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DRM Goes to the Movies
By Janet Rae-Dupree
October 1, 2003
Sony Pictures Entertainment CIO John Stubbs on how digital rights management can be used to thwart pirates.
CIO Insight: You were named the CIO of Sony Pictures Entertainment on Sept. 12. You were a consultant in digital rights management. What lessons can the visual entertainment industry learn from the music industry's experience?
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Stubbs: I think movie executives have the advantage of learning from what Napster and other peer-to-peer networks did to the music industry's ability to support its business models. The music industry has suffered greatly and a lot of it is because of the rampant piracy that's going on right now. Forewarned is forearmed.
You'll be heading Sony Pictures' global information technology group, responsible for fully integrating the information systems that support SPE's motion picture, television, home entertainment and corporate-level operations. What's key to your strategy?
It's a tad too early to talk about everything just yet. I just got here. But digital rights management will be one of the priorities. We will continue many initiatives already under way and we will also be investigating DRM policies and initiatives.
DRM includes the rules and protective mechanisms for the exploitation of content. In other words, you can protect content and only allow assets when people abide by a set of rules that have been specified. Typically, the content owner specifies the rules, or it could be specified by people who the content owner gives permission to specify new rules, so it can be a layered rule approach. Basically, these rules are designed to support various business models—for example, a business model might be a pay-per-view, or another business model might be that you own it, but it's only good for viewing on a particular device, or it can be for an unlimited use. These are all different business models that content owners and the retailers, or the distribution industry, will adopt.
You believe that XrML, the language developed by Xerox ContentGuard, will be the successful common platform for DRM in the entertainment industry. Why?
I think it will be one common way of expressing rights. It has a leg up on everybody because it's been adopted by Microsoft and it's a very rigorous language that allows for a lot of flexibility.
What needs to happen technologically to enable the digital distribution of movies and TV shows?
That's a hard question to answer. I think there will need to be a number of technologies further developed. For example, it's fine to say you have a rights language and it's another thing to say you have technologies that can interpret that rights language and enforce those rights before they allow unauthorized people to have access to content. Interpretation and enforcement is still a fairly complicated problem.
There's a lot of intellectual property out in the marketplace right now, or a lot of patents, if you will, which have been issued by the patent office on this subject, and it's not clear which technology providers are going to be stepping up to the plate and getting a license from the patent holders to develop the necessary technology. Microsoft, of course, is a major player. They are quite a ways down the line and are investing heavily in DRM technology.
I think the next three to five years are going to be very interesting and we're going to be addressing these issues of DRM head on. There's a new policy group that's just formed at Sony Pictures Entertainment that will be involved in figuring out where we stand on digital rights issues, and I hope to contribute to and help execute that effort in a meaningful way.
U.S. record stores get no satisfaction from Stones
Monday October 6, 4:06 pm ET
By Dean Goodman
LOS ANGELES, Oct 6 (Reuters) - If music retailers needed another warning that their future is imperiled from slackening sales, veteran rockers the Rolling Stones have given it to them.
The British band snubbed U.S. record stores late last week by anointing mass market electronics chain Best Buy Co. Inc. (NYSE:BBY - News) as the only seller of its new DVD, "Four Flicks," for four months, and independent record store owners are seething.
ADVERTISEMENTFrom Nov. 11, through the holiday rush, traditional music retailers will be forced to watch as potential customers flock to Best Buy to snap up the 4-disc package being sold for $29.99.
As the music industry reels from plunging sales due in part to Internet piracy, they also are facing heightened competition from mass merchants like Best Buy and Target Corp. (NYSE:TGT - News) that control about 55 percent of U.S. music sales.
These giants often use their muscle to sell music as loss-leading products in hopes that customers will walk out with a newly released $9.99 CD and a $1,000 TV or refrigerator.
Increasingly, the mass market vendors are entering into exclusive deals with top bands such as U2 and the Eagles, though the exclusive sales windows for those acts lasted weeks rather than months.
Such deals are short-sighted and hurt not only traditional retailers, but the music industry as a whole, said Clark Benson, chief executive officer of Almighty Institute of Music Retail, which helps record labels work with music stores.
"The more that a mass merchant like Best Buy ends up having an exclusive, the more it hurts these pure-play record stores," Benson said. "Those stores are the ones where people are really getting turned onto new stuff, not the mass merchants."
Benson said over 1,100 chain and independent record stores have closed in 2003, making it hard for consumers to stumble upon the new music that is the industry's lifeblood and future.
Torrance, California-based Wherehouse Entertainment Inc., which had 339 stores a decade ago, will soon be down to 111 after filing for bankruptcy protection in January. The 95-store Tower Records chain of Sacramento, Calif. is flirting with bankruptcy.
Industrywide, in North America, first-half 2003 music sales fell 11.7 percent to $5.1 billion from the year-ago period.
NO SYMPATHY FOR DEVILS
Some retailers are not only angry, but are plotting revenge.
"The mistake some of these guys may be making is that a lot of retailers are like elephants that don't forget," said Mike Dreese, co-founder of Boston-based chain, Newbury Comics.
Best Buy's two-week exclusive in 2001 for a U2 concert DVD caused Newbury to retaliate by doubling the fee it charged U2's record label for marketing any of its acts. Newbury ended up with about $15,000 in extra income.
"In essence we issued a speeding ticket to them and they paid it," Dreese said.
With the Rolling Stones, Dreese expects he will mark up the band's extensive CD catalog by a few dollars. He expected to lose some customers but said, "we're basically not going to make it easy for them (the Stones) to easily profit off their brand if they're favoring a competitor in a permanent way."
A spokeswoman for the Rolling Stones said the members and their advisors were traveling and unavailable for comment.
Retailers kicked up a fuss earlier this year after the Eagles released a DVD single exclusively through Best Buy for one month, but received no sympathy from the band's manager, Irving Azoff.
Gary Arnold, Best Buy's senior vice president of entertainment similarly shrugged off concerns about its exclusive deals, and said he expected "Four Flicks" would be the company's best-selling music DVD ever.
Nobody here talons...but there are many clues. We continue to get business from many of the leading companies in the consumer electronics industry and their subcontractors. As always, we wait to see what revenues these projects will generate. The track record has not been great over the last few years but the digital music space is just now on the verge of exploding and becoming mainstream. The digEplayer has been very well received so far and seems to have significant potential for the regional airline carriers and other venues as well.
Maybe this company will never make it, maybe they will. I won't be here when there are 500 million outstanding unless the market cap is >5 billion. Until then you either hold or sell. It really is that simple imo.
OT Wind River reverses direction, launches Linux tools
By Charles J. Murray
EE Times
October 3, 2003 (4:29 p.m. ET)
PARK RIDGE, Ill. — Wind River Systems, Inc. executed an abrupt about-face Thursday (Oct. 2), rolling out a set of development tools for use with its competitor and nemesis, the Linux operating system.
The embedded software giant (Alameda, Calif.) surprised much of the embedded systems community by announcing it is extending its hardware debug tools to include support for the Linux platform. Known as visionProbe II, the tools give developers the ability to access virtual and physical address space, to track Linux virtual access, and to control physical peripherals and memory.
The announcement represented a dramatic turnabout for Wind River, which has emphatically argued that Linux is not a viable competitor in the embedded marketplace, mainly because of legal issues associated with the general public license.
"This marks a major shift in their strategic response toward Linux," said Daya Nadamuni, a senior analyst for Gartner Dataquest (San Jose, Calif.) "It's obvious that they've come to the realization that, as a tools company, they can no longer afford to ignore Linux."
Wind River claimed that the availability of such hardware debug tools for Linux filled a major void in the software tools market, but competitors in the embedded Linux market questioned the claim.
"We've worked with other hardware-assist vendors for the last four years," noted Jim Ready, chief executive officer of MontaVista Software, Inc. (Sunnyvale, Calif.).
Wind River said the new Linux version of its product distinguishes itself, however, through the addition of kernel-level debugging, which includes scheduling, memory allocation and interrupt handling. It also offers an automated boot line, which provides the ability to run the kernel on the target without having a boot loader image installed.
"If your team hasn't completed the boot loader yet, you could actually go in and start playing with the processor and verifying that your hardware is correct," said Steve Veneman, product marketing manager for Wind River's Development Tools Business Unit.
The company, which dominates the market for proprietary embedded operating systems, said its shift toward Linux was the result of popular demand.
"In listening to customers on the hardware bring-up side of the market, we've become aware of the fact that there are Linux users out there who are looking for support on bringing up their boards," Veneman said.
Analysts said Wind River's turnabout is a shrewd business move, especially given the strong feelings held by many developers regarding domineering software makers.
"There's a large population of developers out there who may not be willing to pay for the kernel, but may be willing to pay for the tools," Nadamuni said.
Still, Wind River's move was strikingly inconsistent with the company's public actions over the past three years. During 2001, Wind River acquired an open source Unix variant as a means of dealing with the "Linux threat," but later stopped supporting the variant, saying that Linux was no longer a threat. Wind River's chairman and co-founder, Jerry Fiddler, referred to Linux in 2002 as "a phantasm," which drew its support from developers who believed in an "illusion" that software can be free.
Wind River's former CEO Tom St. Dennis was also vehement in his criticism of Linux when SCO Group launched its Linux-related lawsuit against IBM earlier this year, saying that there were "fundamental IP issues surrounding free software."
Competitors, having heard Wind River's criticism of Linux over the years, took the opportunity to shoot back following yesterday's announcement.
"Wind River for the past four years has very deliberately pummeled Linux, ridiculed it and questioned its validity," said Ready of MontaVista. "They need to be held accountable for their actions and words."
Given such emotions, Nadamuni noted that Wind River's methodology is all the better. "It's a much more sensible and practical approach for Wind River to come to Linux from the tools side of the business, rather than the kernel distribution side," she said. "For the first time in three years, they're actually showing a good response to the ongoing trends in the market."
Competitors predicted Wind River's latest shift signals a move toward the distribution of a Linux OS kernel."There's no doubt that Wind River is eventually going to have to do it," Ready said. "The question is how they're going to manage their business between now and then."
A Wind River spokeswoman, however, said that scenario is highly unlikely. "Right now, going into the Linux distribution business is not what Wind River wants to do," she said. "That doesn't mean we're never going to do it. But everything we are doing with Linux today is a step-by-step process to see how our customers gauge it."
Tiring of royalties, China seeks compression spec for video
By Mike Clendenin
EE Times
October 3, 2003 (1:47 p.m. ET)
TAIPEI, Taiwan — China is pushing to define a homegrown audio and visual compression technology that would rival MPEG-4 and H.264 and, by various estimates, save Chinese consumers and manufacturers anywhere from $300 million to $1 billion in royalties during the next decade. The video compression spec is due out at the end of this year, followed by basic decoder intellectual property (IP) in 2004.
The standards initiative is part of a Chinese effort to lessen reliance on foreign IP. Increasingly frustrated over clashes with licensing agencies like MPEG LA, China is striving to wean itself from foreign standards and to free itself of royalty payments for high-volume products, such as DVD players and cell phones.
The move could undercut the power and revenue of licensing agencies like MPEG LA, a consortium of patent holders such as Apple and Sun that charge a royalty of $2.50 per system, compared with China's proposal of 1 yuan (12 cents) for its codec. During the past few years, MPEG LA and others have had trouble collecting royalties from Chinese manufacturers of DVD players, who feel the combined fees of $15 to $20 per system are too high.
Since Chinese manufacturers produced 10 million of the world's 50 million DVD players in 2002, the stakes are high. And over the next decade, as Chinese consumers help expand the market for consumer electronics, they will only get higher.
The video compression project is directed by the Audio Video Coding Standard (AVS) Workgroup of China, a consortium of 50 universities, government organizations and companies that has been given authority by China's influential Ministry of Information Industry and placed under the supervision of the Chinese Academy of Sciences. The academy has been working on compression technologies for more than five years, but few details have emerged.
About a year ago, during the height of acrimony between Chinese manufacturers and various licensing agencies, the AVS was formed to help commercialize the research.
“The government was scared by the DVD royalty fiasco,” said Mike Yu, chief technology officer for Vimicro, a Beijing-based designer of graphics chips for cell phones. “They understand that there is a new organization working on the next-generation compression technology and they are worried. They don't want to be left alone again.”
That fear was a big factor in China's adoption of a little-known mobile-phone standard called TD-SCDMA, or time-division synchronous code-division multiple access. Supported by Siemens AG in Europe more than a decade ago, the technology was once considered a has-been. But the Chinese government rekindled interest in TD-SCDMA and then co-developed the latest iteration with Siemens in exchange for lower royalty payments.
The government has helped build an AVS-like consortium around TD-SCDMA, and foreign chip makers have come together in joint ventures to hedge their bets against the more entrenched standards, wideband CDMA and cdma2000. TD-SCDMA is now one of three international third-generation cellular standards and a contender in China for a 3G license.
Other examples of greater self-reliance are also emerging. Over the summer, China formed a group devoted to networking home appliances and IT products. The Information Gateway Resource Sharing (IGRS) working group consists of some of China's biggest electronics companies, including Great Wall Computer Group, Hisense, Konka, Legend Group and TCL.
IGRS is similar to another standards group founded this summer in the United States, dubbed the Digital Home Working Group, of which Legend is also a member. Although the two groups have similar goals and will cross-pollinate each other's markets with products, it appears that little contact has occurred between them.IGRS is expected to develop a protocol for automatic detection, networking and resource sharing among IT systems, home appliances and communication devices in wired and wireless environments. The standard will use a TCP/IP-based application protocol, which should be out in draft form by year's end. Development tools will follow next year and a final protocol will be ready in 2005, the group said.
In a statement, Konka said, “The establishment of the IGRS working group reflects the desire of Chinese companies to get rid of the dominance of core technologies and standards of foreign big names in the information technology industry.”
China has also made forays into new optical-disk technology during the past few years, but nothing concrete has emerged. Part of the problem has been overcoming an entrenched video-CD and DVD industry that carries most of the world's popular content, such as Hollywood movies.
As much as Chinese manufacturers would like to be free of foreign IP, there is little alternative to using it. Even if their systems used a Chinese standard, they would still want to be backward-compatible with DVD and CD technology for domestic and, more importantly, foreign export markets like North America and Europe.
Unlike TD-SCDMA, however, the AVS specification will not require a massive and expensive new infrastructure, so it may be easier to implement over time. The government has no immediate plans to make it mandatory, said Huang Tiejun, secretary-general of the AVS Workgroup. Huang said the group can develop a more efficient compression technology than MPEG-4 or MPEG-2. After that, “the market will decide,” he said. “AVS is only a choice — a better choice for markets in China and outside of China.”
Foreign companies have taken an interest in the project, but it's difficult to tell whether they think AVS is a legitimate rival to MPEG-4. At this early stage, it is more likely they just want to keep an eye on developments. Philips, Sony, Microsoft and IBM have been members of the AVS Workgroup, and LSI Logic Corp. recently joined.
Huang said the consortium is open to anyone who can contribute research staff and pay the roughly $1,000 annual fee.
As part of the 3C consortium that requires a $5 royalty payment per DVD system, Philips and Sony have had their own problems with royalty collection in China and are viewed by some Chinese manufacturers as part of the problem. Philips believes otherwise and said it is willing to lend its expertise to China-based standards.
“Philips is pushing MPEG-4, but in China I think Philips is doing the right thing to support Chinese efforts and to also try to push our own IP,” said Ernest Ma, Philips' representative to the AVS Workgroup.
Even domestically, AVS will have an uphill battle against MPEG compression standards. Vimicro's Yu cautioned, “The difficult part is to convince everybody to take it seriously and come up with product.”
I believe we were given a credit line to produce the players and extract a modicum of profit...Woof
Kinda puts to bed the idea about PRs and the ability to release them basically when they want to. DivX clearly waited to issue one with APS until the Cnet article came out last week.
APS and DivXNetworks Partner to Bring Portable Video-on-Demand to Airline Industry; APS digEplayer Offers Secure Movies From 20th Century Fox in High-Quality DivX Video
SAN DIEGO--(BUSINESS WIRE)--Oct. 6, 2003--DivXNetworks Inc., the company that created the revolutionary, patent-pending DivX(R) video technology, today announced that it will provide video encoding, compression and digital rights management services for the groundbreaking APS digEplayer(TM), a portable video-on-demand entertainment system.
The APS digEplayer, to be deployed by Alaska Airlines, will feature secure, full-length movies from Twentieth Century Fox in high-quality DivX video. Unlike traditional inflight entertainment systems, the state-of-the-art digEplayer is a portable device that puts the viewing choice in the hands of customers, initially allowing passengers to choose from a total of nine full-length movies while traveling. Alaska Airlines will offer digEplayer units beginning in October on a number of transcontinental flights.
"The digEplayer is an innovative device that represents the future of in-flight entertainment, and we are very excited to partner with APS and Twentieth Century Fox," said Jordan Greenhall, founder and CEO of DivXNetworks Inc. "The security, compression and visual quality of DivX combined with the innovative portable device from APS brings portable video-on-demand to the airline industry for the first time."
"Our digEplayer gives travelers real entertainment options by offering a variety of first-run movies, and DivX is a key element in that vision," said Bill Boyer, CEO of APS Inc. "With its strong digital rights management technology, DivX video enables us to bring full-length films to travelers securely and with the highest level of visual quality."
"The APS digEplayer is a very exciting device that offers a variety of great viewing opportunities for consumers," said Julian Levin, executive vice president of digital exhibition, non-theatrical sales and distribution for Twentieth Century Fox. "The digEplayer and DivX video technology enable us to distribute films with the strong visual quality viewers have come to expect from a feature film experience."
For more information on the APS digEplayer, visit www.digeplayer.com. To learn more about DivXNetworks, visit www.divxnetworks.com.
About DivXNetworks
DivXNetworks is a consumer-focused video technology company positioned at the center of multimedia convergence. The company's core offering is the DivX(R) video codec, the world's most popular MPEG-4 compatible video compression technology with over 100 million users worldwide. Often called "the MP3 of video," the patent-pending DivX video technology offers DVD-quality at 10 times greater compression than MPEG-2 files, enabling full length films to easily fit on a CD or be delivered over broadband connections. DivX video technology powers a range of applications that span the convergence value chain, from a secure IP-based video-on-demand solution to next-generation consumer electronics products and video software applications. DivXNetworks has headquarters in San Diego with satellite offices in Los Angeles and San Jose, Calif., Taipei, Taiwan and Dortmund, Germany. For more information, visit http://www.divxnetworks.com.
Contacts
DivXNetworks, San Diego
Tom Huntington, 858-909-5358
thuntington@divxnetworks.com
Time for a decision: how Apple can win the online music war (opinion)
Sep 30, 03 / 10:15 am
Once again, for the first time since the early 1990's, Apple finds itself with a choice while in the driver's seat: should they reap profits from a premium-priced hardware product with clear advantages in the marketplace in terms of features, ease-of-use, and positive "buzz" or sacrifice the short-term profits by cutting the price of the hardware in order to sell as many as possible and guarantee dominance of Apple software with continued profits over the long run? The battle here is all about AAC vs. WMA. Which will become the format for online music downloading? Who will control the format, Apple with its AAC/Fairplay digital-rights management (DRM) solution or, shudder, Microsoft with WMA?
"Microsoft hopes to become a popular standard among online media stores and electronics makers. Windows Media Player is already built into over 300 types of consumer devices, Microsoft said. Philips, which globally ranks third behind Japan's Sony and Matsushita, has chosen not to support Microsoft's Windows Media Player in its consumer electronics products, a company spokesman said separately," Reuters reported Friday. Although I applaud them, Phillips alone cannot hold back the tide. Apple can, but they must act soon.
Apple's iTunes Music Store relies on Advanced Audio Coding (AAC) with "Fairplay" DRM technology which is used to determine what you can do with the music you buy from iTunes Music Store. Microsoft's WMA format contains its own DRM technology. Apple finds itself in much the same position as it found itself in the early 1990's with a superior hardware and software solution and a decision to make. Substitute iPod for the Macintosh and iTunes Music Store for the Mac OS and you get the gist. History repeats itself. The iPod plays AAC files, but not WMA files. iPod competitor players don't play AAC files. iTunes Music Store sells only in AAC format. All of the other "iTMS pretenders," so far, like MusicMatch and BuyMusic.com sell their tunes in WMA format, not AAC. If you own an iPod then, of course, iTMS for Mac, and soon (hopefully) iTMS for Windows, will be your music store of choice. Just like if you own a Macintosh, Mac OS becomes your operating system of choice. If you own another portable music player, iTunes Music Store files won't work for you, just as Mac OS X won't run on a Dell. Apple needs to make sure iPods keep selling well.
The reason the Mac's market share pales in comparison to Windows is that the Macs in the late 1980's/early 1990's simply cost too much and people wanted to have a Mac for less, so they settled for a "good enough" knock-off. Bill Gates understood this long before Apple woke up one day with single digit market share. Gates has reaped the profits accordingly.
Right now, the iPod can get away with its pricing, but not for much longer. Knock-off players from Creative and others, promoted by powerhouses like Dell with their re-branded Dell Digital Jukebox (Dell DJ) player are going to be "good enough" for 90% of the world; especially at the prices the Dell's of the world going to charge compared to current iPod prices. Let's not get into the fact that we, as Mac users, understand that "you get what you pay for;" most people don't care about much beyond the sticker price. So, Apple, it's time to decide: lower your iPod prices and ramp up the marketing or reap short-term profits on a premium-priced piece of hardware only to lose the war in the end?
Apple can dominate the online music scene for decades if they can get enough iPods out there to guarantee iTunes Music Store's and AAC/Fairplay's success. Apple must make the iPod price-competitive with Dell's prices for the Dell DJ. No small task, unless you sell them at cost or lower as Dell probably will. Game console makers lose money on every game system they sell. Why? Because they make the money on the software (games), not the hardware. Apple has to get out the calculator and see what dominating online music distribution worldwide could bring them over the long run and see if it's worth forgoing short-term iPod profits for a few years.
It's pretty clear that Apple has decided not to license Fairplay since nobody else seems to be using it; Apple is going to the big win with this strategy. Will they risk losing it all for iPod profits?
If Apple loses the portable music player market share game, iPods will be firmware updated to play WMA files, the iTunes Music Store will be known as the Newton of online music store's (a great pioneer that failed to capture the market), iPod owners will be shopping for WMA files with MusicMatch or similar software, and Apple will have repeated the same mistake it made with the Mac and the Mac OS. In time, Dell DJ player's market share will dwarf iPod sales and AAC will be scoffed at as inferior to WMA. If Apple wins with iPod sales, the world will largely use Apple iPods, shop at iTunes Music Store, and Apple will have a trojan horse in place to build Macintosh and other sales for the future. The choice is Apple's. And the time to choose is now at hand. Will Apple learn from history or repeat it?
SteveJack is a long-time Macintosh user, web designer, multimedia producer and a regular contributor to the MacDailyNews Opinion section.
Internet evolves in wake of music-swapping suits
By Matthew Fordahl, Associated Press
SAN JOSE, Calif. — Just as Prohibition drove drinkers underground in the roaring '20s, the music industry's crackdown is pushing many song swappers away from the open Internet and into what amount to cyberspace speakeasies.
These high-tech Cotton Clubs usually require users to be trusted or at least know someone inside. The files being traded, instead of out in the open, are encrypted — the 21st century equivalent of hiding bathtub gin under a fake floorboard.
Internet file-sharers are operating much like any society that falls under attack. And the very technologies they are using as shields have long been employed by legitimate businesses to protect their data from prying eyes and hackers.
"The software that users are moving toward, it has characteristics that businesses need — which is a high degree of privacy, a high degree of security and the ability to handle large files," said Clay Shirky, a professor of interactive telecommunications at New York University.
Three years after the Recording Industry Association of America's lawyers succeeded in shutting down the Napster file-trading service, the music industry's jihad against unauthorized digital music distribution is reaping an unintended consequence: better, easier-to-use software for exchanging data securely — and even anonymously — on the Internet.
"Thanks to the RIAA, ease of use surrounding encryption technologies, which was never a big deal befobe, is a big deal now," Shirky said.
The decentralized peer-to-peer technology that enables a computer user to share his or her music collection with strangers remains an unbottled genie — and is now likely to evolve so ever more traffic becomes invisible not just to the entertainment industry's copyright cops but also to repressive governments, inquisitive employers and snooping relatives.
On the file-swapping front, current favorites Kazaa, Morpheus and iMesh are more decentralized and harder to sue than Napster. They are breeding more sophisticated stepchildren just as the RIAA goes after the swappers themselves with lawsuits filed against 260 alleged file sharers.
An upcoming release of the file-sharing program Blubster, for instance, not only makes users more difficult to identify. It also seamlessly encrypts files before they are transferred and decrypts them for the end user.
Another program, called Waste, can be used to set up an encrypted instant-messaging and content-sharing network of up to 50 users. Unlike traditional instant-messaging programs, Waste messages don't pass through a central server.
Waste was pulled by America Online shortly after its release by the company's Nullsoft division, but is still circulating online. Neither AOL nor Nullsoft programmer Justin Frankel returned calls seeking comment. (Nullsoft also released Gnutella — on which many of Napster's successors are based. AOL quickly yanked that program, too, but the damage was done.)
Copyright crackdowns like those staged by the RIAA, the Motion Picture Association of America and the Business Software Alliance have succeeded on at least one front: Because higher security and anonymity tend to make software more difficult to use, fewer people are likely to be engaged in casual copying.
"To some degree, the effort has always been one of pushing down the piracy problem, forcing it down to the hardcore pirate," said Bob Kruger, the BSA's vice president for enforcement.
Matt Oppenheim, the RIAA's senior vice president for business and legal affairs, said it's still possible to undermine pirates — even those operating anonymously. In fact, four university students sued last April were using allegedly more-secure swapping software.
So the race is on to improve and simplify advanced security technologies. Beyond programs like Blubster and Waste, there are projects like Freenet, which has been around since 1999. Downloaded nearly 2 million times, it can not only trade files but also exchange information and spread censored news to places like China.
Like other programs, it's difficult for the programmers to know exactly how it's being used, but there are clues.
"Our Web site is censored by Chinese government," said Freenet leader Ian Clarke. "I suspect we must have had some effect to justify that."
Though Clarke is well known for his information-needs-to-be-free philosophy, he's also trying to cash in on Freenet's architecture.
Last year, he founded Cematics and the company has since released a prototype of Locutus, which allows users to search corporate networks for information distributed across a wide range of computers.
"Just as Napster or Kazaa allow 12-year-old kids to shares media files over the Internet, Locutus allows corporations to share documents within their organization," Clarke said. "It's kind of like Google for people's hard disks, but with added security. You can define who has permission to find what kind of files."
The shift toward integrating encryption and anonymity tools answer the prayers of privacy advocates who have been warning Internet users for years about the potential problems of using the open network without such protection.
"The recording industry lawsuits may in fact change the ecological pressures on the software developers to encourage more anonymity. I think that's a good outcome of this," said Cory Doctorow, outreach coordinator at the Electronic Frontier Foundation. "What it won't do is legalize what 60 million people are up to and it won't ... pay any artists."
The Freenet Project is online at freenetproject.org.
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HP trying to become more hip
Benjamin Pimentel, Chronicle Staff Writer Thursday, October 2, 2003
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Hewlett-Packard turns 65 in a few weeks. While the senior birthday underscores the Palo Alto firm's standing as a technology icon, it also highlights a reputation that HP is trying to shake: that of Silicon Valley's geezer.
It's a rep that Mike Winkler, HP's chief marketing officer, is trying to change with a $300 million consumer campaign that starts today.
Among the campaign's goals: to make HP more hip.
The campaign also points to the growing importance of marketing as HP evolves from a technology firm focused mainly on business executives and engineers to one that's trying to appeal to ordinary consumers, including young people.
"We were viewed as somewhat stodgy, conservative, not very human," Winkler said. "Some would say we've missed a generation relating to teenagers, consumers, younger buyers, because we were viewed as a large corporate engineering (firm), relatively inhuman -- not hip."
The campaign aims to turn the HP brand into a pop culture brand like Coke or Nike.
"When you think of HP, what do you think of?" said Jef Loeb, founder of Brainchild Creative ad agency in San Francisco.
"You think of high-end scientific machines. You don't really think of HP as consumers who are going to say, 'That's cool' like Sony or 'That's hip,' like Apple. You think of HP as a big player, but they don't have that brand cachet to be cool."
The first wave of the consumer campaign focuses on HP's strongest suit, digital imaging.
It includes a slick TV ad featuring ordinary people using HP cameras and printers to the song "Pictures of You" by the Cure.
The spot will premiere this week on such popular and youth-oriented shows as "Friends" and "Will and Grace."
HP also will run ads in newspapers, movie theaters, bus stops and train stations in major cities, including San Francisco, New York, Chicago and Los Angeles.
"Today, we're recognized for our engineering prowess and innovation. Adding great marketing to the list is a good thing," said Allison Johnson, HP's senior vice president for global brand and communications.
It took time for that heightened focus on marketing to happen, and the process wasn't easy.
Silicon Valley pioneers Bill Hewlett and Dave Packard formed HP in a Palo Alto garage in 1938. The company incorporated on Jan. 1, 1939.
It became known as a company of engineers that made quality measuring equipment and computer systems.
But for decades, HP put scant emphasis on marketing, which was decentralized and uncoordinated.
Winkler said part of the problem was HP's "very engineering-oriented culture, a very analytically oriented culture."
"In many technology companies, not just HP, marketing people are seen as more emotional (and) visceral. They're just different DNA than engineering people," he said.
Roy Verley, who served as HP's director of corporate communications from 1989 to 1998, described the company as "a company of engineers by engineers that sold to engineers.
"The marketing was data driven as opposed to image driven,' he added.
A stronger consumer image became more important as HP expanded into that market in the '70s and '80s.
Efforts to build HP as a consumer brand gained momentum after Carly Fiorina took over as chief executive in 1999.
"The day that Carly became CEO, the company's marketing and science became equally important," said Rich Silverstein, co-chairman of Goodby, Silverstein & Partners, the San Francisco agency that worked on the HP campaign.
Marketing became even more important after HP's merger with Compaq Computer last year.
The company formed a centralized marketing group led by Winkler, a former Compaq executive who became HP's first chief marketing officer.
His team spearheaded a new branding campaign late last year under the slogan "Everything is Possible."
Earlier this year, the company unveiled a marketing push geared to business customers.
Part of the HP strategy has been to highlight its partnership with brand name companies, such as Starbucks, DreamWorks and Disney.
HP says the efforts have paid off, citing a Business Week survey in August that showed the company's brand rising in value during the past year.
Loeb said HP has embarked on a smart strategy.
But Peter Sealey, an adjunct professor of marketing at the Haas School of Business at UC Berkeley, said that compared with stronger consumer brands like Sony and Apple, HP has yet to come up with a coherent new image.
HP is also up against Dell's highly successful direct-sales business model and its recent push into new markets, including printers and consumer electronics.
"The (HP) brand has been diffused and lacking in meaning," Sealey said. "The underlying business model of Carly Fiorina in desktops and laptops is not going to sustain itself. Marketing will not solve that."
E-mail Benjamin Pimentel at bpimentel@sfchronicle.com.
(San Francisco) CNET News.com on Friday profiled San Diego-based video compression developer DivXNetworks, and the DivX codec that is increasingly being adopted by DVD player manufacturers and content owners as a supported format. Consumers have downloaded DivX more than 100 million times and encoded more than a billion files in the format, the company says. Additionally, consumer electronics firm Philips released a DivX-compatible DVD player in August, and the company recently inked a deal with an in-flight entertainment firm to encode 20th Century Fox movies in DivX for playback on airplanes.
http://news.com.com/2100-1025_3-5085986.html
http://www.divxnetworks.com
Meanwhile, airline shares are once again ascending. AMR Corp. is surging
on word it is holding discussions with Oklahoma state officials about a $6.5
million assistance program for American Airlines. Also, Bear Stearns
upgraded AMR to "outperform" from "peer perform." Separately, Merrill Lynch
raised its earnings forecasts on AMR, AirTran, Alaska Air Group, America
West Holdings, Delta Air Lines and Delta's ExpressJet Holdings and Southwest
Airlines.
United Airline’s Mary Rogozinski Elected WAEA President
Posted: 9/23/2003 9:22:16 PM
News Release
McLEAN, VIRGINIA, 23 September 2003 — Mary Rogozinski, manager of onboard systems planning for United Airlines, was elected president of the World Airline Entertainment Association (WAEA) for the 2003-2004 term. An international member organization, the WAEA represents approximately 85 passenger airlines and 250 airline-supplier companies committed to excellence in airline inflight entertainment and communications.
As WAEA President, Ms. Rogozinski will preside over a board of directors composed of key representatives of the airline, entertainment, aviation, communications, and electronics industries worldwide.
Amy McHaney, senior analyst, IFE hardware, for American Airlines, was elected WAEA Vice President. Sue Pinfold, senior manager entertainment for Spafax, was elected WAEA Secretary. Sylvia Arndt, CEO of Inflight Productions USA, Inc., sustains as WAEA Treasurer.
Airline and supplier-company representatives newly elected to the WAEA Board of Directors are: Christelle Cuenca, director of video services for DMX Inflight (Orange, California) and Maver Mayuga, product research and development for Philippine Airlines (Makati City, Philippines).
Re-elected and sustaining WAEA Directors are: Pablo Astudillo of Lan Chile Airlines, Arno Doerflinger of Austrian Airlines; Joan Filippini of DreamWorks SKG, Michael Freedman of Qantas Airways Ltd., Al McGowan of TEAC America, Inc.; Bryan Rusenko of Crest National Digital Media Complex, and Jim Snyder of Rockwell Collins.
The 2003-2004 WAEA officers and directors were elected by the WAEA membership on 12 September 2003 at the WAEA Annual General Meeting held in conjunction with the WAEA 24th Annual Conference and Exhibition in Seattle, Washington, USA.
A nonprofit organization founded in 1979, the WAEA is the official worldwide network representing approximately 85 passenger airlines and 250 airline suppliers and related companies committed to excellence in airline inflight entertainment and communications and the continual improvement of the airline passenger environment. The WAEA main headquarters is located in McLean, Virginia, USA.
The WAEA sponsors international conferences and exhibitions, educational workshops, technology meetings, industry forums, industry research, and the annual "Avion Awards" for excellence in inflight entertainment. The WAEA also develops recommended technical and operational standards and guidelines for the industry, and publishes industry periodicals.
For more information on the WAEA and the inflight entertainment and communications industry, please visit the WAEA website at www.waea.org.
Foiling Digital Pirates With Souped-Up DVDs
Scott Woolley, 10.03.03, 7:00 AM ET
Currently, the most popular way to download a few billion bits of data is to go online and request to have them delivered--hand-delivered, by the U.S. Postal Service.
That's how the more than 1 million subscribers of Netflix prefer to get their digital movies: contained on a DVD, delivered by a mailman. Netflix brags that on a busy day the 5 million gigabytes it delivers on DVD equal half the Internet's total traffic.
The Internet, despite being the obvious digital conduit into American homes, remains too narrow for most people to use as a movie delivery service. This is true despite the advent of legitimate Internet movie-delivery options and less than legal file-sharing options that now include pirated movies and TV shows along with pirated songs.
The legitimate options include Movielink, backed by MGM (nyse: MGM - news - people ), Viacom's (nyse: VIA.B - news - people ) Paramount, Sony Pictures (nyse: SNE - news - people ), Vivendi Universal (nyse: V - news - people ) and AOL Time Warner's (nyse: AOL - news - people ) Warner Bros. There's also The Walt Disney Co.'s (nyse: DIS - news - people ) newly launched MovieBeam. These legitimate services, plus public awareness campaigns and lawsuits, constitute the industry's anti-piracy strategy.
But the most effective defense against pirates may simply be the raw size of a digital movie. The size of a digital song (about 4 million bits or so) is the reason the music industry is having conniptions; the size of a movie (about 4 billion bits), is the reason the movie industry is merely worried.
To be sure, Hollywood's bulwark against piracy is being inexorably eroded by twin tech trends. Compression technologies are packing video into ever-smaller files. And, in fits and starts, Internet connections are getting faster. This week RCN (nasdaq: RCNC - news - people ) announced a service offering blazing 5 megabit-per-second download speeds, vaulting it to the head of the cable pack. Comcast (nasdaq: CMCSA - news - people ) and Adelphia Communications (otc: ADELQ - news - people ) have also recently announced plans to boost download speeds in many areas to the three megabit-per-second range.
But TV and movie producers have a weapon music executives don't. By increasing the definition of TV programs and movies--moving from broadcast TV quality to DVD quality to "high-definition video" and beyond--those producers can continue to stay one step ahead of online pirates. (Music services have tried offering higher-quality recordings, but few listeners notice the difference, and the file sizes still remain small enough to swap easily.) Hollywood is now planning a leap to improved DVDs that can store at least five times the 4.7 gigabytes a current disk holds. The added capacity would allow viewers to take full advantage of high-definition screens now on the market.
Super DVDs are only the first step. This week the Japanese Broadcasting Association trumpeted a concept that's a leap beyond today's outer limits of high definition. Its new prototype "ultra-high-definition" TV offers 4,000 lines of resolution, quadruple the number today's high-definition sets have. While still unmanageably large for a consumer gadget, the experiment proves that content producers have more options to help them stay ahead of the pirates.
Where will it all end? The human eye can transmit roughly 1 million pulses of information to the brain 200 times per second, the digital equivalent of 200 megabits of information. Today's HDTV runs at one-tenth that pace. Ultra high definition, however, approaches the limit of what the brain can visually process. The game of increasing quality to fend of piracy may work for a while, but not forever.
HUGE..DivX is ready for its sequel. Is Hollywood?
By Evan Hansen
CNET News.com
October 3, 2003, 4:00 AM PT
Add your opinion
Forward in Format for
Digital media upstart DivX Networks may yet see a Hollywood ending for its controversial video format.
The San Diego-based company is perhaps best known among file swappers, who for years have used its highly regarded compression technology to speed video downloads--with or without the permission of copyright holders. Now DivX is hoping for a sequel as the technology partner of choice for film studios and consumer-electronics makers working to bridge the Internet and television.
The tiny company, which has so far announced a mere $11.5 million in venture capital funding, might just pull it off. By this time next year, DivX-compatible DVD players will likely be standard fare at consumer-electronics outlets in the United States, increasing the pressure on industry giants such as Microsoft and RealNetworks to get their own formats off the PC and onto one of the hottest-selling consumer-electronics devices around.
DivX is still only a little way along the road to media redemption, however, and could yet falter. But the company is beginning to tout some successes, having recently inked a deal with consumer-electronics giant Royal Philips Electronics for a DivX-certified DVD player, now available in Europe. It has also partnered with News Corp.'s 20th Century Fox to encode films for a newly launched airline movie-rental service.
"DVD players are considered the killer app for convergence, and we're way ahead of our competitors on this front," DivX CEO Jordan Greenhall said in a recent interview.
DivX's partnerships come as entertainment companies and device makers look to new video formats developed for the Internet as potential glue to connect the PC to the TV screen--an arena that pits the DivX technology against a host of offerings from much-larger rivals, from various flavors of the proposed MPEG-4 video standard to proprietary technology from Microsoft to RealNetworks' multiformat Helix platform.
With broadband connections and wireless networking taking off among consumers, the PC is poised to assume the role of personal media file server, pumping out music, photos, television programs and other entertainment offerings to devices scattered around the home. Few devices currently support Internet video compression formats for television, but that's changing fast, analysts said.
"This fall, you can already hook up your TV to your PC," said analyst Richard Doherty of The Envisioneering Group. "By Christmas, even people who don't have a geek in the family will be able to do it, too."
A TiVo-like digital video recorder on steroids
Like its rivals, DivX offers a huge improvement in compression compared with the current TV video standard, MPEG-2, which is used by most broadcasters and in most DVDs: Using DivX, a standard 4.7GB DVD can be squeezed down to about 700MB without significant loss of quality. (Microsoft and RealNetworks claim similar ratios.)
Using a DivX-compatible DVD player, consumers can playback files stored on their PCs, either through discs burned from computer files or by way of a direct connection such as an Ethernet port. That means hundreds of hours of programming could be stored and retrieved from a computer at will by consumers, creating a TiVo-like digital video recorder on steroids.
That's gotten the attention of consumer-electronics makers, who are looking for new ways to appeal to computer-savvy customers. DVD players have been among the most rapidly adopted consumer-electronics devices in history, with sales soaring from about 315,000 units when they debuted in 1997 to more than 17 million in 2002, according to the Consumer Electronics Association.
As DVD player sales have soared, prices have plummeted, from more than $500 seven years ago to well under $100 for a midrange product today. As a result, manufacturers of DVD players are eager to boost margins with new features. Many have already added audio support for the MP3 music format as well as for Microsoft's Windows Media Audio technology, allowing customers to play back music downloaded over the Internet on their stereo systems.
Denmark-based KISS Technologies released the first DivX-compatible DVD player in March, an Ethernet-connected device costing $299. Philips followed shortly afterward with the DivX-compatible DVD737, released in August with a retail price of 199 euros ($232).
PC retailer Gateway has also released a "connected" DVD player capable of fetching MP3 files or digital photos from one or more PCs over an Ethernet connection or Wi-Fi network.
The stakes are high for makers of standalone DVD players, which face plenty of competition from other devices that aim to bridge the gap between PCs and TVs--and could potentially make DVD players redundant.
This week, Microsoft unveiled partnerships with PC makers for its Media Center software, which supports a widescreen monitor for video playback and uses a TV-style remote control as well as a keyboard. Some models already sell for less than $1,000.
Apple Computer is banking much of its future on the Mac as the center of the digital consumer universe, with strong momentum in music through its iPod portable audio player and its iTunes Music Store. The company also offers home video production tools.
Sony has also bumped up the multimedia features of its Vaio laptops and PCs. In addition, top company executives have said they believe the TV will be the centerpiece of new digital entertainment, and recently released a digital TV in Japan with a direct Internet hook-up called the Altair.
Game consoles that support DVD playback, such as Sony's Playstation 2 and Microsoft's Xbox, and digital home theater projectors could also do the job.
The race to the living room
"We used to talk about a last-mile problem," said Kevin Foreman, general manager for RealNetwork's Helix platform. "Now it's the last-room problem: how to get from the den to the living room. There are a lot of devices in the running."
Analysts said DVD players appear promising as a short-term favorite in the convergence race due to the existing support for the devices in most television sets and the price.
If that's true, DivX Networks may be in the pole position among video technology developers in the race to the living room.
DivX is already a hit with consumers, who have downloaded more than 100 million copies of the software and encoded more than a billion files in the format, according to the company.
That popularity has helped attract consumer-electronics makers, who have less to lose from piracy than content owners. DivX CEO Greenhall said the company has been working for the past two years with leading DVD chipset makers, signing up 15 partners so far that either are now, or soon will be, shipping products.
Those deals are set to pay off with a flurry of new DVD players that support the DivX format, said Envisioneering's Doherty, who said generic Chinese contract manufacturers are slated to begin production on behalf of some well-known brand names, such as Apex.
That's put DivX well ahead of its main rival, Microsoft, which has announced development deals with several DVD chipset makers but has no products that support its video technology on store shelves. The first such device is expected from Samsung in the first quarter of 2004, said Jason Reindorp, group manager for Microsoft's Windows Digital Media division.
Reindorp denied that Microsoft has had trouble getting consumer-electronics manufacturers to support Windows Media, pointing to new licensing terms unveiled in January that he said have smoothed adoption of the format. In all, some 350 devices currently on the market support Windows Media audio technology, he said, and dozens more are in the pipeline.
"Our focus has been not only on the core format but the whole media ecosystem," Reindorp said. "Specifically, we are making sure that our technology gets deployed as broadly as possible so that as many people can use it as possible. Broadcasters are just as important as the (consumer electronics) makers, and we've worked very successfully in this area."
Envisioneering's Doherty said Microsoft's successes until now have been on the audio side and not on the video side.
"Windows Media costs more than DivX, and it requires a lot more computing overhead, which makes it more difficult to design chipsets to support it," Doherty said.
Microsoft could face another problem on the consumer-electronics front: Linux. Doherty said the vast majority of new network-connected devices will likely use the open-source operating system over Microsoft's OS for devices, Windows CE. But he added that it's too soon to count the software giant out. With an updated version of Windows CE in the offing, Microsoft "appears to be gathering for a second wind," he said.
RealNetworks has also announced chipset makers that plan to support its video technology, but no Helix DVD players are currently on store shelves. RealNetworks' Foreman said the first devices may be available in the first quarter of 2004, at the earliest.
The DivX files
Like many popular technologies that take on a life of their own, DivX was developed to solve a particular problem faced by its creator. Jerome Rota, more famously known under his online moniker "Gej," wanted to compile a portfolio of his work, but he couldn't find a way to compress it and transmit it in the popular AVI (Audio Video Interleaved) file format.
So he tinkered with a Microsoft program to make it AVI-compatible and sent the technology to a friend via an IRC (Internet Relay Chat) room. Soon he was deluged with tens of thousands of requests.
Gej has become something of a cult hero in the four years since he created DivX--especially among the file-swapping underground. The name itself (originally spelled "DivX") is a sly poke at early failed efforts by the movie studios to market copy-proof versions of videos, also known as Divx.
Greenhall tracked down Gej and persuaded him to help create a company based on the technology.
Greenhall said the company re-engineered the original DivX code in a clean-room to address any questions over the legitimacy of its software, which has been clouded by allegations that it was originally based on Microsoft code.
"DivX code is clean," Greenhall said. "That happened even before DivX was a company. In any case, it's not clear that any intellectual property issues were raised."
Aside from competition from Microsoft, DivX's biggest hurdle could well be mending fences with content owners who have long equated its technology with Internet piracy.
Microsoft is the largest technology presence in the world of legally sanctioned Internet video download services, powering studio-backed ventures such as CinemaNow and MovieLink, as well music videos on sites such as Yahoo's Launch service. Rival RealNetworks remains a force in Internet streaming through its RealOne service, but has focused on live sports programming and news rather than Hollywood.
DivX has actively courted studios, developing anticopying controls and seeking to present the face of a fully reformed citizen. But it remains an outsider.
"A huge amount of personal content is encoded in DivX--more than Windows Media," Envisioneering's Doherty said. "The dark side is that not a lot of that is legal. DivX is the lingua franca of movies that (Motion Picture Association of America CEO) Jack Valenti has a heart attack over."
DivX counters that its persistence in courting copyright holders is beginning to pay off, pointing to a deal earlier this month with Tacoma, Wash.-based airline movie-rental service APS. The service launched using DivX to encode programming provided by 20th Century Fox and a bevy of other content owners. Alaska Airlines has agreed to purchase 1,000 of the company's digEmedia players, which store up to 30 full-length movies and other content.
That follows on several smaller deals with alternative film distributor Strand Releasing and The Jim Henson Co., which used DivX code for a Muppets DVD project about two years ago.
"Senior media executives have been concerned about using DivX technology because of its history," DivX's Greenhall conceded. "The Fox deal is a first toe in the water...It's a political sign of detente."
Yet Another Outlet for Digital Music
By Cade Metz
October 2, 2003
September was not a good month for peer-to-peer file sharing services like Kazaa and Morpheus. On September 8, the Recording Industry Association of America (RIAA) sued 261 ordinary American computer users, accusing them of using such services to illegally distribute and download copyrighted music over the Internet. Two weeks later, BMG Music, one of the RIAA's member companies, released a music CD with copy protection, preventing users from uploading the CD to peer-to-peer services.
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And then this past Monday, September 29, Srivats Sampath, former president and CEO of McAfee.com, announced a new alternative to services like Kazaa and Morpheus. Mercora, due to launch early next year, will be an online marketplace where individual Internet users and businesses can come together to buy and sell digital songs. Much like Apple's iTunes and RealNetwork's Rhapsody, online services where you can purchase songs for a small fee, Mercora will let you download music without sparking the ire of the RIAA.
The difference between Mercora and existing for-pay online music services is subtle. With iTunes and Rhapsody, the operators license songs from record labels and independent artists and then sell those songs to individual users. Mercora, by contrast, will simply provide the technological means by which labels and artists can themselves sell digital songs to individual Internet users.
The Changing Face of Online Music
The RIAA is Full of Hot Air
RIAA Declares War: Change Needed
What Does DRM Really Mean?
"Services like iTunes are the Amazon.coms of the online music world. They're just e-tailers that distribute music," says Sampath. "The closet analogy I can make with Mercora is that we're trying to be the eBay of online music, bringing together buyers and sellers in a frictionless online environment."
Why would a major record label go to the trouble of selling songs over Mercora rather than simply licensing them to iTunes or Rhapsody? "They also get a very targeted online marketing framework," continues Sampath. "If Universal is coming out with a new Sting album, [it] can have Mercora send a message about the album to every user on the network who has ever downloaded a Sting song or a Police song."
Individual sellers will also be able to use the marketplace. You, as an individual, won't be able to sell digital songs (this would run afoul of the law; you don't own the copyrights). But you will be able to sell used CDs, concert tickets, and the like.
Will Mercora eat into the 60-million-person audience currently commanded by the peer-to-peer file sharing services? That remains to be seen.
According to Internet research firm Nielsen//NetRatings, when the RIAA first announced in June that it would be suing individual file sharers, traffic on services like Kazaa and Morpheus dropped by 15 percent over the following week. And a survey performed by market research company Music Forecasting after the September lawsuits claimed that sixty 60 percent of people who have previously downloaded music say they will be downloading fewer free songs from now on.
The peer-to-peer services continue to fight the RIAA in court and in Congress, but most industry pundits agree that many average users will gravitate from the peer-to-peer services to alternatives like iTunes or Mercora over the coming months.
Film tech group to pool digital protection patents
Thursday October 2, 2:00 pm ET
By Lucas van Grinsven, European Technology Correspondent
AMSTERDAM, Oct 2 (Reuters) - A film technology group said on Thursday it wanted to collect all essential patents that can protect digital content such as music and movies, in an attempt to boost adoption of new distribution models over the Internet.
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Currently, it is not clear which companies own these patents. The uncertainty makes film and music publishers cautious to start selling their products in new digital ways.
The call for the patents was made by MPEG LA, which already offers all essential patents for the international digital video compression standard known as MPEG-2, used in DVDs.
"A patent portfolio license will accelerate market development by providing ready access to the essential technology," MPEG LA said in a statement.
MPEG LA hopes to have collected all essential digital rights management (DRM) patents in early 2004 and start licensing them later that year.
DRM allows companies to give people certain rights and withold others. For instance, a lawyer could send a draft letter to a client, but restrict that client from forwarding or printing it.
DRM can also arrange for songs to disappear from a PC after a certain time, or limit the number of copies that can be made.
Companies supporting the initiative include Netherlands-based Philips (Amsterdam:PHG.AS - News), Europe's largest consumer electronics maker, which hopes to sell more of its new digitally connected products if more films and music become available over the Internet.
"There's no clarity at the moment who owns the patents. It makes music and film publishers reluctant to move," said Ruud Peters, chief executive of Philips Intellectual Property and Standards.
Philips expects to bring patents into the pool, he said.
InterTrust, a company jointly owned by Philips and Japan's Sony Corp (Tokyo:6758.T - News), also has a large set of patents on digital rights management.
The companies pushing the initiative believe it is the first time patents are pooled before a standard has even been set.
Although the patent portfolio is not aimed at creating an open standard for the entire music, film, and technology industry, it should assist plans to come to an open standard, MPEG LA said.
At the moment digital rights, as well as many codecs which compress content for faster delivery over the Internet, are proprietary. It prevents consumers buying music on the Web and play the acquired songs on any device.
Call to arms: new group seeks to unleash promised digital revolution
By Junko Yoshida
EE Times
October 2, 2003 (1:32 p.m. ET)
PARIS — If the founder of MPEG has his way, a call to political action might drive engineers from their ivory towers to grapple with knotty political issues that have slowed the progress of a promised digital media revolution.
Leonardo Chiariglione, founder of Moving Picture Experts Group (MPEG), said this week that a new international group of experts, participating from 21 countries, has completed a document called The Digital Media Manifesto. It spells out both political and technical actions needed for a global digital media industry to flourish.
Frustrated with the digital media logjam that has held back the introduction of commercially viable digital content, the Manifesto's authors hope to use it as a springboard for organizing a non-profit group called Digital Media Project (DMP). the group is scheduled to begin work Jan. 1, 2004.
Despite the promise of digital media, Chiariglione said the "potential is being stifled by untapped technology, illegitimate businesses and legitimate business models that are money-losers for everybody involved."
Jordan Greenhall, founder and chief executive of DivXNetworks, one of the Digital Media Manifesto contributors, said the new Digital Media Project differs from earlier efforts. First, "it has at its core the recognition that digital media has so far failed." He added that the new group's "heart is this recognition, and the determination to change that by tracking down all of the reasons for this failure to root."
Greenhall also stressed the cross-disciplinary nature of the new group. "Too many global initiatives are insular."
Most of the digital rights management initiatives (DRM) launch so far tend to be "business specific," said Chiariglione. "MPEG-21 develops technology components [and the] Digital Media Project integrates the system. These are different functions."
Stressing that the group's DRM platform will be business agnostic, Chiariglione added, "The Digital Media Project takes into account the user and the rights holders with their expectations based on decades of actual use of media to design an interoperable DRM platform."
Perhaps the biggest difference in the Digital Media Project is its determination to tackle policy issues head on. Although policy issues may appear intractable, Greenhall said, "they have to be solved."
He said the new group "can bring a broad and experienced view of policy issues from a global perspective."
The policy statement stresses acting on two fronts — technical and legal — to break the digital logjam. Efforts to break the stalemate "have failed because of fragmented efforts stemming from beliefs that law alone or technology alone could do the job, leaving the business players to sort out the mess," it states. "What is needed is synergistic actions on both the legislative and technological fronts."
The group advocates ensuring basic user rights, phasing out legislative compensation for use of recording equipment and media for private copying and revising standardization and licensing processes.
The group also hopes a DRM platform should spell out traditional user rights and in the Digital Age. The Manifesto argues that consumers should not have to buy incompatible devices for similar services and that content creators should be able to access the DRM platform.
Chiariglione stressed that the Project will not be involved in implementing digital rules. For example, "the DRM platform will be designed to technically support rights and usages traditionally enjoyed by end users. However, it will be the task of individual jurisdiction [to decide] which of those rights to mandate."
According to a spokesman for the new group, dozens of individuals have been involved so far but no companies. "The Digital Media Manifesto was open to individuals. DMP will be open to company membership."
Since it's a slow day...Mechanical Engineer
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Posted: 9/19/03
Dell DJ: An e.Digital Odyssey?
Posted Oct 01, 2003 - 08:59 AM
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iPoding posts an nice piece of detective work, attempting to explain which MP3 player is actually being rebranded by Dell for the Dell DJ Audio Player.
According to the pieces of the puzzle they've put together, they feel that it is most likely an e.Digital Odyssey 1000. And yes, the Odyssey does look like the upcoming Dell DJ.
Here are the features... of the Odyssey:
20 GB hard drive holds up to 500 CD’s worth of music
High-speed download (Up to 8 MB per second with USB 2.0*)
MP3 & Windows Media™ music file playback
VoiceNav – Just Say It to Play It!
Anti-skip Protection - Up to 8 minutes
FM tuner w/ 12 Available station presets
Rechargeable, replaceable Li-Ion battery plays up to 12 hours
Easy-to-use scroll wheel
Digital voice recorder
Built-in mic for recording lectures, meetings
Be your own DJ with playlists
Normal, shuffle, repeat & intro play modes
Large, Blue-Green backlit LCD
Programmable equalizer
Retail Price: $349
The microphone and voice recording would be a nice touch, if the Dell DJ also comes with these features. WMA/MP3 Support is no surprise.
Also noted by an anonymous tip to iPoding is that the Dell DJ "is only a little bit thicker than the 1st gen iPod, and wider and taller by a few mm."
'SONG PLAYS VEGAS!' Delta's Song Debuts New York/JFK to Las Vegas and Boston to Las Vegas Service
NEW YORK--(BUSINESS WIRE)--Oct. 1, 2003--
Unique Amenities - Video on Demand, Live Satellite TV - Will Enrich Travel Experience and Fit Customers' Individual and Changing Needs
Song(TM) (www.flysong.com), Delta Air Lines' new service developed to change customer expectations for high-quality, low-fare air travel, begins service between New York/JFK and Las Vegas and between Boston and Las Vegas on Wednesday October 1, 2003.
The first flight from New York departs JFK at 9:15 p.m. and is scheduled to arrive in Las Vegas at 11:45 p.m. The first flight from Las Vegas to JFK departs on October 2 at 12:35 a.m. and is scheduled to arrive at 8:15 a.m. The first flight from Boston departs at 6:15 p.m. and is scheduled to arrive in Las Vegas at 9:03 p.m. The first flight from Las Vegas to Boston departs at 9:55 p.m. and is scheduled to arrive on October 2 at 5:48 a.m. Song will initially offer one daily roundtrip flight between JFK/Boston and Las Vegas. Song also serves Las Vegas from Ft. Lauderdale and Orlando.
"We're excited to offer Song's high-quality, non-stop service and low fares to customers traveling between New York, Boston and Las Vegas, " said John Selvaggio, president of Song. "Song has been growing quickly and will continue to expand in order to bring its unique service and innovative approach to travelers in markets across the country."
Song provides direct non-stop service between major cities in the Northeast United States and key Florida leisure destinations, plus Atlanta, Los Angeles, Las Vegas and San Juan. Utilizing a fleet of 36 199-seat, all-coach Boeing 757s, Song plans to offer 142 daily non-stop flights by the end of October. Additionally, Song presently serves all three New York metro area airports - JFK, Newark and LaGuardia - the only low-fare service to do so.
Song will meet air travelers' individual and ever-changing needs through a variety of innovations, several of which are industry firsts. These include:
-- Regular updates to amenities and services based on customer feedback. Customers have the ability to vote on products and services via the Song Web site: www.flysong.com.
-- Web site to allow passengers to find low fares across a range of dates. When searching for flights at flysong.com, customers can instantly view additional low fares by selecting a wider range of dates rather than starting the search process from the beginning, for an experience that offers more information and flexibility.
-- The most advanced in-flight entertainment technology available (starting installation in October 2003). Song is partnering with Matsushita Avionics Systems and EchoStar Communications Corporation (NASDAQ:DISH) and its DISH Network(TM) satellite TV service to provide a complement of on-board amenities, which will include:
-- Personal video monitors at every seat with "touch screen" technology and credit card "swipe" capability.
-- Live, all-digital satellite television programming from DISH Network.
-- Digitally-streamed MP3 audio programming, which will allow passengers to create a personal play list from an extensive library of audio files.
-- Pay-per-view programming available on demand, which will feature a wide-range of current offerings for all ages.
-- Multi-player interactive games that allow play between passengers.
-- Interactive iXplor moving map program with zoom capabilities and points of interest information.
-- Connecting gate information broadcast directly to personal in-seat video monitors.
-- Expandable in-flight entertainment technology, which will facilitate the opportunity to integrate additional services in the future such as in-flight shopping and on-line product purchase capabilities.
-- Gourmet food selections created by Song Consulting Executive Chef Michel Nischan, including:
-- Shaved Turkey on Foccacia
-- Rock n' Roll Veggie Sushi
-- Greek Salad
-- Premium branded beverage and food choices available on-board for purchase, including:
-- The "Song Sky High Martini" featuring Finlandia Vodka, with an olive, served in a signature martini glass.
-- The "Song Twisted Madres," a Southern Twist shaken with cranapple and orange juice.
-- Lender's bagels
-- Yoplait and Stonyfield Farms organic yogurts
-- Fresh, seasonal organic fruit
-- Onboard credit card acceptance for in-flight service items.
-- Complimentary Coca-Cola(R) products, including Dasani(R) water.
-- A simple unrestricted low-fare pricing structure with most one-way fares expected to be no more than $299.* Song will provide customers simple, user-friendly pricing options, including 14-day, 7-day, 3-day, walk-up fares and sale fares. Fares will not require a Saturday-night stay.
-- 33 inches of seat pitch, or legroom, throughout the entire aircraft. This is the most pitch available from any low-fare service's fleet and more than most major carriers.
-- Frequent flyer benefits through the Delta SkyMiles(R) program and other partner programs.
-- Simple, one-step connections with Delta's worldwide service, including interline with SkyTeam(TM) members and other partner airlines.
"Our customers will play a major role in the development of Song," said Selvaggio, a 30-year veteran of the airline industry. "They will be able to vote products and services onto the aircraft. And, with the many entertainment choices offered on Song, they will be able to make each flight what they want it to be."
Selvaggio added, "We've put a great deal of thought into everything we will offer, understanding that each time a person flies, he or she has different expectations. They may be on business and want the ability to prepare for a meeting. They may be flying with children and need something to keep them entertained. Or they may be flying for pleasure and are looking for a way to relax on board. We will be able to serve each of those customers on Song, on every flight."
Assets Unique Among Low-Fare Segment
Technology: Unlike its competitors, Song has the advantage to leverage Delta's world-class technological infrastructure to create the world's first all-digital airline product, thereby offering customers a wide-range of conveniences, including:
-- Dedicated Web site - www.flysong.com. On the Web, Delta's technology infrastructure will support flysong.com, a simple, easy to use, information-rich site on which customers can purchase tickets, find low fares, check-in for flights and print boarding cards from the convenience of their home or office.
-- First-ever book to ticket automation. Over the phone, customers will be able to book and complete purchases directly with Song through voice-recognition technology.
-- Self-service kiosks. At the airport, self-service kiosks will continue to help customers avoid lines by electronically executing high-demand transactions.
-- Efficient gate and boarding. At the gate, exclusive gate information displays will ensure that customers remain informed up-to-the-minute. Additionally, gate and boarding technology will facilitate efficient, expedited boarding.
Cost savings through higher aircraft utilization: Delta has developed a process that facilitates Song's aircraft utilization rates to be among the highest in the industry - 12.7 hours per day, a 22 percent improvement over mainline Delta's average 757 aircraft.
"Song is an aggressive initiative to compete in the low-fare market," concluded Selvaggio. "We will not only offer low fares but lower operating costs, so we can be successful where previous attempts by other major airlines have failed."
All Song flights are operated by Delta Air Lines. - Song tickets can be purchased by visiting flysong.com or by calling 1-800-FLY-SONG (1-800-359-7664). (*)Terms and Conditions
Restrictions: Tickets are non-transferable. Seats are limited and fares may not be available on all flights. Tickets: Fares are one way. Round-trip purchase is not required. Except for tickets purchased on flysong.com ticketing must be competed by midnight one day after the reservation is confirmed or at least 14/7/3/0 days prior to departure, whichever pricing selection occurs first. See flysong.com for online ticket purchase requirements and restrictions. Min./Max. Stay: None. Cancellations/Refunds/Changes: Fares are nonrefundable. Delta may permit you to apply a portion of the fare value to future travel upon payment of applicable fees and fare difference, otherwise the ticket will have no value. Contact a Song agent or visit flysong.com for details. Taxes/Fees: Fares do not include a USD 3.00 Federal Excise Tax that will be imposed on each flight segment in the passenger's ticketed itinerary. A flight segment is defined as a takeoff and a landing. Fares do not include Passenger Facility Charge(s) of up to USD 18.00, depending on itinerary, and September 11th Security Fee of up to USD 10.00 per round-trip. For travel to/from San Juan, PR, a USD 13.40 International Departure and Arrival Tax applies. These fees are the responsibility of the passenger and must be paid at the time the ticket is purchased. Miscellaneous: Fares and rules are subject to change without notice. Other restrictions may apply.
(R) "Coca-Cola" and "Dasani" are registered trademarks of The Coca-Cola Company and used with permission.
Contacts
Dan Klores Communications
Public Relations, 212/685-4300
Sean Cassidy, 212/981-5233
Karen Silberg, 212/981- 5232
owd3, one wouldn't know because the link (photo) you provided would not open at least for me. How about making sure that photo comes up so we can all get a look at it....
Software jungle challenges auto engineers
By Christoph Hammerschmidt
EE Times
October 1, 2003 (1:21 p.m. ET)
ArchivesBADEN-BADEN, Germany — Quality software alone isn't enough to tame the exponentially increasing complexity of auto electronics. Instead, experts at a conference here this week demanded implementation of data and interface standards along with specs for manufacturing processes.
Electronics represents up to 90 percent of innovations expected to be made in automotive engineering in the coming years. Increasingly, auto electronics are synonymous with software. Experts estimate that by 2010 software complexity in cars, expressed in the number of lines of code, will increase 100-fold.
Alberto Sangiovanni Vincentelli, professor of electrical engineering and computer science at the University of California, Berkeley, told the Motor Vehicle Electronics conference he is concerned about escalating complexity. In the system software of one vehicle OEM, for example, he counted 500 calibration parameters. “This is nothing to be proud of,” Vincentelli said. “It's a sign of illness.”
Software complexity springs from several sources. For instance, the number of electronic control devices grows constantly. But space constraints, power needs, communication networks and weight all place limits on the expansion of control devices.
Additional functions, according to experts at the conference, must be implemented within the existing control devices. Doing so, however, will force designers to both drop the link between control-device hardware and its function as well as accept a further increase in complexity.
Burdening an existing control device with additional tasks could become a problem for the timing between systems. While most operate in real time, the complexity problem cannot be overcome by simply generating more code.
Vincentelli added that it remains difficult to efficiently partition software, — including application code, communications links, drivers and operating systems. Hence, car makers are increasingly becoming systems integrators.
This emerging role has fueled demands modularization and standardization as a way to get development and manufacturing processes under control.
Play, or pray?
Auto makers remain perplexed. “Some of them can do it, and some can't,” said senior developer at Audi. But Vincentelli offered another explanation: “Embedded software is not really software. Embedded software is a union of hardware and software,” he said. The challenge of modularizing software for embedded systems would therefore far exceed the strict definition of an interface," he continued. Thus, "one cannot really speak of plug-and-play when it comes to embedded software systems — at best it is “plug-and-pray.”
Andreas Eppinger, director of IBM's Global Automotive Software Business, also said plug-and-play often does not work. Frequently, systems don't work even though during troubleshooting each component appears to be error-free. “The diagnosis 'no trouble found' is a huge problem,” said Eppinger. “Obviously, something is wrong with the way that the components work together.”
With auto hardware well under control, according to Eppinger, problems are usually blamed on software. This fuels the belief that problems can be solved merely through high-quality code generation. The problem is deeper, Eppinger said. "This problem is not a question of software quality, it is a question of systems engineering."
Along with modularization, auto engineers have focused on reusable software as one way to handle complexity. The idea has yet to catch on with suppliers, however. “This requirement makes the suppliers afraid that they will become interchangeable,” said Wolfgang Runge of ZF Friedrichshafen AG, a supplier of driveline and chassis technology. Reusable software is "a must if you want more and better electronics in vehicles.”
Another problem worrying designers is the multitude of suppliers and software versions. Volkswagon's Fabian Wolf said a linking process is needed to integrate software from various suppliers.
Even at the process-management level, too many software versions is a problem for designers. According to Eppinger, the key to managing proliferating software for individual control devices is to use a deployment manager. Here, too, software reuse plays a role.
Hence, important policy decisions must be made by the industry. “Either each OEM needs to develop it for itself, or there will be an open, shared infrastructure,” said Eppinger. IBM has already established a strategic partnership with BMW to explore standardization. One goal is to create a standardized data model.
Creative Launches Stylishly Designed Rhomba Brand MP3 Players
Wednesday October 1, 11:49 am ET
Super Compact Creative Rhomba 128MB and 256MB Digital Audio Players Feature A Large Split Screen LCD for Incredibly Easy Music Navigation
MILPITAS, Calif., Oct. 1 /PRNewswire-FirstCall/ -- Creative (Nasdaq: CREAF - News), a worldwide leader in digital entertainment products for PC and notebook users, today announced the new Rhomba(TM) brand of flash based digital audio players that are high on style and features. The Creative Rhomba features a large split screen LCD comprised of two windows that show clear easy-to-read content for incredibly easy music navigation, an FM tuner and recorder so that users will never have to miss their favorite radio programs, and a built-in microphone for voice recording. The ultra-compact Creative Rhomba connects via USB to a notebook or desktop for true drag and drop simplicity of any file type, and even conveniently charges via USB. The Creative Rhomba is now shipping and will be available with 128MB for US$149.99 and with 256MB for US$199.99.
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"With the launch of the Creative Rhomba, Creative adds yet another brand and design alternative to its family of high-quality and award-winning digital audio players," said Lisa O'Malley, senior brand manager for portable audio at Creative Labs, Inc. "Creative is committed to offering consumers the most style and usage options when choosing an MP3 player -- with the Rhomba's all-encompassing feature set and slick style, it's sure to be a holiday hit."
The Creative Rhomba features one of the industry's largest LCD screens on a flash-based player. Comprised of two windows, the LCD displays a cool music visualizer, as well as song title, track number, play time and play mode, such as shuffle or resume. Preset equalizer settings for jazz, pop, rock, and classic can also be accessed, or users can adjust the bass and treble to create their own custom settings for complete audio control. The control buttons on the Creative Rhomba are carefully laid out to make all features selectable when the system is being held in one hand, providing fast access to menu options.
Weighing in at only 1.8 oz., the Creative Rhomba is so light it can be taken wherever one goes, and with its solid-state construction the user will never worry about music skipping during playback. On-the-go music listening can last up to 10 hours on one charge of the player's built-in lithium-ion battery. Creative Rhomba sets itself apart with its ability to also charge via USB so that users will never have to worry about purchasing multiple batteries or bother with carrying around a power adapter.
Thanks to the FM tuner and recorder, the Creative Rhomba can keep users abreast of their favorite radio shows and news, and can even record their favorite programs such as ball games or talk shows. The Creative Rhomba 256MB player can also store up to 16 hours of voice recording -- perfect for recording hours of notes, lectures, meetings or quick reminders.
The Creative Rhomba 256MB can store up to eight hours of high-fidelity music, while the Creative Rhomba 128MB can hold up to four hours (WMA/64kbps). Both versions are not only rich in features and style, they also offer outstanding audio quality with a signal-to-noise ratio of up to 90dB. With the newly designed Creative Rhomba, users will dance for hours in style.
Although the Creative Rhomba does not require software, the player comes bundled with Creative MediaSource(TM) for consumers who may have never used MP3 or WMA files. MediaSource is an easy-to-use full MP3 and WMA ripping and organizing application that includes everything needed to convert a CD collection into a portable digital library that can be transferred easily to the Creative Rhomba and taken wherever one goes.
The Creative Rhomba also comes bundled with stereo earphones and a convenient neck strap. More Creative Rhomba information is available at www.creativelabs.com.
About Creative
Creative is a worldwide leader in digital entertainment products for PC users. Famous for its Sound Blaster® sound cards and for launching the multimedia revolution, Creative is now driving digital entertainment on the PC platform with products like its highly acclaimed NOMAD® Jukebox. Creative's innovative hardware, proprietary technology, applications and services leverage the Internet, enabling consumers to experience high-quality digital entertainment -- anytime, anywhere.
This announcement relates to products launched in the United States. The product names, prices and availability are subject to change without notice and may differ elsewhere in the world according to local factors and requirements.
NOTE: Creative, Rhomba, MediaSource and Sound Blaster are trademarks or registered trademarks of Creative Technology Ltd. in the United States and/or other countries. NOMAD is a registered trademark of Aonix and is used by Creative Technology Ltd. under license.
------------------------------------------------------------------------
Source: Creative Labs, Inc.
Email this story - Set a N
Clearly the Dell Digital Jukebox (DJ) is not a copy of any current player on the market (including those from both Creative and e.Digital/Digitalway). {pure speculation on someone's part here presented as obvious fact...clearly}
some EDIG non-investors seem to want to discredit that belief by pointing out ways that the Dell DJ has some apparent dissimilarities with e.Digital's current hard-drive based players.
I'm no EE, but I think moving the physical locations of nearly all of the controls of the players is a bit of a stretch in the case of the Creative players...hence it seems much more likely that the Dell player is a edig design or perhaps iRiver or whoever...but imo not Creative.
Traffic on P2P Services Down After Lawsuits - Data
23 minutes ago
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LOS ANGELES (Reuters) - Lawsuits launched against individuals for illegal file-sharing appear to have tempered activity on the more popular peer-to-peer networks, new U.S. research released this week shows.
Nielsen//NetRatings, which tracks Internet usage, said on Tuesday it found a 41 percent drop over the last three months in the audience for Kazaa, the leading music file-sharing service.
On Sept. 8, the Recording Industry Association of America (news - web sites) (RIAA), a group representing big labels like AOL Time Warner Inc.'s (NYSE:AOL - news) Warner Music and Vivendi Universal's (NYSE:V - news) (EAUG.PA) Universal Music Group, sued 261 people for illegal file-sharing.
"The RIAA is clearly sending a strong message to American Web users and the message appears to be working," said Greg Bloom, an analyst with Nielsen//NetRatings.
"With hundreds of individuals facing real lawsuits, the threat to music file-sharers is very serious," he said.
Since the week ended June 29, traffic to Kazaa has fallen 41 percent to about 3.9 million unique visitors from 6.5 million in the week ended Sept. 21.
Traffic to Morpheus fell to 261,000 unique visitors in the week ended Sept. 21 from 272,000 in the week ending June 29.
Meanwhile, the RIAA this week reached settlements with 64 people, including 12 with people not yet sued.
On Monday, several peer-to-peer networks unveiled a code of conduct to encourage responsible behavior among the millions of users and asked Congress to figure out a way record labels and other copyright holders can be reimbursed for the material traded online.
Meanwhile, other data released on Tuesday showed that as of August a vast majority of teens believed downloading music for free was morally acceptable.
The August 2003 Gallup Poll Tuesday Briefing Youth Survey, a premium service offered by the Gallup organization, found 83 percent of 517 teens, aged 13 to 17, found downloading free music was morally acceptable.
Gallup officials noted the RIAA's lawsuits in September may have raised awareness of the issue.
"We have to be a little cautious in interpreting this, but it does show that off the top of their heads in August, the vast majority of teenagers said, 'Sure, why not? It's perfectly moral to download,"' said Frank Newport, editor-in-chief of the Gallup Poll Tuesday Briefing.
"We do poll teenagers regularly and I think we'll use exactly the same question again soon and see if things have changed," he said.
Airlines see IT as recovery tool
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Breaking news
Today's top news.
By Denise Dubie
Network World Fusion, 09/29/03
A recent survey of airline carriers shows that while the industry overall remains focused on cutting costs, investment in IT has increased slightly as operators recognize IT as critical to future profitability.
The Airline IT Trend Survey, the results of which were released last week, was conducted during the first half of 2003 and includes responses from 107 carriers. The respondents include airlines in the top 200 mainline carriers, as well as key players in cargo, charter and regional markets. The firth annual survey was conducted by SITA and Airline Business magazine.
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Among the results, the survey shows that recovery for the airline industry will almost depend on IT to help companies cut costs. Lack of investment, scarcity of skilled people and a lack of board support are the top obstacles, consistently reported over several years. On the whole investment appears to have held firm, but actions have been taken to tighten control on expenditure with some projects being deferred. The optimism for increased budgets has gone as most respondents feel they will get the same or less in future.
More than 20% of respondents said they planned to spend 3% of their revenue on IT and telecommunications, and another 32% planned to spend just 2%. While spending plans are down, respondents agreed that not investing in IT is not an option. And as far as the type of IT projects to invest in, the IT function must help transform airlines -- improving operational efficiencies – with technology and processes. Airlines must change they way they handle IT, the survey says.
The survey shows airlines will continue to outsource airline specific applications; some 50% already do, and another 4% plan to in the next two years. Web hosting, network management and desktop management are also considered prime IT tasks for outsourcing. Also, 83% of the industry using application service providers for applications such as reservations, departure control/check-in and cargo reservations. These areas, plus frequent flyer applications and revenue accounting, will most like grow in the next couple of years, the survey says.
More survey results show that:
*
By the end of this year 25% of airlines will offer e-mail and 22% SMS services to passengers onboard their aircraft.
*
More than 4,980 aircraft, about 43% of the world's commercial fleet, are flying with some form of In-Flight Entertainment (IFE), and approximately 3,300 aircraft have satellite communications ability.
*
Direct ticket sales through airline branded Web sites have doubled in the last 12 months to be worth approximately $50 billion per year and account for around 10% of total airline ticket sales.
Dueling Rappers Debate Downloading Music
LL Cool J Tells Congress He Supports Music Industry Moves Against Downloaders; Chuck D Disagrees
The Associated Press
WASHINGTON Sept. 30 — Rapper LL Cool J joined entertainment executives Tuesday in defending the music industry's lawsuits against hundreds of Internet users who illegally distribute music online.
"My question is, if a contractor builds a building, should people be allowed to move into the building for free?" the rapper, dressed in a black suit with an earring glistening in his right lobe, asked senators. "That's how I feel if I record a song or make a movie, and it zooms around the world for free."
Another rapper, Chuck D, founder of Public Enemy, testified at the Senate Governmental Affairs subcommittee hearing that people ought to be able to distribute the songs they want to hear on peer-to-peer Internet services, known as P2P.
"P2P to me means power to the people," said Chuck D. "I trust the consumer more than I trust the people at the helm of these (record) companies."
"LL's a staunch American," Chuck D added in a brief interview. "He's my man and all, man, but when you solely have an American state of mind, you're increasingly becoming a smaller part of the world."
The music industry's trade group, the Recording Industry Association of America, has filed 261 lawsuits against people it accuses of illegally distributing music online. The RIAA blames lagging CD sales on the downloading of music.
The subcommittee chairman, Minnesota Republican Norm Coleman, called the hearing to look into whether the recording industry's tactics were too heavy-handed.
"As a former prosecutor, I am troubled by a strategy that uses the law to threaten people into submission," said Coleman, a former roadie for the '60s rock group Ten Years After. Coleman referred to the rappers as "Mr. Cool J" and "Mr. D."
The RIAA's chairman and CEO, Mitch Bainwol, announced Tuesday that the group will send notification letters to encourage settlements before it files lawsuits.
On Monday, the RIAA said it had settled 52 of the 261 lawsuits. Defense lawyers familiar with some cases said payments ranged generally from $2,500 to $7,500, with at least one settlement for as much as $10,000.
One woman who settled her case told the subcommittee she was horrified when she learned that the RIAA had sued her and that federal law set penalties at $750 to $150,000 per song.
"I thought my life was over, and that I'd have to file for bankruptcy," said Lorraine Sullivan, a 28-year-old student at Hunter College in New York.
The RIAA agreed to settle her case for $2,500; Sullivan raised $600 from a web site she created, .
In testimony before the senators, Bainwol defended the lawsuits.
"The decision to move forward with legal action was a last resort," he said. "The market is just falling apart when you're competing against free. This was the last thing we had in our quiver."
Bainwol said the lawsuits could be avoided if peer-to-peer networks filtered copyrighted material from their sites.
"File sharing networks like Kazaa deliberately induce people to break the law," Bainwol said.
Alan Morris, executive vice president of Sherman Networks Limited, the owner of the Kazaa web site, said his company does not condone copyright infringement.
"But the issue here does not seem to be about copyright," Morris said. "It's about control of the Internet."
But Morris was evasive when Sen. Carl Levin, D-Mich., asked him about pulling the plug on users who downloaded copyrighted material.
Morris said the company lacked the capability to do that. Levin asked what the company would do if it had the capability.
"That's a hypothetical," Morris answered.
In a Gallup Poll released Tuesday, 83 percent of teenagers polled said it was morally acceptable to download music from the Internet for free.
Associated Press Writer Ted Bridis contributed to this report.
On the Net:
Recording Industry Association of America:
Subcommittee on Investigations: and click to Permanent Subcommittee on Investigations
Just thinking...it's not inconceivable that this Dell player could be using nearly the same Portalplayer platform as the Ipod with us as the technology integrators using mOS as necessary....hmmm
The Zen NX has exactly zero of the player controls on the front of the player, whereas the odyssey has a nearly superimposable set of controls with the DJ. Once more your slant is showing...
Music group settles with 52 file sharers
RIAA says 863 song swappers request amnesty
Tuesday, September 30, 2003 Posted: 11:41 AM EDT (1541 GMT)
WASHINGTON (AP) -- The recording industry says it has settled 52 of the 261 suits it filed against Internet users accused of illegally permitting others to download music from their computers.
The Recording Industry Association of America, which plans to file hundreds more lawsuits in October, did not specify how much it collected from the settlements it announced on Monday.
Defense lawyers familiar with some cases said payments ranged from $2,500 to $7,500 each, with at least one settlement for as much as $10,000.
No admission of wrongdoing
The settlements, which do not include any admission of wrongdoing, require Internet users to destroy copies of illegally downloaded songs and agree to "not make any public statements that are inconsistent" with the agreement.
The RIAA, the trade group for the largest labels, said one dozen other Internet users also agreed to pay unspecified amounts after they learned they might be sued. They had previously been notified by their Internet providers that music lawyers were seeking their names to sue and agreed to pay to avoid a lawsuit.
"The music community's efforts have triggered a national conversation, especially between parents and kids, about what's legal and illegal when it comes to music on the Internet," RIAA President Cary Sherman said in a statement. "In the end it will be decided not in the courtrooms, but at kitchen tables across the country."
Discouraging defense lawyers?
Just three weeks ago, the RIAA filed 261 lawsuits against what it described as "major offenders" illegally distributing on average more than 1,000 copyrighted music files each. Lawyers and activists said more settlements were inevitable.
Daniel N. Ballard, a lawyer whose firm is representing at least four defendants, said the settlement offers he was familiar with -- between $3,000 and $4,000 -- appeared aimed at discouraging Internet users from hiring defense lawyers.
"It's a small enough number that it doesn't make economic sense to hire an attorney to litigate these," Ballard said.
The RIAA also said 863 people have requested amnesty from future lawsuits, in exchange for a formal admission they illegally shared music and a pledge to delete the songs off their computers. The offer does not apply to people who already are targets of legal action.
"I'm not surprised that ... people have been intimidated into signing this," said Ballard, who said there are roughly 62 million Americans who participate in file-sharing networks. He called those seeking amnesty a small ratio of total users.
Promising more lawsuits
The RIAA has promised that hundreds or even thousands more lawsuits will be filed and has continued issuing hundreds of copyright subpoenas to compel Internet providers to identify subscribers suspected of illegally distributing music online.
"This isn't a legal matter, this is a PR event," said Greg Bildson, the chief operating and technology officer for LimeWire, a popular file-sharing service.
LimeWire and other file-sharing companies have announced a new trade group, P2P United, to urge Congress to approve compulsory licenses for music files, which would force labels to offer songs on services for flat fees.
CD prices: Leaving the little guys behind
Oligopoly Watch
The latest maneuvers of the new oligopolies and what they mean
Monday, September 22, 2003
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Universal Music Group's (UMG) plan to cut CD prices to improve sales has gotten a good deal of coverage. But an interesting Wall Street Journal article ("CD Price Cuts to Squeeze Retailers", September 18, 2003) presents a postscript to that story. UMG is the largest record company of the Big Five, and it represents a wide variety of artists from Eminem to the Rolling Stones.
Hidden behind the story is a big bonus for the big retailers at the expense of the smaller stores. The big general retail companies now control 33% of all CD sales, up from 27% a few years ago. That's in part because companies like Wal-Mart and Best Buy use CDs as a break-even or loss leader lure to bring customers into their stores.
As the article points out, Universal is dropping its wholesale price by around $3, from $12.12 to $9.09. But retail prices are being reduced by $6, from $18.98 to $12.98. That means that the retailers are been maneuvered into giving up $3 of their potential profits too. The new actual prices are estimated to end up between $11 and $12, with mass market stores selling CDs for under $10. Independents and even many music chains will see their margins cut to the bone.
Second, the UMG price cut will only go to stores who make certain shelf space quotas. According to the Journal piece:
Originally, certain conditions were set in order for retailers to receive the new wholesale prices. Among them: stores would be obliged to give 25% of bin space and 33% of 'prime' space -- kiosks, displays, and the like -- to Universal products. Those numbers were roughly in line with Universal's 30% market share, and they made sense for mass stores like Best Buy, whose sales typically reflect those of the market overall. But independent stores…were outraged at the notion. Universal responded to their complaints by lowering its prime-positioning requirement to 27% of total space, or 33% of the space used to promote the major labels' releases. Universal will retain the right to determine which of its CDs are promoted.
In other words, despite a small retreat, Universal will only give the discounts to the stores that are willing to give the CDs they want to push top billing.
According to another article in the Louisville Courier-Journal, "from a practical standpoint, it would be impossible to satisfy the major labels were they all to make the same kind of request. 'There are five major record companies,' [an independent music storeowner] said. 'If Universal wants 25 percent, what does that leave for the rest? They all can't have 25 percent."
Possibly without deliberate intent, all of this favors big general merchandisers and hurts already ailing independent stores and small music chains. The article also theorizes that lower new CD prices will also lower used CD prices, a staple of small record stores, cutting their profits even more.
This is all rather predictable. The big record companies are mostly interested in the big retailers. It's a lot less work to use them to push up sales, as they take less hand-holding and have better marketing information and display savvy. They also have customers that tend to buy the big blockbusters, the CDs that have the biggest return for the record companies. Smaller, independent shops involve lots of overhead for them, and they have customers with less trend-driven tastes. They also sell the popular CDs, but they do so in smaller numbers. The record shops may sell more at the lower retail price. But more will certainly close their doors because of the price changes started by UMG.
These are all elements of the oligopoly wars: the grab for shelf space, the big companies talking to other big companies, the small guys threatened by being left out. In the music world, UMG's have knocked current trends up a notch. The consumer may benefit in short run, but in the long run, there will be less choice. If the people selling music really don't care about it, only the least common denominator will remain on the shelves.
5:40:43 PM comment [0]
© Copyright 2003 Steve Hannaford .
Last update: 9/29/03; 6:21:53 PM .
Nearly 75% Of Music Buyers In A VH1 Poll Tell Music Industry: 'It's The Price, Stupid!'
Lower the price and we will come.
That's what nearly three-quarters of the music buyers said in a recent VH1 poll about Universal Music Group's (UMG) coming price reduction and the overall value of music today in an industry vulnerable to downloaders. Of the music buyers, 72% said they liked the idea of the price break and that they would buy more CDs.
But the poll revealed that the word isn't exactly out about UMG's new pricing strategy. Only a quarter (26%) of those polled said they knew of UMG's price breaks coming October 1.
89% Say New CDs Are Not Priced Fairly
The VH1 poll found that 89% of music buyers think that CDs are not priced fairly. Only 8% said that a CD priced in the $14-$17 range was a fair price. Nearly half, or 46%, said that $10-$13 was fair, while 43% said that $6-$9 was in the fair range. The survey reveals that other music labels should pay close attention to UMG's price breaks. Close to half, or 48%, said they think the other music labels will soon follow suit with similar price decreases.
Cut the Price - And the Lawsuits
Of those surveyed overall, 20% have ever downloaded music, while 11% have downloaded music in the past six months. Of those who have downloaded, virtually all are aware of the Recording Industry Association of America's (RIAA) lawsuits against downloaders. But their responses indicate that price breaks are much more likely than the threat of lawsuits to get them back to the music stores.
Of those who have downloaded music from the Internet, the majority at 58% said that price breaks such as UMG's would make them more likely to buy new CDs, 27% were neutral to the idea, while 13% said price cuts were unlikely to get them back into the stores.
But when the downloaders were asked if the threat of lawsuits would prompt them to buy new CDs, only 35% said it was likely, 21% were neutral -- and a hearty 45% said it was unlikely that the threats would get them to shop for CDs at retail.
This VH1 poll was conducted by telephone September 17-22, 2003 among a random national sample of 1,038 adults 18 and older. The results have a +/- 3.1% margin of error. Field work was done via the weekly Express omnibus survey, operated by TNS Intersearch of Horsham, Pa
Interesting...I am writing a USB device driver for the Dataplay device for the Linux kernel. Note that I don't work for Dataplay. I just work for a company that wants to use this device from Linux. This is my first device driver I've written. I've done some debugging and testing with other USB drivers, but never authored one myself.
The Dataplay drive uses small (3cm) removable optical disks that store 250MB on each side. It uses a write-once or append only type interface. The biggest kick is that it implements digital rights management (DRM). The filesystem code is embedded into the device. It doesn't present a block interface at all. The API is totally based at the file level.
On the Dataplay Bankruptcy
Yes, Dataplay officially went bankrupt in Oct 2002. If you haven't heard, they have been bought by DPHI, Inc. and are opperating again. At the time of this writing (August 2003) they are fully functional and selling Dataplay devices again. They have every hope and intention of surviving. I personally know several of the engineers and have met the new owner/CEO/President Bill Allman. All in all (no pun intended), I have more confidence in them as a company than ever.
Code Management
I tossed around several times what to do about code management. It seems like an overly complex thing to try and do code management on the kernel while keeping up with or accepting code from various places (like the kgdb or uml patches). I think if I had it to do all over again, I would just use CVS and maintain all the various patches as vendor branches. I tried BitKeeper? for a long while (in fact you can see my project at http://dataplay.bkbits.net/). I had lots of problems because: 1) the two sets of patches I was interrested in weren't maintained in a BK tree anywhere; 2) the USB sub-system maintainer's BK repo wasn't parented by either Marcello or Linus' trees.
So, anyway, you'll find the latest patch below. For the time that's what I'll do.
Well, since this is officially a work project, they wanted the code maintained better than just a series of patches. That meant throwing it in our CVS tree for all practical purposes. Rather than putting all of the linux kernel source in the CVS tree I pulled my module out into a stand-alone compilation unit. That allows me to make a tarball pretty easily of everything you need to build it.
Of course, to get this driver into the official kernel I'll need to merge it back into the kernel source again. However, there are a lot of other things I'll need to do first.
Current status
As of May 2003 I'm "golden". The driver basically does all the simple things I need it to. The bad news is that I'm not allowed to release the code for all the file i/o stuff. The kernel driver implements the Dataplay custom protocol for encapsulating their file i/o commands into the USB protocol. So, you still need to know the "proprietary" file i/o commands from Dataplay themselves in order to make any use of this driver. I implemented this file i/o stuff as a userland library all using ioctls. My userland library works well. I can pretty much do whatever I want on the media in an unencrypted maner.
Note that there will probably never be any open source tools to take advantage of the built-in encryption on the Dataplay drive. Don't talk to me about such things. It's not my product.
All is not lost though. I've been told that Dataplay would very much like to see an open source filesystem driver for their stuff. The problem is that they don't have the manpower to write it. They've told me they'd be more than glad to help support me while I wrote it. Of course, "support" doesn't mean "hire". It just means answer my questions. I'm sure if anyone else came along and thought they could write the filesystem they'd extend the same offer.
Warnings
I know the driver won't work with SMP. It won't even compile. Don't enable SMP in your config. Sorry, I'll get to fixing that once I figure out the right way to use spin_locks
I'm getting a race condition/deadlock in the driver occationally. I suppose I should detail all the testing I've done to narrow it down. Maybe someone could come and fix m yproblem for me . In summary, it appears that with some engines and some kernel configurations after several thousand write commands the driver hangs while waiting for the status packet to be read. I really suspect this is due to my less than stellar understanding of locking. Version 0.9.3.2 has a re-implementation of my locking strategy. It doesn't fix my hang, but it's easier to understand.
CompUSA rescues Good Guys
$55 million buy comes as company posts Q2 loss
By Jennifer Waters, CBS.MarketWatch.com
Last Update: 4:16 PM ET Sept. 29, 2003
CHICAGO (CBS.MW) -- Struggling with plunging earnings and a challenging economic environment, electronics retailer Good Guys said Monday that CompUSA will bail it out in a $55.3 million acquisition.
Shares of Good Guys (GGUY: news, chart, profile) surged 33 percent to an intraday high of $2.01 before settling at $1.97 at the close.
The offer represents a premium of 37 percent to Friday's closing price of $1.50. CompUSA - owned by Latin American billionaire Carlos Slim -- also immediately will invest $5 million in Good Guys through a two-year note that will be convertible into common stock at $2.05 a share.
The news marks another sign of the convergence of technology and entertainment. It also came shortly before the Alameda, Calif.-based retailer of high-end entertainment electronics reported a quarterly loss of $6.9 million, or 25 cents a share, compared to last year's loss of $1.8 million, or 7 cents a share. Sales for the second quarter tumbled more than 14 percent to $152.2 million from $177.5 million. Sales at stores open longer than a year declined 13 percent.
To make matters worse, gross profit margins fell to 26.8 percent of sales from 28.6 percent a year ago as Good Guys stepped up promotions to clear away outdated products. Selling and administrative expenses took a bigger chunk of sales at 29 percent compared to last year's 27.5 percent.
Earlier this month, the company warned that sales of DVD players, TVs and home audio equipment were falling steeply, offsetting strong sales gains of newer products such as liquid crystal and plasma displays, HDTV set-top boxes and DVD recorders.
The company does not expect to reverse sales trends through the third quarter, generally its most profitable.
"Good Guys continues to be impacted by the challenging economic environment as evidenced in the lower sales volume and decline in store traffic during the first half of the year," Chief Executive Kenneth Weller said in the earnings statement.
CompUSA's rescue pumps new life into a company whose stock price has not meandered above $5 for nearly three years. In the last year, shares have floated from a range of 97 cents a share to $2.97 a share.
"The impact of the economic environment on our industry, particularly in Northern California, and the company's need for additional capital to meet its longer term objectives, were key drivers of the decision to go forward with the transaction," Weller said.
"Our combination with CompUSA should greatly strengthen the resources of the company and enhances the company's prospects for future success," he added.
The deal could prove pivotal for CompUSA, as the fusion of technology and entertainment quickly comes to pass. "This deal dovetails perfectly with our long-term technology convergence strategy," CompUSA CEO Hal Compton said in a statement.
"We want to offer the seamless technology solutions our customers' lifestyles demand and, with Good Guys' solid reputation in delivering high-end entertainment technology, our offering just becomes that much stronger," Compton said. "Good Guys owns a niche that's highly complementary with our own."
Just last week Dell unveiled its combination TV screen and computer monitor, the type of product that both stores could sell when it becomes a common offering from other manufacturers.
The companies said Good Guys will continue to operate under its own name. It has 71 stores in California, Nevada, Oregon and Washington. CompUSA has 226 stores in 90 major metro markets.
The deal is contingent on shareholder and regulatory approvals. CompUSA said the deal will be funded by its parent U.S. Commercial.
Meanwhile, the deal with Good Guys is putting pressure on shares of Circuit City (CC: news, chart, profile), which finished down 5 percent, or 50 cents, to $9.70. In June, CompUSA's Slim offered $8 a share, or $1.5 billion, for the electronics chain. The company rebuffed the offer, though the shares were trading at $6.75 a share at the time. See full story.
Jennifer Waters is the Chicago bureau chief for CBS.MarketWatch.com.
It was posted R, but we didn't speculate in that direction. I saw that come up on Agora and it sure seems reasonable. Especially with the Samsung tie-in. Boy, if true, we are definitely moving in the right circles....
Agreed Tin. There has been no concrete proof whatsover that Dell is using the Creative platform other than the basher bluster and posturing in which they invariably try to make it seem like they KNOW the real answers.
Peer-To-Peer Networks Unveil Code of Conduct
17 minutes ago
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By Andy Sullivan
WASHINGTON (Reuters) - Several Internet "peer-to-peer" networks unveiled a code of conduct on Monday to encourage responsible behavior among the millions of users who copy music, pornography and other material from each others' hard drives.
The networks also asked Congress to figure out some way that recording companies and other copyright holders can be reimbursed for the material traded online and urged users toget involved.
The recording industry, stung by declining CD sales that it attributes to widespread peer-to-peer use, has taken the software makers and more recently their users to court in an attempt to squelch the practice.
The Recording Industry Association of America (news - web sites), which represents the five largest labels, said Monday it had reached settlements with 64 of the 261 individuals they sued earlier in September, usually for less than $5,000.
In an attempt to drum up political support, the RIAA has also portrayed peer-to-peer networks as a dangerous haven for child pornographers, identity thieves and "spyware" that secretly tracks online activity.
Such charges "are not central to the relevant debate, and that debate is about how we build an online marketplace for the 21st century," said Adam Eisgrau, executive director of P2P United, an industry trade group.
P2P United members -- Lime Wire, Grokster, Blubster, BearShare, Morpheus and eDonkey 2000 -- said they would help law enforcers track down child pornographers, would make it easier for users to protect sensitive material on their hard drives, and would not secretly install spyware on users' computers.
The group also said it would encourage users to learn about copyright laws but would not install filters or otherwise limit users' ability to trade copyrighted material. Such filters would not be technically feasible and would infringe on legally permitted methods of sharing, they said.
Kazaa, the music file-sharing service that is the most widely used peer-to-peer network, is not a member of the group.
P2P United invited the recording companies to sit down and negotiate a method so they could be paid for the copies users make of their materials. Members suggested various models such as the per-song fee radio stations pay song publishers or the small surcharge levied on blank video and audio tapes, but steered clear of specifics.
As was the case with radio, the videocassette and other technologies that have eventually enriched Hollywood, content owners have more to gain from negotiation rather than litigation, they said.
"Music is what it is in big part because of radio," said Pablo Soto, chief executive of the Blubster network.
An RIAA spokeswoman said it was "refreshing" to see P2P United educate its users about copyright law and security risks.
"But let's face it, they need to do a whole lot more before they can claim to be legitimate businesses," RIAA spokeswoman Amy Weiss said in a statement.
OT Hackers Still Exploiting 'Patched' Microsoft Browser
September 29, 2003 (2:28 p.m. EST)
By Gregg Keizer, TechWeb News
A patch issued last month for a critical vulnerability in Microsoft's Internet Explorer Web browser leaves any user surfing the Web open to a wide variety of attacks, a security analyst said Monday.
The problem stems from August 20 when Microsoft released patches for Internet Explorer 5.01, 5.5, 6.0, and version 6.0 for Windows Server 2003 that it said would fix an Object Type vulnerability, which could allow an attacker to run malicious code on a PC if the user navigated to the attacker's Web site. The original patch can be downloaded using Microsoft's WindowUpdate Service, or from the Microsoft TechNet Web site.
But the patch doesn't seem to be patching.
“Whether you are patched or not, attackers can execute code on your computer at will when you visit a hostile website when using vulnerable versions of Internet Explorer,” said Ken Dunham, the malicious code intelligence manager for Reston, Vir.-based iDefense.
A Microsoft Web page detailing the original Internet Explorer vulnerability it said that teams were investigating reports of new variations on the original flaw. As of publication time, Microsoft had not returned a call asking for comment.
However, according to sources outside of Microsoft, attackers are exploiting this vulnerability in a number of ways. Postings on the Bugtraq security e-mail list tell of one method where the attacker hijacks running AOL Instant Messenger (AIM) accounts, changes the password, and sends a message to the user's buddy list with a link to the malicious Web page.
Other attacks that exploit the undiscovered flaws in Internet Explorer, include one that entices users to porn Web sites, where code is downloaded that dials 900 numbers, racking up hundreds in charges without the user's knowledge. Another uses pop-up adds to drive users to pay-per-click Web sites, said Drew Copley, a research engineer at Aliso Viejo, Calif.-based eEye Digital Security, who discovered the original security vulnerability.
“In one sense, these are new bugs in IE,” said Copley, “but in another sense they're not. Microsoft had more than three months to fix these, but they didn't.” Copley said he originally notified Microsoft of the flaws in IE in mid-May.
“This is pretty scary stuff,” said Dunham. “Any type of code could be deployed in this type of attack.”
What's new here, said Dunham, is the vector used by attackers to plant their code on machines. While Trojan horse authors have used other methods to infect computers -- worms that arrive in e-mail attachments, for instance, and attackers' ongoing exploits of the Microsoft Windows' RPC DCOM vulnerabilities -- this route is more insidious.
“It used to be true that you couldn't get infected just by surfing the Internet,” said Dunham. “But we're not talking about opening an attachment here. It doesn't matter if you've patched Internet Explorer. All you have to do is surf to one of these malicious sites, and boom, you're infected.”
Saying that attackers have a “leg up on us at the moment,” Dunham said that this zero-day vulnerability -- so-called because the exploit is available, but a patch is not -- poses a threat to anyone who uses relatively recent versions of Internet Explorer.
Users should consider disabling ActiveX controls and plug-ins in Internet Explorer until a revised patch is available, urged Dunham, and/or configure the browser to block ActiveX controls on untrusted sites. Microsoft has outlined workarounds that users can take to block ActiveX controls until a patch is re-released. They can be found in the original vulnerability's security bulletin under the Workarounds section of Frequently Asked Questions.
An alternate strategy would be to switch to another browser, such as Mozilla or Opera, which isn't affected by the vulnerability, said Dunham.
“Internet Explorer is one of the most common software applications targeted,” Dunham said in suggesting that companies concerned about security consider switching browsers.