News written by Petteri Pyyny (May, 2002)

According to Viant, a research company which specializes in Internet piracy, Net users download an estimated 400,000 to 600,000 pirate movie copies a day at the moment -- up by at least 20 per cent from last year's figures.

Company also points out that major releases, such as this summer's megahits Star Wars Episode II and Spiderman, will take the numbers even higher. Viant estimated that at one point, shortly after it was widely reported that both movies are available as an illegal copies in the Net, at least 10M users tried to download at least one of these movies. Funniest thing is that only two or three million users actually succeeded in their task :-)

It would be nice to know, what percentage of these users who downloaded, for example SWEp2, actually went to a movie theatre to see the movie and how many of them will purchase the DVD once it hits the stores. I bet that the number would be extremely high.

Nineteen Taiwanese electronics companies have quietly decided to develop their own DVD (Digital Versatile Disc) standard, dubbed as EVD (Enhanced Versatile Disc). The new format will be compatible with similiar Chinese effort called AVD (Advanced Versatile Disc), but EVD's storage would be appx. 1GB higher for dual-layer discs.

Both standards' players would play regular DVD discs and would use similiar red-laser technology what DVD currently uses (instead of blue laser technology what upcoming Japanese Blu-Ray uses). Analysts estimate that Taiwanese and Chinese efforts will eventually merge as one competing standard to current DVD standard.

The reason behind the whole process is very simple -- money. Chinese DVD player manufacturers are refusing to pay licensing fees for their players to companies who own patents on DVD technology (which include Japanese Sony, Japanese Pioneer, European Philips, Dolby Labs, Thomson Multimedia, etc). Licensing fees are currently appx. 20 to 25 percent for $100 DVD player. Same thing happened in early 1990s, when companies who developed VideoCD format (Sony, Pioneer and Philips) which became an instant success in Far East, tried to get Chinese player manufacturers to pay for the patents -- Chinese government simply organized a joint venture which eventually developed royalty-free SuperVideoCD format.

In an interview IBM's HDD division's head Currie Munce told that IBM strongly believes that in future, PVRs are the technology that will create more demand for harddrives.

According to IBM, people simply don't need more HDD space in near future -- 500GB harddrives and bigger than that are most likely going to be used in PVR devices (Personal Video Recorder) like TiVo and in digital TVs. Actually he suggests that only low-end models within 5 years will have 200GB of HDD, most models will ship with 500GB or 1000GB HDDs.

Source: PCWorld.com

RIAA has sued one of the oldest file-swapping services, AudioGalaxy, for copyright infringement.

AudioGalaxy started filtering copyrighted material in mid-2001 after Napster was forced to shut down. Now RIAA claims that company's filtering efforts haven't been effective -- the same claim that actually brought Napster offline for good.

Not very surprisingly, National Music Publishers Association (NMPA) and the Harry Fox Agency, which represents songwriters, joined RIAA in the lawsuit.

RIAA has currently pending legal action against Napster, AudioGalaxy, KaZaA BV (original developer of the KaZaA and FastTrack network), Streamcast Networks (operators of Morpheus), Madster (formerly known as Aimster), MP3Board.com (only non-P2P company of these) and Grokster. Madster and Napster are already virtually out of P2P business and rest of the P2P companies have indicated that their legal costs might actually fold at least some of the companies eventually.

Electronic Frontier Foundation and First Amendment Project today filed briefs to Californian Supreme Court asking the court to uphold the appeals court's decision that distributing DeCSS code on the Internet doesn't violate Californian trade secrets laws.

EFF's briefs were a response to DVD CCA's briefs filed in March to Californian Supreme Court. DVD CCA obviously wants to overturn the decision made by appeals court in November.

DVD CCA's case at least looks weak, because they've based their legal action on Californian trade secrets laws and claiming that DeCSS violates these laws. But reverse engineering, which would have been normally the best method to build DeCSS-type of program, doesn't violate this law. Nor does the method how DeCSS actually was built -- by a mistake made by Xing Technologies. Xing simply forgot to encrypt the CSS encryption keys that were stored within their XingDVD software player and DeCSS uses those keys (which is also the reason why original DeCSS doesn't work with new DVD discs anymore -- DVD CCA has changed the encryption keys since beginning of 2000).

Anyway, the case, which was filed two years ago against Californian resident Andrew Bunner, is closely related to the other high-profile DeCSS case in New York, where movie studios have sued hacker mag 2600 over distributing DeCSS. Only real difference between cases is the fact that courts' decisions have been completely different in each coast -- recently appeals court in New York decided that posting DeCSS actually violates notorious DMCA law (which is the basis of the East Coast case, unlike in West Coast, where DVD CCA is using other legal arguments).

Online DVD rental site, Netflix is one of the few high-profile hi-tech IPOs in this year. Company listed today at NASDAQ after its IPO which brought company a nice pile of cash to operate with, exactly $82.5M.

IPO price was set at $15 a share, but in today's trading stock price was hovering around $17. Company operates one of the most successful new video rental business models -- it offers unlimited DVD rentals for users who subscribe to its service for $19.95 a month. Users choose movies they want from online catalog of over 60,000 movies and after they've selected their movies, discs are sent out using first class mail.

Librarian of Congress rejected today Copyright Arbitration Royalty Panel's recommendations for webcasting royalty rates.

Librarian of Congress based its rejection on recommendation from Register of Copyrights. Now the U.S. law states that LoC has to issue its final determination by 20th of June, 2001 about the issue.

Currently we don't know if this is a good thing or a bad thing for webcasters -- the proposed royalty rate was too high, webcasters say, and would have killed vast majority of webcasters. But LoC could've rejected the proposal also because it felt it was too low, as RIAA suggested.

Phew, yet another KaZaA-related article for this week.. Getting hectic... Anyway, it appears that world's first KaZaA-targeted worm has been found.

The small worm poses itself as a pirated software/movie/track and if user downloads it and tries to open the file, it creates tons of replicas of itself in users harddrive, with various tempting names and finally sets the directory as one of the KaZaA's shared directories, allowing other network users to find and download the files as well.

Worm can also infect other Fasttrack-based clients, including Grokster and extremely unofficial KaZaA Lite.

KaZaA will face yet another legal fight in Netherlands, according to Dutch website Nu.nl.

Despite the fact that KaZaA was sold to Australia earlier this year, Dutch music copyright organization BUMA/STEMRA is determined to take the case which it lost in court already, to Dutch Supreme Court. The case is still valid, since they're sueing KaZaA for the copyright violations that took place before the company was sold to Australian Sharman Networks.

Dutch court decided earlier this year that P2P network is not responsible for the content users transfer in its network, but that the users themselves are responsible.

According to analyst study published on last week, RealNetworks is on its way to reach "magic" number of 1M subscribers with its premium-rate subscription service.

Real's subscription service, which has been rebranded various times and currently is dubbed as "SuperPass", costs anywhere between $9.95 and $19.95 a month and includes premium rate content from NBA, Major League Baseball, CNN as well as music content from MusicNet.

According to report, a whopping 85% of all streaming media content available on the Web currently is encoded and delivered using Real's RealAudio and RealVideo technology. This is remarkable specially because all of us, video freaks, know "good" their widely-used video and audio codecs are in terms of quality.

In last week everything seemed to collapse at headquarters of Napster; board of directors had rejected Bertelsmann acquisition offer and CEO Konrad Hilbers decided to leave the company -- later also six other executives announced that they will leave the company, including Napster's founder, Shawn Fanning.

Now Napster's board of directors have made a full U-turn and have decided to approve Bertelsmann new offer -- which is 50% lower than the previous offer :-)

So, story of Napster as an independent company finally ends. Bertelsmann acquires all shares of the company for $8M which will be paid to company's creditors. Acquisition opens the door for Napster to file for Chapter 11 bankruptcy protection.

Both Konrad Hilbers and Shawn Fanning will stay at the company.

In yet another setback, 2nd Circuit Court of Appeals refused to reconsider 2600's ban to distribute DeCSS code through its website.

Decision is a major loss for free speech advocates, researchers and journalists who have strongly lobbied against a controversial law that we all know as DMCA.

Now 2600's last chance is to appeal directly to U.S. Supreme Court. EFF who has defended 2600 in court, says that it is still considering this option. The case is about DeCSS code which was the first known piece of software to decrypt copy-protection mechanism found on DVD movie discs.

Highly unlikely alliance formed between KaZaA, the notorious P2P software company (owned by Australian Sharman Networks), and American telecom giant Verizon (former Bell Atlantic) is determined to force Washington to change one of the biggest issues surrounding digital media and rights to it.

Companies are pushing Congress to force record companies and other media owners for something that's dubbed as "compulsory licensing". Currently the situation is that unless company's specific needs for content aren't covered by existing contracts (like radio royalties), company has to negotiate with each and every content owner separately to get the content and set the price for the content.

Now KaZaA and Verizon are pushing something that would change this, forcing companies to license and forcing Copyright Office or someone else to set the royalty rates for each and every use there is for the content.

Verizon's main concern is probably the fact that P2P networks are one of the main things that pull users towards broadband connections which are Verizon's bread/butter business at the moment.

As of today, we have implemented a method to block users who are using so-called "ad blockers" from entering our site. At all.

This is due the fact that by using ad blockers, you're getting content for free, without compensating us, publishers. We can't provide this content for free -- our server costs for two dedicated servers are extremely high with hundreds of gigabytes of traffic a month. And this is paid by our advertisers -- however annoying their ads might be (we have blocked 99.9% of popup requests from our advertisers and have only allowed popunders -- and even allowing popunders took 2.5 years to decide), those ads pay our server hosting bills.

If you can't tolerate this decision, feel free to find the content and software from other sites. Only thing what I ask from you, is to understand our situation -- we don't like ads either, but they're necessary for us to survive.

-Petteri 'dRD' Pyyny, webmaster

Napster's CEO, Konrad Hilbers, has announced that he will quit the company after Napster's board rejected the proposed deal to sell the company to Bertelsmann.

The management team "has put together what I consider to be a valid and beneficial deal for Napster over the last weeks," Hilbers said in the e-mail, News.com reported. "Unfortunately, the board has chosen to not pursue the deal...I am convinced that not pursuing the offer is a mistake, and it will lead the company to a place where I don't want to lead it."

Read more from News.com

Sony has delivered a DMCA takedown notice to game company Blizzard to stop distributing Sony's copyrighted music tracks over P2P networks. Allegedly some of the Blizzard's employees have been running P2P tools on their work computers and sharing copyrighted music to their peers.

Blizzard's memo to employees states: "Unauthorized distribution of copyrighted audio, video, graphics, software and/or any other files (e.g., commercial recordings, films, or software) is illegal. Providing these files over the Company network through peer-to-peer file-sharing programs (ie. Kazaa, Morpheus, EDonkey, Gnutella, and similar programs) or by other means puts both the user and Blizzard in jeopardy of being held liable for copyright infringement. As you can imagine, this risk is not one that the company is willing to take."

Boeing has announced that it will launch digital cinema at 22 theatres in U.S. and at one in the UK in this month. This means first real push to finally replace the old distribution model of movies where actual film rolls are transferred from studios to each and every movie theatre physically.

Boeing Digital Cinema has its cost -- the equipment which includes satellite dish, server, digital projector and wiring is appx. $150,000 per theatre. It is believed that Boeing has given radical discounts or has offered revenue-sharing schemes for theatres.

By using digital cinema equipment, studios can transfer the movies over the satellite or fiber-optic cable connections directly to theatres over a connection which is heavily encrypted in order to prevent piracy. Theatres can run digital copies virtually forever, while regular film has to be replaced relatively often since it tends to gets worse after number of viewings.

Other Chinese DVD player manufacturers are about to follow the path laid out by Apex earlier this year, when it agreed to pay technology licensing royalties to companies who own key patents to DVD technology (such companies include Sony and Philips).

One of the main reasons for this surprising development is China's entry to WTO. China must comply with WTO's rules over globally recognized patents, etc and this legislation seems to make Beijing government to actually force certain companies to pay the royalties to foreign companies.

To read more about the issue, visit Yahoo! Finance.

As most of you probably already know, bootleg copies of popular movies tend to appear almost immediately on the Net after their U.S. theatre premiere, but now the trend seems to be that movies get released on the Net before they hit the big screen.

Star Wars Episode II: Attack of the clones can already be found from the Net in VideoCD format, as a "telesync". Meaning that the movie has been shot using hi-quality digital camcorder and direct line-in audio giving it relatively good overall quality.

And the movie will debut in the U.S. movie theatres within a week :-) For some screenshots and the original article, please visit this site.

Group of webcasting companies, more than twenty of them, are going to speak to the members of the U.S. Congress today and tomorrow trying to make their point of view heard in the dispute over webcasting royalties.

Webcasters' have raised their opinions earlier as well, last time was in last week when numerous net radio stations turned their streaming off for 24 hours to protest against U.S. Copyright Office's proposed royalty rates for webcasts.

Webcasters say that the proposed rate of $0.0014/listener/song would kill most of the webcasters immediately, because for most, that rate is appx. 2 times higher than their revenues are from one song/listener.

Librarian of Congress is required to set the royalty rates for webcasters by 21st of May.

In last couple of days there has been an enormous hype and speculation going on on the Net over claimed XBox copy protection hack.

We don't claim to know any better than anyone else, but let you judge by yourselves. To mention, the claimed "mod chip" is not in production yet, just first successful attempts have been reported all over the Net and certain never-heard-before pirate groups, namely ProjectX, have released tons of XBox games in newgroups and dedicated FTP sites.

Anyway, I suggest that you read this article -- if their server is up :-)

http://www.headliner.nl/index.php?c=us&p=headliner&storyid=6

Despite the mounting licensing issues surrounding the MPEG-4 technology, Apple has announced that it will ship next major version of its QuickTime by end of this summer.

New QuickTime 6 was delayed already in February, when Apple announced that it, among group of other technology companies, disagrees with MPEG LA's proposed MPEG-4 licensing model.

According to Apple, MPEG LA has progressed with its licensing terms and that Apple is "hopeful" to see the licensing issue to be solved before the launch.

Ok, one of the most requested features has been added to our site. Now you can post your opinions to our news articles and other users see those comments immediately just below the article itself.

Note: As usual, this feature is in beta test phase and there might be some kind of weird errors. Please help us to solve those and send feedback if you experience anything weird.

Jupiter Media Metrix survey found the fact that most of us already knew -- use P2P tools and you're more likely to buy more music.

34% of P2P networks' users said that they're increased the amount they spend on music CDs because of the P2P usage. 15% said that they spend less money now when they use P2P networks and 51% said that they spend the same amount as before P2P.

This is compared to people who didn't use P2P networks -- only 19% said that they've increased the amount they spend on music CDs annually. Other technologies, such as CD writers or MP3 players, didn't impact on music spending at all.

Only problem is just to get courts to understand this...