief executive of the digital music store eMusic. “They can play a video game, use an iPod Touch.” He added: “If you don’t get the price tag right and make it convenient, they just go elsewhere.”

John Wagoner, a 63-year-old accountant and Kindle owner in Plano, Tex., said that if e-book prices went much higher than $13 he would simply commit his time and dollars to other activities.

“They’re just books,” said Mr. Wagoner, who left an angry one-star review on the Amazon page for Mr. Preston’s novel. “I do other things other than reading.”

Some analysts say that if consumers balk at price increases, piracy could grow rapidly.

Joel Waldfogel, a professor of business and public policy at the Wharton School of the University of Pennsylvania, saw a comparison with movies, a business where he has studied digital piracy rates. With movies, he said, piracy tends to displace paid consumption. “The real cost of consuming a movie is the two hours of undivided attention you spend,” Mr. Waldfogel said. “If people are able to steal a bunch more, they will purchase less, simply because there isn’t time to do all of it.”

Similarly, with books, he said, “I would be scared to death about a culture of piracy taking hold. I wouldn’t mess around with price increases.”

Publishers say price levels are not settled by any means and that now, having reached agreements where publishers — rather than retailers — set consumer prices, they have an opportunity to test different situations.

“We may introduce a book at $14.95 for a year and then move the book to $9.99 when we would have put out the trade paperback edition,” said Dominique Raccah, chief executive of Sourcebooks, an independent publisher. “I suspect you’re going to see a fair amount of experimentation.”

Some e-book buyers are not interested in experiments. Mr. Fogel, who left the one-star review of the Kindle edition of Ms. Coulter’s novel, said he would not pay more than $9.99 for a book.

“There are too many very, very good books I haven’t gotten around to reading yet,” said Mr. Fogel, a 68-year-old retired management consultant. He added that publishers were likely to see “supply and demand turn back on them.”

“I think there’s going to be a general resentment” of higher prices, he said.

British Library to Offer Free Ebook Downloads
Richard Brooks

MORE than 65,000 19th-century works of fiction from the British Library’s collection are to be made available for free downloads by the public from this spring.

Owners of the Amazon Kindle, an ebook reader device, will be able to view well known works by writers such as Charles Dickens, Jane Austen and Thomas Hardy, as well as works by thousands of less famous authors.

The library’s ebook publishing project, funded by Microsoft, the computer giant, is the latest move in the mounting online battle over the future of books.

While some other services, such as Google Books, offer out-of-copyright works to be downloaded for free, users of the British Library service will be able to read from pages in the original books in the library’s collection.

Most downloadable books on the Kindle are by contemporary authors because they are the most profitable for publishers. Many companies have not yet decided what to charge for older, out-of-copyright books.

While the British Library books — which will include Dickens’s Bleak House, Austen’s Pride and Prejudice and Hardy’s The Mayor of Casterbridge — will be available free online, the public will also be able to order printed copies from Amazon.

Like the onscreen versions, the paperbacks, costing £15-£20, will look like the frequently rare 19th-century editions in the library’s collection — including their typeface and illustrations. Originals of works by Austen and Dickens typically cost at least £250.

“Freeing historic books from the shelves has the potential to revolutionise access to the world’s greatest library resources,” said Lynne Brindley, the library’s chief executive.

Microsoft and the British Library, which by law purchases at least one copy of every book published in the UK, have been scanning the books over the past three years. The library concentrated the first stage of digitisation on the 19th century because the books are out of copyright and so can be offered free. Copyright runs out 70 years after an author’s death.

The library, which receives an annual government grant of £100m, declined to disclose the sum paid by Microsoft, beyond saying it was “a very generous amount”.

Books to be made available will include Victorian classics such as A Strange Story by Edward Bulwer-Lytton and The Story of a Modern Woman by Ella Hepworth Dixon.

Many of the downmarket books known as “penny dreadfuls” will also be made available to the public, including Black Bess by Edward Viles and The Dark Woman by J M Rymer.

Altogether, 35%-40% of the library’s 19th-century printed books — now all digitised — are inaccessible in other public libraries and are difficult to find in second-hand or internet bookshops.

The library hopes to extend the digitisation scheme by scanning books out of copyright dating from the early 20th century. As yet, however, neither Microsoft nor the institution itself have set money aside for the project.

Author, 17, Says It’s ‘Mixing,’ Not Plagiarism
Nicholas Kulish

It usually takes an author decades to win fawning reviews, march up the best-seller list and become a finalist for a major book prize. Helene Hegemann, just 17, did it with her first book, all in the space of a few weeks, and despite a savaging from critics over plagiarism.

The publication last month of her novel about a 16-year-old exploring Berlin’s drug and club scene after the death of her mother, called “Axolotl Roadkill,” was heralded far and wide in German newspapers and magazines as a tremendous debut, particularly for such a young author. The book shot to No. 5 this week on the magazine Spiegel’s hardcover best-seller list.

For the obviously gifted Ms. Hegemann, who already had a play (written and staged) and a movie (written, directed and released in theaters) to her credit, it was an early ascension to the ranks of artistic stardom. That is, until a blogger last week uncovered material in the novel taken from the less-well-known novel “Strobo,” by an author writing under the nom de plume Airen. In one case, an entire page was lifted with few changes.

As other unattributed sources came to light, outsize praise quickly turned to a torrent of outrage, reminiscent of the uproar in 2006 over a Harvard sophomore, Kaavya Viswanathan, who was caught plagiarizing numerous passages in her much praised debut novel. But Ms. Hegemann’s story took a very different turn.

On Thursday, Ms. Hegemann’s book was announced as one of the finalists for the $20,000 prize of the Leipzig Book Fair in the fiction category. And a member of the jury said Thursday that the panel had been aware of the plagiarism charges before they made their final selection.

Ms. Hegemann finds herself in the middle of a collision — if not road kill exactly — between the staid, literary establishment in a country that venerates writers from Goethe to Mann to Grass, and the Berlin youth culture of D.J.’s and artists that sample freely and thereby breathe creativity into old forms. Or as one character, Edmond, puts it in the book, “Berlin is here to mix everything with everything.”

A powerful statement, but the line originally was written by Airen, on his blog. The plot thickens, however, and shows that perhaps more than simple cribbing is at work. When another character asks Edmond if he came up with that line himself, he replies, “I help myself everywhere I find inspiration.”

“Obviously, it isn’t completely clean but, for me, it doesn’t change my appraisal of the text,” said Volker Weidermann, the jury member and a book critic for the Sunday edition of the newspaper Frankfurter Allgemeine, a strong supporter. “I believe it’s part of the concept of the book.”

Although Ms. Hegemann has apologized for not being more open about her sources, she has also defended herself as the representative of a different generation, one that freely mixes and matches from the whirring flood of information across new and old media, to create something new. “There’s no such thing as originality anyway, just authenticity,” said Ms. Hegemann in a statement released by her publisher after the scandal broke.

In the beginning, her agent, Petra Eggers, said that the critics could not distinguish between the novel’s 16-year-old protagonist and the author. “It’s the other way around now, there’s nothing left,” Ms. Eggers said. “They say that none of these are her own words even.”

Deef Pirmasens, the blogger who discovered the passages taken from “Strobo,” said that he could understand a few words or phrases seeping into the work through inspiration, but that he quickly noticed that there were too many for it to be a coincidence. “To take an entire page from an author, as Helene Hegemann admitted to doing, with only slight changes and without asking the author, I consider that illegitimate,” Mr. Pirmasens said.

The controversy did not appear to be hurting book sales. On Thursday afternoon “Axolotl Roadkill” was ninth over all among books on the German Amazon site, albeit with many nasty postings about the plagiarism controversy. “It’s a reissue of ‘The Emperor’s New Clothes,’ ” wrote one commenter, who gave the book one star. Under the heading “Customers who bought this item also bought” was “Strobo” by Airen.

Google Fights Back Against Book Settlement Critics
Jessica E. Vascellaro

Google filed a strong defense of its digital books settlement with the Authors Guild and the Association of American Publishers, a week before a federal judge is scheduled to hold a hearing in the protracted copyright case.

The filing is routine and reiterates arguments the search giant has repeatedly made to defend its 2008 settlement, which allows it to distribute millions of books it scanned online in exchange for sharing revenue with rights holders. It comes as briefs objecting to various parts of the agreement — which Google has already revised once — have continued to trickle in. Technology giants including Amazon.com, Microsoft and AT&T have argued that the settlement could limit competition in the digital books market because it would give Google exclusive access to some works and usurps Congress’s authority over copyright law.

Earlier this month, the U.S. Justice Department again expressed concerns against the pact, saying the settlement reaches too broadly and “suffers from the same core problem as the original agreement: it is an attempt to use the class action mechanism to implement forward-looking business arrangements that go far beyond the dispute … in this litigation.”

In a 77-page brief to the court, Google’s lawyers fight back, responding to a range of objections by pointing to various legal precedents. The company said that it is “proper” for a class-action settlement to resolve the dispute and cites a number of business disagreements that have been settled via the mechanism. Addressing the issue of its motivations for entering the digital books space, Google pointed out that it is merely aiming to resolve the lawsuit against it.

“Every settlement is a deal, in which each side gains something and gives up something, and that is just as true in this case,” the brief read. “Plaintiffs are giving up their right to sue to challenge a range of potential future Google activities, in return for compensation and other arrangements beneficial to them. In return, Google is giving up defenses it advanced in good faith and is providing substantial tangible benefits to Rightsholders that they might never have received if Google had prevailed.”

Google also addressed concerns about competition in the digital books market by referring to the “rapidly-developing, dynamic and vibrant market in digital books,” citing news articles referencing Apple’s iPad and other devices.

The brief ends with grandiose language, emphasizing that the settlement will increase access to knowledge. “The (settlement) cannot claim to create a Library of Alexandria, and no settlement can bring back the works lost to Caesar’s fire,” it read. “But it is hoped that this compromise between authors, publishers, libraries, and a company willing to spend hundreds of millions of dollars to digitize so much of the printed history of humanity will be another small step toward the vision that the Alexandrian Library represents.”

Google Leaps Language Barrier with Translator Phone
Chris Gourlay

GOOGLE is developing software for the first phone capable of translating foreign languages almost instantly — like the Babel Fish in The Hitchhiker’s Guide to the Galaxy.

By building on existing technologies in voice recognition and automatic translation, Google hopes to have a basic system ready within a couple of years. If it works, it could eventually transform communication among speakers of the world’s 6,000-plus languages.

The company has already created an automatic system for translating text on computers, which is being honed by scanning millions of multi-lingual websites and documents. So far it covers 52 languages, adding Haitian Creole last week.

Google also has a voice recognition system that enables phone users to conduct web searches by speaking commands into their phones rather than typing them in.

Now it is working on combining the two technologies to produce software capable of understanding a caller’s voice and translating it into a synthetic equivalent in a foreign language. Like a professional human interpreter, the phone would analyse “packages” of speech, listening to the speaker until it understands the full meaning of words and phrases, before attempting translation.

“We think speech-to-speech translation should be possible and work reasonably well in a few years’ time,” said Franz Och, Google’s head of translation services.

“Clearly, for it to work smoothly, you need a combination of high-accuracy machine translation and high-accuracy voice recognition, and that’s what we’re working on.

“If you look at the progress in machine translation and corresponding advances in voice recognition, there has been huge progress recently.”

Although automatic text translators are now reasonably effective, voice recognition has proved more challenging.

“Everyone has a different voice, accent and pitch,” said Och. “But recognition should be effective with mobile phones because by nature they are personal to you. The phone should get a feel for your voice from past voice search queries, for example.”

The translation software is likely to become more accurate the more it is used. And while some translation systems use crude rules based on the grammar of languages, Google is exploiting its vast database of websites and translated documents to improve the accuracy of its system.

“The more data we input, the better the quality,” said Och. There is no shortage of help. “There are a lot of language enthusiasts out there,” he said.

However, some experts believe the hurdles to live translation remain high. David Crystal, honorary professor of linguistics at Bangor University, said: “The problem with speech recognition is the variability in accents. No system at the moment can handle that properly.

“Maybe Google will be able to get there faster than everyone else, but I think it’s unlikely we’ll have a speech device in the next few years that could handle high-speed Glaswegian slang.

“The future, though, looks very interesting. If you have a Babel Fish, the need to learn foreign languages is removed.”

In the Hitchhiker’s Guide to the Galaxy, the small, yellow Babel Fish was capable of translating any language when placed in the ear. It sparked a bloody war because everyone became able to understand what other people were saying.

Conservative Activists Rebel Against Fox News: Saudi Ownership Is ‘Really Dangerous For America’
Lee Fang

Saudi Prince Alwaleed bin Talal owns a 7 percent stake in News Corp — the parent company of Fox News — making him the largest shareholder outside the family of News Corp CEO Rupert Murdoch. Alwaleed has grown close with the Murdoch enterprise, recently endorsing James Murdoch to succeed his father and creating a content-sharing agreement with Fox News for his own media conglomerate, Rotana.

Last weekend, at the right-wing Constitutional Coalition’s annual conference in St. Louis, Joseph Farah, publisher of the far right WorldNetDaily, blasted Fox News for its relationship with Alwaleed. Farah noted correctly that Alwaleed had boasted in the past about forcing Fox News to change its content relating to its coverage of riots in Paris, and warned that such foreign ownership of American media is “really dangerous.” ThinkProgress was at the speech and observed attendees of the conference murmuring and shaking their heads in disapproval:

FARAH: There’s a flaw, a real compromise in Fox that you need to understand. And if you care about national security, you especially need to be attentive to it. And that is that Fox News parent company is News Corp has a significant ownership by a Saudi prince that many of you will be familiar with because right after 9/11 this prince very famously offered Rudolph Giuliani a big multi-million dollar check to rebuild and Giuliani told him to stick the check where the sun don’t shine because this guy was basically blaming America for what happened on 9/11. Well this guy owns a very significant percentage of the News Corp and has let the world know that he can get things taken off Fox News when he finds them objectionable and has in the past. And I really believe this is really dangerous for America.

ThinkProgess spoke to right-wing author Brigitte Gabriel, another speaker at the conference, who said that Alwaleed was recently interviewed by Fox News’ Neil Cavuto. Gabriel angrily denounced the interview as a “darling high school reunion”: “All of the sudden, Neil Cavuto is interviewing him like a buddy-buddy because he is the boss.” Indeed, in the “rare” interview Alwaleed gave last month, he reaffirmed his “alliance” with the Murdoch family and told Cavuto why he has a personal stake in influencing American politics:

– On continuing America’s dependence on fossil fuels, Saudia Arabian oil: “Saudi Arabia’s strategic alliance with the United States will continue and as a derivative of that, the link with the oil between oil and dollars is there. The bulk of our GDP, the bulk of budget comes from oil and oil is still a dollar based commodity.” As Media Matters has documented, Fox News is a reliable source of misinformation on clean energy, and has aggressively attacked efforts to move America away from a fossil fuel dependent economy.

– On opposing financial reforms, bank responsibility fee: “In a way I’m conflicted because I’m invested in Citigroup but at the more global picture, I’m a big supporter of the United States. I believe taxing the banks right now is not the right thing at all. It’s like you have a patient coming out of an ICU.” Alwaleed owns a $4.3 billion dollars stake in Citigroup, a massive bank that spent millions lobbying against financial reform last year.

With the Citizens United Supreme Court decision essentially freeing corporations to spend unlimited amounts in campaigns, theoretically Alwaleed can pressure the American corporations he owns stock in to spend millions — or even billions — of dollars attacking candidates he opposes. In addition to his powerful Fox News outlet, Alwaleed and other foreign investors have potentially unprecedented power to impact American elections.

Frank Magid, 'Action News' Creator, Dies
Patricia Sullivan

Frank Magid, the television "news doctor" whose survey research and advice to local television stations in the 1970s resulted in co-anchors who chatted between stories, fast-paced graphics, sports tickers and live shots, and a heavy reliance on both crime coverage and feel-good segments, died of lymphoma Feb. 5 in Santa Barbara. He was 78.

"Action News," as Mr. Magid dubbed his format, revolutionized broadcast news operations from Cedar Rapids to Kuala Lumpur.

'Action News' format

At a time when most local TV news shows featured a single anchorman reading the news from a sheet of paper in front of a static background, "Action News" and its rival, "Eyewitness News," demonstrated both the untapped possibilities of the medium and the opportunity to devolve into "happy talk" between serious segments. The redone broadcasts almost always shot to the top of the ratings.

But Mr. Magid-style changes were criticized as bringing uniformity and a dumbing-down of news coverage. "Thanks to him, local newscasts throughout America are like airports or fast food joints; they lack all traces of indigenousness," wrote Tom Shales of the Washington Post in 1982.

Supporters noted that Mr. Magid consistently emphasized the importance of local news, sharpened his clients' newswriting and forced them to pay better attention to the impressions of the audience.

Hard news plus

His research said viewers wanted hard news mixed with health, consumer and lifestyle stories, presented in a highly visual, fast-paced broadcast by people viewers liked. Shorter stories, urgent tones and better dressed and coiffed news staffers were just part of the bargain.

The "Action News" format had its first major success in 1970, when WPVI in Philadelphia rocketed from last to first place in the ratings. It quickly became standard fare across the country and later, around the world.

Mr. Magid's research also recommended CBS News feature Walter Cronkite as the solo anchorman on its evening news program. That didn't stop the venerable broadcaster from describing the work of consultants such as Mr. Magid as "a fad" and "balderdash," in a widely reported 1976 speech.

The criticism irked Mr. Magid. He told Washington Post reporter John Carmody the next year, "I feel sorry for Walter because he doesn't take time to check the facts. It's interesting that TV newsmen are so gullible."

Mr. Magid also helped develop ABC's "Good Morning America," which in 1975 defined the modern morning show format, and he developed local early morning local newscasts

Morning news

"We were the first to suggest to clients that there was an opportunity for news between 6 and 7 a.m. in the morning and strongly urged our clients to do that," Mr. Magid in 1997 told Electronic Media magazine, which called him "the godfather of local TV news research."

Clients resisted his suggestion, he recalled, claiming that the time was not covered by ratings, the audience was too small and advertisers would never support the concept. A New Orleans station, followed by Sacramento and Minneapolis, proved the naysayers wrong.

Mr. Magid, through his eponymous company based for many years in Marion, Iowa, also ran a "star school" for anchors.

Magid Associates also served as an industry recruitment agency, providing client stations who were searching for new "talent" with videotapes of up-and-coming broadcasters in other markets.

Frank Newton Magid was born in Chicago Sept. 1, 1931, and served in the Army during the Korean War. He graduated from the University of Iowa and received a master's degree there in 1956 in the fields of social psychology and statistics. After teaching at Iowa's Coe College and the University of Iowa, Mr. Magid launched his company in 1956. His first client was a bank; his fourth was WMT-TV, now KGAN-TV, in Cedar Rapids.

Accurate data

By creating careful surveys and polling random samples of a population, Mr. Magid and his employees were able to provide highly accurate data that gave television its first serious consumer research.

The work paid off for the Iowa station, and the station's manager recommended Mr. Magid for a job at Time-Life's newly acquired KOGO-TV in San Diego. That, too, was successful, and it led to a contract for all the Time-Life stations.

"And that really was our launching pad because they were very kind to us and began to do some considerable amount of advertising to the trades, talking about how they were listening to the public through this rather new, and at that time quite unique, kind of research," Mr. Magid told Electronic Media.

His firm, from which he retired in 2002, also advised AM radio stations to get into the FM field, and urged broadcasters to invest in cable TV. He helped identify viability of direct broadcast satellite television and did the first research that determined the viability of digital video recorders.

Now based in Minneapolis, the privately held company has about 200 employees and advises all kinds of media, including the Washington Post.

Survivors include his wife of 53 years, Marilyn Magid of Santa Barbara; two sons, Brent Magid who took over the company and resides in Minneapolis, and Creighton Magid of Washington; a brother; and four grandchildren.

Super Bowl Surpasses 'M-A-S-H' Finale as Most-Watched TV Show Ever
David Bauder

The New Orleans Saints' victory over Indianapolis in the Super Bowl was watched by more than 106 million people, surpassing the 1983 finale of "M-A-S-H" to become the most-watched program in U.S. television history, the Nielsen Co. said Monday.

Compelling story lines involving the city of New Orleans and its ongoing recovery from Hurricane Katrina and the attempt at a second Super Bowl ring for Indianapolis quarterback Peyton Manning propelled the viewership. Football ratings have been strong all season.

"It was one of those magical moments that you don't often see in sports," said Sean McManus, president of CBS News and Sports.

Nielsen estimated Monday that 106.5 million people watched Sunday's Super Bowl. The "M-A-S-H" record was 105.97 million.

The viewership estimate obliterated the previous record viewership for a Super Bowl — last year's game between Arizona and Pittsburgh. That game was seen by 98.7 million people, Nielsen said.

The "M-A-S-H" record has proven as durable and meaningful in television as Babe Ruth's record of 714 home runs was in baseball until topped by Hank Aaron. Ultimately, it may be hard to tell which program was really watched by more people. There's a margin for error in such numbers, and Nielsen's Monday estimate was preliminary, and could change with a more thorough look at data due Tuesday.

"It's significant for all of the members of the broadcasting community," said Leslie Moonves, CBS Corp. CEO. "For anyone who wants to write that broadcasting is dead, 106 million people watched this program. You can't find that anywhere else."

Moonves predicted CBS will earn more in advertising revenue than in any other Super Bowl. The good ratings for the game and football in general also set CBS and other football broadcasters up well when selling advertising for next season, he said.

The Nielsen estimate also drew some congratulations from Alan Alda, the star of "M-A-S-H," and the slugger whose record was beaten.

"If the 'M-A-S-H' audience was eclipsed, it was probably due in large part to the fact that the whole country is rooting for New Orleans to triumph in every way possible," Alda said. "I am, too, and I couldn't be happier for them. I love that city."

There are more American homes with television sets now (114.9 million) than there were in 1983 (83.3 million). An estimated 77 percent of homes with TVs on were watching "M-A-S-H" in 1983, compared with the audience share of 68 for the Super Bowl.

Nielsen also measures only the United States, and it's possible some World Cup soccer games were seen more worldwide. Accurate measurement of television audiences outside the United States is spotty at best.

Alda also wondered whether the numbers were too close to declare a new champion. He thinks Nielsen didn't take into account large numbers of people watching "M-A-S-H" communally, which is often the case for football games, too.

"Not to say I'm competitive, but in part we are talking about sports," he said. "And I actually AM competitive."

McManus didn't want to jinx it, but the abnormally strong viewership for football this year left him hoping for a record. The NFC and AFC championship games both had their biggest audiences since the 1980s. The growth of high-definition television and its appeal to sports fans has also helped.

A competitive game until the final minutes sealed it. McManus acknowledged some nervousness when Indianapolis jumped out to a 10-0 lead — a Super Bowl rout often makes people turn away from the game — but New Orleans roared back.

The Mid-Atlantic blizzard also helped CBS. After New Orleans, the highest-rated market was snowbound Washington, Nielsen said. More people watched the game from their homes in that area instead of going to parties or bars, and Nielsen does a much better job counting viewers in homes than outside of them.

"Bad weather in the Northeast and good weather in Florida was a good combination for us," McManus said.

The Super Bowl also proved a strong launching pad for the new CBS series "Undercover Boss" that premiered after the game. An estimated 38.6 million people watched the first edition of a series about corporate honchos working secretly as low-level employees in their own companies, Nielsen said. That's third only to a 1996 "Friends" and 2001 "Survivor" as the most-watched program after the Super Bowl.

Meanwhile, Dorito's was a big winner in a measurement of interest in the commercials played during the Super Bowl. TiVo Inc. said the snack company's ad featuring a boy telling a man to keep his hands off his chips and his mom was stopped and played back in 15 percent of homes with the digital video recorder.

The secretly filmed CBS promo with David Letterman, Jay Leno and Oprah Winfrey came in second, followed by the Snicker's ad with Betty White and Abe Vigoda flattened in a football game.

In general, however, TiVo found less interest in the commercials than it has in previous years, judged by how many people paused live action to see them, said Todd Juenger, general manager of TiVo's research department.

A High-Tech Alternative for Hollywood Hopefuls
James Warren

“House lights up!” proclaimed the silver-haired former lawyer who, with blue jeans, black T-shirt, black safari jacket and Nikes, looked oh-so Hollywood in an oh-so Chicago bastion, the Merchandise Mart.

As four understudies from the Second City comedy troupe entered the sound stage, they were trailed by film students climaxing three weeks of labor by taping a half-hour faux “Saturday Night Live.” It featured comedy sketches, droll pre-taped mock commercials and a live performance by Rhymefest, a hip hop artist.

The students get academic credit by handling sound, cameras, lights and the funny people, all with the help of professionals, and their polished handiwork, “Live at the Mart,” may soon be shown on NBC locally or nationally. It underscored the glitz, teamwork and market-driven pragmatism at the core of Chicago’s Flashpoint Academy of Media Arts and Sciences, one of the country’s most curious and disorienting educational institutions.

Imagine Pixar, Disney, Nintendo and Dreamworks all melded into a vocational setting. Started in 2007, this is a pricey ($25,000 a year) two-year school intended for those not motivated by high school, or brief college stays, but who are captivated by technology.

“I was bored by high school,” said Craig Reuss, 18, a red-haired, somnolent-looking first-year student from Lake Geneva, Wis., who wants to work in video games.

Focused in four areas — students can earn an associate of applied science in recording arts, visual effects and animation, game development and film — Flashpoint has drawn visits and testimonials from directors like Ken Burns, Harold Ramis and Quentin Tarantino, as well as executives from Microsoft, broadcast producers and video game development firms.

Howard Tullman, the ex-lawyer with a sleek West Coast look and air, runs the academy on a belief that too many students are “demotivated” by technology-poor four-year schools, and that the convergence of digital technologies necessitates a cross-disciplinary curriculum, mandated collaboration and faculty from high-tech industries.

A workaholic P.T. Barnum with an eclectic modern art collection that is on display throughout the hallways, Mr. Tullman is unabashedly derisive of old academia. He labels “a joke” the tradition of professors’ lecturing, and finds most university film schools a waste, producing “coffee fetchers.”

The academy has 450 students, 26 full-time faculty members and a core curriculum of basic communications skills, English and math. Students work 30 to 40 hours a week producing video games, films and animation. Microsoft and others use the school to test next-generation technology.

“This is the Julliard of digital technology,” said Lyn Niemann of Downers Grove, a former Chicago Tribune reporter and, at 45, one of the older students.

Start-up costs were $20 million, with 90,000 square feet at the main building at 28 North Clark Street, and 50,000 square feet at the Mart. Even pros are taken aback by the facilities: two large performance and broadcast stages; four sound recording studios; five 36-station computer labs for film, recording arts, animation and game development; 10 classrooms with multiple projectors and surround sound; a vast digital media storage infrastructure and a screening room also used by big-time movie productions filming in Chicago.

Amanda See, 21, an aspiring film producer from Huntley, Ill., spent a year at the University of Iowa, and then decided to go to Flashpoint. “They just couldn’t keep up with the fast pace of the industry,” she said of Iowa.

Nicholas Gerger, 21, of Barrington, spent three semesters at Harper College. “I didn’t do well and didn’t apply myself,” he said. He was entranced during a tour of Flashpoint and delighted when he got a camera and a mandate to “go out and do something” on his first day of cinematography.

Classes meet three times a week for nine weeks. Flashpoint said it placed 70 percent of its graduates — most impressive, given the economy — and it was just awarded degree-granting authority from the Illinois Board of Higher Education, a key step in the ultimate goal of formal accreditation.

Local employers lauding the academy include Josh Tsui, president of Robomodo, a Chicago video game developer who created the latest version of the popular Tony Hawk series. Bruno Cohen, general manager of WBBM-TV, finds Flashpoint inspirational. “It’s all about preparation, focus and hard work,” Mr. Cohen said.

Ultimately, the academy appears to be a welcome experiment: a vocational school not for traditional blue-collar trades but for creative tasks.

Mr. Tullman is probably too harsh in his assessment of the many inspiring professors in liberal arts lecture halls. But the market will be the final arbiter.

"Avatar" Loses Box Office Crown to "Dear John"

It had to happen sometime, but nobody expected the biggest film of all time to lose its North American box office crown this weekend to "Dear John," a low-budget "chick flick" with a pair of little-known stars.

The romantic drama opened at No. 1 with three-day sales of $32.4 million across the United States and Canada, crushing both industry forecasts and reigning champ "Avatar," according to studio estimates issued on Sunday.

James Cameron's 3D sci-fi spectacular slipped to No. 2 with $23.6 million in its eighth weekend. But "Avatar" remained the top pick overseas, earning $76 million. Its worldwide tally rose to $2.21 billion, divided between $630.1 million from North America and $1.58 billion from foreign markets.

"Avatar" last Tuesday surpassed the $601 million haul of Cameron's 1997 release "Titanic" to become the biggest movie of all time in North America. It had already taken the international and worldwide titles from "Titanic" thanks to ticket-price inflation and the higher cost of 3D screenings.

Pundits had forecast the 20th Century Fox release would lose its North American crown next weekend to "Valentine's Day," which will take advantage of both the eponymous holiday and the U.S. Presidents Day weekend.

But few predicted that "Dear John" would cause a stampede to movie theaters by young women. Moreover, the hardy demographic appeared to ignore the blizzard that shut down a large swathe of the mid-Atlantic region.

"When they come out, young women come out in droves," said Geoffrey Ammer, president of worldwide marketing at the film's closely held financier Relativity Media.

He said the first wave of moviegoers texted and Tweeted their friends during the screenings to deliver their favorable verdicts, triggering further waves.

Men "Kicking and Screaming"

Channing Tatum and Amanda Seyfried star as lovers whose romance is curtailed by the September 11 attacks. It was directed by Swedish filmmaker Lasse Hallstrom and based on a novel by Nicholas Sparks ("The Notebook").

The film was distributed by Sony Corp's mid-budget label Screen Gems, after Time Warner Inc's New Line Cinema unit dumped the $25 million project. Screen Gems said audiences for the film were 84 percent female and almost two-thirds were under the age of 21.

Ammer said the handful of men "dragged kicking and screaming" to the movie appeared to enjoy it, and he hoped word-of-mouth would bring in more of them. Critics largely ripped the movie.

John Travolta's latest box office offering, "From Paris With Love," was the actor's worst start in almost a decade. The crime thriller opened at No. 3 with $8.1 million. Distributor Lionsgate had hoped for an opening in the mid-teen millions, and said the blizzard did not help business. Critics were also unkind.

Travolta's previous worst opening was the $4.5 million start for "Lucky Numbers" in October 2000. He was in theaters last November with "Old Dogs," which opened at ticket sales of $17 million.

"From Paris With Love" was made by French filmmaker Luc Besson's Europa Corp, which enjoyed a worldwide hit last year with the Liam Neeson kidnap thriller "Taken." Pierre Morel directed both films. Lionsgate is a unit of Lions Gate Entertainment Corp.

Also new to the top 10 was Fox Searchlight's "Crazy Heart," which expanded nationally after seven weekends in limited release on the heels of its three Oscar nominations on Tuesday.

The picture earned $3.65 million, jumping six places to No. 8. Its total stands at $11.2 million. Jeff Bridges, its star, is considered the favorite to take home the best actor Oscar on March 7 for his role as a washed-up country music singer and songwriter. Fox Searchlight and 20th Century Fox are units of News Corp.

"Avatar" and "The Hurt Locker," the latter now out on DVD, led the Oscar field with nine nominations each.

(Reporting by Dean Goodman; Editing by Cynthia Osterman)

United States Box Office

Issued Tue Feb 10, 2010
Title/Distributor Wknd. Gross Total Gross # Theaters Last Wk. Days Released
SONY PICTURES $30468614 $30468614 2969 0 3
TWENTIETH CENTURY FOX $22850881 $629344204 3000 1 52
LIONSGATE $8158860 $8158860 2722 0 3
WARNER BROS. $6855371 $28947851 3066 2 10
TWENTIETH CENTURY FOX $6629595 $34462568 3218 4 17
WALT DISNEY STUDIOS $5549129 $20944734 2456 3 10
WARNER BROS. $4717335 $82045140 2820 5 24
FOX SEARCHLIGHT $3567671 $11105401 819 14 54
SONY PICTURES $3453651 $34731934 2339 6 17
WARNER BROS. $2535174 $201484470 1805 8 45
WARNER BROS. $2503224 $241529593 1740 11 80
PARAMOUNT $2283113 $76614306 1547 12 66
PARAMOUNT $2262399 $41485822 2330 7 59
TWENTIETH CENTURY FOX $2125922 $212156137 1965 9 47
UNIVERSAL $2080395 $107534385 1671 10 45

Disney Aims to Shorten Big-Screen Run for "Alice"
Carl DiOrio

Bob Iger wasn't bluffing. The Disney CEO has been telling Wall Street for months of his plans for studio executives to shorten traditional movie release schedules, and it appears the time has arrived for the first grand experiment.

A day after the revelation that UK exhibitors are being asked to accept a tightened theatrical window for Disney's spring feature "Alice in Wonderland," The Hollywood Reporter has learned that U.S. theater owners have been similarly approached.

Normally, movies play in first-run theaters for up to 16 weeks. Disney is talking about a theatrical run of just under 13 weeks for "Alice," a 3D motion-capture/live-action fantasy directed by Tim Burton and starring Johnny Depp.

The studio would benefit from truncating the theatrical run because the movie, with its family-friendly subject matter and well-known cast, is well positioned to do big success as a home entertainment title. The quicker Disney can get it into DVD and Blu-ray Disc release, the better for its bottom line.

It's likely that Disney also will accelerate the availability of "Alice" on video-on-demand, which home-entertainment executives have come to view as less of a threat to DVD/Blu-ray income and more as a complementary revenue stream.

Exhibitors have made it clear that they need a compensating upside from the moves. Less clear is how the studio will provide such a benefit, but film-rental terms are always subject to some negotiating.

These days, most releases come with "aggregate" terms. In such cases, distributors and exhibitors agree to split box office by a set percentage of a film's entire run, with up to 55 percent going into studio coffers on pricey high-profile releases. But on some pictures, studios still pencil in a growing share for exhibitors during the course of a run. It's possible that Disney will use such an approach to offer a sweeter-than-usual early taste of the receipts for theater owners in exchange for their agreeing to book the film for a truncated theatrical run.

In any event, exhibitors are getting assurances that Disney will proceed cautiously in broadening its experiment to future movie releases.

Disney's sales job in the U.K., where it sought to lop as much as five weeks from its regional run, was a bit easier. European theater owners know the theatrical market will be squeezed greatly when the soccer World Cup kicks off in June.

Meanwhile, another benefit of the shorter theatrical run for "Alice" -- set to unspool worldwide March 5 in a combination of 2D and 3D venues -- would be its freeing up 3D screens for other extra-dimensional features, including Warner Bros.' April 2 release "Clash of the Titans."

For Iger, who's been trying to reinvigorate the Disney film studio through a major executive shuffle, changes to traditional release windows simply are a matter of maximizing studio profits. As recently as Tuesday, the Disney topper mused during an earnings conference that window experiments might be a way of improving the studio's bottom line.

Veoh Finally Calls it Quits: Layoffs Yesterday, Bankruptcy Filing Soon
Peter Kafka

Veoh, one of several well-funded start-ups that have tried and failed to cash in on the Web video boom, is finally calling it quits. The company let go of the remainder of its workforce Wednesday, and sources say it plans on filing for Chapter 7 bankruptcy protection in the near future.

Veoh, which started out as a YouTube-style site, has struggled for years to find a business model that works, and has burned through $70 million in funding from name-brand investors like Goldman Sachs, Time Warner, Intel's venture arm, Spark Capital, and former Disney CEO Michael Eisner.

Veoh CEO Dmitry Shapiro declined to comment.

This one has been a long time coming. Last year, the San Diego-based company laid off about a third of its staff, replaced its CEO with founder Shapiro, and focused its efforts on developing a Web browser-based app. Shapiro spent part of the year also actively looking for a buyer, but a copyright lawsuit with Universal Music Group made the site a difficult sale.

The company was buoyed last fall when it effectively won that lawsuit: in a sweeping ruling, a federal judge ruled that Veoh was protected against the music label's copyright claims by the Digital Millennium Copyright Act.

That decision gave Veoh executives the confidence to try gather up yet another funding round. And as recently as January, the company thought it might be able to convince its existing investors to pony up yet again.

But that plan collapsed in the past few weeks, sources said. It's striking that the company couldn't find any buyer willing to pay up for either its technology or its audience, which was supposedly at 25 million uniques last spring.

Warner Quits Free Music Streaming
Ian Youngs

Record label Warner Music has said it will stop licensing its songs to free music streaming services.

Companies like Spotify, We7 and Last.fm give free, legal and instant access to millions of songs, funded by adverts.

Warner, one of the four major labels, whose artists include REM and Michael Buble, said such services were "clearly not positive for the industry".

That raises questions over the future of free streaming, which is popular with fans but not lucrative for labels.

Spotify has seven million users in six European countries and is in negotiations to launch in the US.

Ninety-five per cent of those fans use its free service, hearing adverts between songs, while 250,000 pay a monthly fee to get it on a mobile and with no ads.

Two-and-a-half million people use We7's free offering, while Last.fm is also free in the US and UK.

Other popular audio services include Deezer, Pandora and Grooveshark.

Warner chief executive Edgar Bronfman Jr said: "Free streaming services are clearly not net positive for the industry and as far as Warner Music is concerned will not be licensed.

"The 'get all your music you want for free, and then maybe with a few bells and whistles we can move you to a premium price' strategy is not the kind of approach to business that we will be supporting in the future."

It is not clear whether Warner will remove its music from existing services or decline to do deals with new outlets.

He said the focus would be on promoting streaming services that require payment, which he said could appeal beyond those who currently pay for downloads in stores such as Apple's iTunes.

"The number of potential subscribers dwarfs the number of people who are actually purchasing music on iTunes," Mr Bronfman said.

Fans could pay a monthly fee direct to a streaming service, as with Spotify, or get access to the music as part of a deal for a mobile phone, broadband connection or another gadget.

Such subscriptions could be taken up by "hundreds of millions if not billions of people, most of whom are not today either buyers or certainly heavy buyers of music", Mr Bronfman said.

And they would be much more profitable than per-track downloads in the long term, he added.

The main legal streaming services have deals with most major and independent record labels and pay royalties for each song played.

But the amount is far less than a label would earn if that song was downloaded or if they got a slice of a listener's monthly subscription.

Mr Bronfman's comments come just weeks after another major label, Universal, said Spotify was well on the way to proving its commercial viability.

"Spotify is a very sustainable financial model - full stop," Rob Wells, senior vice president of Universal Music Group International, said in January.

Paul Brindley of digital music consultants Music Ally said the other major labels were unlikely to follow Warners' lead.

"There's a fairly widespread suspicion that free streaming services just aren't ever going to make enough money," he said.

"But it does seem to be that Warner is taking a firmer stand than the other major labels in terms of opposing a free ad-funded model.

"It would be an absolute tragedy if they were to adhere to that to such a degree that in their renegotiations with Spotify, they withdrew their content without even giving them a chance to see how well they could convert their users to the premium version.

"It would definitely be a tremendous blow to a service like Spotify if Warner were to withdraw their catalogue from the free service."

A Spotify spokesman declined to comment.

We7 chief executive Steve Purdham said Warner and the other major labels had always been "consistent in their concerns" about ad-funded and free services.

"But they have also been very supportive of us. I think Edgar's comments are more a reflection that subscription services is currently the key focus for the industry and I strongly support that view, especially in the mobile arenas."

Jon Webster, chief executive of the UK's Music Managers' Forum, which represents artist managers, said the industry must support services that tempt fans away from piracy.

"Anything that's going backwards is denying where the world's going," he said.

"New media has to give the consumer what they want and the consumer is in a world where they want things right here, right now - and if you don't give it to them, they'll steal it.

"There are new business models out there and they are beginning to work and we are in a transition phase."

WMG Takes Loss In Fiscal First Quarter

Warner Music Group (WMG) has released its revenue results for the label's fiscal first quarter of 2010, which ended December 31, 2009. Despite an increase in revenue and solid digital sales, WMG took a $17 million net loss in the quarter.

Total revenue for fiscal Q1 was $918 million, an approximate three percent increase from a year ago. Digital revenue made up 20 percent of WMG's total revenue in the quarter, coming in at $184 million. This was flat from the previous Q4 '09, but up eight percent from a year earlier. Operating income grew by 15 percent to $47 million, while OBIDA was up five percent to $112 million.

"We are pleased to have delivered stable revenue and OIBDA in our core Recorded Music and Music Publishing businesses despite ongoing recorded music industry pressures and macroeconomic headwinds," said Edgar Bronfman, Jr., WMG Chairman/CEO. "Our goals remain focused on delivering strong returns on A&R investments while we develop new business models, diversify our revenue mix and fortify our digital leadership position."

"As our stable margins show, we carefully manage our costs and regularly work to adjust our business in order to minimize the impact of a transitioning recorded music market," added Steven Macri, WMG EVP/CFO. "Similar to last year, we expect our release schedule in fiscal year 2010 to be back-end weighted."

Sinatra Song Often Strikes Deadly Chord
Norimitsu Onishi

After a day of barbering, Rodolfo Gregorio went to his neighborhood karaoke bar still smelling of talcum powder. Putting aside his glass of Red Horse Extra Strong beer, he grasped a microphone with a habitué’s self-assuredness and briefly stilled the room with the Platters’ “My Prayer.”

Next, he belted out crowd-pleasers by Tom Jones and Engelbert Humperdinck. But Mr. Gregorio, 63, a witness to countless fistfights and occasional stabbings erupting from disputes over karaoke singing, did not dare choose one beloved classic: Frank Sinatra’s version of “My Way.”

“I used to like ‘My Way,’ but after all the trouble, I stopped singing it,” he said. “You can get killed.”

The authorities do not know exactly how many people have been killed warbling “My Way” in karaoke bars over the years in the Philippines, or how many fatal fights it has fueled. But the news media have recorded at least half a dozen victims in the past decade and includes them in a subcategory of crime dubbed the “My Way Killings.”

The killings have produced urban legends about the song and left Filipinos groping for answers. Are the killings the natural byproduct of the country’s culture of violence, drinking and machismo? Or is there something inherently sinister in the song?

Whatever the reason, many karaoke bars have removed the song from their playbooks. And the country’s many Sinatra lovers, like Mr. Gregorio here in this city in the southernmost Philippines, are practicing self-censorship out of perceived self-preservation.

Karaoke-related killings are not limited to the Philippines. In the past two years alone, a Malaysian man was fatally stabbed for hogging the microphone at a bar and a Thai man killed eight of his neighbors in a rage after they sang John Denver’s “Take Me Home, Country Roads.” Karaoke-related assaults have also occurred in the United States, including at a Seattle bar where a woman punched a man for singing Coldplay’s “Yellow” after criticizing his version.

Still, the odds of getting killed during karaoke may be higher in the Philippines, if only because of the ubiquity of the pastime. Social get-togethers invariably involve karaoke. Stand-alone karaoke machines can be found in the unlikeliest settings, including outdoors in rural areas where men can sometimes be seen singing early in the morning. And Filipinos, who pride themselves on their singing, may have a lower tolerance for bad singers.

Indeed, most of the “My Way” killings have reportedly occurred after the singer sang out of tune, causing other patrons to laugh or jeer.

“The trouble with ‘My Way,’ ” said Mr. Gregorio, “is that everyone knows it and everyone has an opinion.”

Others, noting that other equally popular tunes have not provoked killings, point to the song itself. The lyrics, written by Paul Anka for Mr. Sinatra as an unapologetic summing up of his career, are about a tough guy who “when there was doubt,” simply “ate it up and spit it out.” Butch Albarracin, the owner of Center for Pop, a Manila-based singing school that has propelled the careers of many famous singers, was partial to what he called the “existential explanation.”

“ ‘I did it my way’ — it’s so arrogant,” Mr. Albarracin said. “The lyrics evoke feelings of pride and arrogance in the singer, as if you’re somebody when you’re really nobody. It covers up your failures. That’s why it leads to fights.”

Defenders of “My Way” say it is a victim of its own popularity. Because it is sung more often than most songs, the thinking goes, karaoke-related violence is more likely to occur while people are singing it. The real reasons behind the violence are breaches of karaoke etiquette, like hogging the microphone, laughing at someone’s singing or choosing a song that has already been sung.

“The Philippines is a very violent society, so karaoke only triggers what already exists here when certain social rules are broken,” said Roland B. Tolentino, a pop culture expert at the University of the Philippines. But even he hedged, noting that the song’s “triumphalist” nature might contribute to the violence.

Some karaoke lovers are not taking chances, not even at family gatherings.

In Manila, Alisa Escanlar, 33, and her relatives invariably gather before a karaoke machine, but they banned “My Way” after an uncle, listening to a friend sing the song at a bar, became enraged at the laughter coming from the next table. The uncle, who was a police officer, pulled out his revolver, after which the customers at the next table quietly paid their bill and left.

Awash in more than one million illegal guns, the Philippines has long suffered from all manner of violence, from the political to the private. Wary middle-class patrons gravitate to karaoke clubs with cubicles that isolate them from strangers.

But in karaoke bars where one song costs 5 pesos, or a tenth of a dollar, strangers often rub shoulders, sometimes uneasily. A subset of karaoke bars with G.R.O.’s — short for guest relations officers, a euphemism for female prostitutes — often employ gay men, who are seen as neutral, to defuse the undercurrent of tension among the male patrons. Since the gay men are not considered rivals for the women’s attention — or rivals in singing, which karaoke machines score and rank — they can use humor to forestall macho face-offs among the patrons.

In one such bar in Quezon City, next to Manila, patrons sing karaoke at tables on the first floor and can accompany a G.R.O. upstairs. Fights often break out when customers at one table look at another table “the wrong way,” said Mark Lanada, 20, the manager.

“That’s the biggest source of tension,” Mr. Lanada said. “That’s why every place like this has a gay man like me.”

Ordinary karaoke bars, like the Nelson Carenderia here, a single room with bare plywood walls, mandate that a singer give up the microphone after three consecutive songs.

On one recent evening, at the table closest to the karaoke machine, Edwin Lancaderas, 62, crooned a Tagalog song, “Fight Temptation” — about a married man forgoing an affair with a woman while taking delight in their “stolen moments.” His friend Dindo Auxlero, 42, took the mike next, bawling songs by the Scorpions and Dire Straits. Several empty bottles of Red Horse crowded their table.

“In the Philippines, life is difficult,” said Mr. Auxlero, who repairs watches from a street kiosk, as he railed about government corruption and a weak economy that has driven so many Filipinos to work overseas, including his wife, who is a maid in Lebanon. “But, you know, we have a saying: ‘Don’t worry about your problems. Let your problems worry about you.’ ”

The two men roared with laughter.

“That’s why we come here every night — to clear the excesses from our heads,” Mr. Lancaderas said, adding, however, that the two always adhered to karaoke etiquette and, of course, refrained from singing “My Way.”

“Misunderstanding and jealousy,” in his view, were behind the “My Way” killings. “I just hope it doesn’t happen here,” he said.

Media Institute Opposes Performance Rights Act

The Media Institute, a nonprofit research foundation focused on communications policy issues, has voiced their opposition to the Performance Rights Act, which would force radio stations to pay royalties to artists for playing their music. A new paper called Performance Fees on Radio Stations: A Debacle Waiting To Happen was written by Media Institute VP Richard T. Kaplar and says that the royalty would impose an undue economic burden on broadcasters already reeling from the recession.

The paper reinforces the view that radio broadcasters and record labels have enjoyed a "mutually beneficial economic relationship" in which broadcasters play recordings available for free, thereby building audiences and ad revenue, while record labels get the benefit of that free airplay to boost record sales. Imposing a royalty scheme on broadcasters would not only upset this equilibrium, but would likely force a significant number of stations into bankruptcy or off the air altogether. Black and Hispanic stations would bear the brunt of compulsory performance fees for sound recordings, and the loss of such stations would be particularly acute for Black and Hispanic communities where local radio stations are "a primary venue for the expression of minority and ethnic viewpoints," the paper states.

Kaplar concludes that the Performance Rights Act "would most likely reduce diversity, and thus run contrary to Congress’s long-standing goal of enhancing media diversity. The economic and diversity impacts would be especially harsh on minority-owned radio stations, the outlets least able to tolerate additional burdens. Record companies should not try to kill the 'golden goose' of radio broadcasting in an effort to boost their bottom lines. Free music for free airplay has stood the test of time. It’s an arrangement that is not broken, and does not need to be fixed."

The full Policy Views issue paper can be read here.

Will You Be E-Mailing This Column? It’s Awesome
John Tierney

Sociologists have developed elaborate theories of who spreads gossip and news — who tells whom, who matters most in social networks — but they’ve had less success measuring what kind of information travels fastest. Do people prefer to spread good news or bad news? Would we rather scandalize or enlighten? Which stories do social creatures want to share, and why?

Now some answers are emerging thanks to a rich new source of data: you, Dear Reader.

Researchers at the University of Pennsylvania have intensively studied the New York Times list of most-e-mailed articles, checking it every 15 minutes for more than six months, analyzing the content of thousands of articles and controlling for factors like the placement in the paper or on the Web home page.

The results are surprising — well, to me, anyway. I would have hypothesized that there are two basic strategies for making the most-e-mailed list. One, which I’ve happily employed, is to write anything about sex. The other, which I’m still working on, is to write an article headlined: “How Your Pet’s Diet Threatens Your Marriage, and Why It’s Bush’s Fault.”

But it turns out that readers have more exalted tastes, according to the Penn researchers, Jonah Berger and Katherine A. Milkman. People preferred e-mailing articles with positive rather than negative themes, and they liked to send long articles on intellectually challenging topics.

Perhaps most of all, readers wanted to share articles that inspired awe, an emotion that the researchers investigated after noticing how many science articles made the list. In general, they found, 20 percent of articles that appeared on the Times home page made the list, but the rate rose to 30 percent for science articles, including ones with headlines like “The Promise and Power of RNA.” (I swear, the science staff did nothing to instigate this study, but we definitely don’t mind publicizing the results.)

“Science kept doing better than we expected,” said Dr. Berger, a social psychologist and a professor of marketing at Penn’s Wharton School. “We anticipated that people would share articles with practical information about health or gadgets, and they did, but they also sent articles about paleontology and cosmology. You’d see articles shooting up the list that were about the optics of deer vision.”

To make sense of these trends in “virality,” the Penn researchers tracked more than 7,500 articles published from August 2008 to February 2009. They assessed each article’s popularity after controlling for factors like the time of day it was published online, the section in which it appeared and how much promotion it received on the Web home page.

A random sample of 3,000 of these articles was rated by independent readers for qualities like providing practical value or being surprising. The researchers also used computer algorithms to track the ratio of emotional words in an article and to assess the relative positivity or negativity.

The computer textual analysis could identify “affect-laden” articles like “Redefining Depression as Mere Sadness” or “When All Else Fails, Blaming the Patient Often Comes Next.” It distinguished positive articles like “Wide-Eyed New Arrivals Falling in Love With the City” from downers like “Germany: Baby Polar Bear’s Feeder Dies.”

More emotional stories were more likely to be e-mailed, the researchers found, and positive articles were shared more than negative ones. Longer articles generally did better than shorter articles, although Dr. Berger said that might just be because the longer articles were about more engaging topics. (The best way to test that, he said, would be for The Times to run shorter and longer versions of the same article that would be seen by different readers.)

Surprising articles, like one about free-range chickens on the streets of New York, were also more likely to be e-mailed — which was a hardly a surprising discovery, of course. But the researchers also kept finding popular articles with a quality that went beyond surprise.

“If I went into my classroom dressed up like a pirate, that would be surprising, but it wouldn’t be awe-inspiring,” Dr. Berger said. “An article about square watermelons is surprising, but it doesn’t inspire that awed feeling that the world is a broad place and I’m so small.”

Building on prior research, the Penn researchers defined the quality as an “emotion of self-transcendence, a feeling of admiration and elevation in the face of something greater than the self.”

They used two criteria for an awe-inspiring story: Its scale is large, and it requires “mental accommodation” by forcing the reader to view the world in a different way.

“It involves the opening and broadening of the mind,” write Dr. Berger and Dr. Milkman, who is a behavioral economist at Wharton.

“Seeing the Grand Canyon, standing in front of a beautiful piece of art, hearing a grand theory or listening to a beautiful symphony may all inspire awe. So may the revelation of something profound and important in something you may have once seen as ordinary or routine, or seeing a causal connection between important things and seemingly remote causes.”

The motivation for mailing these awe-inspiring articles is not as immediately obvious as with other kinds of articles, Dr. Berger said. Sharing recipes or financial tips or medical advice makes sense according to classic economic utility theory: I give you something of practical value in the hope that you’ll someday return the favor. There can also be self-interested reasons for sharing surprising articles: I get to show off how well informed I am by sending news that will shock you.

But why send someone an exposition on quantum mechanics? In some cases, it, too, could be a way of showing off, particularly if you accompanied the article with a note like, “Perhaps this will amuse, although of course it’s a superficial treatment. Why can’t they use Schrödinger’s full equation?”

But in general, people who share this kind of article seem to have loftier motives than trying to impress their friends. They’re seeking emotional communion, Dr. Berger said.

“Emotion in general leads to transmission, and awe is quite a strong emotion,” he said. “If I’ve just read this story that changes the way I understand the world and myself, I want to talk to others about what it means. I want to proselytize and share the feeling of awe. If you read the article and feel the same emotion, it will bring us closer together.” (Go to nytimes.com/tierneylab to discuss your motives for e-mailing articles.)

The Penn researchers found evidence of readers’ sharing other emotions, too, like anxiety — which, based on the old “fear sells” theory of journalism, might be expected to be the most influential emotion on readers. But of all the variables studied, Dr. Berger said, awe had the strongest relationship with an article making the most-e-mailed list, and that finding strikes me as a high compliment to the Times audience.

In fact, Dear Reader, you could consider this new study to be firm scientific evidence of your own awesomeness. And if you want to share that feeling with anyone, you know what to do next.

Iran's Resistance Keeps Up Cat-And-Mouse Web Game
Reza Derakhshi

With their paths through the Internet increasingly blocked by government filters, Nooshin and her fellow Iranian opposition-supporters say their information on planned protests now comes in emails.

They say they don't know who sends them.

Internet messages have been circulating about possible rallies on February 11, when Iran marks the 31st anniversary of the Islamic revolution. But the climate in the Islamic Republic is much harder than before last year's post-election protests.

Last June, social media sites were hailed in the West as promising opposition supporters an anonymous rallying ground -- especially when they were accessed via proxy servers that could mask participants' actions and whereabouts.

For determined Iranians now, they are a high-risk tactic in a strategic game with the authorities, amid reports of mounting Internet disruption. Almost 32 percent of Iranians use the Internet and nearly 59 percent have a cellphone subscription, according to 2008 estimates from the International Telecommunications Union.

Since the disputed presidential poll that plunged Iran into its deepest internal turmoil since the 1979 Islamic revolution, the authorities have slowed Internet speeds and shut down opposition websites.

They also boast of an ability to track online action even from behind the proxies.

"This one is also blocked," sighed Nooshin, a student, as she surfed the web in a cafe in downtown Tehran. "This is more Filternet than Internet."

Speaking in a low voice and wearing a blue Islamic headscarf, the 22-year-old declined to use her real name due to the sensitivity of opposition activism in Iran.

Momentum Of Fear

The presidential vote was followed by huge protests led by opposition supporters who say the poll was rigged to secure hardline President Mahmoud Ahmadinejad's re-election. The authorities deny that charge.

When their newspapers were shut down after the vote, defeated presidential candidates Mirhossein Mousavi and Mehdi Karoubi launched their own websites. The authorities later blocked them, forcing the opposition to set up new ones.

Much of this action and protest was publicized and tracked on the Internet, especially through micro-blogging site Twitter.

However, concerns are now mounting in Iran that the authorities may be able to track down people who use proxies.

"People are afraid of being identified and are not willing to use them any longer," said Hamid, a shopkeeper in Markaz-e Computre, a popular computer shopping center in north Tehran, speaking on condition of anonymity.

Which is not to say that opposition efforts to plan and publicize their actions have been thwarted.

Afshin, a web developer who supports the opposition, said the authorities would not succeed: "Whatever the government blocks in the web, the people find another way," he said.

"It is a cat-and-mouse game which the government cannot win."


Arrayed against the web activists are the fact that Iran's government is equipped with latest monitoring technology, which enables it to detect computers making a secure connection, said Mikko Hypponen, chief research officer for Helsinki-based F-Secure Corporation.

Some proxy servers use Secure Sockets Layer (SSL) to secure the connection with a remote server. This security layer helps ensure that no other computers can read the traffic exchanged.

When people make these SSL connections -- the same type used in the West for Internet shopping -- the authorities cannot see the content of material accessed. But they could physically raid sites to check on the computers involved.

National police chief Esmail Ahmadi-Moghaddam in January warned Iran's opposition against using text messages and emails to organize fresh street rallies.

"These people should know where they are sending the SMS and email as these systems are under control. They should not think using proxies will prevent their identification," he said.

"If they continue ... those who organize or issue appeals (about opposition protests) have committed a crime worse than those who take to the streets," Ahmadi-Moghaddam added.

Thousands of people were arrested during widespread street unrest after the election. Most have since been freed, but more than 80 people have received jail terms of up to 15 years, including several senior opposition figures.

On January 28, Iranian media said two men sentenced to death in trials that followed the election had been executed. Tension in Iran rose after eight people were killed in clashes with security forces in December, including Mousavi's nephew.

"The security services can turn technology against the logistics of protest," Evgeny Morozov, a commentator on the political implications of the Internet, wrote in the November edition of Prospect magazine, citing experiences in Belarus and elsewhere.


But the authorities are facing determined resistance.

Journalists inside Iran have been banned from attending opposition demonstrations, but that has not kept footage of anti-government gatherings from reaching the Internet.

"It is extremely important for me to check my email messages in order to be informed about the latest developments in the absence of independent free media in the country," said Nooshin, her computer screen repeatedly flashing up the same message in Farsi: "Access to this page is prohibited by the law."

A young customer in the computer shopping center in Tehran said: "It is very important to be unidentified while surfing the Internet these days ... currently the most secure way for us is to have a secure email account."

Hypponen said Iran's international isolation -- especially its tense relationship with the United States -- is likely to hamper its ability to catch web activists.

"It's easier for an activist from Iran to hide than for a web criminal," he said. "When chasing criminals, countries help each other."

"Soft" War

The United States is also a factor. It cut ties with Iran shortly after its revolution toppled the U.S.-backed Shah, and Tehran and Washington are now at odds over Iran's disputed nuclear work.

Iran has accused the West of waging a "soft" war with the help of opposition and intellectuals inside the country, and officials have portrayed the post-election protests as a foreign-backed bid to undermine the clerical establishment.

In January, U.S. Secretary of State Hillary Clinton challenged Beijing and other governments to end Internet censorship, placing China in the company of Iran, Saudi Arabia and others as leading suppressors of online freedom.

She said "electronic barriers" to parts of the Internet or filtered search engine results contravened the U.N.'s Universal Declaration on Human Rights, which guarantees freedom of information.

Iran's supreme leader Ayatollah Ali Khamenei hit back, accusing the United States of trying to use the Internet as a tool to confront the Islamic Republic.

"The Americans have said that they have allocated a $45 million budget to help them to confront the Islamic Republic of Iran via the Internet," he said in a January 26 speech.

The U.S. Senate voted in July to adopt the Victims of Iranian Censorship Act, which authorizes up to $50 million for expanding Farsi language broadcasts, supporting Iranian Internet and countering government efforts to block it.

(Additional reporting by Tarmo Virki; Editing by Sara Ledwith)

European Swift Bank Data Ban Angers US

Tracking funding has been a priority for the US since 9/11

The European Parliament has blocked a key agreement that allows the United States to monitor Europeans' bank transactions - angering Washington.

The US called the decision a "setback for EU-US counter-terror co-operation".

The vote was a rebuff to intensive US lobbying for EU help in counter-terrorism investigations.

EU governments had negotiated a nine-month deal which would have allowed the US to continue accessing the Swift money transfer system.

Top US officials - including Vice-President Joe Biden, Secretary of State Hillary Rodham Clinton and Treasury Secretary Timothy Geithner - had contacted MEPs in recent days to urge them to consider "the importance of this agreement to our mutual security", the Associated Press news agency reported.

But Euro MPs said the deal provided insufficient privacy safeguards.

Lawmakers in Strasbourg voted 378-196 against the deal, with 31 abstentions.

Secret access

The US started accessing Swift data after the 11 September 2001 terror attacks on New York and Washington.

But the fact that the US was secretly accessing such data did not come to light until 2006.

Last week the Greens' home affairs expert, Jan Philipp Albrecht MEP, said that in backing the new deal the European Commission and EU governments had "not respected the fundamental criticism about the lack of sufficient protections with regard to privacy and the rule of law".

The leader of the Socialist group, Martin Schulz MEP, said: "We want a new and better deal with proper safeguards for people's privacy."

Tracking the funding of terror groups globally has been a priority for Washington since the 2001 attacks.

Swift handles millions of transactions daily between banks and other financial institutions worldwide. It holds the data of some 8,000 banks and operates in 200 countries.

Feds Push for Tracking Cell Phones
Declan McCullagh

Two years ago, when the FBI was stymied by a band of armed robbers known as the "Scarecrow Bandits" that had robbed more than 20 Texas banks, it came up with a novel method of locating the thieves.

FBI agents obtained logs from mobile phone companies corresponding to what their cellular towers had recorded at the time of a dozen different bank robberies in the Dallas area. The voluminous records showed that two phones had made calls around the time of all 12 heists, and that those phones belonged to men named Tony Hewitt and Corey Duffey. A jury eventually convicted the duo of multiple bank robbery and weapons charges.

Even though police are tapping into the locations of mobile phones thousands of times a year, the legal ground rules remain unclear, and federal privacy laws written a generation ago are ambiguous at best. On Friday, the first federal appeals court to consider the topic will hear oral arguments in a case that could establish new standards for locating wireless devices.

In that case, the Obama administration has argued that warrantless tracking is permitted because Americans enjoy no "reasonable expectation of privacy" in their--or at least their cell phones'--whereabouts. U.S. Department of Justice lawyers say that "a customer's Fourth Amendment rights are not violated when the phone company reveals to the government its own records" that show where a mobile device placed and received calls.

Those claims have alarmed the ACLU and other civil liberties groups, which have opposed the Justice Department's request and plan to tell the U.S. Third Circuit Court of Appeals in Philadelphia that Americans' privacy deserves more protection and judicial oversight than what the administration has proposed.

"This is a critical question for privacy in the 21st century," says Kevin Bankston, an attorney at the Electronic Frontier Foundation who will be arguing on Friday. "If the courts do side with the government, that means that everywhere we go, in the real world and online, will be an open book to the government unprotected by the Fourth Amendment."

Not long ago, the concept of tracking cell phones would have been the stuff of spy movies. In 1998's "Enemy of the State," Gene Hackman warned that the National Security Agency has "been in bed with the entire telecommunications industry since the '40s--they've infected everything." After a decade of appearances in "24" and "Live Free or Die Hard," location-tracking has become such a trope that it was satirized in a scene with Seth Rogen from "Pineapple Express" (2008).

Once a Hollywood plot, now 'commonplace'

Whether state and federal police have been paying attention to Hollywood, or whether it was the other way around, cell phone tracking has become a regular feature in criminal investigations. It comes in two forms: police obtaining retrospective data kept by mobile providers for their own billing purposes that may not be very detailed, or prospective data that reveals the minute-by-minute location of a handset or mobile device.

Obtaining location details is now "commonplace," says Al Gidari, a partner in the Seattle offices of Perkins Coie who represents wireless carriers. "It's in every pen register order these days."

Gidari says that the Third Circuit case could have a significant impact on police investigations within the court's jurisdiction, namely Delaware, New Jersey, and Pennsylvania; it could be persuasive beyond those states. But, he cautions, "if the privacy groups win, the case won't be over. It will certainly be appealed."

CNET was the first to report on prospective tracking in a 2005 news article. In a subsequent Arizona case, agents from the Drug Enforcement Administration tracked a tractor trailer with a drug shipment through a GPS-equipped Nextel phone owned by the suspect. Texas DEA agents have used cell site information in real time to locate a Chrysler 300M driving from Rio Grande City to a ranch about 50 miles away. Verizon Wireless and T-Mobile logs showing the location of mobile phones at the time calls became evidence in a Los Angeles murder trial.

And a mobile phone's fleeting connection with a remote cell tower operated by Edge Wireless is what led searchers to the family of the late James Kim, a CNET employee who died in the Oregon wilderness in 2006 after leaving a snowbound car to seek help.

The way tracking works is simple: mobile phones are miniature radio transmitters and receivers. A cellular tower knows the general direction of a mobile phone (many cell sites have three antennas pointing in different directions), and if the phone is talking to multiple towers, triangulation yields a rough location fix. With this method, accuracy depends in part on the density of cell sites.

The Federal Communications Commission's "Enhanced 911" (E911) requirements allowed rough estimates to be transformed into precise coordinates. Wireless carriers using CDMA networks, such as Verizon Wireless and Sprint Nextel, tend to use embedded GPS technology to fulfill E911 requirements. AT&T and T-Mobile comply with E911 regulations using network-based technology that computes a phone's location using signal analysis and triangulation between towers.

T-Mobile, for instance, uses a GSM technology called Uplink Time Difference of Arrival, or U-TDOA, which calculates a position based on precisely how long it takes signals to reach towers. A company called TruePosition, which provides U-TDOA services to T-Mobile, boasts of "accuracy to under 50 meters" that's available "for start-of-call, midcall, or when idle."

A 2008 court order to T-Mobile in a criminal investigation of a marriage fraud scheme, which was originally sealed and later made public, says: "T-Mobile shall disclose at such intervals and times as directed by (the Department of Homeland Security), latitude and longitude data that establishes the approximate positions of the Subject Wireless Telephone, by unobtrusively initiating a signal on its network that will enable it to determine the locations of the Subject Wireless Telephone."

'No reasonable expectation of privacy'

In the case that's before the Third Circuit on Friday, the Bureau of Alcohol, Tobacco, Firearms and Explosives, or ATF, said it needed historical (meaning stored, not future) phone location information because a set of suspects "use their wireless telephones to arrange meetings and transactions in furtherance of their drug trafficking activities."

U.S. Magistrate Judge Lisa Lenihan in Pennsylvania denied the Justice Department's attempt to obtain stored location data without a search warrant; prosecutors had invoked a different legal procedure. Lenihan's ruling, in effect, would require police to obtain a search warrant based on probable cause--a more privacy-protective standard.

Lenihan's opinion--which, in an unusual show of solidarity, was signed by four other magistrate judges--noted that location information can reveal sensitive information such as health treatments, financial difficulties, marital counseling, and extra-marital affairs.

In its appeal to the Third Circuit, the Justice Department claims that Lenihan's opinion "contains, and relies upon, numerous errors" and should be overruled. In addition to a search warrant not being necessary, prosecutors said, because location "records provide only a very general indication of a user's whereabouts at certain times in the past, the requested cell-site records do not implicate a Fourth Amendment privacy interest."

The Obama administration is not alone in making this argument. U.S. District Judge William Pauley, a Clinton appointee in New York, wrote in a 2009 opinion that a defendant in a drug trafficking case, Jose Navas, "did not have a legitimate expectation of privacy in the cell phone" location. That's because Navas only used the cell phone "on public thoroughfares en route from California to New York" and "if Navas intended to keep the cell phone's location private, he simply could have turned it off."

(Most cases have involved the ground rules for tracking cell phone users prospectively, and judges have disagreed over what legal rules apply. Only a minority has sided with the Justice Department, however.)

Cellular providers tend not to retain moment-by-moment logs of when each mobile device contacts the tower, in part because there's no business reason to store the data, and in part because the storage costs would be prohibitive. They do, however, keep records of what tower is in use when a call is initiated or answered--and those records are generally stored for six months to a year, depending on the company.

Verizon Wireless keeps "phone records including cell site location for 12 months," Drew Arena, Verizon's vice president and associate general counsel for law enforcement compliance, said at a federal task force meeting in Washington, D.C. last week. Arena said the company keeps "phone bills without cell site location for seven years," and stores SMS text messages for only a very brief time.

Gidari, the Seattle attorney, said that wireless carriers have recently extended how long they store this information. "Prior to a year or two ago when location-based services became more common, if it were 30 days it would be surprising," he said.

The ACLU, EFF, the Center for Democracy and Technology, and University of San Francisco law professor Susan Freiwald argue that the wording of the federal privacy law in question allows judges to require the level of proof required for a search warrant "before authorizing the disclosure of particularly novel or invasive types of information." In addition, they say, Americans do not "knowingly expose their location information and thereby surrender Fourth Amendment protection whenever they turn on or use their cell phones."

"The biggest issue at stake is whether or not courts are going to accept the government's minimal view of what is protected by the Fourth Amendment," says EFF's Bankston. "The government is arguing that based on precedents from the 1970s, any record held by a third party about us, no matter how invasively collected, is not protected by the Fourth Amendment."

Update 10:37 a.m. PT: A source inside the U.S. Attorney's Office for the northern district of Texas, which prosecuted the Scarecrow Bandits mentioned in the above article, tells me that this was the first and the only time that the FBI has used the location-data-mining technique to nab bank robbers. It's also worth noting that the leader of this gang, Corey Duffey, was sentenced last month to 354 years (not months, but years) in prison. Another member is facing 140 years in prison.

500,000 EU Computers Can Access Private British Data

Giant Schengen database holds a host of personal details that could be of use to criminal gangs

Privacy campaigners expressed shock last night after it emerged that large amounts of confidential personal information held about British citizens on a giant computer network spanning the European Union could be accessed by more than 500,000 terminals.

The figure was revealed in a Council of the European Union document examining proposals to establish a new agency, based in France, that would manage much of the 27 EU member states' shared data. But the sheer number of access points to the Schengen Information System (SIS) – which holds information regarding immigration status, arrest #warrants, entries on the police national #computer and a multitude of personal details – has triggered concerns about the security of the data.

Statewatch, a group that monitors civil liberties in Europe, said it was aware of a case in Belgium where personal information extracted from the system by an official was sold to an organised criminal gang.

"It is well known that the greater the points of access, the greater the number of people who have access and the greater the chance that data will be misplaced, lost or illegally accessed," said Tony Bunyan, director of Statewatch. "The idea that mass databases can be totally secure and that privacy can be guaranteed is a fallacy."

The rapid expansion of the EU has played a significant part in increasing the size of the network. In 2003, there were 125,000 computer terminals across the EU with access to the system, according to official documents. But following EU enlargement, the number of computer terminals with access to the system increased dramatically.

According to the Council of the European Union "Inter-institutional File", "the SIS is built around a central database that is networked, via national systems, to more than half a million terminals located within the security services of the member states". The file goes on to explain that the system "currently contains more than 30m alerts [for wanted persons, stolen vehicles and stolen or lost identity papers and documents]". While the SIS is credited by its supporters with helping to track wanted criminals and illegal immigrants, there are concerns that the personal data it holds could be invaluable for fraudsters.

Google Buzz Criticized for Disclosing Gmail Contacts
Robert McMillan

One day after its launch, privacy concerns have been raised about Google's new Gmail-based social-networking tool, Buzz.

At issue is a feature that compiles a list of the Gmail contacts who users most frequently e-mail or chat with. Buzz automatically starts following these people and makes the list public, meaning strangers can see who Buzz users have been in contact with.
The issue was noted by the Silicon Alley Insider on Wednesday. "Imagine ... a wife discovering that her husband emails and chats with an old girlfriend," the Web site said. "Imagine a boss discovers a subordinate emails with executives at a competitor."

There are some mitigating factors, however. Buzz only shares information about other people who are using Buzz and have set up public profiles in Google. So currently, most Gmail users are not publicly listed by the service. Users can also "unfollow" people who they don't want to be linked to.

And while Buzz requires users to set up a public profile before they can post messages, it does give them an option to hide who they are following and who is following them.

However, the default setting is to make the information public, and only users who click on an "edit" tab can see the choice to opt out. That means many people who start using Buzz may be publicly linked to other users without realizing it.

Reached Wednesday afternoon, a Google spokesman had no immediate comment.

Google introduced Buzz as an alternative to popular sites such as Facebook and Twitter, which are increasingly being used to navigate the Web.

Internet HoneyGrid Reveals 95% of User Generated Content is Spam or Malicious
Davey Winder

Websense Security Labs has published its bi-annual State of Internet Security report and, as usual, it makes for pretty interesting if somewhat scary reading.

Covering the last six months of 2009, the report is based upon the findings of the ThreatSeeker Network which is used to discover, classify and monitor global Internet threats and trends courtesy of something called the Internet HoneyGrid. This comprises of honeyclients and honeypots, reputation systems and advanced grid computing systems, all of which combine to parse through one billion pieces of content every day while searching for security threats. Every single hour the Internet HoneyGrid scans some 40 million websites for malicious code as well as 10 million emails for unwanted content and malicious code.

So what did the HoneyGrid have to report about the Internet security threatscape for Q3/Q4 2009?

Here are the key findings:

* 13.7% of searches for trending news/buzz words (as defined by Yahoo Buzz & Google Trends) led to malware.
* The second half of 2009 revealed a 3.3% decline in the growth of malicious Web sites compared to the first half of the year. Websense Security Labs believes this is due to the increased focus on Web 2.0 properties with higher traffic and multiple pages.
* However, comparing the second half of 2009 with the same period in 2008, Websense Security labs saw an average of 225% growth in malicious Web sites.
* 71% of Web sites with malicious code are legitimate sites that have been compromised.
* 95% of user-generated posts on Web sites are spam or malicious.
* Consistent with previous years, 51% of malware still connects to host Web sites registered in the United States.
* China remains second most popular malware hosting country with 17%, but during the last six months Spain jumped into the third place with 15.7% despite never having been in the top 5 countries before.
* 81% of emails during the second half of the year contained a malicious link.
* Websense Security Labs identified that 85.8% of all emails were spam.
* Statistics for the second half of 2009 show spam emails broke down as 72% (HTML), 11.2% (image), 14.4% (plain text with URL) and 2.4% (plain text with no URL).
* 35% of malicious Web-based attacks included data-stealing code.
* 58% of all data-stealing attacks are conducted over the Web.


New Russian Botnet Tries to Kill Rival

Spy Eye steals data and can then 'Kill Zeus'
Robert McMillan

An upstart Trojan horse program has decided to take on its much-larger rival by stealing data and then removing the malicious program from infected computers.

Security researchers say that the relatively unknown Spy Eye toolkit added this functionality just a few days ago in a bid to displace its larger rival, known as Zeus.
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The feature, called "Kill Zeus," apparently removes the Zeus software from the victim's PC, giving Spy Eye exclusive access to usernames and passwords.

Zeus and Spy Eye are both Trojan-making toolkits, designed to give criminals an easy way to set up their own "botnet" networks of password-stealing programs. These programs emerged as a major problem in 2009, with the U.S. Federal Bureau of Investigation estimating last October that they have caused US$100 million in losses.

Trojans such as Zeus and Spy Eye steal online banking credentials. This information is then used to empty bank accounts by transferring funds to so-called money mules -- U.S. residents with bank accounts -- who then move the cash out of the country.

Sensing an opportunity, a number of similar Trojans have emerged recently, including Filon, Clod and Bugat, which was discovered just last month.

Spy Eye popped up in Russian cybercrime forums in December, according to Symantec Senior Research Manager Ben Greenbaum.

With its "Kill Zeus" option, Spy Eye is the most aggressive crimeware, however. The software can also steal data as it is transferred back to a Zeus command-and-control server, said Kevin Stevens, a researcher with SecureWorks. "This author knows that Zeus has a pretty good market, and he's looking to cut in," he said.

Turf wars are nothing new to cybercriminals. Two years ago a malicious program called Storm Worm began attacking servers controlled by a rival known as Srizbi. And a few years before that, the authors of the Netsky worm programmed their software to remove rival programs Bagle and MyDoom.

Spy Eye sells for about US$500 on the black market, about one-fifth the price of premium versions of Zeus. To date, it has not been spotted on many PCs, however.

Still, the Trojan is being developed quickly and has a growing list of features, Greenbaum said. It can, for example, steal cached password information that is automatically filled in by the browser, and back itself up via e-mail. "This is interesting in its potential, but it's not currently a widespread threat at all," he said.

Zero-Day Vulnerabilities on the Market

Zero-day vulnerabilities have become prized possessions to attackers and defenders alike. As the recent China-Google attack demonstrated, they are the basis on which most of the successful attacks are crafted these days.

Since to find this kind of vulnerability usually takes months of full-time hacking, hackers ask from tens of thousands to hundreds of thousands dollars for each.

According to Ventura County Star, there is a growing underground market flourishing around these vulnerabilities, but there are also "white markets" - set up by VeriSign, TippingPoint, Google - where they buy zero-day flaws and alert the companies so that they can patch their products before the vulnerabilities can be taken advantage of.

Even government agencies from all over the world are engaged in buying these zero-days, since it's vital for them to fortify their defenses against breaches. Usually, they can offer larger amounts of money for the flaws than any of the companies. Pedram Amini of TippingPoint says that when governments are involved, a vulnerability can sometimes yield as much as $1 million to the skillful researcher.

In general, companies refuse to pay researchers for the vulnerabilities. Microsoft is famous for it. In their opinion, offering payment would "not foster a community-based approach to protecting customers from cybercrime.” On the other hand, Mozilla and Google offer a modest fee (around $500) for bugs and vulnerabilities found in the Firefox and Chrome browsers.

But what is that compared to the estimated $40,000 that the IE flaw used in the Google attack could have commanded? Charlie Miller, a security researcher with Independent Security Evaluators, who sold a bug he discovered in the Linux OS to a government contractor for $50,000 dollars, said that choosing whether to sell such an item or give it away for free to Microsoft is a hard decision to make, but that the amount of money he received for it is difficult to turn down.

Rest assured, this is an issue that will continue to be debated for a good while yet, along with the issue of responsible disclosure.

Supergeek Pulls Off 'Near Impossible' Crypto Chip Hack
Jordan Robertson

Deep inside millions of computers is a digital Fort Knox, a special chip with the locks to highly guarded secrets, including classified government reports and confidential business plans. Now a former US Army computer-security specialist has devised a way to break those locks.

The attack can force heavily secured computers to spill documents that likely were presumed to be safe. This discovery shows one way that spies and other richly financed attackers can acquire military and trade secrets, and comes as worries about state-sponsored computer espionage intensify, underscored by recent hacking attacks on Google.

The new attack discovered by Christopher Tarnovsky is difficult to pull off, partly because it requires physical access to a computer.

But laptops and smart phones get lost and stolen all the time. And the data that the most dangerous computer criminals would seek likely would be worth the expense of an elaborate espionage operation.

Jeff Moss, founder of the Black Hat security conference and a member of the US Department of Homeland Security's advisory council, called Tarnovsky's finding "amazing."

"It's sort of doing the impossible," Moss said. "This is a lock on Pandora's box. And now that he's pried open the lock, it's like, ooh, where does it lead you?"

Tarnovsky figured out a way to break chips that carry a "Trusted Platform Module," or TPM, designation by essentially spying on them like a phone conversation.

Such chips are billed as the industry's most secure and are estimated to be in as many as 100 million personal computers and servers, according to market research firm IDC.

When activated, the chips provide an additional layer of security by encrypting, or scrambling, data to prevent outsiders from viewing information on the machines. An extra password or identification such as a fingerprint is needed when the machine is turned on.

Many computers sold to businesses and consumers have such chips, though users might not turn them on. Users are typically given the choice to turn on a TPM chip when they first use a computer with it.

If they ignore the offer, it's easy to forget the feature exists. However, computers needing the most security typically have TPM chips activated.

"You've trusted this chip to hold your secrets, but your secrets aren't that safe," said Tarnovsky, 38, who runs the Flylogic security consultancy in Vista, California, and demonstrated his hack last week at the Black Hat security conference in Arlington, Virginia.

The chip Tarnovsky hacked is a flagship model from Infineon Technologies AG, the top maker of TPM chips. And Tarnovsky says the technique would work on the entire family of Infineon chips based on the same design. That includes non-TPM chips used in satellite TV equipment, Microsoft's Xbox 360 game console and smart phones.

That means his attack could be used to pirate satellite TV signals or make Xbox peripherals, such as handheld controllers, without paying Microsoft a licensing fee, Tarnovsky said. Microsoft confirmed its Xbox 360 uses Infineon chips, but would only say that "unauthorised accessories that circumvent security protocols are not certified to meet our safety and compliance standards."

The technique can also be used to tap text messages and email belonging to the user of a lost or stolen phone. Tarnovsky said he can't be sure, however, whether his attack would work on TPM chips made by companies other than Infineon.

Infineon said it knew this type of attack was possible when it was testing its chips. But the company said independent tests determined that the hack would require such a high skill level that there was a limited chance of it affecting many users.

"The risk is manageable, and you are just attacking one computer," said Joerg Borchert, vice president of Infineon's chip card and security division. "Yes, this can be very valuable. It depends on the information that is stored. But that's not our task to manage. This gives a certain strength, and it's better than an unprotected computer without encryption."

The Trusted Computing Group, which sets standards on TPM chips, called the attack "exceedingly difficult to replicate in a real-world environment." It added that the group has "never claimed that a physical attack - given enough time, specialised equipment, know-how and money - was impossible. No form of security can ever be held to that standard."

It stood by TPM chips as the most cost-effective way to secure a PC.

It's possible for computer users to scramble data in other ways, beyond what the TPM chip does. Tarnovsky's attack would do nothing to unlock those methods. But many computer owners don't bother, figuring the TPM security already protects them.

Tarnovsky needed six months to figure out his attack, which requires skill in modifying the tiny parts of the chip without destroying it.

Using off-the-shelf chemicals, Tarnovsky soaked chips in acid to dissolve their hard outer shells. Then he applied rust remover to help take off layers of mesh wiring, to expose the chips' cores. From there, he had to find the right communication channels to tap into using a very small needle.

The needle allowed him to set up a wiretap and eavesdrop on all the programming instructions as they are sent back and forth between the chip and the computer's memory.

Those instructions hold the secrets to the computer's encryption, and he didn't find them encrypted because he was physically inside the chip.

Even once he had done all that, he said he still had to crack the "huge problem" of figuring out how to avoid traps programmed into the chip's software as an extra layer of defence.

"This chip is mean, man - it's like a ticking time bomb if you don't do something right," Tarnovsky said.

Joe Grand, a hardware hacker and president of product- and security-research firm Grand Idea Studio, saw Tarnovsky's presentation and said it represented a huge advancement that chip companies should take seriously, because it shows that presumptions about security ought to be reconsidered.

"His work is the next generation of hardware hacking," Grand said.

'Aurora' Attacks Still Under Way, Investigators Closing In On Malware Creators

Researchers find 'markers' associated with authors of Aurora malware used in attacks against Google, others
Kelly Jackson Higgins

The targeted attacks that hit Google, Adobe, and other U.S. organizations are still ongoing and have affected many more companies than the original 20 to 30 or so reported by Google and others.

Security experts who have worked on forensics investigations and cleanup of the victim organizations from the attacks that originated out of China say they are also getting closer to identifying the author or authors of the malware used to breach Google and others.

"The attack called Operation Aurora is larger than just [the attacks acknowledged at the] 30 companies. That attack is still in operation and is much larger," says Greg Hoglund, founder and CEO of HBGary, which today published a report on Operation Aurora that recaps where things stand with the investigation.

He and other forensics firms say they have no direct evidence implicating the Chinese government in the Aurora attacks, but that doesn't mean other investigators or officials have it and just aren't sharing it publicly, Hoglund says. HBGary has found trails left behind in the Aurora code by its creators that are "very specific to the developer who compiled the malware," Hoglund says, and it has Chinese language ties.

HBGary has identified registry keys, IP addresses, suspicious runtime behavior, and other data about the Aurora malware and its origins using the firm's latest analysis tool, he says.

Hoglund says HBGary was able to identify "markers" specific to the way the Aurora developer wrote the malware. But he says his firm did not include this in its new report. "This is not in the report because we don't want him to know what we know about his coding," he says. "[It] is algorithmic in nature."

The Aurora "knock-off" malware based on the publicly released Aurora IE exploit and Metasploit's Aurora exploit wouldn't carry these markers, he says, so investigators would be able to identify whether it was from the same attacker or attackers that hit Google, Adobe, and others.

"We're really just getting started in tracing him," Hoglund says.

Kevin Mandia, CEO of forensics firm Mandiant, also says his firm's investigators are getting close to exposing the creators of the Operation Aurora malware. "We feel like we know a couple of them in their coding -- we recognize their trademarks ... down to the person."

Mandiant, which has been in the business of investigating these targeted, persistent attacks -- also known as advanced persistent threats (APTs) -- has seen the handiwork of these groups of attackers before. "The groups behind these [Aurora] attacks have hacked hundreds of companies" in previous targeted attacks, Mandia says. "At one time we saw over 200 victim [organizations hit by targeted attacks]," he says.

He says attacks that steal intellectual property typically funnel the goods via IP addresses based in China. But Mandia says he doesn't know if the Chinese government is involved in the recent attacks or other APT attacks, though some trends with these attacks raise questions. "We see patterns that just make us curious. If you're doing merger and acquisition work in China, you're targeted," Mandia says. "We've seen when we respond to client sites [that were attacked] a lot of legal counsel, external counsel, and C-level executives [targeted] in M&A with China."

Meanwhile, HBGary today released a free tool for downloading that scans and removes the Aurora malware from Windows machines. Hoglund calls it an "inoculation shot."

Still, Hoglund and other security experts note that the attackers didn't use only the Internet Explorer 6 exploit. One source with knowledge of the attacks says the attackers aren't using just phishing emails to deliver their exploits, either. "I know they are not" relying on just the IE exploit via email, the source says.

About 80 percent of APT attacks use custom malware, Mandia says. "We recently took over 1,800 programs we've collected since 2008 that are all part of APT ... and ran it through AV, and only 24 percent of the malware triggered antivirus," he says. "Over a year ago, none of it was triggering AV."

Mandia says that while some Aurora and other APT victims continue to be hammered by attackers sending new malware variants to the already-infected machines, these types of targeted attacks aren't letting up. "There's just another patch of victims somewhere else now," Mandia says.

"Aurora is a wake-up call," says Peter Schlampp, vice president of marketing and product management for forensics firm Solera Networks. "Companies are waking up to the fact that they've under-invested in the area of security around surveillance and monitoring and forensics to get to the bottom of what happened."

Chinese Police Shut Down Hacker Training Business

Police in central China have shut down a hacker training operation that openly recruited thousands of members online and provided them with cyberattack lessons and malicious software, state media said Monday.

The crackdown comes amid growing concern that China is a center for a global explosion of Internet crimes. Search giant Google said last month its e-mail accounts were hacked from China in an assault that also hit at least 20 other companies.

Police in Hubei province arrested three people suspected of running the hacker site known as the Black Hawk Safety Net that disseminated Web site hacking techniques and Trojan software, the China Daily newspaper said. Trojans, which can allow outside access to a computer when implanted, are used by hackers to illegally control computers.

Black Hawk Safety Net recruited more than 12,000 paying subscribers and collected more than 7 million yuan ($1 million) in membership fees, while another 170,000 people had signed up for free membership, the paper said.

The report said police seized nine servers, five computers and a car, and shut down all Web sites involved in the case. Authorities also froze 1.7 million yuan ($250,000) in assets.

The Hubei government refused to comment Monday while officials at the provincial public security bureau were not immediately available.

Google threatened last month to pull out of China unless the government relented on censorship, an ultimatum that came after the search giant said it had uncovered a computer attack that tried to plunder its software coding and the e-mail accounts of human rights activists protesting Chinese policies.

Government officials have defended China's online censorship and denied involvement in Internet attacks, saying the country is the biggest victim of Web attacks. The Ministry of Industry and Information Technology said hackers tampered with more than 42,000 Web sites last year.

China Alarmed by Threat to Security From Cyberattacks
Sharon LaFraniere and Jonathan Ansfield

Deep inside a Chinese military engineering institute in September 2008, a researcher took a break from his duties and decided — against official policy — to check his private e-mail messages. Among the new arrivals was an electronic holiday greeting card that purported to be from a state defense office.

The researcher clicked on the card to open it. Within minutes, secretly implanted computer code enabled an unnamed foreign intelligence agency to tap into the databases of the institute in the city of Luoyang in central China and spirit away top-secret information on Chinese submarines.

So reported The Global Times, a Communist Party-backed newspaper with a nationalist bent, in a little-noticed December article. The paper described the episode as “a major security breach” and quoted one government official who complained that such attacks were “ubiquitous” in China.

The information could not be independently confirmed, and such leaks in the Chinese news media often serve the propaganda or lobbying goals of government officials.

Nonetheless, the story is one sign that while much of the rest of the world frets about Chinese cyberspying abroad, China is increasingly alarmed about the threat that the Internet poses to its security and political stability.

In the view of both political analysts and technology experts here and in the United States, China’s attempts to tighten its grip on Internet use are driven in part by the conviction that the West — and particularly the United States — is wielding communications innovations from malware to Twitter to weaken it militarily and to stir dissent internally. “The United States has already done it, many times,” said Song Xiaojun, one of the authors of “Unhappy China,” a 2009 book advocating a muscular Chinese foreign policy which the government’s propaganda department is said to promote. He cited the so-called color revolutions in Ukraine and Georgia as examples. “It is not really regime change, directly,” he said. “It is more like they use the Internet to sow chaos.”

State media have vented those concerns more vociferously since Secretary of State Hillary Rodham Clinton last month criticized China for censorship and called for an investigation of Google’s claim that its databases had been the target of a sophisticated attack from China. “China wants to make clear that it too is under serious attack from spies on the Internet,” said Cheng Gang, author of The Global Times submarine story.

Despite China’s robust technological abilities, its cyberdefenses are almost certainly more porous than those of the United States, American experts say. To cite one glaring example, even Chinese government computers are frequently equipped with pirated software from Microsoft, they say. That means many users miss out on security upgrades, available to paying users, that fix security breaches exploited by hackers.

Cybersecurity is a growing concern for most governments. While the United States probably has tighter defenses than China, for example, experts say it relies more heavily on computers to run its infrastructure and so is more vulnerable to an attack.

But for China, worries about how foreign forces might employ the Internet and other communications advances to unseat the Communist Party are a salient factor in the government’s 15-year effort to control those technologies. Chinese leaders are constantly trying to balance the economic and social benefits of online freedoms and open communications against the desire to preserve social stability and prevent organized political opposition.

A distinct shift in favor of more comprehensive controls began nearly two years ago and hardened over the past six months, analysts say.

New policies are intended to replace foreign hardware and software with homegrown systems that can be more easily controlled and protected. Officials are also expanding the reach and resources of state-controlled media outlets so they dominate Chinese cyberspace with their blogs, videos and news. At the same time, the government is simultaneously beefing up its security apparatus. Officials have justified stronger measures by citing various internal threats that they say escalated online. Among them: the March 2008 riots in the Tibetan capital, Lhasa; reported attempts to disrupt the August 2008 Olympic Games and the amassing more than 10,000 signatures supporting a petition for human rights and democratic freedoms, an example of how pro-democracy advocates could organize online.

Especially alarming to officials, analysts say, was the role of the Internet in ethnic riots last July that left nearly 200 people dead and more than 1,700 injured — the worst ethnic violence in recent Chinese history. Government reports asserted that terrorists, separatists and religious extremists from within and outside the country used the Internet to recruit Uighur youth to travel to Urumqi, the capital of western China’s Xinjiang region, to attack ethnic Han citizens.

In August, security and propaganda officials briefed China’s ruling Politburo on their view of how the Xinjiang riots developed, according to one media executive with high-level government ties. The executive spoke on the condition of anonymity for fear of retribution for discussing delicate political topics.

China’s leaders also reviewed how Iranian antigovernment activists used Twitter and other new communication tools to organize large street demonstrations against President Mahmoud Ahmadinejad over the summer. He said Chinese leaders saw the Iranian protests as an example of how the United States could use the new forms of online communication in an imperialist fashion that could one day be turned against China.

“How did the unrest after the Iranian elections come about?” People’s Daily, the Communist Party’s official newspaper, asked in a Jan. 24 editorial. “It was because online warfare launched by America, via YouTube video and Twitter micro-blogging, spread rumors, created splits, stirred up and sowed discord.”

Since the unrest in Iran and Xinjiang, Chinese leaders have unrolled a raft of new initiatives, including closing thousands of Web sites, tightening censorship of text messages for lewd or unhealthy content and planning to converge China’s Internet, phone and state television networks. They are also carefully cultivating homegrown alternatives to foreign computer technologies and foreign-based Web sites like YouTube, Facebook and Twitter, all of which Chinese censors now block. The government says it needs the new controls to fight pornography, piracy and other illegal activity.

In November, nearly 300 government officials and technicians gathered in Beijing for a seminar that stressed China’s vulnerability in cyberspace.

“It is a long-existing reality that the West is stronger than us in terms of information security,” said the training manual, posted on the Web site of the Ministry of Public Security.

“Most of the key technology and products in the information security sphere are held in the hands of Western countries, which leaves China’s important information systems exposed to a bigger chance of being attacked and controlled by hostile forces,” the manual said.

The risks of dependence on foreign-made software became clear in 2008 after Microsoft deployed a new antipiracy program aimed at detecting and discouraging unauthorized users of its Windows operating system. In China, where an estimated four-fifths of computer software is pirated, the program caused millions of computer screens to go dark every hour and led to a public outcry.

New government procurement rules issued in December require state buyers to give preferential treatment to Chinese-made computers and communication products. But James Mulvenon, director of the Center for Intelligence Research and Analysis, a Washington-based consulting firm, said such orders were typically ignored.

James A. Lewis, director of the Center for Strategic and International Studies, a Washington-based research group, said China was caught between contradictory goals. The authorities want to keep using superior Western software so they can engage in espionage and defend themselves against foreign infiltration. “But at the same time they want to use indigenous software, which is not up to par,” he said.

But China is pushing hard to catch up. Mr. Mulvenon describes China as “absolutely the world leader” in development of Internet Protocol Version 6 (IPv6) — the successor to the current Internet.

Some suggest China aims to develop a more autonomous system equipped stronger firewalls and filters. China’s leaders “have always had the ambition to develop the capability of one big domestic Intranet that they could manage more easily, if need be,” one Communist Party newspaper editor said. But others suggest China is merely trying, like other nations, to respond to the reality that the existing IPv4 global Internet, in which the United States commands a disproportionate share of addresses, will soon run out of space.

The clearest evidence of China’s determination to wield greater control was the virtual communications blackout imposed over Xinjiang for six months after the July riots. Nineteen million residents in a region three times as big as Texas were deprived of text-messaging service, international phone calls and Internet access to all but a few government-controlled Web sites. The damage to tourism and business, not to mention the disruption to everyday life, was significant.

Hu Yong, a Beijing-based media expert, said the government was no longer as worried as it once was about the economic impact of electronic communication controls.

“That is more secondary to their concerns about political and social stability,” he said.

John Markoff contributed reporting from San Francisco, and Zhang Jing and Xiyun Yang contributed research from Beijing.

Record 13-Year Sentence for Hacker Max Vision
Kevin Poulsen

A skilled San Francisco computer intruder was sentenced here Friday to 13 years in federal prison for stealing nearly two million credit card numbers from banks, businesses and other hackers — in what is the longest hacking sentence in U.S. history.

Max Ray Vision, 37, was also ordered to pay $27.5 million in restitution, and to serve five years under court supervision following his release, during which time he’ll be allowed to use computers only for legitimate employment or education.

Vision, who changed his name from Max Butler shortly before his arrest, ran an online forum for thousands of identity thieves called CardersMarket, where he sold credit card magstripe data to the underground for about $20 a card. He was caught with 1.8 million stolen credit card numbers belonging to a thousand different banks, who tallied the fraudulent charges on the cards at $86.4 million.

The hacker faced up to life in prison under federal sentencing guidelines. But prosecutor Luke Dembosky on Friday recommended the significantly lower 13-year sentence, noting that Vision has provided substantial assistance to the government during his time in pre-trial custody.

“I was quite impressed by the cooperation shown by Mr. Butler,” agreed U.S. District Judge Maurice Cohill Jr.

Dressed in orange jail clothes, the soft-spoken hacker said little at Friday’s hearing, which at times felt more like an awards ceremony than a sentencing. Vision’s lawyer, prosecutor and judge took turns praising the hacker for his computer skills, and his apparent remorse over his crimes.

“I have a lot of regrets, but I think my essential failing was that I lost touch with the accountability and responsibility that comes with being a member of society,” Vision wrote in a letter (.pdf) to the judge on Thursday.

“I’ve changed,” Vision said in court Friday.

“He’s a likable person,” said prosecutor Dembosky. “Almost wide-eyed and optimistic in his view of the world.”

Vision’s 13-year term is the longest U.S. hacking sentence, though that record likely will be eclipsed next month when confessed TJX hacker Albert Gonzalez faces the first of two sentencing hearings. One of Gonzalez’s plea agreements contemplates a term of 17 to 25 years in prison.

The defendant’s sentence is longer than the one given to Michigan hacker Brian Salcedo. He was handed a then-unprecedented, nine-year term in 2004 for cracking the corporate network of the Lowe’s chain of home improvement stores.

In the late 1990s, Vision was a superstar in the computer security community, billing himself as an $100-an-hour computer security consultant. He gave the FBI information on security and piracy threats, and earned the respect of his peers for creating and curating an open source library of attack signatures used to detect computer intrusions.

But it turned out Vision was staging recreational hacks on the side, and in 2001 he was sent to federal prison for 18 months for launching a scripted attack that closed security holes on thousands of Pentagon systems, and left backdoors and packet-sniffers behind for his own use.

While in prison, Vision met more serious criminals, and after his release one of them introduced him to an Orange County, California entrepreneur and former bank robber named Chris Aragon, who became Vision’s partner.

Aragon, who’s pending trial on related state charges in Southern California, used Vision’s stolen credit card data to create near-perfect counterfeit cards, complete with holograms, and recruited a crew of shoppers who used the cards to snap up designer merchandise for resale on eBay. Aragon earned at least $1 million in the business, police say.

Vision also sold the credit card data online under the handles “Generous” and “Digits.” He stole data from restaurant point-of-sale terminals and other targets, including competing hackers.

“From what I know, his actual income from this entire event is probably not even a million dollars,” federal public defender Michael Novara said Friday.

The hacker became a priority to federal law enforcement officials in 2006 when, under the handle “Iceman,” he staged a brazen takeover of the competing online carder forums where hackers and fraudsters buy and sell stolen data, fake IDs and specialized underground services.

He hacked into the forums, wiped out some of their databases, and absorbed their content and membership into his own site, CardersMarket.

On one of the sites he hacked, called DarkMarket, Vision later discovered that an administrator named “Master Splyntr” was logging in from an FBI office here in Pittsburgh. The defendant partnered with a Canadian hacker to try and expose Master Splyntr as a fed, but his claim was largely dismissed in the underground as inter-forum rivalry. DarkMarket went on to become a full-blown undercover FBI operation, and the FBI and Secret Service began an investigation into “Iceman.”

Using informants and some genuine electronic gumshoe work, the feds identified Iceman as Vision about a year later, and arrested him in September 2007 at a corporate apartment he used as a hacking safe house. When the feds seized his computer, they found five terabytes of encrypted data. Experts at Carnegie Mellon University’s Computer Emergency Response Team eventually cracked Vision’s crypto.

Vision’s plea deal wraps up a separate federal case in Virginia, where Vision was charged with staging the first documented “spear phishing” attack against employees of a financial institution by unlawfully accessing the corporate network of Capital One bank.

With credit for time served and good behavior, Vision could be released in December 2018.

The iPad Questions Apple Won't Answer
InfoWorld Mobile Patrol

What exactly does Apple have to hide about the iPad? Ten days after CEO Steve Jobs introduced the iPad with words like "magical" and "revolutionary," any questions regarding key capabilities remain unanswered. If history is any guide, Apple's ongoing silence may mean the first-generation iPad will not be as compelling or as useful as many of us had hoped.

I've asked Apple a set of questions about what Jobs and Apple have not revealed about the iPad, and more than a week later, Apple PR has yet to get me the answers or receive permission to relay those answers publicly. Others in the press and analyst community are also getting the silent treatment regarding the iPad capabilities that matter to many prospective users.

Famously tight-lipped, Apple often views the press as an extension of its marketing effort, treating all but a favored few to a sadistic game of hard-to-get. When Apple extends this silence beyond a product's razzmatazz unveiling, it's usually meant that the product in question could not deliver the functionality journalists have asked about. With that in mind, unanswered queries about the iPad may imply that the iPad is less "magical" and "revolutionary" than Jobs suggests.

Here are the questions Apple has not yet answered, and why the "silence = no" implications diminish the iPad's value:

iPad question No. 1: Can you save and transfer documents to the iPad?
Anyone who uses an iPhone [6] or iPod Touch with an office productivity app such as Quickoffice [7] knows how frustrating it is to access Office documents. You have to set up a wireless connection over a local Wi-Fi network, enter the IP address, and transfer the files, or you send the document via email on an Exchange account so that it can be opened as an attachment.

Apple says its "no save" restriction is meant to prevent malware from being placed on the iPhone or iPod Touch. I've never bought that argument, as the iPhone and iPod Touch allow you to save images to what is essentially a folder and sync those images via iTunes -- so why not other file types? Of course, that may be a loophole Apple is closing: The iPad's Photos app (a photo gallery), like the iWork for iPad app, appears to do away with saved photo files altogether, instead embedding them into the app itself.

Yet it doesn't appear that the iPad will let you transfer files in folders via iTunes, email attachment downloads, or wireless networks. (I do, however, expect some of the Wi-Fi file-sharing hack apps will enable you to transfer files, though it is unclear whether Apple's iWork productivity app will be able to see them.) Given that Apple will offer a version of its Mac-only iWork suite for the iPad, it would make sense to be able to transfer files to and from the iPad.

Unfortunately, Apple's Website only mentions access to iWork and Office files from email and avoids any claim of saving the file to the device. The implication is that iWork for iPad can open email attachments, edit them in memory or within protected cache in the app itself, then send out the edited version in email. It's also apparent that iWork can read both Office and iWork documents, but only send back iWork or PDF documents. Again, Apple remains silent on this discrepancy, one that essentially restricts document editing to Mac users who have iWork -- an extremely tiny sliver of the world.

iPad question No. 2: Does the iPad support Microsoft Exchange email?
Apple mentioned several Web-based email providers that would work with the iPad's Mail app, such as Gmail and Hotmail, but Microsoft Exchange was conspicuously absent. I first assumed that the iPad would support Exchange and the same handful of Exchange ActiveSync security policies [8] as the iPhone and iPod Touch, but now I'm not so sure. My colleague Jason Snell, editor in chief of Macworld, would be surprised if Apple removed Exchange from the iPad, given its place on the iPhone and iPod Touch, but he too can't say for certain.

Analyst Chris Hazelton from the 451 Group noticed the Exchange omission [9] back on Jan. 27 and told the IDG News Service that the iPad categorically won't support Exchange. When I spoke with him later, he acknowledged that this was a supposition on his part, not a confirmed fact, but that Apple has not responded to his inquiries. Apple hasn't responded to me on this, either, and neither he nor I can fathom why Apple would not clarify this simple fact immediately.

If you, like me, see the potential of the iPad as a laptop surrogate for short business trips [1], the lack of Exchange support kills that potential, and it signals that the iPad is not a dual-purpose business/consumer device as the iPhone and iPod Touch are. Instead, it is, as has been suggested by some, just a big iPod.

Apple's announcement of the iWork productivity app for the iPad led many of us to see the iPad as a lightweight laptop for e-mail, Web access, and basic document work -- but the lack of Exchange, coupled with iWork for iPad's inability to save files in Microsoft Office formats, would mean that the only business users who could harness the iPad for work would be that tiny portion of Mac-based professionals who don't run Exchange email.

iPad question No. 3: Does the iPad support VPN and configuration management?
If the iPad doesn't support Exchange, I can't imagine it wouldn't work with VPN and configuration management, two capabilities that the iPhone and iPod Touch can claim.

Although the iPhone and iPod Touch doesn't support over-the-air management of the device or its security capabilities, they do support these capabilities using emailed or Web-downloaded configuration files. This management approach is nowhere usable for enterprises, as it gives no assurance that users have the right configuration, but small businesses with local IT staff can deal with it. (Yes, several vendors such as Good Technology now offer more enterprise-class management tools for the iPhone.)

If Apple has pulled these capabilities from the iPad, then almost no business can seriously allow an iPad onto its network. Apple won't say.

iPad question No. 4: Can you use media services other than iTunes on the iPad?
The idea of a highly portable media player is compelling -- I'd love to have one when traveling so that I could watch Netflix programs in the hotel, rather than be stuck with the usually uninteresting hotel cable fare. My MacBook Pro gets too hot to place in my lap, and watching a DVD or streaming video on the MacBook while sitting in a hotel desk is not very pleasant.

But there is no way to watch Netflix streamed video -- or that of similar services -- on an iPad. On an iPhone or iPod Touch, the screen size doesn't make for great movie-watching, so the lack of a Netflix app on those devices isn't so bothersome. On an iPad, it will be. So far, it appears that iTunes will be your only quality media source on the iPad (YouTube doesn't qualify; it's more of a needle-in-the-haystack source for amusing clips), which means you can't use a service from someone else that you already paid for; instead, you'll need to give Apple money. Maybe using my laptop isn't so bad an option after all.

I should point out that the issue may not be Apple's but AT&T's. Apple's app approval process sometimes acts as a proxy for AT&T, such as the Apple policy that disallowed VoIP iPhone apps because AT&T said its networks couldn't handle the traffic. Last fall, AT&T said it no longer objected to VoIP iPhone apps [10] running over 3G (they had been limited to Wi-Fi), and Apple began approving them. Just this past Friday, AT&T said it dropped its objections to Sling Media's video-streaming service for the iPhone, which had thus been limited to Wi-Fi connections. Presumably, this means Apple will approve a 3G version of the Sling app and open the door to other services such as Netflix's. For now at least, Apple won't say.

Will Apple allow the use of such video services? There's been no comment so far.

iPad question No. 5: Can the iPad be used for videoconferencing?
The iPad has no embedded camera, as the iPhone and MacBooks do (but not the iPod Touch). That's riled many people who could see the iPad as a great videoconferencing tool. There's potential for adding a camera through the iPad's sole connection port; after all, companies have offered plug-in microphones to iPods this way. But it's unclear that even with an add-on camera whether Apple would allow videoconferencing apps on the iPad.

It could well be that the high bandwidth usage of videoconferencing is too much for AT&T's network to handle [11]. After all, it can't handle regular data traffic in cities like New York and San Francisco, so perhaps Apple is ensuring the problem doesn't exist by not providing a camera in the first place. This would be consistent with Apple's disallowing VoIP apps on the iPhone until this past fall [10], when AT&T said it could finally support the traffic.

Another theory: The health care industry has long been interested in tablets but has not liked the bulky, hard-to-use Windows offerings, and an Apple tablet is conceptually appealing to hospitals. However, a built-in camera would raise too many privacy issues for them to adopt the iPad. If true, that's easy to address: Apple can offer a camera-less model. In either case, Apple won't say.

iPad question No. 6: Will the iPad's internal storage be upgradable?
We do know that the iPad's internal flash memory will not be user-upgradable -- you can't just swap in a new card. But will Apple provide, or let others provide, an upgrade service for the iPad, similar to how you can have a battery replaced in an iPhone or iPod Touch by an authorized service provider? Apple won't say.

iPad question No. 7: Will the iPad allow multiple apps to run simultaneously?
The iPad has as much in common with a PC as it does with an iPhone: iPad developers can use desktop UI conventions [12] such as menus and dialog boxes, and the bigger screen opens up the possibility of apps that can do more desktop-like things, as the bundled app shows. So iPad users will expect to be able to run multiple apps at the same time. (Some parts of the iPhone OS do run simultaneously on the iPhone and iPod Touch, but beyond those core capabilities, Apple forces apps to suspend or close when the user switches to another app, ostensibly due to memory-usage and processor-performance issues [13].)

Apple's use of its own processor chip, the A4 [14], in the iPad raised the possibility of running multiple apps at once. But Apple won't say.

iPad question No. 8: Will Apple allow the use of Flash on the iPad?
Users have been complaining about the lack of Flash support since the very first iPhone three years ago. Apple has said little, though Jobs has criticized Flash [15] for taking too many system resources and Flash Lite for being not capable enough. It's true that Flash technology is often used to create buggy, memory-sapping videos and animations -- you see that in your desktop browser all the time. But as Apple increases the peformance of its mobile devices, you'd think it'd hit a point where it can support Flash and let ill-behaved Flash files simply close the app running them.

The iPad is a natural device for playing back Flash files, both on the Web and as native files. Apple should let Adobe release a Flash Player app and Safari plug-in, and if Adobe screws it up, Adobe gets the blame. I suspect the issue really isn't about Flash performance issues, but instead is about blocking a video-delivery conduit that Apple doesn't control and can't charge for. Whatever the truth is, Apple won't say.

If Apple won't say, maybe you shouldn't buy
I'm as guilty as any other writer in getting swept up in the iPad's promise [16]. And my 18-year history of dealing with Apple means I know all too well how the company withholds information, thus creating a vaccuum that allows rumors and speculation to run rampant, while keeping Apple top of mind at no cost to the company.

I also know firsthand that Apple typically makes better products than its competitors. I have no doubt the iPad will be compelling to some users. But I now have major concerns that it will fulfill the potential beyond being an iTunes delivery screen that I and other industry observers saw. I can't blame Apple for not delivering on promises it hasn't actually made, but I can be fed up with its lack of candor on its products' basic capabilities.

It's to Apple's advantage for us all to assume the iPad can do whatever we want it to do -- that's likely why Apple won't say. But it's not to your belief to believe the iPad fulfills your own desires. Within a few weeks of the iPad's availability this spring, we won't have to speculate about the iPad's actual capabilities, limits, and sleights of hand. We'll actually know. Then we can make rational decisions of whether and where the iPad makes sense. Ultimately, we users get the final say.

If Apple can't take customer questions seriously, maybe we shouldn't take its iPad hype seriously. No one should buy an iPad until we really know what it can do and what limits Apple has set on it. Maybe it does all the things Apple is silent about. But maybe it doesn't.

Opera to Test Apple's Resolve with iPhone Browser
Barry Collins

Opera is launching a version of its Mini browser for the iPhone in what could prove a landmark decision for Apple's app gatekeepers.

The company will unveil Opera Mini for iPhone to journalists at next week's Mobile World Congress. Unlike Safari, the Mini browser compresses web pages on Opera's servers before sending them to the handset, both accelerating page load times and reducing the amount of data required.

However, any iPhone application needs to pass through Apple's approval process before it can be downloaded onto users' phones. Apple was initially hostile to the idea of third-party web browsers, with Mozilla claiming that Apple made it "too hard" for its rivals to develop a browser for the iPhone.

Apple's stance seems to have softened in recent months, with a smattering of minor rival browsers appearing in the App Store. But Opera will be the first of the well-known browser makers to make it over the Apple drawbridge if it is successful.

Opera remains bullishly confident that it's app will be approved. "We have not submitted Opera Mini to the Apple App store," an Opera spokesperson told PC Pro. "However, we hope that Apple will not deny their users a choice in web browsing experience."

When asked if the company had received any indication from Apple that Opera Mini would be accepted, the spokesman said: "We see no reason why it should not be."

Opera is, of course, not afraid to take its case to higher authorities if it feels it's been treated unfairly. It was Opera's complaint to the EU that saw Microsoft fined and forced to offer rival browsers with Windows last year.

Google's Gmail to Try to Challenge Facebook
Jefferson Graham

Google is feeling the heat from red-hot social network Facebook.

The search giant is upgrading its Gmail program to add social-media tools similar to those found on Facebook. Google will incorporate photo and video sharing within the Gmail application, along with a new tool for status updates. Google will hold a press conference at its Mountain View, Calif., headquarters today to show off the new features.

Google (GOOG) is still far and away the No. 1 most-visited website, with 173 million U.S. visitors in December, according to measurement service ComScore Media Metrix, up 16% from the previous December. But Facebook is close behind.

Facebook was the fourth-most-visited site in December, with 111.8 million visitors, up 105% from the prior year.

"If Google can get you to do more things in Gmail, they can sell more ads, because you've spent more time there," says Danny Sullivan, editor of the Search Engine Landblog.

That Google would feel the heat from Facebook makes sense. Many former Google executives now work at Facebook, including Chief Operating Officer Sheryl Sandberg, who at Google helped build the lucrative AdWords pay-per-click ad program. Facebook has a similar pay-per-click program now.

Facebook invites members to share photos, videos and status updates on their personalized home pages. Advertisers reach out there with ads that are targeted by age, gender, location and more.

Wedding photographers, for instance, can reach out to women in a specific ZIP code who are engaged to be married.

"Initially, Google misunderstood social media and its significance," says Greg Sterling, an analyst at Sterling Market Intelligence. "They've got the religion now and have been trying ever since to add more social utility. Social is how the Web has evolved."

Yet he thinks that bringing social tools to Gmail doesn't make sense. "Gmail is a good product as it is. I'm not sure these tools add anything except to make it more bloated."

Google recently added a new social search feature that can in part show you "results from people in your social circle."

In order to participate, Google users first must fill out profile information, similar to Facebook, which lists interests, contacts and friends. Sullivan says few have participated because, unlike Facebook, it's not mandatory.

In the end, no matter how big Facebook eventually becomes, Sterling says it will "never take away" Google's core business: search.

"It could shave off a little search volume and might take some ads away from Google, but the end result will be small," he says.

Judge Dismisses Windows Anti-Piracy Software Lawsuit

Decision ends 2006 case over WGA software sent as security update
Gregg Keizer

A federal judge last week dismissed a three-year-old lawsuit that accused Microsoft of duping customers when it fed them company anti-piracy software as a critical security update, court documents show.

U.S. District Court Judge Richard Jones dismissed the case last Friday, a day after the plaintiffs and Microsoft agreed to drop the lawsuit.

"We are pleased this resolved successfully," said Kevin Kutz, director of public affairs for Microsoft.

Last month, Jones denied several motions by the plaintiffs, including one that would have given them a third chance to turn the case into a class-action lawsuit. That essentially put an end to the action, and ensured Microsoft would not face millions in potential damages.

In June 2006, Microsoft pushed its Windows Genuine Advantage (WGA) anti-counterfeit software to Windows XP as a "high priority" update that was automatically downloaded to and installed on most machines. Microsoft relies on WGA, and its successor, Windows Activation Technologies (WAT), to detect bootlegged copies of Windows. If the software sniffs out a counterfeit, it posts nagging messages on the screen.

Multiple lawsuits filed in July 2006 claimed that Microsoft mislead users by labeling the WGA software as a security update, and failed to tell customers that WGA collected information from their PCs, then frequently "phoned home" the data to Microsoft's servers. The plaintiffs later combined their cases and asked the court to grant the joint lawsuit as a class-action.

Last year, Microsoft warned Jones that if the lawsuit was allowed to proceed as a class-action, it could be tapped for big money. "Plaintiffs seek hundreds of millions of dollars on behalf of tens of millions of persons for twelve forms of alleged damages," Microsoft said as it cast the plaintiffs as little more than gold diggers.

In his January ruling, Jones had also said that Microsoft could demand compensation for the money it spent contesting the class-action charges, even though the plaintiffs withdrew most of those allegations prior to trial. At the time, he gave Microsoft until Feb. 12 to come up with its expense report.

As part of the stipulation to dismiss the case, however, the plaintiffs and Microsoft agreed that each would pay their own attorneys' costs and fees.

Anti-Piracy Windows 7 Update Phones Home Quarterly

Lauren Weinstein sends in news of a major and disturbing Microsoft anti-piracy initiative called Windows Activation Technologies, or WAT. Here is Microsoft's blog post giving their perspective on what WAT is for. From Lauren's blog: "The release of Windows 7 'Update for Microsoft Windows (KB71033)' will change the current activation and anti-piracy behavior of Windows 7 by triggering automatic 'phone home' operations over the Internet to Microsoft servers, typically for now at intervals of around 90 days. ... These automatic queries will repeatedly — apparently for as long as Windows is installed — validate your Windows 7 system against Microsoft's latest database of pirated system signatures (currently including more than 70 activation exploits known to Microsoft). If your system matches — again even if up to that time (which could be months or even years since you obtained the system) it had been declared to be genuine — then your system will be 'downgraded' to 'non-genuine' status until you take steps to obtain what Microsoft considers to be an authentic, validated, Windows 7 license. ... KB71033... is scheduled to deploy to the manual downloading 'Genuine Microsoft Software' site on February 16, and start pushing out automatically through the Windows Update environment on February 23. ... [F]or Microsoft to assert that they have the right to treat ordinary PC-using consumers in this manner — declaring their systems to be non-genuine and downgrading them at any time — is rather staggering."

Windows Patch Cripples XP with Blue Screen, Users Claim

Angry customers blame MS10-015 for Blue Screen of Death, XP reboot hell
Gregg Keizer

Tuesday's security updates from Microsoft have crippled Windows XP PCs with the notorious Blue Screen of Death (BSOD), users have reported on the company's support forum.

Complaints began early yesterday, and gained momentum throughout the day.

"I updated 11 Windows XP updates today and restarted my PC like it asked me to," said a user identified as "tansenroy" who kicked off a growing support thread. "From then on, Windows cannot restart again! It is stopping at the blue screen with the following message: 'A problem has been detected and Windows has been shutdown to prevent damage to your computer.'"

Others joined in with similar reports. "There is something seriously wrong with the update. I can't even open in safe mode," said "Ghellow," referring to Windows diagnostic mode that's often a last-chance way to boot a PC.

"I am not very happy with Microsoft as I got to work this morning to find my helpdesk flooded with messages that the PC has the famous Blue Screen," said "brawfab."

"I had to go to work and use my Mac to get online to find out what is going on with the XP updates last night," complained "moosewalk" on the same thread. "I am this much closer to switching over to a Mac for good."

The support thread, which was first noticed by security blogger Brian Krebs, contained more than 120 messages as of early Thursday, making it the third-longest on the Windows Update support forum. The thread had been viewed more than 2,800 times since its inception.

Several users posted solutions, but the one laid out by "maxyimus" was marked by a Microsoft support engineer as the way out of the perpetual blue screens. To regain control of their PCs, users were told to boot from their Windows XP installation disc, launch the Recovery Console and enter a series of commands.

Unfortunately, that left netbook users out of luck, since most of the lightweight, inexpensive laptops lack an optical drive, and so can't boot from an XP installation disc. "Are there any fixes for netbooks, or am I essentially screwed for the time being?" asked "HimDen."

Several users tentatively identified the MS10-015 update as the one which triggered the BSOD, and claimed that uninstalling that security fix -- which was labeled as KB977165 -- returned their PC to working condition.

MS10-015, one of 13 security updates Microsoft issued Tuesday, patched a 17-year-old kernel bug in all 32-bit versions of Windows. The vulnerability went public three weeks ago when a Google engineer disclosed the bug and posted proof-of-concept attack code.

This was not the first time that a Microsoft update has incapacitated Windows PCs. Two years ago, a set of updates for Vista sent an unknown number of machines into an endless series of reboots. Similar problems stymied users who tried to upgrade to Windows XP Service Pack 3 (SP3) in May 2008, and others attempting to upgrade from Vista to Windows 7 last October.

Microsoft was not immediately available for comment early Thursday.

Man Charged With Posting Threat On Newspaper Website
Jenna Carlesso

A 26-year-old man is accused of posting an anonymous threatening comment about a Torrington police officer on The Register-Citizen newspaper's website last month.

Brian E. Couse, of Stanfordville, N.Y., turned himself in to police, who charged him with second-degree breach peace on Tuesday. Couse was released on $2,500 bail and is due in Bantam Superior Court on Feb. 22.

An employee at the Register-Citizen called officers on Jan. 20 after noticing the threat in the comment section beneath an online article. The article was police-related, Lt. Michael Emanuel said, but he declined to comment on what the story was about.

Police launched an investigation and later executed a search warrant, which revealed the Internet protocol address and identity of the anonymous blogger.

Couse sent the message from a work computer in New York, Emanuel said. He declined to say where Couse worked but said that he has been fired from the job.

The comment was "a threat of physical violence against an active police officer," Emanuel said.

"Simply because a person posts comments in an anonymous fashion does not give them the right to threaten or cause fear in people or their families," he said in a statement.

Calls to the Register-Citizen were not immediately returned.

Operation Titstorm: Hackers Bring Down Government Websites
Asher Moses with Ari Sharp

Cyber attack draws yawns

Minister Stephen Conroy has barely raised an eyebrow at the thought of more cyber attacks from internet prank group Anonymous.

Groups opposing the government's internet censorship plans have condemned today's attacks on government websites, saying it will do little to help their cause, while Communications Minister Stephen Conroy called them "totally irresponsible".

Hackers connected with the group Anonymous, known for its war against Scientology, this morning launched a broad attack on government websites.

They are protesting against forthcoming internet filtering legislation and the perceived censorship in pornography of small-breasted women (who are thought to be under age) and female ejaculation.

Several government sites were down this morning and the hackers have promised to follow up by spamming government offices with pornographic emails, faxes and prank phone calls.

The Attorney-General's department this morning confirmed the attacks and said the Department of Defence Cyber Security Operations Centre was monitoring the situation.

A spokeswoman for Communications Minister Stephen Conroy said the attacks were not a legitimate form of political statement. They were "totally irresponsible and potentially deny services to the Australian public".

The attacks, organised under the banner "Operation: Titstorm", come five months after hackers connected with the same group briefly brought down the Prime Minister's website. At the time the hackers said they would regroup and launch new attacks.

Flyers distributed to recruit participants for the operation said the denial of service attacks on government servers would begin at 8am today.

The Parliament of Australia website, aph.gov.au, was down for a period this morning, while access to the Department of Broadband, Communications and the Digital Economy's website was patchy.

A spokesman for the Department of Parliamentary Services, which runs the Parliament House website, said at the peak of the attack the site was receiving 7.5 million hits a second, up from the few hundred per second it normally receives.

He said the website was inaccessible for about an hour from 8am, and was offline intermittently due to the four attacks that had been detected by lunchtime.

It is not clear how many other sites were targeted but it appears a wide range of government servers were flooded with traffic.

Anonymous is a loosely connected group of anonymous online pranksters who come together to work towards certain goals, such as the eradication of the Church of Scientology or blocking perceived threats to internet freedom. It is not clear if the same members of the group involved in attacks on Scientology participated in the attacks on government websites.

The attacks come as the government prepares to introduce its controversial mandatory internet filtering legislation and just after the Australian sex industry claimed porn films were being banned from sale in Australia because they featured small-breasted women and female ejaculation.

The Classification Board confirmed that pornography could be banned if participants simply "appeared" to be under age, while female ejaculation was considered a form of urination, which is banned under content classification guidelines.

In an email sent to media yesterday afternoon foreshadowing the attacks, Anonymous referred to the internet filtering legislation and the perceived pornography censorship.

"No government should have the right to refuse its citizens access to information solely because they perceive it to be 'unwanted'," the email read.

"The Australian government will learn that one does not mess with our porn. No one messes with our access to perfectly legal (or illegal) content for any reason."

In the flyer recruiting people for the attacks, Anonymous said the attacks on the websites would be followed by "a shitstorm of porn email, fax spam, black faxes and prank phone calls to government offices (emails/faxes should focus on small-breasted porn, cartoon porn and female ejaculation, the 3 types banned so far)".

Despite anticipating the attacks because of flyers that had previously been circulated, the Department of Parliamentary Services spokesman said there was little that could be done to shield the site from attack.

‘‘We were never going to be able to protect against that,'’ he said. ''Our objective has simply been to bring the site back into operation after the attack. They can’t last forever.''

The attack also extended to spam, with various email accounts within the department receiving bulk emails from an anonymous sender that featured pornographic images and text. The email addresses targeted appear to be those listed on the website.

The Department of Defence has been informed of the attack, which the parliamentary services spokesman said appeared to be based on the false idea that the bureaucracy was partisan.

‘‘We assume that they think we’re a part of executive government,’’ he said.

Speaking to the ABC's Hungry Beast this week for a segment on the government's internet filtering policy, which airs tonight, Senator Conroy laughed off the Anonymous threats. He said the hackers themselves described last year's attack on government websites as "shockingly disappointing".

Anti-censorship groups in Australia, including stopinternetcensorship.org and the System Administrators Guild of Australia, have condemned the attacks, saying it hurts their cause.

"It would be much more helpful for these people to put their efforts behind legitimate action to stop this ineffective and inefficient attempt at censorship by the Australian government," Stop Internet Censorship co-founder Nicholas Perkins said.

Anonymous: Attacks Better than Signing a Petition
Renai LeMay

A spokesperson for the loose coalition of individuals who attacked Federal Government websites this week to protest against the internet filtering policy today acknowledged some thought the attacks were juvenile, but said they sent more of a message than “signing a petition”.

The group this week knocked the website of the Australian Parliament offline in a distributed denial of service attack that also targeted the website of Communications Minister Stephen Conroy’s Department of Broadband, Communications and the Digital Economy.

Government workers were also sent a flood of email with porn enclosed, prank phone calls and dodgy faxes, in an initiative dubbed “Operation Titstorm”.

“Maybe some people think the attacks are juvenile but it makes more of a message then signing a petition as the attacks can not be ignored,” said an individual claiming to be a spokesperson for the group in an email interview.

They added they did not feel the attack would completely stop the filter initiative initiative from being cancelled. “However, even if they make the blacklist public I personally will be happy, but there are other people that will not be happy until it is completely destroyed,” the spokesperson said.

They said the aim of the attack was to make governments everywhere aware that they “can not mess with the internet and not have a backlash”.

Despite their sentiments about petitions, the spokesperson said the best thing the broader Australian public could do to protest against the filter was to sign the petition of Electronic Frontiers Australia and tell government officials that they disagreed with the policy.

It’s not the first time Anonymous has attacked government websites; in September last year, the group, which has achieved notoriety for its attacks against the Church of Scientology, temporarily took down several Australian Government websites, including the website of Prime Minister Kevin Rudd.

In response to a question about whether that prior action had had any legal consequences, the spokesperson said the group had not had any reports of legal action, but as every member of Anonymous was an individual, the group had no formal membership and anyone could take part in the protest action, news of legal action against individuals did not always spread.

In this week’s attack, the individual estimated that there were about 100 people actively participating in the protest, but because of the way Anonymous is organised, it was impossible to tell. Last night, they said, there were at least 480 people in an associated chat room discussing the attack.

One of Anonymous’ claims is that the government is cracking down on in an inappropriate way on certain types of content online that may not be illegal, but may suggest illegal behaviour — for example pornographic images of women with a certain chest size that may suggest they are below 18. In answer to a question about the veracity of the claim, the spokesperson pointed to government statements and information released by the Australian Sex Party.

Delimiter also asked the Anonymous spokesperson about their views on the internet meme lolcatz, which, like Anonymous, has been associated with the internet messageboard 4chan. “Lolcatz is great, what is not to love about a cat with a funny caption under it,” they said.

Monticello Mayor Charged with Selling Knockoffs

The mayor of an upstate New York village has been charged with selling counterfeit merchandise at the retail store he owns.

State police say Monticello Mayor Gordon Jenkins was arrested Thursday and charged with a felony count of trademark counterfeiting after troopers removed bags of knockoff footwear from his store in the village, 80 miles northwest of New York City.

Authorities say the 49-year-old corrections officer was also charged with criminal Possession of a weapon and marijuana possession. Also arrested on the same charges was 49-year-old Rochelle Massey, who lives with Jenkins.

Both remain free on $2,500 cash bail.

Massey said she had no comment Friday morning and said Jenkins wasn't available.

Jenkins was elected mayor in 2008.

Until next week,

- js.

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