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Napster Suit Unnerves Venture Capitalists Apr. 29, 2003
Efforts by Universal Music and EMI to sue the VCs that backed Napster could disrupt the venture capital industry
By Michael Liedtke, AP Businss Writer
SAN FRANCISCO (AP) -- Venture capitalists didn't need another reason to avoid high-tech investments, but two major record labels have given them one anyway.
Still seeking retribution for Napster's online file-swapping system, industry giants Universal Music and EMI are trying to break new legal ground by suing the venture capital firm that helped finance the revolutionary Internet service.
Napster failed last year, but the discord about the service and the free music that it distributed is far from over.
The music industry's latest legal assault would push the boundaries of blame by holding investors liable for the actions of a company and its management.
It's a showdown venture capitalists have long dreaded.
If the music labels prevail, "it could destroy the whole venture capital industry," said J. William Gurley, a general partner at Benchmark Capital in Menlo Park, Calif.
The music labels say they are just looking for justice.
"Businesses, as well as those individuals or entities who control them, premised on massive copyright infringement ... should face the legal consequences," the record companies said in a statement.
The record labels' suit, filed in Los Angeles last week, alleges Hummer Winblad Venture Partners' $13 million investment in Napster enabled tens of millions of Napster users to infringe on music copyrights. San Francisco-based Hummer Winblad made the investment in April 2000--long before federal courts declared Napster illegal.
If venture capitalists can be held responsible for the actions of the companies in their investment portfolios, Gurley wonders if the same principle could be applied to individual investors who own stock in companies with legal headaches.
"Should someone be able to come after you because you invested in Philip Morris when you should have known that cigarettes are bad for people?" asked Gurley, a former Hummer Winblad partner who left the firm before its Napster investment.
The National Venture Capital Association has even broader concerns.
Mark Heeson, the trade group's president, was so concerned about the entertainment industry's aggressive litigation that he sent a letter to Sen. John Kerry, D-Mass., last year.
"The ability of entrenched industries to deter investment in next-generation technologies has profoundly anticompetitive and anti-innovative implications throughout American industry," Heeson wrote.
In an interview, Heeson said that's just what the Hummer Winblad lawsuit could do.
Other venture capitalists say they aren't worried, arguing that the lawsuit against Hummer Winblad is as much of an oddity as Napster itself.
"It's not changing the way I approach investments, nor is it changing things for any of the people I know," said Wes Raffel, a general partner for Advanced Technology Ventures in Palo Alto, Calif.
A surprise decision that went against the record labels and movie studios last week may even embolden some venture capitalists.
U.S. District Court Judge Stephen Wilson squelched a copyright infringement suit against two other popular Internet file-swapping services, Grokster and StreamCast Networks Inc., after concluding they couldn't be held liable for pirating by their users.
Still, there's little doubt that the latest Napster suit is designed to scare venture capitalists, according to several attorneys who specialize in investment law.
"It's pure thuggery," said Philadelphia lawyer Howard Scher.
The suit against Hummer Winblad and two of its partners, Hank Barry and John Hummer, seeks $150,000 per copyright violation, plus punitive damages. It's the kind of money that the labels couldn't get out of Napster after the company went bankrupt last summer.
"This suit is all about finding a deep pocket," said Houston securities lawyer Joe Cohen.
Neither Barry, who once served as Napster's chief executive, nor Hummer, who sat on Napster's board of directors, returned calls seeking comment.
Venture capitalists have always realized that they could lose money if a startup in their investment portfolio ran into serious legal problems. As a rule, they traditionally cash in on just a handful of successful startups, offsetting losses and paltry returns from most of the companies they finance.
Until now, though, venture capitalists had presumed their losses would be limited to the amount of money that they invested in a company.
The Hummer Winblad suit raises the possibility that they could lose more than 100 percent of their investments.
"That makes everyone nervous because it injects even more risk into the system," said Palo Alto attorney Barry Kramer, who works with venture capitalists. "There is already enough risk in venture capital. We don't need any more."
I have seen the future of music and its name is iTunes
Apple's new online music-buying system is everything Napster promised to be -- cheap, easy and, best of all, legal.
- - - - - - - - - - - -
By Farhad Manjoo
April 29, 2003 / Hunter S. Thompson never actually said that "the music business is a cruel and shallow money trench, a long plastic hallway where thieves and pimps run free, and good men die like dogs." The quip, from Thompson's 1988 "Generation of Swine: Tales of Shame and Degradation in the '80s," was in fact meant to describe the TV business.
But in a post-Napster world, one in which both musicians and music lovers have come to harbor a deep animosity toward record labels, the Thompson misquote has taken on the patina of truth -- which is why, in his introduction of a new online music-buying service on Monday in San Francisco, Apple CEO Steve Jobs elicited a rousing response by flashing the quote up on the giant video screen behind him. Probably the only folks in the room who weren't applauding were the industry executives in attendance, but they, too, might have been OK with Jobs' insults. Indeed, the execs ought to have been pleased with Apple's geek-chic CEO: That's because Jobs is being nice enough to save the music business from itself.
The music service Jobs unveiled is a delight. Called the iTunes Music Store, the service -- it's available only on Apple machines for now but will be ready for Windows "by the end of the year" -- is fully integrated into the company's jukebox software. Users can search for songs to purchase in the same way they'd look for songs they already have on their machines. The system is foolproof: You type in a name, a song comes up, and you press a button to buy it. That's it. You're in the hole for 99 cents for each song you download ($10 for each album), but you see none of the transaction details; all the purchases are "one-click." And here's the stunning thing: Once you've bought a song, you own it. You can do (pretty much) whatever you want to do with the songs you download, including burning them to CDs, transferring them to iPods, or sending them to other Macs.
Forgive me if the above sounds like a paid-for marketing pitch for Apple, but anyone who's familiar with the recent battles between the music and tech industries should be amazed that something like Apple's service ever came about. Many online music services are on the market, but they've all done poorly, most likely because, as Jobs said, they all "treat you like a criminal." For the most part, the other services are subscription based -- users pay a $10 or $20 per-month fee for access to a catalog of songs, and they must put up with a Byzantine set of rules outlining how they can use the tracks. Some services only offer "streaming" music, meaning that you have to be connected to the Internet when you want to listen to your songs; others let you download songs so long as you play them on a single machine (forget about transferring them to portable MP3 players); a few services let you burn songs to CDs, but only for selected tracks for an extra per-song fee. The worst part is, you have to keep paying to get the music; once you cancel your subscription, you can no longer listen to many of the tracks you've downloaded.
One can't fault the subscription services for their poor offerings -- the blame goes straight to the record labels, which have dragged their feet for years in offering workable licensing terms for online distribution. The industry, scared of spawning other Napsters, usually allows music online only with a host of restrictions curbing its use. For instance, Warner Music recently licensed Madonna's songs to pay services only on the condition that the companies sell full-length albums, and not selected Madonna tracks -- something that many of the services can't even technically accomplish.
In this light, Apple's service is best thought of not as a technological breakthrough but as a psychological one. The product is clearly the result of what must have been tough negotiations between Apple and the labels -- and in the end, Steve Jobs seems to have convinced music execs of the folly of their ways. How did he do it? Dealing with the music industry, Jobs explained in his press conference, was not easy. A year and a half ago, when he came up with a plan to offer an easy way to buy digital music online, he didn't know whether anyone in music would see things his way. The industry was going after Napster and other file-trading services in the courts, and they were pushing draconian legislation in Washington. But when he met with the labels, Jobs found many executives who shared his passion to "change the world," and according to some reports, Jobs personally negotiated with key artists to get them to let their music go online. By Monday, Apple had struck "landmark" licensing deals with the five biggest music companies, and it garnered the blessing of no less a critic of the tech industry than Hilary Rosen, the head of the Recording Industry Association of America. "The Apple system has the potential to do for music sales what the Walkman did for the cassette," Rosen told the New York Times on Monday.
But now that the music business appears to have changed its tune, it's time to see whether listeners, who have so far shown no qualms in stealing their music from file-trading services, will accept the righteous path. For years, critics of the music business have said that once customers are offered a reasonable alternative to stealing, they'll gladly embrace it -- now we'll find out if these people are right. Fans of file-traders will find much to like in the new Apple system. The downloading is hassle free -- you won't have to worry about songs that never come through, as is common on peer-to-peer systems like Kazaa and Gnutella, or programs chocked with adware and spyware. Apple uses the AAC music format, which sounds better than MP3, and some of the songs it offers are encoded straight from the master tapes, Jobs said, which means the tracks will be of better quality than the comparable CD. You won't find that on Morpheus.
Perhaps even more compelling -- users of free services are increasingly exposed to legal action by the recording industry. Recently, in separate cases, federal judges have ruled that it's perfectly legal for companies like Morpheus to run file-traders, but that ISPs (like Verizon) must turn over to the music industry the names of people who use these services -- taken together, these rulings give the music business an increased incentive to sue people who trade on such services rather than the people who build such services. If you're offering files up on Grokster, you'd better have a good lawyer.
Still, there are some reasons people won't immediately quit using the free services to switch to Apple's service, the most important of which is the catalog size. Apple will start off with only about 200,000 songs in its store. This is a huge number, and the company has exclusive online rights to many artists (including Eminem, Alicia Keys and Bob Dylan), but far more songs are still available for free on file-trading services.
Because Apple's service doesn't require a subscription, though, its catalog size might not be much of a problem. For a while, people will probably just use both the Apple service and the free services, putting up with the frustrations of something like Kazaa only when the song they're looking for isn't available in iTunes. You can see how this scenario could prompt many labels to release more and more of their songs to Apple: If giving your song to the Apple store will reduce the number of people who steal it, why wouldn't you want your song on the shelf?
Except for some well-paid congressmen, nobody likes the music industry anymore. In the public imagination, the companies that brought us the Beatles and Madonna are about as trustworthy as those that bring us tobacco and firearms. Jobs' new service might change that. Finally, it'll be possible to listen to music as Napster promised -- without the worries, without the frustrations, as music was meant to be enjoyed. If it takes off, the system -- and the clones of it that will surely follow -- could significantly boost the record labels' bottom line, and Apple would certainly benefit as well.
And down the road, perhaps, music itself will change. If tracks are sold one by one, can the death of the full-length album be far off? (The CD, as a physical medium, surely can't last the decade.) What will happen to top-40 radio? If innovative indie stars enjoy as much access to your desktop as sultry teenagers, will we ever have to listen to sugary pop again?
These are the sorts of questions everyone asked when Napster came along, and we never quite got our answers. Perhaps, now, we'll finally see what the future has in store for us.
Music Industry Sends Warning to Song Swappers
Tue April 29, 2003 03:06 PM ET
By Sue Zeidler
LOS ANGELES (Reuters) - The record industry opened a new front in its war against online piracy on Tuesday by surprising hundreds of thousands of Internet song swappers with an instant message warning that they could be "easily" identified and face "legal penalties."
About 200,000 users of the Grokster and Kazaa file-sharing services received the warning notice on Tuesday and at least one million will be getting the message within a week, according to music industry officials.
The copyright infringement warnings, which were sent by the Recording Industry Association of America, on behalf of the major record labels, said in part:
"It appears that you are offering copyrighted music to others from your computer. ...When you break the law, you risk legal penalties. There is a simple way to avoid that risk: DON'T STEAL MUSIC, either by offering it to others to copy or downloading it on a 'file-sharing' system like this. When you offer music on these systems, you are not anonymous and you can easily be identified."
The music industry's campaign for the hearts and minds of Internet song swappers comes four days after a federal judge threw an unexpected roadblock to its efforts to shut down song-swapping services in court.
U.S. District Court Judge Stephen Wilson on Friday ruled that the Grokster and Morpheus services should not be shut down because they cannot control what is traded over their systems. Like a videocassette recorder, the software in question could be used for legitimate purposes as well as illicit ones, he said.
"We're expecting to send at least a million messages or more per week because these users are offering to distribute music on Kazaa or Grokster," said Cary Sherman, president of the RIAA.
Sherman described the move as an educational effort to inform users that offering copyrighted music on peer-to-peer networks is illegal and that they face consequences when they participate in this illegal activity.
CNN talks to Steve Jobs about iTunes
Tuesday, April 29, 2003 Posted: 1:06 PM EDT (1706 GMT)
Apple chief executive Steve Job poses with musicians Seal, left, and Josh Groban, right, during the iTunes Music Store launch event.
Apple is launching a service that provides music online while protecting artists and record companies from illegal downloads. CNN's Andy Serwer reports (April 29)
Fortune.com: Will Steve Jobs save the music industry?
SAN FRANCISCO, California (CNN) -- Launching an online music service that charges 99 cents a song, Apple Computers hopes to provide an alternative to the song-swapping services that saturate the Internet. On Monday, the day of launch, CNN anchor Miles O'Brien talked via satellite with Apple CEO Steve Jobs.
O'BRIEN: The novel idea here: it's completely legal, and consumers would actually pay for the songs they download. It isn't the first such service, but Apple is the biggest player in the realm, and it may help legitimize the move away from CDs and LPs into bits and bytes.
The move comes amid a crackdown by the big music companies on music-loving scofflaws, and it comes as Apple's business plan seems to be running out of gas a little bit. Joining us with more on all this, the CEO himself, hot off the big demo, Steve Jobs. Steve, good to have you with us.
JOBS: Thanks for having me.
O'BRIEN: All right. What makes you so certain that people are going to actually pay for music they see online?
JOBS: Well, we're going to find out. Napster and Kazaa certainly demonstrated that the Internet was built perfectly for delivering music. The problem is they're illegal. And the services that have sprung up that were legal are pretty anemic in terms of the rights they offer you, and they kind of treat you like a criminal. You can't burn a CD, or you can't put it on your MP3 player.
And so our idea was to try to come up with a music service where you don't have to subscribe to it. You can just buy music at 99 cents a song, and you have great digital -- you have great rights to use it. You can burn as many CDs as you want for personal use, you can put it on your iPods, you can use it in your other applications, you can have it on multiple computers.
And we were able to convince the big five music companies to go along with us on this. So it's a pretty landmark offering. Nobody has ever seen anything like this before.
O'BRIEN: Well, that seems to be the key point here. The big music companies, it seems, have been slow to buy into this whole concept. It's literally changed the way they're doing business, and they've been slow to adopt it. Now, you have well-known powers of persuasion. What did you do to win them over?
JOBS: Well, the most important thing we did was we created the iTunes Music Store, which is 100 miles ahead of anything that has been done before. So we write really good software, and we were able to create a really great store experience. So I think that's the most important thing we did.
O'BRIEN: So ease of use is a key thing here. As a matter of fact, we have here one of our folks here who is a Mac-head brought out her iBook, and there is the interface. It looks very clean, very user-friendly. That, of course, is the iPod. Now, do you have to have a Mac to avail yourself of this service?
JOBS: Today you do, but we did announce that by the end of the year, we'll be bringing it to Windows so that everyone can use it. The other thing, too, is as an example, we're giving people free, high-quality 30 second previews of every song on the store. You can't get that off the free download services. We are giving people pristine encoding, which you cannot get off the download services, and we are giving people fast, reliable downloads so they're not slow as molasses or crap out halfway through. So I think we're providing people with a far higher quality service than they've ever had before.
O'BRIEN: But a lot of things -- it's like a lot of things on the Net, Steve, in the sense that when people are accustomed to getting it for free, will they make the move and pay for it, or are you going after an entirely different market that is not out there already?
JOBS: Well, let me give you an observation that's really interesting. If you go to Kazaa and you try to find a song, you don't find a single song. You find 50 versions of that song, and you have to pick which one to try to download, and usually it's not a very good connection. You have to try another one, and by the time you finally get a clean version of the song you want, it takes about 15 minutes. If you do the math, that means that you're spending an hour to download four songs that you could buy for under $4 from Apple, which means you're working for under minimum wage.
O'BRIEN: That's a good point. Let's talk big picture here for just a moment. Your company has been moving into the digital entertainment realm in a lot of ways. Pixar is one, this is another example, the iPod. Lots of talk you might try to wrestle a music company out of Vivendi, Universal, specifically. Care to make any news on that account here, or at least tell us a little bit about your strategy?
JOBS: You know, Apple has a policy of not commenting on rumors, but this just got so out of hand that we did issue a statement that said we've never made any offer to invest in or buy a music company. And I think we're just focused on what we're doing, which is making the best music store in the world, and making the most popular and best MP3 player in the world, the iPod.
O'BRIEN: All right. So when will we see it -- deftly shrugged off there, by the way, Steve. When will we see this available? Is it online right now?
JOBS: It is online right now. You can go download it and start buying music.
OT Intel Researchers Teach Computers to 'Read Lips' to Improve Accuracy of Speech Recognition Software
Monday April 28, 11:01 am ET
BERLIN--(BUSINESS WIRE)--April 28, 2003--Intel Corporation researchers have released software under an open-source license that allows developers to build computers that see and "read lips" the way humans do to better understand spoken commands.
Today's speech recognition algorithms work well when background noise is eliminated or a well-tuned headset is used, but their accuracy rapidly degrades when applications have to cope with noisy environments, such as public places. Combined with face detection algorithms from Intel's OpenCV computer vision library, Audio Visual Speech Recognition (AVSR) software enables computers to detect a speaker's face and track their mouth movements. Synchronizing video data with speech identification enables much more accurate speech recognition, enhancing a wide variety of computer applications in noisy environments. The AVSR software is part of Intel's OpenCV computer vision library, a toolbox of more than 500 imaging functions that helps researchers develop computer vision applications.
"Intel wants to develop technology that allows computers to naturally interact with the world the way humans do. Human recognition is seldom based on a single type of information. We make decisions by combining information from a variety of sources," said Justin Rattner, Intel senior fellow, Enterprise Platform Group and director of Intel's Microprocessor Research Labs. "The addition of Audio/Video Speech Recognition code to Intel's OpenCV library is certain to drive research and development in vision-assisted speech recognition."
Accelerating Research Into New Uses
Faster microprocessors, falling camera prices and ten times more video capture bandwidth from technologies like USB2 are all enabling real-time computer vision algorithms to run on mainstream PCs. OpenCV is designed to increase innovation in this field by providing source code for a wide range of computer vision and imaging functions. Since its release in 2000, OpenCV has seen over 500,000 downloads of code and has attracted more than 5,000 registered members to its user group.
Developers are using OpenCV code in applications ranging from toys to industrial manufacturing. The software includes C source code for all of the library's functionality and a royalty-free redistribution license. Information about AVSR can be found at www.intel.com/research/mrl/research/avcsr.htm. The OpenCV web site is located at www.intel.com/research/mrl/research/opencv/. Individuals interested in joining the user group can register at groups.yahoo.com and then can subscribe by sending email to OpenCV at subscribe@yahoogroups.com.
Intel has developed a uniquely decentralized research model with more than 70 labs located around the world. The majority of the AVSR software team resides at Intel China Research Center in Beijing, China. Established in 1998, the center currently employs more than 40 computer research scientists and engineers working in research areas such as computer vision, media, Bayesian networks, compilers and tools.
Intel, the world's largest chip maker, is also a leading manufacturer of computer, networking and communications products. Additional information about Intel is available at www.intel.com/pressroom.
Intel is a trademark or registered trademark of Intel Corporation or its subsidiaries in the United States and other countries.
* Third party marks and brands are property of their respective holders.
------------------------------------------------------------------------
Contact:
Intel Corporation
Kevin Teixeira, 408/765-4512
kevin.d.teixeira@intel.com
OT Samsung considers embedding FPGAs in ASICs
By Anthony Cataldo
EE Times
April 25, 2003 (2:34 p.m. ET)
SAN FRANCISCO — Samsung Electronics' semiconductor division said it may embed FPGA blocks in future ASICs and application specific ICs as a way to reduce the time and cost of chip design, Samsung Semiconductor Inc. executives said Thursday (April 24).
Samsung is now in discussions with a number of FPGA companies and EDA providers about the pros and cons of embedded FPGAs, which will allow designated logic gates to be programmed after a chip has been fabricated and packaged.
The technology would let Samsung's ASIC customers design a single device that could be used across multiple product lines. Samsung may also design its own standard products in this way, officials said.
The company said it would discuss its views Friday during a technical session on embedded FPGAs here at the Embedded Systems Conference here.
“We find that it's almost impossible to define the perfect product for customers. In many cases they want to add their own encryption technology, for example. For that reason we think having pieces of programmable logic embedded in an ASSP or ASIC makes sense,” said Benson Cheung, director of business development at Samsung Semiconductor, (San Jose, Calif.)
The company could design, for example, a communications chip that works either in a DSL or cable modem. “You can imagine a programmable block that can do either QAM encoding and decoding or DMT,” said Bob Burke, marketing director for Samsung's system LSI division.
To go this route, Samsung needs two major components: an FPGA fabric and a design methodology. On the hardware side, the company said it will consider acquiring technology from or partnering with vendors making standard FPGA chips, including Altera, Actel, QuickLogic and Xilinx. The company is also talking to smaller players promising new approaches, such as eASIC and Leopard Logic.
Considering options
One option would be to use technology similar to that offered by Actel and QuickLogic, which use programmable vias to attain high density. Another would be to partner with either Xilinx or Altera, the two top FPGA providers, which use a reprogrammable SRAM-based approach and own most of the patents related to FPGA technology.
The two companies' strong patent portfolio “may be one of the reasons that, if we decide to do this, we may partner with one of the larger guys than one of the smaller guys in the market,” said Cheung, who once worked in Altera's marketing division.
Xilinx is now working with IBM Microelectronics under a non-exclusive contract to embed FPGA blocks in ASICs from IBM starting at the 90-nm process technology node. Altera says it has the means to embed FPGAs, but has so far steered clear of this approach, preferring instead to promote its concept of a “system on a programmable chip.”
On design methodology, Samsung is talking with “all the major players” to come up with tools for mapping an FPGA fabric to an ASIC and achieving timing closure, Cheung said.
Samsung executives stressed however that they have not decided on what approach to take, nor are they certain that embedding FPGAs is the right approach. One potential barrier is cost.
Customers "will pay a 10 percent or so premium for this product and it will have to ship in the hundreds of thousands or millions of pieces per year,” Cheung said.
If it decides to use embedded FPGA technology, the technology would likely come on stream at the 90-nm process technology node, which is now under development. At that point it would be less expensive to embed FPGA gates in an ASIC.
It could also help defray the costs of the mask sets, which will be in the $1.5-million range, Cheung said.
OT D&M Holdings Buys Escient
By Steve Smith
TWICE
4/24/2003 11:21:00 AM
Tokyo - A week after D&M Holdings was the high bidder for the ReplayTV and Rio business units of SONICblue, the company has bought the assets of U.S.-based OpenGlobe and Escient Convergence, subsidiaries of Escient Technologies.
Escient, a leading developer of digital home entertainment devices including the FireBall digital music managers, will be merged into the digital development group with ReplayTV and Rio
Terms of the acquisition were not disclosed.
These companies will form the new Escient Division within Digital Networks North America, Inc. (DNNA), the new platform established by D&M to further the development of core technologies in the emerging entertainment-based home networking market.
Escient’s flagship product is FireBall, an all-in-one digital audio jukebox that finds and plays both physical discs and digital music files while also displaying album cover art, album and song titles and artist information through an onscreen interface.
FireBall supports up to five managers for distribution of music around the home, receives weekly software updates through the Internet and plays music from both Internet radio stations and higher-speed satellite radio stations, D&H said.
D&M Holdings also announced the senior management leadership team for DNNA. Michael Seedman, a director of D&M Holdings, becomes chairman of DNNA and Bernie Sepaniak, current Escient president/CEO, will remain as president of the Escient Division of DNNA. D&M Holdings anticipates that most of Escient’s employees, including its technical team, will join DNNA.
'Our goal is to provide access to entertainment anytime and anywhere throughout the home. This acquisition furthers that strategy,' said Tatsuo Kabumoto, president/CEO of D&M Holdings.
Today’s announcement represents the company’s fourth investment in technology to create entertainment-based digital home networking solutions. In addition to its pending acquisitions of ReplayTV and Rio, D&M Holdings also made an investment in 2002 in Mediabolic, a San Francisco-based company that provides an embedded software platform for entertainment devices. Denon will use the Mediabolic platform in new products that will be launched later this year.
Colleges aggressively cracking down on downloads of music
By Jefferson Graham, USA TODAY
Posted 4/27/2003 7:26 PM
College administrators, under pressure from record labels, have dramatically stepped up efforts to wean students from downloading copyrighted music and movie files via high-speed university networks.
Princeton senior Yashih Wu surveyed students and found that 46% would pay for legal online music.
By Eileen Blass, USA TODAY
"More schools are becoming more aware of the seriousness of the problem and trying to figure out ways to deal with it," says John Vaughn, executive vice president of the Association of American Universities. "Administrators see this as a multidimensional problem — bad press, bandwidth, educational and ethical responsibilities to teach. It's a real struggle to reduce illegitimate activity without causing a total breakdown of the system."
The Recording Industry Association of America has been working with universities since last fall to increase anti-piracy efforts, including letters and e-mails to students about copyright theft, and to make punishments more severe (specifically, loss of Internet access) if students are caught using the system for uses other than homework.
But a few weeks ago, the RIAA took the battle to a dramatic new level by filing lawsuits against students at Princeton, Michigan Technological University and Rensselaer Polytechnic Institute, marking the first time the industry had gone after individually identified Net users. These students weren't users of the most popular pirate download program, Kazaa, but rather had posted internal sharing sites on university servers. At $150,000 per song, each student is potentially liable for hundreds of millions of dollars in damages.
"Right now, there's near-universal agreement among university presidents that we'd like to rid our campuses of illegal use of peer-to-peer file sharing," says Graham Spanier, president of Penn State University, who chairs a committee with RIAA president Cary Sherman aimed at curbing piracy. "It's costly for us, in terms of tying up huge amounts of bandwidth — but what our students are doing when they pirate copyrighted material is not only illegal, but also immoral."
Penn State recently temporarily took Net access from 220 students for downloading. Harvard instituted a new policy earlier this month removing access for one year if, after a warning, a student returns to downloading. And just last week, in Australia, a site run by three college students was shut down by local police for copyright violations. Most of the music and movie files on the site were hosted by university computers.
Campuses are small places. Yale's Derek Lomas says he is a friend of a friend of Princeton's Daniel Peng, one of the four students being sued by the RIAA. (Peng's attorney hasn't responded to calls.) Still, Lomas says the reaction among fellow students to the suits and crackdowns has been mild. "I know students who won't touch the download sites anymore because they're worried about legal repercussions, but I also know sharing and CD burning is as popular as ever."
Princeton senior Yashih Wu just did her economics thesis on whether campus students would be willing to pay for a legal online music system. Despite the stated defiance from students in the past, some 46% of the students she surveyed said yes, while 27% said no. Wu says current services such as Pressplay and MusicNet don't have enough content to satisfy students, and their pricing plans are too complex, with none offering one price for unlimited songs.
"College students have gotten used to unlimited music downloading, and it's not going to be something they'll want to give up easily," she says.
The services are not well marketed, she found: Some 40% of her 679 respondents didn't even know legal services existed.
The college crackdown is not universal. Labels' efforts at more effective policing "run flat into University of California policies against invading privacy," says UC-Berkeley associate vice chancellor Jack McCredie. "We don't read people's mail or snoop on what they do on the Net."
The university does respond to written notices received from the labels, as required by law. About 100 students have been contacted about their activities since fall. "Most do a mea culpa and say, 'I didn't realize I was breaking the law,' and stop," he says. "The system works."
Charles Phelps, provost of the University of Rochester, echoes what many college administrators are saying: that the record industry needs to come up with a business model that lets the schools pay a flat license fee for students' downloading activities — in effect, to tie a music fee into the tuition "the same way we license Internet access to read journals from anywhere on campus," he says.
Lomas, 21, thinks the answer lies in letting students "stream" music from school servers, much like radio, since streamed music can't be copied, and therefore, he believes, doesn't violate copyrights.
Another possible solution being advocated by Spanier is software that automatically detects unauthorized music file sharing, similar to workplace software that filters porn. But Phelps has concerns about that: "Such devices have a potential for invading privacy, and that makes me very nervous."
"We have a cultural problem," says UC-Berkeley's McCredie. "The students don't believe this is theft. They wouldn't walk out of a record store with 20 stolen CDs, but downloading on the Net is OK. And they're doing it long before they get to the university, from home. We're all not doing a good enough job educating them about intellectual property."
EMI starts European-wide music download service
Thursday 24th April 2003
[Computer Buyer] 12:39
In this post-Napster era, EMI is bidding to generate sales from music downloads. More than 140,000 tracks from 3,000 performers will feature in a new programme for selling music online.
EMI describes it as the biggest ever European music download initiative to be carried out by a record company. Kylie Minogue, Blur, Air, Norah Jones and Robbie Williams are among the performers whose tracks will be available online.
The strength of EMI, however, lies in its back catalogue. While music from The Beatles may be missing, Pink Floyd, The Beach Boys, Cliff Richard, Duran Duran and Frank Sinatra are among those represented. And what an eclectic bunch they are.
As part of the programme, users will be able to burn tracks to CD-R and copy them to portable players. And, in a bid to help boost single sales, songs will be available for download as soon as they start to get radio airplay. This is traditionally a month or so in advance of the official commercial release on CD.
'This is a significant initiative because it brings many new features to the online offering,' asserted Tony Wadsworth, chairman & CEO, EMI Recorded Music UK & Ireland. 'EMI has a vast digital catalogue and is now providing consumers with the music they want in a way that is faster, safer and more adaptable than is currently available on any of the current services - and it's legal!"
Among those participating in the EMI programme are HMV, Freeserve, Telewest's Blueyonder and BT Openworld. That's in the UK. As the initiative is European wide, ISPs from Germany, Spain, France and Italy are also taking part. Microsoft's MSN and the music channel MTV are also onboard.
There will be a soft roll-out for the programme, with the retail operations going live at varying times over the coming weeks. The platform for managing sales is provided by online distributor
OD2 - the company that managed the recent Digital Download Day - which means the music will be available in Windows Media format.
'EMI is embracing the digital world,' said Emmanuel de Buretel, chairman and CEO of EMI Recorded Music Continental Europe, 'by making more music from more artists from France, Germany, Italy, Spain and the Netherlands legally available online in new and flexible ways. We are using new technology to benefit both artists and consumers by massively expanding the amount of music available securely online.'
The European programme follows a similar US initiative - EMI in US music download deal - back in November 2002.
In the struggle to shore up falling music revenues - caused by online piracy, the recording industry believes - EMI has signed more than 60 license agreements with digital music companies. World wide. It declares it was the first record company to issue licenses to both MusicNet and pressplay, as well as other music subscription services such as FullAudio.
Verizon Loses Suit Over Music Downloading
Thu Apr 24, 5:44 PM ET
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By TED BRIDIS, AP Technology Writer
WASHINGTON - A federal judge rejected a constitutional challenge Thursday by Verizon Communications Inc., which is trying to avoid turning over the names of two of its Internet subscribers suspected of illegally offering free music for downloading.
U.S. District Judge John D. Bates, who ruled against Verizon in January in the same case, determined that First Amendment protections concerning anonymous expression do not conflict with the 1998 Digital Millennium Copyright Act (news - web sites).
The law permits music companies to force Internet providers to turn over the names of suspected music pirates upon subpoena from any U.S. District Court clerk's office, without a judge's signature required.
Critics of the procedure contend judges ought to be more directly involved, given the potential privacy issues involved when a corporation is asked to reveal personal information about customers over an allegation of wrongdoing.
Bates also refused to stay his earlier ruling against Verizon until an appeals court considers the case, granting it only two weeks to seek such protection. Barring a reversal, Verizon must reveal the names of the subscribers to the Recording Industry Association of America (news - web sites), the trade group for the largest music labels.
The latest rulings mean consumers using dozens of popular Internet file-sharing programs can more easily be identified and tracked by copyright owners. Even for consumers hiding behind hard-to-decipher aliases, that could result in warning letters, civil lawsuits or even criminal prosecution.
"If users of pirate peer-to-peer sites don't want to be identified, they should not break the law by illegally distributing music," said Cary Sherman, president of RIAA.
Verizon said the ruling undermined subscribers' privacy.
"Verizon is going to continue to use every legal means available to protect the privacy of our subscribers and immediately seek a stay," said Verizon's associate general counsel, Sarah B. Deutsch. She said the ruling "exposes anyone who uses the Internet to a host of scam artists, crooks and stalkers."
The RIAA had sought the user's identity with a subpoena approved under the copyright act. Bates acknowledged that fear of being identified under the law "could discourage some Internet users from otherwise protected activity," and that some copyright owners could abuse the law to obtain personal information from innocent users. But that was insufficient to throw out the law, partly because there has been no evidence of such practices during the past five years.
"There is nothing in the record to indicate that the ... subpoena authority has been used for stalking or other fraudulent purposes," the judge wrote.
Bates dismissed arguments that the legal debate posed any "grave or formidable constitutional problem" and said that the law "hardly amounts to a real or substantial threat to protected expression."
The judge said the 1998 law contains "adequate safeguards," such as requiring a sworn declaration from a copyright owner that any information sought from Internet providers will only be used to protect their own copyrighted materials.
The entertainment industry traditionally has fought illegal trading by suing companies that operated file-sharing networks. But such networks have become increasingly decentralized, allowing users to trade from computer to computer without a service like Napster (news - web sites)'s.
In response, the industry has increasingly worked to trace users individually, either threatening them into shutting down their collections or persuading Internet providers to pull the plug. It also has resorted to seeding networks with fake files and clogging network connections to frustrate people looking for free music.
OT Apple CEO Ducks Questions on Music Strategy
25 minutes ago Add Technology - Reuters to My Yahoo!
By Duncan Martell
CUPERTINO, Calif. (Reuters) - Steve Jobs (news - web sites), chairman and chief executive of Apple Computer Inc. (Nasdaq:AAPL - news), declined to comment on its forthcoming online music service and its reported talks to buy Vivendi's Universal Music label at the computer maker's annual shareholder meeting on Thursday.
"There have been a lot of rumors in the last few weeks," Jobs said in response to a shareholder question. "Many of them are not true and some of them are true."
Apple, based in Cupertino, California, is readying to launch an online music service, which will allow for users to buy single songs from a deep catalog, record industry sources have told Reuters. The service has already won the praise of some record executives who see it as a potentially powerful weapon against online privacy (news - web sites).
In a further confirmation, Apple sent invitations earlier this week to reporters to an event in San Francisco on Monday, noting that it would be "music to your ears."
Asked by one shareholder if Apple were indeed going to launch such a service, Jobs responded: "You'd think so if you haven't been asleep the last two weeks."
"We really can't talk about unannounced products," he said later, in response to a question regarding the Vivendi (NYSE:V - news) EAUG.PA> talks about Universal Music Group, home to acts such as Eminem (news - web sites) and U2.
Jobs last week denied Apple had made a bid for Vivendi's Universal Music Group record label, but he did not clearly deny that the two parties were in acquisition talks.
Apple, under the direction of Jobs, has been pitching Apple computers as the "digital hub" of a digital lifestyle, and analysts said an acquisition of Universal assets, plus Apple's own online music service due as soon as next week, are an obvious extension of that strategy.
Apple has made digital entertainment, with its iTunes and iMovie editing and recording software, central to its strategy. The company did not Webcast its annual meeting.
In response to a question about when Apple may return to the days of paying a 10-cent to 12-cent a share dividend, Chief Financial Officer Fred Anderson said that unless the U.S. Congress acts to cut taxes on shareholder dividends, an increased dividend would be among "the least effective ways" to return money to shareholders.
Apple had $4.53 billion in cash, cash equivalents and short-term investments on its balance sheet at the end of the most recent quarter.
Earlier this month, Apple reported net income that fell 65 percent from a year ago as revenue was little changed, but hit its own revenue target and profits were at the high end of Wall Street's expectation.
Jobs, in his concluding comments, said that morale at Apple is "very high," adding that, "I have never seen folks at Apple work as hard as they are now."
"I think we are leading this industry in innovation," Jobs said.
"Hopefully things will start to turn around at some point," Jobs said, referring to the weak economy and slack demand for computers and high-technology products in general.
Shares of Apple fell 15 cents to $13.43 in late trading on the Nasdaq.
This is ALSO correct ...
I guess he and Ran realized what all the hulabaloo was about. The financing agreement from last year will require the registration of shares UNLESS the approx 2 million is paid back or REnegotiated.
spin on Cassie...
Samsung Jumps Into Flash Market, Defers DVD Burner Launch
By Doug Olenick
TWICE
4/23/2003 1:15:00 PM
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New York - Samsung will introduce a line of flash memory products this summer, but has pulled back on its plan to enter the rewritable DVD retail market.
In June the company expects to have 128MB and 256MB CompactFlash, SD, MMC and SmartMedia cards and a USB drive in stores, said Sean Stead, Samsung’s marketing and storage product manager. The company will leverage the fact that it already is a major flash memory manufacturer to bring these products to market with a very competitive shelf price in order to compete with the slew of similar products now available, he said.
The flash product road map has 512MB versions of these devices out by August and 1GB by September. Pricing has not been set for any of the products, but Stead said Samsung will try and bring the 1GB models initially somewhere in the $200 to $299 range. He added that for 1GB flash products to truly become a volume seller the price needs to be below $200.
Samsung will support the flash program with a new Point of Sale plan, Stead said, that will position the devices for impulse buying.
Unlike the flash category, Samsung has slammed the brakes on its plan to enter the rewritable DVD retail market this year. In January Samsung was eyeing an early summer release for a DVD+RW drive or possibly some type of multi-drive capable of burning to all the formats. Instead the company will hold back with the possibility that something might be released late this year.
There were several mitigating factors behind the decision, Stead said, primarily that Samsung could did not have the manufacturing capability to produce the needed 4x DVD burner that has been the hot seller in stores. The company’s plant was overwhelmed with orders for a slower burner that was slated for its OEM business and Stead was unwilling to bring this drive into retail because it would be inferior to its competitors.
Samsung has not sided with the DVD-RW or DVD+RW formats, instead the company will wait for one or the other to take a commanding lead. Last year Stead expected the plus format to be the winner, but right now he sees DVD-RW as having an edge due to the greater availability of -R blank media and a slightly better backward compatibility with the installed base of drives and players.
Samsung has moved forward on the combo CD-RW/DVD-ROM front. Last month it released a 52x speed version with a $99 street price and a stand-alone model price at $79.
Samsung will launch a four new LCD monitors this month, the 1501MP, 1701MP, 152MP and 172MP. Suggested pricing is $429, $629, $589 and $789, respectively. The primary upgrade is the inclusion of TV tuners in all the models with the 152MP and 172MP also coming with a secondary snap on TV tuner giving these monitors picture in picture capability.
Record labels sue Napster venture backers
By Sue Zeidler
Click to enlarge photo
LOS ANGELES (Reuters) - Angered by the widespread practice of unauthorised copying of music on the Internet made popular by Napster, two record labels are aiming their legal fire at the venture capitalists who once backed the now-defunct song-swapping service.
Vivendi Universal's Universal Music and EMI Group filed a copyright infringement lawsuit against San Francisco-based Hummer Winblad Venture Partners and two of its partners, Hank Barry and John Hummer, in federal court in Los Angeles on Monday.
The National Venture Capital Association, which represents early-stage investors, cautioned that the lawsuit could have a chilling effect on investment in unproven technologies to the detriment of economic growth.
The lawsuit alleges Hummer Winblad, through a $13 million (8.2 million pound) investment in May 2000 and its management roles contributed to unauthorised copying of digital music by tens of millions of users who were drawn to the Napster service.
Barry served as Napster's chief executive for more than a year, and both men were members of Napster's board.
The suit seeks $150,000 per copyright violation and punitive damages.
"Businesses, as well as those individuals or entities who control them, premised on massive copyright infringement of works created by artists should face the legal consequences for their actions," both labels said in a joint statement.
Hummer Winblad made the investment after the recording industry sued Napster for enabling infringement. The case never went to trial, although it succeeded in idling Napster, which filed for bankruptcy protection in June 2002.
A spokesman for Hummer Winblad declined to comment beyond saying the firm's lawyers were reviewing the complaint.
The other three major record labels -- Sony, Bertelsmann and Warner Music -- did not join the lawsuit. All three declined to say why they did not participate, but some industry sources suggested that the labels believed that the case was too weak and potentially costly.
Barring a settlement, the venture capitalists could revisit some of the same issues raised by Napster in its defence that have also been echoed by other sites under legal fire like Kazaa, one person close to the case said.
Essentially, these companies have accused the music and movie industries of conspiring against them in order to crush competition and maintain a monopoly on online distribution.
In recent arguments filed in federal court in Los Angeles by Sharman Networks, which distributes the Kazza Media Desktop program, has accused the record labels and film studios of abusing their copyrights to improperly extend their monopolies into the realm of Internet distribution.
Those arguments echoed those raised by Napster and are likely to find their way into any litigation between the labels and Hummer Winblad, the person said.
Despite repeated meetings with executives at the major labels, all the labels refused to license music for these services. Rather than legitimise them, the industry conspired to destroy, lawyers for Napster and Kazaa have said.
While Federal District Court Judge Marilyn Hall Patel repeatedly ruled against Napster, it allowed the company to explore anti-trust issues in its defence.
But the Redwood City, California, company went bankrupt before it could make its arguments in court.
Other investment community members cited concern that such a lawsuit sent the wrong message to venture capitalists.
"The concern is that investors would be cautioned about investing in innovative technologies, which is very important for economic growth," said Jeanne Metzger, vice president of the National Venture Capital Association.
"The concern is that investors are being sued for investing in high-risk companies," she added.
MP3 copyright law enforcement increasing
It turns out that Hail to the Thief, Radiohead´s sixth album, couldn´t be more aptly titled.
Nicole Roché
columnist
E-mail Nicole
The unfinished album was leaked online in late March and downloaded by thousands of eager fans — much to the dismay of the band members.
“All the attention is gratifying, but we want it when all our hard work´s done and the best it can be,” bassist Colin Greenwood said recently. “Until then, this is all just unhelpful noise.”
Despite angry artists, most of us don´t give MP3 downloads a second thought — an oversight that could mean trouble for frequent users.
Copyright infringement notices have nearly doubled at the University of Kansas in the past semester, said Jenny Mehmedovic, coordinator of information technology policy and planning.
From January to mid-April, 218 copyright-violating downloads were reported from corporations such as the Recording Industry Association of America and the Motion Picture Association. That´s compared to 115 violations reported from August 2002 to December 2002.
These all took place on a KU network connection, which is used by residents in the residence halls, scholarship halls, Jayhawker Towers and some off-campus dial-up users.
Mehmedovic said it wasn´t the downloads that had increased. The higher number of violations can be attributed to increased enforcement of laws such as the 1998 Digital Millennium Copyright Act.
Could casual KaZaA users finally be held accountable for all those illegal downloads? Show me a single MP3 virgin at this University and I´ll show you someone living in a digital dark age — many people have entire libraries of music downloaded on their computers.
“What we find is that most students don´t realize that this is an issue,” Mehmedovic said. “But we feel like we ought to educate students about what is legal and what is ethical when it comes to electronic downloads.”
Mehmedovic e-mails first-time offenders asking them to delete the illegal material within 24 hours. A second offense will land students in a required educational meeting about copyright law. Students who are caught downloading copyrighted material for the third time will lose their Internet connection for the remainder of their stay in the residence halls — a punishment imposed by the Digital Millennium Act.
According to an article in the April issue of PC World, this act is helping organizations such as the Recording Industry Association of America target commercial Internet providers like Verizon or AOL. Recently the association subpoenaed Verizon to release the name of a user who had downloaded more than 600 songs, and a U.S. district court judge ordered Verizon to comply.
If the ruling stands, Mehmedovic said, then off-campus users could be targeted as aggressively as those currently on the University network.
Michele Kessler, associate director of Legal Services for Students, said groups such as the Recording Industry Association of America and Motion Picture Association probably weren´t as concerned with “the little fish.”
“It´s probably not going to be a problem unless they think you´re some big-time distributor charging everyone $1 to join your network,” Kessler said.
Still, students should play it safe, she said. Those who download occasionally should turn off the file sharing feature on their download program, she said, so at least you´re not sending the file to other users.
Even if you occasionally indulge in the sins of MP3 downloading, it´s still a good idea to protect yourself from the watchful eye of the law. In the end, if you can´t keep the KaZaA to a minimum, it might be time to abstain.
Each week reporter Nicole Roche covers a different consumer issue. She is a Wichita senior in journalism.
This isn't helping IMO.eom
Digital Music: Still Scores Left to Settle
APRIL 22, 2003
NEWS ANALYSIS
By Jane Black
Songwriters think online services want their work for, well, a song, but an ailing recording industry can't afford to play hardball
Randall Wixen represents some of the biggest names in music -- and he's not shy about defending their copyrights. In 2000, he sent a cease-and-desist letter to Presidential candidate George W. Bush, who had been playing Tom Petty's hit I Won't Back Down at campaign rallies. "Any use made by you or your campaign creates, either intentionally or unintentionally, the impression that you and your campaign have been endorsed by Tom Petty, which is not true," wrote the president of Wixen Polin Music Publishing, which negotiates on behalf of its stable of songwriters. The Bush campaign backed down.
Wixen's tactics aren't any softer when it comes to the burgeoning digital music services, such as the label-backed MusicNet and Pressplay. Wixen is no Luddite. But he fears the services are a ruse by the labels to give artists and publishers a smaller piece of the profits: "I'm all in favor of new delivery systems," he begins, "but it shouldn't change the relationship so that we get less and the labels get more."
SONGS FOR RENT. Without the artists that Wixen and other powerful independent music publishers represent -- about 10% to 15% of songwriters, including such big names as Steve Miller, Bob Dylan, Neil Young, and The Doors -- digital music services worry they'll never be able to compete with the underground peer-to-peer services (P2P), which offer unlimited lists of free songs dating back to the dawn of recorded music. Moreover, the gaps in the catalog are particularly important to digital music services' target audience: Well-heeled music fans between the ages of 24 and 55 who want the value-added features that illegal services such as KaZaA don't offer (see BW Online, 4/22/03, "Web Music Gets Its Act Together").
Traditionally, publishers are required by law to grant so-called mechanical licenses to labels and others who want to sell music. It works like this: Songwriters are paid 8 cents for each track that's physically produced -- if the writer has 12 songs on a CD and 1 million disks are produced, the songwriter gets paid $960,000. The new digital services, which charge subscribers $10 a month, allow subscribers basically to "rent" songs. A subscriber can download unlimited tracks to a PC hard drive, but as soon as the subscriber quits the service, the music disappears. Such restricted downloads, also known as "tethered downloads," are the foundation of subscription services because they prevent people from making an infinite number of perfect digital copies on CDs -- or uploading them to the Internet, where they could be shared on illegal P2P services.
Here's the rub: Tethered downloads don't fit the industry's traditional definition of an 8-cents-a-strike copy. And some publishers are asking: If the subscription company earns $10 per month by offering a collection of our songs, why should we get paid only once? Until independent publishers are assured that they'll get the same terms in the digital world as they get otherwise, they're not prepared to budge.
WHO GETS WHAT? The remaining music publishers are willing to negotiate. About 85% of songwriters, represented by the Harry Fox Agency, have agreed that the compulsory "mechanical license" covers tethered downloads, too. In an October, 2001, agreement with the Recording Industry Association of America (RIAA), publishers accepted a $1 million payment up-front in exchange for a promise that the services would account and pay for use of the publishers' work when the Copyright Office ultimately sets a rate. (That won't happen until the market is deemed more mature.) All the music services need to do is file the appropriate legal paper work and the right is granted.
That's easier said than done, respond Pressplay and MusicNet. They say Harry Fox isn't equipped to handle the volume or detailed nature of their requests. On average, executives say, Harry Fox is able to approve only about 50% of requests since, in many cases, it doesn't know who owns the publishing rights to a particular song.
The task is even more onerous with popular hip-hop songs, which often include samples from a variety of different tunes. For example, Christina Aguilera's hit Dirty from last fall featured popular rapper Redman. Aguilera's publisher granted digital rights while Redman's didn't.
Digital Music: Still Scores Left to Settle
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NEEDED: SIMPLICITY. Cases like these mean it can take a few months for Harry Fox to track down and receive permission from the publisher. That's not fast enough for digital services keen to offer the latest hits. The result: Digital music services sometimes end up doing the legwork themselves. MusicNet, for example, contracts with a Burbank (Calif.) company that employs 12 people to research digital publishing rights.
Harry Fox admits that the process is often slower than it would like. After all, until two years ago, it licensed work only on an album-by-album basis. Changing the system to accommodate tens of thousands of individual song requests takes time, says Carey Ramos, an attorney who represents Harry Fox. But Ramos says these complaints are just an attempt to pass the blame for consumers' slow uptake. "The music publishers made an incredibly generous offer," says Ramos. "Imagine if Microsoft were asked to give away Windows free now and that sometime, years later, people would pay for it."
The standoff has many in the industry calling for Congress to step in. "I'd rather see a solution based on the spirit of cooperation in an industry that's contracting," says John Jones, MusicNet's chief of content and music acquisitions. "But we think a clearer definition of the [law governing tethered downloads] may ultimately be what's necessary." Bob Ohlweiler, senior vice-president of digital service MusicMatch, says clarifying statutory rights for rentals of music "would make clearance of publishing rights electronic and simple. We believe that would be advantageous for the industry."
NOT MUCH TIME. On Apr. 3, the Digital Media Assn. (DiMA), which represents large Webcasters and computer companies such as Microsoft (MSFT ) and Intel (INTC ), submitted a proposal to the Copyright Office that would reduce the rates paid to music publishers. But this strategy may be a mistake if it only serves to further anger the publishers and songwriters. Ramos charges that the digital music providers are trying "to turn music publishing into a government-regulated utility." Nor are the proposals doing anything to inspire cooperation from the powerful independent publishers who, like Mark Twain, believe that "no man's life, liberty, or property are safe while the Congress is in session."
For the flagging music industry, time is running out. In February, the RIAA reported a 9% decline in CD shipments vs. February, 2002, and a 6.8% slide in sales for all of 2002. With drops like that, the key to getting the publishers on board may not be legislation but convincing them that a huge potential audience exists for paid digital music and that music-downloading services have arrived.
The more subscribers these services attract, the more inclined publishers will be to take them seriously and make more of their own music available. One sure way to boost traffic would be to lower the price of subscription services. Customers may not be willing to pay top dollar for a service with a limited catalog, but they would pay something. And the greater the number of songs that are offered, the greater the number of fans that will sign up.
It's a virtuous cycle. But the music industry to find harmony, someone is going to need to back down.
Interview: RealNetwork's CEO Rob Glaser
By Lance Ulanoff
Click to Enlarge April 21, 2003
Total posts: 1
2003 has already been productive for the Seattle technology company RealNetworks. With its partners, it launched two new major services: ABC News Live, a 24/7 online news broadcast, and MLB.TV—a venture with Major League Baseball to Webcast live video of the league's thousands of games. RealNetworks technology also became the de facto delivery mechanism for much of the live, breaking news from the War in Iraq, turning already connected citizens into online junkies hungering for news at all times of day. RealNetworks execs claim a five-fold increase in the amount of audio and video delivered by the company. The war even increased subscriptions to RealNetworks' paid services.
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There's no telling how many of those subscribers will stick around as the war winds down, but RealNetworks and its CEO have already proven adept at navigating rough waters. In the past few years, the company joined in the fight against what it perceived to be Microsoft's anticompetitive practices and then watched as the same company launched a major streaming media initiative with Windows Media 9 Series. Microsoft and RealNetworks were once partners.
The broadband wave, swelling to 20 million US homes, could help float the fortunes of streaming media companies, so this seemed like a good time to chat with the man who started it all: RealNetworks CEO Rob Glaser.
LU: How has the release of Windows XP impacted RealNetwork's bottom line, technology choices, and direction?
RG: Well, you know, basically there's a set of fundamental technology trends out there if you just step back. There's the growth of bandwidth, and that is a fundamentally positive trend for us, because it allows us to deliver better and better experiences.
There is an increase in the range of devices that speak IP, be [they] mobile devices like the new Nokia 3650 phone that you can buy anywhere for $300 bucks [and that has] a full-fledged RealOne player in it, or these network devices that people are using to take MP3 collections and run them all over their houses.
Personally, I just got one of these Vonage IP phones. It's actually pretty cool. It comes with one of these Cisco ATA routers where you just plug an analog handset in.
In terms of technology trends, a new operating system like XP makes a big difference. It makes the PC more stable and robust, so you can be running background tasks as your PC operates effectively as a hub or a server in your environment. Those are positive dimensions of a new operating system.
Because Microsoft seems to sometimes not trust customer choice, they salt XP with all these little gizmos and trap doors to get people to try Microsoft stuff. But the reality is that we're downloading more players than we ever have on a worldwide basis. Whatever the impact is of the courts saying what Microsoft should or shouldn't be doing with Windows XP, we've focused our business on continuing to deliver the best technology. We're increasingly focusing on a combination of enabling free services and keeping an eye on the growth we've seen in our premium services.
So our business is just fine. In terms of market dynamics, just look at the broadband trend and the growth in the wide range of devices. I wouldn't say we're going into an era where PCs are irrelevant, and I certainly wouldn't say that to PC Magazine, but I think we're going into an era where the PC is just one of a number of important devices. It plays a special role because of its programmability and extensibility, but when you look at the totality of what's going on with digital media in the mobile market, in the living room, in the home networking environment, there's more. Our focus is on the totality of that, with the PC as a core part of our heritage that we're continuing to focus on.
As the landscape gets broader, the fact that we have partnerships matters. In fact, I was at the NAB convention last week showing our player running on the PlayStation 2, and running on the new Nokia phones, and on the new Palm Tungsten devices. Think of those three categories: the new game consoles, PDAs, and mobile phones. The leading manufacturers are people who are bundling our player, and the players are not running on a Microsoft operating system. My view is that the opportunities in front of us are very good, and we'll continue to more than hold our own on the PC.
Interview: RealNetwork's CEO Rob Glaser
LU: What about the impact of Window Media Player 9 Series?
RG: My sense is, it's actually kind of an interesting dynamic. Microsoft, for reasons that I don't understand—but I welcome—seems to be trying to cram a proprietary Microsoft-only agenda down the throat of the entire consumer electronics industry, and the entire mobile industry, and the entire media industry. We had a booth at NAB last week showing our player working on mobile phones that support mobile standards like 3GPP. We also showed our player supporting MP3 and MPEG4 and RealAudio and RealVideo. We give people a choice between the unique advantage of our innovative, award-winning, proprietary codec and support for all the other standards.
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If you look at the Microsoft agenda, it's all about the Windows Media 9 codec and why it's better than MPEG4. Microsoft wants its codec to be the thing that the industry embraces. I have to tell you that the harder Microsoft pushes an anti-common-standards agenda, the better it is for us. So I certainly encourage Microsoft to keep pushing its uniquely proprietary agenda. If you're looking for mainstream solutions in the marketplace, you've got two choices. One embraces open standards and in fact is built on an open source foundation—Helix—while the other one is tied to Microsoft operating systems. For the primary formats that they're pushing and the primary formats that they're wrapping with the DRM, the whole agenda is Microsoft.
We're having this conversation in the month of the tenth anniversary of the Web browser. I think history shows that if one company, even a super-powerful company, pushes a proprietary solution and the rest of the industry is behind open standards, open standards win.
LU: What's your take on Microsoft's move into digital cinema and theaters?
RG: I think Microsoft focusing on high-end digital movie theaters is great. I think it's a great boon to all the little companies that have been making the old 35-millimeter sprocket projects. It's a pretty low-volume market—but I certainly think it's kind of neat from a technical standpoint. We'll focus on the 100 million phone handsets that Nokia ships every year, or the 50 million PlayStation 2s that are installed. I don't want to say that we'll ignore the market of the 20 digital theaters that are out there capable of playing satellite-delivered movies. You know, we'll probably go after that market eventually, but we'll probably wait till it's a little more of a volume play.
LU: What's the playback quality on these small devices like the Nokia?
RG: In terms of, actually, the CPU of those devices, you can get a pretty darned good frame rate if you've got a couple hundred [kilobit] stream. If you look at the image quality on the screen itself, it's pretty darn good. The bigger issue is network bandwidth. We're in this period where we're getting good data rates. I would say we're getting data rates that are like the data rates we got when we launched RealAudio in 1995. You're getting 24 kilobits now on the GPRS networks, and that's in the US. On the CDM networks like Sprint and Verizon, you're probably getting 40 or 50 kilobits depending a little bit on coverage area.
So what that means as a practical matter is that these devices, like the Nokia, are great streaming audio devices. They're very fine video downloading devices, though the streaming video at this point is more of a technology demonstration. That doesn't become a reliably deliverable consumer experience until you have the 3G services. But as I can tell you from the launch of RealNetworks, we spent our first two years just doing streaming audio and didn't even do video until '97. We figured, hey, that doing video that looks more like pop art than a visible video stream isn't doing anybody any good.
We'll have some video download services if you just want to get a movie trailer and watch it, but in terms of streaming content, we'll mostly be doing audio—the stuff we did back in '95 with the PC. So in the everything-old-is-new-again world, we're seeing familiar trends in the mobile market. The carriers are doing the thing that we hoped they would do, which is being super-aggressive on the next-generation image phones and camera phones that are also media-player phones. We're starting the process of educating consumers that mobile media creation and delivery is becoming a very practical reality. It can become part of people's lives, just like PC streaming started to be in '95.
LU: How have the economics of bandwidth changed in the last few years?
RG: As a general sense, we've seen bandwidth costs dropping [by one-third to one-half] a year. So bandwidth costs have been decreasing, for a frame of reference, faster than Moore's Law specifies.
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That's a very powerful force that takes certain applications and makes them economical when they weren't economical, like downloading a movie. If a movie is 500MB, it used to be that the cost of that movie would overwhelm the consumer. Now with bandwidth costs coming down so dramatically, the economics of that kind of application are like the economics of renting a video.
With things like Real Video 9, we can compress the file 25 to 30 percent more than we could with Real Video 8, which was in turn better than the last MPEG. When you compound that trend with the generational increases in compression, you get very significant savings in bandwidth and cost reductions in bandwidth.
Look at the live video baseball product that we're doing with MLB.TV. We're streaming individual games at 350 Kbit and it looks great. It's an example of something where, certainly a year ago, the economics would have been kind of dicey. This year the economics are quite good. So there are new applications that open up that would have been dicey a year ago—or two years ago might have been close to inconceivable. The interaction of bandwidth, cost improvements, and Moore's Law allows us to have better and better commercial outputs. The wind is at our backs.
LU: MLB streaming video is a very new service. How has the reception been on that?
RG: It's been great and exceeded expectations. I don't know what Bob Bowman of MLB has actually said publicly, so I'll be a little circumspect. From our work with them, we know they've been very pleased from an uptake standpoint. People are actually using and watching this stuff.
A live 24/7 news channel available just over the Internet and a live broadcast of baseball games—those are big events. If this had happened during the bubble, man, there'd be screaming front-page articles about what a huge transcendent thing this is. The reality is that the financial bubble came and went, but the innovation is still happening. That's a very important message that everybody in the industry, particularly your readers, really need to understand. They should give this stuff a try, and see what they think of it.
LU: Microsoft and RealNetworks implement DRM differently. What's your general sense of the importance of DRM and your general philosophy on it?
RG: DRM can give rights holders choices. That's important in terms of having their content be used according to rules that they set.
Taken as an overall portfolio of approaches, we see DRM as very important. When you're talking about the rights holders that are talking about long-form movies, they're particularly sensitive to it. The music industry has been certainly sensitive to it. Rights are an important part of their portfolios. The fact that we've got one of the two mainstream DRM approaches in the industry is terrifically valuable from our standpoint. We've also got the only one that embraces open standards.
LU: I think the main criticism of DRM is that it's invasive and does more watching of you than seems necessary. Is your DRM any different than any others? Does it grab info about the user and send that data back?
RG: Everything we do is consistent with our published privacy policy. From a privacy standpoint, there's nothing about the way our DRM works that anybody has ever looked at and ever raised their hand. Sometimes you get people that say, "Hey, we don't like DRM, we want all the content to be free." My view is, look, if rights holders want to make the content available to the marketplace on their terms, they should. That's why we support a portfolio of ways for people to get access to content.
Our philosophy is, we want to enable the consumer to have access to all fair-use rights. That's why the RealOne player supports people ripping CDs and putting them on their hard drives for personal use. That's why we support playback of MP3s—because we don't make any presumption about consumers having done anything illicit. MP3 is just a format. It can be used for plenty of personal-use scenarios. That's our philosophy—to let people have personal use rights and also give rights to those people who want to characterize how their content is used.
LU: As a longtime Mets Fan, what do you think of the Mets' chances this year?
RG: I think the Mariner's chances are better than the Mets' chances this year. I say that not just as someone who moved from New York to Seattle 20 years ago, but as somebody who tries to be a little bit realistic about these things. Baseball is about having very, very reliable starters, a very reliable bullpen, and decent hitting. There are probably a half a dozen teams that are better than, certainly, the Mets, and maybe two or three more promising than the Mariners. Although I'll tell you that the Mariners won 116 games two years ago. I had seen them in spring training and I thought they looked [like they'd win] about 85 [games]. So it convinced me, among other things. What the heck do I know? [Glaser is a part owner of the Seattle Mariners baseball team.—Editor]
RealNetworks to Acquire Listen.com
Acquisition Will Strengthen Position as Leading Provider of Media Subscription Services for Consumers
Conference Call to be Held at 2PM PDT/5PM EDT at
http://www.realnetworks.com/info/listen.html
SEATTLE, April 21 /PRNewswire-FirstCall/ --
RealNetworks(R), Inc. (Nasdaq: RNWK) today announced it has entered into a
definitive agreement to acquire Listen.com, Inc. in a cash and stock
transaction valued at approximately $36 million. With this acquisition,
RealNetworks will own two of the Internet's best subscription content
services, the critically-acclaimed and market-leading RealOne(TM) SuperPass,
which offers leading news, sports and entertainment programming, and the
award-winning RHAPSODY music service.
"RealNetworks has long been a pioneer and leader in digital music, going
back to our invention of Internet streaming in 1995 and introduction of
RealJukebox in 1999. The opportunity for us to add Listen.com's RHAPSODY, the
best music subscription service, into our family of services was just too
compelling to pass up," said Rob Glaser, CEO, RealNetworks, Inc.
"Listen.com's RHAPSODY has pioneered a number of important capabilities such
as integrating artist guides and customized radio stations within a music
subscription service, and its innovative hybrid streaming and caching
technology. Bringing RHAPSODY and RealOne together will, we believe,
accelerate the adoption of legitimate digital music services."
"RealNetworks has a world-class technology infrastructure and a
demonstrated ability to reach a broad consumer audience with compelling
entertainment content," said Sean Ryan, chief executive officer, Listen.com.
"Backed by these extensive resources, we are in a strong position to grow the
online music market by strengthening RHAPSODY, licensing a wider variety of
music, and offering even more value to new distribution partners."
Listen.com has music assets that will enhance RealNetworks' music
programming and provide operational efficiencies. Listen.com's RHAPSODY
subscription service, highly regarded music and artist information, and
innovative radio service will be important assets in building the music
offerings of RealNetworks' RealOne subscription service. In addition,
Listen.com's distribution arrangements and technology partnerships with
broadband cable and DSL providers, online music sites, computer manufacturers
and consumer electronics companies will enhance the reach of RealNetworks'
subscription offerings. Listen.com has distribution agreements with a network
of more than 15 companies, including Time Warner Cable's Road Runner
high-speed ISP, Charter Communications, Verizon Online, Sprint, Cablevision
Systems Corporation's Optimum Online, Gateway, Lycos, RCN Corporation, and
Sony's Musiclub.
The acquisition follows RealNetworks' strategic investment in Listen.com
announced in February. The parties expect the acquisition to close late in
the second quarter, or early third quarter of 2003, subject to California
Fairness Hearing Approval. All consents from the major music labels have
already been granted. The cash consideration to be paid for stock and vested
stock options of Listen.com is approximately $17.3 million and the stock
consideration is approximately 4.1 million shares of RealNetworks common
stock. These shares represent less than 3% of RealNetworks' shares
outstanding. If the transaction were valued as of the close on April 18th,
the total purchase price would be approximately $36 million.
An integrated financial outlook will be provided on RealNetworks' first
quarter conference call scheduled for April 29th. Depending on the timing of
obtaining California approvals, the impact of this acquisition may be
reflected in RealNetworks' 2nd quarter financial results. Following the close
of the acquisition, RealNetworks would expect Listen.com to incur operating
losses of approximately one million to two million dollars per quarter in
2003, and decreasing thereafter.
As part of the agreement, Listen.com's executive and management team will
be joining RealNetworks. Sean Ryan will continue to lead the Listen.com team
as vice president of music services as part of the RealOne division, directed
by Merrill Brown, senior vice president, RealOne Services. Rob Reid, founder
of Listen.com, will join RealNetworks as vice president of strategic
development. Listen.com will remain in San Francisco and will continue to
operate music services for its customers and distribution partners.
Since 1998, Listen.com has been a pioneer in the online music industry,
first building the largest and most comprehensive directory for legally
available music on the web and subsequently introducing the RHAPSODY digital
music subscription service. RHAPSODY combines unlimited, on-demand access to
the world's largest library of digital music, CD-quality Internet radio, and
the ability to mix and burn custom CDs, plus extensive music information and
editorial recommendations.
RealNetworks remains a committed investor in and technology partner of
MusicNet, a leading online music company formed by RealNetworks, AOL Time
Warner, Bertelsmann, and EMI in 2001.
Conference Call
RealNetworks will host a public webcast and conference call at 2 PDT today
at http://www.realnetworks.com/info/listen.html. A replay of the call will be
available at the same location. The dial-in number for the call is
877-501-1455 for domestic callers and 484-630-4026 for international callers.
The passcode is RealNetworks.
About RealNetworks
RealNetworks, Inc. is the leading global provider of network-delivered
digital audio and video services and the creator of the technology that
enables digital media creation, distribution and consumption. Consumers use
RealNetworks' RealOne Player and RealNetworks' content subscription service,
RealOne SuperPass, to play free and premium digital content. Broadcasters,
network operators, media companies and enterprises use RealNetworks' products
and services to deliver digital media to PCs, mobile phones and consumer
electronics devices. Consumers can access and experience audio/video
programming and download RealNetworks' consumer software at
http://www.real.com . RealNetworks' systems and corporate information is
located at http://www.realnetworks.com .
NOTE: RealNetworks and RealOne are trademarks or registered trademarks of
RealNetworks, Inc. All other companies or products listed herein are
trademarks or registered trademarks of their respective owners.
This press release contains forward-looking statements that involve risks
and uncertainties, including statements relating to: (a) the effect of the
acquisition on RealNetworks' business and the combined business; (b) the
future growth of online music and other subscription services; (c) the ability
of RealNetworks to utilize, grow and enhance the assets acquired in the
acquisition; (d) the closing of the acquisition in the second quarter of 2003;
(e) the executive and management team of Listen.com joining RealNetworks; and
(f) the effect of the acquisition on RealNetworks' financial results and
future operating losses. Actual results may differ materially from the
results predicted. Factors that could cause actual results to differ from the
results predicted include risks regarding: whether and when closing of the
acquisition will occur; whether RealNetworks will be able to successfully
integrate Listen.com following the closing of the acquisition; the potential
inability to retain key employees of Listen.com; the timely development,
production and acceptance of the products, services and technologies
contemplated by the proposed acquisition; competitive risks, including
existing competing technologies, products and services and the emergence of
new entrants; development and consumer acceptance of legal online music
distribution services; the continued growth of "free" peer-to-peer services;
potential litigation involving patents and intellectual property matters; and
general macroeconomic trends including without limitation financial
difficulties facing technology companies, the reduced demand for technology
products and the impact of past and potential future terrorist activities and
military actions.
More information about potential risk factors that could affect
RealNetworks' business and financial results is included in RealNetworks'
annual report on Form 10-K for the year ended December 31, 2002 and from time
to time in other reports filed by RealNetworks with the Securities and
Exchange Commission.
SOURCE RealNetworks, Inc.
Web Site: http://www.real.com http://www.realnetworks.com
Music download event is a hit
19 April 2003
- by Claire Woffenden
Over one million people visited the Digital Download Day website in just over two days last week - with thousands downloading free music tracks.
Digital Download Day, organised by digital music company OD2, gave music fans £3 worth of free tracks to stream, download or burn on to CD. Tracks were accessible free of charge from 9 to 16 April.
According to event organisers OD2, more than 150,000 music fans downloaded tracks making the website the number one music site in the UK last week.
Paul Smith of OD2, said: "The success of the project has shown that people want a simple, yet legal way of accessing music over the internet.”
The Digital Download Day top five artists and songs were:
1 Christina Aguilera Beautiful
2 Coldplay Clocks
3 T.A.T.U. All The Things She Said
4 Room 5 Featuring Oliver Cheatham Make Luv
5 Eminem Sing For The Moment
Students Lose Web Use in Copyright Case
51 minutes ago
Add Technology - AP to My Yahoo!
STATE COLLEGE, Pa. - Penn State deprived 220 students of high-speed Internet connections in their dorms after it found they were sharing copyrighted material, the university said Monday.
"Basically, we received a complaint," said Penn State spokesman Tysen Kendig, who said he could not reveal who registered the complaint.
"Upon investigation, we found that the students had publicly listed copyright-infringing materials on their systems to other members of this network," he added.
Music and movie industry groups have urged universities to curb the sharing of copyrighted files and penalize violators.
Students, who often have fast Internet connections and little cash, are seen as the vanguard in a wave of downloading that the entertainment industry claims is cutting into its profits.
"I was kind of surprised at being caught," Jason Steiner, a freshman in aerospace engineering, told The Daily Collegian, Penn State's student newspaper. "I was sitting there online and all of a sudden I wasn't, with no idea why."
The sanctioned students all live in campus residence halls. They can still access their campus accounts from other computers.
The connections to their dorm rooms will be restored once the copyrighted materials have been removed, Kendig said.
On March 31, Penn State's executive vice president and provost, Rodney Erickson, sent an e-mail to more than 110,000 students, administrators, faculty and staff reminding them that the university prohibits sharing copyrighted material and warning that such sharing is against the law.
Earlier this month, 85 students at the Naval Academy in Annapolis, Md., were disciplined for using the school's network to trade copyrighted music and movies.
___
On the Net:
http://www.psu.edu
Securing Digital Content
By Dennis Fisher
April 21, 2003
As Microsoft Corp. prepares to release the beta version of its anticipated and controversial Rights Management Services, a small security company has been quietly working on technology that could trump Microsoft's and make it easier for companies to control digital content.
Cryptography Research Inc. has developed a technology that associates security measures with each piece of content instead of using a generic protection scheme for all copies. The security measures are contained in code that runs on a virtual machine inside a playback device.
As the content is decrypted during playback, the virtual machine uses APIs in the playback device to determine whether or how the playback should proceed.
The architecture includes a digital watermarking function that would let content owners identify every legal copy of a given piece of content. If a legal copy is duplicated, the illegal version could be traced. Under this system, each playback device would have a unique set of keys for decrypting content.
The concept, which the company calls self-protecting digital content, grew from research to uncover a DRM (digital rights management) solution amenable to everyone in the debate over mandating copy protection.
"Both sides are missing the point. Mandating copy protection isn't realistic," said Paul Kocher, president of Cryptography Research, based here. "But [content owners] have a real problem. Piracy is illegal, and my job is to solve the security problem."
Kocher said the company has had discussions with Hollywood studios about licensing the technology.
Microsoft, meanwhile, is taking a more traditional approach with its upcoming RMS, which will be a part of Windows Server 2003. Designed mainly to give enterprises a way to protect intellectual property, RMS will let users assign persistent rights to a document. For example, a user could control whether the recipients of an e-mail are permitted to forward, print or reply to the message.
That's just the tip of the iceberg for Microsoft's content protection initiatives, according to officials. The heart of the effort is NGSCB (Next-Generation Secure Computing Base), which will have a series of advanced security features that, when coupled with RMS, will enable tighter DRM.
The system relies heavily on the use of encryption, with only trusted, digitally signed applications being allowed to run on NGSCB-enabled machines.
The NGSCB concept has drawn quite a bit of flak, and several well-known cryptographers criticized the plan during a panel discussion at the RSA Conference here last week.
BILL OF RIGHTS
Details of CRI's new DRM technology
Content played by virtual machine running inside player
Security code embedded in virtual machine determines how content is played
Digital watermarking can help trace illegal copies to original owners
Both Ron Rivest, one of the founders of RSA Security Inc., and Whitfield Diffie, inventor of public-key cryptography, said that the NGSCB architecture gives Microsoft and its partners too much control over users' machines.
Microsoft officials said that they are aware of the concern around NGSCB and RMS, but they believe users will embrace the technology as a way to improve security.
"The evolution of Palladium as it relates to rights management will be very important," said Dave Aucsmith, chief technology officer of the Security Business Unit at Microsoft, based in Redmond, Wash. "The long-term process of rights management as a security tool is something we have to continue to work on. I'm hoping that we can reach a state where people don't attack software anymore."
Although that may be a fantasy, many of the security features in NGSCB are hardware-based, making them much more difficult to tamper with or attack than software. Encryption keys stored in hardware, as they will be in the Microsoft architecture, are considered more secure than those stored in software.
U.S. Sides with Record Labels in Internet Case
Fri Apr 18, 9:21 PM ET Add Technology - Internet Report to My Yahoo!
By Andy Sullivan
WASHINGTON (Reuters) - The U.S. government sided with the recording industry in its dispute with Verizon Communications Inc. on Friday, saying a digital-copyright law invoked by record labels to track down Internet song-swappers did not violate the U.S. Constitution.
The move, while expected, came as a blow to the Internet provider as it struggles to shield its customers.
"We would have expected they would have recognized there are important privacy and safety issues beyond the narrow copyright claims here," Verizon Vice President Sarah Deutsch, who is also associate general counsel, told Reuters.
Verizon, and a recording-industry trade group have been in court since September, arguing over whether Verizon should be forced to help crack down on the online song-swapping that record labels blame for a decline in CD sales.
The Recording Industry Association of America (news - web sites) says Verizon is required under law to help its members protect their copyrights. Verizon says it is willing to help, but that the law only applies to Web pages stored on its computers, not the "peer to peer" networks like Kazaa that merely travel across its wires.
A district court sided with the recording industry in January. Verizon appealed the decision, and is arguing that the names of suspected copyright violators should not be revealed in the meantime.
Verizon argues that the law in question, the 1998 Digital Millennium Copyright Act (news - web sites), known as the DMCA, violates free-speech and due-process rights protected by the U.S. Constitution.
In a filing with the U.S. District Court in Washington, the Department of Justice (news - web sites) said the law is not unconstitutional. The Justice Department (news - web sites) is required to weigh in on cases where constitutional issues are raised.
Deutsch said she was disappointed that the Justice Department would take such a stand, as stalkers and other criminals could conceivably use the law to track down victims.
RIAA WELCOMES RULING
"The government's filing today supports the proposition that we have long advocated: copyright owners have a clear and unambiguous entitlement to determine who is infringing their copyrights online and that entitlement is constitutional," said Matt Oppenheimer, Senior Vice President for Business and Legal Affairs at the RIAA.
"Verizon's persistent efforts to protect copy thieves on pirate peer-to-peer networks will not succeed," he told Reuters.
Justice said the law did not violate the free-speech rights of everyday users because it is only targeted at those who violate copyrights.
"It is manifest that the DMCA's subpoena provision targets the identity of alleged copyright infringers, not spoken words or conduct commonly associated with expression," Justice said.
Justice also said that the law did not violate due-process protections because nothing in the Constitution specifically barred the investigative process set up by the DMCA, which requires record labels to get approval from a court clerk before asking Verizon or other Internet providers to surrender customer names.
Verizon argues that record labels should be required to get permission from a judge, rather than a clerk, a move that would add another legal hurdle to any copyright investigation.
Verizon says such a move is necessary to protect user privacy because otherwise any copyright holder -- or anybody claiming to be a copyright holder -- could easily obtain the name and address of any Internet user.
(wow- could be cause for basher concern I would guess...)
Digital audio player sales expcted to remain brisk
By Margaret Quan
EE Times
April 17, 2003 (12:48 p.m. ET)
MANHASSET, N.Y. — The market for digital audio players should remain robust over the next five years, driven mostly by sales of hard-disk drive-based portables and combination CD/MP3 players, according to market researchers Instat/MDR.
Its report forecasts the market for all portable digital audio players will register a 39.7-percent compound annual growth rate from 2002 through 2007. During that time, total portable unit shipments are expected to climb from 6.8 million in 2002 to 36 million units in 2007, according to Instat/ MDR (Scottsdale, Ariz.).
Higher capacity storage, more inexpensive semiconductor components that decrease costs and increase player options and the addition of real-time encoding will fuel the popularity of portable digital audio players.
Most growth in the portable player segment is expected to come from hard disk drive-based portables which will grow 68.4 percent annually over the forecast period. Price reductions and a larger variety of HDD-based devices along with consumers interest in using the devices to store video and even data will contribute to the growth, said Instat/MDR's Internet access device analyst Cindy Wolf.
CD/MP3 player portables will contribute the most volume over the next five years and grow 42.7 percent annually. They currently make up the largest portion of the digital audio players sold, or about 22 percent of the 30 million CD players sold worldwide in 2003.
The number of PDAs and handhelds with digital audio will increase in the next year, and companies will offer a wider range of devices with different featuress and prices in hopes to entice consumers to make purchases in a down economy, Wolfe said.
gern- Wolf, Wolfe, the e must have come from expcted LOL
Samsung Adds WOW to New MP3 Player
Device features surround sound simulation technology.
Martyn Williams, IDG News Service
Wednesday, April 16, 2003
Samsung Electronics has unveiled what it expects to be its most popular flash-memory based digital music player for 2003.
The YP-55 will be available in two versions, one with 128MB of memory and one with 256MB of memory, and is the first MP3 player to include SRS Labs' WOW surround sound simulation technology, according to the company.
The player also includes an FM radio and has a real-time encoding function that enables users to record both radio and audio from an external device, such as CD player or microphone, connected via a mini jack. There is a USB 1.1 socket to connect to a personal computer.
A single AAA battery provides power for the device and should last through around 15 hours of playback, said Samsung.
Cool Case
The player is encased in a small cylindrical aluminum case that certainly gives it a cool look. A few buttons grace the outside of the case in addition to a small LCD that displays information about the track being played.
It was designed to make it appeal to the youth market and Samsung expects sales of the player will contribute to around 60 percent of the estimated 200,000 players it aims to sell in South Korea this year. Samsung said it expects the entire domestic market to be 400,000 in 2003.
The player will go on sale in South Korea on April 20 and cost $172 for the 128MB version and $205 for the 256MB version.
Samsung has not decided on sales plans for the device in overseas markets although the company usually follows domestic sales with international launches. It currently sells MP3 players in the U.S., China, South East Asia, and Europe.
Navy disciplines students for downloading
Wednesday, April 16, 2003
FROM CNET NEWS.COM
The United States Naval Academy disciplines 85 students accused of illegally downloading music, in one of the most public rebukes yet to campus file-swapping.
The United States Naval Academy has disciplined 85 students accused of illegally downloading music, in one of the most public rebukes yet to campus file-swapping.
The punishments stopped short of the most extreme possibilities for Naval midshipmen, as Academy students are called. A spokesman for the school said that no students had been expelled or suspended, but that they had been appropriately disciplined.
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"This was about holding the next generation of our nation's combat leadership accountable for their actions," said Commander Bill Spann, the Academy's spokesman. "This was an important lesson to learn, particularly given their age, and that they were told on numerous occasions that this was an inappropriate use of government resources."
The Academy's confiscation of student computers last year was one of the most well-publicized moments in a growing campaign against file-swapping on campuses. Other colleges have warned their students about the dangers of copyright infringement, or imposed strict bandwidth monitoring tools, but few have imposed direct punishments for trading songs or videos online.
The Recording Industry Association of America turned up the heat earlier this month, however. The trade group sued four students at three universities, primarily for running tools on their personal computers that allowed other people to search the campus networks for MP3s and other files. The RIAA called the search tools "mini-Napsters," although critics of the action noted that several of the tools functioned more like a traditional Web search engine than a file-swapping service.
The lawsuits, filed without first contacting the students involved, angered officials at some of the universities.
"Had you followed the previous methods established in notification of a violation, we would have shut off the student and not allowed the problem to grow to the size and scope that it is today," Michigan Tech President Curtis Tompkins wrote in a letter to the RIAA following the lawsuits, one of which targeted a student at his school. "We would have expected the courtesy of being notified early and allowing us to take action following established procedures, instead of allowing it to get to the point of lawsuits and publicity."
The Naval Academy investigation began in November, when the administration seized computers belonging to 92 students. Seven of those were not disciplined. Spann declined to comment on specific punishments, but said disciplinary actions for the others could range from demerits and loss of leave to extra duties and restrictions on campus activities.
All the students were given back their computers, and at no time did they lose access to their network files or campus computing facilities, Spann said.
Spann declined to comment on whether any of the students had run their own network search tools, or on whether the Navy was actively monitoring students' use of the network. He said any future violations would be dealt with according to the school's policies.
The RIAA welcomed the disciplinary actions.
"When colleges and universities enforce their own policies against copyright infringement occurring on their campuses, it is often a wake-up call to those unaware of the serious consequences involved in engaging in this type of illegal activity," a spokeswoman said. "We absolutely applaud those (institutions) who take such theft seriously."
By John Borland, Staff Writer, CNET News.com
Perception Digital Proudly Launches Their Digital Recordable Car Jukebox
Compatible With All Cars / Doubles as Standalone Jukebox at Home / 20GB Hard Drive
SANTA CLARA, CA -- (INTERNET WIRE) -- 04/14/2003 -- Get ready to experience a true treasure on the road. This universally versatile Car Jukebox is powered by PDHercules state-of-the-art, digital hard drive operating system. Perception Digital's innovative new Car Jukebox is now available at Fry's Electronics. How simple is it? Fry's will do the system installation for you.
"Now you can drive from San Francisco to New York for 6 times without repeating the same song," said Dr. Jack Lau, CEO of Perception Digital. "What's more is that the detachable hard drive can be used as an auxiliary music server at home."
With this sophisticated unit you can convert any audio source such as voice, CD, cassette, FM radio and much more into MP3 format. You can even record a voice memo to send out for later use. PDHercules Car Jukebox has a standard 20 GB trunk mountable and easily removable hard drive and a sleek navigation unit. This highly developed unit allows you to archive approximately 5,000 songs, meaning you can take about 300 hours of music with you on the road. Equipped with Audio in/out and USB port, PD Hercules Digital Recordable Car Jukebox can be easily detached and used at home as a standalone Jukebox. With its endless uses, it is simply a must have on a road trip and a pleasure at home.
Perception Digital is a Hong Kong based company whose products have been featured in articles by the New York Times and named "Best Buy" in Wired Magazine July 2002.
Perception Digital
c/o Sunnytech
Santa Clara, CA 95054
------------------------------------------------------------------------
Contact: Virgil Chen
Company: Perception Digital
Title: c/o Sunnytech
Phone: 408-986-8113
Email: virgil@perceptiondigital.com
URL: http://www.perceptiondigital.com
MusicNow? Not Yet.
Subscribe to The Post By Rob Pegoraro
Sunday, April 13, 2003; Page H07
Buying music on the Internet isn't as easy as you think. You can order a CD with one-click efficiency -- but if you want to download a song instead of waiting for a plastic disc to arrive in the mail, you'll face a maze of fine-print restrictions, enforced by proprietary, sometimes buggy software.
This problem can't be blamed on technology. Tools to compress a song into an easily transferred file have existed for years, and millions of people use them every day.
But they're not paying for their downloads, nor have they been given any easy way to do so, even though online sales are also old hat.
The recording industry's ventures into digital-music sales, with one exception (Vivendi Universal's MP3-only, minor-label outlet EMusic), have consistently failed to heed the lessons of such file-sharing systems as Napster and Kazaa: People want downloads they can use as they see fit.
MusicNow, launched March 26 by Chicago-based FullAudio, could have learned from such predecessors as Listen.com, MusicNet and Pressplay. Instead, it compounds their errors.
MusicNow (www.musicnow.com) offers a $4.95-a-month plan that consists of souped-up Internet radio and a $9.95-a-month option that adds unlimited music streams, "conditional downloads" and the ability to buy "permanent downloads" at 99 cents each for copying to music players and CDs.
That two-tiered structure lends this service, which lives inside Microsoft's Windows Media Player 9 (for Win 98 SE or newer), a split personality.
Its radio half, done up as a series of channels, looks slick but doesn't offer a lot over existing Web radio, much of which remains free. Its sole advantages are the lack of ads, the option to skip past a song and its display of what artist is next on the playlist.
MusicNow's downloading is much less remarkable. Both conditional and permanent transfers are offered as Windows Media Audio files, encoded at a good-but-not-great bit rate of 128 kilobits per second. You can search for music by artist, album title or song title, then stream it, obtain it in conditional form or buy it outright. (The two kinds of downloads are indistinguishable in Windows without inspecting file-properties windows.) Conditional downloads can only be played on a PC signed in to a MusicNow account, and you must also go online periodically to renew the songs' licenses.
Permanent downloads are touted as yours to keep but aren't quite: Each one can only be burned to CD twice and transferred to three portable players. And it remains in Windows Media Audio format, incompatible with a lot of digital-music hardware.
Most damning of all, these limits mean purchased tracks will not stay purchased. I burned three songs to a CD Thursday morning, but when I tried to burn them to a second CD that night, MusicNow's software asked me to cough up another 99 cents each.
Tech support, accessible only via e-mail, replied Friday that it had "reissued the licenses to these tracks"; a spokesman later said the buy-these-songs-again message shouldn't have appeared until my third copy to CD, but the damage was done.
This behavior is unacceptable in any kind of sales transaction. The nation's foremost foe of Internet piracy, Motion Picture Association of America President Jack Valenti, has put it best: "If you cannot protect what you own, you don't own anything."
You can easily evade these restrictions by burning a permanent download to CD and then copying it back to your computer in MP3 format -- but why should you have to? Don't the record labels insisting on this know they're only annoying potential customers?
MusicNow's malfunctions might be forgivable if it offered better access to music, but it doesn't. Despite having signed up all five major record labels, the service's irritatingly erratic catalogue leaves out many artists big and small. As with other music services, this isn't all MusicNow's fault; some artists refuse to sell their work online, and others are still arranging for that.
Microsoft May Be Eyeing Universal Music Buy
7 minutes ago
Add Business - NewsFactor to My Yahoo!
Keith Regan, www.EcommerceTimes.com
Amid widespread reports that Apple (Nasdaq: AAPL - news) Computer is mulling the purchase of Vivendi Universal's music business, Microsoft (Nasdaq: MSFT - news) may be about to join the fray.
Published reports say Vivendi has approached Microsoft as part of its effort to find a suitable buyer for the Universal music label. Late last week, Apple was rumored to be close to sealing a US$6 billion deal for the business, while Intel (Nasdaq: INTC - news) was said to have expressed interest as well.
Not a Stretch
Attempts to reach Microsoft and Apple for comment were not immediately successful. Analysts said that while details of any transaction would dictate whether the move was a prudent one, the gap between technology companies and those involved in entertainment has never been smaller.
"If you look at how PCs are sold today, it's all about the listening and viewing experience," Giga Information Group analyst Rob Enderle told the E-Commerce Times.
Although it has made serious inroads into the entertainment PC market only in recent quarters, Microsoft has made major improvements to its software suite for those operations. "It's not that far of a leap to owning a label," he added.
Already at War
In fact, both companies have battled fiercely for the attention of entertainment technology enthusiasts, though Apple still holds only a single-digit share of the home computer market.
Last fall, Microsoft announced it would offer a discounted version of its media player software platform, in an effort to fend off a new release from competitor RealNetworks (Nasdaq: RNWK - news). And Apple's mobile iPod device has won almost unanimous acclaim.
The Wall Street Journal reported that Microsoft was on a short list of companies approached by Universal executives in hopes of finding a buyer who would keep the unit intact or an investor willing to bankroll a management-led buyout from France-based Vivendi.
Cash and Carry
If that report is true, Microsoft almost certainly was chosen for its deep pockets. At one point last year, the software giant had some $40 billion in cash on its books, sparking speculation that it would embark on a buyout spree to take advantage of the depressed values of technology companies.
Indeed, the company has made some purchases, spending $1.3 billion to buy software integrator Navision last spring, buying PlaceWare earlier this year for $200 million and paying an undisclosed sum for some assets of Connectix.
But Microsoft's willingness to take a multibillion-dollar plunge into an entirely new business may be another matter entirely. The company has been fairly conservative to date, Enderle noted, and has not shown signs of changing its stripes.
A Couple Billion Short
The Apple rumors, meanwhile, were met with concern by some analysts, who noted that the rumored purchase price is well above the amount of cash Apple has on hand. In addition, the company's stock is not as valuable a commodity as it once was.
Shares of both technology companies were up slightly in early trading Monday.
Apple Wants Vivendi To Dance
Arik Hesseldahl and Peter Kafka, 04.11.03, 3:00 PM ET
NEW YORK - To the long list of gigs tech pioneer Steve Jobs has held over his life, he now wants to add another: record producer.
Industry sources confirm that Jobs' Apple Computer (nasdaq: AAPL - news - people ) is considering a bid for Vivendi Universal's (nyse: V - news - people ) Universal Music unit. According to a story in today's Los Angeles Times, Jobs may offer up to $6 billion for the unit. Apple shares fell sharply on the news.
Neither Apple nor Vivendi offered any immediate comment on the reports, which come amid much rumor and speculation about Apple's intentions in the music business. The rumors have been prompted by forthcoming updates to Apple's iTunes music software and its iPod digital music player, and the potential launch of a downloadable music service that would complement them both.
Sources familiar with negotiations say Apple is close to finalizing a deal with Sony (nyse: SNE - news - people ) to sell the company's digital music catalog on its new digital music service. Three other major music groups--privately held Bertelsmann's BMG, AOL Time Warner's (nyse: AOL - news - people ) Warner Music and EMI (nyse: EMI - news - people )--are said to have already signed on. A launch is expected this spring and could come as early as this month.
People who have seen the service say it will let Apple users buy individual songs for 99 cents apiece, which they can burn to compact discs or port into the company's trendy iPod music players.
Rumors have intensified in recent days that a major revamp to the iPod is also in the works, the unveiling of which would coincide with the other announcements. The iPod is available in capacities of 5, 10 and 20 gigabytes; rumors suggest the new players would range in capacities from 15 to 30 gigabytes and include a desktop cradle.
Word of the planned service has circulated within the fanatic Apple community for months. Jobs, Apple's chief executive and a famously persuasive salesman, has been pitching the plan himself in presentations to potential partners.
One possible stumbling block for Jobs is that, like all other digital music services to date, Apple still wouldn't be able to offer every song that music fans might want--including those by the Beatles. A handful of prominent artists, such as Madonna, still won't let their music be sold online.
Irving Azoff, manager of the Eagles, says he likes the Apple service, but he won't consent to selling the band's music on it unless they get a higher royalty rate than the one Apple has promised. "I looked at it and I loved it," he says of the service. "I'm just waiting for a deal that makes sense for us."
Another potential stumbling block: For all the attention the iPod has received in the national press, it is hardly a ubiquitous consumer item. Apple doesn't release sales figures on the units, but industry observers say the company has sold no more than 600,000 of them since the product launch.
Even if the new music service turns out to be wildly successful, it won't have a significant impact on Apple's bottom line--or the music industry's attempt to slow a sales decline it blames in large part on piracy.
The market for digital music is tiny. Services like Pressplay and Musicnet, backed by record companies, account for only about $50 million in sales and boast a paltry 300,000 to 350,000 paid subscribers, according to Jupiter Research. That compares to a $12 billion market for CD sales, according to the Recording Industry Association of America.
But CD sales are on the decline. Unit sales in 2002 barely topped 681 million, down from 762.8 million in 2001, according to Nielsen-SoundScan. The number of new CD releases has been on the decline as well, to 33,400 last year from 35,500 in 2000. Sales per title in 2000 averaged above 8,350 in 2000, but dropped to below 8,000 last year, based on Nielsen-SoundScan figures. Meanwhile, sales of blank CDs often used, though not exclusively, for making personal copies of music topped 1.7 billion units last year, according to the Consumer Electronics Association.
Apple could be wading into the market for downloadable music at just the right moment. Consumer surveys conducted by Ipsos-Insight, a New York-based consumer research firm, found that at least 19% of the U.S. population aged 12 and up--or about 60 million people--has downloaded music from some kind of music file-sharing service, be it legal or not. Yet music labels have so far resisted seriously embracing music download services because of copyright concerns and instead have focused their efforts on chasing services like Napster and AudioGalaxy out of business, or reducing their services, with aggressive lawsuits.
"There can be no doubt that the U.S. population has become accustomed to digital music," says Matt Kleinschmit, an Ipsos-Insight analyst based in Minneapolis.
And--no surprise--younger people, who represent the future of the music business, are downloading more music than anyone else. Kleinschmit says 61% of U.S. teens have downloaded MP3 or other music files. But despite the wide availability of pirated music, they also seem willing to pay for it, too, he says.
"This is a generation that has come of age with digital music and CDs," he says. "To them it's a no-brainer. They see the value of online channels of distribution."
And so it may be for Apple Computer and Steve Jobs. Apple's share of the overall computer market is down below 5% globally, and like others in that market it has struggled to maintain profitability, reporting an $8 million loss in its most recent quarter on sales of $1.47 billion.
"This could be a catalyzing event if it goes through," says Phil Leigh, an analyst at Raymond James in St. Petersburg, Fla. "It is becoming clear that Apple is focused on digital media and would like to reduce its reliance on the economic dynamics of the PC business. Copyright issues have been an excuse for not moving forward. But once the decision is made, I think everyone will get on the train as it moves forward."
Apple buy could spit in the face of the RIAA
Downloads for all?
By Jack Russell: Saturday 12 April 2003, 10:30
RUMOUR HAS IT, as we reported yesterday, that Apple is considering buyinging the Universal Music Group for approximately $6 billion in a bid to strengthen the company's role as a digital media company. The most intriguing part of a potential deal, however, is how it could affect ongoing questions of DRM and the continuing war between the MPIAA/RIAA and their consumers.
Apple, unlike Microsoft, has been considerably quieter about integrating digital rights management or draconian spyware/licensing schemes into their operating system, and while plans to do so may be on the drawing board they've not attracted near the attention or publicised such moves nearly to the same extent. Some would argue that Apple has shown little interest in even treading such a path, especially given the company's history of providing MP3-friendly devices like the iPod or its long-running inclusion of CD/DVD burners in its systems.
Up until now, the consensus has been that Apple, in the end, would be forced to lock-step with whatever DRM system was eventually adopted by the world at large, particularly if copy-protection was integrated into the MP3 file structure which required a compliant player to function. If Apple was to buy its own major branch of the music industry, however, the entire situation would change. With 23% of the market, Universal has tremendous leverage and access to a wide variety of talent. Apple could, if it chose to do so, launch an entirely new online music distribution system or offer songs for download (for a small fee) in the sorts of ways fans have been clamouring for since the dawn of MP3.
If such a move was successful it would shake the music industry to its roots. Faced with the reality that Universal had made the successful jump to an online distribution model, other record companies would be forced to follow suit or watch their own market share shrink. The battle between DRM companies and computer users is, in the end, a battle over whether or not the individual consumer or the corporation should have control over a user's machine, and who should have the right to investigate the content stored there. Apple has always seemed to favour the rights of the user over the intrusions of the corporation — here's hoping Cupertino has a plan that'll spit in the RIAA's eye.
emit, Fujitsu-Ten just licensing Ibiquity (PAC) as well don't forget.
cheers
Experts predict end of CD
by Greg Kot
Chicago Tribune
(KRT Campus)
April 11, 2003
When it was introduced, the compact disc helped bail out the music business: Domestic sales of the new technology zoomed from 800,000 copies in 1983 to 288 million by 1990, and continued to surge by the hundreds of millions through the '90s.
But with March marking the CD's 20th anniversary, the boom is over. Compact disc shipments in the U.S. plunged nearly 9 percent last year to just more than 800 million, according to the Recording Industry Association of America (RIAA). The statistics confirm a downward trend that has been gaining steam since 2001, and continues this year, with CD sales down more than 6 percent from their already slack 2002 pace.
The ripple effect is only beginning as the music industry braces for a future that will involve the death of CD stores and the rise of wireless, pocket-size MP3 players that will enable consumers to access thousands of hours of music at the touch of a button. The only real question is how long it will take for those scenarios to become reality.
"You'll see CD sections in stores decline quickly over the next few years because they will be replaced by technology that provides dirt-cheap storage and the ability to basically access and play any type of music anytime, anywhere," says Mike Dreese, the CEO and founder of Newbury Comes, a New England record-store chain. "Wireless technology basically will create a world where we can have anything we want all the time."
The death knell is already ringing for CD stores, some retailers and industry observers say. In January, two major chains - Warehouse Entertainment and Value Music - filed for Chapter 11 bankruptcy protection. And nearly 500 music specialty stores nationwide have been shut down in recent months.
"Brick-and-mortar specialist CD stores are done in five years," Dreese says. "Stores like Tower or Sam Goody or Virgin are fast becoming anachronisms."
Not so fast, says Dan Hart, CEO of Echo, a joint venture of retailers (Best Buy, Tower Records, Virgin Entertainment, Warehouse Music, Hastings Entertainment and Trans World Entertainment) that is licensing songs from labels and plans to begin offering in-store downloads this year. Internet retailing was one of the few growth areas for music stores last year, with sales up 8.4 percent to 8.1 million units, according to Nielsen SoundScan.
"There's no question CD sales are declining, but the phase-out of retail will take longer than people predict - it'll be more like 30 years rather than five," he says. "There is a whole generation of people out there educated to using CDs as their primary music format."
But even Hart says that to retain a role in the marketplace, CDs will have to evolve.
For two decades, record companies bathed in profit, thanks to the compact disc. The rise of the new digital technology prompted many labels to reissue their long-neglected back catalogs on CD: Bands like the Beatles, Rolling Stones, Aerosmith and The Who made millions of dollars for their respective labels simply by having their past albums transferred to the new digital format, sometimes several times over. The shelved work of artists such as Bob Dylan, Eric Clapton and Robert Johnson was repackaged in multi-CD box sets, and sold millions of copies.
But in the last three years, the bottom fell out of the CD market. Why the sudden decline in what had been an industry staple? The RIAA blames Internet "piracy": file-sharing by consumers is proliferating, with millions downloading free MP3 music files daily through services such as Soulseek and KaZaa. MP3 files are digitally encoded files that can be downloaded from the Internet, posted on a Web site, sent via e-mail or stored on a computer hard drive and then played back or transferred onto blank CDs. KaZaa alone claims more than 9 million monthly users. Six of the leading free file-sharing applications were being used by 14 million consumers a month in a recent comScore Networks analysis.
Sales of blank CDs soared past the 1 billion mark worldwide in 2000 and increased 40 percent last year. Illegal CDs - often manufactured and copied on personal computers from free Internet downloads - are now routinely sold for a few dollars in school lunchrooms and on playgrounds, and are available on street corners from New York to Hong Kong. "When 23 percent of surveyed music consumers say they are not buying more music because they are downloading or copying their music for free, we cannot ignore the impact on the marketplace," says Hilary Rosen, president and CEO of the RIAA.
But there are other pressing issues: the $18.98 retail price of most CDs, when the industry is phasing out less-expensive options, such as CD singles and cassettes; the dearth of credible acts at a time when the music industry is more interested in quarterly profits to satisfy corporate shareholders rather than long-term artist development; and the rise of a generation of consumers for whom music has become demystified and devalued.
"I wish people would realize what value music plays in their lives and would remunerate artists accordingly," says singer-guitarist Bob Mould, who now releases his music on his own Web-based record label, "but if people want music to be free, it'll be free."
The industry's reluctance to accept that scenario has cost it dearly, observers say, causing it to fall behind in figuring out ways to exploit the new technology to its advantage. "The relationship between artists and labels has been ruptured over such issues," says entertainment attorney L. Londell McMillan. "Is music worth $10? Is it worth nothing? Something in between? While the artists and labels are bickering, the money is going elsewhere."
The industry has belatedly responded to the crisis by introducing a variety of Internet subscription services, which essentially try to induce consumers to pay as little as a few dollars a month for something they can readily get for free through rogue services on the Web. These services - AOL's MusicNet, Liston.com's Rhapsody, Pressplay, Full Audio - have gradually expanded their catalogs of available music and loosened restrictions on burning songs to CD or transferring them to portable devices. But they still command fewer than 500,000 subscribers, generating about $25 million in revenue.
"How we compete with `free'" is the big question facing the music industry and its nascent subscription services, says Pam Horovitz, president of the National Association of Recording Merchandisers. "The solution is to make something better than free."
The industry is putting its future in the digital clutches of value-added CDs, replete with so many extras (DVDs, bonus CDs, artwork and graphics) that to download all the data on a personal computer would tax most hard drives.
"People will still want to go to stores to browse and hold the things they are considering to buy," Echo's Hart insists. "In addition, stores can provide a faster connection to the Internet, so that consumers can transfer tens of thousands of gigabytes to their iPod player in minutes. It'll be like going to the filling station for music consumers."
But the Internet file-sharing culture has devalued not just music, it has also weaned consumers off the idea of packaging. For artists who treat their music conceptually, with complementary artwork and music, and songs sequenced for particular artistic impact, the hodge-podge aspect of the Internet is bad news.
"I would be sad to see CDs go by the wayside," says King Crimson guitarist Adrian Belew. "For something as conceptual as King Crimson usually is, the idea of presenting our songs in piecemeal fashion simply won't work."
(c) 2003, Chicago Tribune
New Philips MP3 player is recordable
10:11 Friday 11th April 2003
Winston Chai, CNETAsia
Details have emerged about Philips' new MP3 player, which is smaller than its rivals and contains an MP3 recorder with built-in mic
Details of the new Philips hard drive MP3 player -- claimed to be the world's smallest hard drive recorder -- have been put on a Web site.
Besides playing MP3 and WMA (Windows Media Audio)-encoded music tracks, the 15GB device, coined HDD100, also doubles up as a MP3 voice recorder, according to Philips.
While other high-capacity portable players like Creative's Nomad Jukebox boast a voice recording feature, they require an external powered microphone or a line input from other audio devices.
Besides built-in recording, the HDD100 is also much smaller compared to the Nomad Jukebox and at 167 grams, is almost half its weight.
The current darling of the hard-drive MP3 player world, Apple's iPod, cannot record.
More compact MP3 players like Ravemetal CardRec from Japan has built-in audio recording capabilities, but their flash memory-based storage is very much smaller than the 15GB available on Philip's new gadget.
The HDD100 supports USB 2.0, which allows users to transfer audio files between the player and a personal computer about 40 times faster than USB 1.1 ports found in older computers.
It also sports other frills such as a remote control and a software-based navigational interface.
The HDD100's availability and pricing remains unclear as the product is still in its trial phase. The company said on its site it now looking for 50 volunteers to test the product for eight weeks.
Philips could not be reached for comments on this story.
Portalplayer Names Gary Johnson President And Chief Executive Officer
Santa Clara, Calif. - April 7, 2003 - PortalPlayer, Inc., a leading supplier of platform solutions for consumer electronics digital audio devices, today announced the appointment of Gary Johnson as president and chief executive officer (CEO). Johnson brings more than 25 years of experience in the technology industry to PortalPlayer, including leading S3 Inc. to revenue of nearly $450 million as a global leader in multimedia accelerators.
"Gary's proven ability to develop and execute sound business strategies in fast-growth, competitive environments make him an ideal leader for PortalPlayer," said Dick Sanquini, Chairman of the Board at PortalPlayer, Inc. "We became the leader in digital audio by working closely with customers to implement truly innovative products. Gary's skill set helps to build on that success across the entire digital media solutions market."
"PortalPlayer's business and engineering teams have defined the platforms for the most dynamic segment of the digital audio market today, and we are just getting started," said Johnson. "I am really looking forward to helping the company achieve its full potential by continuing to design and deliver platforms that connect people to a full range of digital entertainment content."
Johnson has a successful track record in building profitable businesses in both start-ups and multinational market leaders. Most recently, he was CEO of Z-force, a company he co-founded in 2000 to develop a new category of network attached storage solutions. From 1994 1999, Johnson served in executive positions at S3, Inc., including President & CEO. During his tenure, he developed several industry-first product lines for the mobile and gaming markets, implemented consumer focused marketing programs, raised more than $100 million in a secondary public offering, and increased annual revenue by more than 400 percent.
Prior to S3, Johnson held general manager, operations and marketing positions at National Semiconductor, where he created two product lines in the wireless communications space, including pioneering work developing chips for the Wi-Fi (802.11) market. At British Telecom (BT), where he started his career, Johnson was an engineering department manager and headed engineering teams developing products such as digital feature phones and digital switches.
Johnson holds a Bachelor of Science degree in Electronics Engineering with First Class Honours from DeMonfort University in the United Kingdom. He has served on the advisory boards of several technology companies, including TuneTo.com (acquired by Listen.com), Silicon Valley Networking Lab (acquired by Agilent), and Proquent Systems.
Thanks for weighing in MH.eom
Free music: Why not?
By Greg Blonder, ZDNet US
07 April 2003
COMMENTARY--One sure way to stop pirates is to make music free. Distributors could pick up the tab and get their investment back from marketers and advertisers.
"Ripping" a copy of a friend's music CD, or grabbing a track from a Napster-like service on the Internet, is stealing, plain and simple.
Music fans, seeking to justify this casual act of larceny, claim they're really supporting an economic boycott of a usurious and uncreative music industry. "Cybershoplifting", reply the record companies, seizing the opportunity to impose their opaque and onerous copyright schemes on the listening public.
While the battle rages on, piling up legal fees and taking the joy out of music, a simpler solution is on the horizon. The best way to stem this tidal wave of thievery is to give the music away.
Free content, by itself, is not at all that unusual. Broadcast television is "free" -- at least to the viewer -- courtesy of ad- supported subsidies, as are radio, many concerts and sporting events. But even those services commanding a fee today should become free tomorrow as the economics of music distribution take radical new shape.
To understand how, we would do well to look at a very different industry, but one with surprising parallels to music: 19th-century fuel delivery. In the late 1800s, when a tenant sought to warm a cold apartment, she had to buy her own coal from passing coal wagons and then haul it in coal buckets up to her fourth-floor kitchen. This apparently straightforward transaction brought with it considerable challenges for wagon drivers.
Theft was endemic. Stories abound of coal wagons stripped of half their load by street urchins before a first delivery could be made. Various solutions to improve security were proposed, including various patented coal locks. The ultimate solution, however, proved to be something quite different: a new distribution model that made coal theft irrelevant. It was called central heating.
Coal distributors sold their product efficiently in one large delivery to apartment landlords, at the same time removing the incentive for individual tenants to steal. Landlords could pass a significant part of the savings on to tenants in their bill for monthly rent. Everyone benefited, even the families of the coal-stealing urchins.
Similarly, it is the power of low-cost distribution, combined with subsidised free services, that will save and transform the music business. Stealing will become equally irrelevant.
To understand how, consider these statistics: the U.S. music industry collects US$12bn per year from CD sales to about 50 million active fans. That means each person spends an average of US$250 per year to purchase around 15 albums a year.
Now, US$250 per year is a very interesting number. By next year US$250 will buy an MP3 player with a 100GB disk. That disk will hold over 2,000 CDs. Even strapping on headphones 15 hours a day, a listener would still need over four months to cruise through every track. For many people, 2,000 CDs is all the classical, jazz or rock music they will ever care to collect. For others, it's just about enough to fill a summer vacation with tunes. But it's a lot more than 15 CDs.
With these economics, distributing music on flashy plastic disks one album at a time seems, well, like heating your kitchen with coal. And US$250 is not too high a price for a marketer -- even those outside the music business -- to spend acquiring customers, especially those dedicated fans holding an ad-supported player in their hand 15 hours a day.
Imagine the possibilities. Buy a new Kia? Get 1,000 albums with every car. Purchase a lifetime subscription to the Boston Symphony Orchestra? Receive an MP3 player with a library of the world's 2,000 most important classical music selections. Sign up for a new cellular contract? Get unlimited access to music from over 30,000 indie bands.
The economics are such that it would take only one leading company to break the music distribution mold. Among MP3 player makers, Apple, with its pioneering iPod and remnant counter-culture customers, is one possibility. Sony -- rumoured to earn more from player hardware than from its own music division -- is another. Or it might be a local brand in China, with less to lose.
A workable payment plan? But how will artists and their agents and lawyers get paid? This time we can turn for answers not to coal distribution, but to an industry much closer to musicians' homes: the American Society of Composers, Authors and Publishers. ASCAP licences, collects and redistributes music royalties from music performance venues (like radio stations, concert halls and so on) to the artists. It determines who gets paid what by polling these venues to see whose music gets played and how often.
To determine reimbursement in an MP3 player world, a small sample of users could be invited periodically to voluntarily, and anonymously, share their listening history stored in the player. Then, just as in the ASCAP model, payments collected from the music player distributors (Kia, the BSO and the like) would be split among the copyright owners. No fuss, no complexity and no secret CD police.
And we consumers would finally have the freedom to play music where we want it, when we want it, how we want it.
This is the future of music, if anyone is listening.
Greg Blonder is a general partner in Morgenthaler Ventures, a venture capital firm based in Princeton, N.J.
The wheels are still turning eh MH?eom
Yahoo! Japan to offer free music downloads
07:44 Monday 7th April 2003
Staff, CNET Asia
The Web portal has signed a deal with a Japanese copyright society allowing it access to more than one million songs registered in Japan and overseas
Yahoo! Japan will offer free music downloads after signing a deal with a Japanese copyright society.
The Web portal has signed an agreement with the Japanese Society for Rights of Authors, Composers and Publishers (JASRAC) to distribute music from its Web site, according to a statement from Yahoo! Japan.
JASRAC, which controls music copyrights, will be paid an undisclosed sum for the rights. In addition, lyrics will be provided, Yahoo! said.
The copyright society controls 1.1 million Japanese-registered songs and 5 million overseas-registered songs -- many of which will soon be offered on Yahoo! Japan.
Other reports say that the songs will be encoded to prevent copying, but this could not be confirmed with the portal. Yahoo! Japan said that over 90 percent of Japanese web users visit one its sites at least once a month.
It is unlikely that new and popular releases will be made available, and that the move by JASRAC is a means of generating income from older songs, say industry observers. The giveaway of songs as a method of driving traffic to a Web portal marks another step made by the music industry to generate income in the midst of a multi-year sales slump.
Piracy, illegal downloads and the lack of compelling artists has caused CD sales to shrink worldwide. Offering free music as a means of selling another product has been mentioned as one method of recouping revenue.
Actel Rolls Out New Line of Automotive FPGAS
Monday April 7, 8:03 am ET
eX Solutions Provide High Reliability, Extreme Temperature Operation, Fast Design Time and Low Development Cost for Automotive Applications
SUNNYVALE, Calif., April 7 /PRNewswire-FirstCall/ -- Underscoring its commitment to deliver best-in-class high-reliability products, Actel Corporation (Nasdaq: ACTL - News) today announced a new line of field-programmable gate arrays (FPGAs) targeted specifically for the automotive market. Characterized for operation from -40 degrees C to 125 degrees C ambient temperature and up to 150 degrees C junction temperature, the highest temperatures among competitive FPGA solutions, the initial offering includes all members of Actel's successful eX family with plans to extend the automotive line to also include the company's MX and SX-A families. Leveraging the inherent low power, high performance, low cost and security benefits of Actel's nonvolatile antifuse technology, Actel's automotive FPGAs enable designers to use programmable logic for their traditionally low-density application-specific integrated circuit (ASIC) requirements. The new automotive products are well suited to in-cab control and interconnect functions for a range of telematic applications, such as navigation, speech recognition, control/comfort systems, passenger monitors and heads-up displays.
"The introduction of our new automotive eX FPGAs is a timely one, as the design benefits of programmable logic solutions address the growing demand for more advanced, more converged in-cab applications," said Barry Marsh, vice president of product marketing at Actel Corporation. "Further, with the acknowledged benefits of our single-chip, nonvolatile technologies in combination with our long history of delivering highly reliable solutions, Actel's automotive products deliver the features and small package flexibility automotive customers need to speed time to market without compromising cost or performance while offering improved quality and durability for in-cab automotive systems."
Actel's automotive eX family includes three products, the eX64A, eX128A and the eX256A, and is available in 2.5- or 3.3-V operating modes. For these new automotive solutions, Actel offers customers the industry's broadest package portfolio certified to extended automotive temperature, including chip scale (CS) and fine-pitch ball-grid array (FBGA).
Optimized Intellectual Property
Actel also offers customers a broad portfolio of IP specifically designed and optimized for in-cab automotive applications. Initially, Actel and its partners Memec Design, Amphion Semiconductor, Inc., CAST, Inc. and Inicore, Inc. will offer more than 30 IP cores for Actel's automotive solutions, including: CAN, I2C interface, SPI, Z80CPU, MC-ACT-6809 CPU, Reed Solomon and DES/3DES/AES. By providing customers with pre-designed IP, Actel helps reduce design time and provides the ability to integrate multiple design elements into a one-chip solution, reducing an application's component count and cost.
"Since 1996, we've supported common automotive IP, such as the CAN bus, and our products are used by customers worldwide," said Dr. Richard Joy, vice president at Memec Design. "With the huge market opportunity for FPGA technology in the growing automotive market, Memec Design is excited to be involved with Actel and we intend to support its venture fully."
Pricing and Availability
The automotive eX family is available now in production-level volumes with prices below $2 per unit in 100K quantities. Actel's automotive MX and SX-A solutions are expected to be available in early Q3 2003. For more information about Actel's automotive solutions, please visit the Actel Web site at http://www.actel.com/products/auto/index.html .
About Actel
Actel Corporation is a supplier of innovative programmable logic solutions, including field-programmable gate arrays (FPGAs) based on antifuse and flash technologies, high-performance intellectual property (IP) cores, software development tools and design services, targeted for the high-speed communications, application-specific integrated circuit (ASIC) replacement and radiation-tolerant markets. Founded in 1985, Actel employs approximately 500 people worldwide. The Company is traded on the Nasdaq National Market under the symbol ACTL and is headquartered at 955 East Arques Avenue, Sunnyvale, Calif., 94086-4533. Telephone: 888-99-ACTEL (992-2835). Internet: http://www.actel.com .
NOTE: The Actel name and logo are registered trademarks of Actel Corporation. All other trademarks and servicemarks are the property of their respective owners.
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Source: Actel Corporation