All Things Digital

If there was an Emmy Award for legislation production, NBC Universal Chief Executive Jeff Zucker would surely win it. Last October he called upon Congress to pass a bill that would create a dedicated intellectual-property enforcement bureau and today it’s looking more and more like he’s going to get it.

This week members of the House Judiciary Committee passed the Prioritizing Resources and Organization for Intellectual Property (called “PRO IP” groan…) Act of 2007, legislation that would create an “anti-piracy czar” at the White House level, a separate IP-enforcement division at the Justice Department and ratchet up already high civil penalties for copyright infringement.

The measure is backed by many of the most powerful politicians on the House Judiciary Committee, including John Conyers (D., Mich.), Lamar Smith (R., Texas) and “Hollywood” Howard Berman (D., Calif.), the content cartel and, of course, Zucker, who likes to tell everyone that it dramatically advances the cause of protecting innovation, technological invention and creativity.

Said Zucker, “This is such an important step in combating this incredibly serious piracy and counterfeiting problem that’s getting worse, not better.”

In Zucker’s eyes, maybe. But not in the eyes of consumer folks like Google Senior Copyright Counsel William Patry who calls Pro IP “the most outrageously gluttonous IP bill ever introduced in the U.S.” and consumer advocacy group Public Knowledge which feels it is in sore need of adjustment.:

This bill takes already extraordinary copyright damages and increases them, expanding the threat of litigation intended to stifle competition and innovation. … Increasing penalties is one of the least necessary, and quite possibly counterproductive, actions the committee could take, particularly when current law is adequate to deal with most infringement issues and because the higher penalties serve only to force faster and larger settlements potentially from innovators. … Instead of following the course of this bill, the committee should look to the future, to a more realistic and rational copyright regime that can adapt pre-VCR copyright laws to a post-YouTube world.”

If the Motion Picture Association of America is so intent on shuttering BitTorrent trackers, perhaps it should set its sites on the really big offenders, like say … Google (GOOG). It’s going to have to sooner or later, because some day there won’t be any smaller operations left for it to sue.

After a prolonged, and quite nasty, legal battle with the MPAA, TorrentSpy is shutting down. “The legal climate in the USA for copyright, privacy of search requests and links to torrent files in search results is simply too hostile,” reads a statement posted to the site’s front page by founder Justin Bunnell. “We spent the last two years, and hundreds of thousands of dollars, defending the rights of our users and ourselves… [W]e now feel compelled to provide the ultimate method of privacy protection for our users–permanent shutdown.”

If you lack the moral compass with which to determine ownership of digital music, Recording Industry Association of America president Cary “tough love” Sherman would like to provide you with one. Speaking at the Congressional Internet Caucus Advisory Committee’s State of the Net Conference in late January, Sherman suggested that rather than filtering the Internet globally for copyright infringements, as some have proposed, it might be better to filter it locally. At the end-user level–with spyware built into ISP-provided modems, routers and perhaps anti-malware and media software as well. “Filters can be put in the applications for example,” Sherman said. “You know, one could have a filter on the end user’s computer.”

Why would anyone agree to such a thing? For their personal enrichment, of course. “I don’t think you can estimate the educational benefit of these things. … A lot of this is basically letting people know that what they’re doing is not OK,” Sherman reasoned. “And for a lot of people that makes a difference in their behavior.”

A bit of stretch, even for Sherman, as Ars Technica aptly notes: “Filtering as a concept is ultimately doomed by encryption unless the ‘filters’ simply block entire protocols altogether, and talking about the consumer benefits of installing RIAA-approved filtering software is just another sign of how ludicrous the entire debate has become.”

The cheeky folks at the Pirate Bay may need a peg leg or two when Sweden’s legal sharks are done with them. A Swedish prosecutor filed charges today against the popular BitTorrent tracker’s proprietors, accusing them of “promoting other people’s infringements of copyright laws.”

“The operation of the Pirate Bay is financed through advertising revenues,” said prosecutor Hakan Roswall. “In that way it commercially exploits copyright-protected work and performances. … [This case is] a classic example of accessory–to act as intermediary between people who commit crimes, whether it’s in the physical or the virtual world. [The Pirate Bay] is not merely a search engine. It’s an active part of an action that aims at, and also leads to, making copyright-protected material available.”

Pirate Bay’s defiant operators, predictably, disagree. Though they acknowledge the site maintains an index of BitTorrent files, they say no copyrighted material is stored on their servers. They colorfully describe the charges as “idiotic,” and have so far refused to take the site offline. “In case we lose the pending trial (yeah right) there will still not be any changes to the site,” they wrote in a recent post to the site’s blog. “The Pirate Bay will keep operating just as always. We’ve been here for years, and we will be here for many more.”

Digital music sales are soaring, but that hasn’t stopped the recording industry from continuing to spin its long-running woe-is-me tale of piracy and declining revenues.

According to the International Federation of the Phonographic Industry’s 2008 Digital Music Report (PDF), global digital music sales rose to $2.9 billion in 2007, up from $2.1 billion in 2006.

Now that 40% increase isn’t nearly the doubling of digital sales we saw in 2006, but it’s not insubstantial, either. Especially when one considers that digital sales grew to account for 15% of the world’s music market, up from 10% in 2006. That means that almost a sixth of music sales already come through digital channels. This despite five or so years of the recording industry’s Keystone Kops approach to the digital music revolution.

All things considered, things aren’t going too poorly–even if the growth of digital music sales hasn’t yet offset declines in physical music. That being the case, it’s difficult not to look askance at the IFPI’s calls for governments and Internet service providers to take a hard line against file-sharing.

“Copyright theft has been allowed to run rampant on [ISP] networks under the guise of technological advancement,” IFPI Chairman and CEO John Kennedy wrote in the report. “Some estimates say no less than 80% of all Internet traffic comprises copyright-infringing files on peer-to-peer networks.”–80%? Does the IFPI suffer from the same math disability as the MPAA?–”ISPs have largely stood by, allowing a massive devaluation of copyrighted music. This in turn–and despite all the positives about our digital growth–has prompted a crisis in recorded music that has wide implications for the whole digital marketplace and all those businesses to whom music is an important ingredient. … Today, however, a sea-change is happening. The whole music sector, governments and even some ISPs themselves, are beginning to accept that the carriers of digital content must play a responsible role in curbing the systemic piracy that is threatening the future of all digital commerce. After years of discussing and debating, I am convinced it is no longer a question of whether the ISPs act–the question is when and how.”

And the answer? Five bucks and a copy of the latest Britney Spears album says it’s network-level filtering.

According to last year’s safely-looking-ahead-to-the-year-to-come lists, 2007 was to be “a year of hyperdisruption for the technology industry”; it was to be “a year of significant developments” and “a year of evolution”; it was to be “a year of invention and innovation,” “a year of experimentation” and “a year of slow, but significant, change”; it was to be “a year of carnage,” but it was also to be “a year of great happiness and multiple blessings.” Above all, 2007 was to be “a busy year for technology.”

Which, as you’ll see below (and in our companion video), is pretty much how it turned out. What follows is Digital Daily’s abridged guide to the year in tech news–a fond reminiscence of what was, and our First Annual Year-End List For Year-End List Haters.

1. Yahoo Shareholders Reject Plan to Tie Executive Compensation to Company’s Crappy Performance
   Well, what do you know: Yahoo’s annual shareholder meeting didn’t conclude with CEO Terry Semel’s head piked on the exclamation point of the Yahoo sign outside company headquarters.

2. I Know It Was You, Fredo. You Broke My Heart. You Broke My Heart!
   Apparently, Fred Anderson is the “Fredo” of the Apple options backdating family.

3. We’ve Asked John Williams to Do a Special Performance of the Theme From “The Poseidon Adventure” for Our Q4 Results
   Who’s programming Microsoft’s on-hold music, Apple’s Phil Schiller? Waiting for the company’s third-quarter earnings call to begin yesterday, those listening in were treated to an instrumental piano version of Celine Dion’s “My Heart Will Go On.” From “Titanic,” the disaster movie.

4. I’m Proud to Say Our New “Soylent Green” iPod Is Made of 100% Biodegradable Greenpeace Activists!
   If you’re going to try to smear Apple for reckless environmental practices, you best have some hard epidemiological and toxicological data on hand, because goofy Photoshop treatments of the company’s marketing materials just can’t stand up to a blow from the Apple PR machine.

5. And Online Display Impressions Soared as More Americans Checked Their AOL Accounts for Old Times’ Sake
   To hear tell from Time Warner executives, the company’s better-than-expected earnings for the first quarter owed quite a bit to gains in online-advertising market share by its AOL Internet division.

6. Web 2.0 Audience in Mirror May Be Smaller Than It Appears
   How ironic is it that Web 2.0–the “participatory Web”–has far fewer participants than its architects would have us believe?

7. And for My Next Trick, I’ll Turn Myself Into a Complete Jackass
   If you’re going to demand that YouTube remove a video to which you object under the Digital Millennium Copyright Act, it’s probably wise to make sure that you actually understand the DMCA.

8. War Is Peace. Freedom Is Slavery. Ignorance Is Strength. DRM Is DCE.
   You can’t put frosting on manure, but HBO’s Chief Technology Officer Bob Zitter isn’t above trying.

9. We’re Naming It the Motorola STNKR, After Our Q1 Earnings …
   Carl Icahn was right. Motorola really is desperate for a new product. How else to explain a patent the company was awarded last month for a “communication device having a scent-release feature and method thereof.”

10. The Frienemy of My Frienemy Is My Enemiend
    If Microsoft is planning an acquisition in the online marketing and advertising space, it better act fast, because if it waits much longer there won’t be anything left to acquire.

11. How Would Monsieur Ellison Like His BEA Served? Mixed in a Bucket With Oracle’s Other Acquisitions?
    Looks like we may be in for another PeopleSoft-esque takeover drama …

12. I’m Just Biding My Time Here Until I Can Quit and Study Whale Feces Full Time
    Given the chance, how would you alter the course of your career? Well, if you worked at Microsoft’s Security Response Center, you might consider taking a job as an Olympic drug tester, a gravity research subject, or a “whale-feces researcher.”

13. Much Like Energy, BS Cannot Be Created or Destroyed, It Can Only Be Changed From One Form to Another
    If Steorn’s perpetual motion effort is anything like its e-commerce venture (and by all accounts things do seem to be going that way), the only thing in its future is insolvency.

14. From Now On, We’ll Be Known as Nlsn/NtRtings
    Looks like vowels won’t be the only accoutrements to be tossed aside in the rise of Web 2.0. The venerable page view is to be abandoned as well.

15. The Defendant Stands Accused of Copyright Infringement, Breach of Contract and Misappropriation of Dumb Luck
    According to popular legend Facebook founder Mark Zuckerberg once kept two versions of his business card in his wallet–one with the title CEO, the other with “I’M CEO . . . BITCH.”

16. Well, Here Come YouTube’s Video ID Tools. Guess That Means Godot Will Be Here Any Minute Now
    Google’s apparently finished “educating users about copyright law” and has moved on to the far more important business of making sure not to run afoul of it.

17. Look at It This Way: Now That Yahoo’s an ‘Ecosystem,’ the EPA Can Finally Declare It a Superfund Site
    “Our financial performance is not what we would like to see long-term.” This, from Blake Jorgensen, Yahoo’s chief financial officer who, just six weeks into the job, is already well versed in the company’s fiscal truisms.

18. Gates to Google: My Lyrical Technique Will Leave Your Body Weak
    Much as Microsoft Chairman Bill Gates fancies himself untroubled by Google’s incursions into his software empire, they clearly do chafe him a bit.

19. Newest Yahoo Mail Feature: BCC Beijing
    Sure, Yahoo signed China’s “Public Pledge on Self-Discipline for the Chinese Internet Industry,” a voluntary agreement to monitor and restrict information deemed “harmful” by Beijing, but did it have to take it quite so seriously?

20. Apple: Wham, Bam, Thank You Fanboi
    “I feel like a $200 whore.” That was one iPhone early adopter’s crass assessment of his feelings of self-worth, after Apple unexpectedly cut the price of the device by a third–just two months after it arrived at market.

21. In the Unlikely Event of a Water Landing, Sergey’s California King May Be Used as a Flotation Device
    With its onboard hammocks, full-size sofas and California King beds, it’s a wonder Google’s “party plane” has room for scientific instrumentation befitting the National Aeronautics and Space Administration, but apparently it does.

22. Act Now and Get a Downgrade to the OS You Really Want, ABSOLUTELY FREE!
    It’s looking more and more like the pent-up demand for Windows Vista we’ve heard so much about this past year is really just pent-up demand for Windows XP.

23. Dude, I Work for Friggin Forbes Magazine. Have You Heard of It?
    The year-long guessing game is over. New York Times reporter Brad Stone has outed Daniel Lyons, a senior editor at Forbes magazine, as the author of the Secret Diary of Steve Jobs, the satirical blog lampooning Apple’s iconic CEO (See? Told you it wasn’t me).

24. If Facebook’s Worth $15 Billion, Then My Stupid Idea’s Got to Be Good for $10 Mil
    Apparently the vainglory from which Facebook CEO Mark Zuckerberg appears to suffer is communicable and spreading rapidly throughout the social network’s developer community.

25. A Billion Here, a Billion There, and Pretty Soon You’re Talking Real Bollocks
    MySpace is worth $65 billion in the same way that Facebook is worth $15 billion–hypothetically.

26. “Apple Has Destroyed the Music Business”–Not That We Didn’t Try Our Best
    Many, many years ago, when the digital-music business consisted of little else besides Napster and the Recording Industry Association of America’s lawsuits against it, Apple proved that there was indeed a decent business to be had in selling music online for $1 per song.

27. It’s Not an Unpaid Endorsement, It’s a “Social Ad”
    Facebook’s Social Ads aren’t endorsements, they’re a “representation” of user activity.

28. Obama Announces “No Tech Policy Left Behind” Plan
    If Google’s mission is to organize the world’s information and make it universally accessible and useful, then Democratic presidential candidate Barack Obama’s is to do the same to its tech-policy issues.

29. Sounds More Like the “Zune of Reading” to Me
    If Jeff Bezos truly hopes to create “the iPod of reading,” observers say he’s going to have to do a hell of a lot better than Amazon’s new Kindle e-book reader.

30. Fiascobook
    What Facebook CEO Mark Zuckerberg lacks in foresight, he certainly makes up for in disingenuous hair-shirt remorse.

Looks like Samba is the first beneficiary of the European Commission’s antitrust sanctions against Microsoft. To comply with the terms established by the EC’s 2004 antitrust ruling, the software giant has signed an agreement with Samba that will give the company the protocol documentation its developers need to make its open-source software inter-operate with Windows.

“Today the Samba team announced that they’re satisfied with the agreement, and are taking a Work Group Server Protocol Program trade secret and copyright license,” Microsoft Director of Platform and Technology Strategy Sam Ramji wrote in a post to the Microsoft Port 25 blog. “This will give them access to Microsoft specifications for the protocols in WSPP (such as file, print, and user and group administrative services) and allow the Samba team to create, use and distribute implementations. I expect this will significantly improve the process of Samba development, and produce better quality inter-operation between Windows and Linux/Unix environments. … This is an historic moment, and one that I’m proud of.”

As he should be. Even if it did come under duress.

Samba, which has been struggling valiantly for years to support Windows server protocols, was understandably overjoyed to finally ink such a deal. “They’re giving us all the documentation to make everything work,” Jeremy Allison, co-author of Samba, told InfoWorld. “We will have no more excuses to suck … if we don’t have something, we won’t be able to say it’s not our fault we don’t know how to do it.”

(Incidentally, you’ll find Microsoft’s Holiday Gift Guide here. And boy, is it ever something: Traditional calendars for Excel! Three dozen Outlook add-ins! Oh, and thanks for the photo, “Encyclopedia Brown.”)

Copy-protection vendor Macrovision’s decision to acquire Gemstar impressed investors about as much as one of the “Welcome Back, Kotter” reruns listed in Gemstar’s flagship magazine, TV Guide. Macrovision shares dropped 24%, to $19.66, and Gemstar lost 18%, to $4.91, on news of the $2.8 billion deal.

Seems the market’s not too keen on Macrovision spending that much money on Rupert Murdoch’s worst investment, even if it will allow Gemstar to offer copyright-protected libraries of shows, movies and music on TVs, mobile phones and the Internet.

In a conference call, Macrovision CEO Fred Amoroso assured investors that the deal makes good business sense. “Look, I recognize this is a complex transaction, no kidding,” Amoroso said. “You’ve got a little company, you’ve got $800 million of debt, there are certainly questions, the debt markets haven’t been the most robust and all of that. But you know what? We don’t make decisions as a factor of what the immediate first-day market reaction is going to be … I have a confidence and a high expectation that as we continue to work over the next few months on integration–and beyond that after closing–that this is going to be an enormous value for our stockholders.”

A $9,250 per-song fine might seem an excessive punishment for illegally sharing music for no personal gain, but it’s really not. According to the U.S. Justice Department, anyway.

The DOJ says the $222,000 in damages awarded to the Recording Industry Association of America in the Virgin Records America et al. v. Thomas copyright-infringement case is constitutional. Seems it didn’t quite buy Thomas’s argument that fining someone - particularly a single mother of two - $222,000 for songs that could be bought for $24 on iTunes violates a Supreme Court precedent that prohibits fines that are “so severe and oppressive as to be wholly disproportioned to the offense or obviously unreasonable.”

From the DOJ’s brief:

Although defendant claims that plaintiffs’ damages are 70 cents per infringing copy, it is unknown how many other users–‘potentially millions’–committed subsequent acts of infringement with the illegal copies of works that the defendant infringed. Accordingly, it is impossible to calculate the damages caused by a single infringement, particularly for infringement that occurs over the Internet. Furthermore, plaintiffs contend that their witnesses ‘testified to the substantial harm caused by the massive distribution of their copyrighted sound recordings over the Internet, including lost revenues, layoffs and a diminished capability to identify and promote new talent…’

“Most recently, Congress has crafted a statute that serves as a deterrent to those infringing parties who think they will go undetected in committing this great public wrong, as well as providing compensation to copyright owners who have to invest resources into protecting property that is often unquantifiable. Accordingly, given the findings of copyright infringement in this case, the damages awarded under the Copyright Act’s statutory damages provision did not violate the due process clause…”

Note: John Paczkowski is on vacation and won’t be writing or posting videos until he returns on Monday.

To keep you abreast of tech news while he’s away, we’re compiling a daily digest of 10 must-read tech stories. Our Tech 10 appears below.

1. Auction Action: Confirming the expected, Google announced today that it would indeed apply to bid for wireless spectrum in the Federal Communications Commission auction in January, writes Kevin J. Delaney in The Wall Street Journal, adding that if the search giant grabs a wireless license, it could become a provider of mobile phone and Internet services, among other things.
2. Facebook Gets a $60 Million Infusion… Hong Kong mogul Li Ka-shing has invested $60 million in Facebook, reports BoomTown’s Kara Swisher, who notes that the billionaire businessman has the right to invest another $60 million.
3. … And Pulls Back on Privacy: The social-networking site, under siege from Move.On and its own members, as well as from “Landmark Partner” Coca-Cola (which, says Louise Story of the New York Times, is holding off on participating in the social-advertising feature) has announced changes to its new Beacon ad system. Observes Om Malik: “Facebook finally backed down, more or less acquiescing to the demands of those concerned about its seemingly blatant abuse of privacy of its fast-growing user base.”
4. Rise and Fall of Motorola Magnate: Ed Zander, CEO of the electronics manufacturer whose mojo with the Razr cellphone brought the company big gains, is resigning in the face of equally disappointing declines to rival Nokia over the last year, The Wall Street Journal reports. Greg Brown, the company’s president and chief operating officer, will succeed Zander.
5. Sprint Rejects a Suitor: Sprint Nextel has turned down a $5 billion investment offer from Providence Equity Partners and SK Telecom of South Korea in exchange for sacking its management, according to the New York Times.
6. Big Brother Online: Government agencies worldwide are increasingly using the Internet to spy on and conduct cyber attacks on their enemies, according to an annual virtual criminology report by McAfee, writes Jon Brodkin of Network World, noting that the U.S. joins China as one of the biggest employers of Internet espionage.
7. Kiwi Teen in Botnet Probe: New Zealand police have held for questioning a teenager suspected of leading an international cyber-crime group, according to the BBC, which adds that the group allegedly hacked a million computers to steal millions from people’s bank accounts.
8. Publishers Want Web Respect: Launching an effort to bring them more power to say what content search companies may make available, publishers have developed a framework to inform online search engines that certain pages, directories or sites must not be indexed, reports eWeek, noting that supporters of the measure to respect copyright include the Associated Press, Reuters and the Association of American Publishers.
9. Sony Hears On-Demand Demands: Starting early next year, users of Sony’s PlayStation 3 will be able to download high-definition video to their devices, according to Variety, which adds that each download will cost about $1.85.
10. Exploding Cellphone Death Greatly Exaggerated:The Korean quarry worker whose death was blamed on an exploding cellphone was actually killed by a co-worker, who admitted he concocted the story after accidentally hitting his colleague with a drilling vehicle, the Associated Press reports.

Posted by Associate Editor John Sullivan.

Well, look at that. AT&T’s actually figured out a way to turn the bad press over its cozy relationship with the National Security Agency into a product endorsement: offer a surveillance service to owners of small- and medium-size businesses.

Today the NSA-preferred telecom announced AT&T Remote Monitor, a package of IP video cameras and environmental sensors with which to surveil business locations and the employees who work in them. “It’s a unique and affordable option for a small business that wants to keep in touch with various locations,” Steve Loop, executive director for business development at AT&T, told the New York Times. “It saves them a lot of time in their day from having to physically go to all of their locations.”

Bet that’s exactly how the NSA felt when AT&T provided it with access to millions of email messages, Web-browsing sessions and phone calls. Anyway … AT&T’s touting the service as an easy way to monitor employees, customers and operations, which folks like restaurateur Beaux Roby says is a necessity. “It is Big Brother,” Roby said, “but in this day and age, you need these type of tools.”

And AT&T is, of course, ready and willing to provide them–whether it’s busting time-wasting employees, filtering the Internet for widespread copyright infringement or building that massive database of Americans’ phone calls.