All Things Digital

As far as solutions for California’s $14 billion budget deficit go, taxing “digital property” is nearly as outlandish as Gov. Arnold Schwarzenegger’s proposed $4.8 billion cut in education spending.

Yet it’s being bandied about by Democratic State Assemblyman Charles Calderon, whose Assembly Bill 1956 would expand the state’s sales tax to digital goods–music downloads, e-books, pornography and what-not. “The notion of taxing tangible, physical property is really an industrial-era construct when we made widgets and sold widgets,” Calderon argues. “Now it’s not about widgets, it’s about information, and selling information and moving information.”

It certainly is, but is it really prudent to slap an iTax of 8.25% to 8.75% on such information? Especially when those who peddle it could pretty easily create a separate entity out-of-state and avoid it altogether? Driving away e-commerce certainly isn’t going to do California’s budget any good. “When you charge these taxes, all these e-commerce [companies] are going to move outside of California,” said Michelle Steel, a member of the California State Board of Equalization. “California is the high-tech state; why would you want to kick them out?”

Good question. Because if you do force them out, who’s going to provide the state with its massive tax windfalls? From an Associated Press report from January, 2007:

After cashing in more than 9 million shares valued at $3.7 billion last year, 16 Google insiders will owe the Golden State as much as $380 million in taxes–enough to cover the salaries of more than 3,000 state workers.”

Who better than AT&T to filter the Internet for widespread copyright infringement? After all, the company has a fair bit of experience with just this sort of thing, having aided and abetted the National Security Agency in its warrantless domestic-surveillance efforts.

Anyway, together with NBC and Disney, AT&T has invested a combined $10 million in Vobile, a company whose VideoDNA is rumored to be the gold standard of video content recognition systems and is considering deploying it at the network level.

The mechanics of the initiative haven’t all been sorted out, but sources tell BusinessWeek that one scenario involves traffic on AT&T’s network being routed through racks of Vobile servers that would scan it for NBC Universal and Disney content. And perhaps child pornography as well, you know, just to make the idea of network-level monitoring a bit more palatable to the masses.

Such a strategy, if AT&T were to pursue it, would make the company the first major Internet carrier to implement a network solution to copyright enforcement. And it would beg a number of questions: Will AT&T police the Internet traffic of its customers alone? Or will it police traffic over all its backbones and peering points (IE: traffic from other ISPs)? The answers could be troubling.

Suffice to say privacy advocates who’ve been railing against AT&T over the NSA debacle and issues of Net neutrality aren’t exactly thrilled with the company’s latest move. “They better be very careful,” warned Lee Tien, a staff attorney with the Electronic Frontier Foundation. “This is serious, serious stuff, to basically invade the privacy of all of your subscribers.”

Conventional wisdom and Apple spin have long held Macs to be more reliable and more secure than PCs. But after reports of installation bugs, along with data loss and other problems in Mac OS X Leopard, some are beginning to ask: how much more reliable? How much more secure? Especially now that Apple has confirmed that OSX.RSPlug.A, a malicious new Trojan found on several pornography Web sites, can indeed compromise Macs running Mac OS X.

“We’ve been made aware that a small number of Web sites attempt to trick Mac OS X users to install malicious software on their Macs,” said Apple spokeswoman Lynn Fox. “Apple has a great track record for keeping Mac OS X users secure, and as always, we encourage people to install software only from trusted sources.”

And be sure to stay away from porn sites that require you to install software to view them.

So is OSX.RSPlug.A an anomaly or a harbinger of things to come? Security researcher Gadi Evron says it’s the latter. “Apple’s day has finally come, and Apple users are going to get hit hard,” Evron told Wired. “OS X is the new Windows 98. … It’s Mac season. The next two years will be interesting.”

Good thing the Australian government’s $84.8 million NetAlert Internet filtering program was never intended to take the place of parental supervision, because it’s already been cracked. Tom Wood, a 16-year-old from Melbourne, managed to bypass the filter in 30 minutes on the day it was released to the public. “I downloaded it on Tuesday to see how good it was, because for $84 million (Australian), I would have expected a pretty unbreakable filter,” he told the Australian Broadcasting Corporation. “Tried a few things, it took about half an hour and (it) was completely useless.”

Understandably embarassed by Wood’s achievement, the Australian government began distributing a second filter. Wood cracked that one in 40 minutes. This time the government had only rhetoric to offer in response. “Sadly, just as a seatbelt will never prevent every fatal car crash, as the government has always maintained, no filter is foolproof,” said Communications Minister Helen Coonan. “But a computer with a filter is infinitely safer than one without.”

Sony wants me to publish my films on HD DVD.”

–Joone, founder of adult-entertainment company Digital Playground

If history is any guide, the victor in the battle over the next-generation DVD optical-media standard won’t be determined by the Hollywood studios, but by performers with names like Flick Shagwell and Wendy Whoppers. The adult-entertainment industry, after all, is widely credited with tipping the balance of the videotape format war in favor of VHS, giving it the critical mass of support it needed to check the advance of Sony’s competing Betamax format and turn the battle into a rout.

It should come as little surprise, then, that Sony has reportedly begun offering a bit of technical support to the Japanese porn industry, which has apparently been having a bit of trouble mass-producing its products for Blu-ray Disc. “In Japan, there are some problems. Companies cannot press Blu-ray Discs because they cannot touch adult-related contracts,” Kiyotaka Konno, director of administration for Japanese DVD replication outfit Assist Corp., told Network World. “So we asked some makers in Taiwan to do the work, and then we import the discs back to Japan. The Taiwanese company was able to obtain a pressing machine from Sony and will start mass production in August.”

So it looks like we’ll see Blu-ray tentacle porn after all.

An interesting turnabout for Sony, though the company claims its longstanding policy against manufacturing DVDs or videocassettes with adult content remains unchanged. Lucky for Sony that policy doesn’t extend to other countries–especially when HD DVD has taken an early lead over Blu-ray Disc in the battle to become the next-generation DVD format.

Is government ever a good substitute for parenting? If you’re at a loss for an answer to that question, consider some of the statements coming out of this week’s “Protecting Children on the Internet” hearing in Congress. In testimony given at the hearing, Senate Commerce, Science and Transportation Committee Chairman Daniel K. Inouye (D., Hawaii) and Committee Vice Chairman Ted “Tubes” Stevens (R., Alaska) both argued that the Internet presents a threat to children–one best addressed with universal filtering and monitoring technologies.

“While filtering and monitoring technologies help parents to screen out offensive content and to monitor their child’s online activities, the use of these technologies is far from universal and may not be foolproof in keeping kids away from adult material,” Inouye said. “In that context, we must evaluate our current efforts to combat child pornography and consider what further measures may be needed to stop the spread of such illegal material over high-speed broadband connections.”

“Given the increasingly important role of the Internet in education and commerce, it differs from other media like TV and cable because parents cannot prevent their children from using the Internet altogether,” Stevens said. “The headlines continue to tell us of children who are victimized online. While the issues are difficult, I believe Congress has an important role to play to ensure that the protections available in other parts of our society find their way to the Internet.”