Peer-To-Peer News - The Week In Review - November 27th, '04

[JackSpratts]

Quote Of The Week


"Contrary to most predictions, sales of recorded music rose earlier this year. In the first half of 2004, shipments of CD's rose 10.2 percent from the period the previous year, according to the recording industry group." - Daniel Gross


"Sales can go up even when the usage of peer-to-peer technology is rising." - Felix Oberholzer-Gee


"I think the taxpayers would be surprised that there's money being spent for copyright enforcement when terrorists and criminals still roam the streets." - Gigi Sohn


"Police grudgingly admit that in Britain at least, house burglars don't even bother to take VHS players." - Jeremy Lovell


"When AOL took the program down, Frankel quit to spend more time building special-effects for his electric guitar." - Nick Farrell


"I wouldn't count him out yet." – Jeff Tweedy










Failure to produce evidence; attempting to circumvent filing fees. Imagine that.

Court Blocks Movie Studios' Bulldozer Legal Strategy
EFF Press Release

Northern California - A federal judge in California has put a roadblock in front of the movie studios' lawsuits targeting filesharers.

Last week, members of the Motion Picture Association of America (MPAA) filed 11 lawsuits against hundreds of people they accused of using file-sharing networks to share infringing copies of movies. They sued groups of "Does" identified by numerical IP address and requested discovery of names from the users' Internet Service Providers (ISPs). A Northern District of California judge found this bulldozer approach improper, ordering that the case for Does 1-12 should be put on hold for all but one of the defendants.

Judge William Alsup ruled that because claims against the 12 defendants were unrelated, yoking the defendants together into one big case was improper. "Such joinder may be an attempt to circumvent the filing fees by grouping defendants into arbitrarily-joined actions but it could nonetheless appear improper under Rule 20," the order states. The Electronic Frontier Foundation has filed friend-of-the-court briefs objecting to similar misjoinder in many of the cases filed by the Recording Industry Association of America (RIAA) against alleged infringers.

"This decision helps to give due process rights to the Internet users accused of infringement," said EFF Staff Attorney Wendy Seltzer. "Lumping them together makes it more difficult for everyone to defend against these claims." EFF is also concerned about the movie studios' failure to produce evidence of infringement against even Doe #1 in this case.
http://www.eff.org/news/archives/2004_11.php#002147


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Lawmakers OK Anti-Piracy Czar
Brooks Boliek

Buried inside the massive $388 billion spending bill Congress approved last weekend is a program that creates a federal copyright enforcement czar.

Under the program, the president can appoint a copyright law enforcement officer whose job is to coordinate law enforcement efforts aimed at stopping international copyright infringement and to oversee a federal umbrella agency responsible for administering intellectual property law.

Intellectual property law enforcement is divided among a range of agencies including the Library of Congress, the Justice and State departments and the U.S. Trade Representative.

It is hoped that designating a single overseer to coordinate copyright law enforcement will put some cohesion into the federal effort, said one Senate Appropriations Committee aide.

"You need a head. You need someone who has to answer," the aide said. "If staffed out and funded by a number of different agencies, it never does anything. Agencies don't want to give up good people. When you don't have an agency responsible, their attitude gets to be, 'I don't have to do anything about it."'

The legislation, part of the bill funding Justice Department operations, also for the first time funds the National Intellectual Property Law Enforcement Coordination Council (NIPLAC).

NIPLAC is charged with establishing policies, objectives and priorities designed to protect American intellectual property overseas and to coordinate and oversee implementation of intellectual property law enforcement throughout the government. While NIPLAC has been around since the early 1990s, it has never done anything, and appropriators hope that giving the organization $2 million and a new charter will make the office effective.

"This is an effort to get some air under the wings of that interagency effort," the aide said. "NIPLAC is a good idea, but it hadn't taken off. You really couldn't point to anything they'd ever done."

Congressional aides say Sen. Judd Gregg, R-N.H., chairman of the Senate subcommittee that doles out funding for the Commerce, Justice and State departments, and Sen. Ted Stevens, R-Alaska, chairman of the full Senate Appropriations Committee, took a personal interest in ensuring that NIPLAC was kept in the omnibus spending bill.

But their ambitions for a more robustly funded program were scaled back. Originally the subcommittee had designated $20 million for the program, but fiscal reality forced lawmakers to agree to one-tenth of that.

The legislative effort coincides with the administration's new emphasis on intellectual property protection. Under Attorney General John Ashcroft, the Justice Department has cracked down on intellectual property crimes, and the White House has set up the Strategy Targeting Organized Piracy program, which is designed to curb the production and importation of items ranging from fake purses to pirated CDs and DVDs.

"We welcome Congress' recognition of the challenges the U.S. intellectual property industries face and their efforts to better arm the U.S. government to respond to these challenges," said an official at the Motion Picture Assn. of America. "We're gratified to see the high priority they've placed on tackling international enforcement problems."

While congressional aides said there was a lot of support for the program, its inclusion still raised some eyebrows as there have been questions about the government's involvement in protecting a private, for-profit enterprise.

A recent congressional attempt to approve legislation known as the "Pirate Act," which would allow the Justice Department to file civil lawsuits, was turned back over complaints that it would advance Hollywood's interest at taxpayer expense.

"This isn't the Pirate Act, but I think the taxpayers would be surprised that there's money being spent for copyright enforcement when terrorists and criminals still roam the streets," said Gigi Sohn, president of the nonprofit fair-use advocacy group Public Knowledge. "When every dollar is being counted for education, health care and homeland security, it seems like a strange priority."
http://www.reuters.com/newsArticle.j...toryID=6893056


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Senate Passes Scaled-Back Anti-Piracy Bill

The Senate has voted to outlaw several favorite techniques of people who illegally copy and distribute movies but has dropped other measures that could have led to jail time for Internet song swappers.

People who secretly videotape movies when they are shown in theaters could go to prison for up to three years under the measure, which passed the Senate on Saturday.

Hackers and industry insiders who distribute music, movies or other copyrighted works before their release also face stiffened penalties under the bill.

Most elements of the bill have already passed the House but will need to be approved by the House again in December after minor differences are ironed out.

Left out were several more controversial measures that would criminalize the actions of millions of Internet users who copy music and movies for free over "peer to peer" networks.

These users now face copyright-infringement lawsuits from recording labels and movie studios; thousands have been hit with such suits since last year.

Under a measure approved by the Senate Judiciary Committee last month, song swappers could go to jail for up to three years if they shared more than 1,000 copyrighted works.

Consumer groups, consumer-electronics makers and the American Conservative Union had sought to derail those measures, portraying them as a radical expansion of traditional copyright protections.

That material was dropped from the bill, but the Justice Department said last month that it planned to take a more aggressive approach to policing intellectual-property crimes. http://www.latimes.com/business/la-f...lines-business


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TiVo Pop - Up Ads Raise Consumer Concerns
AP

Digital video recording pioneer TiVo Inc. has long promised ``TV Your Way.'' But the company's plans for pop-up ads and restrictions on copying have sparked worries that the service may be eroding consumer control in favor of Hollywood and advertiser interests.

Is it becoming TiVo -- their way?

``Consumers are very distrustful of technologies that seize yet another opportunity to offer up advertising,'' said Mike Godwin, legal director of Public Knowledge, a public interest group. Whether the fears are founded or not, he said, ``it feels like TiVo is taking away some of the prerogatives and flexibility that TiVo TV watchers have become accustomed to.''

TiVo officials say that starting in March users will begin to see static images, such as a company logo, appear on their television screens as they fast-forward through commercials. The billboard-like ads -- which will last about four seconds for a fast-forwarded 30-second spot -- may offer giveaways or links to other ads.

For some ads, viewers could choose to provide advertisers with their contact data so they can get more direct marketing.

A pop-up recording ``tag'' is also planned: a ``thumbs-up'' icon would appear during TV show promotions and allow users to instantly place those programs in their recording queue.

TiVo officials contend that the new features will not be any more intrusive than the ``thumbs-up'' icons that already appear during some commercials and shows. But to some customers, the impending advertising changes smack of betrayal from the innovators whose hard drive-based gizmo lets TV viewers record programs, fast- forward through ads and pause at will.

``It's crossing the line,'' said Darren McClung. The 24-year-old Kansas City, Mo. systems administrator says he didn't mind as much when TiVo introduced ads in its main menu area, giving users the option of watching them.

But with ads set to appear over the very commercials he's trying to skip, ``they've moved from unintrusive to intrusive advertising, and that's troublesome,'' he said.

Some skeptics also worry that TiVo's planned use of Macrovision Corp.'s new copy-protection scheme signals more boundaries on what shows they can or cannot record -- even as TiVo prepares to unveil a new service later this year, called TiVoToGo, that will let users record shows onto DVDs or transfer them to computers.

Macrovision has developed a feature that will allow content providers -- the people who produce television shows -- to place restrictions on how long a digital video recorder such as TiVo can save certain kinds of programming. For instance, movies could disappear after seven days.

TiVo officials say the new restrictions will apply only to pay-per-view and video-on-demand programs. If Macrovision expands the feature to any other content, the deal is off, said Brodie Keast, executive vice president of service business at TiVo.

``We believe the consumer should be in control of entertainment -- either free over-the-air or paid broadcasts -- and this doesn't change that in any way,'' Keast said. ``But reaching this kind of compromise allows us to innovate freely.''

Industry watchers say TiVo has no choice but to make peace with networks, cable and advertisers.

``TiVo has to become more advertising-friendly because, at the end of the day, TV runs on advertising dollars and companies that are part of that food chain have to acknowledge that,'' said Tim Maleeny, director of strategy at Publicis & Hal Riney, a San Francisco-based advertising firm.

Josh Bernoff, analyst at Forrester Research, said, ``Any product that's part of a cable and satellite world has to obey some of the restrictions that go with it.''

The restrictions are tightening.

For instance, HBO says it plans to introduce in June a copy-protection technology that will restrict viewers to only one digital copy of its regular shows -- and no copies of its on-demand programs.

As it is, TiVo is fighting an onslaught of competitors, including cable operators, who now offer digital video recorder-equipped set-top boxes of their own. The Alviso- based company has yet to post a profit.

It reported Monday a net loss of $26.4 million, or 33 cents per share, on revenue of $38.3 million for the third quarter ended Oct. 31. Its subscriber base has more than doubled from a year ago to about 2.3 million, but roughly 61 percent of subscribers come through satellite operator DirecTV, which is expected to offer a competing DVR soon.

That is expected to help boost the number of U.S. households with DVRs well beyond the 6.5 million that currently have them.

For its part, TiVo tries to balance between customers' desires and Hollywood's demands.

Hollywood studios sued TiVo's rival, DVR pioneer ReplayTV, over its automatic commercial-skipping recording feature -- a function TiVo and other DVR makers could have adopted but didn't. ReplayTV's rebel stance bankrupted its former owner. New owners have removed the ad-skipping feature.

TiVo has worked for years with advertisers, trying to find new ways to market to an increasingly fleeting television audience. As part of its delicate dealings with Hollywood, TiVo sells data on the viewing patterns of its users, such as when they choose to watch instant replays or when they fast-forward.

TiVo executives acknowledge that they're walking a fine line with their new advertising strategy.

``Those who feel that they've been 'sold out,' I can understand that,'' Bob Poniatowsky, a TiVo product marketing manager, wrote recently in an online posting on the TiVo Community Forum. But ``that's simply not the case here.''

Advertisers -- and TiVo-- will have to tread cautiously nonetheless, said Maleeny, the advertising strategist. Consumers already encounter hundreds of ads a day all around them -- from billboards to newspapers to the Internet.

``It's easy in this environment,'' Maleeny said, ``to suddenly cross a line from being inviting and intriguing to being intrusive and obnoxious.''
http://www.nytimes.com/aponline/tech...Surrender.html


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Security Officials To Spy On Chat Rooms
Declan McCullagh

The CIA is quietly funding federal research into surveillance of Internet chat rooms as part of an effort to identify possible terrorists, newly released documents reveal.

In April 2003, the CIA agreed to fund a series of research projects that the documents indicate were intended to create "new capabilities to combat terrorism through advanced technology." One of those projects is research at the Rensselaer Polytechnic Institute in Troy, N.Y., devoted to automated monitoring and profiling of the behavior of chat-room users.

Listening in
The CIA has been working behind the scenes for a number of months to help develop technology for monitoring chat on the Internet. A real-world test starts with the New Year.

• November 2002: Invitation-only workshop convened by CIA and NSF on antiterrorism research.

• April 2003: CIA and NSF sign "memorandum of understanding" to fund technology research.

• June 2004: Deadline for submitting research proposals to NSF.

• July 2004: CIA and NSF review nearly 250 research proposals.

• January 2005: Scheduled start date of chat room monitoring project at Rensselaer Polytechnic.

Even though the money ostensibly comes from the National Science Foundation, CIA officials were involved in selecting recipients for the research grants, according to a contract between the two agencies obtained by the Electronic Privacy Information Center (EPIC) and reviewed by CNET News.com.

NSF program director Leland Jameson said Wednesday the two-year agreement probably will not be renewed for the 2005 fiscal year. "Probably we won't be working with the CIA anymore at all," Jameson said. "I think that people have moved on to other things."

The NSF grant for chat-room surveillance was reported earlier this year, but without disclosure of the CIA's role in the project. The NSF-CIA memorandum of understanding says that while the Sept. 11, 2001 attacks and the fight against terrorism presented U.S. spy agencies with surveillance challenges, existing spy "capabilities can be significantly enhanced with advanced technology."

EPIC director Marc Rotenberg, whose nonprofit group obtained the documents through the Freedom of Information Act, said the CIA's clandestine involvement was worrisome. "The intelligence community is changing the priorities of scientific research in the U.S.," Rotenberg said. "You have to be careful that the National Science Foundation doesn't become the National Spy Foundation."

A CIA representative would not answer questions, saying the agency's policy is never to talk about funding. The two Rensselaer Polytechnic Institute researchers involved, Bulent Yener and Mukkai Krishnamoorthy, did not respond to interview requests.

Their proposal, also disclosed under the Freedom of Information Act, received $157,673 from the CIA and NSF. It says: "We propose a system to be deployed in the background of any chat room as a silent listener for eavesdropping...The proposed system could aid the intelligence community to discover hidden communities and communication patterns in chat rooms without human intervention."

Yener and Krishnamoorthy, both associate professors of computer science, wrote that their research would involve writing a program for "silently listening" to an Internet Relay Chat (IRC) channel and "logging all the messages." One of the oldest and most popular methods

for chatting online, IRC attracts hundreds of thousands of users every day. A history written by IRC creator Jarkko Oikarinen said the concept grew out of chat technology for modem-based bulletin boards in the 1980s.

The Yener and Krishnamoorthy proposal says their research will begin Jan. 1, 2005 but does not say which IRC servers will be monitored.

A June 2004 paper they published, also funded by the NSF, described a project that quietly monitored users of the popular Undernet network, which has about 144,000 users and 50,000 channels. In the paper, Yener and Krishnamoorthy predicted their work "could aid (the) intelligence community to eavesdrop in chat rooms, profile chatters and identify hidden groups of chatters in a cost-effective way" and that their future research will focus on identifying "topic-based information."

Al Teich, director of science and policy programs at the American Association for the Advancement of Science, said he does not object to the CIA funding terrorism-related research in general.

"I don't know about chat-room surveillance, but doing research on issues related to terrorism is certainly legitimate," Teich said. "Whether the CIA ought to be funding research in universities in a clandestine manner is a different issue."
http://news.com.com/Security+officia...3-5466140.html


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File Sharing Growing Like a Weed
Katie Dean

While the music industry attempts to shutter peer-to-peer services in court and in Congress, one company is using P2P networks to promote and pay artists.

Shared Media Licensing, based in Seattle, offers Weed, a software program that allows interested music fans to download a song and play it three times for free. They are prompted to pay for the "Weed file" the fourth time. Songs cost about a dollar and can be burned to an unlimited number of CDs, passed around on file-sharing networks and posted to web pages.

"We're trying to take the problem of unauthorized music sharing and turn it into an opportunity for everyone to participate in the music business," said John Beezer, president of Shared Media Licensing. In addition to launching its home website, the company recently joined eBay's digital music distribution program with its own store.

Each time the song is downloaded by a new listener, the Weed file resets itself so the same rules apply: three free plays, then pay. The music can also be transferred to Windows portable media devices.

Shared Media Licensing makes the Weed purchasing software and channels the money to the artists and distributors. Over 100 independent content providers find the music, clear the rights, manage the files and promote the distribution and sales on their own websites.

Weed also encourages sharing by awarding a commission to people who pass the songs on to friends who then buy it. The copyright owner always gets 50 percent of each sale. Weed gets 15 percent for service and software costs. The fan who passes the music along gets 20 percent of the sale if a friend buys the track.

CD Baby is the largest Weed content provider with over 60,000 titles, according to Beezer. About 80,000 Weed tracks are available. Well-known artists who have signed on to distribute some of their music this way include Chuck D, Heart, Sir Mix-A-Lot, Built to Spill and Kristin Hersh.

Brian Hardgroove -- band leader for Public Enemy and bass player from Fine Arts Militia (another Chuck D group) -- compared Weed to Robin Hood. While the major labels continue to sue people for file sharing, he said, Weed rewards files sharing.

"A lot of artists are caught in the middle," Hardgroove said. "They want a fan base and they want a machinery to put the records out, but the machinery becomes prohibitive."

Singer-songwriter Stacie Rose said Weed is a great way for people to find new artists.

"Because CDs are so expensive, sometimes people don't want to take a chance (buying a full CD) with a new artist," Rose said. "The whole idea of (Weed) is really cool."

"Basically the fans are promoting the music that they love," said Jeff Leisawitz, president of Weedfiles, a content provider that has signed about 75 artists, including Heart. "Love Hurts," the band's exclusive track, debuted over the summer on Weedfiles at the same time the record was released.

"It's not a pyramid scheme," Beezer said. But those who are motivated to get others interested in the music can make some money if people opt to buy the tracks.

Weed is also participating in the P2P Revenue Engine project organized by the Distributed Computing Industry Association, which seeks to demonstrate to entertainment companies how they can use peer-to-peer services to make money.

"This is a good evolution from free peer-to-peer networks such as Kazaa," said Thomas Dolby Robertson, who recorded the '80s hit, "She Blinded Me with Science," and is now president of Retro RingTones. He's also considering using the service for his music. "It seems like such a simple idea. I wonder why the guys at Napster didn't think about this. They never really got around to implementing any fair payment mechanism."

One analyst said the Weed service is an admirable idea and is important for the growth of digital music. The challenge is building the traffic for Weed services.

"This is giving a relatively low-cost distribution alternative to these creators out there," said Mike McGuire, research director at Gartner/G2. "It uses some of the same methods for music discovery and sharing (as P2P networks). That's very powerful."
http://www.wired.com/news/digiwood/0,1412,65774,00.html


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Music Industry Is Trying Out Digital-Only Releases
Jeff Leeds

As an unsigned band, the Shazam has never gotten the perks enjoyed by acts attached to major record labels.

"The budgets we've used probably wouldn't even pay the catering on a major-label release," said Hans Rotenberry, a singer and guitarist for the Nashville band, which he said had sold several thousand copies of its self-produced recordings over the last 10 years.

But this week, the Shazam and seven other relatively unknown acts will get a shot at the kind of exposure that only the major record labels can provide, after being recruited for an experiment by Universal Music Group. Universal, which like other record companies has heavily relied on profits from sales of CD's, has signed the artists to a digital-only label. Starting Tuesday, it will release songs through services like iTunes from Apple Computer, Rhapsody from RealNetworks and MSN Music from Microsoft.

The move says a great deal about how record companies are grappling with the Internet, which has toppled established techniques for promoting talent and threatened the industry's economic structure. After years of dithering over how to sell music online, the major labels are eyeing digital sales in some cases as a first step on the road to the larger marketplace.

It is partly a matter of necessity. Since sales of CD's began to fall almost four years ago, hundreds of record stores have shuttered, while the remainder have devoted more shelf space to DVD's and video games, leaving less space to stock CD's.

But music industry executives say they can also use the Internet to measure fan interest or start a buzz for a new act before releasing an album. Universal's new label represents another leap - the belief that by signing enough acts with small, established audiences, the company can earn a profit on digital sales alone. The new unit, Universal Music Enterprises Digital, could become a model for labels that are seeking a low-risk way to market an act without producing a physical album or underwriting a band's tour or music videos.

"It's just so expensive these days to record an artist and make a video and put them out on the road to properly develop them," said the executive responsible for the digital label, Jay Gilbert, a senior director at Universal's Music Enterprises unit. "This is an alternative to that that's not very expensive but can be highly effective."

But for the companies, shifting to a digital world means treading on unstable financial ground. Instead of plunking down $16 for an album, fans can now visit free file- sharing networks to grab songs. Even when fans pay for the music, they buy singles over albums at a ratio of more than 25 to 1, according to Nielsen SoundScan data.

Labels usually carry out global marketing campaigns that include several radio singles and music videos spread out over a year or more. How, executives ask, can they turn a profit if they spend the money to turn an unknown into a star and then only sell singles, which usually cost 99 cents each?

"The economics don't necessarily work today," said Bruce Resnikoff, head of Universal Music Enterprises. "But the economics of the business are constantly changing."

To keep up with the shifts in where and how fans shop, the record companies are grasping for new approaches. As they move toward licensing their music catalogs to companies that plan to filter unauthorized material out of the free file-sharing systems, Universal has made a deal with one such company, Snocap, started by Shawn Fanning, the creator of Napster, the former file-sharing Web site.

Warner Music Group is developing a unit similar to Universal's, initially to sign artists and finance recordings for online sales, with the potential for later CD releases.

Mr. Gilbert of Universal said he came upon the idea for a digital-only label after getting to know a few Los Angeles musicians who didn't have major-label deals.

Mr. Gilbert said the effort provided a chance for acts whose music did not fall into the dimensions crafted by radio formats and music video television. Universal has signed acts including Rusty Anderson, a singer and guitarist who has played in Paul McCartney's band; John Jorgenson, a guitarist for Elton John; and Parthenon Huxley, who performs with former members of the art-pop act Electric Light Orchestra.

For the artists, the deals do have a downside. The company does not pay them an advance or cover the cost of producing an album. That part is up to the musicians, who finance their own recordings and in most cases have been selling their music - in the form of regular plastic CD's - through their own Web sites or outlets like Amazon.

The artists retain ownership of their master recordings but license them to Universal for a limited time; if online sales of an artist's music reach a certain point - around 5,000 copies of a particular song - the company has an option to pick up distribution of the CD to record stores.

Universal is paying the musicians an estimated 25 percent royalty on the retail price of the downloads, without taking the industry's standard deductions for CD packaging and promotional giveaways, according to people with knowledge of its contracts.

In exchange for the music, Universal is throwing its considerable muscle behind promoting the artists, including them in its own advertising and seeking to license their music to films and television shows. The company will also handle online marketing.

The trick will be to "reach the next frontier of consumer, the consumer searching in the digital world," said Mr. Resnikoff of Universal Music Enterprises.

Other labels have been using the Internet to promote artists whose physical CD's are to be released later. Warner Brothers Records released the major-label debut of the band the Secret Machines to online services like iTunes in February, three months before it was available in stores.

"What I think the physical world has told us is that there isn't a lot of room or patience for putting out an album that people don't want to buy right away," said Tom Whalley, the label's chairman. "You can't let it sit in the store 6 months, 12 months, while you build up the demand."

The Internet music stores, however, offer endless space and the chance for artists to release new music any time, instead of taking a year or more between releases, which major labels often require. In Universal's effort, the Shazam is starting with a previously unreleased song in addition to its latest album, "Tomorrow the World."

"Even a token gesture from their promotional department is going to be more powerful than anything we've ever had,'' said Mr. Rotenberry, the band's singer. "The old model never worked for us anyways.''
http://www.nytimes.com/2004/11/22/bu...a/22music.html


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Does a Free Download Equal a Lost Sale?
Daniel Gross

RECORD industry executives hold it as an article of faith that the advent of file-sharing Web sites like Napster and Kazaa was largely responsible for a stunning decline in the sales of recorded music. From 1999 to 2003, after all, the number of compact discs and other forms of recorded music shipped in the United States plunged 31 percent.

Sure, other factors - including the stubbornly high price of CD's, a recession that cut into discretionary spending, a plethora of unappealing pop acts and the intense competition for the entertainment dollar - may have contributed. "But there's no question that file sharing has an enormous impact on sales," said Mitch Bainwol, chairman and chief executive of the Recording Industry Association of America, based in Washington. "The most basic notion of economics is this notion of perfect substitution. You have two products that are in essence substitutes, so the market drives toward the freebies."

The association has buttressed this Econ 101 lesson with consumer surveys showing that the industry's core audience would rather download tunes free than pay for them. In November 2002, Peter D. Hart Research Associates found that when 19- to 24-year-olds were asked about a song they liked, 32 percent said they would download it, while only 9 percent said they would buy it.

From the outset, however, economists have been skeptical that every free download represented a lost sale. And several years after the explosion, and subsequent implosion, of the original Napster, academics have begun to plug data about free downloading into complex equations and theoretical frameworks.

Stan Liebowitz, an economist of the University of Texas at Dallas who has synthesized much of the research, sees economists as generally coming to an agreement. "I think the consensus is going to be that file sharing and downloading is going to be harmful to sales of music," he said. The question is, how much?

Two professors at the Wharton School at the University of Pennsylvania, Joel Waldfogel and Rafael Rob, measured the downloading and CD-buying behavior of students at the University of Pennsylvania, Hunter College in New York and City College of New York. In a working paper published recently by the National Bureau of Economic Research, they concluded that students each spent $126 on the best-selling CD's without downloading and $101 with downloading. While conceding that their research did not cover a representative sample, they concluded that every 10 downloads of music resulted in 1 to 2 lost sales.

Why such a small correlation? Many downloads represent transactions that would not have taken place at the asking price. As part of the study, the professors asked students to place a dollar value on CD's they bought and on CD's they effectively obtained free. The average valuation of downloaded hit CD's was only $8.81 - far below the retail price. "If they were downloading things they would not have purchased, that would tend not to reduce industry revenue and not to increase displacement," Professor Waldfogel said.

While most studies conclude that free downloads depress music sales to some degree, Felix Oberholzer-Gee, an associate professor of business administration at Harvard Business School, isn't ready to add his voice to the harmony. In a paper he wrote with Koleman S. Strumpf of the University of North Carolina at Chapel Hill, he examined the correlation between popular downloads and popular CD's in the fall of 2002.

They found that Eminem's "8 Mile" soundtrack was the second most popular among albums sold, and that his song, "Lose Yourself," was the most popular among file sharers. It seems that downloading was more a symptom of an artist's popularity in the record stores than a barrier to it. "Our best guess is that peer-to-peer networks in 2002 had no effect whatsoever on sales," Professor Oberholzer-Gee said.

ANALYZING the economics of downloading is difficult, partly because the landscape has changed so rapidly. As the industry has begun to embrace digital distribution of music, the free-for-all era of file sharing is slowly giving way to the more commercial age of iTunes. Plainly, many consumers are reluctant to buy music for $15.99 a CD at large record stores. But that doesn't necessarily mean doom and gloom for the industry.

Contrary to most predictions, sales of recorded music rose earlier this year. In the first half of 2004, shipments of CD's rose 10.2 percent from the period the previous year, according to the recording industry group. "In that context, there's a tourniquet around the problem," said Mr. Bainwol. He said the industry's crackdown on file sharing was bearing some fruit.

But Professor Oberholzer-Gee draws a different lesson. "Sales can go up even when the usage of peer-to-peer technology is rising," he said. So it appears that the digitization of music will continue to be a boon both to music-loving consumers and to data-loving economists.
http://www.nytimes.com/2004/11/21/bu...ey/21view.html


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Former AOLers Bet on Private P2P App
Ryan Naraine

Is there a place in the enterprise for a legal file-sharing application using peer-to-peer technology?

Three former America Online Inc. executives with a history of entrepreneurial success believe they have the answer with Grouper, an encrypted P2P network that integrates file sharing, instant messaging and multimedia streaming.

Josh Felser, who hit pay dirt with the $320 million sale of Spinner.com to AOL in 1999, is one of the key people behind the Mill Valley, Calif.- based Grouper, the company he created with former AOL colleagues Dave Samuel and Mike Sitrin.

"Our technology turns the computer into a private server that allows you to share files securely in a small, invite-only group," Felser said in an interview with eWEEK.com. Each group becomes an encrypted peer-to-peer network that allows one-click access to browse and download files.

Currently in beta, Grouper limits private networks to 30 members. While file sharing is a key feature in the application, there is no uploading/ downloading of music, Felser explained, citing the legal issues associated with sharing of copyrighted works.

By limiting music sharing to streams in small groups, Felser said Grouper simply enables "private performances," which is protected by U.S. Copyright Law.

"We're not a public file-sharing network. What we offer is a way to connect to hard drives within a group in a safe, encrypted environment," he said.

For a look at the security concerns of P2P, click here.

During the stealth beta, Grouper is free and being marketed as a consumer application. But, in Felser's mind, the application will evolve into a workplace collaboration tool for the SMB (small and medium-size business) segment.

"Think of it as a simplified collaboration tool similar to Groove," he said, referring to the high-end enterprise software sold by Groove Networks. "We've been approached by lots of companies who see this as an accessible way to connect and share larger files in an encrypted environment."

"Groove is complex and more of an app for larger enterprises. We're aiming for the smaller workgroups," Felser added.

Grouper will also be marketed as a remote access tool for business use, much like the Go2MyPC utility sold by Santa Barbara, Calif.-based Citrix Online.

Felser envisions a premium version of Grouper offering remote access to e-mails, desktop folders, applications and file transfers from anywhere.

Next Page: A tool for universities.

Grouper can also be used as a tool for universities where students can form study groups to share notes and collaborate on projects. It could also be embraced by professors to distribute course material or post audio or video lectures.

Felser said plans are also in place to offer custom versions for university network administrators to allow students to legally share personal files amongst themselves. Running Grouper through university networks can save Internet bandwidth costs because file transfers are done between machines on the local network (unlike other P2P networks).

Felser, who served as vice president and general manager of AOL's Spinner, WinAmp and Shoutcast music brands, believes the invite-only element separates Grouper from others in the space.

Mercora, the peer-to-peer radio network launched by former McAfee Chief Executive Srivats Sampath, also combines IM and image-sharing capabilities, but that service is public.

Google Inc. runs a similar service, the Hello application that came with the acquisition of Picasa earlier this year.

Businesses have generally frowned on peer-to-peer usage because of the security implications, a potential stumbling block for widespread adoption of Grouper. The Skype P2P VoIP client, for instance, has been banned from some workplaces because of the data leakage risk.

However, Felser said Grouper's emphasis on being a small, private, encrypted network minimizes the risk. "We're a heck of a lot safer to the business because we target very small groups of people who already know and trust each other. And we have a very firm anti-spyware policy. We'll never add spyware or adware of any kind."

Grouper, which launched with $1 million in angel seed funding, expects to make money from a feature-rich premium version for power users and SMBs.

Felser said rich media advertising will be embedded into the free version, and e-commerce tie-ins with online music stores and photo printing services will also offer business opportunities.
http://story.news.yahoo.com/news?tmp...9/tc_zd/139644


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Kazaa Pulls Skype Voice Into P2P
Jay Lyman

Moving beyond media downloads, leading peer-to-peer (P2P) file-sharing company Kazaa , is now offering free, Internet-based telephone service via the Skype voice over Internet protocol (VoIP) application.

Perhaps the highest-profile P2P purveyor and a favorite target of intellectual property owners such as the Recording Industry Association of America (RIAA), Kazaa parent company Sharman Networks announced the new telephony service with its Kazaa version 3.0 this week.

Calling it "a future vision of P2P," Sharman said Kazaa version 3.0 also features advanced search capabilities and a free Web log trial, but the biggest new offering was the free telephone service, which Kazaa claims will allow Internet calls around the globe.

The telephony will be limited to computer-to-computer calls using the Kazaa P2P application, Skype and the Internet, Sharman spokesperson Richard Chernela told TechNewsWorld. The two technologies complement each other, analysts said, because VoIP is basically a form of P2P. There is also synergy among the two companies, as both Kazaa and Skype were founded by Niklas Zennstrom and Janus Friis.

Natural Extension

Sharman Networks CEO Nikki Hemming said the P2P-based voice service represented a "new frontier" in P2P communication . "The inclusion of Skype is a natural extension of the Kazaa product and of peer-to-peer," Hemming said in a statement.

Claiming more than 300 million downloads of its software, Kazaa also said that the VoIP service demonstrated the potential for legitimate communications over P2P.

"Despite narrow-minded attempts by others to stymie P2P technology through litigation, boycotts and legislation, Sharman Networks remains committed to delivering on the promise of peer-to-peer," Hemming said.

Although it has faced legal resistance to its music and movie downloads, Kazaa is less likely to come under fire for its Internet telephony, which does not involve copyrighted material. Instead, the VoIP service from Kazaa is more likely something the telephone and carrier industry will want to emulate with their own P2P-based calling, Yankee Group analyst Boyd Peterson told TechNewsWorld.

Peterson said with most carriers investing in data and broadband networks that will be capable of the same kind of P2P phone service, as opposed to aging circuit-switch telephone networks, it is only a matter of time before all calls are carried over the Internet.

Logical and Licensed

However, Peterson said that while the use of the Internet may reduce the cost of the transmission network for operators, there are access charges, taxes and other costs associated with calling that will not change.

"If the cost of the network goes to zero, it doesn't mean the cost to provide [telephone service] is anything less," Peterson said.

Nevertheless, Peterson indicated that VoIP is a logical use of P2P since both forms of networking have the same technological basis.

"It's basically the same underlying architecture," he said. "Phone networks are really peer-to- peer anyway. It's easy to understand how Skype came out of Kazaa."

Peterson added that while major carriers may not be coming after Kazaa for its VoIP offering, the issue of bandwidth and the network stress of unprofitable P2P users remains a concern for providers. Traditional phone companies are still likely to make similar, IP-based offerings, including video and Internet access, but with only licensed and legal content, according to Peterson.

"When [traditional carriers] get into content delivery, they will do it with [digital rights management] built in," he said.
http://www.technewsworld.com/story/K...P2P-38420.html


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Ian Clarke's New P2P Tool
p2pnet.net News

Freenet author Ian Clarke is developing Dijjer, a new open source p2p content distribution tool, and he's looking for people to test drive it before it goes online in beta.

"Dijjer is a peer-to-peer HTTP cache, designed to allow the distribution of large files from Web servers while virtually eliminating the bandwidth cost to the file's publisher," he told p2pnet.

"Dijjer is designed to be simple, elegant, and to cleanly integrate with existing applications where possible. Dijjer uses "UDP hole punching" to allow it to operate from behind firewalls without any need for manual reconfiguration.

"Dijjer's distributed and scalable content distribution algorithm is inspired by Freenet."

Below is a brief Q&A.

p2pnet: When did you start working on this?

Clarke: Several months ago. It's hard to pinpoint a specific time because it's a combination of a variety of ideas that have been at the back of my mind for quite some time.

p2pnet: What prompted you?

Clarke: Dissatisfaction with apps like BitTorrent, and a desire to demonstrate that the ideas behind Freenet

could be applied to solve other problems.

p2pnet: When do you expect (hope) it'll be completed?

Clarke: Well, I'm sure that development will continue for quite some time, but I hope to release a beta version

in four to eight weeks that will be suitable for large-scale adoption.

p2pnet: Who do you see as the principle users?

Clarke: Anyone who needs to distribute large files to large numbers of people but who can't afford to pay for

the bandwidth that this would normally require.

The download site says features include:

"No Firewall configuration

With many P2P applications you must reconfigure your firewall to get the most out of them. Not so with Dijjer, we use state-of-the-art "NAT2NAT" techniques to get the most out of your internet connection without any reconfiguration.

"Sequential downloads

If you tried to download a video through Dijjer you may have noticed that you could start watching the video before the download completed. This is because Dijjer behaves like a web server, pieces of a file are download in-order and fed to your web browser when they arrive, allowing your browser to start displaying content before it has completely downloaded.

"No "Tracker" necessary, works with virtually any URL

This is a big one, Dijjer will work with almost any direct URL, the content publisher doesn't need to lift a finger - they may not even realise that people are using Dijjer to save their bandwidth costs!

"Cross platform and native compilable

Dijjer is implemented in Java, meaning that it will run on Windows, Linux, and Macs. Those who don't wish to install the Java Runtime Environment (JRE) will be pleased to note that Dijjer can be compiled with the GNU Compiler for Java (JCJ) to native code thus eliminating the need for a JRE. Native compiled versions of Dijjer will be available from this site in due course.

"Free as in Speech

Dijjer will be released under the GNU Public License.

"No cumbersome clients

Dijjer downloads through your web browser or preffered HTTP download application. You don't need to learn to use yet another P2P client user interface.

"Advanced scalable distributed caching algorithm

Dijjer uses a highly scalable distributed caching algorithm inspired by Freenet. This will allow it to deliver faster download speeds while placing less burden on the web server, and will be better able to handle sudden increases in demand for content."

"Now all I need are some people to help me test it," says Clarke.
http://p2pnet.net/story/3082


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Barrett: Good Business Models Vary Widely
John Ribeiro

Peer-to-peer (P2P) sharing would never have gathered momentum if the music industry had adopted models for distribution over the Internet, said Intel Chief Executive Officer Craig Barrett, addressing IT executives in India Friday.

"The music industry absolutely stonewalled the distribution method associated with the Internet to the point that peer-to-peer sharing became so prevalent, that it didn't make much difference," Barrett said.

"Five to eight years too late we are starting to see distribution models set up for distributing music over the Internet, where actually somebody gets paid for it," he said. "People are inherently honest and want to pay for goods and services and that would have happened if the music industry had adopted the technology and come up with commercial distribution models a lot earlier."

The film industry faces a similar challenge as bandwidth increases enable downloading movies over the Internet. "It would be interesting to watch whether the movie industry will in fact rapidly and aggressively adopt a distribution model consistent with the new technology," he said.

Slated to talk on corporate governance at the event hosted by the Delhi-based National Association of Software and Service Companies (NASSCOM), Barrett also spoke at length on the variety of business models companies can adopt to be successful.

A number of companies have benefited by changing the rules, said Barrett, citing retailer Wal-Mart Stores and Dell, which sells configured-to-order computers direct to customers. Wal-Mart uses IT to control inventory and point-of-sale information, to know exactly what is selling at any of its locations, how to price a product, how to price it by region, and how to replenish inventory automatically.

"Wal-Mart is really an IT company in disguise," Barrett said. "They just happen to sell products to the consumer."

Intel changed the rules to its advantage using four key strategies, according to Barrett. These included its "Intel Inside" branding program, shifting the definition of computer architecture from computer makers to companies like Intel, creating a new distribution channel of about 180,000 system integrators that build computers with Intel technology, and setting up a venture capital business that invested in companies with technologies supporting or compatible with Intel's own technologies.

"There are very few ingredient brands that have been successful," said Barrett, referring to the company's "Intel Inside" branding.

As computer devices got more sophisticated, packed with more functionality, Intel had a greater impact on the definition of computer architecture so that computer manufacturers did less research and development (R&D) in computer architecture, Barrett said. "We decided to use that to our advantage, and we decided we would foot the bill to do the R&D, we would create new architectures, and then we would give our customers that research and development information free of charge so they would use our latest products for their next generation of computer architectures," Barrett added.

Along the way, there were a number of startups with new technologies that could have posed a challenge to Intel. Barrett gave the example of Transmeta, which designed a microprocessor with a software-based approach to processing instructions that could compete with Intel in the low-power, mobile market.

"They were not particularly successful, for one, because they did not execute particularly well, and also Intel recognized what was happening, and responded quickly enough," Barrett said.

Touching on new rules of corporate governance and accountability in the U.S., including the Sarbanes-Oxley Act, Barrett said that he believes most companies are professional and honest and new regulations led companies to focus their resources on compliance, rather than on creativity and innovation.

"The U.S. political system instituted a number of rules and regulations, and perhaps the best way to describe these is that they try to legislate integrity, morality, professionalism, and behavior in a legal fashion in the corporate business world," Barrett said. "I think that the great majority of U.S. corporations were already doing all of those things, but the politicians in their wisdom have put an infinite burden of proof on everyone."
http://www.pcworld.idg.com.au/index....89;fp;2;fpid;1


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Napster-Style Service in Taiwan Faces Suit
UPI

"The implication is that while P2P relies on the consumer for files, Kuro has actually paid someone to add files to its servers," said Alex Chen, assistant to Taiwan's secretary- general of the International Federation of the Phonographics Industry, which represents music labels, The South China Morning Post reported today.

A Napster-style Web site in Taiwan called Kuro is attracting the ire of the music sector, which is planning to file a civil damages case against it.

Music companies complain that the profitable, peer-to-peer, file- sharing service is actively ripping off and uploading songs from CDs to its network, and they say they have evidence to prove it.

"The implication is that while P2P relies on the consumer for files, Kuro has actually paid someone to add files to its servers," said Alex Chen, assistant to Taiwan's secretary-general of the International Federation of the Phonographics Industry, which represents music labels, The South China Morning Post reported today.

Kuro provides a range of content on its Web site and industry observers believe the company is making a very high margin on its operation, while it claims to spend a lot on staff and research and development.

Prosecutor Lin Yuh-bin filed an indictment in September that accuses Kuro of hiring two Taiwanese companies, Xinji Technology and Puxuen Technology, to upload new music on to its P2P network.

Kuro spokesman Eric Yang has denied the company owned Puxuen or Xinji. He said it contracted the companies to act as its sole distributor for online CD sales.
http://www.ecommercetimes.com/story/...uit-38401.html


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Who Survivors to Work on First Album Since 1982

Singer Roger Daltrey and guitarist Pete Townshend -- the two surviving members of the legendary British rock band The Who -- will get together next month for what could be their first studio album since 1982.

"I'm just about to go into the studio again with Pete for the first time in 22 years," Daltrey, 60, told Reuters in an interview.

"It's exciting. I think it's going to be very different. We are going to take a completely new approach to how we work in the studio and see what happens," he said.

The deaths of drummer Keith Moon in 1978 and bassist John Entwistle in 2002 left only Daltrey and Townshend from the original lineup of The Who -- the influential band that made its name in the 1960s by smashing up its equipment and proclaiming "hope I die before I get old."

Despite several reunions, solo projects and the release in May of two new songs on a greatest hits compilation, The Who has not made a studio recording since 1982's "It's Hard."

"There is only Pete and I left. First thing we're going to be doing is him and I going in and making music just together. Then we're going to get our stage band together and work around involving them in whatever that band creates, which is a different thing again," Daltrey said.

In a posting on his Web site, Townshend said the working title for the project, starting in mid- December, was "Who2."

"We may have a CD ready to release in the spring...If the recording works out, we will tour...in the first half of 2005," he said.
http://www.reuters.com/newsArticle.j...toryID=6899568


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Last Rites Sounded for Life-Changing Video Format
Jeremy Lovell

It changed the lifestyles of a generation but after a lingering death, the last rites have been sounded for the revolutionary VHS home video format.

All over the world, Video Home System -- which let people record and watch television programs when they wanted rather than at the whim of broadcasters -- is in headlong retreat as the Digital Versatile Disc (DVD) takes over.

Accepting the inevitable, Britain's biggest high street electronics retailer Dixons announced over the weekend that it was taking VHS video players off its shelves for good.

"We are now entering the digital age and the new DVD technology available represents a step-change in picture quality and convenience," said marketing director John Mewett.

Dixon's is not alone. Wal-Mart, the world's largest retailer, offers only a handful of stand-alone VHS recorders on its Web site.

"VHS was pretty revolutionary," VHS player collector Andy Hain told Reuters on Monday. "The fact that people take them for granted so much today shows just how important they were."

For more than 25 years, VHS dominated the world home entertainment market after staving off a challenge from Sony's Betamax in the early 1980s.

By the 1990s, a VHS recorder was a common feature in most homes as prices fell and technology improved -- although the art of actually programming a recorder remained a mystery to many.

To add insult to injury, police grudgingly admit that in Britain at least, house burglars don't even bother to take VHS players because new ones now cost so little that no one wants a second-hand model.

Film Industry Benefits

When DVDs first came along in the mid-1990s, sales were initially very slow but now sales of DVD players outstrip those of VHS players by a factor of 40 to one globally. Leading high street film rental company Blockbuster reports that over 80 percent of its rentals are DVDs.

Far from undermining the film industry, DVD sales can make the difference between loss and profit.

Internationally the market for DVDs -- currently estimated at some $15 billion a year -- is expanding exponentially and the industry expects that some 450 million households will have a DVD player by 2008.

But the explosion of DVD technology has brought with it a surge in piracy -- discs may be offer better-quality viewing but they are far more quickly copied than tapes and easier to carry.

The demise of VHS vindicates the foresight of Andy Hain who has been collecting VHS players for the past 11 years and has set up his own museum of video recorders.

He admits on his Web site, though, that the museum is rather small. "This is partly because VHS decks are a little dull," he reflects.
http://www.reuters.com/newsArticle.j...section= news


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Viacom Agrees to $3.5 Mln Indecency Settlement-FCC

Viacom Inc. has agreed to pay a $3.5 million fine to settle complaints that it broadcast indecent material on its radio stations, the U.S. Federal Communications Commission said on Tuesday.

The agreement covers several incidents dating as far back as 1999, in which radio personalities, including Howard Stern and Opie & Anthony, discussed sexual topics on stations owned by Viacom's Infinity Broadcasting radio network.

It does not cover singer Janet Jackson's breast-baring during the Super Bowl halftime show last February on Viacom's CBS television network.

In addition to paying a fine, Viacom admitted that some of the material in question was obscene or indecent and will take steps to make sure that such incidents do not occur in the future. In particular, the company will delay broadcasts of live events by several seconds to screen out indecent material.

The FCC has been cracking down on broadcast radio and television stations for explicit sexual discussions and other incidents that are aired when children are likely to be watching or listening.

Viacom was not immediately available for comment.
http://www.reuters.com/newsArticle.j...1&section=news


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Peer to Peer File Sharing Leader Lime Wire LLC Releases LimeWire 4.2; New Technology Allows Many Firewalled Users to Share Files for the First Time
Press Release

Lime Wire LLC (www.limewire.com), the leading designer and developer of advanced P2P file sharing software, announced today the release of LimeWire 4.2, a superior file sharing application introducing firewall to firewall transfer technology, network connections up to four times faster than before, complete iTunes integration on both Mac and PC, and much more. Lime Wire continues its guarantee of no bundled software and no spyware. Lime Wire 4.2 will be available in November from www.limewire.com, with versions for both PRO customers and users of LimeWire BASIC, a free version.

"Lime Wire continues to set the standard for innovation in peer-to-peer file sharing," said Chief Operating Officer Greg Bildson. "Our customers have responded appreciatively to our guarantee that Lime Wire has no bundled software or spyware. Performance and trust has lead to a doubling in our number of users since May."

LimeWire 4.2 runs on the world's most popular operating systems, including Windows, Mac and Linux, and can be used by the entire Internet community. Version 4.2 builds on the popularity of version 4.0 with the following brand new features:

-- 1) Firewall to Firewall transfers. With 50% of users currently firewalled, this greatly increases content on the network.

-- 2) Faster network connections than ever before.

-- 3) More comprehensive search results.

-- 4) Completely new MP3 player, with less skipping, and OGG audio file support.

-- 5) iTunes integration on Windows.

-- 6) New file view, making it easier to share files directly with friends.

-- 7) New icons, improving the look and feel of Lime Wire.

For more information on Lime Wire or to download LimeWire 4.2, please visit the Lime Wire website at www.limewire.com.
http://home.businesswire.com/portal/...&newsLang =en


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Milestones: Nullsoft closes

AOL Does Without The Rebels Within
Paul Boutin


The Nullsoft team, with Justin Frankel, second from right. Photo: Getty Images

When America Online purged its tiny Nullsoft branch of all but three employees last week, it lost one of the most prolific divisions of the company.

Not that you could blame AOL for the redundancies. All of Nullsoft's projects were spitballs tossed at the bosses upstairs.

Before the AOL days, Nullsoft founder Justin Frankel and his team of whiz- kids practically invented the MP3 craze when they rolled out their Winamp player and Shoutcast server. When AOL paid millions to buy Frankel's services in 1999 (he was 20), he used his new gig to become what Rolling Stone called "the Net's No. 1 punk".

From his AOL office, Frankel posted software (without AOL's permission) that made beating the Recording Industry Association of America easier, including the peer-to-peer program Gnutella and covert file-sharing system WASTE.

Frankel quit AOL at the beginning of this year and Nullsoft's shutdown looks like the final act. There will be no more cool pirate tools underwritten by AOL.

What kind of snot-nosed brat takes millions from AOL and then publishes software perfect for ripping off Time Warner's entire catalogue? Frankel, a grunge-dressing slacker from Sedona, Arizona, was a teenage college dropout in 1997 when he wrote Winamp, the first program that made playing MP3s on a PC point-and-click simple.

He's not the world's greatest programmer but Frankel has a knack for finding simple and clever solutions to huge engineering problems. He's got a prankster's streak (one of his high-school hacks was a keystroke logger for the teachers' computers), but Frankel didn't write Winamp so he could steal music. All he wanted was a better way to listen to music on his PC. Apparently, so did several million other people.

As the shareware cheques for Winamp piled up, Frankel kept hacking. While big software companies walked in circles trying to develop online music distribution systems, he created Shoutcast, an MP3 server that streams music over the Net.

Winamp and Shoutcast became the default way to play, drawing tens of millions of fans in less than two years.

That's when AOL rewarded Frankel by buying Nullsoft for $US100 million in 1999.

Lots of geeks who couldn't make it through engineering school became multimillionaires in the boom, but Frankel remained an unreconstructed kid in a field of hackers-turned-entrepreneurs.

Like Kurt Cobain, he used his money to challenge the people who gave it to him. As AOL was merging with Time Warner in March 2000, Frankel published Gnutella, a peer-to-peer file-sharing system that addressed the fatal flaw in Shawn Fanning's Napster.

Fanning relied on a bank of central servers that would eventually be shut down by record industry lawyers. Gnutella, by contrast, was completely decentralised. The only way to shut it down would be to go after every user.

When Frankel posted Gnutella on Nullsoft's site, it came with a cheeky, half-apologetic note: "See? AOL can bring you good things!" AOL was not amused; the company had him remove the program immediately and disclaimed it as an unauthorised side project.

But Gnutella had already been spread around the Net and reverse- engineered by eager programmers who set to work improving Frankel's gift. Years after Napster's servers went dark, Gnutella traffic is still growing.

For most people, having a go at the boss once would be enough, but Frankel kept at it for years - he even posted a tool that removed the ads from AOL Instant Messenger.

Finally, in the middle of last year, as the RIAA was preparing lawsuits against random Gnutella users, Frankel concocted a counterstrike: WASTE, a private file-sharing system whose traffic is encrypted from prying eyes and whose networks are invitation only. (The name comes from the underground postal system in Thomas Pynchon's The Crying of Lot 49.) If snoops can't see what WASTE users are sharing and RIAA stoolies can't hop on to the network to lure copyright violators, there's no way to gather evidence of copyright infringement short of raiding homes and seizing computers.

Frankel told Rolling Stone that he tried to persuade AOL to release WASTE as a way to revive its fast-falling customer base. When he was rebuffed, he released the program on the fourth anniversary of AOL's acquisition of Nullsoft - May 28, 2003 - as a way to confront the parent company.

Again, AOL took the program down and disowned it.

Not long after spilling his guts to Rolling Stone, Frankel resigned. "For me, coding is a form of self-expression," he explained in a blog post that he would later remove. "The company controls the most effective means of self-expression I have. This is unacceptable to me as an individual, therefore I must leave."

With Nullsoft gone and Frankel spending his time building a special-effects computer for his electric guitar, the old Winamp/Gnutella gang probably won't get back together for one more hit.

Conventional wisdom says Frankel is more likely to join the millionaire has-beens who dot the hills in San Francisco, or become a trophy hire at a tech startup, like contemporaries Fanning, Marc Andreessen and Linus Torvalds.

But I wouldn't count him out yet. Most dotcom heroes come across as self-promoting one-hit wonders, but Frankel does his best work when you try to shut him up.

Frankel's blog is at 1014.org/finger.phtml

http://www.theage.com.au/news/Next/A...oneclick=true#


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Thorn In Side Given P45
Nick Farrell

AWOL has finally shut down one of the most sharp, jabbing and prolific thorns in its side -- Nullsoft.

According to AP, AOL has made all but three of the Nullsoft staff redundant. The company was founded by Justin Frankel and his team of whiz-kids who invented the Winamp player and Shoutcast server so they could play MP3s.

AOL was so impressed that they handed over huge wodges of cash to buy the company in 1999 totally failing to notice that Frankel seemed mostly interested in winding-up AOL's stuffy management.

From his AOL office, Frankel posted software including the peer-to-peer program Gnutella. AOL, of course, is owned by Time Warner who have a lucrative back catalogue of movies and music which are ripped off and distributed under Gnutella.

Gnutella fixed Napster's fatal flaw which eventually caused it to collapse under the weight of the record industry's mighty briefs.

Frankel's big idea was that if you decentralised the whole operation the only way for his friends in Time Warner to shut it down was to go after every user. AOL execs did force Frankel to take down Gnutella, but it was already being distributed on the net.

Later Frankel posted a tool that removed the ads from AOL Instant Messenger and it was only a matter of time before he went too far.

Last year he penned a bit of code called Waste which was a private file- sharing system whose traffic is encrypted. In this case his big idea was that if the Musak biz could not see what WASTE users were sharing they couldn't sue.

When AOL took the program down, Frankel quit to spend more time building special-effects for his electric guitar.

Without him, it seemed that AOL was a quieter plaice and Nullsoft was a bit of a waste of cash waiting only to be shut down. Which it has been.
http://www.theinquirer.net/?article=19827


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Music Industry More at Risk in Piracy
Kimberly Hill

The technical challenge of sharing massive movie files over the Internet has kept the problem of P2P file sharing to a minimum for the movie industry. But now the Motion Picture Association of America has joined the Recording Industry Association of America in filing lawsuits against file sharers.

The lawsuits are being filed fast and furiously by officials in both the recording and motion picture industries.

Last week, the Motion Picture Association of America filed its first suits against individuals who it says illegally shared movies over the Internet. Meanwhile, the Recording Industry Association of America filed over 700 more actions in its ongoing campaign against file sharing.

Both industries claim that they are losing millions of dollars on illegal downloads and piracy. Both are pursing a strategy of going after the audience members -- often university students -- who access illegally copied media.

But who really has more at stake in the battle to fight online piracy? "Piracy has been nowhere close to the problem for the motion picture industry that it has been for the recording industry," Yankee Group's Mike Goodman told NewsFactor.

Massive Files

One factor that keeps illegal downloads of full-length motion pictures in check is that movie files are simply too large for most people to download.

"A movie file is just so massive," said Goodman, "even with a high-speed connection it can take a couple of hours to download the whole thing." By contrast, a single song -- or even a whole album full of them -- takes a minute or two.

Another technology issue facing movie pirates is viewing the movies once they are downloaded. One option, of course, is simply to watch the movie on the computer to which the file was downloaded.

Technophiles soon tire, however, of the limitations of computer display screens and sound technology. And the DVD field has not standardized enough yet for computer users to create disks on their PCs that can reliably be viewed on many entertainment systems' DVD players.

20/20 Hindsight

But these technology shortcomings do not pose much of a hurdle to the determined movie pirates, most experts agree. The question is what actions will establish effective roadblocks.

"The motion picture association has been sitting on the sidelines waiting and watching what the music industry has been doing and taking notes," said Goodman. For example, the music industry began filing lawsuits in 2003 against people who downloaded illegal copies of songs. The movie industry made its first such move only earlier this month.

"They [the movie industry] did not have to react immediately," explained Goodman. "The RIAA was reacting, so it gave them the luxury of sitting on the sidelines and watching the repercussions of the RIAA's strategies."
http://www.newsfactor.com/story.xhtm...story_id=28577


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Playlists Could Be WinAmp Hack
Robert Lemos

Playlist files for the WinAmp player could contain a new flaw, security firm Secunia said this week. The company advised people to remove the associations in the program for the ".cda" and ".m3u" extensions in order to avoid being bitten by the bug, which it rated as "highly critical"--the company's second highest rating.

The vulnerability is due to a memory problem with a certain function in the program that reads the music lists. The flaw occurs in version 5.05 and 5.06 of the program, the firm stated
http://news.com.com/Playlists+could+...3-5466571.html


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P2P Start-Up Gets Record Label Deals
John Borland

A small peer-to-peer start-up has won rights from three of the four major record labels to distribute their music online.

The deals with Peer Impact, a new division of online marketing company Wurld Media, continues the labels' gradual warming trend toward peer-to-peer services. Top label executives have increasingly said they are willing to support file-swapping networks, as long as no pirated songs appear alongside authorized works.

For now, Peer Impact's partners include Universal Music, Sony BMG and the Warner Music Group. The company remains in negotiations with EMI Music and plans to launch the file-swapping service in early 2005.

Songs will cost 99 cents, as they do at Apple Computer's iTunes and other download stores, and they'll be wrapped in copyp-protection technology. But executives say the file-swapping technology can help build relationships between customers in a way ordinary Net music stores can't.

"Consumers like the concept of community," said Wurld Media Chief Executive Officer Greg Kerber. "We have seen that when successful companies like eBay build large communities, and people share in that, there is power in that for the consumer."

Peer Impact is one of a handful of emerging companies that are hoping to take advantage of the technical benefits of file-trading--primarily low distribution and bandwidth costs--while avoiding the legal headaches of allowing unrestricted trading.

Former Grokster executive Wayne Rosso is planning an authorized file-swapping service called Mashboxx, also slated to launch next year. In Britain, a company called Wippit is already running a peer-to-peer service with music from BMG and EMI.

Although these companies have helped build bridges between record labels and the peer-to-peer technology that was once deeply feared by music executives, it's less clear whether they can attract the mass audiences found on the anarchic file-trading networks such as eDonkey or Kazaa.

Today's services are competing not only with the unauthorized networks where pirated content remains free, if legally risky, but with download stores from powerhouses such as Apple, Microsoft and VirginDigital. All these stores, like the peer-to-peer services, will be offering a similar range of content at the same 99 cents per song price point.

Peer Impact's technology is built on a formerly open-source file-swapping technology called FurtherNet. That service still exists, but its creator, Jamie Addessi, now works for Peer Impact.
http://news.com.com/P2P+start-up+get...3-5465845.html















Until next week,

- js.














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