News archive (2 / 2002)

U.S. Senate Committee on Commerce, Science and Transportation has told that it plans to hold hearings on a proposed bill that would require hardware manufacturers to include copy control mechanisms to all new hardware.

Obviously the movie and recording industry groups have praised the proposed bill, because they haven't found any reasonable methods so far to block illegal copying of their works (some might say that they haven't really tried to find alternatives..). Meanwhile, consumer groups and civil liberties groups such as EFF have opposed the new bill saying that it gives too much control for government and copyright owners over users' legally purchased equipment.

Witnesses to attend the hearing include technology companies and content owners like Disney, Intel, etc.

In yet another update for Morpheus, an extremely popular P2P client software, News.com has an article where StreamCast Networks (company who owns Morpheus and MusicCity.com) explains the reasons for their downtime.

It seems that FastTrack, who has created the P2P network where Morpheus, Grokster and KaZaa operate, updated their network protocol and didn't inform it to StreamCast Networks at all. So, in Tuesday, Morpheus users saw an error message that asked users to upgrade their software even that there wasn't a new version of Morpheus available.

Now StreamCast is obviously slightly angry and is considering to drop the FastTrack technology altogether and start using Gnutella P2P network instead. This would definately cause huge waves in P2P world where Gnutella, despite its huge promises, has failed to show significant numbers of users connected to its network.

As a software licensee, StreamCast has never seen the source code of the FastTrack technology and StreamCast says that they don't even know if the Sharman Networks (company who bought KaZaa earlier this year) or the original Dutch company owns the FastTrack technology.

28-year-old John Sankus, Jr pleaded guilty for running "notorious" piracy group DrinkOrDie and causing financial loss for software, music and movie copyright owners by doing so. He might end up serving time in prison time, and also faces fines of up to $250,000. Prosecutors said Sankus has agreed to cooperate with investigators as part of the plea.

"This plea is another significant step in our effort to eliminate intellectual property crime on the Internet and to make it safe for individuals and businesses to develop and use new software and technologies," U.S. Attorney Paul J. McNulty said in a statement announcing the plea. "John Sankus and his group knew what they were doing was illegal, and they took every technological step possible to conceal their identity."

DrinkOrDie was one of the oldest so-called "warez" groups and it was busted in December by FBI, U.S. Customs Service, U.S. Justice Department and national law enforcement agencies from various countries including Finland, UK and Australia. Group cracked software items, distributed illegal digital copies of movies and CDs, etc.

MPAA claimed that after DoD was busted in December, the number of illegal movies available on the Net decreased by 45 per cent. We think that this number is total b.s., just by taking a brief look at various IRC channels, P2P networks, newsgroups, etc you can see that all the latest titles are available from several groups in several formats, just like it used to be.

Update to our previous headline about Morpheus being shut down. This appears to be true -- according to Streamcast Networks who operates Morpheus and website MusicCity.com, their service is temporarily suspended because of "technical difficulties" and company estimates that they're back online within few days.

Until then, FastTrack network which powers Morpheus, seems to be working just fine. You can continue file sharing using other clients -- you can download Grokster from here.

We don't have even a slightest idea what has happened, but MusicCity.com's servers that operate Morpheus P2P client don't respond any more.

The FastTrack network, which is the backbone of Morpheus, is still alive, but not even single Morpheus users could be found 5mins ago when we ran a test through the network.

Other FastTrack tools work, so download Grokster from here!

During the last two or three weeks our server has became more and more unresponsive and we've struggled to understand the reasons behind this as we still have plenty of CPU and memory resources free on our server. We finally figured out a way to improve the performance, but also had an appx. 30min outage today around noon (EST).

We're also pleased to tell you guys that our site is getting more and more popular every day, we expect to hit 2M page imps/month in March!

Listen.com signed its fourth major record label licensing agreement today with AOL TimeWarner to use label's music in its online subscription service Rhapsody which competes directly with major record label-backed subscription services Pressplay and MusicNet. Now Rhapsody has an edge over its competitors, because it is the only service that offers music from four labels while other services only have music from three labels (out of five major record labels EMI is the only one whose music is available in all three services).

All three services were launched in December and none of them has disclosed their number of subscribers yet. Analysts say that it will take at least a year before subscription services account a considerable amount of revenue for companies involved.

BMG Finland, a subsdiary of BMG, has decided to remove all copy-protected CDs from Finnish markets after they released Westlife's album World of our own using Cactus Datashield copy protection earlier this year. Release caused complains from customer organizations and from various government officials.

BMG Finland has agreed to exchange all copy-protected Westlife albums to ones without copy-protection and has removed all the copy-protected versions from Finnish retailers already.

In September, Californian woman Karen DeLise sued Music City Records and CD copy-protection developer SunnComm because an album released by Music City Records, "Charley Pride: A Tribute to Jim Reeves", didn't have any kind of information on its cover saying that the CD is copy-protected, wont work with certain CD players and tracks user behaviour. Now she says that all involved companies have agreed to add stickers to CDs stating the obvious and also agreed to remove the user behaviour tracking system. CDs contained PC-playable versions of the tracks that could be played only with SunnComm's player and that player sent user's listening data to SunnComm's servers.

Does sound good, but it kinda misses the point -- we are still waiting for a court decision whether copy-protected CDs are legal or not. There's a huge fight currently going on over this issue and various groups are saying that if labels are allowed to do this, they should not receive any money from blank tapes, CDs, etc as they currently do.

California Supreme Court yesterday agreed to hear the case between DVD Copy Control Association (DVD CCA) and Andrew Bunner. In case DVD CCA sued San Fransisco-based Andrew Bunner in 1999 claiming that he violated Californian trade secrets law (note: NOT the notorious DMCA) when he posted DeCSS code to the Internet.

Californian 6th District Court of Appeal decided in November that posting DeCSS code is allowed under American constitution's First Amendment (free speech).

DeCSS allows users to break copy-protected DVD-Video discs that contain copy-protection scheme called CSS and DVD CCA claims that by allowing users to post and distribute DeCSS they violate DMCA and encourage movie piracy.

In New York there's a separate case going on where Universal and MPAA have sued website 2600 because it posted DeCSS code on its site and didn't take it down after MPAA sent the website's owner, Eric Corley, a letter demanding a removal of the program.

California Supreme Court didn't teel when it is about to hear the opening arguments in the case.

After a long series of discussions and negotiations, webcasters and copyright owners couldn't agree to set a royalty rate for webcast and the U.S. government had to set up a panel to decide a royalty rate for them.

Today panel proposed royalty rates for Internet-only webcasters to be set at 0.14 cents per listener per song and 0.7 cents per listerner per song for regular radio rebroadcasts over the Net.

Rates are a compromise between webcasters suggested 0.4 cents per listener per song proposed by copyright owners and 0.15 cents per listener hour proposed by the broadcasters. The panel's decision must be approved by the librarian of Congress in May before it takes effect. The royalty rate is effective retroactively from 1998.

In January, Judge Marilyn Patel ordered both parties, Napster and Big Five record labels to negotiate for a month in order to find a comfortable licensing agreement and settlement in case that has been going on for almost three years now.

Now the 30-day deadline is over and nothing has happened in terms of licensing labels' content to Napster or to settle the case outside courtrooms -- so now they're heading back to court.

This is really bad for the labels, because Judge Patel told in January that she will launch an investigation whether labels are misusing their copyrights and don't allow other companies to license their content under fair terms. And now, when the negotiations with Napster have collapsed, it is very likely that she will execute these investigations.

Taiwanese site, Movie88.com, was shut down by its ISP, HiNet, this morning. Movie88.com scared the movie industry few weeks ago when it launched its service that offered latest movies streamed over the Net in RealVideo format for $1 a day -- without paying to copyright holders. And according to company, it was all legal because of "interesting" clauses in Taiwanese copyright laws.

According to Movie88, their ISP didn't send any warning or any communication whatsoever before they pulled the plug. Company is obviously outraged because of this behaviour which was executed without any court orders to shut the site down, without any warnings, etc.

Nine major DVD equipment manufacturers announced today that they've agreed to produce uniform recordable standard for blue-laser DVD discs -- new standard is dubbed as 'Blu-Ray'. Blue-laser DVDs are about to hit the markets in 2003 and they multiply the current appx. 9GB maximum capacity (dual layer -- writable consumer discs can only have one layer which limits them to 4.36GB) on regular DVDs to 27GB on one side (manufacturers are also developing dual layer version of the format which would have 54GB of data on one side of the disc).

Manufacturers want to avoid current situation where markets are flooding with uncompatible DVD formats such as DVD+RW, DVD-R, DVD-RAM, DVD-RW and DVD+R. Group says that they will start licensing the technology in spring.

Main driving force behind the development of blue-laser DVDs is the fact that Japan is about to move to digital TV broadcasting in 2003. Funny thing is that American digital TV is not driving this phenomenom, most likely because companies are afraid of bringing new perfect-quality recorders to U.S. markets where TV networks don't really like the idea of people even time-shifting broadcasts, not to mention get perfect copies of them.

New York Times published an article covering the issue of artist royalties in digital media distribution and it really doesn't seem good for artists.

According to article, most of the labels have licensed artists' music to subscription services such as Pressplay and MusicNet without asking a permission from the artist. And older acts who don't have additional clause in their contracts that allows labels to publish music over the Net, are obviously pretty angry about this and have already sent out cease&desist letters to subscription services to remove their music from the service.

The problem is that labels are not willing license the music from the artists to use on the Net, but pay royalties instead. Why this is important? In normal licensing deal, artists and labels split the profit 50/50, but by using royalty payments that are used for CD sales as well, labels can keep appx. 90 per cent of the profit and artists have to pay packaging fees(!) and promotional expenses from their share which is ridiculous because we're talking of pure Internet licensing deal in here.

You can read the full article from Yahoo.

European and North American consumers have been enjoying low cost import DVD-players for quite some time now. In addition to being cheaper than their big-brand counterparts, like Sony and Pioneer, the players are often loaded with nice features like MP3-playback and easy region-free modifications.

One of the reasons for the low prices is the fact that only a few of the Chinese manufacturers have taken care of DVD licensing. Philips, the company behind many of the key DVD patents and responsible for granting DVD licenses and collecting royalties, has had it with the "bootleg" players and discs.

Philips has begun to enforce the DVD licensing by asking the European Union Customs Authorities to impound all unlicensed DVD-players and -discs. The request is based on an EU Council Regulation that covers patent-infringing products. Even if the products manage to avoid being impounded by the customs, Philips has stated they will act against wholesale and retail traders directly for selling patent infringing products.

Source:
New Scientist

Apple, Ericsson and Sun announced today that they're joining forces in order to develop a new standard for video streaming in mobile phones. New standard would be based on ISO-specified MPEG-4 format and would use Apple's QuickTime as a "wrapper" format for the video.

Parties have their own areas of expertise that they hope to join efficiently; Ericsson has the wireless infrastructure knowledge, Apple has the content and encoding technology and Sun has the content delivery mechanism.

Alliance has one major problem -- are they going to succeed in creating a new standard without Nokia, the biggest mobile phone company in the world? And companies also aim to use the standards in PDAs and "communicators" (as tightly integrated mobile phone/PDA hybrids, like Nokia 9210, are called) -- Ericsson is one of the main owners of Symbian, the operating system that will be used in all major manufacturers' 3G cell phones, but does that guarantee that Symbian will pick the standard for its platform? We'll see..

Apple announced today that it wont accept the proposed licensing terms for MPEG-4 technology, giving a major setback to technology and its joint licensing efforts.

MPEG LA proposed a new licensing model for MPEG-4 technology two weeks ago and it caused an immediate wave of anger from content providers and technology companies. Most controversial part of the proposed licensing model is the per-minute licensing fee companies would have to pay for patent owners (who are willing to license all related MPEG-4 technology patents under MPEG LA's supervision).

Apple says that it has a new QuickTime version ready that is based on MPEG-4, but it wont release the product if the licensing model doesn't change.

Kazaa, a enormously popular P2P software that was sold to Australian Sharman Networks in January, today unveiled new features to its software client.

New client, v1.5, introduces features such as download recommendations, faster search results, faster start-up time and a Kazaa-specific IM (instant messaging) feature.

Kazaa avoided, at least temporarily, Dutch court order to shut down its service when its original Dutch owners sold the company to Australia. Kazaa is also being sued in United States by MPAA and RIAA -- it will be one of the first real tests for international community to see if U.S. laws can be extended to overseas companies; which sounds ridiculous. If U.S. laws can be forced to overseas companies, it has to work other way around as well and so China could sue all U.S. newspapers and TV companies for spreading anti-communist propaganda, EU could sue U.S. companies for violating Kyoto treaty, etc.

Australian Competition and Consumer Commission announced this weekend that it will file a 'friend of the court' papers to Australian Federal Court opposing Sony's attempt to rule PS2 mod chips illegal in Australia.

ACCC's opposing doesn't relate to the fact that mod chips allow users to backup their games and play those as well as pirated copies, but it opposes the fact that Sony also wants to maintain regional coding of its games and wants to keep modifications that allow users to play i.e. American games in Australian consoles, illegal.

ACCC says that it filed its opposing opinion to court "because it feared if Sony was successful consumers stood to lose money on PS2 games purchased overseas at significantly cheaper prices by being denied the right to use them in Australia."

Sony is most definately going to argue against this vigorously, because it has maintained relatively high prices across the globe by using regional coding in its games -- it can't sell games with same price tag to Eastern Europe and to U.S., because the income levels in these countries are so different.

And obviously, if ACCC's opinion is going to be the winning opinion in this case, it would mean a major setback for movie studios as well -- DVDs use similiar regional encoding and often major releases are sold in the U.S. months earlier than in Europe or in Australia.

Ok, you must have already heard about Taiwanese site called Movie88.com? It's a small site that offers all the latest Hollywood blockbusters for $1 a movie. Users can stream the content using their accounts and one "rental" that costs $1 lasts up to three days, after which you need to pay $1 again if you wish to watch the same movie again. And they offer $5 for signing up to the service.

Obviously, they don't pay any royalties to Hollywood studios and they don't have any licensing deals from studios -- they just comply with Taiwanese laws that require copyright holders to register their works with local copyright office within certain period after the movie has been released -- and most of the studios fail to do so :-)

So, once again, overseas sites are testing how far MPAA's claws can reach. Ok, MPAA got DeCSS author sued in Norway even that it's not illegal to create a tool that circumvents copyright protection in Norway. And iMesh, an Israeli P2P software is filtering their network already. But how about now, do the copyright owners have enough firepower to stop this phenomenom?

I suggest that you visit the site and read this excellent article from MP3Newswire.net.

Vivendi announced plans to launch a new video service called MP4.com that would allow users and indie film makers to share their movies in digital format much like unsigned artists do currently through Vivendi's MP3.com service.

Vivendi said that the service is currently in beta testing phase and will launch officially within next few weeks. Users can stream certain amount of the indie clips for free, but for larger amount of streaming, they would have to pay a fee.

Service was inspired by the MP3.com's success (and the domain name MP4.com was originally registered by MP3.com before Vivendi bought the company) and is also powered by the MP3.com's technology that also powers the Pressplay subscription music service.

DivXNetworks announced today that it has licensed its DivX4 video compression technology to Fraunhofer Institute who will use DivXNetworks' technology in its projects to stream interactive 3D images in real time. Projects include virtual classroom where students can watch professors' lectures in 3D environment.

Fraunhofer is the technological institute behind the MP3 audio format and various other audio and video related research projects. DivXNetworks' DivX4 is extremely popular among movie pirates, but the company has desperately tried to gain more legitimate position among video compression developers.

Move might also signal that DivXNetworks has given certain promises to comply with MPEG-4 standards in its future versions (as Fraunhofer has a long tradition with MPEG compatible standards) -- currently DivX4 technology almost complies with ISO standards for MPEG-4 video, but not totally.

Pressplay, an online subscription service owned by Sony and Vivendi, announced today that it has signed a non-exclusive distribution agreement with Zomba Recording Corp. to use Zomba's music in Pressplay's service.

Zomba's music catalog includes names such as Britney Spears, 'NSync and the Backstreet Boys. Pressplay currently uses music from Sony, Vivendi, EMI and various small labels.

MPEG LA, a body that provides joint licenses for MPEG-2 (used in DVDs, digital TV broadcasts, etc) technology has proposed a new licensing model for MPEG-4 (used in streamig video apps and is also the core of DivX and WMV video formats) video technology. MPEG LA's licenses cover various companies' patents -- MPEG LA's idea is to be a one place where company can license all the required patents to use in company's products, such as MPEG-2 decoders.

The new proposed MPEG-4 pricing (at least for decoders) would be cheaper than MPEG-2's price, but the proposed "use fee" where service providers would pay licensing fees based on the time of the streamed/encoded content, has raised concerns among the content providers and ISPs.